The Minister for Public Expenditure has pushed back against criticism from the independent budget watchdog, who warned that the Budget “repeats Ireland’s past mistakes of pumping billions into the economy” when it is at full employment.
The Irish Fiscal Advisory Council said that the Government needs to deliver on the economy’s needs without “repeating the boom-to-bust pattern of its past”.
The watchdog also said that only half of the Government’s €2.1 billion of cost-of-living measures were targeted.
The universal energy credits, child benefit payments, and extension to VAT cuts on electricity and gas make up one billion euro of this.
“The same supports could have been provided to those most in need at a much lower cost,” it added.
Paschal Donohoe said that Ifac is a “really important organisation and institution” in advising on economic policy.
He said that he and Minister for Finance Jack Chambers produced a Budget that is a balance between protecting the country into the future but also “meeting the needs of today”.
He made the comments after the two ministers took RTÉ’s Claire Byrne for the annual Budget phone-in special.
“Jack and I have just been on a programme for an hour in which we have had many members of the public calling in, looking for more spending and lower taxes, and they are making those calls on the basis of really important issues within their own lives,” Mr Donohoe said.
“What we have to do is try to balance between protecting us against what the future could bring, but also meeting the needs of today.
“If you look at this budget purely from a spending perspective, a majority of the spending that we have in the permanent spending is all about standing still.
“It’s about maintaining the quality of the public services that we currently have with a relatively small amount of new measures.
“Ifac are doing their job, and we listen to them, they play a really important role in the budget decisions that we make.
“But the Budget that we have, by not spending the very significant additional surpluses that are available to us for next year, and by setting aside 16 billion in two funds to help us care for the future, gets the balance right.”
Mr Chambers said the Government is running “significant surpluses” to allow for future spending on infrastructure projects.
“We’ve established two funds. There’ll be €10 billion put aside this year and €16 billion by next year,” the Fianna Fáil minister said.
“The trajectory of the medium to long term is to continue to put a significant portion of the windfall receipts aside to plan for the long term.
“The other important component of this, is that the key focus of the Government in our Budget announced yesterday was on infrastructure and building the future capacity of the economy, which is central to the long-term economic performance of Ireland.
“What we’ve set out in a summer economic statement, and what we’ve delivered from a tax and expenditure perspective, I think, is balanced and also has a clear focus on the future in the context of infrastructure.”
During the phone-in, Alice, a childcare worker from Co Cork, said that she welcomed the extra funding for parents getting access to childcare, but said there is no availability in the sector to cater for these parents.
She said the annual funding for childcare needs to be increased to allow for further child places to become available and to pay better wages for childcare staff.
Mr Donohoe said there was an 18 PER CENT increase in spending in the childcare sector than the previous year.
He added: “In the overall childcare budget, around €1.7 billion, within that, €350 million has been ringfenced to support the sector.
“What that will help us do is two things.
“Firstly, support the wages and terms and conditions of those who are working within the sector, by therefore leading to more spaces in the future.
“Secondly, it give us the funding to try to support the development of the sector overall.”
