The Government’s decision to bring forward budget day by two weeks has been dismissed as a “token exercise” amid renewed calls for an emergency response to the cost-of-living crisis.
The Coalition has been under pressure to introduce further measures to ease the impact of inflation but it has been resistant to chasing the issue and bringing in new supports before the budget, which is now taking place on September 27th rather than October 11th.
Opposition parties have criticised the Government’s intention to wait for months to act and there have been calls from the Government backbenches to take steps sooner. Senior Government figures have defended holding off until budget day, pointing to the need to bring in a comprehensive package ahead of what is expected to be a tough winter.
They have also pointed to the more than €2.4 billion in supports already provided in response to the crisis, such as a €200 electricity bill credit, reduced public transport fares and cuts to excise duty on petrol and diesel. There have also been promises that some budget measures to help struggling households will kick in before the end of the year.
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Under the strategy set out in the Summer Economic Statement (SES), announced by Minister for Finance Paschal Donohoe and Minister for Public Expenditure Michael McGrath, Budget 2023 will focus on the cost of living with a €6.7 billion package of spending and tax measures to be announced.
Ged Nash, the Labour Party’s finance spokesman, said the statement confirmed that tax revenues are “powering ahead” and that the windfall “must be put back into the pockets of those who need help the most”.
“Moving the budget ahead by 14 days is a token exercise,” he said.
Cost of living
The Louth TD said many of the measures flagged by the Coalition in recent weeks, like increased social welfare payments, could “be done at the stroke of a pen and should be done now”.
Sinn Féin finance spokesman Pearse Doherty said the measures planned would “not help one household with the soaring cost of living this summer”.
“What was needed was an immediate emergency budget before Government Ministers pack their bags for the summer recess,” he said.
Social Democrats co-leader Róisín Shortall said that the statement confirmed that the Government had the capacity to introduce an emergency budget now. She said the Coalition had indicated that there would be further one-off measures on top of the €6.7 billion package to be announced on budget day.
“Given the Government has effectively conceded that an emergency package is needed, in tandem with the budget, why does it continue to refuse to introduce those measures now?” she asked.
The cost-of-living crisis, driven by inflation as the impact of the Covid-19 pandemic recedes and exacerbated by the rise in energy prices caused by the war in Ukraine, has prompted the Government to change its budgetary strategy. The medium-term strategy adopted last summer was based on public expenditure growth of 5 per cent per annum over the years 2023-2025.
However, reflecting the much-less-benign inflation environment, the plan set out in the statement will see core spending increase by 6.5 per cent next year to €85.8 billion.
Mr McGrath said he was making a “temporary change” to the spending rule imposed last year because of the rate of inflation. He also said there would be scope for one-off measures to ease the cost-of-living crisis in addition to the €6.7 billion package announced.
The budget day expenditure package is to be €5.65 billion over this year and next, an increase of €1.7 billion relative to what was originally provided for. The package for tax measures, at €1.05 billion, is double what was originally planned. Mr Donohoe said tax changes would seek to ensure that workers did not end up paying the higher rate of income tax if they received a pay rise.
