Fiscal hawks seek to terminate ‘once-off’ cost-of-living payments

Sometimes the different parts of government speak to one another around the Cabinet table. Sometimes they stop one another in the corridors of Leinster House for a word. And sometimes they make statements that are reported in the media.

Remarks by Minister of State Neale Richmond on Tuesday, in which he said that US tariffs could mean the end of plans for tax cuts in the budget, were eagerly observed within the ranks of Government. The comments were taken as a signal to spendthrift Ministers by the fiscal hawks that the days of budgetary incontinence – which smoothed the way back to power for the Coalition – are over. And remember in the eyes of the Department of Finance and the Department of Public Expenditure every Minister is a spendthrift, and every budget is, potentially, fiscally irresponsible.

These are among the early shots in a war over fiscal priorities that will rage behind closed doors – and occasionally spill, like Mr Richmond’s intervention, on to the front pages of the newspapers – for the next five months until the budget is delivered in October.

One of the key battles of that war will be over the question of whether there is any repeat of the “once-off” cost-of-living payments that have stuffed cash into voters’ pockets for the last three budgets.

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Double welfare and child benefit payments, energy credits, cutting college fees and a range of other once-off payments – all funded by the now-threatened corporation tax boom – were the Government’s principal response to the cost-of-living crisis that hammered voters in every western country. Only Ireland had the resources to shower its voters with such largesse; perhaps not uncoincidentally only in Ireland was an incumbent government re-elected.

Both the Minister for Finance Paschal Donohoe – the chief apostle of prudence in the last three governments – and his colleague and collaborator in the Department of Public Expenditure Jack Chambers have repeatedly warned in recent months there won’t be a cost-of-living package this year. Speaking in Brussels last week the Taoiseach Micheál Martin reiterated the point: no package this year.

The determination among senior officials in the budget-making departments on the point is entirely obvious.

“If there is ever a time to end the once-offs it has to be now,” says one person involved in discussions at the highest level. “Inflation is down to 2 per cent. It’s year-one of the Government. If we repeat them this year they’re there for good.”

So the Government is now resolved that the “once-offs” can’t continue for a fourth year. Isn’t it?

After ruling out once-offs last week speaking to journalists in Brussels, the Taoiseach then added: “However, it’s early days yet. Obviously there are tax measures ... reducing the burden of taxation over the last number of years. Now and then there are specific targeted measures we want, in respect to disability ... and also child poverty.”

On Wednesday in the Dáil, Mary Lou McDonald zeroed in on the cost-of-living issue. Her Dáil insistence that the cost-of-living is a real issue for people is borne out by politicians in every party and none – it’s what they’re hearing on the doors and in their clinics.

“We need cost-of-living supports and we need them urgently,” McDonald said.

The Taoiseach’s response in the Dáil did not exactly encourage the fiscal hawks. In the budget, he said, the Government will “do everything we can to make sure that we can reduce pressures on families and on children” through social protection measures and taxation changes.

It doesn’t sound like the door is completely closed.