Chapter 1: What are the main challenges faced by the Minister for Finance?
The Clare Byrne Show on Newstalk. With Aviva Insurance.
WhatsApp us this morning 087 1400 106 or email clareburn at newstalk.com. Well, I'm joined in the studio now by the Thornishdown Minister for Finance, Simon Harris, Fine Gael TD for Wicklow. You're very welcome. Thank you for coming in. You were put under a bit of pressure in the Dáil yesterday by Sinn Féin and Labour over the cost of living.
Both parties urging you to introduce a mini budget now to help people with rising costs. Now you said you can't come in every week with packages, but you know what people see that... The protesters got what they wanted through pure brute force and everybody else has to make do. What do you say to that charge?
That it's fundamentally untrue. Let me tell you why. So we have put in place measures specifically for sectors. What has not been said is two things. Firstly, the biggest part of the package is a reduction in excise at the pumps, which benefits most people in this country. Most people, anybody in fact, who got in a car this morning and drove to work and uses diesel or petrol.
And secondly, and I think this is a really important point because I do get it that it's tough for people, the package that we've put in place will reduce what would have been the inflation rate by around 0.6% each of the months that it's in place. So what does that basically mean?
It means if you go into a supermarket, your Tesco, your SuperValue, your Sentra, whatever the cost of an item on the shelf was, it would be lower than it would have been otherwise. So the economic benefit of this package, and this is not just my view, it's the chief economist's analysis of the package, will suppress the inflation rate by around 0.6%.
So everybody benefits, you're saying?
But no, not just I'm saying.
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Chapter 2: How is the government addressing the cost of living crisis?
The statement of fact is that everybody benefits.
But the package, the size of the package, 750 million euro, although construction now included, so it may be more than that. It makes it hard to say no to the other groups knocking on the door. You know, the unions who already made the point, look, we see what can be done in a very short space of time.
Well, look, none of this is easy. So, I mean, I think that's the starting point. None of this is easy. War is not easy. There's nothing ideal here. The world is going through the largest global energy crisis in decades, if not ever. So none of this is easy. But it does make sense. to target in the first instance the sectors that are most dependent on fuel.
Not just for those sectors, but actually for the broader benefit of the Irish economy. Because there's a huge, huge, huge link between the cost of fuel and the level of inflation. And of course, the level of inflation affects every family, every business, every person. But this is not the final word. I mean, our country is in good economic stead. We do have to take it step by step.
And I'm not flippant when I say, I don't mean to be flippant. No one should be flippant about this. When I say there can't be a budget every week, but there can't. You know, we have just announced one of the largest packages, if not the largest, in the European Union. We managed to do that without borrowing because the economy is in good stead.
But you were forced to do it.
No, I don't agree with that at all. I mean, I do agree that people are angry. I do agree that people are really feeling the pinch. And obviously there was widespread protest across the country. But we had already taken measures on excise and we had already said we intended to come back and do more in relation to the agri-food sector and in relation to the haulage sector.
But I have to be honest with people. If I thought this crisis was going to end today, tomorrow, next week, next month, of course we could have different conversations about what to do in the era now. But I have to be honest about the winter.
What do you say to the unions, though, and the representative bodies, including the Garda Representative Association? They said that they may refuse now to cooperate with planning and policing around the EU presidency because they see what can happen when you put the pressure on.
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Chapter 3: What measures are being taken to support specific sectors affected by fuel prices?
Well, I think there's a lot of learnings from that protest because I've no difficulty with protests. I've attended protests. I've been protested at. I have a huge difficulty with illegal blockades and they're very different and I differentiate the two of them in my mind. Protests are an important part of a democracy.
Deciding who can and can't move around the country is illegal and nobody should have a right to do that in a democracy. And I do think there are significant learnings in relation to that, including in relation to security of critical infrastructure. But look, the broader point I'd make is this. We are going to pull through this as a country.
We are going to be able to help keep our economy secure. We're going to be able to assist people. We're going to be able to do more in the budget. We are going to be able to look at how we can help people with tax. We're going to be able to look at how we can help through public sector pay talks too. But what we can't do, what we can't do is every single week make another intervention.
Nothing to do with the government. Forget the government. If we do that, we will bring ourselves to a very perilous place as a country. And we've worked too hard as a people to get to this position of relative economic stability.
So how does the package that you're putting in place today, or rather announcing how it will work today, how does that affect your calculations for the budget? Because if we look at the simple fact of delaying, postponing the increase in carbon tax, that's 22 million. We've the 750 then in total. So where does that leave you when it comes to cuts to USC, cuts to income tax in the budget?
So the very honest answer is it doesn't have a material impact on our budget arithmetic for the time ahead because of the running of a surplus. So surplus has been used as a kind of dirty word in Irish politics.
I tell you, thank God we have one because as a result of having one, we were able to, for want of a better phrase, intervene in the last couple of weeks and basically make the surplus a little bit smaller, not have to borrow any money on the market. If you look at the UK... they had to go, they brought in a smaller package for their citizens and they had to borrow for it and got charged 5%.
So we've been able to put in place this temporary one-off targeted package using the surplus. That allows us to stick to what we call our medium term plan in terms of the budget. And it will allow us to deliver a plan that would both invest in public services in October's budget, but also be able to try and reduce taxes on working people too.
So what about cuts to USC? Because calls are growing for that to happen. Will it?
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Chapter 4: How does the recent economic package impact inflation rates?
So I genuinely think people listening to this programme are less fixated as to what we reduce and more concerned about what it means for their family. So what I definitely know is this, there's too many people in Ireland who play by the rules, work really hard and find they're struggling to get by, let alone get ahead. They're my priority in the budget.
And we have to, we cannot approach a cost of living crisis by thinking the only answer is social welfare or subsidisation. One of the things you can do during a cost of living crisis, one of the things you can do anyway to help make sure work pays, is allow people to keep a little bit of their own money. So there will be an income tax package, a personal income tax package.
The composition of it, what you do in the USC, what you do on thresholds, what you do on rates, what you do on tax credits, they're all, as you'd expect, a matter for proper detailed discussion across government.
But people feel particularly aggrieved about the USC because they were told it was temporary back in 2008, 2009 when it came in. But you're saying it's not a specific issue that you're going to target. It'll be the overall package.
Well, I'm not ruling that out. What I'm saying is, though, I'm not fixating with which tax do I reduce. What I am fixated about is how do we help? We call them different things at different times in politics. Sometimes they're called people who get up early in the morning. Sometimes they're called the squeeze middle. We know who they are.
People who are working their backside off and feel they just can't catch a break. They have to be our priority and our focus. But I should say this too. People are paying less income tax now than they were over the last number of years. That's true. In the government 2020 to 2025, four of those five budgets reduced income tax.
We have four more budgets to go in this government and I expect there to be a personal income tax package as part of each of them.
Yeah, but inflation has increased by an awful amount over the last couple of years since 2022, so people don't feel the benefit of it.
And I fully acknowledge the cost of living crisis that people went through, the inflationary crisis had a real impact and we've got to try it now, I suppose, try and get ahead of that again. And this war, which is outside all of our controls, has caused real challenges.
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Chapter 5: What is the government's stance on public sector pay negotiations?
But just at the time of Budget 2026, the last budget, we were predicting that inflation was going to be 1.9%, below that 2% figure. It's now being predicted in the baseline scenario, if you like, to be 3.3%. So we're in a vastly different economic situation.
We campaigned in an election on the basis that we were going to move away from temporary one-off and try and bring about structural changes in cost spaces that families and business
Yeah, but that is sort of my point in that there was nothing there on income tax for working people. There was nothing for them in the budget. There was actually nothing to talk about in the day after the budget because there was nothing done for people.
Well, that's definitely not how I remember the day after the budget. But I mean, you are right that we didn't have a personal income tax package in the last budget.
Was that a mistake? Did that lead you to the problems that you found yourself in in the last couple of weeks?
Being blunt, it certainly irked a hell of a lot of people who vote for my party. being blunt, but I also believe on balance, it was the right thing to do at that moment in time. And I'll tell you why. We did it in the last government too. So every government delivers or should deliver five budgets.
In the last government, we had one of the five budgets that focused on other areas than income tax that it felt the country needed to focus. I'm being really clear. I mean, one of the reasons I took up the position of Minister for Finance is to help drive the domestic economic agenda.
And I'm extraordinarily clear that people who voted for me, people who voted for my party, people who voted for, let's call it the centre, expect the budget to start delivering for them. And what they mean by that, by the way, is they don't necessarily mean... the government doing a load of things for them.
They mean the government making sure their tax policies actually reward work and help them in terms of their own economic resilience. And you've heard me outline a number of plans that I have in relation to that, including income tax, but also including the savings and investment.
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Chapter 6: How is the government planning to support families during the energy crisis?
So we're talking about this later on in the programme. The Sockdams councillor, Daniel Ennis, is going to be talking to us about it. The reason he's bringing this up is because he says that's what people are saying to him on the doors.
And obviously the Fine Gael candidate in Dublin Central is Councillor Ray McAdam and he's canvassing on the doors too and absolutely childcare is an important issue.
And we will name all of the candidates but the material point here is that in the run up to the election, the last election, you promised that childcare would cost 200 euros a month and you could do it in the first 100 days.
So I don't mean to fact check, but that's not correct. I did promise that childcare would get down to 200 euro per child per month. I think every political party in Dáil Éireann did. That is a commitment in the programme for government. And I did say we'd produce a roadmap in terms of reforming childcare within 100 days. Roadmap took a little bit longer, but there is now a roadmap.
There is a clear plan. But let's also know this. I know my own constituency, I know my own life. The cost of childcare is, of course, an important issue and we are going to. I reiterate the commitment that I want childcare to be €200 per month per child in the lifetime of this government.
Well, you did say you could do it pretty quickly. You did feel that. I read your comments this morning.
So I do think it's something that we can do reasonably quickly and I do think it's something we can make more progress on in the next budget and I don't think I'm alone in that and I know Minister Norma Foley is doing a good job on that. But I have to say the next bit too, it'll only work if we have the places, right?
So, I mean, there's as many people in my constituency who contact me about trying to get their child into a childcare place as there is about the cost. I'm not suggesting the cost isn't too high, it is. We have reduced, as you know, the cost of childcare on many occasions through the National Childcare Subsidy Scheme. There's not a parent listening to this programme.
And some of the childcare providers would say that is the reason why there are fewer places. Because they find the scheme so difficult to operate within.
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