Minister for Public Expenditure Paschal Donohoe has said he expects “some measures” to combat the cost of living from the last budget to be repeated but that it was “too early” to predict which measures would be used.
Asked whether there would be a return of the once-off payments from Budget 2023, Mr Donohoe told RTÉ radio’s Today with Claire Byrne show on Wednesday “I expect that there will be some measures that we’ve had in the past that may be needed again, but I really can’t give an indication as to what the breadth of them will be or what the measures could be.”
He said that overall the rate of inflation was predicted to fall this year, coming in just below five per cent but that people will still be facing higher prices at the till “even though prices are not going up at the speed they did last [year]“.
The Government is set to face multiple demands on the exchequer in advance of next year’s budget, with warnings that overspending could be a threat to public finances projected to record massive surpluses in the coming year.
Mr Donohoe said Minister for Finance Michael McGrath will “carefully consider” comments by the Fiscal Advisory Council, which today warned that political pressure could be a key risk to the public finances.
He told RTÉ radio’s Today with Claire Byrne show that there was “a bigger picture” for Budget 2024. The Fiscal Advisory Council had acknowledged in their comments that the Government had been dealing with “many large surpluses” for some time and had not spent the additional levels of corporate tax, he said.
Mr Donohoe said the reason the country was now in the position of having large surpluses was because he, Michael McGrath and the other party leaders had tried to get the balance right.
Mr Donohoe said that in the past, as Minister for Finance, he had listened to the advice of the Fiscal Advisory Council “and it’s because I’ve listened to them in the past that, for example, they have acknowledged that the budget strategy, which myself and the Minister for Finance, Minister McGrath, put in place for this year is appropriate. And it’s because I’ve listened to them in the past while also respecting the fact that I’m a politician inside the Government looking to gain and keep the support of people.
“The core focus of the Fiscal Advisory Council has been to run surpluses when times are good and don’t spend tax revenue that you believe we might not have tomorrow. And the case I would make and will have to consider very carefully what they’ve said is we’re running a surplus for this year of around €8 billion, €10 billion for the year ahead in 2024. We’re one of the very few economies now with that level of surplus, because we tried to do the right thing with our public finances and we continue to do that.”
When it was pointed out that the Fiscal Advisory Council had cautioned against spending the surplus as it would be needed for pensions for the ageing population, Mr Donohoe said that the Minister for Finance had set out a number of weeks ago that an extra €8 billion to €9 billion per year to deal with society becoming older.
“We have been doing that year by year. We have been putting more money into dealing with the costs of our society becoming older because people are living for longer. And if you look at last year, we have between last year and this year set aside €6 billion in a national reserve fund while running a surplus. And we’re now examining proposals for a new fund to deal with other costs for the future.”
“With that balance still acknowledged. We’re running the surplus for this year for €8 billion. And I just go back to what I have warned is don’t spend on day to day spending money you believe we might not have in the future. We didn’t. It’s the reason we have a surplus today.”
A spokesman for the Department of Finance said that all political parties will have an opportunity to put forward proposals as part of the budgetary process, saying that the National Economic Dialogue will take place next Monday.
“Ministers will lead a range of sessions considering key economic themes with input from a variety of stakeholders including members of the Oireachtas Budget Oversight Committee and Minister McGrath looks forward to constructive engagement with a wide range of interested parties.”