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

I thank Deputy Doherty and his colleagues for putting down this motion and for affording me an opportunity to further respond on behalf of the Government. I know the Minister of State, Deputy Chambers, spoke earlier. I will set out our position on this issue. I believe that budget day is the appropriate time for the Government to set out its overall response to the cost-of-living pressures we know are very real for many households all over the country. The reason we are debating the issue is because the Government reduced excise in March last year. Two of the three phases of restoration are now complete. The legislation being spoken about this evening was broadly supported across the House. A stand-up vote was called by our colleagues in the Rural Independent Group. The legislation providing for the restoration met with broad support across the Oireachtas. That point must be made.

The date for the final restoration, 31 October, was chosen deliberately because of the window we have in the budget to take stock. That will be an opportunity for us to take stock of where we stand in relation to inflation, energy prices and grocery prices, wage growth across the economy and the state of the labour market. We can take account of all those issues and decide on the appropriate collective response of the Government on budget day. That is what we will do. Of course, we as a Government are monitoring prices at the pumps. We know that prices have increased significantly in recent weeks because of market forces, primarily decisions made by Russia and Saudi Arabia around the supply of oil to the international markets. Brent crude oil has now increased to $93 or $94 per barrel. Of course, refining costs are also a relevant consideration when it comes to the final price that is charged at the pumps. The relative strength of the dollar is also a key factor in that regard.

In the next couple of weeks, I and my officials will be considering the range of issues we must decide in the context of the budget. We have a whole plethora of issues across the taxation code, including income tax, VAT, excise, capital taxes and across the suite of taxation. We will have decisions to make within the parameters of the budget we set out in the summer economic statement. That will be the opportunity for us as a Government. It will also be the opportunity for the Opposition to set out its response to the whole set of issues. As Deputies will be aware, the reduced rate of VAT on household bills, gas and electricity, is also due to end at the end of October. That is another matter that must be considered in the context of the budget. When one is in government, one does not have the luxury of picking off one issue at a point in time.

One has to deal with the totality of the issues one faces, and we will be doing that on budget day. It is my view that, in the round, looking at the decisions we have made to help people with the cost of living, we have been as fair as we could possibly be and we have brought in measures totalling approximately €12 billion since the beginning of last year. This is a combination of targeted measures and universal measures that I believe have made a real difference and have been broadly welcomed. They have undoubtedly helped to mitigate the impacts of inflation, particularly for the lower income cohorts. These are people across society who are on fixed incomes or are on relatively modest levels of employment income. The independent analysis of the response of this Government has been that it has been progressive and that we have provided the most support to those who need it the most. That is a policy which we will be continuing in this forthcoming budget and indeed in next year's budget.

We responded in March of last year to the circumstances we faced at the time by reducing excise and we set out then a phased restoration. In total the reduction was 21 cent on petrol, 16 cent on diesel and 5.4 cent on agricultural diesel. Two of the restorations have taken place and the last one falls due at the end of October. I and my colleagues will be giving the matter very close consideration over the next couple of weeks.

We are seeing considerable volatility on the international markets, which is a point that has to be acknowledged. We have pointed that out in the countermotion we have put forward. Crude oil is an internationally traded commodity. Its price is determined by changing global demand and supply factors and has had a divergence of $100 over the period July 2022 to May 2023.

It is about striking the right balance. That is the key challenge we face in providing an appropriate level of support to households and to businesses in two weeks' time while at the same time ensuring we manage the public finances sustainably into the future.

We have made decisions which have got us to a point where our economy is pretty much at full capacity. We have a record number of people at work. We have many households which can absorb the level of inflation and many others that are under pressure. That is why, insofar as possible, we have to use the levers available to us to target the resources to those who need it the most. I, along with the Minister, Deputy Donohoe, look forward to setting out what we can do. We never claimed as a Government that we could fully offset the impact of inflation. We have experienced inflation in the past 12 to 18 months that we have not experienced as a country since the early 1980s. It has been a remarkable confluence of events and circumstances which resulted in a level of challenge which for many is beyond compare. That is why the range of interventions we have brought about have been unprecedented across taxation and expenditure.

We are now in an environment which is changing. While there is much uncertainty and volatility internationally, we are seeing a weakening of the external environment, particularly among many of our main trading partners who have experienced little or no growth at all this year nor will they next year. That has a direct impact on Ireland, which is a small open trading economy. We have seen our exports fall so far this year, primarily driven by reductions in pharmaceutical exports because last year was an exceptional year, coming from a lower base in 2021. The year 2022 is the base, of course, against which the current year of exports are measured. Also, we have seen a very challenging environment for semiconductors.

I am satisfied as to the overall resilience of the Irish economy. This is borne out by all of the data I see and from my own experience of engaging with businesses from across a whole range of sectors. We are in a position where we can respond. The public finances are in good health. That is not an accident and is because of the decisions we have made over a number of years. That gives us the capacity to respond and to support people who need our assistance the most.

We pay a great deal of lip service to climate change in this House and to the need for decarbonisation to support businesses and households in their journey to reduce carbon emissions. When it comes to the difficult decisions, however, about how we fund that transition, how we raise money to tackle fuel poverty and support households in retrofitting, and how we find the money to support the farming community in its journey to reduce carbon emissions, we can then be found wanting, but not on this side of the House. I look forward to hearing what Deputy McGrath has to say in that regard and at least the Deputy is honest when he says he is against the carbon tax.

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