A one-off reward bonus to acknowledge the efforts of frontline Covid-19 workers is being finalised and could be announced alongside next month’s budget, senior Government sources have said.
The so-called recognition payment looks set to be announced on Budget day on Tuesday, October 12, with Public Expenditure Minister Michael McGrath looking to secure approval from the leaders of the three Government parties in the coming days.
The measure, which will take the form of annual leave and in some cases a monetary payment, is set to cost the exchequer “many tens of millions of euro”.
Thehas also learned that Mr McGrath will tap the EU Brexit adjustment fund of €1.1bn to boost his Budget day coffers, on top of the €4.7bn he is set to spend, meaning an overall spending package of €5.8bn.
Sources have confirmed that on foot of claims by health unions to the Workplace Relations Commission and the Labour Court, delaying the recognition payment any longer is "not really an option". Therefore, there is an expectation that some move on that will likely in the coming weeks.
“We cannot defer that matter much longer,” said a senior source.
Outstanding concerns about the payment include just who would qualify for such once-off ex gratia payment and whether the Government can get private sector buy-in for retail staff and other low-paid workers who bore the brunt of the pandemic.
“The costs are chunky and the question is where do you draw the line. Is it gardaí, is it prison officers? It is tricky,” the source added.
Also, there is some concern at the timing of it as the “pandemic is not yet over".
Government sources have made clear that the recognition payment will not impact on the Budget number for 2022, as Mr McGrath is looking to cover the cost of it out of this year’s revenues.
Buoyant tax receipts and a lower-than-expected Budget deficit allow significant wiggle room.
“There is a certain attractiveness in getting it done on Budget day. While it might be announced as part of Budget 2022, it would be accounted for from this year’s revenues,” one source said.
Mr McGrath is also set to access the EU’s Brexit Adjustment Fund to the tune of €1.1bn, allowing him a great deal of flexibility in finalising his estimates for each department.
This once-off windfall will be used for targeted schemes in areas worst affected by Brexit, including fisheries, enterprise, and agriculture.
According to the summer economic statement, Mr McGrath would be announcing €4.7bn worth of additional spending on Budget day. However, €3.2bn of that is already pre-committed to dealing with demographic pressures, the public service pay deal, and other matters.
This leaves €1.5bn in unallocated money to be decided upon, but it has been agreed that €500m of that would go on tax cuts.
However, divisions in Government have emerged with Green ministers seeking an increase in PRSI rates for the self-employed.
Junior minister Joe O’Brien said “there is a case to be made for PRSI increases” in the Budget for self-employed people, but this was sharply ruled out by both senior Fine Gael and Fianna Fáil sources.
On welfare, Mr McGrath said the Government would consider the issue of core social welfare rates in Budget 2022, “conscious” that there had been no increases in the past two budgets, and that households were grappling with inflation.
Speaking to the, Mr McGrath said the priorities in Budget 2022 include building on the economic recovery that is already well underway, making sure that our public services are working well after a turbulent 18 months, and making progress in repairing the public finances to ensure we are on a sustainable path.
“Covid isn't over, but I think we can face the future with a renewed sense of confidence. The budget is a great opportunity for us to reset our key priorities as a society and an economy after all that we have been through,” he said.