'No rationale' to one-off cost-of-living measures in Budget 2025

Taoiseach Simon Harris speaking with World Ploughing Champion Ger Coakley, Clonakilty, Co Cork on day one of the National Ploughing Championships at Ratheniska, Co Laois. Picture: Dan Linehan

There is no valid reason for the Government to include cost-of-living supports in the upcoming budget, according to a prominent economic think tank.

Representatives of the Nevin Economic Research Institute (NERI) will tell the Oireachtas on Wednesday that such supports are no longer appropriate given that prices in Ireland are not likely to decline.

The Government has already flagged that the next budget, this coalition’s last, will include a €1,000 boost to workers via a combination of tax changes and a fresh cost-of-living package.

The electorate has grown accustomed to such packages over the course of the last two budgets as the world reeled from a post-covid inflationary crisis together with the fallout from the Russia/Ukraine conflict which lead to a massive spike in wholesale energy prices.

However, Tom McDonnell of NERI will tell the budgetary oversight committee on Wednesday that “once-off cost-of-living supports have no obvious rationale in the current economic climate”.

“Such policies only make sense if we expect prices to decline,” Mr McDonnell is expected to say.

Instead of once-off, untargeted, and/or ad-hoc supports, we need to move to an evidence-based approach to welfare payments based on income adequacy.

Separately, Irish Fiscal Advisory Council chairman Seamus Coffey will tell the committee that the Government will be “adding to price pressures” by delivering the €1,000 short-term benefit to taxpayers.

“The Government might put money back in people’s pockets, but by raising prices these indirect costs take out of their pockets in a lasting way,” he will say.

Mr Coffey will add: "The Government’s budget package is already large. Overruns and untargeted cost-of-living measures will add to the pressure further." 

Meanwhile, speaking at the National Ploughing Championships, Taoiseach Simon Harris hit out at Sinn Féin’s suggestion that €1bn of the Apple tax funds be spent on disadvantaged communities.

He said he believes it should be spent on housing, water, and infrastructure but emphasised the funds can “only be spent once”.

“I’ve noticed a new thing developing with Sinn Féin where they tried to divide communities, and they tried to classify communities — ‘you can have an asylum centre in your community because we’ve classified you as such, but you won’t because we’ve classified you as something else’. Let’s not divide Ireland.” the Taoiseach said.

“This is a small country, a country bound by community and fairness, and we will, as a government, put in place a roadmap as to how we best believe that that €14bn or thereabouts can be spent — but it can only be spent once, so let’s keep count of how many times Sinn Féin tries to spend it,” Mr Harris added.