The Tánaiste has said the Government will reassess the country’s financial situation in the new year to see whether it needs to intervene again to help people. But Leo Varadkar said he did not envisage a mini-budget being implemented.
He described the Budget unveiled on Tuesday as a “dynamic response to a unpredictable and rapidly unfolding situation”.
In January “we will see how the economy is doing” and examine the book of finances, he told RTÉ radio’s Morning Ireland. Most of the payments in the Budget will be front-loaded to get help to people “upfront”, he said. One-off payments would be made before Christmas with increases in weekly welfare payments, decreases in income tax and the energy credits in new year.
He also said energy prices might fall by February but this was uncertain. “If prices continue to rise we will have to look at it again in the new year and that’s why we’ve put money in the tank,” he said referring to the €2 billion voted into the National Reserve Fund in the Dáil on Tuesday night. “Yes we will have to look at the situation come January and February to see where we are in terms of the public finances, what the economy is like and what prices are like”.
“We do have some financial firepower to intervene again to help people in the new year if we have to. And we might not have to. It is a prudent approach for helping people most now when they need us.
“There is more help in the new year with the energy credits and the tax deductions and increases and weekly welfare payments, but we have set aside some money in reserve in the tank in case we need to help again.”
However Minister for Public Expenditure Michael McGrath said on Wednesday that there are no plans to “dip into the reserves” in the new year. The hallmark of the Government’s approach to date had been flexibility and agility he told RTÉ radio’s Today with Claire Byrne show. Mr McGrath said there were no guarantees about the country’s finances, he said. “As of now this is our best assessment using our judgement that will see us through.”
The Government unveiled an unprecedented €11 billion giveaway budget on Tuesday. The cost-of-living package, which will see once-off payments to families beginning in the coming weeks under a range of headings and a series of tax changes and business supports, will cost €4.1 billion. The core package of recurring spending increases and tax changes will cost €6.9 billion.
The Government announced that every household will get €600 in electricity credits in three payments of €200: the first before Christmas and two in the new year, costing €1.2 billion All social welfare payments will also go up by €12 and there will be double social welfare payments in October. A double payment of the €140- child benefit will also be issued in November. Childcare fees will decrease by 25 per cent for centres registered under the National Childcare Scheme while there will be a €500 tax credit for renters for this year and next year.
Minister for Finance Paschal Donohoealso announced that the Government would transfer €2 billion into a reserve fund this year and a further €4 billion next year to create a buffer to deal with future needs, and to take account of the many warnings that current bumper corporation tax receipts may not last indefinitely.
Sinn Féin said the Budget fell short of what was required, with finance spokesperson Pearse Doherty arguing that more should have been done to help the squeezed middle and those €35,000 euro or less.
Mr Donohoe told RTÉ on Wednesday that he knew there was “a huge amount of uncertainty” and that the Budget had been crafted to try to help as many people as possible. When asked about tax measures for middle income earners, Mr Donohoe said that budget by budget the Government wanted to make progress on tax indexation and that Budget 2023 “in the round” provided support for those who needed it.
On Wednesday, Mr Varadkar defended the decision by the Government not to put a price cap on energy prices, as was don un the UK. He said a price cap sounded like bank guarantee that was impossible to cost. Mr Varadkar defended the €12 increase in social welfare saying the payments were front-loaded but when added to other increases it was more than €20 per person per week.. It was not fair that people earning under €50,000 had to pay the top tax rate, but getting it to €40,000 in the budget was a big step, he said.
In response to criticism from Sinn Féin, Mr Varadkar said it was possible to “zero in” on any aspect of the Budget and say it was not fair, but the best help the Government could give was by reducing the cost of living. “You have to take the Budget in the round and see it as a progressive Budget.” - Additional reporting PA