Budget will focus on infrastructure not cost-of-living supports, Taoiseach says as he admits 30pc US tariffs would lead to job cuts
She was speaking, she said, after a raft of reports that there would not be any such provision, worth about €1,000 per taxpayer in recent years.
Mr Martin said however the focus in the Budget "quite simply has to be on transforming our infrastructure."
It would be a better allocation of the Exchequer surpluses, he said.
He spoke of investment in energy, roads and water, in order to protect and help create jobs in future.
Ms McDonald replied: "The deficit in infrastructure is on you.
"Home heating oil up by €25 per fill, rents up up up, LPT up, petrol and diesel up in May and again in October.
"People need these supports. They will need a cost of living package in October, mark my words," she said.
Mr Martin said there would be supports in the Budget, but refused to promise any cost of living package.
"Prices are at a relatively elevated level following the peaking of inflation," the Taoiseach said. "Inflation peaked at about 10pc in the immediate aftermath of Covid-19 and the Russian invasion of Ukraine.
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"This Government did an awful lot. We did more than any other European Government, actually, in terms of cushioning and trying to reduce the impact on people, and we continue to do that."
In April, the Government decided to extend the VAT reduction to 9pc on gas and electricity, he said.
"This measure will save households €70 for gas and €55for electricity.
"From September onwards, there will be a significant increase in the number of people who qualify for the fuel allowance.
"And since the first of June, women can receive HRT free of charge. At the beginning of June, the Carers Support Grant increased to €2,000. That's the highest level ever, and that benefits some 138,000 carers.
"Then we have the back-to-school clothing and footwear allowance will be paid out over the summer months, and that's been extended for the first time to foster carers," Mr Martin said.
"From September, the free school book scheme continues to be extended to all students in post-primary schools, and from September all primary schools are eligible for free hot school meals.
"So, far from your assertions that the Government is doing nothing, we have taken all of these measures on top of the measures that we took in budget 2025."
The Taoiseach added: "But it's also worth noting that inflation in Ireland will come down to about 1.6pc this year.
"We will have the third lowest rate of inflation among the 27 member EU countries. And given the strength of the domestic economy, that's quite a remarkable outcome."
Mr Martin also claimed that wage growth will was "set to reach 5.5pc this year". Real incomes would rise 3pc to 3.5pc as a result, he said.
"We are turning the tide in terms of this issue."
Ms McDonald said he had comprehensively ruled out providing a cost of living package in October's Budget.
"You're doubling down on the removal of support payments for struggling households at a time when living costs are through the roof."
She added: "People, frankly, can't believe their ears when they hear you talk as if sky-high living costs they experience every day are a thing of the past.
"Taoiseach, people are being fleeced now today - when they open their electricity or gas bill, when they get to the checkout with the weekly shop, when they go to fill the car, and when they go to buy basic toiletries like toothpaste or shampoo.
"For one thing, households in Ireland are paying 30pc more on their electricity bills each year than the EU average. That's nearly €350 more.
"The ESRI says that it is difficult to explain why electricity prices here are so far above other countries. People are being taken for a ride.
"And now you propose to cancel the very help that they desperately need. ou should be continuing to provide energy credits as part of a cost of living package in the Budget."
Tariffs threat
The Taoiseach also told the Dáil that the threat of 30pc US tariffs on EU goods is having an effect on the framing of the Budget.
The situation is "very uncertain and volatile" and is making forecasting very difficult, Mr Martin said.
There are also implications for the completion of the National Development Plan, and for planning capital expenditure on water, energy and other areas, he said.
"The estimates are processed with Government ministers, and then the Budget itself will be in October. And it's very difficult to forecast," Mr Martin said.
"We have to be prudent. We have to be cautious and careful in terms of the resources that we have. And I know everybody wants us to spend billions, but that is not open to us.
"We will be spending a lot. There won't be any austerity, in itself, but there has to be some degree of caution there, because the situation could change.
"There's a considerable downside risk. There will be tariffs, and the Economic and Social Research Institute (ESRI) has done tables in relation to a. 10pc tariff impact.'
It was the working assumption, he indicated, even if a 30pc tariff failed to materialise.
Mr Tóibín raised planned EU countermeasures on "Boeing, bourbon and butter" that could result in futher American retaliation.
This would hit the aircraft leasing sector in Ireland, with its €300 billion value and 10,000 aircraft listed in this country.
There was also a threat to Irish medical devices, worth €16 billion, and the Irish whiskey sector, which "is stopping production at the moment."
Mr Tóibín told the Taoiseach there was an Irish American vote. "And when you were in the Oval Office, Trump basically admitted that that was the case. We need to use that leverage in relation to our national interest,' he said.
Mr Martin said the uncertainty and volatility was "terrible", and the result was a pause on investment decisions over the last six months.
"The Irish position has been up to now to avoid any escalatory response by Europe,' he said.
"Some [in the EU] would have liked a more robust response already, but Europe has played it calm and firm.
"We had good reason to believe that there was a deal on the table, an outline Framework Agreement in principle, a couple of days ago. At the weekend that all changed."
A 30pc tariff would be unsustainable and would have to be met with an EU response, the Taoiseach said. 'The situation is very serious.' a rate of 30pc would mean job cuts, he said. 'Tariffs could impact tax revenues and employment.'
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