Budget 2026: Public transport fare hikes or service cuts on cards
A spokesperson for transport minister Darragh O’Brien confirmed there was a funding deficit in public transport due to cost increases. Picture: iStock
Public transport fare hikes or cutting back on services are on the cards in October’s budget because of a €250m funding deficit in State-run public transport services.
A “funding gap” exists in the public service obligation (PSO) for public transport, which includes services such as Bus Éireann, Dublin Bus, and Luas services. The obligation refers to funding provided by the Government to shore up routes that might not be commercially successful but are nonetheless vital, often for rural passengers.
Amid budget negotiations on transport, it is understood there are two options available for the Government, including a possible fare increase.
Another option is to reduce the level of public transport services, or the Government could opt to raid the National Development Plan.
The plan funds are expected to be used for infrastructure, rather than current spending.
One source said the Government needs to find a way to avoid increasing public transport fares, citing the already high cost of living.
However, they acknowledged it was not “fiscally responsible” to maintain a deficit in the PSO budget, and funding would be required to plug the gap.
A spokesperson for transport minister Darragh O’Brien confirmed there was a funding deficit, saying the cost of delivering public transport services had increased.
They said: “In recent years, the costs of delivering public transport services have been impacted by a number of issues, including rising energy and fuel costs, general inflation, expansion of services in line with Government policy, and various fare initiatives.
“The costs associated with these issues have outpaced revenue growth, despite increasing passenger numbers, and as a result, the PSO programme has required supplementary funding in recent years.”
Amid the concern over the funding gap, the Government is considering long-term plans to develop a new “sustainable funding model” for State-run public transport.
In August, Transport for Ireland reported an “all-time high” usage of PSO public transport, with a total of 343m journeys across 2024.
Meanwhile, finance minister Paschal Donohoe signalled the Government will maintain the rent tax credit, but insisted that no final decisions on Budget 2026 will be made until next Friday at the earliest.
The tax relief, introduced in Budget 2023, was due to expire at the end of 2025.
It is currently worth €1,000 per renter.
Mr Donohoe said he was “well aware” of the importance of the credit and said it had played a “really valuable role” in supporting tenants amid rising rents.
He said that while no decisions were made on tax measures, he signalled that the credit would be renewed, citing its “importance” and how it has supported renters.
The programme for government commits to progressively increasing the tax credit, but it is unclear whether it will be increased in this year’s budget due to the tight €1.5bn tax package.
Sources said housing minister James Browne wants to see the tax credit “protected” in the upcoming budget, amid concerns over the sunset clause.
Mr Donohoe met with public expenditure minister Jack Chambers on Friday morning to “review the progress” being made on the budget, saying they are united on ensuring it does not “add any risk within our economy”.
He stated they were “well aware” of recent warnings and perspectives provided by bodies such as the Irish Fiscal Advisory Council (Ifac) in recent weeks.
In early September, Ifac warned against the high levels of spending and called for a reduction in the size of the overall package, while saying the budget was being planned “without a clear roadmap for fiscal policy”.
Mr Donohoe said the Government planned to address the cost of living through targeted measures, while continuing to rule out any return to once-off giveaways.
He added that no specific decisions had been signed off on in relation to the budget, saying this would not happen until next Friday at the earliest.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
