Already the debate about the October budget has taken off, full of the usual mix of speculation, argument and position-taking. It is a vital package for the Coalition, possibly the last one before a general election. At most, there will be one more budget in autumn 2024, but either way key decisions this year will frame the final period of this Government.
Chief among these is how to use the significant budget surpluses forecast for the coming years. Some of the predicted ¤12 billion surplus for next year looks set to be used up by once-off spending measures, in addition to the allocation for permanent changes, which has already been made.
However, the Coalition will still have the prospect of significant surpluses to plan for. Minister for Finance Michael McGrath is hoping to allocate much of the surplus funding in two directions: one is for a permanent fund to help pay for future liabilities in areas such as pensions; the other is to support State investment spending and to ensure there is enough for key programmes in the years ahead, even if revenue growth slows.
While initial indications were that much of the money would go into the first, longer-term fund, there is now pressure to also allocate significant cash to increasing State investment. As part of this, Minister for Housing Darragh O’Brien is trying to get agreement for an expansion of the activities of the Land Development Agency, helped by a chunk of extra funding.
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The Government faces vital choices here. Minister McGrath and his officials should explain in more detail what, in their view, is possible. Both of the goals -– saving for the long-term and boosting investment –– can offer significant benefits.
The question in relation to investment is how and where the money would be allocated and how the State would secure the necessary construction capacity. In the short-term, boosting investment could risk economic overheating. But looking out over a period of years, there is a case to develop a more ambitious investment programme and, crucially, to put in place the capacity across the economy to deliver this.