Paschal Donohoe defends government's plans for upcoming budget

Vivienne Clarke

Minister for Finance Paschal Donohoe has defended the government's plans for the upcoming budget, including the decision to not repeat the one-off cost of living payments provided last year.

Mr Donohoe told RTÉ radio’s Morning Ireland that there was a need to rein in spending and to focus on permanent measures to support the vulnerable.

"Spending in government departments has grown by around 8 or 9 percent each year for the past few years. Is that going to have to be reined in? So we are going to have to reduce the level of current spending growth that we have within our economy."

Earlier on Newstalk Breakfast he explained: "We're facing many challenges to the future of our economy. It's not that we don't want to help. It's that we need to help and intervene in a way that we're conscious that we'll be able to afford and that won't create further difficulties for us in the future."

"I've never seen the kind of uncertainty we have at the moment. That is generated by economic policy, which is why I want to ensure that the budget that we bring forward is safe, doesn't add to uncertainty we have in the future, and above all, focuses on investment."

"I do think it is important to acknowledge that there are things that could happen to our economy that would pose real periods of challenge that we would then need to work together to overcome."

The Minister told RTÉ about the possible impact of US tariffs. “We brought forward an economic forecast that said if there were 10 percent tariffs in place within our economy between the US and the European Union and 60 percent tariffs between China and America, it would mean a lower level of growth within our economy and it would mean up to 75,000 fewer jobs being kept or created within our country.

“Progressively the scenario that we now face could involve an even more significant effect on growth. It could involve further effect on the job creation and number of jobs within Ireland.

"But that is why we continue to negotiate so hard through the European Union to try to avoid that happening. And thankfully, we are approaching these moments of great challenge with our economic finances in good condition, our public finances in good condition and a record number of people that work in Ireland.

“So we are facing challenges but I'm confident that with the decisions we've made, the hard work of the people of Ireland and further choices we can make, we will rise to this moment and get our way through.

“I accept that the removal of one-off measures is going to have an effect on those within our society, of course I acknowledge that, but we have just spent the first half of our interview acknowledging the really big challenges that we could face in terms of jobs, in terms of growth, in terms our public finances, and we need to make decisions now that can help but that won't create further challenges or risks for us in the future.

“And as we speak at the moment we have rolled out measures to help carers, we've rolled out measures to help in the cost of going to school, we rolled out measures with the cost to going to college, we have rolled out measures that help with the costs of childcare.

"They were permanent measures that were brought in in recent budgets and what myself and Jack Chambers, working with our colleagues in government, will aim to do is continue to affordably roll out measures we want to be permanent that will help those who are the most vulnerable.”

When asked about concerns expressed by Ibec about the impact of the Occupied Territories Bill on Irish businesses, Mr Donohoe said: “We've always acknowledged that there are consequences in any decision that we make.

"It is important to be clear that in the bill that we are bringing forward, it's referring to an extremely limited amount of trade that has taken place from the territories into Ireland.

“And I believe that if you look at the enormous trauma and the awful, awful loss the people of Gaza have endured due to the action that has been taken against them, always acknowledging of course the hurt and violence that happened in October, that was also the catalyst of much of this, that it is so important that the Government of Ireland make clear that we are diplomatically acting to try to lessen and weaken the harm.

“When you make a diplomatic decision, there are consequences to that too. But that is why we are doing three things. Number one, we're working within the European Union to bring forward a coalition of countries that feel the same way that we do about what is happening in the Middle East.

"Number two, it's why we're acting in a way that we believe is consistent with our law and that of the European Union. And thirdly, it is why we are engaging diplomatically with America to explain what we are doing and why. And we will continue to pursue those three steps because we do believe it is really important that we send a very clear diplomatic and political signal regarding our view of what is happening to the people of Gaza.”