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Spending decisions loom for Government ahead of budget

Inside Politics: Many expect a tinkering-around-the-edges exercise rather than a giveaway extravaganza

Spending has rocketed, but the Government is also discussing tax cuts and welfare increases

Jennifer Bray's face
Jennifer Bray
Wed Sep 22 2021 - 07:43

Good morning.

Spare a thought for the two Ministers in charge of the purse strings as a gruelling yet tedious three-week period beckons.

From this morning we are now only 20 days from budget day. It also looks like the National Development Plan will be published just before that, where we will learn the fate of major infrastructural and transport projects and their new costs and timelines.

In years gone by, it would be about now that the first “budget kites” would be flown. Details of major budgetary policies under discussion would leak to journalists, and politicians would in turn carefully watch the public’s reaction.

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The fanfare has gone out of the budget preamble in recent years. Fine Gael needed Fianna Fáil’s tacit approval during the confidence-and-supply years and that took some of the air out of it. Now the two parties must walk the tightrope together and slim are the pickings.

The Irish Fiscal Advisory Council (IFAC), which has said the Government’s Budget 2022 plans are “at the limit of what is prudent”, will come before the Committee on Budgetary Oversight today at 3.30pm.

Minister for Finance Paschal Donohoe will also appear before the same committee this week, and the key questions will likely revolve around those red flags raised by groups such as the IFAC.

Spending has rocketed – and that was clearly needed in the context of Covid-19 – but the Government is also discussing tax cuts and welfare increases. Many in Government expect the whole thing to be more of a tinkering-around-the-edges exercise rather than a giveaway extravaganza.

Tánaiste Leo Varadkar recently said there will be tax measures aimed at “middle-income people in particular” as well as a welfare package to offset the impact of the rising cost of living.

There are many other pressures that look like they will require action such as the projected increase in energy costs for homeowners. It seems inevitable that the fuel allowance will increase and that eligibility could be extended to cover more people.

There will be plenty of demands from all quarters. But what we are likely to hear today and over the coming days is that the outlook is uncertain.

A big part of that uncertainty is the future of the corporate tax system and the mooted global deal.

As Pat Leahy, Marie O'Halloran and Cormac McQuinn report in today's lead, the Government's strategy for the moment when it comes to the OECD deal is to be involved in the process but stay out of the deal. At least for now.

Speaking in the Dáil last night, Mr Donohoe said there was “a desire” to sign up for a deal, but there were “too many significant unknowns for now”. A big problem appears to be a clause in the current text of the agreement that requires a corporation tax rate of “at least 15 per cent”.

Joining the deal would have huge implications for national tax revenue. Staying out of it would have huge reputational ramifications. This story is not going away.

Best Reads

Keep an eye on Cormac McQuinn's coverage from New York where Taoiseach Micheál Martin is jetting from one high-powered meeting to the next. Mr Martin will deliver Ireland's National Statement to the UN General Assembly on Friday. Here's Cormac's latest report.

And here's Miriam Lord: Driven round the bend by incessant Ring of Kerry.

Kathy Sheridan weighs in on the Armagh invitation.

The Government will struggle to deliver on promises in its new housing plan on the planned timescale, according to a new report, writes Cliff Taylor.

Playbook

Dáil

Dáil business kicks off just after 9am with Topical Issues followed by Private Members’ Business at 10am courtesy of the Labour Party. The party will be bringing its Residential Tenancies Bill, which aims to put pressure on the Government to deliver tenancies of indefinite duration.

At 12pm, the Dáil will hear Leaders’ Questions with Sinn Féin, the Social Democrats, the Regional Group and the Independent Group taking the lead. Questions on Promised Legislation are up just after.

Government Business will be taken at 13.04 and will include the Companies Bill 2021. This will transform the Office of the Director of Corporate Enforcement into a statutory and independent agency with more resources to investigate and prosecute white-collar crime.

The Dáil adjourns at 9pm. Here is the full schedule.

Seanad

Commencement Matters are up at 10.30am followed by the Order Of Business an hour later.

There will be an address to the Seanad by MEPs from Ireland Northwest at 2.30pm.

At 5pm Senators will discuss the Child and Family Agency (Amendment) Bill that will give the Minister for Education appropriate governance and oversight of the education welfare functions performed by the Child and Family Agency.

Private Members’ Business will be taken at 18.45 with the Non-Fatal Offences Against the Person (Stalking) Bill on the agenda. The Bill seeks to provide for a specific offence of stalking characterised by repeated, unwanted behaviour that occurs as a result of fixation or obsession and causes alarm, distress or harm to the victim. The Government agreed at its Cabinet meeting yesterday not to oppose this Bill.

The Seanad adjourns at 8.45pm.

Committees

At 9am, chairwoman-designate of Pobal Rosarii Mannion will come before the Joint Committee on Social Protection.

At 9.30am, Tánaiste Leo Varadkar is up before the Joint Committee on Enterprise, Trade and Employment to discuss the EU-Canada Comprehensive Economic and Trade Agreement.

At the same time the Joint Committee on Health will meet to discuss mental health and the urgent need for investment in mental health services

The Joint Committee on Finance, Public Expenditure and Reform and Taoiseach will discuss the Protected Disclosures (Amendment) Bill 2021 with whistle-blowers Noel McGree and John Wilson and others.

The Joint Committee on Transport and Communications will hear an update on the review of the National Cyber Security Centre from Minister of State Ossian Smyth. This is at 2pm.

The Committee on Budgetary Oversight will hold a pre-budget scrutiny meeting with representatives from Irish Fiscal Advisory Council at 3.30pm.

Here is the full schedule.

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