Darren O'Rourke (Meath East, Sinn Fein) | Oireachtas source

In the time available to me, I want to contest the argument made by various Government representatives in support of the claim by the Minister for Public Expenditure and Reform yesterday that: "Households in the bottom four income deciles will see all of the cost of the carbon tax increase offset, with the bottom three deciles being better off..." I heard George Lee make the same statement yesterday on "Six One News". It is my understanding that this claim is made on the back of an Economic and Social Research Institute report, Carbon Taxes, Poverty and Compensation Options, which was published in October 2020. That research deserves further scrutiny given the influence it is now having. Like any research, it has its limitations, and those limitations need to be discussed. I want to make five points in that regard.

First, the authors say they do not account for changes in prices beyond those directly arising from the higher carbon tax. They do not account for the higher prices firms charge for their products because of changes to input prices. This is significant because we know the wholesale price of natural gas has increased by 250% since January. Brent crude oil is at more than $80 a barrel for the first time since 2014. On my reading of the paper, that is not factored into the model.

Second, the report notes that energy poverty is beset with measurement issues. It also notes that there was a commitment in the 2016 strategy to combat energy poverty to establish an energy poverty advisory group to review and report to the Minister on an appropriate methodology for measuring and tracking energy poverty levels in Ireland. This would be an important thing to do if there was a real wish to understand and address energy poverty in the midst of runaway energy costs and ensure a just transition. However, this group has yet to be convened or to meet. The ESRI researchers were constrained in this regard by Government action. When they assessed the impact of the range of redistributive measures on energy poverty, they found that at disposable incomes of greater than 10%, 15% and 20% after housing costs, none had a mitigating effect. That is there in black and white on page 11 of the report.

Third, in making the case that energy or fuel poverty is primarily one of inadequate resources, the researchers abandoned the energy poverty measurement and moved to the official at-risk-of-poverty rate. That is a questionable move in and of itself. We should also note that the eight mitigating measures they assessed do not map directly to the measures taken by Government. Option B, for example, refers to a €6.50, rather than a €5, rise in the fuel allowance. I raise this as another limitation in terms of the conclusions that are being drawn by Government spokespersons.

Fourth, in regard to the impact on specific groups, the report concludes:

In terms of geographic impact, an increase in the carbon tax would disproportionately affect those living in rural areas, with or without any compensation measures. However, as [shown elsewhere], this is driven by the particularly large effects on those living in rural areas who commute long distances to work by car. Given the ongoing pandemic and public health advice to work from home where possible, such differential impacts may be moderated by a reduction in long-distance commuting by car.

That argument hardly holds true now and the differential impacts will not be moderated.

My final point relates to renters, in respect of whom the report authors conclude:

Renters - both in the private and social sector - would be left on average better-off by those measures which raised the personal rate of working-age benefit payments or Increases for Qualified Children... This is because those renting are disproportionately likely to be in receipt of a social welfare payment.

The problem with aggregate data is that they lead to the drawing of aggregate conclusions when we know the picture is far from uniform within and between groups. That has been clearly shown by a number of people who have taken the time to map energy poverty in Ireland and look at the risk index. The picture is not uniform and hundreds of thousands of renters are not in receipt of social welfare payments. They got no relief in the budget yesterday and are being penalised with carbon taxes. It is really important that we dig down into the detail of the data on which the claims that are being made by Government representatives are based. I call on the Government to publish the data from which it derives the claim that there has been relief for the real impact of the carbon taxes. On my reading of the document on which it is relying in this regard, the evidence is not there.

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