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Budget may include social welfare hikes – Michael McGrath

Minister also confirmed the Government plans to increase carbon tax


Michael McGrath

Michael McGrath

Michael McGrath

Public Expenditure Minister Michael McGrath says the Government is considering increases in social welfare rates in next month’s Budget.

Mr McGrath said he was aware of the impact of the rising cost of living on those who depended on State benefits to pay their bills and the lack of increases in welfare payments such as the State pension and Jobseeker’s Allowance in the last two years.

“We are conscious and we acknowledge that in the last two budgets, there has not been an increase in core social welfare weekly rates and we will consider that issue,” Mr McGrath told RTE Radio One’s This Week.

“We do recognise that people are facing rising costs but what I have to do is to balance that reality against the reality of limited resources, where I have in the region of €1bn to make new budget day decisions,” he added.

“We’re very conscious at the moment that we are in an environment where fuel costs have risen very substantially and that is an issue that the Government will be taking into account.”

The Irish Independent revealed on Saturday that a €5 weekly increase in the State pension was still under consideration, despite Department of Social Protection officials warning against such a move.

Mr McGrath said he was in negotiations with Social Protection Minister Heather Humphreys on her spending priorities for the Budget.

He also confirmed the Government planned to increase carbon tax in the Budget, with the rates expected to go up by €7.50 per tonne.

However, he said the revenue raised from the tax hike would be used to “cushion the impact” for people most affected by the measures.

“We will do as we have done in previous years and that is we will compensate for the impact of that by improving the measures within Social Protection, particularly in the areas of fuel poverty. There will be targeted measures there to address the impact of changes in the carbon tax,” he said.

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He said the revenue from the carbon tax would also go towards sustainable farming in the form of agri-environmental schemes and meeting the cost of retrofitting homes.

“We’ve given the commitment that carbon tax receipts that we collect as a Government are not about balancing the books.

“They are about trying to bring about changes in behaviour and we would encourage and nurture those changes through the decisions that we make,” he added.

Meanwhile, the Irish Small and Medium Enterprise Association (Isme) has called on the Government to treat private-sector workers equally in any pension reforms announced in the Budget.

It said 40pc of private-sector workers had no pension other than the State pension, while public-sector workers “enjoy risk-free guaranteed-income pensions, which they do not make an economic contribution towards”.

Isme chief executive Neil McDonnell said the “subject of pensions” tended to “discourage even the most ardent of savers”.

However, he said pensions were “extremely important” to discuss because a worker’s pension was the second-largest asset they have after their home.

“Any Government proposals for pensions reform will be dead in the water if they exacerbate the gulf of inequality that already exists between public and private-sector workers,” he added.

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