One of the most generous pre-election budgets ever is to be unveiled by Finance Minister Michael Noonan, with tax cuts and spending hikes amounting to €3bn, twice what ministers had signalled.
The move came as Taoiseach Enda Kenny pulled back from a snap November poll after Coalition infighting threatened to overshadow tomorrow’s intended ‘feelgood’ financial package.
One of the country’s leading economists, Conall Mac Coille of Davy stockbrokers, said that the “enormous” increase in spending of €1.5bn the Government announced over the weekend and which it earmarked for spending in the last few weeks of this year will actually lead to a doubling of the total of the 2016 budget measures to a huge €3bn.
The intervention came as Mr Kenny denied he was planning a “spend, spend, spend” pre-election budget, like those of Fianna Fáil predecessor Bertie Ahern, which could put the recovery at risk.
The big spending boost emerged at the weekend when the Finance Department published its White Paper on Estimates of Receipts and Expenditure detailing the amount it plans to pump into so-called supplementary budgets across health, transport, education and social welfare, by the end of 2015.
The additional measures totalled €1.5bn, including about €600m to plug a huge hole in the health budget. The measures also featured a range of policy measures across other departments which effectively boosts the overall level of spending for 2016 too.
Writing in a research note published this morning, Mr Mac Coille said the pretence that the €1.5bn in supplementary spending will be allocated for 2015 cannot be sustained. Taken together with the further €1.5bn of spending increases and tax cuts Mr Noonan is due to unveil tomorrow, the overall size of the 2016 budget therefore balloons to €3bn.
Mr Mac Coille said Europe’s strict lending rules, which were meant to limit the amount of money a government can spend in any single year, have had “an inauspicious start”, as the rules have encouraged 2016 spending to be allocated into the last months of 2015. “It’s a big giveaway ahead of the election,” Mr Mac Coille told the Irish Examiner.
After a week of refusing to damp down speculation of a snap election, Mr Kenny was forced to resignal a spring poll after a near-open revolt by Labour TDs.
With the inner-CCabinet Economic Management Council meeting this morning to finalise budget details, ministers were expected to stop short of restoring the Christmas welfare bonus in full this year, but Labour was pushing for it to extended to 60% of its previous rate.
Mr Kenny has pledged to reduce USC rates, and said it would be his aim to abolish it during a second term.
A refocusing of childcare policy is set to be a major theme of tomorrow’s budget.
the package to be outline by Finance Minister Michael Noonan and Public Expenditure Reform Minister Brendan Howlin, with free pre-school places for every child from the age of three.Carers are set to receive a boost as Ministers restore a deeply unpopular €325 cut to the respite allowance two years ago.Sinn Féin leader Gerry Adams said that Mr Kenny’s dithering of the election date had exposed the “chaos” at the Heart of the Coalition as he called on the Taoiseach to resign and prompt an immediate poll.Renua leader Lucinda Creighton said the uncertainty over the election date had been a real “circus” over the last few weeks.