Mr. Eugene Drennan:

We thank the committee for the invitation. I am joined by Mr. John Nolan and Mr. Paul Jackman from the management team of the IRHA. Similar to what Mr. Cullinan has said, I will refer to the background and context for the members of the IRHA and our sector. I will give members an idea of what we do for the economy, our sector and the relevance to us of the Commission for Taxation report.

The IRHA is the representative body for the licensed haulage sector in Ireland. Our members play a critical role in keeping the Irish economy moving and ensuring that our homes, shops, businesses and key services are supplied with the essential goods that we need each day.

Our members operate within Ireland and all over Europe and also play a key role in keeping Ireland's mercantile trade going, bringing goods to and from Ireland on international routes. The 24,000 HGVs in Ireland do 87% of the heavy goods transit, covering more than 1.8 billion km per year. As a sector, we have faced a number of specific challenges over the last four years. Covid-19 provided a specific challenge for the sector but also imposed a particular duty and obligation on our members to keep important supply lines going, despite the significant public health challenges in travelling to some countries with red zones, etc. These challenges impacted on members delivering within Ireland, but in particular for members operating across Europe. The sector responded positively to the challenges presented by Covid-19 and we worked hard to play our role as an essential service during an unprecedented difficult period. As far as I know, Ireland was not short of very much due to our efforts.

The impact of Brexit has been really significant for the licensed haulage sector. The key impact has been the additional costs, delays and responsibilities that Brexit has introduced. This has led to a seismic shift in the trade patterns between Ireland, Britain and continental Europe. Hauliers have been to the fore in bearing the additional impacts of the new rules, regulations and routes. At least now we can see the long-term impact of Brexit and hope that the State authorities can adjust their practices to ensure that the facilitation of trade is supported rather than obstructed by excessive checks and stops. We must now try to work with the unfair competition that may be presented by the Windsor agreement. In all of this we are conscious of separating the commercial from the political, and also our island status.

The increase in fuel prices following the Russian invasion of Ukraine has been a major issue of concern to members. I acknowledge the Father of the House, Deputy Durkan. It is a long time since he got involved in a dispute of ours outside Buswells Hotel to be educated on the amount of fuel we take. My neighbour from Kerry, Deputy Michael Healy-Rae is also very well aware of our agenda. Given that our sector is almost entirely dependent on diesel fuel, any increase in the cost of this fuel goes straight to the bottom line. We are grateful to the Government for the various relief and support schemes to help to defray the high cost of fuel. We have argued for the continuation of these schemes until fuel prices decline to more manageable levels. However, in spite of all our reasoned lobbying the Government has sneaked back in the National Oil Reserves Agency, NORA, levy in the past two weeks. Given the amount of fuel we burn, the result is that the past two weeks have taken back any help we got through the hardship scheme within one year. We are very annoyed over this. I do not think it was needed at this time but we will tease that out later.

There is a real difficulty in sourcing drivers for HGVs and this is presenting a major constraint for the sector. We have brought forward various ideas and initiatives to seek to support the training and recruitment of drivers, as well as streamlining the approvals processes by the RSA. As late as this morning we had a meeting on this. There is still much that needs to be done in this regard.

Operating costs and competitiveness are very close to our heart. As an island nation, we must do our level best to keep the competitive edge. In addition to fuel costs, our sector has also had to deal with other high operating costs, including the exorbitant rate of insurance, which continues to blight many business sectors. For some reason, which I am sure committee members can figure out, the reforms that have been introduced to reduce the cost of insurance have not translated to cheaper premiums. Insurance companies are seeing profits increase, but our members are not seeing premiums come down. Currently there is an attempt to introduce measures on behalf of a private company, the Motor Insurance Bureau of Ireland, with the only one getting a fine or sanction being the haulier.

Our sector is also intensely competitive with members operating on very tight and volatile margins. We are not unlike the farmers in this regard. The slightest increase in costs or charges can turn a marginal business into a loss-making position very quickly.

I will turn to the Commission on Taxation report, in particular chapter 13, which is our main focus, although we will reflect on chapter 15 as well because the mental health issues deal with some services for drivers. The issues raised in that chapter which apply to our sector highlight issues of extreme frustration to licensed hauliers. There is a really strong sense among many of our members that there is a stubborn and unreasonable resistance by certain think-tanks, including the commission, to accept a basic reality that is central to the operation of our sector.

It is an incontrovertible reality that no matter what we might wish, the vehicles we use to transfer the nation's goods will remain powered by diesel in the medium term, at least. Despite promises of evolving technologies, whether from gas, hydrogen or electrically-powered vehicles, real progress in rolling out these technologies is a long way off. Most are still at design or concept stage and lack the practical application to be effective substitutes for diesel. None of the major heavy goods vehicle, HGV, tractor unit manufacturers are close to rolling out viable alternatives to diesel at present. While we may wish this to be different, there is very little we can do to magic up alternatives that do not exist. This does not mean that the State is powerless in terms of advancing measures to support the reduction in emissions from HGVs. I am happy to spell out some suggestions in this regard. It does mean there is nothing to be gained from taxing or penalising diesel use by HGVs in circumstances where there are no realistic and substitutable alternatives.

We would all love to embrace some new transmission sources but none are realistically available. We need to work with existing technologies and try to ensure that where diesel is used, taxes and subsidies reflect the amount of carbon emitted. We have paid millions into the carbon fund and have not seen any incentive in return for our sector. Bearing in mind the absence of any commercially available or viable alternative to diesel, any new measures designed to modify behaviour or force a move away from diesel will merely be punitive and counterproductive where no such alternative exists. We must strip out from the private to the commercial. We also point out the complete inconsistency between the treatment of the fuel powering HGVs and that powering airlines, where zero rates of VAT, excise and carbon tax apply to aviation fuel. How can two industries, both essential to the effective and efficient operation of our economic and social activities, be treated so differently? It appears that the commission has no difficulty in accepting that the airline sector has no alternative to kerosene, but cannot accept that HGVs have no choice but to use diesel. To put different taxation treatment for both sectors in context, a truck delivering kerosene from Dublin Port to Dublin Airport pays more tax on the diesel used to make the delivery than will be paid on the consumption of the full 30-tonne load by the aeroplanes it will be filling.

The Irish Road Haulage Association believes that many of the commission’s recommendations in chapter 13 should be refined when it comes to looking at the use of diesel for commercial vehicles. This refinement could come in the form of seeking to hone any adjustments to excise, motor tax and vehicle registration tax, VRT, and so-called fossil fuel subsidies to take account of the following positive initiatives which could help to reduce carbon and other emissions. Recognition that clean diesel is appropriate until new transmission sources are available. There are items the committee may tease out with us regarding a plan. Provide clean diesel rebates for diesel use that achieves the lowest emissions targets possible, readily achievable through Euro 6 and Euro 7 diesel HGVs. Provide an incentive or scrappage scheme or both to support the transition to Euro 6 and Euro 7 HGVs. At present, uncertainty around future State taxation treatment of new HGVs is limiting take-up of new vehicles and unnecessarily keeping older HGVs on the road. Provide incentives for the operation of clean diesel vehicles through toll roads, fuel rebates and relevant city permits. Provide encouragement for the use of hydrotreated vegetable oil, HVO, over diesel. I heard Deputy Moynihan speaking about it for home heating to the previous witnesses. There is not enough HVO for all of us to soak up the carbon and we are the big carbon users. I will tease that out in a minute.

Another initiative would be to ensure support for night-time deliveries by making adjustments to ferry timetables and container terminal operations to reduce the HGV impact on areas adjacent to ports, facilitating eco-driving, reviewing an increase in vehicle weights and dimensions to reduce road trips by smaller, less efficient vehicles, adjusting traffic light sequencing in towns to reduce dwell time at lights to a minimum and providing barrier-free tolls for HGVs on all toll bridges to reduce dwell time at barriers to a minimum. We have been asking for more than 20 years for a barrier into the port to be lifted automatically. It is responsible for between 2.5 and 8 tonnes of carbon a day in Dublin city. There is much that can be done to achieve a low-carbon economy and our taxation system has an important role to play in this regard. Taxation measures, however, must reflect the realities as they apply today and for the foreseeable future and not seek to change behaviour that cannot be altered due to the absence of alternatives. We hope the committee will look at the Commission on Taxation report through a lens of reality, taking account of the challenges on the ground of giving effect to recommendations that do not take account of practical and real difficulties in migrating from diesel to as yet unproven and unavailable technologies, as well as in respect of our island status. We are happy to take questions from the committee and thank members for their attention.