The three Coalition leaders will on Monday evening meet Minister for Finance Paschal Donohoe and Minister for Public Expenditure Michael McGrath in advance of far-reaching decisions on budgetary strategy, the public sector pay talks and the Government’s continuing response to increases in the cost of living.
Taoiseach Micheál Martin, Tánaiste Leo Varadkar and Green Party leader Eamon Ryan will discuss with Mr Donohoe and Mr McGrath the growing political pressure for another package of State supports to help people struggling with rising costs. But senior Government figures played down reports that a welfare package was being readied for July, warning that such a move would reduce their scope to act in the October budget.
The choice facing the Coalition is whether to effectively split the budget package between July and October, or wait until the autumn to implement further measures.
Two people involved in the discussions said on Sunday night that the leadership of the Government was resolved to hold the line on further expenditure measures until the budget.
Mr Donohoe is understood to have issued strong warnings to his colleagues about the dangers of chasing inflation.
“It’s four weeks to the recess,” said one source on Sunday. “We have to hold out. If we start panicking ... we’re on a hiding to nothing.”
It’s expected that Monday’s meeting will also discuss the forthcoming Summer Economic Statement, a key staging post before the budget which will identify the scale of resources available to the Government.
On Sunday, Mr Martin said that the Statement would not be accompanied by a package of measures, but that budget measures would probably take effect immediately in October rather than waiting until the beginning of 2023.
“The Summer Economic Statement will lay out what is available in terms of funds and so on and resources to help alleviate pressures on people and the objective and the aim is to do that comprehensively in the budget itself because we can’t chase it month to month,” Mr Martin told Newstalk’s On the Record programme.
“However, anything we do in the budget around cost of living, quite a significant amount of it will have immediate application,” he said.
The party leaders are also likely to discuss on Monday postponing pay increases for the highest paid public servants which are due in less than two weeks. The senior public servants, which include judges, hospital consultants and high-ranking civil servants are due to receive the last instalment of the restoration of their pay — which was cut during the financial emergency a decade ago — on July 1st. All other public servants have already had their pay restored, and the move to postpone these increases would require emergency legislation.
But political sources say that granting pay increases for these public servants while holding out against welfare increases for people struggling with the cost of living would be politically unsustainable.
The Coalition leaders will also have to decide if an improved offer should be made to public service unions after talks on a new pay agreement for public sector workers broke down on Friday without agreement. Unions rejected an offer of an additional 5 per cent over the next 18 months, in addition to 1 per cent paid earlier this year and another 1 per cent due later this year under the existing agreement.
Unions and Government will come face to face again on Monday as the National Economic Dialogue gets under way at Dublin Castle.
On Sunday, ICTU General Secretary Patricia King said that unions “will want to hear from Government what measures they intend to take immediately to protect the incomes of low and middle income workers who are experiencing the value of their wages being eroded on a weekly basis given the current inflationary crisis”.
