Minister for Finance Jack Chambers can claim that the €8.3 billion budgetary package laid out in the Summer Economic Statement is largely a repeat of last year’s numbers and therefore not a giveaway budget designed to woo voters on the eve of an election.
But the package is more than double the pre-pandemic budgets of 2019 and 2020, which were both less than €4 billion. The €6.9 billion hike in core spending earmarked for Budget 2025 also drives a veritable coach and horses through the Government’s own 5 per cent spending rule.
Why the Coalition adopted the rule, which sets a 5 per cent limit for core spending, in 2021 only to break it every year since is anyone’s guess. Cumulative breaches of the rule will, in real money terms, be in region of €11 billion by the end of next year.
Chambers and Minister for Public Expenditure Paschal Donohoe insist the sea change in budgetary arithmetic between now and pre-pandemic times reflects the increased draw on public services from a larger population and a greatly increased capital spend aimed at addressing the country’s many infrastructural deficits. “The Government has adapted its fiscal strategy to take account of this, to support the continued delivery of better healthcare services as well as accommodate higher capital spending,” Mr Chambers told reporters on Tuesday.
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Either way it’s becoming increasingly difficult to parse the Government’s budgetary arithmetic because there are so many moving parts.
The basic €8.3 billion budgetary package comprises €6.9 billion in spending measures and a €1.4 billion tax package. There are a raft of other spending channels, contingencies and possible once-off measures that are included in the equation.
Non-core spending relating to ongoing Covid spending and supports for Ukrainian refugees is put at €4.5 billion in 2025, but, controversially, it is not included in the basic budgetary package despite the fact it is likely to persist.
The Irish Fiscal Advisory Council (Ifac) claims the Government is using “many techniques to present lower spending than is likely”, which it suggests are “deliberate attempts to game fiscal assessments”.
That particular flashpoint aside, there is one perennial draw on the public purse that the Government can’t seem to rein in: health.
The State’s health budget is already €1.1 billion in the red at the half way stage this year, and is expected to require an additional €2 billion in a supplementary budget in 2024 alone. Health spending has effectively doubled in the last decade and is now commanding 28 per cent of all current spending. In terms of the additional budgetary spend it is almost equivalent to what the Government is deploying on the National Development Plan (NDP). But in health we’re paying this just to stand still.
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