Tánaiste defends expenditure levy: We have to live within our resources

By Cillian Sherlock, Press Association

The Tánaiste has defended a levy to reduce expenditure in Government departments.

The Government is bringing in an expenditure levy, which will be applied to departments from 2027, requiring them to implement reforms and efficiencies to cover the increased spending in the Department of Education.

Asked if his parliamentary party colleagues had raised concerns about a drive to cut spending in departments, Simon Harris told reporters on Thursday: “Every member of the Government is well aware of their responsibilities as members of the of the collective Cabinet.

“We have to live within the resources that are available to us.

“The decision to invest more money in education is a really good one. You will never, ever, ever regret spending hundreds of millions of euro more on special needs assistants, special classes, special teachers, resourcing education.

“It is the key to our economic and social wellbeing, and I think it was the right decision to be made.”

He added: “I think it’s also perfectly acceptable at a time of extraordinary levels of public spending, to say to everybody working in the public service ‘is there any opportunity to find savings, is there any opportunity to do things more efficiently?’

“We’ve asked people to do that in the past during times of recession. The idea that people could find savings and reforms at a time of recession but can’t at a time of expansion doesn’t add up to the taxpayers of this country.”

Harris said October’s Budget will have around €7 billion in additional expenditure, with the split on tax and spending to be decided in the Summer Economic Statement.

He has said the Budget should include an income tax package and progress towards the commitment of reducing childcare fees to 200 euro per child per month by the end of the Government’s lifetime.

Speaking to reporters at a philanthropy awareness event at the RDS in Dublin, he said: “I’m very conscious that people are hurting.

“Our country is doing well economically in terms of resilience, in terms of full employment, in terms of having built up fiscal buffers – but I’m also very conscious in people’s lives they’re feeling the pinch, they’re feeling the squeeze.

“I do believe this year we’ll be able to deliver a Budget that will have a personal income tax package.

“I do believe during a cost-of-living crisis, actually enabling people to keep some of their own money is an important way of supporting them and making sure that work pays.”

On the €200 target for childcare, he said: “No one budget can get you from the start line to the finish line of that project, but it can certainly set out the trajectory, it can certainly set out the roadmap.”

Harris said AIB projections that inflation could reach 7% if the Strait of Hormuz remains blockaded were closely in line with those of his department.

“If you saw the adverse scenario – a very severe scenario – continue around oil prices for a very sustained period of time, it’s possible that inflation could reach 6 or 7% by the end of the year.”

Harris said that would not be the yearly average, which his department expects to be 4.6% in the most adverse projection.

He added: “But of course I’m concerned, because we know that commodity prices are very, very closely linked in terms of their impact on inflation.

“The greatest economic intervention we can see is de-escalation of the conflict, and to see the Strait back open and to see energy flowing again.”

Harris has also called for structural change on energy infrastructure.

The Fine Gael leader said the conflict demonstrated a need for a broader conversation in Ireland and Europe around energy independence.

“We seem to be on this kind of almost hamster wheel, where we have in the last half a decade seen significant energy disruptions twice – based on events that have taken place many, many, many, many, many thousands of kilometres from Ireland.”