Taoiseach says a 'cautious budget' could push more people into poverty

Kenneth Fox

Taoiseach Leo Varadkar has warned that a cautious budget could push more people into poverty and financial distress, in comments that appear at odds with other senior Government ministers.

On the same day that Tánaiste Micheál Martin and Finance Minister Michael McGrath suggested that the forthcoming budget must be “prudent”, Mr Varadkar said an overly cautious approach is not something that he would be able to stand over.

As the Irish Examiner reports, tensions have been mounting in the Coalition in recent weeks after three Fine Gael junior ministers called for a €1,000 income tax reduction in the budget, which sparked fury in Fianna Fáil.

One Government source accused the Taoiseach of “classic distraction tactics” after Mr Varadkar said the Government has “a responsibility to take decisive action” on behalf of citizens, adding that an “overly cautious approach could push more people into poverty or financial distress”.

Another Cabinet source said the comments were “unhelpful”, but added that Mr Varadkar is “clearly under pressure”, referring to reports that members of Fine Gael are becoming increasingly unhappy with their leader.

“There is going to be an awful lot of this because Michael [McGrath] will be the main man, and it’s the first time since 2010 that Fine Gael will not be presenting the budget,” said a separate Fianna Fáil source.

"They are going to become more and more desperate as the budget nears.”

Mr Varadkar told a National Economic Dialogue meeting in Dublin Castle: “If the Government takes an overly cautious approach in dealing with the cost-of-living crisis and the climate crisis, it is making a conscious decision to reduce living standards and to do less. And that’s not something we should stand over given our fiscal position.

“Having said that, we have never, nor will we, use temporary revenues to fund permanent or occurring day-to-day spending. We have to be careful not to do that.”

The Taoiseach’s comments come after the Central Bank advised that the Government needs to be careful that budgetary policy does not fuel inflation.

Also speaking at the event, Mr McGrath said the forthcoming budget will be “prudent” but he said workers can expect changes to the entry point to pay the higher rate of tax.