A series of crucial pre-budget meetings to decide on spending increases and a multibillion-dollar cost-of-living package will begin this week.
Bilateral talks between Public Spending Minister Michael McGrath and his Cabinet colleagues are expected to see sharp divisions as ministers push for big spending increases.
The Ministry of Public Expenditure and the Ministry of Finance will, however, endeavor to limit any additional funding commitments announced on September 27 and to retain the €6 billion surplus as much as possible.
Mr McGrath warned ministers last week that their offers, submitted to his department in recent weeks, were unrealistic and would need to be significantly moderated. Sources said some departments have asked for spending increases of more than 20% for next year.
However, there is growing pressure to provide the public with significant budget and cost-of-living relief, which is due to be announced on the same day. Insiders expect significant tensions over this issue within the government over the next fortnight.
Energy and well-being
Sticking to previously agreed budget spending caps is seen by insiders as a red line for Mr. Donohoe and Mr. McGrath, though they sanction a multi-billion bundle of one-off measures, which aren’t counted in the budget numbers. as they do. are not part of next year’s spending plans.
These are expected to be paid over the next few months and will involve new energy credits and possibly additional social benefits. Reports over the weekend suggested electricity credits of €200-250 could be paid to consumers this year and next, but sources said no decision had yet been made on the level or the credit schedule. The three coalition party leaders are likely to discuss budget details when they meet this week.
The government will face additional scrutiny as it prepares the budget from this week, with the Dáil returning on Wednesday after the summer recess. Sinn Féin said on Sunday it would table a Dáil motion to cap electricity bills at 2021 prices, although such motions are not binding on the government.
The series of budget meetings will intensify throughout the week and next week, as ministers seek to agree their departments’ annual allocations.
The Coalition must also decide on a package of tax measures, totaling around 1 billion euros. Fine Gael sources said there was strong support during the party’s brainstorm for a measure proposed by Tánaiste Leo Varadkar which would see a third rate of income tax of 30 per cent introduced for those on middle incomes , although other members of the Coalition remain skeptical. The cost of extending a VAT cut on electricity and gas will also be taken from the billion euros earmarked for tax cuts.