Budget to focus on long-term gains at cost of short-term pain

Irish Times

6 days ago

TDs and senators may well have departed Leinster House for the summer recess but Tuesday will see not one but two major political set pieces.
The summer economic statement (SES) will set the stage for this year's
budget
and how much the
Government
is likely to splash out when it comes to spending and
tax
measures.
The revised
National Development Plan
(NDP) will lay out the trajectory for perhaps the next 10 years – and as much as €200 billion – in investment in
housing
, hospitals, roads, rail and schools.
All of this happening at a time of deep economic uncertainty caused by the prospect of a full-scale trade war over
US
president
Donald Trump
's threats of punishing tariffs on goods from the
European Union
.
READ MORE
The messaging from Government Buildings has been clear for some time that the budget giveaways of recent years are a thing of the past.
One-off
cost-of-living
measures are highly unlikely to feature when Minister for Finance
Paschal Donohoe
and Minister for Public Expenditure
Jack Chambers
take to their feet in the Dáil on budget day.
As part of the SES, Cabinet colleagues are set to be put on notice too that they will have to rein in current spending, which has risen as part of the response to the Covid-19 pandemic and other economic shocks.
As The Irish Times
reported last week
, increases in current spending of 8 to 9 per cent in recent years are expected to be reduced significantly, perhaps towards 5 per cent.
This could have implications for budgetary questions such as the increase in welfare rates.
The period leading up to budget day will see intense negotiations as Ministers seek to carve out the biggest possible slice of the pie for their departments amid constraints not present in recent years.
They had practice in recent weeks as they made requests as part of the revision of the NDP.
Departments where allocations were agreed over the weekend include transport – set to get increased funds generally and money earmarked for
MetroLink
– education and defence.
Minister for Housing
James Browne
– who has been awaiting the NDP as he develops the Government's new housing plan – had big asks.
These are not only in terms of funds to help meet housing targets, but also to cover investment in water services to pave the way for home building. There is also the need to fund financial assistance to people with homes affected by defective concrete blocks.
NDP talks on housing were said by one source to have been 'heated', though Mr Chambers sought to play down any tensions during an interview on RTÉ radio on Sunday.
Talks were said to be ongoing as of last night.
There was no confirmation that allocations for health – where negotiations have also gone to the wire – have been agreed yet either.
This week's NDP update will be more focused on the sums involved than specific infrastructure projects to be funded.
Ministers are expected to outline specific programmes and investment as part of the budget.
There is already pressure from the Opposition over the likely elimination of one-off cost-of-living measures, with
Sinn Féin
leader
Mary Lou McDonald
telling the
Dáil
last week that people 'desperately need' help.
The Coalition may well learn if announcements of plans for spending large sums on yet-to-be-delivered infrastructure projects – albeit many of them badly needed – will make up for a lack of energy credits and double welfare payments on budget day in the eyes of the public.