Oireachtas Joint and Select Committees

Wednesday, 11 July 2018

Committee on Budgetary Oversight

Summer Economic Statement: Discussion

3:30 pm

Photo of John LahartJohn Lahart (Dublin South West, Fianna Fail)
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I stand corrected. I thank the Chair. That question is then null and void.

As the Minister will be aware, the committee does not take a view on the issue of equalisation between diesel and petrol. We heard recently from representatives of the Irish Road Haulage Association and the Minister will have received representations from the association as well. It was a very interesting discussion. There is not yet an alternative to the pulling power of diesel for industry and farming. Some of the evidence given by Professor Edgar Morgenroth on the 2008 changes and the reduction in car tax gave the impression that these were successful in that they led to a switch to diesel cars, as intended.

YesYes, it was successful in that there was a switch to diesel cars, which was the intention, but the saving which was abiding by the science at the time, that if one switched to diesel it was more environmentally friendly, according to the science available in 2008, was off set by the fact that people bought bigger diesel engines because the tax was cheaper. Many people, up to this year, have opted for diesel engines thinking they were doing the right thing, but science now tells them they were not doing the right thing. Any change must be sensitive to purchases that consumers make.

The scientific evidence at the time suggested switching to diesel was environmentally friendly. However, the environmental benefit was offset by the decision of many people who bought diesel vehicles to opt for bigger engines because the tax was cheaper. Many people opted for diesel engines thinking they were doing the right thing, but science now tells us they were not doing the right thing. Any change must be sensitive to purchases consumers make.

Professor Morgenroth referred to 300,000 Volkswagen vehicles parked in a desert in the United States. They were returned or were unsold because Volkswagen lied to people about the emissions standards. We learned yesterday that Nissan has done exactly the same. We have devised policy around automotive science which has been lying to us, and we did it in the best interests of the environment. This leads to a question for the Minister for Finance and the Minister for the Environment, Community and Local Government. Members of the public have followed this debate and have adapted to it by adopting measures in the belief that this is in the interests of reducing their carbon footprint. There is a move towards equalisation because it is an environmentally good thing to do. What does the Minister say to those who bought a diesel vehicle in 2017 or 2018 given that the value of their cars will potentially decrease? How can that be addressed?

Another question, which is aligned to the same point, came up in the context of electric vehicles. Given the impressive range of incentives to switch to electric cars, has research been done to show why there has not been a significant take-up of these vehicles? Without giving them away for free, what additional measures could be implemented to encourage people to buy electric vehicles?

The European Commission described the Government's proposals for a rainy day fund as vague. While they are obviously still under development, will the Minister share his thoughts about how his proposals will develop?