As cost-of-living crisis continues, Government says no to price caps and yes to spending on Ukraine military

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24/09/2022 Olivia O'Sullivan - Cathaoirleach of the Metropolitan District of Limerick, Kieran O'Donnell, Leo Varadkar, Tánaiste and Minister for Enterprise, Trade and Employment, Senator Maria Byrne and Paschal Donohoe, Minister for Finance, Public Expenditure & Reform pictured at a Fine Gael Small Business and Enterprise Conference which took place at Thomond Park Stadium, Limerick. Pic: Don Moloney

THE Cabinet will not bend to calls from opposition benches for energy price caps to be introduced in order to cushion the cost of living crisis, because doing so would carry too much of a “risk” to the economy, Minister for Finance Paschal Donohoe said, while visiting Thomond Park on Saturday.

Meanwhile, the Tánaiste Leo Varadkar told cash-strapped business owners at a conference in Limerick that Ireland will not only continue spending tens of millions of euro on military aid to assist Ukraine defend itself against invading Russian soldiers, but it will likely increase its spending as the war continues.

The finance minister pledged that he would not drop the ball on Budget 2023, but he warned it would not be a panacea for the cost-of-living crisis.

Ruling out energy price caps in the Budget, Minister Donohoe said: “Any measure that we bring in needs to be affordable and sustainable, and should not be a source of new risk, and we can see significant difficulties with a cap idea.”

“You are in effect requiring the taxpayer to take on all of the cost regarding the price of something that is currently uncertain,” he said.

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While Budgetary measures will “put money back in the pockets of people”, Minister Donohoe said he would not drain the country’s funds surplus that has been built up due to the government “collecting more money in taxes than we are currently spending”.

“There will always be demands on us to do more and to spend more but we are in really uncertain times, we are dealing with a crisis caused by a huge war in Europe and we cannot be sure who long this will go on for,” explained Minister Donohoe.

“This is why we want to ensure that we have the ability to continue to respond  back throughout 2023, if things get more challenging or if we have to deal with new risks,” he added.

The Tánaiste acknowledged “people are worried and are seeing their incomes eroded by high prices” but he promised, “they will see on (Budget) Tuesday a very significant intervention by government to help people and families with the costs of living, (they) will see the results of that within weeks, but it wont just be one-off measures, there will be help throughout next year”.

Ireland has, so far, spent €55 million on military aid for Ukraine,  however Deputy Varadkar said spending for Ukraine will be likely to increase as Ireland plays its part in helping Europe spend its way out of the energy crisis caused by Russia by funding the Ukrainian defensive.

“Yes support for Ukraine will continue, if anything, it will increase – let’s not forget that part of the reason we are facing this cost-of-living crisis is because Vladimir Putin is using energy and food as a weapon of war,” said Deputy Varadkar.

“If we don’t help Ukraine it won’t stop there, I guarantee you (Putin) will threaten other countries, he will threaten more of his neighbours and that will result in a greater risk of famine around the world and a greater energy crisis for the rest of Europe, so we absolutely have to stand by Ukraine – it is not just their war, it is ours as well.”

Deputy Varadkar told reporters Ireland would provide asylum to Russian citizens, including those who flee conscription to Putin’s army.

“Yes, so the way it would apply for any Russian person who is fleeing Russia is like anyone (else), they have the right to apply for international protection, and if they make an application it will be considered, and if their story stands up, they will be granted international protection, and if it doesn’t, then it wont,” Deputy Varadkar said.

“The same rules that would apply to anyone (else) would apply to Russian citizens, so, those fleeing Russia have a right to apply for international protection, they don’t necessarily have the right to get it, it has to be assessed and their story has to be checked out,” he added.

Responding to reports on Saturday of a row brewing over healthcare spending, and concerns that the Budgetary package would leave little money for plans to expand free contraception for women, building a state-funded IVF service, or further reducing/eliminating hospitals charges, the Tánaiste said, while “negotiating the health budget is always a real challenge every year”, it was “absolutely the intention of the government to extend (free contraception) to women over 24” – however he continued, “but I should say that new scheme has only just been introduced in the last few weeks so I wouldn’t expect that it will be expanded in January or February (2023), but certainly through the course of next year”.

“You’re going to see significant increase in the health budget next year, you’re going to see more money for more staff and development – will it be everything we would like to do, no, but unfortunately that will never be possible,” he added.

The Tánaiste told a conference of invited small to medium business owners they would not be forgotten in Tuesday’s Budget: “We are not going to allow viable businesses go to the wall during this period of high energy prices which hopefully won’t last too long, although we need to plan for the possibility that it might be prolonged.”