Pre-Budget White Paper will show ‘significant surplus’

Minister for Public Expenditure and Reform Michael McGrath has said the Government’s White Paper, to be published tomorrow, will reveal a very significant surplus for this year and an even bigger one for next year.

The White Paper is published ahead of the Budget. It contains estimates of income and expenditure for the next calendar year.

Speaking in Cork, Minister McGrath said the surplus for this year and that projected for next year will be of a scale that it will give the Government the flexibility to fund the package of one-off cost of living measures due to be announced in the up -coming Budget, while at the same time also providing resources to respond next year, should the need arise.

“We will fund the substantial cost of living package, which will be one-off in nature, out of the surplus that we now expect will be generated in the current year and people will see when the White Paper is published tomorrow morning, a very significant surplus this year but an even greater one next year.

“That is because the economy has rebounded well after Covid-19 and I think we have managed the public finances well,” Minister McGrath said.

The minister added that it gives the government the resources to respond with the cost of living package and then with the overall budget package for next year.

“So, a good surplus this year and an even better one projected for next year. That’s where we get the resources from,” he said.

The minister also said that the entire surplus will not need to go towards the cost of living measures for the coming weeks.

“We will not need to use the entirety of what is being projected by way of the surplus this year and next year to provide for the cost of living package of measures in the coming weeks.

“We will be able to fund it from the surplus and there will still be a significant surplus anticipated for next year after the Budget, which does give the Government flexibility that if we have to respond in the course of 2023 then, at least, we will have the resources to do so,” he added.

The three coalition party leaders are due to meet on Sunday to finalize a budget and cost of living package to be announced next Tuesday.

The Irish Fiscal Advisory Council (IFAC) has predicted a budget surplus of €4.5 billion this year and it is understood that the figure to be announced tomorrow morning is close to that.

It is expected around €3 billion will be used for one-off measures to help with the cost of living this year, with at least €1 billion held over to next year.

Earlier today, the Taoiseach said that the bulk of the revenue surplus available to the Government will be used to fund the cost of living package in next week’s Budget.

Micheál Martin said part of the surplus will be set aside for contingencies

However, he said part of the surplus will be set aside for contingencies.

Speaking to reporters in New York, Micheál Martin said that a contingency would be provided for throughout 2023 and beyond “as we did during Covid years where we put money aside for uncertainties or events that could unfold in the subsequent year and obviously, a significant proportion of the surplus would be used for the cost of living package that would be a one-off”.

He said: “Those will be targeted mainly towards energy costs that businesses are incurring. It’s complex enough. But there are ongoing meetings in terms of settling on the precise mechanism to be used to ease the cost pressures.”

He added that the government would also be looking at ways to assist businesses to reduce energy demand and to become more energy efficient.

He said: “Some companies are already doing that, in respect of reducing their consumption of energy and thereby reducing costs as well. So, a three-pronged approach.”

Asked if the surplus revenue from the final sale of the State’s shareholding in Bank of Ireland will be available for spending during the coming year, the Taoiseach said the proceeds of the sale would go into the general Exchequer account over the winter.

He said the bulk of the extra funding for the Budget will come from the surplus position “but of course other forms of funding could help us later on when we might not have similar surpluses”.

The Taoiseach cautioned that “we are always very conscious of the growing proportion of revenue that Corporation Tax represents, there has to be an underlying caution in terms of how we allocate resources into the future”.

Additional reporting by Sean Whelan and Mary Regan

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