Oireachtas Joint and Select Committees
Tuesday, 3 July 2018
Committee on Budgetary Oversight
Environmental Impact of Fiscal Instruments: Discussion (Resumed)
I remind members and witnesses to turn their mobile telephones off, as they interfere with recording and transmission. I welcome Ms Verona Murphy, president, and Mr. Tony Goodwin, general secretary, Irish Road Haulage Association, IRHA. I thank them for making themselves available to the committee. I particularly acknowledge their facilitation of us in respect of the change of date, which we appreciate.
On 8 May, the committee met with Professor Edgar Morgenroth to consider some research carried out by the Economic and Social Research Institute, ESRI, on the environmental impact of taxes in Ireland, including examining the gap between excise duties on petrol and diesel. We will the views of our the IRHA on the equalisation of petrol and diesel excise rates.
I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.
Ms Verona Murphy:
I thank the Chairman and members for the invitation to appear before them for what I believe is the first presentation by the Irish Road Haulage Association, IRHA, before the committee. The association is the representative body for the licensed haulage sector in Ireland. We estimate that 47,200 people are employed in the road freight, distribution and logistics sectors in Ireland, accounting for 2.5% of total national employment. Our members play a key role in the sector.
I will outline the economic context for the road haulage sector. Merchandise trade is a very important component of the economy. Exports and imports of goods are key to the functioning of the economy, both from a consumer and a business perspective. In 2017 Ireland’s merchandise exports totalled €122 billion, while its merchandise imports totalled €79 billion. When combined, total merchandise trade was equivalent to 68% of gross domestic product, GDP, in 2017. The road haulage sector is central to this two-way trade in goods and, consequently, the proper functioning of the economy. As such, it is essential for Ireland’s future growth and prosperity that the sector be as efficient and effective as possible. IRHA members are a key cog in the efficient functioning of a vibrant and dynamic economy. In a very real sense, we can be described as the wheels of Irish trade and commerce.
The operating environment for road hauliers is very challenging and the sector is also facing many pressures and uncertainties in the coming years. Our challenges include increasing costs, especially fuel costs, but also high insurance premia and new daily levies being imposed in the United Kingdom on Irish trucks which do not apply to UK trucks operating here. Very high levels of competition are driving down margins to unsustainably low levels. New regulatory impositions are leading to a tougher and costlier operating environment. One change resulted in some members' loading capacity being reduced by 7%. There is a labour shortage which is really stretching our members' capacity to recruit drivers. Currency fluctuations, in particular, recent movements in the value of sterling, are having a negative impact on many operators. The difficulties exporters are facing are being directly visited on hauliers who are having to deal with lower business volumes.
Future challenges are even more concerning, including Brexit which poses enormous potential challenges for the sector. Ireland is the only EU country that shares a land border with the United Kingdom. Each week there is €1.2 billion worth of trade in goods and services between Ireland and the United Kingdom. In addition, more than 80% of road freight to continental Europe travels through the United Kingdom. Anything that might act to disrupt this trade such as adverse currency movements or border controls would be damaging to Irish road haulage activities and, consequently, the Irish economy.
The risks to the economy from a hard Brexit are very clear. The road haulage sector is the one that is most exposed to Brexit and already feeling its impact through increased currency differentials, a loss of business confidence and declining credit for future investment in rolling stock and support services. The road haulage industry is at the forefront of the economic relationship between the United Kingdom and Ireland; hence, it looks to be the most vulnerable and exposed sector in the event that there is a negative Brexit outcome. Policy makers need to ensure this vital component of Irish economic life is supported to the greatest extent possible. One way of supporting the sector is to ensure we will not introduce new domestically conceived charges, taxes or rules which would add to the challenges we face as a sector. We cannot deal fully with the uncertainties that are emerging from what increasingly looks like a chaotic Brexit, but we can ensure we do not make the economic position of exposed sectors any worse through misdirected or inappropriate new rules or charges.
Fuel costs are a very significant overhead for licensed hauliers, representing up to 35% of the operating cost of a vehicle. Licensed hauliers have no alternative but to use diesel. They do not have alternative fuel sources which they can choose as prices fluctuate. Diesel is the most cost effective carbon and energy efficient fuel for use in heavy road transport. It offers the best combination of power, torque and cost efficiency. Other fuels require more space such as gas or weight such as batteries, reducing payload and increasing the number of journeys. Even in the USA where cars and light commercial vehicles are predominately run on gasoline, heavy duty trucks run on diesel. Furthermore, as a fuel, diesel has slower combustion characteristics compared to petrol. Diesel vehicles produce higher torque at lower speeds, the primary requirement of a heavy goods vehicle. High torque is needed to move heavy loads. The diesel engine remains the only viable option for hauliers. In simple terms, diesel is the only readily available fuel source for hauliers and any increase in its cost represents a direct and immediate charge on the cost of business for a haulier. A proposal to equalise the excise duty between diesel and petrol would lead to an immediate 10% increase in fuel costs for our members.
Regrettably many of the public policy debates on this issue are conducted with a very poor understanding of the complex issues underpinning the use of diesel by the haulage sector. One particularly poor piece of analysis was conducted by the ESRI which was published in February. The report suggests a worryingly misinformed point of view in favour of the recent narrative that sees diesel as a bad fuel type, no matter what the circumstances. The IRHA contends that the significant analytical flaws and lack of objectivity demonstrated in the report should preclude its use to inform Government taxation policy on fuel excise levels. It is certainly not fit for that purpose. The report completely misses the point that the road haulage industry has no alternative but to use diesel and that modern trucks are leading the way in slashing air quality pollution levels. It also ignores the vast investment made by truck manufacturers in designing highly efficient diesel engines in line with Euro 6 emission standards.
I will now address sustainable transport modes.
Ms Verona Murphy:
I thank the Chairman for that guidance.
There have been huge investments made by truck manufacturers to reduce air quality pollutant levels to near zero. For instance, new Euro 6 engines which have been fitted in commercial vehicles constructed since 2014 actually deliver an exhaust particle content which is comparable and, at times, cleaner than ambient air. In the real world the testing and compliance of heavy good vehicles have proved to be far better than for cars for which emissions cheating devices were discovered. It is partly due to heavy good vehicles being more expensive and requiring more physical space that manufacturers were enabled to fit the best technological solutions to meet the standards required. Only 10% of Euro 6 cars meet emissions limits in real world driving conditions. Therefore, in short, a simplistic analysis which proposes that excise duty on petrol and diesel be equalised in order that the price of diesel would increase would do nothing for the environmental sustainability of the national road haulage fleet, other than taking trucks off the road as haulage businesses failed owing to excessive fuel costs. Fuel price equalisation between diesel and petrol would not produce any positive environmental benefit from the national road haulage fleet but would inflict grievous financial damage on a sector that is already facing huge costs and massive uncertainty.
The revised diesel rebate scheme was introduced in 2013 by the then Minister for Finance, Deputy Michael Noonan. The intention behind the scheme was to sustain operators through fluctuating oil prices and bring certainty to the cost base for haulage operators when contracting to provide haulage services. This certainty, in turn, benefits exporters by helping to control transport costs and reduce at least one aspect of the variable component of costs. Under the scheme, the Revenue Commissioners repay a portion of the mineral oil tax on fuel provided that the purchaser is a qualifying road transport operator who meets specific requirements. The scheme has not worked effectively since it was introduced, as the applicable floor for diesel rebates was set too high at €1 per litre. The IRHA believes that for the scheme to make a substantial difference in current conditions, the floor should be reduced to 85 cent per litre.
Additionally, we believe that the maximum rebate available under the scheme should be increased from 7.5 cent to 15 cent per litre, with a maximum rebate of 15 cent per litre once the price of diesel reaches €1. Such a move would alleviate cost pressures on the sector, benefit the Irish Exchequer by reducing fuel tourism and bring certainty for Irish exporters by helping to control and predict stable transport costs. This proposal is based on current conditions. Should equalisation of the excise duty between diesel and petrol be contemplated, the diesel rebate scheme must be introduced to recompense the haulage industry in full for that increase.
The IRHA believes that rather than demonising diesel engines in a non-thinking and fad driven fashion, the ESRI and the environmental lobby should call on the State and the European Union to make the most of the solutions brought to market by Euro 6 emission standards, by encouraging the acceleration of fleet renewal and-or fleet retrofitting. Retrofitting to Euro 6 standards was undertaken on a grand scale by Transport for London and proved to be extremely successful.
The IRHA hopes that in budget 2019, the Government, when determining appropriate budgetary measures, will take account of the strategic importance of the licensed road haulage sector and note the precarious operating environment applying at present and the threats coming at the sector from Brexit. In particular, we believe the current economic context requires no increase in fuel costs for hauliers by way of taxation and necessitates a recalibration of the diesel rebate scheme to levels that are applicable in other EU countries and which will assist licensed hauliers to plan for the extremely challenging period ahead.
I will be pleased to answer any questions members may wish to raise.
I thank Ms Murphy for her opening statement. This is not the first time we have discussed this issue. Ms Murphy noted the work of Professor Morgenroth and the issue was also discussed with the Minister last week in a breakaway forum at the national economic dialogue.
Ms Murphy has highlighted the concerns of IRHA members about the impact of Brexit. What percentage of additional costs could a hard Brexit impose on the typical road haulage business? Does the IRHA have estimates for that?
Ms Verona Murphy:
The average haulage company in Ireland has three or four articulated trucks. Each truck contributes roughly €250,000 to the economy every year. Approximately 50% of the haulage fleet operates on the Continent. We estimate that the cost of Brexit to the 50% of the industry that operates on the Continent will be €180 million in the first year as a result of delays. This estimate is calculated on the basis of customs agency checks, waiting time at borders and so on. In the event of a hard Brexit, it is anticipated the cost to hauliers will be approximately €40 per hour.
Ms Verona Murphy:
All the different groupings did estimates. I do not want to name anybody but it is well known in the sector. We have never missed a Brexit forum and the estimate is that the reduction would be 20% in the event of a hard Brexit.
What I am here to discuss today is the combined effect of excise equalisation on diesel and petrol and Brexit. European Union countries such as Belgium and France already have a fuel rebate scheme in place. This is known as an essential user rebate. The essential user is somebody such as a haulier who does not have an alternative. I receive texts every day about this. In Belgium, for example, which has a similar if not identical excise regime to Ireland, the rebate to a haulier on the price of diesel is 22 cent per litre. If one equalises the system, the rebate in Ireland is approximately 0.05 cent, less than 1 cent. Already a Belgian haulier, operating in the European mainland has an advantage of 22 cent per litre of fuel over us. If one adds diesel equalisation, it contributes another 12 cent on top of that.
Our environment will become absolutely untenable. It is not sustainable. Without equalisation we need the fuel rebate in the next budget. With equalisation, that must also be catered for within the realm of the fuel rebate because the essential user does not have an alternative. Enprova, the body charged with implementing obligations under Article 7 of the energy efficiency directive of 2012, has stated that diesel is the cleanest and most efficient fuel for long distance trucks and trucks of 40 tonnes capacity. This is the expert body saying this. The IRHA is saying that hauliers are under significant pressure, none of which we can do anything about. Brexit is driving much of this pressure through currency fluctuation. The environment in which IRHA members are operating is very stressful.
People want predictability and diesel car drivers thought they had predictability in 2008. We then found out there was a whole new science around pollutants, which has led to the current discussion about a change in policy to change purchasers' behaviour.
Ms Murphy criticised the study carried out by the ESRI on environmental and fiscal taxes. Professor Morgenroth of the ESRI provided an outline of the study in an earlier contribution to the joint committee. What evidence does the IRHA have to support its claim? This will be vital in developing tax policy. In hindsight, the science was probably was not available in 2008. However, for the past eight to ten years, right up to this year, people bought diesel cars in good faith, believing they were doing their best for the environment. Having invested in these cars, they find that is not the case and tax policy on diesel may change in the budget. Can the IRHA point to any errors in the data presented in the ESRI study? Does it have empirical evidence that contradicts the research published by the ESRI?
Mr. Tony Goodwin:
It is important to point out that our criticism of Professor Morgenroth's report is in respect of his account of the diesel rebate scheme, an issue that directly affects the Irish road haulage industry. The report referred to 140 fiscal measures that would have an environmental impact. Our concern relates to two pages of the report that deal with the diesel rebate scheme. It is important, therefore, to ensure no one misunderstands our position as one of criticism of the general tenor of the report. Our criticism is of the account the report gives of the diesel rebate scheme only. Professor Morgenroth's conclusion on the diesel rebate scheme is that, somehow, giving the scheme to Irish haulage operators resulted in them driving more and using more diesel. That is a fundamentally misconceived notion. Haulage operators drive the minimum required distance needed to deliver and collect goods. Common sense would suggest that is the case. A large part of dealing with a haulage operation is to ensure fuel efficiency at all times, because burning fuel is a cost.
Professor Morgenroth explained in the report how he came to his conclusion on this matter. He stated he applied a price elasticity factor taken from the National Roads Authority to suggest that an increase in the cost of diesel would change behaviour and that hauliers would switch to another type of fuel. Those two factors do not apply to an Irish road haulage operator for the simple reason that the haulier will not drive any more or any less and he will not be able to switch his truck to another fuel type because it does not exist or is not a viable option.
Therefore price elasticity does not apply. It does apply absolutely to-----
Mr. Tony Goodwin:
----- the general discussion the committee is having today, but not to road haulage, which is the critical point. The diesel rebate scheme that exists in a number of countries throughout Europe is in recognition that diesel is the appropriate fuel for that type of activity. Our concern is that it has been mixed up in the fad-driven concept that diesel is the wrong fuel in all circumstances, which it is not. As Ms Murphy has pointed out the Euro 6 standard diesel engine emits air that is in some cases cleaner than the ambient air. It has a 90% reduction in the nitrogen oxides. It is a far better and cleaner system than the equivalent Euro 6 standard car, which was subject to the emissions scandal. That emissions scandal did not apply to the heavy-duty vehicles. That relates to buses and not just trucks.
I thank all our contributors. What they have said is very interesting and it never occurred to me. We have just come from a discussion on setting up a special committee on climate change. Irrespective of whether we like it, we have no choice but to accelerate our efforts to reduce CO2 emissions and the country will incur very significant fines starting in 2020 if we do not succeed and we are well behind. Transport is one of the big areas that is contributing to increases in CO2 emissions, which have increased by 7% in the past two years. I believe the Government has pledged that by 2030 all CO2 emission vehicles will be off the road. What do the representatives of the Irish Road Haulage Association say to that? I understand their difficulty. It never particularly occurred to me but-----
Ms Verona Murphy:
Our difficulty is that we are not the people creating the CO2 emissions. With the Euro 6 standard there can be actually no emissions. We are spending a minimum 35 cent a litre for AdBlue for that Euro 6 standard truck on top of the price of diesel. We are not responsible. An incentive is certainly needed for the many cars on the road to change. We do not have an alternative. Doing this will not decrease the amount of trucks; it will make them more expensive. If an alternative of hydro, battery-powered or even compressed natural gas, CNG, comes in place, they are less efficient and will actually mean more trucks on the road. This is where we have to stress what we do; we know what we do.
Ms Verona Murphy:
From a Euro 6 standard vehicle, virtually none are produced. We are asking the Government to recalibrate the fuel rebate scheme to allow us all to come to the standard of Euro 6. There has to be an incentive as there is not an alternative. We need to build the fleet just as Transport for London did; its new fleet of buses all meet the Euro 6 standard. They have virtually cured the problem, particularly in the public transport sector of the London area. We aspire to everyone evolving to meet the Euro 6 standard but it is not possible in the current environment. Our transport costs are too great at the moment without equalisation and with equalisation, it will make it even worse and will slow down the process even further.
I understand the point Ms Murphy makes about the costs imposed on road haulage operators and the difficulties that would create. I am somewhat surprised to hear that some diesel engines have zero emissions.
May I interject? I could be wrong on this, but this is my understanding. The policy to change from petrol to diesel in cars was to reduce CO2 emissions. Effectively whether it is based on the Euro 6 standard or whatever, diesel is effectively low on CO2 emissions. However, having switched over a vast quantity of cars, the particulate pollution, which is the particulates in the exhaust emissions that cause problems particularly to big European cities with very little air movement during warm summer periods of summer, massively mushroomed. It is two different forms of pollution. I am not sure whether diesel engines - the particulate pollution that we are talking about there - my understanding is that it is not a main contributing thing. If we shift completely away from diesel engines back to cars, we will reduce particulates pollution so we will purify the air in the immediate city, probably Dublin only, but we will actually run the risk of driving up CO2 emissions unless the shift was done to electric vehicles. Even going back to petrol vehicles would run the risk for us. That is my understanding of the evidence we were previously given on that. That seems to tie in with what has been said.
Mr. Tony Goodwin:
At a previous meeting, Professor Morgenroth accepted that in many cases diesel vehicles were more suited to the longer-distance journeys. It needs to be generally understood that no one is saying that diesel is a bad option in every circumstance. Unfortunately the policy is driving in that direction when there is no evidence to suggest that. The Chairman is right that there is a difference between the urban and rural environments. When he was here the last time, Professor Morgenroth said that Ireland does not have the air particulate problem that other countries have because it is windy here and because our urban areas are not so built up. The ban on diesel cars in an urban environment is a very different concept from the long-distance haulage operator.
Mr. Goodwin knows they are carcinogens. We all knew in 2008 and we knew in 1998. Volvo, Saab and a few other companies tried to move away from diesel at the time when we were moving into it. They will still be emitting carcinogen particulates.
Ms Verona Murphy:
They are virtually emissionless. There is an AdBlue aspect whereby it is cleaned before it ever comes out of the exhaust but it is costing us more money. It is 35 cent per litre on top of fuel. That is our contribution; that is what we do. It has also increased the cost of trucks by about €20,000 meaning it is very difficult for someone to purchase to that standard in the current environment. The incentive that is required here is to do like the European model, which is to have an essential-user rebate that works. In Belgium it is 22 cent a litre. In Ireland with the same excise regime it is less than 1 cent. Does that sound right? It is not right. It is why Belgium is running predominantly on a Euro 6 standard fleet.
Ms Verona Murphy:
There is no doubt hauliers are well known for reinvesting their funds into their own businesses. That is from where a new fleet of trucks could be generated, without a shadow of a doubt, if there was such an incentive and our members knew that it would not be removed. At a time when we have many destabilising and chaotic Brexit forums and when there is fluctuation in the price of a barrel of oil, there needs to be stability for Ireland. The impact of such an incentive would be twofold for the sector.
Currently the sector is able to benefit from the rebate but the benefit is very small. As Ms Murphy said, it is less than 1 cent per litre. If there was equalisation, the cost of diesel would increase. That would mean the benefit to the sector would increase also.
Parking that to one side, if there was no upper limit of 7.5 cent and if equalisation was introduced, the association's members would not be adversely affected because they would simply get a larger rebate. Would that be the case?
Mr. Tony Goodwin:
Currently, the base level is €1 plus VAT. The sliding rate brings it from zero cent up to 7.5 cent and 7.5 cent is repayable when diesel is priced at €1.25 per litre plus VAT. It is not that our members get back the increases, they only get the smallest portion back on a sliding scale. I can read out the detail if the Deputy wishes. If the price is €1.25 per litre plus VAT, which would be €1.54 per litre at the pumps, the rebate would be 7.5 cent. If, for example, the price were lower, say, €1.10 per litre plus VAT, which would be €1.35 per litre at the pumps, the rebate would be 3 cent. It is not the case that our members would get a rebate of any increases.
Has the association done calculations on the basis of a base rate for the rebate being set at 85 cent per litre given that it is the level that would neutralise any impact of equalisation or would that create an additional incentive?
Mr. Tony Goodwin:
Our pre-budget submission will be to the effect that, without the introduction of equalisation, we want to tackle all the other cost issues Ms Murphy mentioned, and to bring the rate to somewhere near the ballpark of the rate in other European countries, although it will fall very short of that. We want to bring the floor for the rebate down to 85 cent and to increase the maximum rebate allowable from 7.5 cent to 15 cent and for that 15 cent to be payable once the price reaches €1 per litre. That costing would be €22 million and that is in circumstances where there would be no reduction in fuel tourism. Currently, our international hauliers buy all of their fuel on the Continent simply because they can avail of a much better rebate.
The witnesses are talking about reducing the floor for the rebate from €1 to 85 cent while increasing the maximum rebate rate from 7.5 cent to 15 cent and that the maximum rebate payable would kick in at the current minimum level for the rebate.
Ms Verona Murphy:
We have had substantial cost increases. The Chairman will have heard me say previously that we do not have a buffer for Brexit. The cost to the sector in the first year of a hard Brexit would be €180 million. Effectively, our proposal means there will be an increase in the fuel rebate but it will only be in line with other EU countries and it will be paid quicker but not necessarily in excess. Our sector contributes more than €5 billion to the economy and percentage-wise our proposal would cost very little to keep the sector viable. Foreign direct investment requires the best possible transport structure, particularly on an island . We are advising the committee that if this proposal is not implemented, we will not have a viable road haulage sector.
The €22 million cost is based on having the lower base for the rebate and increasing the rebate rate to 15 cent. That is not taking on board the benefits that could accrue to the State from hauliers purchasing their fuel-----
We also need the sector to move from using a diesel engine to a more sustainable type of engine. I appreciate what the witnesses said about Brexit. I come from a Border community and I hear about all the challenges, and God knows how it will end up. We need to move to having a far more sustainable system. Where does Ms Murphy see the road haulage sector in ten or 15 years' time? Will it still be relying on a diesel engine? We have read of an electric roads model. Scania was involved in a partnership in Sweden incorporating a hybrid. Does that represent the future? People in Donegal who might be listening in would say we cannot even get the potholes in the roads repaired, never mind talking about having electric roads. Is that the type of model for which we need to plan or where does Ms Murphy envisage the sector will be in ten, 15 or 20 years' time?
Ms Verona Murphy:
From our point of view, any study for replacing the diesel engine that we have considered would involve either a hydro or a gas engine. There are two issues in that respect. The hydro engine is much heavier and it would reduce the payload by about 10 tonnes. Our capital carrying capacity is between 22 tonnes and 26 tonnes depending on the type of trailer being pulled. If 10 tonnes has to be taken off that, the Deputy can see the problem that would arise. Regarding gas, we are an island and when it comes to certain types of gas - our sector ships from the country - the vehicle cannot be on an enclosed deck and must be on an open deck. That is not the case for all types of vehicles, but with certain types of vehicles with a gas engine, the engine must be dismantled before the vehicle can board the ship. This would currently apply more to imports because we do not see these trucks much here. Vehicles with a compressed natural gas, CNG, engine can travel, but there is not enough space if we were to change over in the morning to that type of engine. The necessary infrastructure is not in place. As to the direction in which I see the sector going, we have been told for years that we will run out of diesel and other fossil fuels. I have no idea about that, all I know is that the technology has to be viable if the sector is to change.
Ms Verona Murphy:
I read about it. We must bear in mind this is a very small country. The Deputy will have read about driverless trucks and platooning. That would be suitable for journeys from Cork to Dublin but it is certainly not suitable if for delivering a load to Cahirciveen, in which case a driver is still needed in the truck. At all times a driver would need to be in the truck. Even though people talk about driverless trucks, these trucks would not be unmanned.
If that happens, and even if there is not that type of crash, there could still be implications for the association's members where trucks would have to be checked in terms of the carriage of different types of products and so on. That would have to happen at Dublin Port and possibly at Rosslare Europort. What discussions has the association had with the port authorities? There is not the physical space in Dublin Port to carry out the types of checks that would be needed in that type of scenario.
Ms Verona Murphy:
Spatial considerations are currently under way at Dublin Port. It has bought land and it is making provisions. The same is not happening at Rosslare Europort but it should be. It will take a minimum of €40 million to prepare Rosslare Europort for a hard Brexit scenario, but it can be done and it should be done now. Five Government agencies will operate in the port, namely, those dealing with emigration, agriculture, immigration, customs, the Health and Safety Authority, HSA, and the HSE. They need to be catered for and that can be done now. The financial input for that can only come from Government.
Many of the questions I intended to ask have already been asked.
As well as the environmental factor, some of us on the committee became interested in broadening the tax base because of the dangers to our corporation tax among other factors. The UK, including Northern Ireland, went down this route before us. How did they manage an equalisation which was fair to the haulage industry as well as beneficial to the Exchequer?
Ms Verona Murphy:
The French tried to equalise the duty and they were very unsuccessful. They have been trying for nigh on 12 years and it has not happened yet, but they also have a rebate scheme that gives 17 cent a litre back to the haulier. Both Belgium and France operate very significant essential user rebates, and it is only to a licensed haulage operator, but from any country within the EU.
Does Ms Murphy feel that if we went the equalisation route, be it phased over a number of years or just as quickly as possible, and we opted for the rebate scheme the association wants, the Exchequer would be better or worse off?
Ms Verona Murphy:
I would say it would be better off because I very much believe that although the initial cost, which we have to cost, is €22 million, it would go straight back in through wages, truck manufacture, sales and other areas. Deputy Broughan must remember that when one talks about equalisation, somebody who drives a petrol car or a diesel car has an alternative but we do not so it is a penalisation for us. It is not as if we can say go ahead because we can do this. We cannot. It is a very serious imposition on a sector that is under a lot of pressure and it will do more harm than good to that sector
I compliment the Irish Road Haulage Association under the stewardship of Ms Murphy both for her lobbying and her proactivity on behalf of truck drivers everywhere. I do not just refer to truck drivers in my constituency because, as a Border constituency, we know the dependency, in particular in the Cooley Peninsula area. We are all aware of the traditional issues that arose when the Border existed previously. I hope we will not get back to seeing Customs and Excise clearance become a reality again.
I am concerned about the analysis of the ESRI report and what Ms Murphy has said about it. My question is for both the Chairman and the witnesses. Other speakers have touched on it. There is clarity on the issue that there is no solution in the truck business for replacing diesel. Is there a need for us as a committee to request the ESRI to look at this? The obvious question then is to ask if the ESRI did not consult the association while carrying out its research. That surprises me greatly. Should we refer the document and ask that it would be analysed?
I am new to the committee but I believe the rule is that we do not come back in. I would prefer to ask all the questions in the one act. The association has discussed the shortage of drivers with me. Will the witnesses quantify that as I did not hear a number mentioned?
We are all aware of fuel tourism. Has a costing been done in terms of what the savings could be to the Exchequer if that were not happening and if there was an ability to purchase the product at the right price here? Others have referred to the fact that we are an island country. The same is true for Britain but it has clear access to Europe through the Channel tunnel link. Has a costing been done in terms of the extra cost to road hauliers of getting off the island compared with someone who is connected to the mainland and is any assistance provided in that regard?
Ms Murphy mentioned AdBlue. It is available in all new cars. Is she saying they are as effective as well? They would be looking for parity of esteem should concessions be made to road hauliers because they also have the costs of having bought that type of vehicle.
In terms of trying to be more inventive, I recently discussed congestion with Ms Murphy. Is there some quid pro quothat could be offered to road hauliers in return for what they want to free up movement into cities in particular? I do not have a solution but I am sure the association has thought about this. Congestion has gone beyond a joke.
Ms Verona Murphy:
I thank Deputy Breathnach. I will answer his questions in succession. No, we were not consulted by the ESRI and we were taken aback by the report. As far as I am aware, it was commissioned by the Environmental Protection Agency, EPA. Mr. Goodwin explained about its assertion on the basis that we had a fuel rebate. I might add that at the time in which the report and study were undertaken, we were not in receipt of the fuel rebate. It only kicks in at a certain level so we had not been in receipt of it. That was the reason for the disgruntlement about the report.
I was asked about Euro 6 cars. I cannot comment on that for obvious reasons. The point I made about AdBlue is that this is what we are doing and it makes us more green. It does little for efficiency but it certainly helps with emissions. Trucks have cost a lot more at the manufacturing stage in the process of developing this system. One is looking at about €27,000 of an increase as well as an exhaust system that does not last as long and has to be replenished after four to five years at a huge cost - somewhere between €5,000 and €8,000, if one purchased a truck with a Euro 6 engine. Again, in relation to the French, the cost of getting off the island of Ireland for a haulage operator is about 30% of the general cost. It equates to the fuel costs. If one is going to the UK, that can be reduced to 20%, as the costs increase when one goes further afield to mainland Europe.
I am conscious that we are not here to discuss congestion, which was Deputy Breathnach's last question, but I did speak to him about it at a recent forum in Drogheda. One initiative that could improve the entire situation, in particular emissions, is by having a dedicated truck lane without barriers. The cost of a truck stopping at a barrier is a litre of fuel. Today's cost is approximately €1.12. We have put that to Transport Infrastructure Ireland, TII, which does not often listen to what we have to say. That is a huge cost both to the operator and from a CO2 perspective. The M1 in particular has barrier tolling. We do not need or want to sit on the M50 burning fuel when it is 35% of our business outlay. There are solutions but because of the public private partnership and the 30 year contract that is in place, nobody is prepared to spend the money, but if we want a holistic approach, as Deputy Pearse Doherty said, and we want to cure something once and for all, then we have to spend money. Unfortunately, we no longer have it to spend because of all of the regulatory impositions that have been put on us in recent years and with Brexit coming down the line.
Mr. Tony Goodwin:
In response to Deputy Breathnach's question about trucks versus the equivalent Euro 6 car, I will refer to the following information. The International Council of Clean Transportation, ICCT, which is the team that exposed Volkswagen's cheating on emissions testing, found that testing and compliance for heavy vehicles to be far better than cars where emissions cheating devices were commonplace. That is partly due to HGVs being more expensive and having more physical space to enable manufacturers fit the best technological solutions to meet the standards required. ICCT test results confirmed that only 10% of Euro 6 cars meet emissions limits in real world driving test conditions. In real world testing of nitrogen oxides, NOx, as a percentage of CO2 in Euro 6 trucks versus Euro 6 cars, the cars showed ten times the level of nitrogen oxide as trucks for the same amount of CO2 emissions.
Unfortunately, what has happened with the emissions scandal has affected Euro 6 trucks despite the fact that they are on a completely different plane.
I am sorry I was not here for the start of the presentations. I am delighted to welcome the witnesses. I have to declare that I have a small haulage business. I understand the problems and the regulations by which hauliers have to abide. I am glad to hear the witnesses putting to bed the idea of equalisation and having diesel at the same price as petrol in the absence of a proper rebate system. As Ms Murphy stated, hauliers are operating on very slim margins and are only barely keep going. They have to be complimented because there are many new trucks on the roads and they are very effective in keeping down emissions. Older trucks did not have AdBlue and were not as effective. Most trucks are operating in Third World countries. We are all in the same world. Whatever good or bad is in them, they will operate for a long time because they have massive engines. What I know about these new engines is that they are great. AdBlue costs a lot of money. If something happens to these engines, they are way more expensive to repair. Fellows have told me that they are not repairable. They have also stated that the engines have to be replaced if something goes wrong because it is so costly to repair them.
I am glad we have been given the presentation. Some Deputies seemed to exit very fast when they realised the lorries of today hardly create any emissions or any damage to the country. I know some Deputies would like us to go back to using horses and carts-----
I would like to see them coming in here more because I am afraid that they will do something to the haulage industry without realising the harm they are doing or that they may do. The witnesses have explained it simply.
The amount the haulage industry contributes to the Exchequer should be mentioned. It is vital for bringing our goods to places as far away as Cahersiveen and Castletownbere, as the witnesses stated. It is a different thing when one goes down there because the roads are not as good and one uses way more diesel on that type of road. People in those rural places need to get their goods and supplies just as much as their counterparts it in the cities of Dublin, Cork or Limerick. I am amazed by the way Governments and Ministers change their advice. In 2007, we were advised to buy diesel cars and there was an incentive introduced which reduced the amount of motor tax to be paid. Now in the way one flicks a switch, we are being told that we must change and opt for electric cars. People who do not know what they are talking about are even suggesting it for lorries. How ridiculous can they be? They need to wake up and join the real world because in the context of delivering a load from Dublin to Cahersiveen or from Dublin to Castletownbere, there is nothing that will replace a lorry with a diesel engine. They had better just shut up until they have something to offer because they are only wasting people's time and upsetting road hauliers who-----
-----have to abide by every rule and regulation of the RSA and others.
I am glad to see the witnesses here. I welcome them back. There are fellows around this place who need to hear the witnesses talking. The witnesses should continue the wonderful job they are doing until. They have all the facts. That is what we need to tell the people who want to change the world and who think they can run everything on electricity when there is nowhere to plug anything in to charge. I thank the witnesses for their presentation.
I appreciate that there was no question in the Deputy's contribution. I thank the witnesses for their contributions and for attending. It was a very informative session. On the issues the witnesses raised regarding the ESRI report, we will raise them with the institute.