Paschal Donohoe rejects ‘austerity budget’ label for 2020 plans

Paschal Donohoe rejects ‘austerity budget’ label for 2020 plans

The minister for finance has defended his spending plans for next year after it was labelled as an “austerity budget” and “non-budget”.

Speaking at the post budget briefing in the Budgetary Oversight Committee today, Minister for Finance, Public Expenditure and Reform Paschal Donohoe’s plans were criticised by independent TD Tommy Broughan‎.

“The bulk of social welfare recipients, people who are often, you know by the collar trying to survive, didn’t get increases this year,” Mr Broughan said.

“It was another austerity budget minister, and is there not a strong case, if we, and who can predict what’s going to happen in British politics, but if 2020 turns out to be rather like 2019, to have more targeted resources at people who are dependent on pensions and on social protection – we should be able to afford it.

“So, isn’t there a strong case maybe that you should have another budget?”

Tommy Broughan criticised the budget (Niall Carson/PA)
Tommy Broughan criticised the budget (Niall Carson/PA)

Mr Donohoe previously defended not topping up social welfare payments next year, saying there is a chance more people will become unemployed because of a no-deal Brexit, and money must be set aside.

Mr Donohoe reaffirmed on Tuesday that it was his “strong view” that there should not be another budget until October 2020.

Mr Donohoe replied that the criticism was incorrect: “Austerity tends to be defined by the reduction of government expenditure over time.

“This budget increased government expenditure by €3.4 billion, so describing a budget as austerity budget, given we increased overall expenditure is a very odd description.”

Mr Broughan interrupted Mr Donohoe a number of times, telling him that this did not take into account of inflation and incomes.

Brexit has weighed heavy in Mr Donohoe’s 2020 budget, which was curated in the expectation of a no-deal exit of the UK from the EU – which is predicted to have extremely detrimental outcomes for Ireland.

Mr Donohoe repeated that although the government has set aside a separate Brexit fund, if a no-deal does not happen, the money will not be used for any other purpose but transferred into an approved surplus for the next year, resulting in “a swing from an expected deficit of 0.6% to a surplus of 0.5%”.

He added that the “external economic outlook is still deteriorating, and with the remaining uncertainty around Brexit, our policy approach should be to budget surpluses in the future, and if the economy continues to perform strongly, to use them to reduce our national debt”.

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