Monday 14 October 2019

Donohoe's plan to buy family vote in Budget

Minister to find funding for giveaways on GP, dental and childcare help for parents

Family focus: Paschal Donohoe speaks to the media during a visit to D-Light Studios in Dublin yesterday. Photo: Brian Lawless/PA Wire
Family focus: Paschal Donohoe speaks to the media during a visit to D-Light Studios in Dublin yesterday. Photo: Brian Lawless/PA Wire
Kevin Doyle

Kevin Doyle

Finance Minister Paschal Donohoe wants to present Budget 2020 as a 'giveaway for families' ahead of a general election.

With Brexit removing the option of a pre-election splurge, Mr Donohoe is formulating what ministers are describing as a "thematic budget".

The Irish Independent has learned some of the early measures that have been agreed, although sources say the package is "far from complete".

It will include:

- Free GP care for under-eights in 2020;

- Free dental care for under-sixes;

- Millions of extra funding for childcare to ensure families with a gross income of up to €100,000 qualify for subsidies;

- A 2pc reduction in the tax on savings;

- Extra money for homecare help;

- New teachers to maintain the current pupil-teacher ratio as student numbers grow.

Mr Donohoe is also likely to reference a number of existing promises such as the introduction of two weeks' paid parental leave for each new parent, which becomes available from November 1.

The allocation for the Department of Social Protection is still being negotiated, but Mr Donohoe will target payments aimed at low-income families rather than broad welfare top-ups as occurred in recent years.

The Working Family Payment, Jobseeker Transition payments and Back to School Allowance are among those being looked at.

“Put together it will all add up to a good Budget for working families,” a source said.

The full Christmas bonus for those in receipt of welfare payment is “all but certain” to be paid again in December.

Although Taoiseach Leo Varadkar hinted at potential tax cuts earlier this week, it is understood there will be minimum tweaks to the thresholds to ensure low-income workers are not penalised for an increase to the minimum wage.

DIRT on savings will be reduced from 35pc to 33pc in a bid to encourage people to keep an eye on their own finances ahead of potential economic trouble. Mr Donohoe has just €700m for new spending and tax cuts in his Budget – but he is expected to grow this by expanding some revenue streams.

A hike to the carbon tax has been well flagged. This is likely to be €6 or €7 per tonne, with the money being ring-fenced for environmental initiatives. 

Ministers believe this will be the controversial element of the Budget and therefore needs to be carefully managed.

A special effort will be made to communicate the reason for the change with older people and an increase to the fuel allowance is expected to be announced as a counter-balance. 

Employers will be hit by plans to increase the National Training Fund, which is bankrolled by a levy from businesses. As signalled last year, the levy based on the earnings of an employer’s employees will rise by 0.1pc to 1pc from January.

This should bring in an extra €77m which will go towards improving third-level education.

Although it is widely accepted that Brexit must be the key focus of the Budget, a number of ministers have privately told the Irish Independent they fear Mr Donohoe is being too conservative.

“There are some people in DPER (the Department of Public Expenditure and Reform) who yearn for the Troika,” said one minister.

A number of ministers told the Irish Independent that Mr Donohoe is primarily only interested in spending proposals that can be presented as making life easier for families.

“The cost of living is becoming an issue for people. We see that,” said one source. 

Ministers and TDs were recently briefed that the slogan ‘A Better Deal for Families’ will form a central pillar of Fine Gael’s re-election pitch.

Mr Varadkar has said he does not want an election until May 2020, but Fine Gael TDs have been told to be ready at any stage.

If a Brexit extension is agreed it could open up the option of going to the polls in November.

Fianna Fáil is understood to favour an election in February, but this is the one date Mr Varadkar wants to avoid as voters tend to be less optimistic in the post-Christmas period.

Read more: Varadkar hints at income tax cuts to 'put money back in people's pockets'

Read more: Finance Minister rules out additional budget to tackle no-deal Brexit fallout

Irish Independent

Also in Business