An €11bn budget has been announced today, the biggest budget in the history of the Irish State. The Minister for Public Expenditure and Reform, Michael McGrath, said the Budget is delivered today against an “extraordinary backdrop of uncertainty and challenge”. The Minister said that while the budget seeks to respond to challenges facing the people of Ireland with “unprecedented resources”, it would not be possible to “meet every need”.
“But this Budget will make a difference, and people will see that quickly,” he said today.
Many of the cost-of-living measures announced are due to take effect within a matter of weeks, however Budget Day only really kick-starts the process of new supports, one-off supports, tax changes, and financial allocations, with many of the measures announced today anticipated to take months to pass.
Several one-off supports have today been announced, including electricity credits of €600 for all households (to be paid in four instalments of €200), a one-off €200 payment to those on Living Alone Allowance, and a one-off €500 payment to people on Disability Allowance, Invalidity Pension and Blind Pension. Tackling climate change was described as “our defining challenge” by Finance Minister Dohohoe, which would be responded to with “courage and resolution”.
However, Budget 2023 has been described as a “catch-up budget” to deal with the Government’s inaction over the past year. Below are some of the key elements of the 2023 Budget:
COST OF LIVING CRISIS
Presenting Budget 2023, Finance Minister Paschal Donohoe told the Chamber that while Ireland has emerged from the worst of the Covid crisis, the country now faces a “further economic challenge”. Outlining the cost of living crisis crippling many people nationwide, he said that Budget 2023 was a “Cost of Living Budget” focused on helping individuals, families and businesses to deal with rising costs.
“If you are an older person, you are having to spend more of your pension on heating your home; if you are looking after a family, you are facing higher grocery bills; if you are running a small business, you are trying to cope with increases in the cost of energy,” he told the Chamber.
As part of the measures enacted to grapple with the cost-of-living crisis, described as “the worst in a decade” prompting a fall in living standards, an income tax package worth €1.1bn was announced. The standard rate cut-off point will increase by €3,200 to €40,000.
The main tax credits (personal, employee and earned income credit) will increase by €75, while the home carer tax credit will rise by €100 to support stay-at-home parents. The Help to Buy Scheme will continue at the current rates until the end of 2024, whilst the Government announced the introduction of a new tax credit of €500 annually for renters. Every Irish household will receive a €600 electricity credit, with the first payment to be made before Christmas, with an additional two payments in the new year. There will also be a once-off double payment week for core social welfare recipients. However, the cost of cigarettes is set to rise again under the budget, with an additional 50 cent to be charged on a pack of 20.
HOUSING CRISIS
Under Housing for All and the National Development Plan, the Government has announced €4.5bn in public funding for the provision of social, affordable and cost-rental homes.
In his Budget 2023 speech, Mr McGrath said he was allocating a “record €6.2bn in Exchequer funding to the Department of Housing, Local Government and Heritage of which the majority, €3.5 billion, will be capital investment”. Additionally, a total of €1.7 billion will be allocated to the Department of Housing in 2023 in order to help deliver the social housing new build target of 9,100 homes.
There was no ban on rent increases, despite similar measures announced to ease pressure on tenants in the UK. in addition,
EDUCATION
The Budget has also outlined a Free School Book Scheme for primary school pupils to commence in autumn 2023. In addition, the National Childcare Scheme hourly subsidy is to increase from 50c to €1.40. Other changes include:
CHILDCARE
A double Child Benefit payment will be made to all qualifying households, worth €140 per child in addition to the normal monthly payment. An additional lump payment of €500 to those in receipt of the Working Family Payment, will be payable in November. in addition,
HIKE IN CARBON TAX
The rate per tonne of carbon dioxide emitted for petrol and diesel will go up from €41 to €48.50 from 12 October as per the trajectory set out in the Finance Act 2020. This means that there will be an increase of just over two cent VAT inclusive per litre of petrol and diesel.
“However, I also recognise the sharp cost of living challenges currently being faced by society, so the government is therefore proposing to offset this carbon tax increase with a reduction to zero of the National Oil Reserves Agency (NORA) levy,” Minister Dohohoe said.
“The NORA levy which is collected at a rate of 2 cent per litre (VAT exclusive) will help offset the carbon tax increase which means that the price at the pump will not go up as a result of taxes or levies,” he added.
RESPONSE TO UKRAINIAN REFUGEE CRISIS
An additional €11 million was today announced for the continued response to the Ukrainian refugee crisis at community level to “help integrate arrivals from the Ukraine into local communities”.
RURAL AND COMMUNITY DEVELOPMENT
The Government also announced an investment of €390 million for Rural and Community Development. “Recognising the increased cost of living for all sectors €10 million is also being provided directly by the Department for immediate supports to community groups to assist in managing increased costs,” Mr McGrath said.
HIGH-VISIBILITY POLICING
The need for high-visibility policing was also a focus, with the funding for recruitment of a further 1,000 Gardai into Gardai college next year announced.
TRANSPORT
The Minister for Public Expenditure and Reform announced the allocation of €3.5bn to support the delivery of a range of transport projects next year. Mr McGrath said that capital funding of €2.6bn to transport represents the “highest level of capital investment since 2008”. He said this will progress BusConnects, MetroLink and the DART+ Programme.
“In addition, I am extending the 20% public transport fare reduction and the Youth Travel Card discount of 50% on all operators’ services to end 2023,” Mc McGrath added.
WINDFALL ENERGY TAX
“Turning to revenue raising measures; much work is underway in the EU on capturing the windfall gains of energy companies,” Mr Donohoe said, adding: “It is not fair for companies to earn excess profits from the current volatility in the market.
“Ireland aims to be part of this EU-wide response to high energy prices. If this is not possible, this government will bring forward our own measures”.
ONCE-OFF MEASURES
The Budget included a string of once-off payments for carers and students, including: