Will Government expand its spending plans on budget day?

Good morning.

Budget season is well and truly upon us, and the perennial problem of finance ministers - how to reconcile all the demands for spending increases with the necessarily finite resources at their disposal - now looms large before Paschal Donohoe and Michael McGrath.

One of the many cheerleaders for an expansive budget is Leo Varadkar, who followed up Tuesday’s promises of welfare increases and tax cuts with the suggestion that it’s not just healthcare workers that should be entitled to two weeks’ extra holidays as a thank you for their work in the pandemic, but many civil servants too.

To say there were sharp intakes of breath in the Department of Finance and the Department of Public Expenditure would be an understatement. Concern is growing there that the billion euros or so that McGrath recently identified as available for discretionary spending increases on budget day will be gobbled up quickly by the pledges that Ministers are making daily with an enthusiasm that verges on the incontinent.

Concerns rise in Government that pandemic rewards for public sector may wipe out budget resources

---

New car prices will jump €1,300 – with electric vehicles up €4,100 – under budget proposals

---

Significant PRSI hikes proposed for workers and employers from 2023

---

Better tax relief for remote workers hard to justify – report

---

Concern too in the Government’s budget watchdog, the Irish Fiscal Advisory Council, whose chairman, Sebastian Barnes, appeared before the budget scrutiny committee yesterday and expressed concern the Government was making to avoid hard decisions by increasing current and capital spending, while also cutting taxes.

Barnes has noted the existing budgetary plans are “at the limit” of what could be considered prudent; so if the Government yields to pressure and expands its spending plans again on budget day, it’s hard to see how the fiscal council could avoid criticising it. So what? Politicians grumble these fellas don’t have to get re-elected. That, of course, is precisely the point of them. They don’t have to be popular.

It all makes for our lead story this morning, while we also have an analysis piece on why energy prices are suddenly the hot-button political topic.

All geopolitics is local for Martin in New York

The Taoiseach is still in New York, and today he is due to chair a meeting of the UN Security Council on Climate and Security. Here's a preview.

Global affairs and geopolitics are on the Taoiseach’s mind, naturellement. But the intrepid Irish journalists who are following his progress are always keen to get his views on the issues of the day at home, and the Taoiseach is ever keen to please.

Yesterday he essayed a few thoughts on the crisis of crumbling homes due to defective building materials in Donegal and Mayo, promising the Government would bring forward improved proposals for compensation shortly.

In the Dáil, Michael McGrath said much the same thing. At last night's Fine Gael parliamentary party meeting, Donegal TD Joe McHugh made clear that as far as he is concerned, the Government has to meet the campaigners' demands for 100 per cent of their costs to be met by the State.

The issue is not going away, but with costs likely to exceed - and maybe comfortably exceed - a billion euros, it’s another budgetary headache for Messrs Donohoe and McGrath.

Best reads

Newton Emerson is critical of the President's decision to refuse to commemorate the founding of Northern Ireland.

Our op-ed pages also have the findings of an interesting exercise in deliberative democracy on a united Ireland.

The Irish lobby is still flexing its muscles in Washington.

What happens when the wind doesn't blow? Chris Horn on the questions facing energy providers and government.

Miriam Lord: Government faces stampede of elephants in the room.

Playbook

Another busy day for the Taoiseach in New York, while at home Dáil business begins early at 9am with questions to the aforementioned Michael McGrath on public expenditure issues. Leaders’ Questions at noon is followed by mostly Government legislation until the Dáil adjourns tonight after 9.30pm.

There’s no Seanad business, but there’s some meaty business at the committees. The Public Accounts committee is looking at governance in the health sector, particularly in organisations funded by the HSE.

The housing and local government committee has officials from the department and from Irish Water to talk about the topical issue of water quality, while the committee on disabilities will discuss the participation of people with disabilities in political, community and cultural life.

The committee on the Travelling community will discuss Traveller accommodation with local government officials, while the budgetary oversight committee has Paschal Donohoe in. So stay tuned. Full schedule is here.