Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

Táim buíoch as an deis seo labhairt ar an Bhille Airgeadais, 2022.

There is no doubt but that our economy and society are faced with another crisis. Following on from the financial crisis, Brexit and a global pandemic, we have been thrust into an energy crisis that threatens living standards and will test the resilience of our economy and society. This is all set against a backdrop of failures in housing and healthcare that continue to test the patience of households, their security and hopes for the future.

Households have seen the largest income shock fuelled by inflation in a generation, resulting in the biggest fall in living standards since the financial crash. While a squeeze on living standards driven by high housing and other costs predated the war in Ukraine, Russia's illegal invasion turbocharged inflation.

The Department of Finance has outlined its expectation that inflation will reach 8.5% this year and 7.1% next year. In real terms, that means that somebody earning a €35,000 salary will see his or her purchasing power drop by more than €5,000 next year compared to last year. That is a significant drop in living standards.

Inflation has been driven by rising energy prices with households having faced a wave of price hikes in the past year and the most recent round of price hikes effective from this month. Sinn Féin argued for a time limited price reduction and cap on household electricity bills for the winter months until February to provide certainty and relief to households. Unfortunately, the Government rejected this proposal, a measure that has been introduced in several other European countries in recent months.

The centrepiece of this Finance Bill to address the cost-of-living crisis is an increase in the entry point to the higher rate of income tax, bringing it to €40,000. A key issue at the heart of any budget decision is whether it is fair and whether it is the best use of taxpayers' money. Sinn Féin called for an income tax package that would cut the lower rates of USC, ensuring the benefit was spread fairly and evenly across households so that high income earners did not benefit more than those on middle and low incomes, as they will do under the Government's proposal. That is the path that was pursued by the Government.

Section 9 of this Bill provides for an increase in the entry point to the higher rate of tax, which will cost more than €800 million but leave more than 2.2 million income earners out in the cold. Some 77% of income earners will not benefit from this measure. Someone with an income of €35,000 will benefit by €191 from changes to income tax and USC while someone with an income of €100,000 will benefit by €831. This, by any measure, is an unfair use of public resources because there was, and is, a fairer way which Sinn Féin has outlined.

I welcome a number of provisions in this Bill. The recent changes made to annex 3 of the VAT directive expanded the list of goods and services which could be reduced to zero rates of VAT from now on. I welcome a number of the provisions in Part 3 of this Bill that will zero rate a number of goods from next year, including automated external defibrillators, certain non-oral medicines and menstrual products. Section 44 extends the reduced 9% rate of VAT applied to electricity and gas from the end of October this year to the end of February next year. This is a measure that Sinn Féin has called for since last year and I welcome the extension.

As households are all too aware, the cost of running a car, travelling to work, visiting sick relatives or filling the tank with home heating oil has risen sharply in recent times. The price of diesel has again shot up to over €2 per litre, while the price of petrol is now over 40% higher than it was last year. Section 37 of this Bill provides for further reduced rates of excise applied to petrol and diesel until the end of February but the Government opposed Sinn Féin's amendments that would have reduced the price of petrol at the pump by a further 15 cent per litre and the price of diesel by 12 cent per litre, bringing it back below the €2 per litre mark. The Government voted against that amendment, denying households much-needed relief in their transport costs and we will again, through this Finance Bill, encourage the Government to do the right thing and reduce the cost of petrol and diesel by the maximum amount allowable under the EU rules, with the suspension of the fuel rebate alongside it.

It is unfortunate that the Government has once again ignored the concern of the one third of households that use home heating oil and have seen its cost increase by 84% in the past year. Instead of using this opportunity to provide these households with relief by reducing the rate of excise which applies to home heating oil, the Government will instead increase the rate again from May, according to this Bill. This is part of the Government's continued drive to increase the cost for households in heating their homes and running their cars through further hikes in carbon taxes, which are regressive and hit those on lower incomes hardest, lone parents and those in rural households. In an era of high inflation, now is the wrong time to increase costs to households and the focus must turn to delivering on the alternatives and supply-side investment that households need.

Turning attention to housing, it is clear that the Government's housing plan is failing dramatically. Housing commencements are again beginning to fall. House prices have smashed the Celtic tiger peak. They rose by more than 12% in the past year, while supply of rental accommodation has collapsed, with rents spiralling and increasing by 12% in the past year.

The average rent right across the State now is nearly €1,500 and in Dublin it is €2,000.

The human reality behind these numbers is one of insecurity, homelessness, desperation and of emigration. Renters hand more of their hard-earned pay packet over to their landlords each year under this Government. College students are sleeping in cars, on sofas, commuting long journeys or deferring their courses because they cannot find accommodation under this Government.

The number of people in homelessness has reached record levels under this Government, while homebuyers continue to be locked out of home ownership.

It is now performing screeching U-turns to contain the fallout of their abject failure by adopting measures that Sinn Féin has been calling for for years and one of them is contained within this Bill. The Government’s U-turn on an eviction ban is a case in point but this measure is needed, and needed now, and should have been introduced quite some time ago.

Having opposed Sinn Féin’s proposal for a tax credit for struggling renters for years on the grounds that it would be a transfer of public money into the pockets of landlords, which are the words of the Minister for Finance, and where the Taoiseach said it would increase rent prices; section 2 of this Bill crafted by the Minister for Finance indeed contains a rent tax credit. I am glad that the Minister is seeing sense but, unfortunately, he is making a balls of it because instead of just doing a U-turn, he is doing what he warned about in the first place, which is putting money into the landlords’ pockets. We needed not just a renters’ tax credit but a ban on rent increases. That was the crucial point in a two-part proposal by Sinn Féin, that is, a renters’ tax credit which would have put a month’s rent back into renters’ pockets - as opposed to the €500 proposed - but ensuring also that landlords would not just jack up prices by having a ban on rent increases.

Perhaps in the future, just like the Government is seeing the light in the ban on evictions and a renters’ tax credit, in a couple of months’ time the Minister might come around to the sensible idea that he also has to have a ban on further rent increases.

The housing crisis is first and foremost driven by the failures to deliver social and affordable housing at scale. Instead, the Government has implemented measures which increase demand, when the demand is already white hot and supply stone cold. As a result of affordability issues in the mortgage and housing market as a result of Government failure, the Central Bank has responded by loosening lending rules, which it admits will pump up further credit into the market, will increase house prices and will risk undermining the resilience of borrowers. It is doing that because of the affordability issues resulting from Government failure.

Section 5 of this Bill provides for an extension of the help-to-buy scheme in its current form for another two years. There are no amendments at all to the scheme, despite warnings from a Department-commissioned report that over half of the successful applicants already had the 10% deposit, and with the level of dead weight associated with this relief averaging 48% since its introduction.

Sinn Féin has called for years for the introduction of a vacant property tax to end the scourge of vacancy and dereliction in the face of an acute housing shortage. Section 48 provides for the long-overdue introduction of a vacant homes tax and while I welcome this U-turn from the Government, it took long enough for it to get here, I have concerns regarding its design and what it omits. By restricting it to properties with a local property tax liability, the Government excludes derelict properties entirely.

The Minister may refer to the derelict site levy but this levy is not working and everybody knows that. In many instances, it is not even being collected and is an issue to which my colleague, Deputy Gould, has brought repeated attention in this Chamber and outside of it. If the vacant homes tax is to bring properties back into use, derelict properties must be addressed. The tax proposed remains unchanged in its rate of charge, regardless of how long the property remains vacant, be it one year, two years or indeed ten years, and I believe there is scope to increase the rate, as the length of time that the property remains vacant increases.

Section 86 of the Bill reaffirms the Government’s plan to press ahead with a flawed and counter-productive defective concrete products levy. In the context of hard costs making up 48% overall of the cost of housing delivery, where the cost of concrete has increased by almost 40% in the past year and with the need to drive down construction costs to accelerate delivery; this levy as designed will directly increase building costs and house prices, which is something, in fairness, the Minister does not deny. This will push up prices for homebuyers, rather than putting the cost on to the profits of the industry itself and on the banks, which will also benefit from the redress scheme. It is time to drop this levy and to go back to the drawing board.

Our domestic exporters and SMEs who provide employment and opportunity across the State face energy costs that threaten their very viability. In advance of the budget, Sinn Féin proposed a suite of measures which would provide them with support, including a scheme which would cover a portion of the increase in their energy bills, with appropriate limits and safeguards in place. Sections 88 to 90, inclusive, provide a temporary business energy support scheme and I welcome the Government's introduction of this scheme to support businesses with rising energy costs. For many, however, this support will not be enough to offset the very significant increases they are seeing.

Having gone through the experience of State supports during the pandemic, there must be a better way to provide enhanced, targeted and tailored support to those who need it most. This scheme as drafted takes no account of profitability or revenue. For instance, the same criteria and limits are applied to the local restaurant or butcher as apply to a highly profitable business with large cash reserves. We need to revisit these sections on Committee Stage to safeguard the viability of our small firms.

I also urge the Minister to learn the lessons from the pandemic to ensure that safeguards are in place in order that highly profitable companies, for example, do not avail of taxpayers’ money by distributing dividends to shareholders.

As my time is up, I will give way now to my colleagues.

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