Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank Deputy McDonald for raising the issue of inflation and the cost of living pressures we as a Government acknowledge people are facing at this time. It was highlighted further by the ESRI report the Deputy mentioned in her introductory remarks.

People will accept this is a global phenomenon. All developed economies in the world are experiencing a high level of inflation. For our neighbours in the UK, the latest figure is 6.2%. In the US it is just under 8%. These are unprecedented times. The level of inflation we are witnessing and that people are having to deal with in their day-to-day lives is without parallel in recent modern history. That is why the Government is not standing idly by. The Government is not an observer or commentator. The Deputy is correct on that. It has already taken very significant steps in an effort to alleviate the burden people are undoubtedly facing at this time. That started with the budget back in October where we had a package of over €1 billion in income tax reductions including for people on low and middle incomes and also welfare increases both in core social welfare weekly rates but also targeted, anti-poverty measures such as the living alone allowance, the qualified child dependant allowance, changes to the working family payment and so on. However, it is because of what has happened since that we recognise we had to go further and the Government has responded outside of the normal budgetary calendar with two further significant interventions in recent weeks.

As the Deputy knows, back in February we had the package of over €500 million. This included the energy credit of €200 for every household which will be applied to electricity accounts in the next number of weeks. There was also the fuel allowance lump sum of €125 for up to 400,000 households, along with a range of other measures, including the reduction in the drugs payment scheme threshold to €80, the front-loading of the budgetary changes in the working family payment, a 20% reduction in transport fees and improvements in the school transport scheme as well to try to help families deal with the current pressures. The Minister, Deputy Donohoe, in the last two weeks brought forward the reduction in excise on petrol and diesel in recognition of the extraordinary increases in prices people are experiencing at the forecourts in recent weeks. The Government has made a genuine and concerted effort to tackle this issue. That overall cost-of-living package is close to €2 billion at this time.

In the next number of weeks, led by the Minister, Deputy Donohoe, the stability programme update will be published by Government. This will reset our economic and fiscal forecasts to take account of the prevailing conditions we are experiencing. We are witnessing a perfect storm in relation to inflation. Inflation was increasing coming out of the worst effects of Covid internationally and that has now been compounded by the impact of the Russian invasion of Ukraine. I assure the Deputy the Government is as one. The Minister, Deputy Donohoe, myself and the entire Government collectively are at one in our determination to assist and support people at this time. That is why we have already taken a number of critical decisions. At this point we have no immediate further plans to introduce additional measures but as is always the case the Government will keep this issue under review.

I acknowledge what Deputy McDonald said on VAT. I am sure she will accept we are governed by an EU VAT directive. The member states' national laws on VAT have to be consistent with that directive. The Taoiseach and the Minister, Deputy Donohoe, are directly engaging with Commission President von der Leyen and her colleagues to see what flexibility there may be on options available to member states. We expect to hear back from the Commission in that regard shortly.

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