Timmy Dooley (Clare, Fianna Fail)

I move: "That the Bill be now read a Second Time."

I will be sharing time. Fianna Fáil is bringing forward this Bill as an exceptional measure to deal with a crisis facing hundreds and thousands of motorists throughout the country. The price of petrol and diesel, which has been increasing steadily over the past year, is being raised with me and other Members of this House on an almost weekly basis. Motorists are at their wits end. Families are at breaking point. The steady increase in the price of oil is placing an unbearable burden on so many people throughout Ireland.

This Bill, Second Stage of which it is hoped will be passed by the House tomorrow evening, seeks to reduce the price of petrol and diesel on the forecourt by 5 cent. The mechanism in this Bill which we envisage being used by the Government to achieve the 5 cent reduction is a 4% reduction in excise duty and the corresponding VAT forgone, resulting in a 5 cent reduction. It is clear that there is an unbearable burden on so many motorists. The director of policy with AA Ireland, Mr. Conor Faughnan, has stated that feedback from the association's regular motorists' survey reveals the heavy cost to commuting mortgage holders. He also stated:

Motorists have told us that they are in negative equity in a house 40 miles from Dublin and commute to work in order to pay an outrageous or onerous mortgage. Some have actually quit their job because it was not adding up for them.

He further stated that while people who bought a house in 2007-2008, when their budget looked sound, were paying €142 for petrol in January 2009, they are now paying €300 per month, which is crucifying them.

Motorists make a huge contribution to the Exchequer, paying more than €4 billion per annum in excise duty, VRT, VAT and motor tax. Next year, that contribution will be in excess of 10% of the revenue generated by the State, an exceptional burden on one particular sector. It is for this reason that we believe there is a necessity to act and to do so swiftly. Fianna Fáil is calling for a relatively modest reduction in excise duty and is seeking to achieve this in a way which will address the current spike in oil prices.

The Fianna Fáil proposal also calls for a review of fuel prices every three months rather than annually as is currently the case. It does not make sense to only have a review of fuel prices once a year at budget time when the cost of oil on the world market is changing all the time. The Government needs flexibility to respond to this on a regular basis. The legislation we are proposing would allow the Government to react quickly to developing situations in the marketplace. We estimate that the cost in terms of revenue forgone would be approximately €145 million. However, the State is currently taking in substantial additional VAT revenue from the spike in fuel prices. The burden of increased motoring costs is, as stated by the Minister for Finance in the House last week in response to a parliamentary question, having a significant dampening effect on the domestic economy. I will deal with this issue later in my contribution.

As we enter the peak summer driving season, the need to give hard pressed motorists a break is becoming more acute. If this legislation is passed it will bring immediate relief to thousands of motorists, farmers and small businesses across the country. People feel they are being squeezed from every angle. The rapidly rising price of fuel is another cost they simply cannot afford. An instant reduction at the pumps would have a significant impact on household budgets. We are all aware that fuel prices in Ireland have risen steadily since January 2009. Since the deregulation of fuel prices in October 1991, AA Ireland has produced a useful monthly national average. This data shows that in January 2009 prices hit a low point of 94.6 cent for petrol and 94.4 cent for diesel. According to AA Ireland's April survey since then, prices have risen to 164.9 cent for petrol and 159.9 cent for diesel, representing an increase of 75% in petrol prices and 70% in diesel prices over that period, which is a phenomenal increase on a commodity which is such an essential part of every day life for so many people. If anything, prices have worsened since that survey was done. The website pumps.ie shows that retailers are charging 169.9 cent for petrol and 164.9 cent diesel.

Fianna Fáil acknowledges that fuel prices are driven by a number of factors, including the price of oil on international markets, exchange rates, production costs and refining costs. The rise in oil prices during the recent past reflected additional factors such as the geopolitical uncertainty in North Africa and the Middle East, with potential supply disruptions. The uncertainty in stock markets and the real estate sector have seen investors shift emphasis towards commodity markets and oil, gold and other extracts have seen significant increases as a result of that shift in investor sentiment. However, the State also has a significant influence on the price of motor fuel. Ireland's excise rates are 9th and 4th highest in the EU 27 for petrol and auto-diesel respectively. In its budget, the Government increased the carbon levy on fuel by €5 per tonne of CO2 and VAT by 2%. Some 54% of the cost of petrol and almost 50% of the cost of diesel accrues to the State. The loss of disposable income from increased motor taxes affects almost all households and businesses because it is a rise in a basic cost of living, taxed as if it were a luxury.

I am not blaming the current Government for this. This has been one of the old reliables for successive governments. Tonight is about trying to establish where we are at and recognising that the current price of oil is unsustainable and is creating an unsustainable burden on this economy and the people who live in it. The Automobile Association calculates that a car doing about 12,000 miles per year - which is a limited amount for many people in this House - based on a fuel economy rate of 30 miles per gallon would utilise approximately 150 litres of fuel per month. For petrol users, the monthly bill is now €247.35 while it is €239.85 for diesel users. The monthly cost for petrol and diesel users since April last year is €28 and €22 more per month, respectively.

Since the budget of October 2008 and the first budget announced by this Government last December there have been five separate tax increases on both fuels, which between them adds approximately 22 cent per litre to the retail price. Were it not for those tax increases, the price of petrol would be €1.42 per litre and diesel would be €1.37 per litre. The cumulative effect of these measures is that for an ordinary family the tax on fuel is now €396 per annum higher, which is a significant amount. High fuel prices have a particularly negative impact on rural communities where there is a lack of alternative public transport options. In this regard, I point not only to people living in rural communities, but to the many people who commute to work from commuter belt communities on a daily basis, often travelling a distance much greater than the average 12,000 miles per annum mentioned earlier. Many of those people will travel 25,000 to 30,000 miles per annum.

Within Europe, Ireland already has comparatively high electricity and fuel costs. While it lacks the major energy intensive industries which would result in competitiveness being severely impacted by oil and gas prices, the cost of energy and fuel is a factor in relation to the operational costs of business and associated investment decisions. In this regard, I understand the Irish Road Haulage Association has entered into dialogue with the Government through a working group established with the Department of Finance, which is welcome. However, I spoke with hauliers today and they do not believe that the Government or Department of Finance is addressing the issue as expeditiously as they need to. They believe there is a level of delay and non-engagement. I understand they are due to meet tomorrow. However, they do not believe there is an understanding at Government level of the benefits associated with the rebate which they have talked about and, in particular, of the urgent need to address the laundering of diesel which is creating an exceptionally uncompetitive environment for genuine hauliers. I urge the Minister to bring forward some measures to address this issue at the earliest possible opportunity. Fianna Fáil is happy to be of assistance to Government and to bring forward such measures, much as it is happy to bring forward this legislation tonight. I can assure the Minister of State, Deputy Perry, that if the Government does not move to meet the demands of the Irish Road Haulage Association and does not show a clear understanding of the issue in terms of its impact on the competitiveness of this State, Fianna Fáil will bring forward legislation. We are already working on that legislation. I will be happy to share with the House in due course our recommendations and solutions to this difficult problem.

On 18 April, the Minister for Finance, in response to a question, spoke about this issue in relation to the additional revenue that the State generates as a result of VAT being levied on the base price of oil.

He said:

The yield from VAT per litre of fuel, as VAT is set as a percentage of the price, increases as the price of fuels increase. However, in this regard it should be borne in mind that to the extent that spending in the economy is reallocated to petrol and other oil products, and away from other VAT liable spending, and to the extent that the overall level of economic activity is reduced by higher oil prices, there may be little or no net gain to the Exchequer.

I dispute that conclusion, as do my colleagues in the Fianna Fáil Party. The Minister of State, Deputy Perry, indicated in the House recently that in excess of €1 million accrues to the State each week as a result of the increased rate of VAT that is applied to the base oil price. He suggested that between €64 million and €70 million accrues to the State each year as a result. I am delighted that has been recognised by someone in the Minister of State's position.

See this speech in context