Welfare bonus, fuel rebates and €200 energy credit to be targeted in early budget

Ministers are seeking to identify “early and quick” measures which can be deployed long before the end of the year.

Extending current fuel rebates beyond budget day, another round of the €200 energy credit, and an autumn welfare bonus will all be part of the €6.7bn budget package to be approved in principle today.

The increase in spending — up from the €4.7bn that was promised in April — comes as the Government struggles to offset runaway inflation and rising prices.

The extra €2bn — made up of €1.5bn on spending and €0.5bn on tax cuts — will form the basis of the Summer Economic Statement to be announced today, however much of that money will be needed "simply to stand still".

Due to inflation running well in excess of what was forecast last year, a large proportion of the €1.5bn in additional spending measures will be "eaten up" by inflation — which topped 10% late last week — and the new public sector pay deal.

Inflation is causing havoc across all departments," said one senior minister.

'Sobering assessment'

While some ministerial sources said there is “lots of fiscal space” or additional revenues allowing much greater scope to help struggling families, Finance Minister Paschal Donohoe and Public Expenditure Minister Micheal McGrath will be seeking to "dampen down expectations" at Cabinet with a "sobering assessment" of the national finances.

This, senior sources have said, is due to record employment levels, rising incomes, and higher-than-expected tax revenues.

Finance Minister Paschal Donohoe and Public Expenditure Minister Micheal McGrath will be seeking to 'dampen down expectations' at Cabinet.

Under significant political pressure to address the cost-of-living crisis, the Cabinet will meet for an extraordinary meeting to approve its Summer Economic Statement.

This will set out the budget-day parameters when it is delivered in the last week of September.

It is understood that both Mr Donohoe and Mr McGrath are in favour of a “modest” bringing-forward of budget day from October 12 to September 27; however, this may not be signed off today.

The plan will involve:

• A mix of once-off measures and targeted more-permanent measures, some of which will have a universal impact;
• A repeat of the €200 energy credit and a Christmas-bonus type payment in the autumn are to be included, according to Foreign Affairs Minister Simon Coveney;
• Reducing childcare costs;
• Reducing student fees from €3,000 a year;
• Building more social, private, cost-rental and affordable-purchase homes;
• Extending the reduced public transport fares;
• Extending free GP care and lowering medicine costs.

Speaking ahead of the Cabinet meeting, ministerial sources, speaking to the Irish Examiner, said the intention is to “balance the budget or thereabouts”, saying anything else would be “unwise”, given the prospect of rising in interest rates and the significant uncertainty around the war in Ukraine.

Ministers are seeking to identify “early and quick” measures which can be deployed long before the end of the year.

It has been made clear that ministers will look to extend the current cuts on petrol and diesel beyond their current expiry date of budget day.

While this move is not strictly in the budget-day package, Mr Donohoe and Mr McGrath have been in talks with the party leaders over the weekend to identify measures that can have an immediate impact.

One senior source told the Irish Examiner that the focus will be on “targeted and once-off” measures which are less likely to further increase inflation, which is now running at close to 10%.

Foreign Affairs Minister Simon Coveney: Once-off payments likely in upcoming budget.

Speaking yesterday, Foreign Affairs Minister Simon Coveney confirmed that another energy credit and an additional Christmas-bonus type payment in the autumn are on the table.

“It allows us to make once-off payments to respond to what we hope will be a once-off dramatic increase in the cost of living, at least in the near term,” he said.

That would allow us to spend in a way that we normally wouldn't … the kinds of things that we've already started doing in terms of an energy credit, that does effectively reduce the cost of household electricity bills, those kinds of things."

Despite the bringing forward of the Summer Economic Statement, the Opposition is demanding more immediate action.

Sinn Féin TD for Cork South Central Donnchadh Ó Laoghaire said his party was of the view that there was a need for "immediate intervention" by way of an emergency budget.