Budget 2024 will be unveiled on October 10th when Minister for Finance Michael McGrath will stand up in the Dáil to present an overall package worth at least €6.4 billion.
There will be an additional multibillion euro package of temporary measures to tackle the cost-of-living crisis. This was worth some €4 billion last year, but the Government has this week been suggesting that it will not be as high this year.
Talks between officials have been under way for weeks but the substantive meetings between McGrath, Minister for Public Expenditure Paschal Donohoe and other Ministers are set to swing into gear properly next week. Despite it being just over two weeks away the shape of Budget 2024 is already beginning to emerge, according to senior sources across the three Coalition parties.
Tax
The Government plans to spend around €1.1 billion on taxation changes. The view within the Coalition is that there are many ways to skin a cat, but at this stage there is a strong push from both Fianna Fáil and Fine Gael for a package that would contain an increase in tax bands and credits and a cut to the universal social charge (USC). Last year the standard rate tax band rose by €3,200 a year to €40,000. One source suggested a further increase of between €1,000 and €1,500 this year.
“Another change to the bands and credits will make up the bulk of the tax package, and then it is a matter of looking at what is left there and how this could potentially fund cuts to the USC,” one source said.
However, a Fianna Fáil source said there is an increasing focus on delivering a significant USC cut, and prioritising that, not least because of the political optics given the negative public sentiment around the charge.
There has been criticism from think-tank, the Economic and Social Research Institute, and the Irish Fiscal Advisory Council, the State’s budgetary watchdog, about plans to cut taxes, but the Government will argue that there is plenty of money in State coffers to increase spending, cut taxes and put a few billion aside.
“Besides, are we really arguing that we cannot help people with the cost of living when we are talking about these mega surpluses?” one source said.
Childcare
A cut in childcare costs of up to 25 per cent – but perhaps not the full 25 per cent – is now also expected. While Minister for Children Roderic O’Gorman is pushing for the full amount, the demands from other Ministers are piling up.
“It’ll have to be taken in the round. We will see,” said one official.
It is understood there is also a push to expand access for disabled children to the Early Childhood Care and Education (ECCE) programme, while another possibility is targeted childcare supports for those in disadvantaged areas. Further funding may also be on the cards to bring childminders into the National Childcare Scheme so that more parents can avail of subsidies.
Welfare
Increases to welfare payments are a certainty for pensioners, carers, people with disabilities and others. It has not yet been agreed how much this increase would be worth, but at this stage it looks as though the figure may be same as last year or just a little less. A figure of between €10 and €12 has been mooted.
“I would be surprised if it was any less given inflation is still high,” a well-placed source said.
Mr O’Gorman has also indicated that he is prioritising an increase in the foster carers allowance. There may also be a hike in the additional rate paid to parents in receipt of welfare payments whose children meet certain circumstances.
Housing
Minister for Housing Darragh O’Brien has indicated that he wants to see the €500 rent tax credit increased to around €800, while Minister for Higher Education Simon Harris has said he wants to see it doubled to €1,000. A doubling of the credit is being heavily downplayed in political circles.
One source said it had a price tag of €400 million and would end up limiting the room for manoeuvre on income tax. A package for landlords is also on the table, and it is now likely that they will be offered further tax relief on their earnings. This will only be offered where the landlord is offering security of tenure to the renter for a number of years. The cost of this measure is, as of now, a closely guarded secret.
Cost of living
Ministers were this week dampening expectations that the cost-of-living package would be worth the bumper €4 billion sum it was worth last year. But managing expectations is all part of the lead up to budget day, and many within Government still expect a multibillion package.
In reality the final figure for the cost-of-living package will not emerge until just before the budget because officials will want to check where inflation is at, where energy prices have landed and also have the latest set of exchequer figures under their arm. Expect the true figure to emerge only in the days before.
Last year the Government rolled out three €200 energy credits. This will be “scaled back” this year, three senior Coalition figures confirmed. Two payments of €150 could be made, or perhaps even three payments of €100. It has not yet been agreed, but this is what is on the table.
Three €200 credits would cost around €1.2 billion, which will be “a stretch too far”, a source said.
Minister for Social Protection Heather Humphreys will also likely be looking for similar one-off payments to last year. One source said that a double welfare payment at Christmas is all but guaranteed.
Other options on the table include targeted measures such as a lump-sum payment to all households receiving the fuel allowance and families in receipt of the working family payment.
Mortgages
The Coalition is considering a targeted form of mortgage relief for homeowners who are struggling with their payments and at risk of losing their home. This could take a similar form to the previous mortgage interest supplement (MIS) which was abolished in 2017. It would likely come under the remit of Ms Humphreys and be routed through the welfare system.
Justice
Funding for hundreds of extra officers – if not more – will likely be on the cards. There will probably be two main areas of focus for Minister for Justice Helen McEntee: law and order, and funding to tackle domestic violence. Also mooted is an increase to the weekly Garda trainee allowance of €184 a week, which is paid for 33 weeks, in order to address the recruitment crisis.
Transport
A 20 per cent public transport reduction fare until the end of 2024 is now expected.
Education
Last year the Government moved to provide free schoolbooks to primary level children, and this year Minister for Education Norma Foley will be keen to expand this to secondary schools. Separately, funding for hundreds of additional mainstream teachers is expected.
Environment
Carbon tax will likely go up from €48.50 to €56.00 per tonne from October for petrol and diesel, with home heating fuels to follow suit after the heating season next May.
Health
Right now health is the great unknown and that is because the department is set to run over budget by at least €1 billion. “This will have impact on what they can get next year,” a source confirmed.
But the political reality is that an election is looming and given this it is expected in political circles that Mr Donnelly will seek funding for the roll out of 1,500 rapid-build hospital beds, and money for a huge tranche of new consultants given around 600 have now signed up to a new contract.
