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From National Recovery Fund for Covid fallout to extending the wage subsidy scheme - five things we learned about next week’s Budget

But Public Expenditure Minister Michael McGrath is accused of wanting to ‘pull the bunny out of the hat’ as he declines to outline ball-park figure


Minister for Public Expenditure Michael McGrath. Photo: Gareth Chaney/Collins

Minister for Public Expenditure Michael McGrath. Photo: Gareth Chaney/Collins

Minister for Public Expenditure Michael McGrath. Photo: Gareth Chaney/Collins

Public Expenditure Minister Michael McGrath told TDs the Government’s Budget strategy will be to prioritise crisis management to meet the challenges posed by Covid-19 and Brexit while preserving existing levels of State services.

In two hours of questioning by the Oireachtas Budgetary Oversight Committee he gave little away about specific measures in next Tuesday’s big announcement.

But he did offer hints on the Government’s plan for a National Recovery Fund and on deliberations over the future of the Covid-19 Employment Wage Subsidy Scheme (EWSS).

Here are five things we learned today.

1. The ‘bunny out of the hat’

Mr McGrath said around €9bn will be spent on Covid-19 next year with around €3bn more being provided in 2021 for current and capital expenditure. He also said there will be a National Recovery Fund to provide a stimulus to the economy as the country continues to deal with the fallout of the pandemic.

The minister was tight-lipped on how much will be in the fund despite persistent questioning by Sinn Féin’s Pearse Doherty who accused the Government of disrespecting the committee by not providing a ball-park figure.

He asked if it would be €550m or €5bn, but to no avail. Mr McGrath insisted the sum is not finalised yet. He promised a “significant fund of scale to meet the challenges that are there across the economy in 2021”. Mr Doherty accused him of planning to “pull the bunny out of the hat” on Budget Day.

2. Extending the wage subsidy scheme

The current EWSS is due to end on March 31 though nobody believes the pandemic will be over by then. Labour TD Ged Nash put it to the minister that it will need to be extended in some form, given the twin challenges of Covid-19 and a possible no-trade-deal Brexit. He said businesses and workers need certainty.

Mr McGrath said €2.7bn has been spent on wage subsidies so far and it has been extended for almost another six months from now. He said the issue is being “considered in the context of the Budget”.

He added: “We are under no illusions about the level of dependence that many employers have on that scheme now. We need to think very carefully about the future of that scheme and particularly around an abrupt end to it.”

He told Mr Nash: "We hear your message."

3. There will be a ‘large increase’ in transport spending

The Government is reviewing the National Development Plan (NDP) which details capital spending like road, rail and other infrastructure and building projects.

Mr McGrath said that €9.2bn is set aside for the NDP for next year – around €1bn more than had originally been planned for 2020. He said: “There are increases in a range of departments, transport gets very large increase in 2021.”

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Mr McGrath didn’t name any specific projects like Metrolink, BusConnects or the M20 motorway between Cork and Limerick.

Mr McGrath also told TDs that preparations at Dublin Airport and Rosslare Europort for Brexit has been completed but some work at Dublin Port will go into 2021. He said “huge progress” has been made at Dublin Port and “I’m confident that they will be ready to deal with whatever scenario arises.”

4. Learning from the National Children's Hospital (NCH) overspend

The costs of the NCH have spiralled to more than €1.7bn and there have been predictions they will top €2bn. Mr Nash asked how the lessons learned on the project can be applied to future projects in the NDP.

Mr McGrath said he’s been briefed on the NCH project and lessons do need to be learned about project management. He said this will feed into the ongoing review of the NDP. He said of the Children’s Hospital Project, "It’s a costly lesson. But it’s one that we’re determined to have learned.”

5. We can’t assume we can borrow forever

Mr McGrath predicted that the deficit for 2020 will be around €25bn due to the massive spending and borrowing taking place as a result of the pandemic. He said: “Next year’s deficit will also be very significant – less than €20bn but still very significant.”

Fine Gael’s Bernard Durkan asked if the State has adequate borrowing resources. Mr McGrath said: “There is borrowing capacity there at the moment but we can’t assume that that will be there forever and that is why we have to make sure that we make the right decisions, that we focus on the recovery of our economy as well as maintaining and improving public services and that we try to bring about greater employment.”

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