Paul Hosford: Government flying kites on Budget 2023 but the public won't be strung along 

With many popular policies being floated in recent weeks, elbows are being sharpened for when the announcements are made, writes Political Correspondent Paul Hosford

With little room to move, the coalition Government is now in a place where it has a number of priorities. File Picture

If it feels like the air above your head is busier in the last few weeks, it's not just the unpredicted rebound in air travel, you may have noticed some kites.

The selective leaking of measures by the Government or lobbying through the media is nothing new, but this year's have come earlier and more pointedly. 

While the previous two budgets were agreed by the coalition with what we were told was minimal fuss, October's version is likely to come with – if not disagreement – a rush to take the credit for whatever measures are taken to eat into the cost of living.

Of all of the financial crash-era terms that entered the lexicon, one which has made something of a return in recent weeks is "fiscal space".

Broadly referring to the amount of money the Government has at its disposal in October's budget, demands to fill the space come from ministers and departments earlier and earlier every year, with this year's hands being raised since early in May. 

With the Summer Economic Statement due to be published in the coming weeks, how much money is there to be put towards new spending is unclear, but the Taoiseach has been very clear in one thing – whatever cash there is will be saved until October's budget because that's the best way of setting out a long-term approach to rising costs.

In Tuesday's Leaders' Questions, Micheál Martin told Social Democrats co-leader Catherine Murphy that if the Government was to come forward with a plan, it was likely that opposition parties would "be looking for something a month later". 

It makes no sense, he said, to "chase inflation" every month and only by following the budgetary process can the Government lay out a plan to put money in people's pockets and fight inflation.

The Taoiseach told co-leader of the SOcial Democrats Catherine Murphy if the Government was to come forward with a plan, it was likely that opposition parties would 'be looking for something a month later'. Picture: Damien Storan

But less than 24 hours later, an alternative was suggested – by Tánaiste Leo Varadkar. The government has no plans for further intervention on the cost of living until budget day but may intervene specifically on fuel, he told radio programmes on RTÉ and Newstalk.

"I'm reluctant to definitively rule anything out 100% because this is a rapidly changing situation," Mr Varadkar said.

"I think if we were to see further dramatic escalation to fuel prices, we'd have to give consideration to an intervention then.

"We've reduced excise on diesel to the lowest allowed under European law. I know that thecost of living in Ireland compares unfavourably with other parts of the EU if you look at the cost of petrol and diesel it's roughly the same across Western Europe. We have the lowest VAT right now ever on electricity and gas."

This difference of, not opinion but certainly of definition, between the Taoiseach and Tánaiste was seen just last Thursday, too.

Speaking in Cork last Thursday, the Taoiseach said that an ESRI report on energy poverty “illustrates the importance of not doing something every single month”, while later that same day the Tánaiste said that he was "not ruling out" any measures in the intervening period.

The Tánaiste Leo Varadkar said that increased subsidies should be used to reduce costs of childcare.

There is no major difference between the utterances in real terms and there is little indication that they are causing any major friction in the coalition, but it speaks to a difficulty which may lie ahead for the Government. In having little room to manouevre and with a number of popular likely proposals already being flagged – a cut to childcare fees, a cut to college registration fees and cuts to the cost of public transport – the question of who gets the credit will arise.

A Green Party source said this week that they were "very aware" that two of those measures – childcare and public transport – are under the portfolios of Green Party ministers. To that end, elbows are being sharpened for when the announcements are actually made.

For their part, the Taoiseach and Tánaiste have repeatedly said that they want to see childcare costs come down, but some in the Greens are wary that what is seen as their work would be co-opted and claimed as the doing of their coalition partners.

Indeed, the early kite-flying also highlights how targeted this Budget - touted by the Taoiseach as a "cost of living Budget"- will be.

“There is no doubt people are under enormous pressure,” Mr Martin said on Monday.

“But what we have to do is in the context of the Budget. It’s to reduce the pressure on people, but do it in a way that's comprehensive, that's sustainable, and that will be applicable this year.”

In a lecture given in April, Mr Varadkar touched on what we all now expect to see in October's announcement.

Mr Varadkar said an anti-inflation plan should have six components. These include pay increases and "industrial peace", reducing the income tax burden on middle-income earners "so they can keep their pay rise if they get one", and strengthening laws to reduce insurance costs.

Mr Varadkar said that increased subsidies should be used to reduce costs of childcare and the Government should also look to reduce charges for healthcare, the cost of public transport and higher education.

But so too is the Government constrained in what it can do. A recent report by the Irish Fiscal Advisory Council said that untargeted measures would not help the inflationary issues.

“The Government faces a delicate balancing act in protecting the economy and poorer households from higher energy and food prices, while avoiding adding to inflation through second-round effects,” the council said in its May report. It warned that trying to match price increases would not work for the Government.

“This approach would see spending increase without providing excessive stimulus to an already fast outlook for growth; it would help avoid the risk of second-round increases in prices and wages, potentially destabilising the economy and the public finances,” it said.

With little room to move, the coalition Government is now in a place where it has a number of priorities – a new public sector pay deal, welfare increases, funding housing, the Ukrainian refugee crisis on top of the desired cuts to costs and must box clever about achieving real savings for working families.

That is without worrying about who gets the credit.