Arthur Morgan (Louth, Sinn Fein)

I broadly support this motion and I call on the Government to recognise that the increases in heating and fuel costs, and daily living expenses have had a severe effect on working families on low and middle incomes, which has ultimately damaged our economy and made the path to economic recovery all the more difficult to find. While the Government will go on about low inflation or even the projected deflation for the next 12 months, in key areas such as home heating and everyday shopping, the Government has stood back while prices spiralled out of control. Energy and food costs have more than doubled over the past 12 months, while a litany of charges and levies were sneaked in through budget 2009.

As the result of the Government placing the burden of our economic difficulties on the shoulders of ordinary people, families have been prevented from using their own incomes to boost the Irish economy and are effectively being forced to shop outside of the State. The failure of the Government to intervene at an earlier stage to halt inflation has a direct negative impact on areas such as the retail sector. However, while prices are at the highest ever level and consumer confidence is at an all-time low, options remain available. I urge the Government for once to start listening to people on this side of the House and to change the direction it has taken.

We have all seen the recent figures released by the European Commission, demonstrating that pre-tax petroleum prices in Ireland are 24% higher than the EU average. The only explanation for the disparity in prices is greed on the part of certain motor fuel outlets and a laissez-faire approach by a Fianna Fáil-led Government that chose to ignore that people are being ripped off. However, the issue of high energy costs goes beyond petroleum. Over the past eight years Ireland has moved from being below the EU average for electricity costs in 2001 to becoming one of the most expensive EU countries for electricity. Ireland rates as the second highest of the EU 25 for industrial electricity prices.

While the Government will no doubt point to the recent freeze in electricity and gas prices, only last August the ESB was granted a 17.5% increase in tariffs, while Bord Gáis was given permission for a 20% hike. Both State bodies had to withdraw their most recent applications for tariff increases as world energy prices have fallen by up to 60%. While global energy prices may have tumbled, we have seen only a minuscule decrease of less than 1% in ESB-supplied electricity and nothing has been forthcoming from Bord Gáis. Despite claims to the contrary, the decreases in international energy prices are not being passed on and it remains to be seen if the ESB and Bord Gáis end up passing on the decrease or keep the difference themselves.

High electricity and home-heating costs impact most on low-income families which spend a far greater proportion of their household budgets on these basic items. As people are spending more on their petrol, home heating and electricity, they now have less money to spend on other basic items such as food and clothing, which has the inevitable consequence of damaging other sectors of the economy, such as retail. There is undoubtedly a problem with statutory bodies, such as the Commission for Energy Regulation, sanctioning increases without proper regard to the consequences for families and business.

While I support the proposal that would require regulatory organisations to hold public meetings, more measures are necessary to ensure that the regulatory bodies take account of the effects of their decisions. This is clearly not happening today. Another measure could be to oblige regulatory authorities to conduct proper impact assessments as to what are the likely effects on low and middle-income families, and on businesses if they sanction increases. For there to be any transparency, impact assessments should also be published by the regulatory bodies. This should have been happening as a matter of course anyhow. It never happened because the Government was sleepwalking through that period.

Retail price disparities are damaging shops and stores south of the Border. The National Consumer Agency has found a margin of difference up to 30% in food prices on either side of the Border, which must be inexplicable. I have had representations from businesses in my constituency which are being damaged by the numbers of shoppers who are travelling north. However, rather than coming to the aid of retailers, the Government has made matters worse by increasing VAT to 21.5%, resulting in a 6.5% difference between North and South, which has placed retailers at a competitive disadvantage, with which they may not be able to cope.

The decision is all the more bizarre in light of the shortfall in VAT revenue. VAT receipts are down by €2.1 billion and with this increase not only is the Government sending shoppers to the North, but for those who will continue to shop in the South the Fianna Fáil and Green Party Government is removing up to €200 from their annual incomes. My party has always highlighted the damage that is being done to the long-term development of both economies, North and South, through disparities in taxation. While the retailers in the North are now benefiting at the expense of retailers in South, the situation could change in the future and Northern shop owners could end up suffering the same hardship. There is a history of such seesawing of benefit on either side of the Border.

Ultimately, the Government will need to go beyond the lip service it has been paying to the development of an all-island economy and start taking on board our proposals and the proposals of a number of organisations, business groups and bodies such as InterTradeIreland. One of our proposals is for VAT harmonisation. While we accept that many more measures must be taken to ensure a proper level playing field, a 2% reduction in VAT would make a significant difference at this time.

On the issue of levies and charges through State agencies and Departments, the increases made by the Government are hitting vulnerable people the most. By increasing accident and emergency unit and hospital charges, the Government is effectively discouraging people who may be in need of urgent care, from going to hospital.

By increasing school transport charges the Government is making it more difficult for children from disadvantaged backgrounds to continue their education. However, these increases are not being done to improve or safeguard our services. They are being initiated while the health and education services are being cut back. The cutbacks in health and education will do long-lasting damage to our public services and I urge the Government to bow to public pressure on these issues.

The 1% income levy on workers who earn more than €18,305 is unwarranted and will damage low income families. The levy should apply only on incomes in excess of €38,000 and we believe that the threshold for the 3% levy should be reduced to incomes in excess of €200,000. Our proposal to remove the PRSI ceiling would have had the double effect of raising much needed tax revenue, while cushioning those on low and middle incomes from the worst effects of the increase. All of these charges and levies amount to more than €1,000 being taken out of the pockets of families on moderate incomes at a time when they need it the most. We are all aware of the shortfall in public finances and the economic downturn, but the measures implemented by the Government can only serve to perpetuate this recession and exacerbate the dire state of our public finances.

I will give the House a brief outline of what it is to try to shop in the North. Accounts have been to relayed to me about my nearest town, Newry. The PSNI had to be called twice last week to separate people from the South fighting. In one case two women were fighting over a shopping trolley which somebody had just finished with after loading the groceries into the boot of his or her car. In another instance, two men were fighting over a parking space. Somebody had just left a parking space in a well-known shopping centre in Newry and two men were literally at fisticuffs to get the space. Others, while using their shopping trolleys in the aisles, are having goods removed from them by other shoppers who cannot find the items. It is no pleasure to shop in some of the busier shopping centres close to the Border and in the North. While I can understand why people from the South would contemplate moving North given the huge price disparity, it is no pleasure. There is much more comfort to be had in this State.

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