Elaine Loughlin: When it comes to this budget, even an extra €2.3bn won’t make it easy
So, €6.7bn is this year’s magic budget number.
Similar to calculating the distance to the moon or the number of people on hospital waiting lists, it’s a figure so astronomical most people would find it difficult to fully comprehend.
But for Michael McGrath and Paschal Donohoe — dubbed the political twins by Mary Lou McDonald in the Dáil last week — managing the expectations of Cabinet colleagues and meeting the demands of backbenchers will be an extremely difficult task, even with a few billion euro more to spend.
To be technical about it, the summer economic statement sets out the Government’s medium-term budgetary strategy and outlines the fiscal parameters within which discussions will take place ahead of a budget.
This year’s summer economic statement has provided €2.3bn in additional unallocated funds to the Government, which will bring the total budget package for new measures up to €6.7bn.
However, before Monday, roughly €4bn of that total had already been earmarked for changes.
The €2.3bn figure announced on Monday was “calibrated to balance the need to provide further support with the need to avoid adding to inflationary pressures”.
However, the billions will quickly begin to dwindle once the ministers get down to fully examining the asks that are already out there — a cut to third-level fees; a significant childcare package; measures to bring down hospital waiting lists; changes to income tax bands; increases in pensions and other social protection payments; the extension of free GP care; as well increased funding to deliver more social and affordable homes.
All of these measures come on top of a special cost-of-living package that will have to meet public expectations, and do not take into account a hike in the public sector pay bill in a new deal which, it is hoped, can be hammered out in the coming weeks.
When this lengthy budget shopping list is totted up, it’s clear that not everyone will get what they want. Increasing all social welfare payments by €10 a week, for example, would cost about €750m per year and, if the 7% pay rise that has been floated by public sector unions is accepted, it would have a €1.6bn impact on the exchequer.
The upcoming budget will be unusual for a number of reasons.
First is the timing. The Government has bowed to growing pressure from both the opposition and from within its own ranks to act in a more immediate manner to address spiralling inflation.
September 27 is the compromise that has been arrived at between an emergency budget and staying put with the traditional second Tuesday in October — the normal date in recent times.
Secondly, Budget 2023 has to be immediate. Instead of waiting until January, or even well into the middle of the next year to introduce measures, a significant chunk of the inflation-busting supports the Government comes up with will have to kick in from the end of September.
Finally, September’s budget will have a dual aspect to it. As well as the more regular housing, healthcare, and education demands which will have to be funded on a multi-annual basis, it will contain one-off and temporary supports to address inflation, which is now running close to 10%.
However, as political journalists began to drown in the millions and billions they found themselves floating in on Monday, Mr McGrath indicated that one-off cost-of-living measures would come from a funding package separate from that outlined in the summer economic statement.
These measures could include an extra fuel allowance payment, a repeat of the €200 energy credit, and a Christmas-bonus type social welfare payment that would be paid to those on social welfare in the autumn.
But Mr Donohoe was not revealing how much will be available for one-off measures to be rolled out this year, claiming “we have yet to find” the money.
Mr McGrath backed up his Coalition partner, telling members of the media: “That’s a judgement we think we will be best placed to make in September.”
In allocating funding for new permanent measures — such as a childcare package to bring down fees for parents, or an increase to the pension rate — the Government has to be confident that it will be able to afford this, not just in 2023, but in subsequent years.
“We just need to be careful — the worst thing is to have to take it back if things sour,” as one senior Government minister put it.
The summer economic statement outlined a corporation tax take of €8.8bn — €3bn higher in the first half of this year compared to the same period last year.
However, Ireland’s tax take could suddenly plummet into a very vulnerable situation if even a small number of these multinational firms got into difficulty.
It’s a concern that has been raised multiple times by the likes of the ERSI, with Mr Donohoe recently stating that corporation taxes cannot be relied on as they paint an “artificially benign picture” of the public finances.
Mr Donohoe stressed that it is “so important” that unstable corporation tax receipts are not used to introduce permanent changes.
On Monday, Taoiseach Micheál Martin said the Government would have to “get the balance right” in relation to temporary and longer-term measures.
“We are in the context of a unique set of circumstances coming out of Covid-19; supply chain difficulties, imbalance between supply and demand, which created its own inflationary cycle,” he said.
“Then the war in Ukraine has been very dramatic in terms of its impact on energy prices, which has fed into the broader economy. So, we do have to, through a combination of budgetary and temporary measures, try to alleviate the pressures on people, and that is the objective.”
He warned that any extension of the temporary cost-of-living measures already announced, such as excise cuts on petrol and diesel, will “eat up a lot of resources”.
Put simply, to Mr McGrath and Mr Donohoe, the extra €2.3bn in the summer economic statement is a bit like winning €50 on a scratch card — a welcome surprise, but hardly life-changing.
The business committee meets weekly in private (usually each Thursday afternoon) to agree the agenda of Dáil business for the coming week. However, members of the opposition are given the opportunity raise issues they believe should be included for debate or voice objections to the agenda
during the order of business each Tuesday in the Dáil. The Ceann Comhairle then asks members of the Dáil: “That the proposed arrangements for this week’s business be agreed to.” If members disagree, they can call a vote.
:
The Drunkenness (Ireland) Bill was debated in the British House of Commons. During the debate, Irish Nationalist MP for South Louth, Joseph Nolan, said the bill was “uncalled for, ill-considered, mischievous in its provisions, and needlessly offensive to every Irishman who had any regard for the fair fame of his country.”
:
A truce in the War of Independence was declared. While the agreement to hold a “disarmament conference” was welcomed, on the same day the Cork Examiner reported the discovery of the bodies of four soldiers in a filed near Togher in Cork. “The four had been blindfolded before being shot, and the coverings were still over the eyes when the bodies were found.”
:
Fine Gael accepted an offer made by seven university professors to overhaul its Irish language policy. It came after the academics slammed the party claiming that if the policy was implemented it would “lead to the complete extinction of the language, sooner rather than later”.
:
Proposals to end the Shannon stopover sparked rebellion within Government which resulted in a number of resignations.
It was reported that Taoiseach Albert Reynolds told a meeting of the Fianna Fáil party that those who resigned the whip would be “left out in the cold for a very long time” and expressed fury over the fact that Síle de Valera had communicated her decision via fax from the US.
- Leaders’ questions kicks off at 2pm, the summer economic statement which sets out the amount the Government will have to spend in the budget is likely to feature.
- There was disagreement at the Business committee last week over the amount of time allocated to debate the mica redress scheme. It has been scheduled for two hours on Wednesday but expect members of the opposition to demand further time during the order of business.
- It will be a late one for Justice Minister Helen McEntee who is due to take questions on her portfolio from 10.30pm before the Dáil adjourns just before midnight.
- The Dáil will debate a Social Democrats motion on the cost of disability in the morning.
- With the summer recess getting closer, the Government has six items on the agenda, including emergency legislation to ensure all children with additional needs have a school place in September.
- The Oireachtas Committee on International Surrogacy will publish its report after hearing from many experts and those who have been through the process.
- The Health Committee is to discuss the impact
- of long Covid with consultants from Dublin’s Mater Hospital.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
