Government admits cost of living plan 'won't be enough'

Finance Minister Paschal Donohoe and Public Expenditure and Reform Minister Michael McGrath at a Budget 2022 briefing last October.  Mr Donohoe today denied that the €.5bn package announced today is a mini-budget.

The Government has admitted its half a billion euro package to address the cost of living crisis “won’t be enough” for many families.

Opposition parties and social justice groups were scathing in their criticism of the “lack of ambition” in the plan, with Sinn Féin’s Pearse Doherty saying it “won’t scratch the surface” of the pain being felt.

Following a meeting of the Cabinet sub-committee on the economy, Finance Minister Paschal Donohoe and Public Expenditure Minister Michael McGrath announced the package.

They accepted the measures will not be sufficient to fully insulate families from the significant spike in the cost of living, with Mr Donohoe saying: “We're not able to meet every need."

The full list of new measures include:

• An increase in the energy credit to €200 including VAT, estimated to impact just over 2m households;
• A temporary 20% reduction in public transport fares to apply from April until the end of the year. However, planned fare increases by the National Transport Authority later in the year could nullify the impact of the reduction;
• A lump-sum payment of €125 on the fuel allowance to be paid in early March to 390,000 recipients; 
• A further reduction (from €100 to €80) in the maximum amount that qualifying patients will pay under the drug payment scheme, benefiting just over 70,000 recipients; 
• The working family payment budget increase announced on Budget Day will be brought forward from June 1 to April 1
• Reduced caps for multiple children on school transport fees to €500 per family post-primary and €150 for primary school children

Mr Donohoe described the package as “significant” but insisted it did not amount to a mini-budget, saying the Government has not decided to make changes to taxation or core social welfare rates.

"The key features of a budget are changes in personal taxation, changes to the core social welfare rates, and [to] revise where we're going to be with our national finance. These are not contained in the package here today," he told a press conference.

As much as I do appreciate the pressure many are under, the Government has decided not to make changes in relation to personal taxation. We've also decided not to make changes in relation to core social welfare rates. 

He said the package will keep the Government well within the €7.7 billion borrowing threshold announced in the budget, and said it will not have a measurable impact on inflation.

Mr McGrath said the €200 energy rebate and the €125 increase in the fuel allowance will be temporary measures as will be the 20% reduction in public transport.

The Public Expenditure Minister estimated that the energy measures will cost €430m of the €505m package.

Green Party leader Eamon Ryan said the €200 credit will be implemented quickly, adding that the bill is currently before the Oireachtas and will be enacted by the beginning of March.

Responding to the plan, Social Democrats co-leader Catherine Murphy said the Government’s response to the cost-of-living crisis is not sufficiently targeted at those who need help the most, delivering instead a bonanza to high earners: 

"The vast bulk of the funding announced today is for a blanket €200 electricity credit that will be paid to every household, regardless of income," Ms Murphy said.

In fact, the owners of 62,000 holiday homes in Ireland are set to receive a €12.4m bonanza under the Government’s plan. 

Seán Healy, the CEO of Social Justice Ireland said those who were left behind in Budget 2022 have been left behind again in Government’s cost of living package. 

He said: “This plan to tackle the rising cost of living proves, once again, that this Government is not focused on protecting Ireland’s most vulnerable.”