Govt agrees €450m of bailout funds in Budget to plug departments' overspend

Bailout funds amounting to some €450m to plug overspending in departments, most of which is in Health, have been agreed by the Government.

The Budget White Paper released overnight shows that supplementary funds for a number of departments will be factored into spending for the remainder of this year.

Finance Minister, Paschal Donohoe, made the announcement as he also confirmed that part of the supplementary funds will cover the Christmas bonus for social welfare claimants this year.

He said the €450m agreed, which is expected to cover overspending in Health, Justice, Education and Social Protection, was after supplementaries last year amounted to a €1bn.

Mr Donohoe added: “We have delivered a significantly different performance on supplements, but it is an issue that I am going to continue to make progress on as we through this year and into next year.”

It is expected that overspending in Health will be in excess of €320m and possibly higher while garda overtime has cost €32m. Elsewhere, pensions for teachers have added to costs in education.

Mr Donohoe insisted that the Health overspend is far less than that of last year, which amounted to €645m.

It was also confirmed by the minister that some of the overspending by departments will be covered by corporation tax receipts, which have come in ahead of profile recently.

Figures this week showed that corporation taxes, paid mostly by large multinational US companies based here, delivered more than €700m more than at this time last year, totalling some 5.84bn. This excess amount is now expected to come closer to €1bn. Department underspends will also help plug financial gaps.

However, Sinn Féin was critical of the confirmed supplementary funds that are needed to bailout departments.

TD Pearse Doherty said: “News that the minister will be funding €450 million worth of supplementary estimates through corporation tax revenue is yet more evidence that this Government has no control of the public finances. Year after year the Government underprovide for our public services, and then announces overruns at each year’s end. This makes a mockery of the budgetary process and is a dangerous way to manage our public finances.”

Mr Donohoe declined to confirm reports that next week's budget will include hikes in taxes for fuel as well as carbon taxes. However, he said that any such taxation, if agreed, would see funds reinvested into schemes designed to reduce carbon emissions as well as alleviate any fuel poverty.

The minister added: “I'm absolutely aware of the concern that commuters have in relation to price of fuel. I'm aware this is a particular issue to citizens who don't have access to public transport.”

Overall, the white paper shows there will be a budget surplus of 0.25% this year, amounting to more than €600m.

Unlike other budgets, Mr Donohoe said, there are only a “few small options” for next year when it comes to issues such as adjusting income tax rates.Mr Donohoe also confirmed that the fiscal space in the budget will be in the region of €700m, which was outlined previously.

Mr Donohoe said next week's Budget will, in essence, be about preparing Ireland for a disorderly Brexit.

He said: “The key theme of the budget that will be announced next week will be how the country will respond back to a no-deal Brexit if it occurs. So we will be outlining next Tuesday the different supports that will be available for our economy to respond back, how we would make those supports available and how we would deal with further risks that a no-deal Brexit would pose to our economy."