Matt Shanahan (Waterford, Independent)
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223. To ask the Minister for Finance how long the Government expects to be in a position to maintain some level of cost-of-living supports; to what level he envisages inflation rates would need to be reduced to before these supports will no longer be necessary; and if he will make a statement on the matter. [11666/23]

Michael McGrath (Cork South Central, Fianna Fail)
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The Government is acutely aware of the cost of living pressures facing households and businesses and has acted swiftly and frequently to help ease the burden.

In advance of Budget 2023, Government provided some €3 billion in direct relief, including the first energy credit for every household, lump sum payments in respect of the fuel allowance, and a reduction in the tax levied on fuel, electricity and gas.

Budget 2023 was a ‘Cost of Living Budget’, with over €3 billon of the overall package of €6.9 billion composed of direct measures to address the cost of living challenge, including adjustments to income tax bands for all workers and increases in social welfare and pension rates.

Budget 2023 also included a sizable package of temporary cost of living supports, amounting to over €4 billion, which took effect from the final quarter of last year. This included three €200 electricity credits for every household amounting to €1.2 billion.

In February, in recognition of ongoing cost of living pressures, Government acted once more, announcing a further package of cost of living supports amounting to around €1¼ billion. This includes a temporary extension of the reduced rate of VAT for the hospitality sector until end-August this year, an extension of the reduction in VAT on electricity and gas to end-October and an expansion of the eligibility criteria and application period for the Temporary Business Energy Subsidy Scheme, and lump sum payments in respect of the child benefit and for social welfare recipients.

The temporary reduced rate of excise on fuel has also been extended in full until end-May. This will then be gradually phased out, in an incremental manner, from June until end-October.

In total, this brings the fiscal support provided by Government to around €12 billion, or some 4½ per cent of national income. This is an enormous sum, and demonstrates this Government’s commitment to acting, as and when appropriate, to help shield households and businesses from the impact of rising prices.

However, it is essential that Government strikes the appropriate balance between assisting where we can today and ensuring we are prepared to meet the challenges that we know are ahead. That is why the February package will be the last suite of cost of living supports until Budget 2024, and why we have taken the decision to gradually phase out the reduced rate of excise on fuel.

In terms of the question of whether more could have been done, the Deputy has - in a separate question - also correctly raised the issue of high public debt and the need to reduce it. Government must balance the need to support households with the need to ensure fiscal sustainability - policy involves trade-offs.

Finally, I would point out that the rate of inflation is expected to ease from the second quarter of this year and this will help support real incomes.