Coalition leaders meet to debate cost of living measures ahead of October's budget

A source said the meeting will be an opportunity to 'shape ideas' for the budget, due to be delivered October 10, and that it was unlikely any specific measures will be discussed in detail

Minister for Finance Michael McGrath will present on taxation, while Minister for Public Expenditure Paschal Donohoe willl detail options for expenditure. Picture: Damien Storan/PA

Coalition leaders will meet tomorrow evening to intensify negotiations on the scale of the cost of living package which is to feature in next month's budget.

Taoiseach Leo Varadkar, Tánaiste Micheál Martin, and Green Party leader Eamon Ryan will be given presentations by Finance Minister Michael McGrath and Public Expenditure Minister Paschal Donohoe ahead of Tuesday’s Cabinet meeting.

Mr McGrath will present on taxation, while Mr Donohoe will detail options for expenditure.

While negotiations are still ongoing between civil servants in individual departments and the Finance and Public Expenditure Departments, budget bilateral meetings between ministers are due to kick off in the middle of the week.

It is understood that one of the key aspects up for discussion at tonight's meeting will be the size and scope of the package of one-off cost-of-living measures, as well as broader plans for spending on services like welfare and childcare.

One senior source said the meeting will be an opportunity to “shape ideas” for the overall budget, due to be delivered on October 10, and that it was unlikely any specific measures will be discussed in detail.

In recent weeks, both Mr Varadkar and Mr McGrath have signalled that the overall cost-of-living package will be smaller than the one delivered alongside Budget 2023. However, once-off payments seen in the previous package are likely to be repeated this year.

Doubts are already being cast on significant increases to the renters' tax credit, introduced in last year’s budget.

In recent weeks, Taoiseach Leo Varadkar and Mr McGrath have signalled that the overall cost-of-living package will be smaller than the one delivered alongside Budget 2023. Picture: Brian Lawless/PA

Last week, Higher Education Minister Simon Harris called for the tax relief to be doubled from €500 to €1,000. However, one senior source downplayed the chances that happening, citing the significant cost to do so. 

The tax credit cost €200m to implement last year, meaning the State would have to find €400m a year if it were to press ahead with doubling it.

The process of creating Ireland’s new sovereign wealth fund will be started in the budget, following a scoping paper being presented by Mr McGrath earlier this year. One source said that October’s budget will begin putting “meat on the bone” of the proposed wealth fund.

One memo due to go before Cabinet on Tuesday is around the increased cost of delivering key infrastructure within the National Development Plan. Following weekend reports that the Department of Transport is raising concerns about a deficit of €14bn due to inflationary pressure, a spokesperson for Transport Minister Eamon Ryan said the Government “has to balance infinite demand and finite resources”, with inflationary pressures reducing “real spending power”.

They added that delivering infrastructure projects in time is a “fundamental government priority” and that there needs to be a recognition of inflationary pressures and that steps are taken to ensure projects are not delayed.

Separately, the CEO of the HSE, Bernard Gloster, said he expects that the health service will require “substantial” Government assistance due to massive budget overspends.

“The end of July position is about a 700m of an overspend,” Mr Gloster told RTÉ Radio, saying that health inflation, further demand, and how budgets are managed within the HSE are the root causes of the deficit.

“We are going to need substantial assistance towards the end of this year and into next year, there’s no question about it.”