Fianna Fáil leader Micheál Martin has said his position is that next week's budget should set out a €5 increase in the old age pension from the beginning of next year, but declined to say if it was a "red line issue" with Fine Gael.

The Government and Fianna Fáil are haggling over the welfare benefits to be paid in the budget, with Minister for Social Protection Leo Varadkar saying we wants to treat those in receipt of carers, blind and illness benefits equally to pensioners.

A proposal to give all those categories a delayed increase, that would kick in in the first six months of the year, has been tabled.

Fianna Fáil has ruled out the payments being paid in June or July.

Mr Martin said he has been anxious throughout the entire budgetary process to avoid talking about "red lines", but said his position is that a €5 increase in the old pension should be paid from January 1st next.

He declined, however, to say if this is an absolute position but said the introduction of payments in the second quarter of 2017 is “not an option”.

“We are very clear that the welfare payment should commence from January,” he said as he arrived at his party’s annual fundraising Cáirde Fáil dinner in the Doubletree Hilton hotel, formerly the Burlington, in Dublin. “Everyone knows we are talking five euros for the old age pension, we make no apology for that.”

He said Fianna Fáil is “somewhat concerned” about the emergence of €200 million in extra budget money in recent says, with the expansion of the so-called fiscal space to €1.2 billion.

“But we are somewhat concerned about the 11th hour nature of some of what is now happening in terms of the overall budget that is now available in terms of the famous fiscal space and also the 11th hour suggestion that the welfare payments would go back to mid year. We find that is unacceptable. Certainly the process will need to be improved for next year.”

He also accuses Mr Varadkar of having “a go off Fianna Fáil consistently, and try to undermine Fianna Fáil, that that might gain him traction” in order to further his Fine Gael leadership ambitions.

But Mr Martin denied that his party was consistently targeting Mr Varadkar in an effort to damage him in advance of the Dublin West TD possible assuming the leadership of Fine Gael.

In his speech at the event, Mr Martin said Fianna Fáil has played a “unique role” in this Dáil by allowing a Government to be formed.

He also claimed his party had softened “the ideology” of Fine Gael.

“What we did was to take the edge off their ideology and to secure a complete reorientation of government policy on critical areas,” he said.

“Most importantly we stopped the efforts to implement highly-unfair tax cuts weighted to the wealthiest and secured a substantial increase in funding for critical public services like education, pensions and health.

“There are a lot of people who say that the government is drifting and is not delivering any badly-needed strategic policies. They are absolutely right. This has nothing to do with the government’s minority status and everything to do with the core problem with Fine Gael - that party just doesn’t understand the scale and nature of the challenges facing Irish society today.”

The Cork South Central TD accused ministers if continuing the policy of the last government of “repackaging ongoing activity and presenting it as a plan”.

He also talked about the core values of Fianna Fáil.

"In this very room five years ago I talked about the fact that the core tradition of our party, and especially of its founding generation, has always been motivation by the republican ideal of serving the people. It is a tradition of building up essential public services, expanding education, encouraging enterprise and honouring a social guarantee to our weaker citizens. And as Ireland changes the policies required to serve the people change to.

“Even in the toughest of times there are still choices to be made and what we confronted was a government which chose a path to a more divided and unfair Ireland. The evidence of this was mounting day after day but the policies remained unchanged.”

He said some parties were “selling a cynical message of how everything was someone else’s fault and that there were no hard choices to be made”.

“And in contrast to this is where Fianna Fáil has played a unique role. Those on the hard left see problems and want to exploit them. We see problems and want to solve them. They want you to choose between social progress and economic growth - we understand that you have to have both.”