LAST UPDATE | 12 Oct 2021
BUDGET 2022 HAS been unveiled, with the government outlining its plan for how it will spend a €4.7 billion package.
We have you covered with the main points of the announcement and details of what’s in store over the course of the next year.
Here are some of the other key aspects broken down:
Good morning, Rónán Duffy here and welcome to our coverage of today’s Budget announcement.
We’re just under an hour away from the actual speech so let’s take a bit of time to set the scene and get you up to speed.
This is Paschal Donohoe’s fifth Budget speech as Finance Minister and his second as part of the Fine Gael/Fianna Fáil/Green coalition.
Michael McGrath is Minister for Public Expenditure and Reform and he’ll follow Donohoe in outlining the government’s spending plans.
The coalition’s first Budget last year was announced in the teeth of the Covid-19 crisis and dominated the government’s measures.
Covid is still a factor of course this year but the government says this year’s announcement is on the theme of “restore, repair and recover”.
That’s Donohoe on his way into the pre-Budget Cabinet meeting in Dublin Castle this morning, bag in hand but not quite the red budget briefcase we might see from our friends across the water.
We’ll of course bring you the all-important shots from the steps of Government Buildings when we have them.
What do we know about today’s announcement? Well, quite a lot as it happens with various measures trailed or leaked ahead of today.
Our Political Correspondent Christina Finn has summarised most of the plans here, which include no income tax hikes but hikes to carbon tax.
👶It was flagged on Friday that the government wants to do something in this Budget for parents who are paying for childcare.
— Christina Finn (@christinafinn8) October 11, 2021
This could see changes to the National Childcare Scheme and an increase in the universal subsidy.
There’s to be an announcement of plans to allow people working from home to claim back some of their utility bills with plans also afoot to widen the fuel allowance net to make more people eligible.
One specific measure will see people aged between 19 and 23 getting a 50% discount on public transport fares across the network.
Another long-promised measure that’s likely to be rolled out today are plans for free contraception.
This pledge was made by the previous government but Health Minister Stephen Donnelly is understood to have been battling hard to see it included this time.
All the way back to the Oireachtas Committee on the Eighth Amendment there has been a standing recommendation that contraception should be made more accessible.
Last year the Budget was announced in the Dublin Convention Centre to allow for social distancing but TDs are back in the Dáil this year and the chamber is now filling up with a few minutes to go.
Here we go, Ceann Comhairle Sean Ó Fearghaíl reads the opening prayer before Donohoe takes to his feet.
The Finance Minister first references what he describes as the “unprecedented experience” of Covid-19.
The last time I announced the budget in this chamber two years ago none of us could have foreseen that the worst global pandemic in a century awaits us.
We could not have predicted the devastation, which Covid-19 would leave in its wake.
Donohoe is speaking about what he says is the “strong recovery” of the economy as Covid restrictions were gradually lifted.
Due to the success of our vaccination program, restrictions were eased over the course of the second quarter, with the domestic economy recovering strongly as a result. Modified Domestic Demand, the best measure of the domestic economy, grew by almost 8.5% in the second quarter and surpassed the level immediately preceding the pandemic.
Donohoe says that the current “covid adjusted unemployment rate” is now down to below 10%.
(The CSO has been publishing to different rates to account for people unemployment due to restrictions.)
I promised you some cheesy pics from Government Buildings, so here we go.
All smiles.
Checking their homework.
Back to business, on to Covid-19 supports.
Donohoe on working from home supports:
I am announcing an income tax deduction, amounting to 30% of the cost of vouched expenses, for electricity and broadband in respect of those incurred while working from home.
Housing, vacant tax leve is to be replaced by a zoned land tax.
As part of Housing for All plan, we’ll be introducing a zoned land tax to encourage the use of land for building homes.
The tax will apply to land which is suitable for residential development but has not been developed for housing. It will therefore target land areas, which are zoned residential or which are zoned for a mix use, including residential.
I’m not proposing to have any minimum size exclusion, as I see the potential of the tax to incentivize the development of small sites in town centres.
Some light jeering from the opposition as Donohoe says that the new Zoned Land Tax will have a two year lead in time for lands zoned before January 2022 and a three-year lead in time for lands zoned after January 2022.
Donohoe turns to climate change.
The world is burning and the only chance we have to control those fires is through coherent and effective policies. And that is why carbon taxation is important.
As agreed as part of Programme or Government negotiations, Carbon Tax is to increase annually up to 2030.
The carbon tax will be increased by another €7.50 this year to €41 per tonne.
As I mentioned, guffaws from the opposition on the Zoned Land Tax plan, as People Before Profit Richard Boyd-Barrett tweets out.
Zoned land levy a total joke, with 2 or 3 year lead in before it’s imposed on land hoarders & speculators and less than the 7% for vacant site levy, which itself was useless. This is worse than useless compared to the radical action needed to unlock sites in hands if speculators
— Richard Boyd Barrett (@RBoydBarrett) October 12, 2021
On housing, the Help to Buy scheme will be continued at current rates for 2022 but there will be “a full review of the scheme” over the course of next year.
Old reliables klaxon.
Cigarettes duty is going up by 50 cent on a pack of 20, meaning your average pack is now likely to be €15.
Donohoe now onto corporation tax and he accurately mentions that Finance Ministers for years (including himself) have hailed the importance of Ireland’s 12.5% rate.
Now that Ireland has agreed to increase it as part of a OECD efforts, Donohoe says it is “in our interest to be in” the global agreement rather than outside it.
I know that this was a major decision, but it is the right decision for Ireland, for our jobs for our economy and for our ability to attract and keep investment in our country.
Concluding his speech, Donohoe says that as a country were are “moving out from under the dark cloud of the pandemic”.
“Yes, there are many difficulties but a good journey to a brighter Ireland is within our grasp for 2022 and beyond,” he says.
Michael McGrath up next.
There’s the Fianna Fáil Minister for Public Expenditure and Reform, he begins:
For the past year and a half we have walked a long road together. We did not know what we would encounter along the way. There have been many dark moments, times when it all seemed hopeless, times of great loss and suffering. But we kept. We dug deep, and we have stayed the course, and I want to thank the Irish people for their extraordinary efforts for their selflessness.
McGrath says that the spending plans “strike the right balance”.
Next year I am providing €87.6 billion for public spending. €80. 1 billion of this will be made available in core expenditure, an increase of over €4.2 billion, or 5.5% on this year. Capital spending is increasing by more than twice the rate of current spending by providing €69.2 billion for core current expenditure, an increase of 4.6%.
Here are some details on the free contraception plan:
McGrath also confirms the plans for free GP care to be extended to children aged six and seven “with the intention to extend this cover to all children up to the age of 12″.
Fuel Allowance, one of the big talking points ahead of today’s Budget.
McGrath says that the government is “acutely aware” of the rising cost of fuel for households.
There’s a lot of detail on childcare supports that I’ll go into some detail when we’ve had a chance to look through it.
A few quick hits though on the cost of being a parent:
To conclude his 45-minute speech, which followed Donohoe’s 45-minute speech, McGrath says:
I look forward to a time when the crisis will be in the past and a distant memory for our children. I look forward to a time when historians will conclude that we rose to the challenge that we learned the lessons and we emerged in a better place.
A now for the opposition, beginning with Sinn Féin’s finance spokesperson Pearse Doherty TD:
“This budget is a reflection on the government that delivered it. Out of touch, out of ideas and out of time,” he says.
Never has so much been spent to achieve so little. No answers, no urgency, and no leadership on rents that are out of control, and you have done nothing for 1 million people who are on waiting lists. No real step change, energy prices are spiralling and your plan is to increase them further with carbon taxes.
I promised you some details from the Budget announcement on childcare, and my colleague Aoife Barry has had a look through the details now it you want to have a look.
Minster Michael McGrath said during his speech that there will be €78 million for additional investment in core funding for the childcare sector and a reform the national childcare scheme.
He said that a new funding stream for up to 4,700 early years and childcare providers will be put in place from September next year onwards, at an estimated cost of €69 million next year, to support improvements in the quality of childcare provision.
Orla Dwyer here taking over from Rónán with the latest on reactions and a closer look at the measures announced in Budget 2022.
There’s lots of reaction around – let’s start with the Restaurants Association of Ireland describing the plans for VAT as “disastrous” for hospitality and tourism.
This is in relation to the Value Added Tax rate increasing back to 13.5% for this sector from next September.
The VAT rate was reduced to 9% last November for tourism and hospitality during Covid-19 but this will end next year, Paschal Donohoe confirmed today.
Adrian Cummins, the chief executive of the RAI said: “The VAT rate ending, and wage supports tapering off will be the death nail in the coffin of many hospitality businesses this winter.
“Although the supports offered in today’s budget are welcomed, there are still some long hard months ahead.”
The employment wage subsidy scheme will stay in place until 30 April next year, with rates reducing on a phased basis.
Labour TDs are up now in the Dáil giving their reaction to the Budget.
The party’s finance spokesperson Ged Nash described ministers Donohoe and McGrath as the “Ant and Dec” of Irish politics.
TDs are in flying political form this afternoon, with reams of laughter following the Ceann Comhairle’s reminder at the start that the Budget documents distributed in the chamber remain confidential until the specifics are announced by the ministers.
“That’s not meant to be a cause of levity,” Seán Ó Fearghaíl said in response to cheers and laughter from TDs in light of numerous days (and weeks) of media reports on the measures.
Groups representing older people have criticised the pension rise, saying the measures don’t go far enough to improve the quality of life for older people.
Active Retirement Ireland said the €5 per week increase in the State pension is “not sufficient to meet the increased cost of living” such as energy costs and fuel.
Maureen Kavanagh, CEO of Active Retirement Ireland, said: “The Government has failed to take into account the fact that for the majority of older people, the state pension is their sole income and they have no other income supports.”
Kavanagh further said that the €3 increase in the Living Alone Allowance “falls far too short for our older people”.
Age Action welcomed the €3 increase but said the State pension should increase automatically when the cost of living goes up.
Nat O’Connor, senior public affairs and policy specialist at the organisation said: “That would take the politics out of the State Pension rate so that we all have more certainty about our core income in older age.”
Sinn Féin’s Mairéad Farrell, the party spokesperson on public expenditure and reform, has accused the government of “trolling” people.
She criticised measures addressing the cost of living as seeming “at best ineffective, and at worst exacerbating the problem”.
Farrell said the government has long claimed that “tackling the cost of living has been an aim of yourselves [government] and of your predecessors for a long time”.
But we’ve been hearing it so long, that at this stage I genuinely think you’re actually trolling us.
Labour’s Ivana Bacik described the Budget as “inadequate, flawed and under ambitious”.
The party’s spokesperson on environment and other issues said the measures were based too much in the short-term.
She said there is not enough focus on structural changes “so sorely needed” in areas like childcare and care for people with disabilities.
Bacik also said measures on climate, education and health are “piecemeal”.
The Children’s Rights Alliance has welcomed some of the Budget measures relating to children, young people and their families, but said a more “joined-up approach” is needed to tackle child poverty.
CEO of the organisation, Tanya Ward, highlighted the increased investment in early years and childcare which she described as “significant”.
She said this funding “will go a long way in helping to improve quality and sustainability in the sector which can only be a good thing for young children”.
Ward said the Budget “does not go far enough to reduce the numbers of children living in poverty”, but said that it is a “good start”.
I’m going to wrap up the liveblog here and leave you in the capable hands of our other reporters.
You can keep track of the main points of what was announced today here and stay updated through our reaction and analysis pieces published over the next few hours.
Have a great evening!
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