Increased spending in September’s Budget will find a balance between helping people struggling with the cost of living and maintaining a healthy economy, Finance Minister Paschal Donohoe has said.
Mr Donohoe refused to predict that the Budget would increase people’s living standards, stating that the economic outlook was currently too uncertain.
On Monday the Cabinet approved the Government’s Summer Economic Statement which said that the Budget will contain spending and tax measures equal to €6.7 billion.
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It also confirmed that Budget Day would be held two weeks early on September 27 in response to the cost-of-living crisis.
The statement outlined an increase in spending of €2.2 billion compared with last year’s Budget amid the Government’s estimations that inflation will average at 7% to 8% for the year.
The overall package will be made up of additional public spending worth €5.65 billion, and taxation measures worth €1.05 billion.
Three billion euros of the total are pre-allocated, and €3.7 billion is left to be divided between Government departments.
Mr Donohoe told RTE on Tuesday that specific spending decisions would be communicated on Budget day.
He said: “What we did yesterday is make a change in the resources that will be available to the Government, that aims to get the balance right between helping all, recognising that we can’t do everything, but also being very conscious of maintaining safe public finances, maintaining resilience in our economy.
“During my time as finance minister we have dealt with Brexit, we have had to deal with the effects of a pandemic and we have also had to deal with the effects of a war. These are all things which have had a very big effect in our country.
“Even though we have brought the Budget forward by two weeks to give ourselves better ability to help within 2022, we yet have to do the Budget.
“What I did yesterday was make the case for the kind of resources that I believe should be available for the Budget while at the same time trying to avoid problems or challenges which could develop next year or sooner in our finances given the economic environment and the uncertainty that is there.”
Mr Donohoe added: “In relation to taxation, where we want to be is in a place where if you are at work and get a wage increase, that they can actually benefit from the wage increase that they get and we don’t find ourselves in a place where they are just paying higher levels of tax.
“Likewise with social welfare we are very much aware that pensioners, lone parents, they are really feeling the impact of the rising price of food and fuel. But the details of all of this will await the work that minister (Michael) McGrath will do with colleagues in Government.”
Mr Donohoe refused to confirm whether people would be better off following the September Budget.
He said: “If you look at where we are this year, when we put together our plans for the economy last year, we thought and we expected that we would have a level of inflation that would approximately be 2%. Last week it was confirmed at 9%.
“So I would be very, very wary of making predictions of what 2023 would hold and what would be the conditions that our workers, our businesses may confront.
“There are two things we are working to deliver. The first is to put the decisions and plans in place that helps our economy to continue to grow next year because that is vital for the protection of jobs.
“The second thing we will do is make the best use possible of the additional resources we announced yesterday to give as much help as we can.
“When we get nearer to the Budget, we will have a far better idea then regarding what impact that could have on the living standards for next year.”
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