Varadkar says 'substantial' welfare package needed in October's budget

Leo Varadkar said it is possible that some welfare increases could come in on the day of the budget as they do not require legislation to be passed in the Dáil. Picture: Denis Minihane.

A welfare package of more than €5 a week on the pension will be needed in October’s Budget, Tánaiste Leo Varadkar has said.

Speaking at the National Economic Dialogue in Dublin Castle, Mr Varadkar said there will have to be a substantial welfare and pension package greater than that of 2022.

While he said the scale and detail have yet to be determined, the determination of the Government to address the cost of living is clear across all three parties.

Mr Varadkar said this is because the spike in inflation is not temporary, adding “it could go on for years”. 

“It will moderate, slow but I don’t see a return to very low inflation any time soon. It requires a long-term response as well as temporary measures. As every doctor knows, it’s important to treat the symptoms and you must also treat the underlying disease,” he said.

“We had the biggest social welfare package in many years last year. brought in by Minister Humphries. But that was on the basis that inflation was running at around two or 3%. And inflation is now running at around seven or 8%. So I think it stands to reason that the pension increases and social welfare package will have to be greater in 2023 than they were this year. That's only right. The cost of living is rising. And the economy is in good health,” he said.

Mr Varadkar said it is possible that some welfare increases could come in on the day of the budget as they do not require legislation to be passed in the Dáil.

“Actually a lot of the weekly rates can be increased by ministerial order. So it doesn't require legislation to go through the Dáil. So that can be done more quickly,” he said.

Leo Varadkar identified childcare as a key area to be addressed by the Government in the context of the Budget. Picture: Gareth Chaney/ Collins Photos

“I think we all agree the focus of Budget 2023 must be the cost of living crisis without losing sight of long-term challenges like health, housing and climate. For the first time in many years, real living standards will fall this year if prices rise faster than disposable incomes. It’s certainly true for very many households already. Those hardest hit by inflation are people on social welfare and pensioners. People in rural areas are more affected than those in urban ones,” he said.

Mr Varadkar identified childcare as a key area to be addressed by the Government in the context of the Budget.

He said all three branches of government are determined to make a significant move on the cost of child care.

He said it's an enormous cost for a lot of parents for a lot of young families in particular. And he said it prevents a lot of people from getting back into the workforce. 

“So it makes economic sense to substantially reduce the cost of childcare,” he said.

“It is a barrier to re-entering into the workforce for a lot of people, particularly parents, particularly women, but not exclusively, he said.

Mr Varadkar also said he supports efforts to secure a new public sector pay deal.

He says he wants to see tax reform to protect middle-income earners from losing half their pay increase to tax, USC and PRSI.

A larger percentage increase on income earned before a certain threshold than income above it is another measure proposed by Mr Varadkar. He also wants commitments on the ‘Social Wage,’ as trade unions describe it, to ensure that the money we do earn goes further.

He also confirmed the Government is scenario planning for the event of the UK tearing up the Northern Ireland protocol.

“We have some modelling on different scenarios. There are just so many variables. It's a result of the kind of work we do on an ongoing basis, it is modelling for different scenarios as to what might happen,” he said.

He said unlike a temporary storm to be weathered, Mr Varadkar said Brexit is a permanent change in the relationship between Britain and Ireland and a permanent change in the relationship between the European Union and Britain.

“And we're going to be constantly negotiating around the US relationship. And that's just the reality of it. It's going to be a similar relationship that European Union has, for example, with Switzerland with issues coming up all the time. We're just going to have to manage that as best as we can,” he said.