2026-02-10

160. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance if he will bring forward a cost-of-living package, considering inflation is far higher than projected on budget day, at 2.8%, and given the findings of the ESRI that the budget has resulted in income losses for the average household; and if he will make a statement on the matter. [10451/26]

Inflation is 50% higher than what the Government had forecast. It claimed prices were stabilising and that was the basis for the Government pulling the cost-of-living supports in the budget. The ESRI said that the budget resulted in income losses for the average Irish household. Will the Tánaiste accept he got this badly wrong? Will he bring forward a cost-of-living package that so many families desperately require giving the prices that are being charged to them in different guises, whether shopping, insurance or many other examples?

As the Deputy and people across the country will be aware, the Government has provided significant support to households and businesses to try to help to absorb the worst impact of rising prices on households and businesses over the last four years. Analysis from my Department confirms that lower income households gained the most from measures introduced in budget 2026. The analysis also shows that people with the lowest incomes fare the best, with gains in the bottom two cohorts of 4.9% and 3.8% respectively. The targeted nature of the package is also evident in supports provided to households with children. Over previous budgets, governments provided supports to give relief to the most vulnerable in the face of extraordinary shocks. At the same time, we avoided a scenario whereby fiscal policy would have served to add inflationary pressures in our economy. I know this is a hard thing to say when people are under pressure, but the Government can have an inflationary effect which can inadvertently make things more challenging in relation to the cost of living. That is always a balance one has to try to strike. Full employment can never be taken for granted, as it sometimes is in political debate. The budget measures were calibrated to protect jobs, maintain our competitiveness and keep our public finances safe while allowing for increased capital investment. The budget moved away from the one-off packages of previous budgets, as we said we would do, in favour of more targeted and permanent measures that will provide greater certainty to people. However, recognising that energy prices remain elevated, we extended the reduced VAT rate on gas and electricity bills until 2030. We also extended the rent tax credit and mortgage interest relief to further support households. Headline inflation averaged just over 2% in 2025. I am, of course, conscious that the rate reached around 3% in the autumn of 2025, as the Deputy alluded to. The Department is clear this increase reflected a base effect, meaning that very low figures were recorded in the same period a year earlier. Inflation is now moderating. We see this in the figures for both December and January. This reflects, in part, the unwinding of the base effects. This is in line with my Department's expectations and we expect further moderation as the year progresses. The ESRI and Central Bank published revised forecasts for inflation in December of between 2% and 2.25% for 2026.

The latest increases in food prices expose the Government's bogus justification for ripping away the cost-of-living supports. The ESRI was very clear: lower-income households felt worse off as a result of the budget. We can argue over and back all the time but the lived experience is very clear. Deputy Mary Lou McDonald stood here earlier today and outlined that 70,000 more households cannot pay their electricity bills than the same time a year ago. This is not us saying it, but the CRU. These are families. They could not fit into Croke Park and the Aviva together. That is just the additional number of people in the past year who cannot pay for their electricity. Whatever the Minister might say, suggesting the Government is doing this, that and all the rest, 70,000 more people are worse off. Those are the bare facts of it. Market researchers tell us that food inflation is 6.8% and the CSO tells us it is 4%. Five large supermarkets control 90% of the market. The Government refuses to stand up to these vested interests over prices that are out of control. The Government is not ending the rip-off or getting prices under control and all it has done is withdraw the supports. Does the Minister accept the reality of all of these figures and recognise that the State has to intervene and support those individuals in a cost-of-living package that the Government wrongly decided to withdraw at the wrong time?

We did take interventions in the budget to support people. In this Dáil we did not provide energy credits to anybody, but we did take a decision to bring in a range of targeted measures for those most in need. There is a legitimate debate on how best to do that and we have that debate back and forth across the floor. However, we introduced a social protection package of over €1 billion. We increased weekly payments to 1.5 million people, including our pensioners, carers and people with disabilities. These payments have been increased by more than €50 over the past number of years. We increased the domiciliary care allowance. We have the largest ever increase in the child support payment. To help working families, which we rightly talk a lot about in this House, we saw a large increase the threshold for the working family payment. We saw large increases in eligibility for fuel allowance. The minimum wage also increased. Next month, we will expand the fuel allowance for families receiving working family payment. Later this year we will introduce the largest ever increase in income disregards for carer's allowance. We will pay the carer's support grant. We are expanding the back-to-school clothing and footwear allowance for preschool children. I accept the cost-of-living challenge is real; I do not doubt that. However, I disagree and push back on the idea that we did not take actions to try to assist.

I accept the Government did all those things; that is a statement of fact. However, if the Minister thinks that people are not worse off this year than they were last year, he is living in a bubble and that is the problem here. The facts are clear. As I said, energy is just one example where 303,000 people cannot pay their bills and that is only electricity. Another 170,000-plus cannot pay their gas bills. Prices are going through the roof. The Minister talked about how the Government had put up rates. It is also putting up rents with the rent-hike Bill. Electricity bills have gone up. The Government put up college fees. It has put up taxes on petrol and diesel. It put up the tax on the family home. It is planning to increase taxes on home heating oil. Insurance premiums are up. Car insurance is up. Home insurance is up. Health insurance is up. Public liability insurance is up. The Government has completely failed to be true to the promise it gave in the election campaign to reduce childcare costs. It abandoned workers when it promised them it would provide them tax cut, but instead it was developers who got the multimillion euro tax cut. The Government based all this on inflation rates that are now 50% higher than it had projected in the budget. It has got this wrong. People are struggling and people are suffering. A cost-of-living package is desperately needed. The Minister and his colleagues need to get out of the bubble they are in and recognise where ordinary people are at.

We are not in any sort of bubble. The Deputy may have his political differences with me, but the economists in the Department of Finance stand over the projections. The ESRI and the Central Bank projections, published in December are there for him to see. I have outlined, as was outlined to me, the base effect. We expect inflation to further moderate as the year goes on. The Deputy has a list of things he thinks we should have done and we also have a list of things we did. Budgets are about trying to get the balance right. Wages are also up. The State pension is also up. Carer's allowance is up. Employment is up. Inflation is falling. The number of people buying their first home is up. The number of homes being built is also up. We intend to build on that in the time ahead because this was the first budget of five. While different people will have different views, we took decisions to lower the cost base for the hospitality sector. We took the decision to try to stimulate apartment building. Let us see and we will debate that in time. I believe that is a good thing to have done; the Deputy has a different view. We also took the decision to invest significantly in public services, including an extra €618 million in disability services. The Deputy knows my views on the progress I believe we can make on personal income tax to help working families in the time ahead.