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THE IRISH FISCAL Advisory Council has warned that the Government’s “everything now approach” could result in the State having to “reverse on its promises later”.
The Council today published its pre-budget submission and cautioned that the Government is “adding needless pressure to the economy” by breaching its “tax-and-spend rule”.
Tax-and-spend refers to the Government increasing taxes in order to spend more on public services.
The State’s budgetary watchdog was established to offer an “honest and independent view of how the Government manages its budget”.
Taoiseach Simon Harris also confirmed last month that the Budget in October will include a cost-of-living package.
Finance Minister Jack Chambers has said a key objective in the Budget will be avoiding a situation where workers and other taxpayers end up paying a higher percentage of tax as their income grows.
While the Fiscal Advisory Council noted the “unprecedented strength of Ireland’s workforce”, with record employment and wages beginning to outpace price increases, it added that there are still pressures.
“Prices remain high even if falling energy prices have brought some relief,” said the Council.
It also highlighted that “domestic prices”, such as rent, food services, and medical costs, continue to “rise rapidly”.
The Council also claimed the Government is taking an “everything now” approach that is “needlessly adding to these pressures”.
“The approach has seen the Government expand in all areas of its budget,” said the Council.
“This means tax cuts, higher day-to-day spending, and a continued ramp-up in capital plans.”
The budgetary watchdog accused the Government of “adding unnecessary fuel to the fire by not prioritising” and added that “overruns and untargeted cost-of-living supports could see the Budget rise to double pre-Covid packages”.
In addition to “adding to pressures”, the Council said the Government is at risk of having to “reverse its promises later on” because its “boasts of a surplus are misleading”.
“The surplus is entirely driven by taxes from a handful of foreign multinationals,” said the Council.
“Without these, Ireland would be facing a large and growing deficit.”
In April, a general Government surplus of €8.6 billion was projected for this year.
McGrath also cautioned that corporate tax receipts “cannot be relied upon”.
The Fiscal Advisory Council has warned that the Government “might be forced to renege on its promises if things change suddenly”, such as corporation tax revenues suddenly shrinking or if “exceptional job numbers reversed”.
“A reversal like this could come at a time when the economy most needs support,” said the Council, which added that this “would repeat Ireland’s past mistakes”.
Meanwhile, regarding infrastructure deficits, the Fiscal Advisory Council advised the Government “to look beyond just providing more money”.
It said one option is to “focus on areas that require less workers”.
The Council added that the Government can also “look at planning, regulations, and ways to encourage the private sector”.
“This includes giving private investors more certainty and more incentive to play their part.”
Seamus Coffey, the Irish Fiscal Advisory Council’s Chair, said that the “big promises” being made by the Government is “driving up prices and making it harder for people to afford the basics”.
Coffey added: “Price increases may have slowed, but there are many areas where pressures remain high.
“If we are to learn from past mistakes, now is the time for the Government to stick to its own rule rather than to have to hit reverse later on, and potentially in the next recession”.
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Where were the governments dog when they over spent on the most expensive hospital in the world, or the latest scandal of the 350.000 bike shelter. Costing more than an average house price.
Do they only ever speak out when giving to the people.
@Colette Byrne: oh that hospital ye haven’t a hope getting to in an emergency.
@Colette Byrne: not just that, it spending across all departments. Their budgets have increased over 30% since 2019 because they’re taking in mega income tax and vat receipts on the back of inflation and the COL crisis (higher employment too accounting for some of it). They increase their spending because it’s there and give us breadcrumbs in the last budget. All they know is how to waste money while we struggle!!!
@Paul Gorry: many of the consultants’ rooms are not assessible for wheelchair users.
Who spend more time in hospital, than most other children. Go figure.
@Colette Byrne: Or what about our bloated Public Sector, with a ratio of mangers to ordinary workers that just would not be allowed in the private sector, not to mention workers in the private sector are actually accountable, whereas in the private sector it’s almost impossible to get rid of excess staff or underperforming staff.
@another one? what’s going on is the semi state sec: Total govt expenditure planned is €105 billion. In 2019 it was €77 billion. In 2018 it was €73 billion. In 2017 it was €69 billion. In 2016 it was €68 billion….. These lads are really losing the run of themselves with the spending and not reducing our tax burden/reversing the austerity taxes. When something hits the economy it’s going to be mighty hard to roll back the swelling departmental budgets. The general public won’t be able to afford to pay much more taxes with the higher cost of everything. It’s hard enough to get by now as it is being taxed at outdated tax thresholds and given outdated tax credits after massive inflation.
@another one? what’s going on is the semi state sec: that’s a crazy level of increased expenditure without any sort of perceived increase in services.
@Colette Byrne: On the tonight show, Neasa Hourigan stated that the bike shed should not have cost that amount because when you compare it to the cost of installing a bus stop with a shelter “only” costs €150,000!! Are they for real, like that amount of money for a bus shelter is a bargain. The sooner the better the whole lot of them are gone and this give away budget is an attempt to bribe the electorate. And while the price of energy might have reduced by 20 – 30%, that doesn’t even touch the amount of money it went up by when the war in Ukraine started. Price of food is reducing – I’d love to know where they shop because I go to Dunnes with €50 and come back with 2 bags of shopping. No politician should be anywhere near the Dáil unless they’ve first had to live on minimum wage for twelve months. See how that reality hits them
@The next small thing: what’s worse is the “Budget Watchdog”, the ERSI, Central Bank….. Etc all warn coming up to budget time about tax cuts for the citizens who are dealing with massive inflation AND are still paying austerity taxes (which helped keep the country afloat following the crash). But you don’t ever see them warning the government about their increased departmental spending year after year. It’s all going to end in a disaster again and the public won’t have any more to give…… On a side note, there is fanfare about recouping the bailout money from the banks by the government. When will we ever see a cent of the extra cash we’ve been taxed over the years to keep the country afloat. Baffling were still forced to pay the austerity taxes while they spend recklessly again!
@Paul Gorry: Very true but the Doctors wanted it there for Private Practise work and the minister at the time was one of them. So all the reports were ignored.
The bike shed proves it, fact.
@Paul Gorry: it’s no ordinary bike shed it will incentivise and drive a green initiative to cycle you’re bicycle to and from you’re place of work. Thereby lowering city emissions and easing traffic flow creating a user friendly environment and safe work place with economical surroundings. Absolutely fantastic and worth every cent like the electric buses that one day will have infrastructure to charge them. Groundbreaking positive solutions similar to when minister Ryan suggested during the covid pandemic to grow lettuce on you’re window sill. His input and intellectual abilities will change the structure of our society and influence growth and economical investment for generations to come
Woohooooo! Looks like we’re in for a giveaway budget with lots of goodies for everyone. The government will worry about paying for it all later when they’re back in power. And if they don’t get back in, they’ll blame the new crowd for the financial mess the country finds itself in and then offer themelves up as the financial saviours of the nation. Classic Irish politics! “Every election is a sort of advance auction sale of stolen goods…” H.L. Mencken
@William Tallon: Like every giveaway budget in real terms, it means about a fiver extra a week. Cost of living eats up anything given.
@William Tallon: the thickos will continue to vote for them!
@William Tallon: so true, we’ll never learn
Wait, we have a Budget Watchdog?! You sure about this?
Just curious because of the Children’s Hospital, The Place in the Sun Bike Shed, the energy credit that applies to some people and not others, and I’m sure RTÉ have a their own filing cabinet of mysteries…
@Wicked Hedgehog: Everyone got energy credits last year of €450.00, unless you were on a low usage plan, so basically holiday home owners.
More waffling from Simon, hand gesturing from Micheal & shrugging of the shoulders from Eamon as the bread & butter issues for Irish workers are forgotten about. Simon out in Ukraine, Micheal permanently involved with Gaza & Eamon trying to wash his hands of the Bike Shed, instead of taking on the rip offs in Energy prices, Insurance, Fuel, Groceries, the basics for people, who are struggling to survive. Work hard, be honest, pay your Tax & our Govt will abandon you, shout about pronouns, come from Ukraine, Africa or the Middle East & they will trip all over each other to give you everything. The country has lost its way politically in Dail Eirinn, a massive reset is needed.
@SV3tN8M4: I don’t think any kind of ‘reset’ will happen voluntarily, nor can any ‘outcomes’ from it be predicted. What a time to be alive …
@SV3tN8M4: from Africa they give you everything???
Why are there so many tents on canals, get real, no better treated than Irish homeless.
And they signed up to protect these people. It’s that fart right attitude that has seen an increase in violence on our streets. We need a government that can sort out this mess, get immergration under control, build homes for families, the fart right can’t do that.
They want control us and only the wealthy benefit under them.
@SV3tN8M4: You really should do some research and look at the facts and figures.
Rather than the experts on twitter and running their own podcasts!
Where we’re they, During the Crazy Money ( and still rising) for “The Children’s Hospital? Em? Any Takers ¿???????¿????????????¿..?
@Mick Hanna: Surely it’s the civil service, not politicians that manage projects of that size?
@Mick Hanna: it’s at €3bn + now, and rising.
@Mick Duvanny: understand & agree with your point however Politicians Are Civil Sevants. Part of their job is to ensure what public projects happen are in the best interests of the Irish people.
We know the Politicians don’t really run the country, it is the senior executive level within the civil service who run the country, Politicians are nearly figureheads, puppets.
The problem we have now is that the puppet masters are no longer Irish.
The interests of Ireland are no longer the priority. This is why we need a major upheaval of our political parties.
Ireland needs people who will put Ireland first, not Davos or Brussels or any of the other sinister interest groups that are eroding our culture.
@Jim: so who would you recommend that would put Ireland first, since, as you say ; politicians are only puppets ?
Genuine question.
@Mick Duvanny: and who over sees these departments, ministers!!!!! The Government!!!
@offside again: maybe wishful thinking on my part: there are a few ‘new’ parties that have emerged in the last few years & there are some long standing politicians who have left the established parties as well as some outspoken independents that I would like to see form a united party.
Can they put aside their petty differences & work for the country & people of Ireland? I really don’t know.
If they can, there may be a real opportunity to effect change for the betterment of Ireland & her people.
I fee the long sitting politicians are too far gone to be influenced back to an ‘Ireland first’ approach & there needs to be change.
I also think Ministerial pensions should be limited to the duration the Politician was a minister: if you served 4 years, you get 4 years of a Ministerial pension (they still have their TD’s pension after all) – this may weed out those looking to slobber at the trough.
Is this achievable? I really don’t know. What I do know is that lreland is rudderless both in political & moral direction with the current bunch.
@Jim: good comment.
@Jim: Ah the EU and Davos, straight down the conspiracy theory rabbit hole.
Ireland first, what does that actually mean.
Insular, isolated, maidens dancing at the crossroads kind of stuff.
Rent, food and medical supplies continue to rise rapidly, but in the grand scheme of things you’ll be fine, inflation has gone away.
A watchdog barking at the ever so magical money tree while telling them to bolt the gate as the horse rides of into the distance
The Taxman has never had it as good as the last 6 years. While families struggle with cost of living, low salaries and high tax.
Don’t know where they get their info, I don’t see energy prices going down
@andy murphy: We got two miserable reductions in energy prices that don’t even touch the amount they increased by over the 18 months after the Ukraine was started. Same with their claim for the price of food – I don’t see any reduction in my grocery bill and as a matter of fact, it’s gone up. According to Irish Farming Monthly, the price of milk production has dropped, a lot, yet the price of milk has only been reduced by a couple of cents in the supermarket. The price of a small carton of milk, is the price a litre of milk was two years ago. These clowns don’t live in the real world
@Ann Reddin:
“Milk price down from 62.1c/L to 44.25c/L due in greater part to market conditions” https://www.irishfarmersmonthly.com/management-hints/february-2024
It’s very concerning and not surprising at all to see the government potentially walking into a trap of its own making.
On one hand it’s great to see a focus on immediate relief and infrastructure, but on the other hand – the reliance on corporate taxes from a few multinationals to boast about a surplus feels like building a house on sand. What happens if that sand shifts? Everything now approach seems like short-term wins, but it’s setting ourselves up for a harsh reality check down the line.
@Rafa C: I think it should be obvious now that we’ve gone beyond the point of sustainability. Everything is short term now because there is no long term.
Europe is like a dead star that is so far away ; we’re still seeing the light from it.
But it is dead …
@Rafa C: Auction Politics distracts from intelligent spending. The opposition and media inflame public expectations/entitlement and have to be matched.
Pascal with a smile announcing a brilliant increase of 5 euros a month’s… And also more tax for the hard workers. And less for the friends… Why not, they keep being voted in
I see VW will be playing of thousands of workers in Wolfsburg because of a slowing EU economy
@Peter Byrne: If Germany, the largest economy in the EU is in trouble, then Ireland can forget it and start farming again.
There are no fiscally astute parties in Ireland, it’s all auction politics. Once again we will hit a recession hard due to the governments mismanagement of our taxes and do we hear any party highlighting this, no, it’s all about spending more. Now the fact that each party is pushing this suggests that they have done their research and that is what the Irish people want so we deserve everything we get.
On a side note, in relation to the Alan Kelly article, when decisions are made on IPAS applicants they need to leave the centres to make room for new arrivals. Or, have a system where Irish citizens can also get put up in centres and get their accomodation, food etc paid for (great for saving for a deposit etc). Rules are rules and should be enforced uniformly and not allow politicians manipulate the system for individuals.
The civil service.
All they do is spend like there’s no tomorrow.
They couldn’t care less.
NO WAY! I didn’t see that coming…
Could we not replace most civil servants jobs with AI? it works in the tech sector?
@bruce banner: no, it will work too well and be too efficient. Efficiency is a word the civil service doesnt know exists :)
@bruce banner: we need to replace to top brass, we have seen with Rte people don’t know what they are doing.
No moral compass.
Leo, we need to pay for the best talent . No we pay for F00ls
.
@Colette Byrne: Leo wasn’t the first politician to come out with that line, before him it was MM and the fantasist Enda Kenny. They’re paid above the EU average and yet all we ever get is a troop of monkeys
Governments require borrowing and taxes in order to fund the state. Throwing money away to get elected is short-sighted and very much typical for FF/FG led governments.
@AnthonyK: While attempting to buy votes is definitely part of the issue, all parties are guilty of it and it’s a flaw with all democracies. There is something else at play here too though I believe. Up until recently, this Govt. was almost resigned to SF being the lead of the next Govt. In order to mitigate against what FFG perceive as SF’s most dangerous policies, they have decided to spend as much as possible with commitments that will long outlive their term in power. Thereby leaving SF with limited fiscal room to fully implement their dream socialist agenda. They’re trying to hamstring them before they even get into power.
@AnthonyK: Throwing money away is what was done on these expensive projects. Raising people out of the poverty trap is what we need for a fair society. That is where the money should be going.
@Caoimhín Mac Giolla Chaoin: I agree with the start of your post. The rest is dubious , SF would spend a lot more in Government than this particular one. Their housing strategy shows this clearly , and they said the extra spending will come out of the surplus. If a recession comes along, and it’s looking more likely, the only way anything will be funded is by borrowing.
The issue I have with all governments is that they just don’t get the basics right and that will never change unfortunately.
@Caoimhín Mac Giolla Chaoin: “But sure isn’t that what you do during elections” Pat Rabbitte, The Vincent Brown Show when they went into government to prop up FG after the 2011 election and they fooled the electorate into believing they were our saviours. Turns out the only people they were saviours for were the unsecured bond holders. The rest of paid the price and still paying the price because as of two minutes ago, we all still owe the banks €42,000. People seem to have forgotten that but as I’ve been saying for decades, Irish people have very very very short memories.
Well god forbid they might give something back to the Irish people.. No but give €36m aid package to Ukraine poor things don’t have enough with the 14 billion they have already gotten from other countries
@Brian Hackett: you never have enough in a war, hence why they want us to increase defence budget. So they can buy guns for little boys to play with.
@Brian Hackett: As a neutral country, that is shameful. Neutral countries should not support one side of a war and not the other. That makes us biased, so not in the least bit neutral and we won’t mention plains carrying weapons of war, over Irish air space.
I really hope this bike shed palaver opens people’s eyes to the colossal waste that is ongoing in every state department.
Perhaps then people wouldn’t be so quick to default to the state to solve their problems. That above all else is what is causing the current malaise in Western societies IMHO, and it’s a trend that’s not going to be reversed without some hard realities hitting home.
The government are full of it.
The country relies on a handful of companies to keep afloat.
They go and Ireland goes under. AGAIN.
People commenting here need to read up on the role of the Fiscal Advisory Council – they advise on budgetary policy (taxation and spending policy essentially), not implementation such as the Children’s Hospital overrun or bike sheds costing €350k
@SYaxJ2Ts: Nope not a chance they will do that. Any chance to have a pop at politicians and push agendas is taken
Irish government are hypocrites pretending to support Palestine.
This is the truth.
https://www.ontheditch.com/another-two-flights/
@Hector turtlehead:
I don’t know how we can regulate overflights.
Fly up and peer in the window?
As for Israel and Hamas – it’s like trying to unscramble an egg – impossible.
There are non-combatants killed every day in a dozen different conflicts. What can we do about it?
Only try to keep them from coming here.
If we take on any significant number of Palestinians – they will do to us what was done to them.
have your say