Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Deputies for their contributions on a matter I know is very important for our country. It is a challenge affecting homes and households in every community in our country this evening. It is in recognition of this that the Government has acted. It is in understanding the challenges many are facing that we have made so many changes already. I want to list what they are because it is very important to remind the House of the scale of the measures that have been implemented.

In addition to the measures brought forward on budget day, including tax and social welfare changes worth just under €1 billion, the Government reduced the excise duty on petrol and diesel and reduced the VAT on gas and electricity. We brought in a €200 additional payment via an electricity credit. For those we know are affected by rising costs in fuel, we have brought in two additional payments of more than €200, which will help those at risk of fuel poverty. Since the Dáil passed its budget last October and the additional challenges have become more acute and intense for so many, the Government has brought forward measures worth €1.4 billion, which we implemented quickly to help those dealing with the rising costs of living as rapidly as we can.

We absolutely understand that for families and households, the rising cost of energy, food and other services is having a real impact on their purses and wallets. That is why since our latest budget, we have introduced additional measures that are equivalent to an entire budget again of new measures.

They have been put in place because we recognise the challenge that we are facing, right after having had to deal with the economic, social and health consequences of a pandemic. I experience in my own constituency and see in people I meet within my own community the very strain that many Opposition Deputies have referred to. It is in recognition of that that we have put so many additional measures in place.

I want to deal with some of the points that were raised by Opposition Deputies regarding the ESRI and IFAC and where we are with our tax revenue at the moment and the fact that for some taxes we are collecting ahead of where we thought we would be at this point in the year. To deal with the references that have been made to what the ESRI and the Irish Fiscal Advisory Council have said, it is correct that those organisations have made the case for additional interventions to help our country deal with the cost of living. They have acknowledged some flexibility that is there to do it. However, in the same report the ESRI also said that in light of the pressures in terms of the challenges outside our economy at the moment, it is evident that fiscal policy will have to be particularly prudent over the coming years. I did not hear much reference to that in the debate. The institute also made the point that given the challenges our economy and State could face in the time ahead, it may be prudent to deploy a portion of the receipts we could gain in the future from corporate tax and other forms of tax collection towards long-term investment activities or other forms of savings. IFAC said that the risks around the path for the public finances are unusually wide, and that the space for funding new initiatives on a sustainable basis is very limited. The report of the research organisation, IFAC, which was cited earlier, did acknowledge the space for interventions to help with the cost of living, but also acknowledged that the risks and challenges we are facing make the case for a careful approach with regard to our public finances in the time ahead.

The point has been made about where we are on tax receipts. To argue on the one hand that people will spend less and then, on the other, say that our public finances will remain healthy indefinitely is inconsistent. Many are arguing, with good cause, that rising costs are affecting the standard of living and people are, therefore, spending less. That is a change that, were it to happen over many weeks, months or even years in the time ahead, would of course have an effect on where our public finances are. We cannot on the one hand say we expect and acknowledge that people are spending less due to a rising cost of living and, on the other, say our public finances are in good condition, we can expect them to be in good condition for the time ahead and we should do more emergency budgets. The two things are inconsistent. That is why the Government is so aware that if we are going to intervene, we have to get the balance right between intervening to help today and not creating new problems and risks tomorrow, including potentially adding to the inflationary pressures we are facing at the moment or even creating new risks and challenges in our public finances such that we would have to undo tomorrow measures we would bring in today. Our country went down that path before. It is not so long ago that people were asking me how we were going to pay for all the additional debt we incurred during the era of Covid. It is not so long since we were having a debate in this House regarding the need to spend more due to Covid, which did result in an additional €32 billion worth of debt. That debt is there. It is a factor in decisions that we have made.

I accept the Deputy's point about the impact inflation will have on our debt dynamics. I think that is the point he would have gone on to make. It is also the reason the interest rate on new borrowing is going up. That is the other side of the coin if we are in an environment in which the interest rate for borrowing is going to go up in the future. It has gone up from just above zero on 1 January to just under 2.5% this evening. That is a change that has happened. That is also a factor that I and the Government have to take into account in the decisions we make. It is about the need for this balance.

This balance is not present in what the Opposition is putting forward this evening. If I had brought in an emergency budget this morning, I have no doubt that by tonight the Opposition would be condemning it for not being enough. If I was to come into this House tomorrow morning with the emergency budget the Opposition is looking for, by lunchtime it would be saying the Government needed to do more. It would be claiming it was not enough and saying we needed another emergency budget the following week. That may work as an Opposition tactic but it does not work with the risks and challenges our country may have to confront in the time ahead, and acknowledging that we have come through a pandemic and got our country back to a level of employment that would have looked so unlikely even a year ago and public finances that are recovering. During the pandemic we tried to make decisions that would get the balance right between acknowledging the need to intervene now but also acknowledging that there would be other issues and needs we would need to respond to tomorrow. We got that balance right during the pandemic. We are now in a changed time and in very different circumstances with new risks, opportunities and issues around our country. We have to take that into account in decisions we are making.

Yes, we know the challenge that many are facing. We know the rising anxiety and worry. It is why the Government is not talking about intervening in 2022. It is why we have already intervened so many times in 2022. When we come to our budget for 2023, it will contain additional measures for this year to help in a winter that we expect and know will be difficult for so many. We have to get the balance right between intervening to help today and doing our best to avoid further risks and challenges tomorrow. Even if they are not that big of a concern for the Opposition this evening, they are something the country will be concerned about and something the Government has a duty to manage and respond to.

See this speech in context