Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following: "notes that:

— the annual rate of consumer price inflation, as measured by the European Union's Harmonised Index of Consumer Prices, has picked up sharply in recent months, reaching a multi-decade high of 8.3 per cent in May;

— the key driver of inflation at present is the sharp rise in wholesale energy, food and other commodity prices since the onset of the war in Ukraine;

— Budget 2022 contained a large range of measures to protect households from the rising cost of living, including a personal income tax package worth €520 million next year and a social welfare package of over €550 million;

— a further suite of measures amounting to €505 million was announced on 10th February, 2022, with measures including an energy credit of €200 (inclusive of Value Added Tax (VAT)) to every household in the country, a once—off lump sum payment in respect of the Fuel Allowance, and a 20 per cent reduction in public transport fares;

— on 9th March, at an estimated cost of €320 million, the Government agreed to VAT-inclusive reductions in excise duty of 20 cent per litre in respect of petrol, 15 cent per litre in respect of diesel and 2 cent per litre in respect of Marked Gas Oil;

— in April and May, the Government announced a further set of measures amounting to almost €500 million, including a reduction in the VAT rate for electricity and gas to 9 per cent from 1st May until the end of October, an additional once-off lump sum payment in respect of the Fuel Allowance and the extension of the 9 per cent VAT rate for the hospitality sector until the end of February 2023; and

— on a cumulative basis, this brings the total cost-of-living package to approximately €2.4 billion;

recognises that:

— the Government has been pro-active in limiting the fall-out from higher rates of inflation;

— this follows the extensive support provided to households and firms during the pandemic, where the Government made available €48 billion of fiscal support, one of the most significant policy responses of any country in the world;

— Ireland's public debt is almost a quarter of a trillion euros as a result, and among the highest in the developed world on a per capita basis; and

— Ireland is a small open economy, where wage growth in excess of other economies erodes our competitiveness and puts future jobs and economic growth at risk; and

acknowledges that:

— the recent rise in inflation is primarily the result of global factors and consequently largely beyond the reach of Government policy;

— the recent increase in inflation is having a significant impact on the cost of living for Irish citizens;

— while the Government has already introduced a wide range of measures to mitigate the impacts of increases in the cost of living on citizens, it must pursue broadly neutral budgetary policy in order to contain domestic inflationary pressures;

— Government policy should focus on temporary and targeted measures, aimed at the most vulnerable;

— it is crucial that we do not have an inflation 'chain reaction' that would damage our international cost competitiveness;

— borrowing costs, including sovereign borrowing costs, are now on a rising trajectory, and accordingly, trade-offs are once again apparent and choices about tax and spending will have to be made, as revenue and expenditure will need to be aligned in order to avoid adding to the stock of debt; and

— the budgetary process is the best and most appropriate way to consider further action on the cost-of-living challenge and this issue must be addressed in a strategic, comprehensive and responsible manner."

I welcome the opportunity to respond to the motion on an emergency budget, which the Government opposes. As is well known, the budgetary process for budget 2023 is well under way. The national economic dialogue took place last week and the summer economic statement will be published in the coming weeks. The normal budgetary process is the best and most responsible framework for further policy discussions on this matter.

It is important to remember the current economic context. After two years, we have finally put the worst impacts of the pandemic behind us. The fiscal support provided by this Government was unprecedented in scale and scope. This support was essential in laying the groundwork for a strong economic recovery when restrictions could be lifted. We have seen such a recovery taking hold. There are now more people at work in Ireland than ever before. That is a remarkable statistic when considering the turmoil in the labour market during the pandemic. As I speak, there are 2.5 million people in the workforce. That is a record number and a very high proportion. Despite that, many businesses are still having difficulty recruiting staff as a result of the extra spending in which people are engaging at this time.

Enabling this recovery has come at a significant cost, however. Before the onset of the pandemic, we were in a position of financial strength. The economy was operating at nearly full employment, the ratio of public debt to national income was moving in the right direction on a downward path, and there had been two successive years of budgetary surpluses for the first time since the financial crisis. The Government acted swiftly and decisively, deploying all the financial firepower necessary to protect households and the wider economy. Our fiscal resources were emptied as a result. Since the start of 2020, we have run deficits of almost €30 billion overall. This year, in spite of the recovery, we still expect a record deficit. It is important for people to recognise that it was as a result of the sound management of the economy in recent years that the economy was in a position to provide that €30 billion that was much needed during Covid. If finances had been run-down and our financial situation weaker, we would not have been in a position to do that. The level of expenditure and support that we gave to working families, other families and business compare very well with the levels in any other country in the developed world.

This is a dangerous position for a small open economy to be in. We know that, as we have seen clearly through the past two-and-a-half years, Ireland is particularly vulnerable to volatility in the global economy. We must return the public finances to a sustainable trajectory. I do not think any Member objects to that.

The Government knows that people are struggling. That is why we have acted numerous times throughout the year. Taking into account the budget measures, most of which came in earlier this year, and the income tax and social welfare packages, we have provided almost €2.4 billion in support to assist those dealing with the cost-of-living challenge. This support has been particularly targeted at helping the most vulnerable and those least able to absorb increased costs, including multiple lump sum payments in respect of the fuel allowance. That has been done at various times. Some people claim those measures are not targeted. Members of the Opposition have quoted certain figures. The measures consistently proposed in this Chamber day in, day out by the main Opposition parties to reduce tax and levies on petrol and diesel are precisely the measures that the organisations in question have said are not targeted. People driving big cars to work would be the principal beneficiaries of such measures. The Government has taken a different approach. I refer to the ESRI report that was published a week ago and dealt with the exact same measure. It took a more understanding approach on this issue and acknowledged that the social welfare fuel allowance increases and items like that were the most targeted and effective. It went on to state that the €200 off people's electricity bills meant more to people on lower incomes than it did to people on higher incomes.

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