Thursday, 24 March 2022
Ceisteanna ó Cheannairí - Leaders' Questions
In a report published yesterday, KBC Bank says it expects the average household to be €2,000 worse off this year as result of the cost of living crisis. This will hit lower- and middle-income earners hardest. Yesterday, representatives of the Central Bank told me in a committee meeting that they expect household bills already are €1,300 more than they were this time last year and that there will be an additional cost for food of about €600 for the average household this year.
Workers and families cannot bear these costs without significant financial hardship. We know many families already are facing difficulties. According to the CEO of ALONE, an organisation that advocates for older people, the latter are choosing whether to use their money to keep the heating on or to buy food. That is the situation in which they find themselves. Young people, too, are confronted with similar choices. These are choices nobody should have to make. The war in Ukraine has turbocharged inflation and rising prices but we have been in the grips of high inflation since the second half of last year, with energy prices spiking while households already were facing unaffordable rents and housing costs. In its quarterly bulletin, published yesterday, the Economic and Social Research Institute, ESRI, said it expects inflation to average 6.7% this year. The Cental Bank expects it to peak at 9% by the summer.
Rising prices do not affect everybody equally. They hit lower-income households the hardest. Workers and families need support, and they need it now, to weather the cost of living crisis. Without it, they face massive difficulties and many will be forced into poverty. We recognise that households cannot be fully insulated from the full effect of rising prices but the Government can, should and must do more to support them. Last week, the Minister for Finance, Deputy Donohoe, ruled out any measures to provide additional supports to households until October. That is not credible and it is simply wrong. It is not the step he should be taking as Minister for Finance. These individuals need additional support. The Government and the Minister have a responsibility to act.
As a result of rising prices this year, those in receipt of social welfare payments are now significantly worse off than they were last year. The Minister should not stand over this. It involves some of the most vulnerable in our society seeing the sharpest cuts in their living standards and in their ability to provide basic necessities for themselves and their families. That is the reality they face. For months, we in Sinn Féin have been calling on the Government to respond to this reality and to increase core social welfare rates in response to rising prices. It has ruled out doing so time and again. Just last week, the Minister ruled it out at least until the budget.
We know some households are more at risk of poverty than others. More than a third of households in the State use home heating oil as the primary fuel source to heat their homes. In Border counties such as mine, two thirds of households rely on it. Last week, the cost of filling a tank reached more than €1,600. Many households simply cannot afford this increase without cutting back on other essentials. That is what is happening in the real world. We in Sinn Féin have called on the Government to remove excise duty on home heating oil, which would take almost €100 off the cost of a tank fill, to ease the burden on those households. The Government has ruled that out and voted against it.
I am asking the Minister for Finance to act to protect those who are most vulnerable. Will he protect workers and families from the sharpest edge of these inflationary increases? I ask him to change his position and to contemplate other supports for the workers and families who are hardest hit. Will he look at a social welfare package to support those who are most vulnerable? Will he remove excise from home heating oil?
The Government absolutely is aware of the anxiety and additional costs that many people across our country are facing at the moment due to the rise in energy prices, which is mostly being caused by what is happening in the war in Ukraine. We are aware of the worry that many now are contending with as they see their bills go up due to the rising price of food, which is due, in turn, to the food consequences and the raw material consequences of what is happening in that awful war.
It is precisely in recognition of the additional costs that so many are facing that the Government already has acted. Since we brought in last year's budget, we have acted on two separate occasions. We brought in measures that are now in the process of being implemented to make a difference. We brought in the additional payment of €125 for those who are most at risk of energy poverty. We have brought in, and shortly will see implemented, the €200 rebate on electricity bills. Only a number of weeks ago, we brought in additional measures on the price of fuel at the pump, as well as other measures to try to help with the cost of living, which we know is building.
Deputy Doherty made reference to the ESRI report and the inflation forecasts that are included in it. That same report made the point that as we move into dealing with this latest crisis, we are doing so with an economy that is growing, with 2.5 million people at work and with flexibility and capacity for the Government to respond to the latest challenge to which our country, our people and our economy must rise. One of the reasons we are in a position to do so is that while we were dealing with the challenges of the past number of years, we did our best each day to do all we could as a Government and to act in a sensible way, while being conscious that this challenge is one that could be with us, and, indeed, was with us, for some time.
It is the same now. We face a crisis the duration of which is uncertain due to forces that - in fairness, Deputy Doherty acknowledged this - are outside the control of our country. The Government needs the ability and capacity to respond to all of the additional costs and needs to which we will need to respond, and we are doing so. A total of €800 million in funding for additional measures has been given since budget day, as well as the €1 billion in funding for measures announced on budget day, to help with the rising cost of living. We will help with that. The Deputy is raising this issue at the same time as his party in Northern Ireland has just voted through a rates increase for local councils. Decisions his party has made in Northern Ireland, include, for example, an increase of 3.9% in the rates bill families and ratepayers will pay in Mid Ulster. I assume the reason his colleagues in Northern Ireland are doing this is that they are facing the same pressures and challenges we are facing here and are trying to find ways in which they can raise money to respond to the challenges their constituents and communities have and to the challenges they know are approaching.
That is the decision the Deputy's party is making in Northern Ireland and it is the very kind of decision the Government is trying to avoid at this time. Instead, we are bringing forward measures that we know, for many people, will not insulate and cover them from all the costs they are now facing but which will help them. We are determined to ensure those measures are implemented swiftly.
The Minister talks about understanding the anxiety that is out there. I can tell him that for the people I represent and to whom I speak, their anxiety levels went through the roof when they saw him on their television screens saying, "Let me be clear: I am not planning any additional measure to support you, your household or your family until at least the budget." This was on the same day that Bord Gáis Energy increased the cost of gas by up to 40% and electricity by nearly 30%. Other suppliers will follow suit.
The Minister talks about what he has done. I ask him not to listen to me but to the Society of St. Vincent de Paul, which has said it is not enough. Social Justice Ireland has said it is not enough. Organisations that advocate for older people, including ALONE, have said it is not enough and that he needs to do more. People who are depending on social welfare are poorer now and are wondering how they will get the extra hundreds of euro needed to heat their homes or put food on the table for them and their families. They are looking to the Government, which has a responsibility to act in the national interest and to protect those who are most vulnerable from this spike in inflation. The Minister is refusing to act. He has the power and ability to do so now. Instead of increasing the cost of home heating oil, which he plans to do on 1 May, let him reduce it.
This is a Government that has, from the moment this crisis tested our country again, acted quickly, just as it did when contending with the crisis of two years ago. We will be so determined to do what we can at each point in offering help.
I am well aware of the anxiety and concern of many at the moment. I meet them in my clinics and through my constituency work, just as all my Government colleagues do. We are aware of the challenges and the new tests we will respond to. However, I did not hear any word from the Deputy about the measures and increases his party is implementing in Northern Ireland. I did not hear any acknowledgment from him about that — not a single word. The difference between the Deputies on this side of the House and Deputy Doherty and his colleagues is that the Government is busy trying to implement measures that we believe can make a difference.
Inflation makes everyone poorer, particularly those on fixed incomes. In Ireland, energy costs have a far greater impact on inflation than in anywhere else in the EU. I want to put three practical suggestions to the Minister. Our electricity prices are among the most expensive in Europe, with Irish families paying, on average, €180 extra for electricity annually. This is partly as a result of Irish families being forced to subsidise the cost of green electricity, grid connections and backup supplies for existing and already-planned speculative data centres with no substantial employment dividend here in Ireland. The Government decided in 2018 to stop the practice whereby those struggling to pay electricity bills were subsidising the speculative developers and instead make data centres pay their own electricity costs. Therefore, the Government must reduce the cost by stopping the data centre subsidy.
Tomorrow the European Council will discuss the possibility of block-purchasing natural gas, which has the potential to reduce our electricity costs. However, we have no way of storing the gas, even though we have two potential facilities off the Cork coast — the decommissioned Kinsale and Seven Heads gas fields. When I was Minister, I asked my Department to assess the potential of these wells for carbon capture and storage and their potential for the storage of natural gas. In December 2020, in advance of the Dáil deciding on the decommissioning of the Kinsale wells, I sought a copy of this assessment. Sadly, this vital information was not made available to the Dáil, but we were promised that the assessment would be completed by the end of last year. I have now been informed that it will be early 2023 before this assessment will be published, nearly six years after the process commenced. This is far too late for Ireland to capitalise on any natural gas price discount from the European Union.
Carbon tax is supposed to be an environmental tax to drive behavioural change but the current carbon tax model is flawed in this regard because the goal is about bringing in more taxes rather than driving change. If we are serious about moving away from our dependence on fossil fuels, we need a model of carbon taxation that is actually fluid. We must do so by taking into account the ever-changing cost of a barrel of oil. If carbon taxes increase significantly and the price of oil collapses, they will not bring about the type of step change we actually require. When the price of oil increases sharply, it has a direct impact on the cost of living for families as well as a devastating impact on our small, open economy. We are seeing this impact today. It will get even worse when carbon taxes are increased in five weeks' time because Ireland is more exposed to price volatility than most other EU countries.
I thank Deputy Naughten for raising those very important matters. I will answer each question he has put to me in turn.
The Government will of course participate in any collective procedures or arrangements that are possible within the EU to examine how we can establish more clearly the certainty of supply and manage the affordability challenge that I know so many in the House are concerned about. As Members know, the Taoiseach is travelling to the European Council meeting. One of the key issues will be how we can accelerate our progress towards energy independence, with targets set for both 2023 and 2030. It will be a matter of determining whether there are new policies that the European Commission and EU can put in place that would allow us to respond collectively to the issues the Deputy is raising. I am sure the Government will view any such proposals from the Commission favourably.
I take issue with the Deputy’s reference to speculative data centres. As he knows, many of the data centres located in Ireland, if not all of them, are associated with companies that are very large employers. The presence of a data centre in Ireland should not be seen in isolation; it should be seen in the context of companies that are employing hundreds, if not thousands, of people all over our country. Particularly with the changing world we are in and the kinds of changes that will happen with regard to corporate tax, an environment in which data centres can be associated with the ability to employ large numbers is a real asset for Ireland.
On the Deputy’s point on the sharing of the report, I am afraid I am not aware of the status of the report and why it may not have been made available at the point the Deputy indicated. However, I will certainly follow up with the Minister for the Environment, Climate and Communications, Deputy Eamon Ryan, on it. As the Deputy knows, the Minister and his Department are working on a new strategy on energy security and independence, the need for which has been emphasised by the dramatic and deadly developments of recent weeks.
On the Deputy’s point on carbon tax, I am well aware of the model he has proposed. In fairness to him, he has raised this on many occasions, in the Dáil and elsewhere. The one difficulty with the model he makes a case for is that it gives no clarity at all to the Government regarding what our future revenue from carbon taxation could be. As the Deputy knows, carbon tax plays a role in helping us to fund all the changes that he and the Government want to see happen regarding retrofitting and how we can make progress towards energy independence.
The point I am making on data centres is that families that are struggling to pay electricity bills should not be subsidising the cost of electricity going into the centres. It is immoral and needs to be stopped.
May I make a final suggestion to Deputy Donohoe in his role as Minister for Finance and chairman of ECOFIN. We need to see, across the EU, a review of the commodity-trading rules for both oil and gas. While oil production has been maintained in recent times, we have seen price fluctuations in the commodity markets and, as a result, incentives for people to delay deliveries, which have led to the situation in Dublin Port whereby we had only a one-day stock of diesel. There are people lining their pockets and sitting at keyboards while families here in Ireland are trying to decide whether to pay for fuel and food. We need to regulate this.
As we know, the Minister, Deputy Eamon Ryan, has already said we need to consider the impact of very high energy use and the price the Deputy’s constituents and other citizens pay for energy. However, I would still make the point to the Deputy that the very data centres he is referring to are an invaluable element and will be even more valuable regarding how Ireland can continue to be a place in which very large employers are present.
On the factors that influence the price of energy and the impact of speculative trading in that regard, the Deputy makes a fair and important point. The Commission is considering the ways in which we can better manage the price of energy and give greater certainty regarding the pressures that might arise in the coming period.
Some of the markets to which the Deputy referred play a valuable role in helping smaller businesses hedge against a rise in the price of fuel in the future.
It is very clear that this Government is determined to erode any remaining semblance of Ireland's military neutrality. It is doing so extremely cynically by attempting to portray it as a necessary and mature response to Putin's horrendous invasion of Ukraine. The truth is that it is not a new position for the political establishment or Fine Gael. We can go back 19 years to 2003, when Fine Gael proposed in a policy document to move beyond neutrality. The document supported participation in a common EU defence policy and abandoning the so-called triple lock, which requires that the Government needs UN authorisation and the approval of the Dáil before engaging in military action. That argument described the triple lock mechanism as a political straitjacket. Those words are very revealing about the attitude of the political establishment to neutrality in this country.
Ordinary people have overwhelming support for neutrality and see it as independence from military alliances and consistent opposition to all imperialism, be it Russian, American, British or whoever. It is a position in line with the slogan of "Neither King Nor Kaiser" raised by James Connolly in the First World War in opposition to the slaughter of working class people in a war for colonies and profit. In contrast, the political establishment sees it as a straitjacket and a restriction on its ability to cosy up further to US imperialism, including sending working class young people to fight and die in new wars for oil and profit. They have worked consistently and assiduously to undermine it, like with the criminal use of Shannon Airport to ferry over 2.5 million US troops to occupy the Middle East.
The Government wants to be fully rid of it and now it sees its chance. Just look at what has been said in the past two weeks. The Taoiseach said that neutrality is a policy issue that can change at any time. The Tánaiste said we need to think about greater involvement in European defence. The Minister for Foreign Affairs said three days ago that there is a good chance we will be involved in the rapid reaction force and raised the need for a debate about the triple lock. All of this is being done without a public debate and the ability of the people to decide.
Next week, we are using our Private Member's time to try to ensure that they do have a say and that we have a referendum to enshrine neutrality in the Constitution. That means no involvement in military alliances like NATO or the Collective Security Treaty Organization, CSTO. It means no transport of war material or personnel through the country to participate in armed conflict and it means no participation in European militarisation. I know the Minister does not agree with that, but he said a couple of weeks ago that it is appropriate to debate Irish neutrality. Would he agree to have the debate in public and let the people decide?
There are few politicians in this House that better understand the practical value of our neutrality and the impact it has had on Ireland being able to support the vulnerable and stand by our principles and our commitment to human rights than, for example, the Taoiseach. As a Minister for Foreign Affairs, and now as a representative of the European Council, he has articulated the value of our neutrality on many occasions. The Minister for Foreign Affairs used an emphasis on neutrality and our commitment to human rights to, for example, see Ireland attain a position on the UN Security Council.
I can assure Deputy Murphy of two things. The first is that this Government and those involved in this debate are well aware of the importance of our neutrality and the impact it can have on articulating and effecting Irish values on foreign policy in a world that has become so volatile and dangerous. The second thing I can assure the Deputy of is that there is no political establishment over here. Instead, what we have is a Government that is looking at a world that is changing and has become more dangerous. It is looking at millions of people who are fleeing chaos, trauma and the disintegration of their lives due to a war that is being waged by Vladimir Putin. We are seeking to find the ways in which we can co-operate most effectively with like-minded countries within the European Union.
The very capacities and policies that we are now using to respond to this humanitarian crisis are the same that Deputy Murphy campaigned against, and has been against, for so long. From a humanitarian and defence point of view, the Government is responding in a way that is consistent with our policies and values. The Government has acknowledged that in a world that is changing and has become so much more dangerous we are neutral, but we are not neutral to the carnage and terror that is being inflicted on people in Ukraine at the moment. We are not neutral when it comes to that. They are values that we hold dear.
When we see the scenes that are taking place and the poor children and teenagers coming to our airports without their parents, that is something that we are not neutral about and we want to respond to that. Any debate that takes place regarding the principles that underpin our foreign and security policy for decades to come will of course happen in public and in a way in which the Oireachtas is central.
Will the Minister agree that there be a referendum and that the people get to decide on the question of neutrality instead of having a false mature public debate which does not actually allow the people to participate? Will the Minister accept that if Ireland is going to join a rapid reaction force which is, in effect, a super-sized European battle group comprising 5,000 soldiers, there should be a referendum? Would he accept that if Ireland is to drop the triple lock that there should be a referendum?
People in this country know there is a political establishment. If they look at the record they will understand that it is not yesterday, the day before or a month or two ago that the Government started trying to undermine neutrality. Fianna Fáil promised that there would be a referendum on joining Partnership for Peace, but then in government did not provide a referendum and instead just did it. Fine Gael MEPs voted to increase European military spending from 0.3% to 2% across the EU. Look at what has gone on in Shannon Airport. People do not trust the Government. The only commitment they want from the Government is that we have a referendum.
Whose side is Deputy Murphy on in this? This Government knows where we stand at the moment. Any policy that the Government is involved in implementing involving our Defence Forces or any other aspect of our public services will of course be consistent with our Constitution, the principles in our Constitution and the policies of this and previous Governments. In any debate that takes place in the future regarding our neutrality, if such a debate is to begin of course the people will be consulted. I again put it to Deputy Murphy that the very policies we are implementing to make a difference to those who are in the greatest need at the moment and the very aspects of the European Union co-operation that we are using are policies the Deputy has been against for his entire career. The Deputy cannot have it both ways.
The Deputy cannot come into this House and attempt to lecture us about us not being clear about where we stand when he has been against the very elements of European Union foreign policy that are now being used to support those most in need.
Last October, before the war in Ukraine, I asked the Government to reduce the intake from tax on fuel prices to 2020 levels. I understand the Government needs taxes to run the country, but it is taking in 51% of the price of petrol, and 44% in the case of diesel, in taxes.
My job and that of the Government is to protect the people of Ireland. The fastest way to do that is for the Government to reduce the tax that is locking the price on fuel. If that is done, people will be paying the increase in the cost of fuel but they will not be paying tax on the increase. That would benefit farmers, haulage contractors and those in every other sector. The Minister mentioned that there are 2.5 million people working in this country. I am talking about tax. The Government is taxing every single person not only on fuel but also on food because the cost of producing the latter is escalating as a result of the tax on fuel. It is the tax I am talking about.
We know that there is an increase in demand for materials that are not there. The price of wheat has risen by 67%. The people of Ireland are being asked to grow wheat, barley and everything else when they are being taxed at source. The only answer is for the Government to take its 51% tax at 2020 prices. That will automatically go into every household in the context of home heating oil, fuel to run a car and reducing transport costs. It hits everyone across the board and reduces costs.
Silage contractors have told me that other countries are giving them 20% off the price of agricultural diesel. This means that they can try to go to the farmers to bring in the crops in order that we can have reasonably priced food. It is €1.40 a litre for green diesel for doing crops. From 47 cent a litre last year, it has gone up to €1.40. Suddenly the price of milk is going up. The costs for every household are going to go up.
I want the Government to take its 51% tax on fuel at 2020 prices. Every household and person, whether employed or not employed, will be positively impacted by a reduction in the tax on fuel. That is all I am asking the Minister to do in one sector. It will help every family and person in the country.
The Deputy made reference to a number of really important sectors within our economy and society. He made reference to where we stand with regard to the haulage sector and the pressures farmers are facing. The Government has responded in respect of each of those sectors in recent weeks. We bought forward an excise reduction because it is a tax reduction and change that helps the business sector. It is unlike the proposal the Deputy is making in respect of VAT because it helps the business sector. We did that because if we look at the challenges that those in the haulage sector are facing, we know the rising cost of fuel is affecting viability and the ability of many of hauliers to move goods around the country. Not only did the Government act in that way, we also brought forward measures to make additional payments available to haulage companies, depending on how many trucks they have, to help them further with the challenges we are facing.
On farmers and the challenges they are facing, again, the Government knows that farmers are fundamental not just to the economy but also in the context of the price of food. That is why the Minister for Agriculture, Food and the Marine, Deputy McConalogue, secured agreement at Cabinet on Tuesday to bringing forward a set of measures to help tillage farmers to respond to the challenges that exist. Again, while we cannot do all the Deputy and many of he rest of us want us to do, what we are doing is trying to help each part of the economy in a way that we are confident that we can afford to do for as long as we need to. We are doing so in order to respond to the cost-of-living challenges people are facing and to respond to new challenges we may have to deal with as the year goes on.
The measures the Government has put in place across the year, between our budget day measures and what we have just done, are worth approximately €1.9 billion. They are measures that address the cost of fuel, which we know is going up but it is going up by less than it would if the Government had not acted. We are bringing forward measures to help with the cost of energy and the cost of living and for those who are at risk of energy poverty. These are measures that, in their scale and in how quickly we have tried to implement them, compare very favourably with measures that are being implemented elsewhere at the moment as other governments respond to the challenges they are facing.
We will do our best to help and to respond in respect of the issues that businesses, families and commuters are facing. Equally, however, we want to be honest and clear that while we can help, we cannot cover these costs in their entirety. The Government has, week by week, brought forward measures to help.
I am talking about benefiting every household in the country. If the Minister does what I have asked him in the context of 2020 costs, there will be a reduction. He stated that the cost of fuel has gone up but the Government still takes 51% of the total cost. That is for every household. No matter what way one looks at it, it is 51% tax. If the Government takes its 51% tax on 2020 prices, that will go to the 2.5 million people who are working in this country. It costs them €50 to €60 more to fuel their cars and €1,300 a year more to put on the lights in their houses. The Government is after bringing in a retrofitting system that is outdated because the cost of materials has gone through the roof. The grant system the Government is putting in is not even justified because the grant has been neutralised as a result of the cost of materials going up. This is one thing the Government can do and it will have a positive effect in every household. It will help with the cost of their groceries and getting people to school or work. It is €40 to €50 a week. Once the Government does that one thing on fuel, it will improve the quality of life for everyone - the elderly, the young, the vulnerable and everyone else.
I have the answer from your manifesto. In 2016, Fine Gael told everyone in this country it would get rid of the universal social charge. Is that not one cost the Minister could get rid of today if he followed through on his promises?