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People in Buswells Hotel Dublin watching Fine Gael Minister for Finance Paschal Donohoe on television presenting the Budget 2023 to the Dáil Leah Farrell/RollingNews.ie
AS IT HAPPENED

As It Happened: Reaction as Budget 2023 and package to tackle cost-of-living crisis announced

The Budget is being held two weeks earlier than usual.

LAST UPDATE | Sep 27th 2022, 6:41 PM

THE BUDGET 2023 speeches have concluded in the Dáil. 

It’s been confirmed that: 

Good morning and welcome to The Journal‘s liveblog of Budget 2023. Jane Moore here – I’ll be taking you through the morning ahead of the main announcement this afternoon. 

Before then, let’s get you up to speed on everything you need to keep an eye out for.

This is Paschal Donohoe’s sixth Budget speech as the Minister for Finance and his third as part of the Fine Gael/Fianna Fáil/Green Party coalition.

Donohoe will deliver his speech at 1pm, followed by the Minister for Public Expenditure and Reform Michael McGrath. Both are expected to speak for around 45 minutes, which will bring us up to around 2.30pm.

After the speeches, opposition parties will reply with their own views on what has been unveiled. As the main opposition party, Sinn Féin will get an hour in reply, with the other opposition parties and groupings getting 45 minutes each.

The speeches should be done by 8pm

At 8.30pm, voting on the Budget measures will begin. This is due to end by midnight.

While immediate changes will be voted in tonight, such as excise changes, votes on some of the more substantive issues will take place over subsequent days.

The Budget itself is expected to cost around €7 billion this year, with the once-off package to address the inflation and energy crisis set to cost over €3 billion.

As it happens, we already know quite a lot of what today’s announcement will contain, with various measures having been leaked ahead of today.

Our Political Correspondent Christina Finn has summarised most of the expected measures here, including a new credit for renters who pay tax, energy credits amounting to €600 over three bills, an increase in social welfare payments and a 25% reduction in childcare costs. 

Tánaiste Leo Varadkar shares an update ahead of this afternoon’s announcement, deeming this year’s Budget a “Cost of Living Budget designed to help you and your family”.

The final pre-Budget Cabinet meeting is taking place this morning. Ahead of the meeting, Taoiseach Micheál Martin said the package will be comprehensive and sustainable. 

“We will do it in a way that is sustainable, not just this year but throughout 2023,” he said. 

“It will mean investment in public services, it will mean significant reduction in costs for people, childcare education, health and also then allocating funding to people through taxation reductions, social welfare payments and energy credits.

“It’s a comprehensive package, but what we do have a significant eye on, 2023, and we have to be sustainable from a public finances perspective.

In other words, have to make sure that not only do we get people through this winter in the teeth of this unprecedented crisis, but also make sure we have the reserves to get through the entirety of 2023 as well.

So what other measures are expected to be announced this afternoon?

One of the biggest issues facing successive governments in recent years has been how to tackle the housing crisis. 

Today, the Government is set to introduce a tax credit for renters. The credit will be per renter rather than per tenancy, so if there are two or three people sharing a property, they will each get the credit.

It’s understood that the credit will be somewhere in the €400-€500 range per renter.

There is also expected to be “minor changes” for the tax treatment of landlords.

The Help-to-Buy Scheme – first introduced for first-time buyers in Budget 2017 – is being extended for two years.

There will also be a 25% reduction in childcare costs announced, as well as increased subsidies.

The Journal reported in April that subsidies on childcare would increase to help reduce costs for parents, alongside overall price caps.

Return to Dail 010 Leah Farrell / RollingNews.ie Leah Farrell / RollingNews.ie / RollingNews.ie

Social Democrats spokesperson for housing Cian O’Callaghan has said that the proposed tax credit for renters in the Budget will be “gobbled up” by landlords through rent increases.

“Without properly enforced nationwide rent controls, the tax credit for renters will simply be eroded by landlords through further rent increases. This will further fuel spiralling rent inflation,” O’Callaghan said.

“For this tax credit to really benefit renters, it must go hand in hand with properly enforced nationwide rent controls. It beggars belief that the Minister for Housing doesn’t understand this.”

He is also calling for Rent Pressure Zone protections to be extended nationwide to curb rent increases, as well as the introduction of a rent freeze. Combined with a rent credit, he said this “would mean unaffordable rents would actually be reduced”.

Following on from his comments before the Cabinet meeting this morning, the Taoiseach says that today’s Budget is a “comprehensive, fair, and progressive package to tackle an unprecedented crisis”.

That’s all from me, Jane Moore, for today. My colleague Rónán Duffy will keep you updated as Budget 2023 is announced. 

Good afternoon, Rónán Duffy here for the duration of Paschal Donohoe’s speech, Michael McGrath’s follow-up and indeed all of the opposition reaction. 

There’s the man himself, he has 45 minutes says the Ceann Comhairle. 

Green tie, it was the favourite with the bookies. 

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Donohoe begins by speaking about last year and how Budget 2022 was domianted by the pandemic. 

“As one of the most open economies in the world, we benefit when things are going well internationally, but when they reverse, we are also one of the most exposed. As such, it is imperative that we are prepared for these shocks,” he says. 

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The onset of the war in Ukraine has sent shockwaves throughout the global economy, and this is most evident in energy and commodity markets, where prices surged at the onset of the war and have remained high energy price inflation intensified over the summer. 

Donohoe refernces the generationally-high inflation the economy is facing. 

He is saying that inflation for this year is being estinated at 8.5% this year and 7% next year. 

Brexit gets its second mention about 7 minutes in, with Donohoe noting that it continues to make challenges for the economy. 

“This is why our public finances matter. They have recovered strongly from the effects of the pandemic and much of this recovery is due to the careful management of this government is undertaking and appropriate responses to the unique challenges that our country faced,” he says. 

Donohoe is referring back to the government’s Summer Economic Statement which gave a preview of the financial bounds the governemnt was hoping to stay within in the Budget.

He says that they “aim to stay within the parameters of this approach”, adding that the total size of the Budget is €11 billion. 

Some of the actual measures coming now: 

  • The Excise reduction on petrol and diesel are being extended to February 2023
  • The top tax band has been pushed up by €3,200 to €40,000.

The temporary reduction in the rate of VAT from 13.5% to 9% on the supply of gas and electricity is also being pushed out to the end of February 2023.

On USC:

  • The ceiling of the second USC rate band will be increased from €21,295 to €22,920. 

Here’s the confirmation on the rental supports: 

  • New rent tax credits valued at €500 per year.

Donohoe says that the measure “is aimed at those who do not get any other housing supports and will apply for 2023 and for subsequent years”.

He adds that the support “may also be claimed in respect of rent paid in 2022″. 

And the Vacant Homes Tax: 

“The tax will apply to residential properties which are occupied for less than 30 days in a 12 month period. There will be a number of exemptions to ensure that owners are not unfairly charged for the property may be vacant for a genuine reason.”

First bit of unease in the Dáil as Donohoe speaks about farming. 

“We know the challenges farming communities face as they deal with rising input costs by moving towards a sustainable future,” he says, to grumbles around the chamber. 

Donohoe says various agricultural reliefs are due to expire at the end of this year and that five are to be extended. 

Onto SMEs and Donohoe comfirms the creation of a new Temporary Business Energy Support Scheme to assist businesses with their energy costs. 

“This, Ceann Comhairle, it is a significant intervention by the government in the Irish economy to protect employment,” he says. 

Businesses will be required to register for the scheme and it will cover 40% of the increase in electricity or gas bills up to a monthly cap of €10,000.

Here’s one for those of you who buy print newspapers. There are clearly some fans in the Dáil as it prompts a murmour of approval around the house: 

The government is also aware of the critical role that newspapers play in our society, from reporting on local communities to holding those in power to account. And for that reason, I will be reducing the VAT on newspapers from 9% to 0% from the first of January 2023. 

Another specific VAT reduction, it is now to be removed from defibrillators

Donohoe says this hasn’t been permitted under the EU VAT directive but that “after much negotiation” it will be removed from 1 January 2023. 

Vacant Property Tax plan not exactly being met with approaval from the opposition who say it will not do enough. 

More VAT excemptions, a 0% rate of VAT will now apply to Hormone Replace Therapy, nicotine replacement therapies as well as “the small number of period products that are currently subject to a 9% rate”. 

There we are, coming in at about 48 minutes, Donohoe concludes: 

Many are looking at its budget today for confidence, they look to the budget for help. Ceann Comhairle, we can and we should be confident about our future. We know our citizens need help. We know our employers need help and this budget aims to give this help. I commend Budget 2023 to the house. 

It’s now the turn of Minister for Public Expenditure and Reform Michael McGrath. 

It’s likely that next year McGrath will be be first up delivering Budget 2024 after the Coalition rotates the top jobs in government in the coming months. 

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McGrath keeps it coming with the announcements, including some of the big ones like the energy credit: 

  • €600 in electricity credits for every household. 
  • A €400 lump sum payment for Fuel Allowance recipients. 
  • Aonce-off payment of €500 for people living with disabilities, and €500 for those eligible for the Carer’s Support Grant.

Social Protection details now, McGrath says there’s a total package of €1 billion, including: 

I’m increasing the working family payments ratios by €40 per week to further support families through this time. I’m raising the qualified child increase for under 12s to €40 per week and for over 12 to €50 per week.

McGrath says the cost-of-living measures in the budget will help households and businesses.

He told the Dail that supports for energy and other costs will be given to to public services, sports clubs, community and voluntary organisations.

McGrath confirmed that every household will receive energy credits totalling €600

The first will be paid before Christmas while other other instalments will take place next year.

A lump sum of €400 will be made to those who receive the weekly fuel allowance before Christmas.

Those who receive a weekly social welfare payment will receive a once-off double payment next month.

This will go to pensioners, carers, people on disability payments and jobseekers.

It wasn’t really in doubt this year as it has been in other years, but McGrath also confirms that the normal social welfare Christmas bonus will be paid in early December.

Some reaction from the Irish Heart Foundation (IHF) to the news that the VAT on difibrilators is being cut from 23% to 0%. The move was made tricky by the EU VAT directive but Donohoe says it is now gone after “much negotiation”. 

Here’s the IHF’s director of advocacy Chris Macey:

The earlier an AED is used, the better a person’s chances of surviving a cardiac arrest. The decision to remove the 23% rate of VAT on AEDsis a victory for common sense. More lives will be now be saved as a result as they will become more accessible to clubs and community organisations.

As was revealed yesterday, the State is to provide free school books for all primary school students from next September.

The initiative comes following years of lobbying by parents’ groups and charities.

Speaking about the plan, McGrath said:

“We know that buying school books can add further pressure to families at an expensive time of the year as children go back to school.”

An on health. 

McGrath has described the last number of years as an “extraordinarily challenging time” for the HSE. 

He said about 15,000 new staff and 2,000 new hospital and community beds have been added across the health service since the pandemic began.

“Budget 2023 continues this very high level of investment in our public health system by providing for a total allocation of €23.4 billion,” the minister says.

McGrath says this comprises a €1.15 billion increase in core funding.

Some reaction to the €500 tax credit for renters.

Housing charity Threshold says new credit would provide some level of relief but is “simply not enough”.

Threshold’s policy officer Ann-Marie O’Reilly said she was ‘deeply disheartened’ by the measures announced today:

As this tax credit will not apply to households already availing of housing supports, an increase in the HAP basic rates is not only needed but must be kept under yearly review to ensure a proportion of rental properties are available for those reliant on HAP.

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Back in the chamber, McGrath has concluded and Sinn Féin TD Pearse Doherty is delivering the first reponse from the opposition. 

He says that the government has “failed to get to grips with the energy crisis”:

For the past year Sinn Féin and other governments in Europe have called for this broken market to be reformed. For the past year, this government has opposed this reform, pushing up energy prices for households and securing windfall profits for energy companies. Sinn Féin and others have called for taxes to be levied against these windfall profits.

Doherty is telling tha Dáil that Ireland’s “squeezed middle” had been “pushed to the bottom of the pile”:

Time and time again, we’ve seen ministers come into this Dail and deliver budgets that promise much, but ultimately deliver little. And ministers opposite have come today and thrown out large numbers and announced tweaks here and there on the edges of the crisis our people face, and for many workers and for many families on middle and low incomes they will see little change in this budget.

A lot of reaction from lobby groups and civil society to the Buget measures. Here’s a selection: 

SIPTU researcher Michael Taft

The government’s failure to regulate energy prices means that households and businesses are taking on the risks of rising prices.  The electricity credits, once-off social transfers and business supports are effectively subsidising high energy prices and may not be enough to shield the economy from long-term inflation.

Focus Ireland’s Mike Allen 

The cost-of-living measures are welcome – and will grab the headlines – but meanwhile the stark reality remains that homeless services and local authorities nationwide fear that they may not be able to provide emergency accommodation for all of the hundreds of households that will become homeless this Winter. It is unforgivable that given this reality the budget failed to offer a single measure to help prevent these households from losing their homes.

Ibec CEO Danny McCoy

Ibec has been consistently calling on government to address the energy crisis and commended today’s Budget announcement of targeted use of measures to deliver supports for those most exposed to the spiralling energy costs. It is imperative that the supports announced today now work towards having a material impact in offsetting spiralling energy costs. Such supports must work for all sectors of the economy, including experience economy, retail, manufacturing, and SMEs.

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Sinn Féin’s Maireád Farrell TD is delivering another response now under the watchful eye of her party leader. 

Farrell says there was nothing for young people in the Budget.

When young people my age say to me that there’s nothing for them here, that there’s no chance of us ever owning our own home, or I’m not sure what to do about starting a family because I just can’t afford to, it’s because of the political choices that you have made over the years.

“It is because of the political choices you have made today. The reality is that this budget was never written with our young people in mind.”

After the Budget speeches, several of the line minsters are out to big up what was provided for in their departments.

First up is Enterprise Minster Leo Varadkar and his Ministers of State Damien English and Dara Calleary. 

The Journal’s Political Correspondent Christina Finn asks Varadkar about the much-mooted proposal for a 30% tax band, something the Tánaiste himself admitted he was pushing for. 

Varadkar says he was told that it could not be done this year but it could be done from January 2024. The Tánaiste says a process has been agreed to examine it between now and then.

Asked if he will be pushing for it again, Varadkar says he hopes we will be in position to reduce taxes again in the next budget.

“Who knows what is going to happen between now and then,” he adds.

Asked about the Budget in comparison to last week’s blockbuster ‘mini-Budget’ in the UK, Varadkar says that it is “not an approach to follow”. 

He says that in the case of the UK we saw “tax cuts largely funded through borrowing” and that this is “a very different approach”. 

Hello, Hayley Halpin here to take over from Rónán Duffy. 

I’ll be bringing you all the latest as we move into the evening. 

Joint leader of the Social Democrats Roisin Shortall has said short-term measures announced in the budget would not help people in the long-term.

She told the Dáil:

“Today’s Budget has been billed as a giveaway Budget. At nearly €11 billion, it is the largest one for years. But who will benefit the most from what has been announced today?

“If we look behind the figures, it becomes very clear it is those on high incomes who will be most rewarded by this Government with tax cuts and an array of universal lump sum payments that disproportionately benefit the better off.”

She added:

“Temporary supports will not help people in the medium to long term.

“They will not provide sustainable relief to those who can no longer afford the soaring prices for necessities.

“The tragedy is that this was a budget that could have made a real difference to people’s lives.

“Never before has a Government had so much money to invest in lifting people out of poverty and improving our public services.”

An update from our reporter Tadgh McNally who is down at Leinster House: 

During the press conference this afternoon, Tánaiste Leo Varadkar said the government is now acknowledging that renters “need help to pay the rent”. 

He said he hopes renters find today’s measure of the rent credit helpful. 

It will be paid this year and next year for 2022 and 2023. 

Minister for Finance Paschal Donohoe says he believes a rent freeze would result in more landlords leaving the market, which would end up resulting in higher rents. 

He also declined to speculate on whether the rent credit will increase in the future. 

The Finance Minister says the rent credit will be applied for through Revenue. 

Business reaction

The Irish SME Association (ISME) has expressed its disappointment at the lack of direct support for SMEs in the Budget.

The ISME said it is concerned that the measures announced to support businesses may be insufficient to protect many retail, leisure, manufacturing and hospitality businesses over the next year.

The Association said the ending of the 9% VAT rate in early 2023 is “most regrettable, and an opportunity lost to address inflation in services costs”.

It said the increase in the standard rate cut-off to €40,000 is “long overdue and most welcome” but added that it “will still mean that people earning €5,432 below the average industrial wage will be paying tax at the marginal rate”.

The 10% levy on concrete products “will severely impact the cost of construction at a time when construction input prices are already high”, it said. 

The ISME welcomed the Temporary Business Energy Support Scheme (TBESS) energy support of 40%, but said it “may be insufficient to protect many retail, leisure, manufacturing and hospitality businesses over the next year”.

The TBESS is “the only substantial direct support to SMEs in Budget 2023″, the Association said.

Just as Minister for Housing Darragh O’Brien began his post-Budget press conference moments ago, the fire alarm in Government Buildings went off. 

Our political correspondent Christina Finn says they have been evacuated. 

Environment reaction

Friends of the Earth’s Oisín Coughlan has issued a statement in response to the Budget, saying it “offers people some short-term relief from skyrocketing fossil fuel prices but it doesn’t go far enough or fast enough to get us off fossil fuels for good”.

He says: 

“The expansion of the fuel allowance and the €400 lump sum are welcome but why are people on Working Family Payment excluded and why is there no increase in the basic weekly rate?

“And of course, while the Fuel Allowance is an essential sticking plaster the real solution is more insulation and retrofitting so people have warmer homes and lower bills with less pollution.

“The extra money for retrofitting next year is welcome but the target of 37,000 houses is far too low. This is an emergency. We should be insulating 100,000 houses before next winter.”

Q&A

If you’ve got unanswered questions about what this week’s budget proposals might mean for you, your family or your business, please get in touch.

Our team of editors and reporters will put your questions to relevant experts, government ministers and department officials, and we’ll bring you the answers in a series of Budget Q&A pieces to be published in the coming days. 

Send your questions to answers@thejournal.ie and we’ll do our best to answer them with the help experts and officials. 

An update on the fire alarm going off in Government Buildings at the beginning of the post-Budget housing press conference.. 

It’s been reported there has been no fire and that someone just hit off an alarm.

Minister for Housing Darragh O’Brien is now doing a doorstep for the media outside. 

Well, that’s all from us on the liveblog this evening. Thanks for sticking with us. 

We’ll keep you updated on the site throughout the rest of the evening with any other developments on the Budget. 

Additional reporting from the Press Association

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