Gerald Nash (Louth, Labour) | Oireachtas source

I move:

That Dáil Éireann:

notes that: — the annual rate of inflation in Ireland has risen for fourteen months in a row reaching 5.5 per cent in December, the highest in over twenty years;

— the rise in inflation is being driven by increased costs for electricity, home-heating oil and gas, higher rents, housing costs and mortgage payments, and rising prices for food and fuel;

— the National Minimum Wage only increased by 30 cent per hour, or 3 per cent, in January, which is well below the current rate of inflation;

— the €5 increase in weekly social welfare rates in Budget 2022 is not enough to keep pace with rising prices resulting in a real cut in living standards for those on fixed incomes;

— the Department of Finance reported a record tax take for 2021, with Value Added Tax (VAT) alone raising €3 billion more than in 2020, and €1 billion ahead of projections;

— the Irish Congress of Trade Unions issued guidance in December to private sector unions that they should seek pay increases in the range of 2.5 to 4.5 per cent in 2022; and

— Ireland is the most expensive country in the European Union (EU) for housing costs, with record rents, the highest mortgage interest rates in the EU, and a chronic lack of supply that caused house prices to increase by 14 per cent in the year to November 2021; recognises that: — the soaring costs of food, heating, fuel and housing is causing real hardship and putting more people at risk of poverty;

— VAT is a tax on consumption which disproportionately impacts on the less well-off, and rising prices, in particular on energy and fuel, is resulting in a VAT windfall to the State;

— rising prices will cost some households an additional €1,300 this year on their gas and electricity bills after prices rose by over 27 per cent in 2021, while petrol and diesel fuels rose by 33.7 per cent;

— increased economic growth, global supply concerns, and the situation in Ukraine will influence future fuel price rises;

— the proposed €100 off energy bills is tokenistic, not enough for those who need it, and poorly targeted;

— measures to control rents have failed, with annual average increases nationally of 5.3 per cent over the last decade, and the most recent Residential Tenancies Board report showed an 8.3 per cent increase on an annual basis in the third-quarter of 2021, while rents in Dublin are now more than 40 per cent above pre-crisis levels;

— the average Irish mortgage interest rate of 2.79 per cent is more than twice the EU average of 1.31 per cent, costing households over €2,000 a year, with no action to date from Government to bring this down;

— Ireland has the second highest Organisation for Economic Co-operation and Development household spend on childcare costs, with couples spending an average of 24 per cent of income and single parents spending 29 per cent of their wages on childcare costs;

— despite the constitutional commitment to free education, parents and guardians pay significant out-of-pocket costs to send their children to school; and

— since the publication of the Sláintecare Report in 2017, progress on the abolition of patient charges and the rollout of the free general practitioner care is taking too long; acknowledges that: — the failure to act on the cost-of-living crisis in a whole-of-Government way will further reduce the living standards of millions of Irish people and condemn more people to poverty and homelessness; and

— the key factors impacting the rising cost of living are within the regulatory and fiscal control of Government; and calls on the Government to: — urgently take a whole-of-Government approach to tackling the soaring cost of living;

— introduce an immediate rent freeze and a roadmap to reduce Irish mortgage interest rates to the EU average;

— provide an emergency energy costs relief package for households, which should include a temporary time-limited reduction in the VAT rate on energy and fuel up until the next Budget, and for the Minister for Finance to seek an EU derogation to allow for the long-term retention of the historic 13.5 per cent rate on electricity and gas after such a temporary VAT cut expires;

— introduce additional targeted supports for those in energy poverty by widening access to the fuel allowance, and commit to the introduction of a refundable carbon tax credit for low-income households to support the long-term phasing out of fossil fuels;

— support pay increases for workers across the economy in line with the rising cost of living;

— legislate to enhance collective and sectoral bargaining laws and frameworks to ensure that working people obtain a fairer share of the wealth they create;

— transform the National Minimum Wage to a living wage;

— provide for increases in social welfare payments linked to the rate of inflation, with a long-term commitment to bring weekly rates up to the minimum essential standard of living;

— introduce a windfall levy on excessive profits made in the energy, transport, housing and food sectors due to rising prices;

— take comprehensive action to make education free, introduce a universal public childcare model, bring forward the cap on childcare fees, and accelerate the implementation of Sláintecare; and

— meet any additional costs of living with Covid-19 through 2022, including the proactive provision of antigen tests and FFP2 and medical grade face masks.

Inflation is at a 20-year high. The headline rate is now running at 5.5%. Such a rate has not been seen since Charlie McCreevy was in his pomp. According to the price comparison website numbeo.com, Ireland is the 16th most expensive country in which to live, and this is even before housing costs are factored in. None of us in this House will need a website to tell us that working people throughout this country are finding it harder and harder over the week to make ends meet. Our own lived experience and that of the people we represent tells us that ever-rising heating, electricity, transport and food costs are keeping far too many people from their sleep. “Crisis” is an all oft-used and much-abused term, especially in this Chamber, but a cost of living crisis is exactly what we are living through, though you would not think so from the Government's lamentable response to date. This Government just does not get it. The sheer timidity and lack of imagination in response to the effective slashing of the living standards of hundreds of thousands of families and individuals has left an awful lot to be desired.

We should reflect for a moment on what the soaring cost of living means in real terms for the people in early 2022. We should look behind the cold data and statistics. The price of the basic staples, namely, bread, milk and butter is up by 10 to 30 cent since Christmas. Pasta, which is the basic foodstuff a struggling parent will always rely on to feed the kids, is up 6.4% in a year. Rents were up 8.3% on an annual basis in the last quarter of 2021, according to the Residential Tenancies Board. Motorists are having to spend on average an additional €500 per year to keep their car on the road. On energy costs, the Central Statistics Office, CSO, says consumers were paying 53% more in December 2021 than they were at the same point in the year before. Conor Pope, writing in Monday’s The Irish Times, was right that when you add up the real impact rising prices are having on everyday essentials, namely, the things we have no choice about buying, a worker on a modest wage would have to earn an extra €4,000 per year before tax to maintain the same standard of living he or she enjoyed in 2020. I tell the Minister of State that people are in very real trouble and in very real difficulty. Without a package of meaningful actions, living standards will fall severely this year; make no mistake about it.

John Hume famously said: “You can’t eat a flag”. You cannot eat good GDP numbers either. It would of course be churlish not to recognise how well our economy is doing as we put - we hope - the darker days of this phase of the pandemic behind us. However, before we start congratulating ourselves on the performance of the economy, we should ask ourselves a few very basic questions. What purpose has a burgeoning economy if the fruits of our productivity and of our labour are not deployed to help people when they need it most? I refer to real help to stop people from falling into fuel poverty, real help to ensure people can make the rent at the end of the month and real action for those who exist on the breadline to further put sufficient food on the table. People read that we took in more in income tax last year than ever before. A party like mine, that is dedicated to the principle of work and to the principle of the dignity of work, is of course made very proud of our country by that. People also read that big corporations that provide good jobs for skilled workers paid a record amount in corporation tax last year. That is very good too and that is objectively the case.

People have also read we are raking in VAT. As the Minister of State is at the Department of Finance, he knows well that this State took in €1 billion more than it bargained for in VAT last year. This is a phenomenal sum and much of that would have come from a windfall from the VAT levied on energy and fuel. This itself raises big questions for Government. VAT represents the second largest source of tax revenue for the State. VAT, as the Minister of State knows only too well, is a tax on consumption. We all pay it; we do not have a choice. There is no option but to pay VAT when we buy goods and services. The point is the impact of VAT hurts some more than it hurts others and it is the least well-off who bear the brunt of the VAT burden when prices go up. They need help from the Minister of State and the Government to keep the wolf from the door.

To help working people throughout the country through the crisis and to help them make their hard-earned euro stretch a little further, the Government absolutely must look again at the need to reduce the VAT wedge on energy and fuel bills. We do it in the knowledge there is a layer of complexity involved, but this is eminently doable and a further EU derogation is achievable if the political will exists to do it. It is a question of political will. If the Government can achieve this, as we are calling for, we can ensure too the rates do not then go back up to the standard rate of 23%. I am appealing to the Minister of State not to rule that out. Our understanding is other EU member states that are led by some of our colleagues in the social democratic movement are currently interrogating this approach.

This ought to be a temporary six-month measure. It would be time limited and temporary to take us through this emergency period and would be reviewed in October’s budget. I will give a little bit of context. A six-month drop in VAT on fuel and energy would cost around €200 million. This is the same amount the Government will shell out on the electricity bill wheeze but with a bigger and more effective impact for those who need help the most, because as I said earlier, VAT hits the poorest the hardest. The truth is the now €113.50 electricity bill rebate is a bit of a gimmick. That is all it is. It was dreamed up on the back of an envelope and we are still waiting to see the legislation to allow it to be introduced. Too many will get it who evidently do not need it and too few who really need support will end up getting far too little. Instead, the Government should focus its attention on how to return some of that €1 billion unexpected VAT windfall to the pockets of those who need it the most.

We saw in today’s Irish Independentthat the big energy firm Energia paid out €30 million in dividends for the previous financial year. That will not sit well with consumers reading that this morning when energy prices are going up and up. That in itself makes an argument to impose a windfall levy on energy companies that are experiencing supernormal profits at the expense of working people throughout the country.

It is also important to note energy and electricity price rises are not only impacting on residential consumers. The phenomenon is impacting on jobs and businesses too. I know for a fact it is costing jobs and I will tell the Minister of State why. Workers at the Premier Periclase plant in Drogheda are in the teeth of this storm and this is a case in point. I am using this example to illustrate a wider point. They are on temporary lay-off because the firm, which is a very large consumer of energy and fuel, has been tipped into examinership as it struggles with enormous bills from Bord Gáis and without any sign whatsoever of Government support or any understanding as to the experience it is going through. This is something we are likely to see much more of this year, absent a comprehensive set of actions from the Government. A whole-of-government approach and response to this very real world crisis is needed.

However, there is little or no sign of action coming from the Government. There is no urgency and there are no ideas.

The Minister of State might dismiss the problem of inflation as transitory, but we do not. The Governor of the Central Bank, Gabriel Makhlouf admits that the impact of the rising cost of living is uneven. Of course it is. In other words, rising prices hit the poorest the hardest. That is what he meant to say. I will break it down for the Minister of State. Even when this current spike dissipates, it is likely that Ireland will still have higher rates of inflation than the EU average. This requires determined and longer term Government attention.

This issue is the real-life, on-the-ground, urgent financial, economic and political issue of this year and it ought to be treated with the seriousness it deserves. We have put forward time and again constructive proposals to protect living standards, but our calls have so far fallen on deaf ears. If the Government had listened to our warnings in the run-up to budget 2022 last October, there may have been no need whatsoever for this motion today. It was clear then that a 2% increase in social welfare rates would not cut it, and it has not. What we now have is a real, effective cut to the living standards of those who depend on the State for their income. We accept there are international circumstances feeding into the situation, but the most acute price rises in recent months, which are fuel, energy, transport, housing and food, are all subject to one form or another of Government policy or regulatory control. People are looking for action from the Government. They demand action and intervention. We request that the House supports this motion.

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