Roland Evans BBC Wales political reporter

The draft budget was announced on Monday afternoon

It comes with a warning the draft budget will be challenging for the public sector, and claims there will need to be a "bonfire of inefficiency".

The announcement means public services in Wales will see an increase of 1.8% in their budgets over the next three years.

This is the lowest increase since the assembly came into being in 1999.

There will be more funding for education and health, but local councils have already warned key services will be at risk as a result of the low increase in funding local government will receive.

The total draft budget for 2008-2009 is £14.8bn, which will rise to £15.7bn by 2010/2011 - double what the assembly government budget was in 1999.

BUDGET TO 2008/9 Health and social services: up from £5.46bn to £5.69bn Social justice and local government: up from £4.16bn to £4.25bn Environment, sustainability and housing: up from £691m to £734m Rural affairs: up from £137m to £148m Economy and transport: up from £1.15bn to £1.16bn. Children, education, lifelong learning and skills: up from £1.73bn to £1.8bn Heritage: up from £147m to £155m Source: Welsh Assembly Government

The assembly government has created a new way of publishing its budget, which makes it difficult to compare over various years.

There has also been re-organisation within some of its departments, which makes comparing like-for-like very difficult.

Many questions have been raised about the way the assembly government has done its calculations, because some increases in budgets seem greater than what is financially possible.

A strategic capital budget fund will be created in the assembly government to deal with all large projects, such as new roads, schools, theatres and business parks.

This money used to be given to departments at the beginning of the year, but departments will now have to compete for the money, which means there may be less money available to pay for all large projects.

There will still be a considerable debate on the actual real terms budget increase the public services in Wales will face over the next three years.