17 hours ago
The Irish Times view on Budget 2026: put the focus on what is important
Over the next couple of weeks, as the Autumn political season starts to kick in, debate on October's budget will get underway in earnest. As ever, there will be a cacophony of demands from interest groups and lobbyists, looking for more spending or lower taxes for their particular cause. The job of the Government, of course, is to look through the noise to what is important.
Despite the generous amount of €9.4 billion set aside for budget measures, this will not be easy. Money will be quickly eaten up through spending pressures in providing State services. Plans to hike vital investment expenditure need to be allowed for. And the demands on the table already would take up the €1.5 billion set aside for tax reductions a few times over.
Yet while the choices will be sharp in some areas, context is needed. This is not shaping up to be a 'tough' budget. The promised package is still nearly three times the size of the last pre-Covid budget in 2019. The first job of the Government, indeed, is to start returning annual budgets to more sustainable levels, reducing them from the huge spending rises required during Covid-19 and to tackle the cost-of-living crisis.
Claims that households are still squeezed need to be met in two ways. One is by appropriate increases in welfare and other support packages. The other is by continuing to improve the provision of services in areas such as health, education and childcare. These are much more effective in the longer-term than another round of universal cash supports. But by engaging in a blatant pre-election manoeuvre last year to repeat these 'once-off' supports again, Ministers have created a rod for their own back this time around.
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Statements from Ministers that there would be no cost-of-living package this time appear to have become more equivocal in recent weeks. But giving a lot of money out again through these payments to all households is an inefficient use of State cash. If the Government does not bring this process to an end in the first budget of its new term, then – barring a big squeeze on the State finances – it never will.
The plan to increase vital State investment is a key reason why there needs to be some restraint elsewhere. Realistic budgeting for the provision of State services also needs to be restored, ending the annual overruns in areas like health. Relying on corporate tax to keep outperforming as a way to pay for spending coming in ahead of target each year is not a good strategy.
The other reason for caution is the uncertainty faced due to the policies of Donald Trump. Despite the trade deal between the EU and US, the economic and political backdrop for Ireland remains risky and unpredictable. Having cash in reserve and pursuing a strategic approach have seldom looked more important.
