Budget adjustment of €2bn may not be needed, ministers say

Wednesday 23 July 2014 22.29
Brendan Howlin said the economy had grown better than expected
Brendan Howlin said the economy had grown better than expected

Minister for Public Expenditure Brendan Howlin has said the Government will have a less demanding Budget than expected for 2015 because the economy has grown.

Speaking on his way into Cabinet this morning, Mr Howlin said they would have to wait until later in the year, but he said the economy had grown better than expected.

Mr Howlin said they would not have to make the adjustment of the €2bn scale forecast to get to the deficit target of 3% or below.

They were bringing a joint memo today with the overarching approach to the Budget, he said.

Meanwhile, Minister for Finance Michael Noonan said the Government should be able to get the Budget deficit below 3% by making cutbacks and tax increases of less than €2bn.

Also speaking on his way into Cabinet, he said there would be "less tax increases and less cutbacks".

However, Mr Noonan said it was too early in the year to say by how much this would be.

Fianna Fáil Finance Spokesperson Michael McGrath said he believes the adjustment could be less than €1bn, given some of the positive emerging economic data.

Everyone is hoping that this Budget will be as painless as possible, six years into this crisis and after €30bn of adjustments, he said.

The Government had promised to give something back in this Budget, he said, and has been saying it will do it around the €32,800 threshold at which someone enters the marginal rate.

However, he said about 1.3 million earners would not benefit from that change.

It would be deeply unfair if the Government excludes those on low and many people on middle incomes from benefiting from the first tax cut in years, he said.

Mr McGrath said he would expect the Labour Party to be advocating strongly on this.

He said everyone benefits by changes to tax credits and the Universal Social Charge.

The Tanaiste and Minister for Social Protection, Joan Burton, said that the the critical issue is that there is an agreement to reach the 3% deficit.

Ms Burton said the first six months of the year were good, especially in terms of PRSI receipts which are over €100m ahead of schedule.

The Tanaiste said there were issues on the health side and in relation to the justice vote.

She said that overall the Government looks set to be able to reach the 3% target but the Government was not in a position to make a Budget at the moment as there were a number of months to go.

Some households to get €100 off water charges

Over 415,000 households in receipt of the household benefits package are to receive €100 a year to offset the cost of water charges.

Tánaiste and Minister for Social Protection Joan Burton said that a quarterly payment of €25 would begin next January.

A memo on the issue was ageed by Cabinet today and it is set to cost between €42m and €44m a year.

The Tánaiste said that together with the free water allowances, this should go a long way towards mitigating or reducing the cost of water.

Those who will particularly benefit she said would be people over 70, people with a child in receipt of the domiciliary care allowance, people on disability payments and carers.