Wednesday, 29 June 2022
Ceisteanna ó Cheannairí - Leaders' Questions
Last night Sinn Féin brought forward a motion calling on the Government to introduce an emergency budget to ease the enormous pressure on struggling households. I impressed upon the Taoiseach yesterday - at least, I tried - how this crisis is worsening for so many. Last night, however, even though families throughout the country are at breaking point, Ministers stood up one after the other in this Chamber and opposed an emergency budget. I listened to the Minister for Public Expenditure and Reform's partner and political twin, the Minister, Deputy Donohoe, on the radio this morning.
He says that he appreciates the challenge that households are facing. In the next breath he says that he is not going to do anything about it. Tonight, it seems, Ministers and Members of the Government benches will line up and vote against the introduction of measures to help families and workers. The message from Government to households on the brink is to strap yourselves in because you are on your own.
We have only three weeks left in the Dáil term and Government will then clock off for the summer. Its Members will then walk away telling people to wait for budget 2023. Why? Because it does not have a plan in the here and now.
Minister, October is too late for so many families. There are people watching in today who are literally only one bill and rent payment away from going over the edge and going under. These are people who work very long hours and cannot afford the basics. This is the hard reality of people’s lives. Despite everything that the Minister might say, clearly his Government does not get it. In fact, it is incredible to hear the Government congratulate itself over and over for having done so much when, clearly, so much more needs to be done.
Children, as the Minister knows, head back to school in late August and early September, not October. Those families face astronomical costs now. Energy companies are not going to give customers a break between now and October. Rip-off electricity bills will keep coming through the summer months. People go to fill their cars every week between now and October and, by the way, they are paying more than €2 a litre today. This is all happening now.
Asking people to wait until October for help is asking them to wait for disaster. An emergency budget is a sensible and necessary response at this time. Action to cut rents, emergency cash payments for low and middle income earners and increases in social welfare rates to protect the most vulnerable are reasonable and necessary measures and yet the Taoiseach and the Minister, Deputy Donohoe, tell us that they are not for turning. This demonstrates very dramatically the priorities of this Government as I suspect, as many others do, that if it was those at the top who needed a bailout, Fianna Fáil and Fine Gael would be in like a flash.
In fact, the Government has demonstrated before that when it is those at the top, the Government is in like a flash but when it is ordinary people who need a bailout package, its message is tough luck. Tá sé doghlactha go vótálfaidh an Rialtas in aghaidh buiséad éigeandála anocht. A Aire, teastaíonn cúnamh ó dhaoine anois. Beidh sé tubaisteach dóibh iarraidh orthu fanacht ceithre mhí.
Tonight’s vote then is a test for every Deputy in this House who sees their constituents suffering. One can either vote for them or vote against them; it is actually as plain and simple as that. This is a state of emergency for households. They need an emergency budget now.
We in government accept that many people and businesses are under pressure. We represent ordinary people too. We are elected by ordinary people and we meet them every day in our day-to-day lives as well. The reality is that the inflation that is being experienced is at a 40-year high and is primarily driven by international factors. I think Deputy McDonald also accepts that. It is exceptional in nature. That is why we have brought in a series of exceptional measures outside of the normal budgetary cycle because we accept that these are not normal times and a normal approach is not justified.
We have to continue to fund a number of the measures which we have already introduced, including the reduction in excise on fuel, petrol and diesel and indeed the reduction in VAT on gas and electricity also.
We will publish the summer economic statement next week and we will also, at that point, have the mid-year Exchequer position. That will help provide clarity on the resources that are available to the Government and to the country in the context of budget 2023. It is quite possibly the case that we as a country may face a prolonged period of high inflation. We believe it will peak in the short number of months ahead but we cannot be certain of that. Monetary policy is changing internationally also and the global economic outlook is deteriorating. We need to use the limited resources we have wisely and we have to time our further interventions to have maximum impact. It is our view that people will most need further help come the autumn and into the winter period. We will need at that time a set of measures that can have an impact quickly. This will, in particular, be targeted at those who most need the help in respect of one-off measures, temporary measures and so on.
In the budget we will also need to see the building on measures we have already taken across a range of areas to address further the day-to-day costs that people are facing be that in childcare, transport, in education and in health. We have made moves and significant investments in a number of those areas.
Of course, there will be need for a significant welfare package as well as providing a reduction in tax by way of ensuring that people do not continue to climb into the higher rate of tax as they receive an income increase.
In addition, we will have to invest in housing, in healthcare, in education and in disability services, and we have just listened to the debate there. We will have to fund the mica scheme, to ensure that we have the resources for the mother and baby homes payments scheme and, of course, the cost of supporting the refugees who are coming to our country after having fled war. There will be many demands on taxpayers’ money and, of course, Deputy McDonald will be calling for more to be done on all of those issues over the months ahead.
The good news is that Ireland is in a relatively strong position going into this period. Unemployment now is less than 5%. We have labour shortages across a whole range of sectors in the economy and we have a broadly balanced budget. We have one of the fastest-growing economies in the European Union and are continuing to win a large share of international investments. We have some capacity but we have that capacity because we have managed the public finances well and the economy has rebounded very significantly.
Next week is an important milestone in the budgetary process. The Minister, Deputy Donohoe, and I will engage with the Oireachtas and will appear before the Committee on Budgetary Oversight to discuss with the Deputy’s colleagues the choices we face as a country.
I am sure that the irony is not lost on Deputy McDonald that if we had followed her approach, had taken her advice to spend €3.5 billion more in the previous budget, had taken this advice to do more every time we made an intervention over the past number of months, that we would not have the headroom and capacity which the Deputy now calls on us to use in order to do more. We have to try to meet all of these competing demands. There will be a significant intervention in the autumn by the Government and it will be focused on the cost of living that people are experiencing.
The good news is even better than the Minister alludes to because not alone are we in a relatively strong position as an economy, as he brags, but in fact it is projected that the Government will take in €5.6 billion more in tax revenues than projected on budget day. The Minister talked about clarity but I ask him to allow me to give him clarity as he brags about the economic position and how well he has managed the public finances. As we meet today, in households across this country, getting a child back to school in September is now a household crisis. How is that Minister? These are the facts on the ground. School books lists started to arrive today in many households. The outlook for those families who work very hard is not relatively positive. In fact, for many of them, it is terrifying. I am asking the Minister, very simply, that in his position as a Minister of this Government how he will respond now, react now and support those families now and not in October. That is the net point.
If I may say, a Leas-Cheann Comhairle, it is very galling to hear on the one hand the bragging of Government on the wonderful job it is doing, how wonderfully rosy the economic outlook is and, while families suffer, the Minister sits on his hands. Nero fiddles and Rome burns.
I thank the Leas-Cheann Comhairle. There is nobody bragging and there is no need to drag down the tone of the political debate on what is a very important issue which affects ordinary people and businesses all over the country. I can legitimately make the point about following Deputy McDonald's advice and spending €3.5 billion more in the budget last year on expenditure and spending more every time we made an intervention earlier this year when she said it only scratched the surface. Anyone looking at the Deputy's website will see all of the promises and commitments that her party is making which add up to billions of euro - those press releases that have not yet been deleted from her party's website. I can legitimately make the case that we have the resources to do more as a Government because the public finances are in a reasonably strong position.
We have already made interventions. I have given a commitment that we are prepared to go further. It is our assessment that the best time to do this is in the autumn. If we come to the House with a package now, the Deputy would first say it was not enough and then it would mean we would have less money to make a difference in the autumn when we think people will need it most. We understand the pressures people are facing. The Government is committed to a budget that is focused on the cost of living as well as measures in the autumn that will have as close to an immediate impact as we can practically deliver.
Since the Department of Public Expenditure and Reform pulled the plug on Benefacts, a name that will not be familiar to many of the public but that provided a valuable public service, I have been trying to figure out exactly what the Department has against open, transparent and comprehensive data. Benefacts was set up in 2014 at the request of the Department to provide transparency on the financial affairs of Ireland's mammoth €14 billion not-for-profit sector. For the first time, detailed audited financial and governance information on 34,000 non-profit organisations, which have 165,000 employees, was collected and collated in one place. Best of all, the website was open to the public and free to use.
An aspect of the work Benefacts did was to provide detailed information to the CSO that enabled it to fulfil important statistical reporting required under EU legislation. Ireland had availed of a derogation when it came to supplying detailed information about the not-for-profit sector to EUROSTAT until September 2017 when we ran out of road and the derogation ended. Benefacts was then able to step into the breach and spare the country's blushes by providing the CSO with quarterly reports at no charge with comprehensive data that was gleaned, amalgamated and digitised.
We all know there is a huge number of voluntary organisations, some of which provide health and social care services. Many of them receive substantial funding. For the first time Benefacts enabled the CSO to identify all 779 such entities and their various sources of funding. This allowed the CSO to capture all of the non-HSE income and expenditure for inclusion in the health accounts system. This ensured the Estimates on health expenditure in Ireland were comprehensive and accurate. In short, Benefacts allowed the people who used it to follow the money.
Now, without warning, the Department has pulled the plug and spent €250,000 shutting it down, having spent €6 million of public money establishing it. Its funding has been scrapped, the not-for-profit company has been wound up, its employees have been made redundant and the website is no longer available. This is despite a report commissioned by the Department from Indecon stating the benefits of Benefacts exceeded its costs. It also said that scrapping the service would reduce information needed for effective governance. Whose interests does this serve? We have a huge not-for-profit sector worth €14 billion. Does the Minister agree that it is a no-brainer to have detailed transparent financial information available? It is not too late to reinstate this. There are costs associated with duplicating the service and not providing EUROSTAT with the information it requires.
I thank the Deputy for raising the issue of Benefacts. It is important to put on the public record that Benefacts was not a public service body so it was not in the public sector family. While the State provided funding for the organisation for a number of years, it was not running the organisation. It was an external third-party body, which delivered a good service during its lifetime and there is no question whatsoever about that.
As the Minister for Public Expenditure and Reform, I had a clear recommendation from within the Department following an examination that Benefacts did not constitute value for money and that the business case for its continued public funding did not stand up, and it was a matter for Benefacts to identify and source other potential revenue sources to ensure it could continue in existence. The Department consulted other Departments that we thought might have a use for the service provided by Benefacts, or a use for the information that it collated and presented on its website. We did not find any other public service body or Department in a position to take on the relationship to fund Benefacts because, in essence, they did not see value in it.
The Deputy would be first to call the Accounting Officer of the Department of Public Expenditure and Reform before the Committee of Public Accounts if he ignored a recommendation to close down over a period public funding for the body. As I said, we consulted with a range of organisations, including the Department of Rural and Community Development, which has a key role in this area. As the Deputy knows, there has been significant investment in the Charities Regulator. Much more information is collated and presented by the Charities Regulator and the CSO.
As Minister, I received a recommendation that public funding for this third-party body no longer constituted value for money and, therefore, should be discontinued. This was the essence of it. I very much believe in open government. I am the Minister currently undertaking a comprehensive review of the freedom of information legislation. I believe it will result in legislation coming before the House in the months ahead that is not about narrowing its scope or restricting its operation in any way but will broaden it out and ensure it operates much more efficiently and meets the needs of service users who want to access public information held by the Government or other public service bodies.
We had the Secretary General of the Department before the Committee of Public Accounts and I took the opportunity to speak to him about this. I raised the issue of the report the Department commissioned from Indecon. Before he closed it down, I asked him whether he had read the report and he told me he had not, which I thought that was quite extraordinary. He said he had got a briefing on it. It is not a particularly long report. Having read it, it would not suggest the cost outweighed the benefits; in actual fact, it is the opposite. This is a report commissioned by the Department that cautioned against shutting down something for which there was no replacement. Money is being spent by the Department of Rural and Community Development, which is an early stage in creating an alternative system that would be more limited. The Minister's predecessor at the Department was glowing about it several years ago. It is on the record. I find it extraordinary that a valuable resource has been dispensed with that provided very comprehensive and transparent information.
I did not come to the debate with a fixed view. I received a clear recommendation based on an assessment of value for money and the business case. The recommendation made to me as Minister was that we could no longer stand over spending public money on a service that was matched by other public bodies. We reached out to other public bodies, some of which the Deputy has mentioned, including the Department of Rural and Community Development, to see whether they had a requirement for the information being provided by Benefacts. We must bear in mind that Department is the key line Department with overall responsibility for the not-for-profit voluntary charity sector. It did not see a value in the State continuing to extend resources to a third-party body in this respect. It felt it was doing something similar. My preference is always that this type of work and service should be provided from within the public sector. This was the thrust of the recommendation I received. I read all the supporting documentation, I supported the conclusion and, therefore, I made the decision.
The people of Ireland are bleeding and need help now. I welcome the €2.4 billion allocated to cost-of-living measures and the reduction of VAT on gas and electricity bills from 13.5% to 9%. I will not say the Government has done nothing but I will say that it needs to do more. In my constituency office in Dundalk I hear from my constituents what is happening on the ground. People cannot afford to put food on the table, heat their homes, put fuel in their cars or shoes on their children. They are afraid to turn on the cooker or the washing machine.
They are panicking that they will not be able to buy books or uniforms for their children. The Minister should not forget that the kids have only gotten their holidays and their parents are thinking six weeks ahead. Pensioners living in old houses are unable to heat them. People with a disability are unable to access services. Families are unable to find rental accommodation. They tell me about all the buildings around the town lying empty and there seems to be no urgency in bringing them back in order that they can have the homes they badly need.
A number of people have come in to my constituency office lately telling me that they would be better off on social welfare. A young married man with two young children came into my office last Friday, crying. He cannot afford to look after his family. He goes to work in Dublin five days per week. His fuel bills have doubled and he cannot cope anymore. The words he used were "enormous pressure". He was told by his landlord that he must vacate the property he is leasing at present. He went to look for new accommodation, which is impossible to find. Although he found some, he could not afford the €1,800 asking price. He did considerable research lately and found out that he would be better off if he left his job and went on social welfare. He would then be able to get €1,150 through the housing assistance payment towards his rent. He would not have to drive to Dublin to work. He would get all the benefits to which he is entitled, such as a medical card. He does not want to go down this road but he has no option. The Minister's Government can help him.
The cost of living in Ireland for a family of our four is estimated at a monthly loss of €3,072.72, without rent. If rent is added to this, it is more than €4,500 per month or €54,000 per year, before someone pays taxes. It shocked me during the week when I heard the Free Legal Advice Centres, FLAC, state that families could not afford clothes or food for their children. The shoes they are wearing are open-toed. That is a very low level.
Families have come to their breaking point. Inflation has soared to its highest levels since the 1980s. It was at 8.3% in May. Our President, Michael D. Higgins, has slammed the Government's housing challenges as a "great, great failure", stating that, "it is not a crisis ... [but] a disaster". Why will this Government not react now? It has the resources to help these families, pensioners, students and front-line staff. The money is there for the Minister's Government to help the people in Ireland who have built this great country over the years. They deserve to be looked after now, not later.
I thank the Deputy for raising the issue. He has articulated the real-world experience of many people at this point in time. Not everyone but, certainly, a share of the population is very much feeling the effects of what is a 40-year high level of inflation. The Deputy has acknowledged, to be fair, that the Government has made a range of interventions in different areas to address cost of living. We have had some universal measures, including the electricity credit, the reduction in transport costs and, most recently, the elimination of hospital charges for children under the age of 16, but we have also had a number of targeted measures, in particular with the fuel allowance through the two bullet payments, for example, and the increase in the rate of fuel allowance that took effect on budget night last year. Doing it that way was an exceptional measure.
We have reduced the drugs payment scheme threshold to €80 per month and put caps on school transport fees. We have cut the annual public service obligation, PSO, levy. We have launched a major national retrofitting scheme and we have already touched on the reduction in VAT on gas and electricity and in excise on fuel. It is important that it always pays to work. The overwhelming majority, who are able to, want to work. The evidence is that they are working. We have an unemployment rate below 5% and we have now exceeded the pre-pandemic level of employment in Ireland. It is more than 2.5 million people, which is approximately 150,000 more than were employed pre-Covid. That is a remarkable turnaround and is testament to the resilience of the Irish people and indeed, the Irish economy.
That is why it is important that, as well as addressing cost-of-living measures through expenditure, we have a tax package in the budget. We have a programme for Government commitment that we will honour because we do not want a situation in which the constituent that the Deputy highlighted ends up getting a pay rise or does some overtime and pays half of that in tax because he has crept into the marginal rate of income tax. A static tax system at a time of rising incomes is equivalent to an increase in tax. It seems to be only on this side of the House that there is support for a reduction in income tax for people who are earning quite modest levels of incomes - in the mid-€30,000s.
I have acknowledged we will make an intervention in the autumn in the normal annual budget, but we will also be focused on a set of measures that can kick in as quickly as possible and will be temporary and one-off in nature. The advice that we have received from all the main bodies is to target resources, insofar as we can, to those who need them most. Work is actively under way on preparing that. We will have the summer economic statement next week, which will clarify exactly the envelope of money we have for next year's budget.
I am a sportsperson. Morale is very important when one is involved in sport. It is also important for society. Morale in this country is very low. Families are suffering and the people of Ireland built this country to what it is today. The Minister and I know that this country is highly respected throughout the world for the amount of work that it does. All I am trying to say is that the people of Ireland want a bit of help. There is no point in waiting for the rainy day funds. If my family was suffering and I had the money to help them out, I would do so. The Minister's family, which is the country, is asking this Government for help. We are looking for help now. We are not just waiting for a rainy day fund. I am not making this a political football. The Government has helped so far. Some €2.4 billion is a considerable amount to have given so far, but we have this extra money just lying there. Now is the right time to react. We need to keep this country building for our children's future and everything else. This country has a very old population and will need more and more money. To make money, money has to be invest. I am pleading with the Minister to have a look at the situation and invest in Ireland.
We have sought to help to date. We will do more and we will help people who most need it, in particular. We are working on finalising the summer economic statement, and the preparations for the budget are now under way. We are looking at all of the options that are open to Government with a view to making a real impact. It is our assessment that the autumn, coming into the winter, is when people will need help most. We know there are people who need help now. We are criticised every time we highlight that there is an additional needs payment, but we should all highlight the fact that there has been a change in a rule in order that people working full time can now access that payment. If people need assistance with a fuel bill, with repairing a boiler or for clothes and food, they should approach their community welfare officer. I believe they will find him or her supportive. We have to, as a Government, acknowledge the fact that global economic conditions are changing. They are deteriorating. At some point that will impact on Ireland. The cost of borrowing for us as a country, as well as for individuals, is rising. We have to take all of that into account, but work is well under way on the package the Deputy touched on.
I am glad to get the opportunity to raise the issue of the cost of fuel, which is impacting on everyone on the road, whether it is the man going to work in the car, the mother taking children to school or the man filling up his lorry to transport goods or filling a construction work vehicle. Kerry is far away from everywhere and is impacted more than many other places. The increase in the cost of fuel is massive. The pumps along the road tell the story, with prices at €2.15 or €2.20 a litre. People are at their wits' end trying to stay on the road.
Work is slowing. People building new houses and even those building one-off houses are pausing and wondering what they will do. Farmers are paying €1.60 or €1.70 a litre for green diesel. Bus operators are tied into contracts. There is a problem with taxis at night; they are just not operating because it is not worth their while. We see where trawlers are parking up. One transport company, close to the Minister in Cork, is parked up this week.
The Government is taking almost double in tax now from fuel than it did 12 months ago. Surely it is time to give back some of the extra tax it has taken to the people on the road? They need it to stay going and October is too far away. There is talk of mini-budgets and emergency budgets but the Minister has said the normal budget time is when it will be dealt with. These are not normal times. People are paying to try to stay on the road and fill their cars or other vehicles. They are not paying normal prices now.
The Government must keep work going and this is the time to intervene. We recognise that the Government gave back 15 cent or 20 cent per litre on fuel a couple of months ago but that is not enough now. Fuel prices have gone way up again and it is now time to intervene and ensure that work stays going. The Government will reap the dividends if work continues anyway but if it stops, the Government will not even get core taxes because people will not be on the road. They cannot stay going and that is the honest truth.
The Government is not aware of how serious the matter is and how people are suffering. People must travel on long journeys to work from Kerry and they are paying massively to fill their cars and try to stay going. These are not normal times and in rural Kerry people cannot travel without a car or some type of vehicle. They are paying more and suffering more. I am asking the Minister to act now and give them back a sizeable amount of the extra tax the Government has taken.
The Deputy makes a valid point that rising fuel prices have an impact across the board. They affect private citizens in households, of course, but also private enterprise such as contractors, farmers and the delivery of public works contracts. We have made a number of interventions as a Government and we have already spoken about the reduction in excise, which comes at significant cost. Initially it was €320 million until the end of August and it was extended to budget day so the total cost now is well over €400 million. That is the reduction in excise on petrol and diesel.
To ensure school transport services continued up to the end of the year, we provided extra resources and extra money was paid to school transport providers. We were concerned that for many of them it was simply no longer viable to continue providing what is an essential service. We introduced a special scheme of support for hauliers with which I know the Deputy is very familiar.
With private contractors doing public works, I introduced an inflation co-operation framework not just in respect of materials pricing but also in respect of energy and fuel. The State will step in and carry 70% of the extra cost above and beyond normal levels of inflation, backdating that to 1 January. It is a little early to say what is the impact of that but there are some indications that we are seeing a greater willingness among private contractors to take up public works contracts. There was an issue, given the level of inflation and uncertainty and the fact that the contract up to that point provided for no price variation whatever, so the contractor had to carry all the risk. I recognised that was an issue and a change would have to be made.
On the price of fuels at the pump, the levers open to the Government are limited. We could reduce VAT, which is set at 23%, but we would have to do that on everything. Almost half of economic activity is levied at the 23% rate of VAT. A 1% reduction amounts to €500 million per year. That is the truth when it comes to VAT. We have already made a reduction in excise, and with diesel it is the case that when the excise reduction is combined with the diesel rebate scheme, we are at the minimum allowed under the minimum tax directive in the European Union.
We do not have that many options when it comes to reducing the price at the forecourts, which is primarily determined by wholesale prices. The exchange rate is unfavourable currently in respect of the strength of the dollar relative to the euro. There are challenges but the Government will examine all the matters in the period leading up to the autumn.
I thank the Minister for his reply but he has not given much comfort to people who are struggling out there today. I accept and acknowledge what the Government has provided already but it is just not enough. The Minister must admit that the Exchequer has taken in a massive increase in taxation. In the past two weeks alone, fuel prices have increased by 20%. That is coming out of people's pockets. They are on the road and trying to pay for the fuel. I recognise what the Minister said about hauliers but to qualify for that scheme, one must have a haulage licence. Hauliers who are just supplying goods for themselves do not have a haulage licence and they are not benefiting.
Again I say there are people travelling long distances going to work, putting petrol and diesel in their cars, and the Government will have to do more for them. They cannot wait until the budget. The Minister only gave farmers 2 cent off the price of green diesel. God almighty, it is €1.60 and €1.70 per litre today. They are trying to keep going and provide fodder and food for people all over the country. The Government must do something for them. The Minister talks about addressing this in the budget but it must address the kernel of the problem now, which is the extra tax being taken by the Government. There is wriggle room to do something for these people. I am begging the Minister to do something for those people.
The Deputy started his contribution by correctly saying these are not normal times, and I agree with him on that. In normal times a Government would not come out in March and say it would reduce excise by 20 cent and 15 cent. It was an exceptional intervention because of the costs that people face. It happened to coincide with a time when wholesale prices were rising and people felt they did not see any benefit but if the Government had not made the intervention, the prices on forecourts would be 20 cent and 15 cent higher than they currently are.
I have explained that the options open to the Government on fuel are very limited. We could reduce VAT but at a massive cost because it cannot be done for diesel and petrol alone. It would have to be done on half the activity across the entire Irish economy at a cost of approximately €500 million per year for every 1% reduction. It is a massive cost for a measure that is not very targeted. In the budget context, the Government is examining all the options we have to see how we could help. The Deputy has raised a range of different sectors, including contractors, farmers, people delivering public works and, of course, private motorists. We acknowledge those pressures and we will very much take that into account.