2025-12-18

180. Deputy Paul Murphy asked the Tánaiste and Minister for Finance whether, in view of higher inflation than his predecessor predicted prior to the budget, he will bring in an emergency supplementary budget before Christmas to reinstate cost-of-living payments; and if he will make a statement on the matter. [69658/25]

The Tánaiste's predecessor, Paschal Donohoe, said that there was no need for cost-of-living payments in the budget because “inflation has now returned to normal rates”. He said that inflation would be around 2% this year. That is clearly not the case. We have over 4% food price inflation and 3.3% energy price inflation. It is going to be a cold hard Christmas for many people. At this very late stage, I am asking the Tánaiste to bring forward emergency cost-of-living payments.

As stated earlier in relation to my Department’s forecast on inflation, an uptick was anticipated. That was down to what it describes as the base effects. The CSO outlined that the increase in inflation since September is largely accounted for by base effects. As a result, the assessment relating to inflation for next year has not materially changed. That is important to say because I understand that the cost-of-living pressures faced by people are real. They see individual items of inflation and individual reports and they wonder what that means for the year ahead. It is not only my Department and the European Commission. The ESRI has downgraded its inflation forecast for next year as recently as in its report this morning. We are now seeing wages growing faster than prices which should now mean the average worker experiencing real wage gains next year. I know that is much needed. The Deputy and I will have a different perspective on this, but I would argue that we have endeavoured to provide significant support to households and businesses over the past number of years to help them absorb the worst impact of higher prices. These supports were temporary in nature. They balanced the need to provide assistance to the most vulnerable while avoiding a scenario whereby fiscal policy added to inflationary pressures. I say this for people at home: if the Government decides to spend lots more, it can have an inflationary effect and actually offset the benefit of what we are trying to achieve. As a result, we always have to achieve a balance between increasing investment and moderating the growth in day-to-day spending while avoiding doing anything that involves such a cost that it could create other difficulties for us in the time ahead. We have taken a number of measures in the budget to try to assist people. The issue of the cost of energy is real and specific for people this winter. More people than ever will qualify for fuel allowance. The rate of the allowance will increase. For the first time, people on the working family payment will get the fuel allowance as well. We also have a disconnection moratorium in place for the winter period, so nobody should feel the cold in their home this winter. We have supports in place to help those experiencing energy poverty.

The truth is we are going to have the highest inflation rates in two years. They are not back to the extremely high rates we saw before that, but they are high. The whole premise upon which the Government justified not continuing with the cost-of-living payments was that inflation had returned to normal rates. There was a logic set out that has been confounded by reality, yet the Government is sticking with its position of no return of one-off payments. The Minister knows that the impact of the withdrawal of one-off payments was very hard for the poorer sections of society. As a result of getting rid of the one-off payments, the bottom 10% lost 4.4% of their income. The next 10% lost 3.9%, so there were huge cuts in income and then particularly cruel, savage cuts reserved for disabled people of about €1,400 per year.

I very respectfully make the point that we put in place an extraordinary level of support for people over the past four years. Thank God this country was in a position to do that. We did it at a time of very high inflation. Those measures always had to be temporary. It is always difficult to unwind such measures, but I am crystal clear that if we did not get back to a situation of being able to deliver one regular budget each year, the position would not be fiscally sustainable into the future. It also would not necessarily be a good use of public resources. Deputy Murphy probably does not need an energy credit this year. I do not mean that personally to him, I mean people in the Oireachtas do not need an energy credit this year. There are people who need assistance with their energy bills this year. We are constantly trying to get that balance right. We did say we are going to move to permanent targeted measures at a time when wages are thankfully growing above prices for the first time in a while. We did of course keep the Christmas bonus measure in place, which is a one-off double payment that is paid to all those on long-term social welfare payments, including pensioners. Objectively, the budget was a progressive one. The permanent measures introduced in budget 2026 benefited those on lower incomes above and beyond those on higher incomes.

I am sorry to inform Deputy Murphy that we are actually out of time. I thank everyone very much for their co-operation.