Giveaways and tax breaks: €6.4bn budget could be the last before a general election

Finance Minister Michael McGrath and Public Expenditure Minister Paschal Donohoe share a light-hearted moment as they arrive at Leinster House to deliver Budget 2024. Picture: Liam McBurney/PA

The Government has set out a ‘something for everyone’ package of tax changes, increased supports, and once-off payments in what could be its final budget splurge before a general election.

Budget 2024 has targeted the ‘squeezed middle’ with three €150 universal energy credits, substantial investment in childcare, the expansion of the free schoolbooks scheme, income tax reductions, and a crackdown on cigarettes.

Pensioners have been rewarded with a €12 increase in weekly payments; small- and medium-sized businesses will receive up €10,000 in rates supports; while landlords, tenants, and some mortgage holders are to benefit from tax reliefs.

However, critics hit out at what has been dubbed an over-emphasis on short-term measures rather than lasting structural measures. Sinn Féin finance spokesman Pearse Doherty criticised the Government for not making housing the budget’s number one priority, while Social Democrats TD Róisín Shortall said the €65bn package unveiled sounded like “Budget 2023 lite”.

“There was an opportunity with this budget, given the resources available, to do some transformative things, to tackle the big problems facing the country and to ensure that we were not pulling up the ladder and passing on problems to the next generation to solve again,” Ms Shortall said. 

Labour’s Duncan Smith said a number of “relatively small investments”, such as a €20m investment in the national cancer strategy would have had “a massive impact”.

Public Expenditure Minister Paschal Donohoe defended the decision to favour a raft of once-off measures ahead of providing extra money for longer-term housing and health measures.

When asked about the €22.5bn allocation for health, which will be used to maintain existing levels of service with little in the way of new measures, Mr Donohoe said the budget “got the balance right” between “ambition and being confident that we can pay for an ambition”.

This was echoed by Finance Minister Michael McGrath, who said the budget balances the needs of today with future demands. Mr McGrath said: 

I am convinced that the approach we have jointly adopted over a number of years now has been the right one.

Among the once-off cost-of-living measures are three €150 energy credits for every household between now and April.

Lump sums and double payments

Those availing of the working family payment will receive a €400 lump sum this side of Christmas, and there will be a universal double payment of child benefit. Recipients of the living alone allowance will also receive a €200 lump sum this winter.

A double payment of the foster care allowance will be given to around 5,000 recipients.

A one-off double payment to all qualifying social protection recipients will be paid in January.

However, a limited and targeted mortgage interest relief to help struggling homeowners was described by Sinn Féin as not going far enough.

The overall tax relief will be introduced for one year, with only those who have a tracker or variable mortgage balance between €80,000 and €500,000 still outstanding eligible for the scheme. It is expected to benefit 165,000 mortgage holders.

Minister defends childcare delay

Meanwhile, Children’s Minister Roderic O’Gorman defended a delay in implementing his flagship budget measure on childcare. Mr O’Gorman had targeted a second 25% cut to creche fees in this budget and, while it looked like that target would not happen until late in the day on Monday, the announcement did come, albeit with an 11-month delay. Mr O'Gorman said: 

I’ve been able to increase investments in the access and inclusion model so children with disabilities can attend childcare longer. 

“I’ve been able to open the NCS [National Childcare Scheme] to childminders for the first time and to create a brand new stream of support, the equal participation model. 

"So all the objectives I’ve set out have been achieved within a particular financial envelope. And parents will now know — parents will be able to plan.”

Two long-term funds set up

Mr McGrath unveiled two long-term funds to put windfall corporation taxes aside for future measures across health, pensions, and climate change. 

He has stressed that the Future Ireland Fund will not be a rainy day fund, “because it is for costs that we know are coming our way in the years ahead”. Some €4.3bn is being put in next year alone.

Meanwhile, the Climate and Nature Fund will see a €2bn contribution from the dissolution of the National Reserve Fund next year.

This fund will grow incrementally by €2bn for seven consecutive years when it will reach €14bn plus interest accrued.