Paschal Donohoe rules out surprise budget day rise in spending

Minister for Finance Paschal Donohoe has ruled out any surprise budget-day increase in spending, insisting the fiscal space available to the Government was locked down.

His predecessor Michael Noonan garnered a reputation for pulling rabbits out of hats on budget day.

However, speaking to the Oireachtas Committee on Budgetary Oversight on Wednesday, Mr Donohoe dismissed the likelihood of a repeat performance.

“As set out in the Summer Economic Statement, the fiscal space available for Budget 2018 will be in the order of €1.2 billion,” he said, noting that a package of this size, on current projections, would achieve a balanced budget next year.

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When the carryover effects of Budget 2017 and new public-sector pay deal are taken into account “only €350 million remains to be allocated to specific measures,” Mr Donohoe said.

Asked by Fianna Fáil’s Michael McGrath if this figure could change, perhaps by €100 million, between now and budget day, the Minister said: “I cannot see one at the moment.”

Mr Donohoe is expected to concentrate a significant portion of the available resources on widening income tax bands – specifically, raising the entry point for the marginal rate of tax – in a bid to ease the financial pressure on middle-income earners.

Social housing

On the housing crisis, he hinted the Government may seek to divert funding for various rental support schemes, such as the Housing Assistance Payment (Hap), to direct local authority investment in social housing in a bid to address the current shortfall in supply.

In response to a question from People Before Profit TD Richard Boyd Barrett, which noted that Government spending on the Hap scheme alone was likely to hit €800 million a year by 2020, Mr Donohoe defended the use of housing assistance payments as a short-term measure.

“But over time what I do want to see is a rebalancing of that. The State does have a duty to directly build homes for people,” he said.

Taoiseach Leo Varadkar has ordered a review of the Government's flagship Rebuilding Ireland policy document, which was launched by Simon Coveney during his tenure in the Department of Housing.

Mr Varadkar wants the review to consider what additional measures may be required including consideration for a greater social housing build.