Taoiseach Leo Varadkar and Fianna Fáil leader Micheál Martin have signalled they will begin talks on extending the confidence and supply agreement after the third and final budget under the arrangement was agreed and presented to the Dáil on Tuesday.
As the political focus moved on quickly from the budget, the two men spoke last night and have agreed that their officials will begin the process of reviewing the current agreement and examining the potential for a new deal.
Mr Martin said Fianna Fáil was committed to supporting the Government until the Finance Bill was passed on December 11th.
Mr Varadkar said last night he expected the two parties would engage “without preconditions” but he put a much tighter timeframe on the talks – suggesting they could be concluded by early November.
Tuesday’s budget was criticised by hotels and restaurants, which were hit with a VAT increase as expected, by the Opposition in Leinster House and by environmental groups who were scathing about the failure to increase the carbon tax.
But the budget, which saw its first votes passed by the Dáil last night, received a cautious welcome from many lobby groups, reflecting a perception around Leinster House that there was something for most sectors in it.
Spending increases
Minister for Finance Paschal Donohoe unveiled a package of spending increases, especially in health, housing, capital projects and welfare, as well as personal tax cuts amounting to about €250 million which will leave most taxpayers modestly better off.
There were few surprises in his speech, the contents of which had been heavily leaked in the days previously as Fianna Fáil and the Independent Alliance wrangled over last-minute details.
The budget package amounted to more than €1.5 billion, paid for by the VAT increase and by strong economic growth, in addition to spending increases already committed to by the Government.
Mr Donohoe confirmed he would run a smaller deficit than anticipated this year and would balance the budget next year, running a budget surplus in the years thereafter, though expenditure will continue to grow strongly in the coming years. Mr Donohoe insisted he was keeping the growth in current spending, at 4 per cent, within the rate of expected economic growth.
He stressed the Government was influenced by the need to be cautious in the light of the potential of a no-deal Brexit next year.
But the Department of Public Expenditure issued a sharp warning about the rising costs of the health service, increasingly seen as the biggest headache in the management of public spending.
Health demands
In a review of oversight and management of health spending, published with the budget on Tuesday, officials warned about increasing spending demands, with the health budget rising to over €17 billion next year.
The review says health service management has “consistently failed to manage within its annual budget allocation by significant amounts”.
But Minister for Health Simon Harris responded by saying health was a demand-led service that had to deal with increasing numbers of patients. "We can't just tell sick people to come back next year."
While the Government hailed Tuesday’s package as a “housing budget”, Opposition leaders were scathing about the performance and plans of the Coalition.
Fianna Fáil finance spokesman Michael McGrath accused the Government of failing "to get to grips with the housing crisis".
Sinn Féin leader Mary Lou McDonald said the budget had been billed as a housing budget but instead it was more like a homeless budget. “It lacks ambition, it lacks investment. It doesn’t reflect the scale of the crisis,” she told RTÉ.
