McGrath doesn’t see pandemic bonus plan by budget day

Minister for Public Expenditure and Reform Michael McGrath said on Thursday that he does not expect a plan for a Covid-19 pandemic bonus for frontline workers to be agreed by the time of Budget 2022 being announced on October 12th.

Appearing before the Oireachtas budgetary oversight committee, Mr McGrath said that the Government needs "proper engagement" with trade unions and employers before a plan is completed.

“I don’t envisage that it will be a budget day issue,” he said. “The view that I have on the recognition issue is that it would be just such a shame, having had so much solidarity across society over the last 18 months, if we were to end up with a very divisive-led approach to this issue. And that’s what I am determined to avoid.”

Stakeholders

He added: “The best way of avoiding that is by consulting with wider stakeholders, trade union leaders, employer bodies, and, indeed, civil society as well.”

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The Minister said that the issue needs to be resolved “in the coming weeks and, certainly, before the end of the year”.

He added that discussions will get under way between the social partners very shortly, even if his immediate focus, and that of Minister for Finance Paschal Donohoe, will be on the budget in less than two weeks.

The matter of the pandemic bonus was raised at a meeting between the Irish Congress of Trade Unions and the two Ministers on Wednesday. Mr McGrath said that the umbrella organisation for trade unions agree that there was a need for a “collaborative approach” on the matter.

Health workers and gardaí have sought inclusion in any pandemic bonus scheme.

Mr McGrath has previously warned that the cost of a bonus for all public sector workers in the shape of two weeks’ extra holidays could be in excess of €1 billion. That’s the equivalent of the financial leeway the Minister has for additional spending measures in the upcoming budget.

Package

Meanwhile, Mr McGrath said that it is “fair to acknowledge” that the budget deficit for the current year will be narrower than the €20 billion figure forecast by the Government in July in its Summer Economic Statement. This is because of underspending in the Government’s capital spending programme as well as better-than-expected tax receipts.

However, he said that he could not give an updated deficit forecast yet. The Irish Fiscal Advisory Council (IFAC) forecast two weeks ago that the shortfall, a reflection of extraordinary Government spending to deal with the Covid-19 crisis, could come in at €15.5 billion.

The budget it also being framed around a €500 million tax package, with Mr Donohoe indicating last week there will be a widening of income tax bands to protect take-home pay as households are dealing with the spectre of inflation, particularly in energy bills.

Mr McGrath said that the budgetary package will not be widened to take into account higher-than-expected tax receipts in recent months.

Covid supports

In a separate address to the Construction Industry Federation annual conference, Mr McGrath said it was his “firm belief” that the basis of the recovery was sown in actions taken by the Government to stabilise the economy. He said the Government would not remove Covid supports “in an abrupt manner”, with the budgetary framework for 2022 allowing for up to €6.8 billion in further Covid-related spending.

Mr McGrath also told the gathering that he was aware of public concern over cost overruns on high-profile capital projects. A new governance and assurance process for major projects would be in place by the of the year, with this including two external and independent reviews at key points in a project’s life cycle.

He also said he was monitoring price increase for building materials, with officials in his department due shortly to provide recommendations on responding to the issue.