Simon Coveney (Cork South Central, Fine Gael)

Before I discuss the detail of what has been said by the Government side, I will spell out for the House the purpose of this motion on behalf of other Opposition parties and address some of the concerns raised. There seems to be a perception that this is an attempt by Fine Gael to have a general motion on energy policy, or a comprehensive economic recovery package for Ireland. Nothing could be further from the truth. This is a specific proposal brought forward by Fine Gael because there will be a specific lump sum of money which will be paid for by businesses and households over the next five years, a figure of approximately between €1.5 billion and €2 billion. We want to see that money spent properly, which is the principle behind the motion, because it is taxpayers' money. The way in which the electricity regulatory environment has developed requires power generation companies to charge for the international cost of carbon, which is between €24 and €25 per tonne. As a result everybody's electricity bill here is higher than it otherwise would be if power generators were not required to add on to their bill an amount equivalent to the international cost of carbon.

Power generation companies for the next five years until the end of 2012 are being given a free allocation of carbon allowances to enable them to emit a certain amount of carbon into the environment without cost. They are gaining on the back of consumers and it does not cost them anything. The essence of this motion is that consumers will pay €1.6 billion per year for the next five years on top of existing electricity bills. This is based on the average cost of carbon being €25 per tonne, which is a very conservative figure. We need to decide who gets the money and the way to spend it. Is it appropriate to allow the money to go into the coffers of the ESB, Viridian or any other power generation company to which this allowance applies? Alternatively, should we, as legislators and representatives of the people, decide how the €1.5 billion is spent for the betterment of the economy, society and the environment? These are the three areas on which the motion impinges and these are the questions we ask.

This motion is not about the future direction of Government energy strategy as the Minister, Deputy Eamon Ryan, seemed to suggest in an arrogant way before he shuffled off to Luxembourg earlier. This is about the way we spend a carbon tax, which is being introduced by stealth. I agree with factoring the cost of carbon into the price of electricity. However, if we are to factor in this cost let us be honest with people, tell them it is a carbon tax and then tell them how we will spend their hard earned money paid in taxes. Instead, what is happening is that people have no idea they are paying an extra 10% in bills for the cost of carbon. Instead, people are fed the line by Government and others that the price of energy is increasing because of the international price of oil. This is a factor, but not the only one.

The policy decision has been made by the regulator to incentivise power generators to produce electricity in a carbon-efficient way and to charge for the cost of carbon. The money is being paid as we speak, yet the Government allows what amounts to a stealth carbon tax to continue to be paid by the consumer because it is not being up front and honest with businesses and households about what is happening. We are not discussing a small amount of money.

For Fine Gael, the principle for dealing with carbon taxation is simple. We need to encourage — indeed, insist on — a change in behaviour that will reduce carbon emissions and the carbon footprint of companies and people in the future. We agree with the regulatory decision made. However, we do not agree with the system whereby this money will not be recycled into the economy and given back to taxpayers in some other way. If there is to be a carbon tax, it should not be used as simply a revenue raising exercise, which is not the purpose of such a tax; carbon taxation should be revenue neutral.

Putting a value on carbon emissions should help to change people's habits and force a change in the way we think. At the same time we should recycle the money to provide tax relief for the consumer. If we are to take more from the consumer to change carbon consumption habits, let us give it back in another area so that the net tax paid by businesses and consumers remains the same. This is the main principle behind this proposal.

This motion covers two issues and I appeal to the Government to consider the two separately and then collectively. The Government should decide quickly if it will recoup gains made by the power generation companies free of charge on the back of consumers. Then let us have a debate on the best way to spend the money. Fine Gael has made its decision on this matter. We believe the lower rate of VAT should be cut because it represents a good deal in the current economic and social conditions, where people are put to the pin of their collar to heat their homes and where the construction industry is on its knees. The 13.5% VAT rate applies to that sector along with the services sector, tourism and many other sectors requiring stimulus at the moment. This is the reason we have chosen this motion. This is one of a series of packages of economic stimuli that Fine Gael will bring forward in the coming weeks and months, yet, we hear nothing from the Government in its response to the motion except that it will continue to implement the stability-oriented fiscal policies that have underpinned the success of the economy over a decade.

The Government's fiscal policies have caused the current panic in the economy. The Government did not plan for a rainy day when it had the resources to do so. I acknowledge that the Minister for Finance has accepted this is an issue and that he and his Department, together with the Department of Communications, Energy and Natural Resources, plan to examine it.

In his contribution earlier today, the Minister for Communications, Energy and Natural Resources, Deputy Ryan, misled the House on two issues. The first relates to his claim that the single electricity market committee is opposed to the Fine Gael proposal. This is untrue. The committee has stated that windfall gains could be used for the benefit of consumers and that this is a decision for the Government. Second, the Minister accused Fine Gael of being opposed to the ESB's €22 billion plan to reduce its carbon footprint dramatically in the next 20 years. That is a disgraceful comment from the Minister. He has seen my press releases, on behalf of Fine Gael, which welcome that strategy and encourage the ESB to move forward with it.

The issue for Fine Gael is that we do not want the ESB's future capital investment programmes to be funded via a carbon tax without the knowledge of consumers that the moneys they have contributed are being used for that purpose. If we expect them to pay that tax, we should be honest and tell consumers and businesses that they will pay up to €2 billion in carbon taxation in the next five years and how that money will be spent. That is how honest Government works.

Instead, however, the Minister, Deputy Ryan, comes into the House and dismisses Fine Gael proposals in such a way as to suggest that we do not care about climate change. At the same time, he asks for consensus so that we can create a green economy which prioritises a reduction in carbon emissions in the next ten to 20 years. This is something I am happy to do. However, when it suits the Minister politically, he dismisses our sensible, well thought out and properly costed suggestions. These proposals make economic, social and environmental sense. Most importantly, they do nothing to reduce the incentives that have been put in place under the regulatory regime to encourage a change from fossil fuels to cleaner and more efficient energy generation. Our proposal does nothing to impinge on what this policy, which Fine Gael supports, seeks to achieve. I commend the motion to the House.

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