FINANCE MINISTER MICHAEL McGrath has said that he is “not ruling out” introducing additional measures to help people deal with the cost-of-living crisis amid a “disconnect” between the predicted Budget surplus and ordinary households.
However, he said that it was important to wait until Budget 2024 before implementing any such measures.
The Minister was speaking on RTÉ’s Morning Ireland in relation to the government’s latest economic forecasts and public finances, released yesterday, which showed a budget surplus of €16.2 billion is predicted for next year.
McGrath said that while inflation is expected to be around 5% on average next year, it is “absolutely the case” that while the State’s finances are strong, the benefits are not being felt in households around the country.
“I’m so conscious that while we are here talking about billions of euros of surpluses and bumper corporation tax receipts, the lived reality of many Irish people and the people I represent is very, very different,” he said.
“Of course we will do the very best we can with the resources that we have while being sensible and prudent in the management of the public finances, to help people and to ease the burden.”
“I think when people look in good faith at what we’ve done so far, the exceptional measures we have introduced €12 billion in the last 14 or 15 months to help people with cost of living, I think people will see that there is a commitment there… so I’m not ruling out doing more.”
McGrath said he believes we will have a “good budget” in Autumn and that it is important to wait until then to implement cost-of-living measures in order to take time and give them careful consideration.
He said everyone can see the effects of inflation in their daily lives, but acknowledged that not everyone has the capacity to handle it equally.
“We’ve helped a lot so far and depending on the circumstances that prevail in the months ahead, there is a willingness to do more.”
He also said he recognises the “disconnect” between the figures published in the Stability Update Programme yesterday for people concerned about becoming homeless in the coming weeks following the lifting of the eviction ban.
He said the figures are “really positive and this is a good news story for Ireland because it does give us the financial firepower and capacity to address the major challenges that we face”.
For those facing homelessness, he said: “We have to help them, and that’s why through the work of Minister Dara O’Brien, the local authorities and the housing agency, we are determined to put solutions in place for people who find themselves in a situation where they may lose their home or they currently don’t have a home.”
When asked yesterday whether we could expect a giveaway budget given the surplus, McGrath tempered expectations, though couldn’t deny the increased cash at the government’s disposal, stating that the Stability Programme Update is just one of the building blocks in the construction of Budget 2024.
Last year’s budget had a package worth €11 billion – €4 billion of which was for one off measures due to the “nature that was the environment where inflation last year averaged about 8%”, said the minister.
Yesterday’s update predicts that inflation this year will average between 4% and 5%, down from the current rate of 7%.
Pointing out that inflation will be lower this year, he said the context in which budgetary decisions are made must be considered.
He added that last year, the government’s budget expenditure rule was adjusted to allow for greater spending due to the high level of inflation.
“One of the factors to consider in the next number of weeks is what is the appropriate budgetary expanse for 2024.”
The minister said that work is ongoing and it is “too early to give any indication” as to the nature of the composition of the budget will be.
The expected surplus is being driven by strong corporation tax receipts, which ministers said could dry up at any time and therefore cannot be relied upon.
The government’s chief economist said the windfall corporation tax receipts are not predicted to fall within the next few years, but added “that day will come’.
Corporation tax of €3.2 billion was collected between January and March, up from €1.9 billion in the same three months last year.
McGrath told reporters he expects corporation tax receipts this year will exceed last year’s record €22.6 billion, calling it “truly exceptional”.
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