Thursday 17 October 2019

Government won't have €700m budget spending spree previously predicted, warns Fianna Fáil

Michael McGrath (Niall Carson/PA)
Michael McGrath (Niall Carson/PA)
Kevin Doyle

Kevin Doyle

There is considerably less money available for new spending and tax cuts in next week’s budget than previously indicated, Fianna Fáil have claimed

Finance Minister Paschal Donohoe will not have the €700m he predicted would be on the table just three months ago.

The shortfall was publicly revealed by Fianna Fáil ahead of an intense weekend of budget negotiations with the minister.

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The Opposition party is in talks with the Government on foot of their commitment to facilitate a budget that prepares the country for the fallout from Brexit.

But finance spokesperson Michael McGrath said there is “some frustration on our  part that the pace of progress has been very slow”.

Paschal Donohoe will deliver Budget 2020 in October 8, and said it will include planning for a disorderly Brexit (Brian Lawless/PA)
Paschal Donohoe will deliver Budget 2020 in October 8, and said it will include planning for a disorderly Brexit (Brian Lawless/PA)

It was expected the broad shape of Budget 2020 would be agreed by now – but Mr McGrath said there are still many big decisions to be taken.

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And he hit out at ministers for miscalculating how much it will cost to maintain the current level of service next year.

“On the assumption of the information given today to date, you were looking at an overall budget of around €2.8bn, of which €2.1bn was pre-committed, leaving headroom of about €700m for a package of budgetary decisions.

“But it seems to us that when the Minister for Finance gets into discussions with the various line departments, the picture is very different Indeed. And the amount of money actually needed to stand still, before you make any new policy decisions, is far greater than the €2.1bn,” Mr McGrath said.

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He claimed the Government had underestimated the cost of demographics, falling far short of what is actually needed to provide for the growing number of pensioners and the extra demands on the health service.

Fianna Fáil said major income tax cuts were “not really an option” this year as the Budget takes place just weeks before a possible hard Brexit.

But Mr McGrath will be arguing for “modest improvements” for certain people, including the self-employed.

They also want an emphasis on home carers, the National Treatment Purchase Fund and childcare.

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In relation to social protection, Mr McGrath said “nothing is off the table” – but he refused to say whether Fianna Fáil is demanding that the State pension be increased by €5 again next year.

“At this point, there have been discussions about rates, but also about other measures. And we are waiting to hear from government what their proposals are in relation to social protection at this time,” the Cork TD said.

He said Fianna Fáil would not issue “any threats or red lines” because they want no drama ahead of next Tuesday.

“We know the importance for Ireland of getting through this.”

Mr McGrath said the consequence of not passing a budget would be a general election in early November, “so that's not a place that any of us want to be”.

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