Thursday, 14 July 2022
Ceisteanna ó Cheannairí - Leaders' Questions
Tá oibrithe agus teaghlaigh ar fud an Stáit ag streachailt leis an ghéarchéim le costais maireachtála, agus tá sé dhíth ar an Rialtas tuiscint an bhrú faoina bhfuil na teaghlaigh seo agus feidhmiú ansin chun tacú leo. In áit seo agus in áit cáinaisnéis éigeandála a thabhairt chun tosaigh, beidh briseadh ag an Dáil seo fá choinne an tsamhraidh agus beidh míonna deacra amach roimh go leor teaghlach.
The latest consumer price index, CPI, published this morning by the Central Statistics Office, CSO, shows that inflation has continued to rise to more than 9%, the highest rate in four decades. Workers and families are facing alarming increases in the cost of fuel, energy, food and transport. Persistent failures in housing and childcare see households, renters and families paying more and more for keeping a roof over their heads and raising their children. We on this side of the House all recognise that the causes of the cost-of-living crisis are driven by global factors, including the illegal Russian invasion of Ukraine, but also by domestic factors. The causes do not remove the responsibilities of Government.
The impact of this cost-of-living crisis hits lower and middle-income households hardest. That is clear to anybody who has heard from families who have had to turn off their heating or put less food on the table because they simply have no other choice. On in three households today are living in energy poverty. This week, we heard from the Children's Rights Alliance that 62,000 of children are living in consistent poverty. Most people are feeling the squeeze but lower and middle-income households are bearing the brunt. They need a Government that understands their struggle and responds to their needs. Today, this Dáil will rise for its recess and will not return until September, but workers and families will continue to struggle with this cost-of-living crisis week in, week out over those summer months.
The Tánaiste refused point blank to act on the calls from Sinn Féin to bring forward an emergency budget with measures that would protect and provide certainty and support for these households. Instead, he told them that they should wait until the end of September. This is despite organisations such as the Central Bank of Ireland, the Economic and Social Research Institute, ESRI, and our own budget watchdog all saying that the Government has the capacity to provide further support to struggling households and to provide it now. This support is necessary and would relieve the pressure households face and help them navigate through the difficult times in the days, weeks and months ahead.
For months now, Sinn Féin has proposed sensible and affordable measures that would provide real relief to these families by increasing social welfare rates in response to rising prices, introducing cost-of-living cash payments to those on low and middle incomes, reducing childcare fees, supporting renters by putting one month's rent back into their pockets and banning rent increases, providing greater support for more families with back-to-school costs, and reducing fuel costs for those struggling to heat their homes and fill their tanks. These are all measures that could have been introduced before the Dáil broke this summer, but they were not. They should have been acted upon. The Government should have listened not just to Sinn Féin but to the pleas and demands from ordinary people who are struggling just to get by.
We acknowledge that not everybody can be protected from every price increase. The Government can do and should have done more to protect and support workers and families but it decided otherwise. As this Dáil breaks for the summer, what is the Tánaiste's message to the tens of thousands of families who are struggling to survive and cling on and who so desperately need the Government to do more for them right here, right now before the summer break? Once this Dáil returns, will the Tánaiste commit to implementing the solutions we in Sinn Féin have put forward, some of which I listed today?
I thank Deputy Doherty very much. The numbers from the CSO this morning indicate that inflation has now risen to 9.6%, which is the highest rate of inflation we have experienced in 40 years. I think it confirms what people are experiencing in their daily lives. We see it at the fuel pumps, in the supermarkets and in our utility bills. The price of everything is going up and the price of nothing is going down. We face an unprecedented situation, however. We have war on our Continent for the first time in 40 years. We had a pandemic for the first time in 100 years with much of the snapback and demands contributing to inflation. We had the zero Covid policies in China. We are also at the end of an unprecedented period of monetary policy characterised by low inflation, low interest rates and central banks all over the world printing a lot of money. It is, therefore, an unprecedented set of scenarios. Things we have not seen in 40 to 100 years are leading to a global inflation crisis, which is resulting in prices rising at a faster rate than at any point in 40 years.
It is important to say that budgetary measures and actions the Government has taken and will take can help to ease the cost of living and burden of inflation for people. No budget, however, whether it is an early, late, emergency or ordinary budget, will get us on top of the inflation crisis. We need to tame inflation and that requires a comprehensive approach that includes international action, action at a European level and also domestic action. What we must do over the next six months to one year is get inflation down and tame it, not fan the fires of inflation. That will not help anyone in the long run. We must avoid that.
I note that the Deputy made no acknowledgement whatsoever in his contribution of what has been done to date, which I think was unfair and inaccurate. From listening to the Deputy's contribution, one would think that nothing has been done at all in the past seven months while this Dáil was in session. Let me recap on that. In January, we had an increase in the minimum wage, an increase in pensions, an increase in welfare payments, and a reduction in income taxes for low, middle and high-income people, all of which the Deputy's party opposed. Since then, we have had reductions in VAT on electricity and gas, reductions in excise on petrol and diesel, €200 taken off people's electricity bills, and an increase in the fuel allowance. Only this week, people saw an increase in the back-to-school clothing and footwear allowance for those least well-off families who need it most. Contrast that with Northern Ireland, where the increase was £7 or £8 or something in the back-to-school clothing and footwear allowance-----
-----compared with €100 here. People will see in the next few weeks, for example, an increase in the SUSI grant for those attending third level. The budget in September will introduce a series of measures that people will see in their pockets within weeks, and then another set of more regular measures that will take effect in January 2023. Therefore, far from not responding to inflation and the rising cost of living, what people are seeing from Government is a dynamic response with action in January, action since January, action over the summer, more action in September and then more again next January. That is what is required because this is a dynamic and unfolding situation.
The Tánaiste may think this Government is dynamic in responding to the needs of citizens out there. Let me say this, however. When the Tánaiste steps outside the bubble of Leinster House, stops the backslapping and hooraying and all the rest in terms of his own colleagues, and talks to the ordinary people out there, they will tell him that tens of thousands of them are struggling to get by. We have seen survey after survey and report after report telling us how difficult it is for people. After everything the Tánaiste just talked about, one in three families in this State are still in energy poverty and struggling to make ends meet. Organisations far beyond Sinn Féin such as the Central Bank of Ireland, the budget advisory watchdog and the ESRI are all saying the Government has the capacity to do more and do it now. However, the Government refuses. The clear message from Government as it heads off into the recess for the next eight weeks and with a budget 12 weeks away is that people are on their own for the next while.
There are no further interventions. That is a devastating message for families. It is a crucifying message because many of them are struggling to pay the bills at the end of the week. What message does the Tánaiste have for that cohort of individuals, the many thousands who are being abandoned as the Government goes into the summer recess?
That is a false narrative. It is also a populist narrative. I spend as much time outside this House as the Deputy does, as do my colleagues on these benches. I spend as much time talking to my constituents - working people, middle-income people, business people and people from all backgrounds - as the Deputy does. I do not know what the Deputy will be doing through July or August, by the way, but I can guarantee him that Ministers will be continuing to work. There is a Cabinet subcommittee meeting this afternoon, for example, to discuss the situation with migration and people coming from overseas. There are trade missions next week and there will be a Cabinet meeting at the end of July, so we will be working throughout July as normal with the exception of coming to the Dáil Chamber. Throughout August we will be preparing the budget in September. I do not know what the Deputy will be doing, but he will not be doing any of those things.
In this unprecedented cost-of-living crisis, we all know there are certain individuals and families who are living in particular fear - fear about safety in their homes and fear about the cost of remedying defects in the construction of their homes. Last month, for example, I heard from a mother who informed me that the possibility of her daughter progressing to third level education had been cast into doubt because of the cost to the family of having to fix the defects in their defectively built apartment to ensure it is made compliant with fire safety regulations.
We understand the working group on defective homes will be completing its report next week, but we also understand it will have found that up to 100,000 apartments have been affected by fire safety and other defects, with up to 44,000 apartments in the process of being remediated right now. We understand properties in every county in Ireland are affected by construction defects, with a particularly acute problem in Dún Laoghaire-Rathdown, Dublin South-Central, Dublin Bay North and Dublin Fingal. Indeed, in my constituency of Dublin Bay South I have heard from some people who are affected too and I have met members of the Construction Defects Alliance. I have heard great fears expressed by individuals and families. There is the fear of debt due to the cost of fixing the defects, but also a fundamental fear about safety in their homes, primarily due to fear of fire because these homes were defectively built.
I understand the working group is concerned that vital safety works on the apartments, which is ongoing, might stall or be deferred pending any new developments, causing unnecessary risk to the health and safety of the tens of thousands of families and individuals living in those apartments. We know that vital safety works must continue and that people must be supported to ensure they do continue.
Will budget 2023 include measures to support people living in homes where there are these construction defects? For example, will the budget include 100% refundable tax credits for owner-occupiers who have paid already or who are paying ongoing levies for the remediation of defects in their apartments? Some building management companies will allow for the cost of compliance works to be paid in instalments, but that is not the case for everyone. Many of those who have already been charged with the cost of remediating their apartments say they are unable to pay and have been dealt intimidating legal notices and even threats to put attachment orders on their property.
It amounts to a life of fear for the many people affected. It is hard to exaggerate the scale of this pending crisis, which has been somewhat under the radar until now but which I believe will be highlighted by the forthcoming report. It has certainly been highlighted to me by the people I have met. They are in fear. They are in fear of increased insurance costs. Those who wish to sell their homes, perhaps because their families have grown and the apartments are no longer big enough, are forced to stay in unsuitable spaces that are far too small. They simply cannot move on from an apartment that was built defectively and for which an outstanding cost for remediation still exists. Lenders will not allow the taking out of mortgages on defective properties, so the prospect of selling is a real challenge.
What will the Tánaiste and the Government do? Will the Tánaiste give a commitment to ensure the budget will address this and guarantee support for those who are so adversely affected?
I thank the Deputy for raising this important issue. It is one I am very familiar with in my constituency as well, where a large number of apartments have apartment defects. People have been sent bills, sometimes for €10,000 and sometimes for as much as €60,000 per apartment, to carry out necessary repairs. The inevitable happens. Some people can afford to pay, some cannot afford to pay and some people will not pay. Therefore, the money cannot be raised and the work cannot be carried out, so people are left in a terrible limbo where they are unable to sell the apartment and they are worried about whether it is even safe for them to continue to live there.
The Government responded to the issues that arose with pyrite and it has responded with the new mica scheme for Donegal and other counties. I believe we will need a response to assist people who are facing large bills as a result of defects in apartments. I cannot give any commitments at this stage, but as the Deputy mentioned, a working group on this was established by the Minister for Housing, Local Government and Heritage, Deputy O'Brien. A report is due. I have not seen the report but I believe it is imminent or close to being completed. Once we have that report we will be able to give consideration to it. However, the basic principle applies that there will have to be Government assistance for people who, through no fault of their own, purchased apartments that are in buildings where there are defects and those defects have to be repaired.
I thank the Tánaiste for that positive response and his acknowledgement that the Government will have to provide a response for those who, through no fault of their own, are living in this twofold fear in these apartments, the fear of debt and the fear about fire safety, in particular. Following the horrific Grenfell fire in London, that is uppermost in all our minds.
The scale of this problem is immense. It is thought that up to 80% of apartments built between 1991 and 2013 may be affected by these construction defects. Many of the people who are living in these apartments are living a life of fear and a life in debt because of the costs already incurred for remediating the defects. I believe a full remediation scheme will have to be developed, and we will work constructively with the Government to ensure that is done. However, we are conscious this will take time and it is vital that remediation work would continue in the meantime. We are asking the Government to ensure people who are paying remediation levies or have paid them will not be at a disadvantage. In the short term, we believe that will mean providing refundable tax credits to owner-occupiers and grants to social landlords in budget 2023 to ensure the fear that so many individuals and families are experiencing may be alleviated.
I have not seen the report yet so I am not sure what measures, actions or remedies are being suggested. I do not want to comment in detail until I have. However, I understand the point the Deputy is making with regard to some degree of retrospection. I mentioned some of the blocks I am familiar with in my constituency where people have paid or are paying the levy and others have not paid or cannot pay. It would be unfair if those who have made a contribution already did not get any State support while those who did not or could not did. I am sure that is something the group has examined. I do not know what it has recommended. I understand the point the Deputy is making, and it is a valid one.
I wish to raise the concern about contingency planning in the event of decreasing levels of foreign direct investment in Ireland as a result of the implementation of the global and European minimum corporation tax rate. Ireland has used our corporation tax rate as a very effective economic development tool, which has successfully resulted in a flood of multinational investment into the country on the back of favourable conditions. However, a decision made in October 2021, that Ireland would accede to a minimum global rate of 15%, which is up from 12.5%, will undoubtedly have ramifications for our future ability to attract investment. The implementation of the OECD agreement will pose major challenges to Ireland given that Department of Finance officials believe there will be a projected loss of income to the Exchequer of at least €2 billion annually.
The summer economic statement, announced last week, cautions of "a clear vulnerability for the public finances" from the "concentration risk" of ten multinational firms now paying half of all corporation tax and €1 in every €8 collected in tax. In response, the Irish Fiscal Advisory Council said these corporation tax receipts "should not be relied on to fund permanent spending increases". That is possibly because of the potential impact on multinational investment confidence in the country.
Given our acute vulnerability, laid bare by many respected commentators, should we explore and review this decision? The decision was made at a time when the global economy was on a more stable footing. Other countries are reviewing their position in the context of global economic factors. Last week, for example, Hungary, which initially supported the minimum rate, has now refused to implement the agreement, with other voices of opposition growing. Indeed, last week the Tánaiste's party colleagues in Fine Gael voted against the motion on a resolution condemning Hungary for taking this action.
Furthermore, the issue was removed from May’s meeting of ECOFIN because agreement was unreachable. We need now more than ever to retain our blue-chip influence. We are entering into a most uncertain period. There is the economic impact of war in Ukraine, we have soaring inflation, a cost-of-living crisis is engulfing Europe and the possibility of a recession is lingering. With the changes in the economic and geopolitical environment in the past nine months, we urgently need to have a defined contingency plan around how we will remain competitive and continue to attract foreign direct investment, FDI, given these proposed global tax changes. It is clear that we now need a comprehensive, whole-of-government approach. The change in our corporation tax rate will seriously impact the Exchequer's buoyancy, something which has allowed us to address issues like the cost-of-living crisis, by using a robust tax take to redistribute to those families who need it at budget time. What plans are in place to address this matter so that as a country we can make decisions that are firmly in our national interest?
I thank the Deputy for raising this important issue. As the Deputy knows, Hungary is holding up the European ratification of the international agreement on tax at the moment. Their decision to do so has consequences. The United States, for example, has indicated that it will suspend its double taxation agreement with Hungary. One can imagine that if we were to adopt the same approach and if the US were to suspend its tax agreements with Ireland that would not be a position that we would like to be in, given the amount of US investments that we have in Ireland at the moment and have had for decades.
It is relevant to say that our low corporation profit tax rate, which is 12.5%, has been a great success. There are some people who believe that increasing taxes always means higher revenues and that reducing taxes always means lower revenues. That clearly is not always the case. The fact that we have a low corporation profit tax means that we take in more revenue and get in more investments. If you take the amount of corporation profit tax paid in Ireland and divide it by the number of people in the country, we get two- or three-times revenue in than the average EU country. Therefore, low taxes can result in higher revenues. This is a perfect example of where that works.
We have signed up to an international agreement to raise our rate to 15%, but that is only for the very largest companies and there will be some changes as to how the base is calculated. We will probably gain on the 15% but lose a bit on the way the base is calculated. We think it makes sense from an enterprise and economic policy point of view that we should be inside the tent and that we should be part of the agreement. Ireland is not a tax haven. We do not want to be perceived as a tax haven. We think that it makes sense to be inside the agreement. That is one of the reasons why we supported it.
We anticipate that this year we will see record corporation profit tax receipts and that that will continue to rise. The pipeline for FDI is really, really strong. We think that revenues will continue to rise over the next couple of years, but we cannot take that for granted. They will fall at some point. That is why it is important that we use these corporation profit taxes on companies that are coming in in a sensible way. One way we are doing that is by investing a lot into capital, into infrastructure and into things that you only have to build once and therefore maintain after, for example, the metro, the national broadband plan and the housing programme. It makes sense to put these receipts into capital investment, because of the huge deficits that are there in infrastructure, but also to help the economy grow in the future. If we get into a surplus position, and that may well happen, we can put some of it away, either into a rainy-day fund like we did before or perhaps into the Social Insurance Fund to help-----
I thank the Tánaiste for clarifying that and for making it clear that the Government will not be reviewing the position. In that context, we have look to the future. I note that the Department of Enterprise, Trade and Employment and the Department of Finance called for submissions in regard to enterprise policy. The Department of Enterprise, Trade and Employment gave less than one month to people to make submissions. It restricted the submissions to 1,500 words. There are many companies out there that would like to make a contribution to that policy-making process but the bottom line is one needs much longer and a more detailed submission if the people involved are to get the message across. It is clear that we need a whole-of-government approach to development in particular of research capability. This is key to ensuring the robustness of the offer that we are able to make to multinational companies and to make them interested in being involved here in Ireland. I ask the Tánaiste to extend the time of the submissions for both the Department of Finance and the Department of Enterprise, Trade and Employment.
I have to ask the Minister for Finance, Deputy Donohoe, to come back to the Deputy later in relation to the finance side. In terms of my own Department’s consultation on the new enterprise White Paper, the deadline is 5 p.m. on Friday, 29 July. The consultation documents ask that submissions be no longer than 1,500 words, but they do not have to be so if somebody wants to make a longer submission of 2,000 words or 10,000 words, we will still accept it. It is not that it has to be less than 1,500 words. Because it is not a statutory consultation, we can facilitate an extension of the deadline of 29 July. All that we ask is that any organisation or any person who wants to make a submission later than that emails us to let us know so that we can have an idea as to when it will come in. The e-mail address is email@example.com.
We are all aware that the wholesale price of gas has rocketed. It was 4.5% this week. With the fear that Russia will not reopen the Nord Stream pipeline, we know that the price is only going to go one way. Given that approximately 50% of our electricity is generated from gas-fired power stations, that means that for everybody the price of electricity is escalating. The issue of the impact on householders has already been raised here this morning. I fully support that.
I want to raise with the Tánaiste this the impact on small retailers, especially small independent retailers. They are not at the moment and will not be able to pay their electricity bills. I have spoken to many of them. They are genuinely concerned that they will not be able to continue trading. Honestly, I believe this is not a case of somebody crying wolf when retailers tell us that 18 months ago they were paying 12 cent per unit and that they are now paying almost 30 cent. They just cannot take that hit. One of them said to me that politicians do not realise how much at risk that small retailers are. They were including me in that comment. Another spoke of the frightening time that they are facing. The Tánaiste and I both know that it is not just electricity costs that have escalated, but costs for packaging and wages. They are not complaining about that, but they have to bear those costs. The problem is that whatever working capital or contingency they have, they have eaten into it. Many are at the end of their rope as the cost of doing business, as one of them said to me, has just gone out the door. Many smaller stores are now trading at below break even.
These are resilient people. They have survived. They want to acknowledge the assistance that they got from the Government during Covid-19, but they need temporary support. They need some stability so that they can plan for at least the next six months and can talk to their banks. Some of the proposals they have include some kind of price freeze on electricity or a rebate system when energy costs as a percentage of turnover increase over predetermined thresholds. They want a recognition that many energy providers are making huge profits. The Government needs to look at some intervention here. A temporary suspension of commercial rates would help. They are short-term measures. They have long-term proposals as well. I would like to hear if the Tánaiste can give them any respite for the serious few months that lie ahead.
I want to say at the outset that I, as Minister for Enterprise, Trade and Employment, and the Government understand that businesses have endured some really difficult years with Brexit, the restrictions related to the pandemic and now, of course, inflation particularly when it comes to energy costs.
I think it is fair to say that this Government has not been found wanting when it has come to helping businesses get through difficult periods, whether it was the wage subsidy scheme to help businesses to keep their staff on; the Covid restrictions support scheme, which helped with overheads; the new small company administrative rescue process arrangement that allows businesses to restructure if they become burdened by debts and survive; and the reduction in VAT for the hospitality sector. While many businesses are struggling, I think it is fair to point out that most are doing well. That is evidenced by the fact that there are 2.5 million people at work in Ireland currently, more than two thirds of whom work for small businesses in the SME sector. We see the tax receipts coming in from VAT and company profits. There have been very few insolvencies in the last year or two, although I think that figure is likely to rise. While every business is different and some have very high energy bills, the average business spends between 5% and 10% of its outgoing on energy costs.
We are working on some schemes that may be helpful for businesses. I do not want to raise expectations too high. We are not going to be able to step in and pay the electricity and gas bills of every business across the country, or even many businesses across the country. Under the EU state aid framework, we have submitted proposals for an inflation crisis-related loan scheme for businesses, which will be similar to those in place for Brexit and Covid currently, and potentially a grant scheme for businesses that face viability issues as a consequence of energy prices. That would be restricted, under the terms of state aid, to businesses that are in manufacturing and exporting and would not apply to retail.
One of the areas where we are already helping, and where we can help more, is in helping businesses to reduce the amount of energy they use and to make energy savings. I looked at it recently and there are actually 20 different schemes that businesses can apply to to get help from Government to carry out an energy audit and to get capital grants for the installation of equipment such as solar panels and insulation and for micro-generation. That is really important because it might be the case that we are not just experiencing an energy price shock. It could be an energy price shift. While energy prices might fall back, they might remain at a high level permanently. The best response to that is a long-term one, reducing the amount of energy we use and increasing the amount of renewable energy and micro-generation that we produce. That is an area where the Government already has 20 schemes in place to help businesses. I want businesses to become more aware of those schemes. I also want to improve them.
I did refer to the acknowledgement of the support of the Government during Covid; that was made very clear to me.
The Tánaiste stated that most businesses are doing well. I am not so sure that is the case. I think a lot of businesses are on the brink. They are running out of working capital and contingency. While that may not be apparent in the figures that we have currently, it is actually happening on the ground. The Tánaiste spoke about the fact that most businesses spend 5% to 10% of their outgoing on energy costs. However, for independent food retailers energy costs are the second highest after wages. That sector is hit so much harder by increasing energy costs. The Tánaiste talked about long-term schemes that are available, but when your back is to the wall and you have no working capital, a long-term scheme - good and all as they may be - is not as attractive as it might sound in better times. Short-term measures need to be looked at now.
It may well be that the Deputy is right. It is often the case that we experience things on the ground and hear about them anecdotally, yet it is weeks or months before the official statistics prove what we know already. That is what we are seeing now with the statistics on inflation. According to the Central Statistics Office, CSO, prices are rising at 9.6% a year. I think everyone knew that weeks and months ago. In fact, it feels to me that they are actually rising faster than that. I expect that we will see the rate of inflation rise above 10% before it falls back, and it will fall back.
On businesses, I take the Deputy's point in relation to working capital. We have helped over 10,000 businesses already through loan guarantee schemes. However, at the moment, the only businesses that can qualify for them are those that can demonstrate that they have been adversely affected by Brexit or Covid. We have applied to the European Commission for permission to extend those working capital loan schemes to businesses that can demonstrate that they have been adversely affected by the crisis in Ukraine, i.e. energy prices. That is the first step. We made a submission to the Commission to do that. We will have to legislate to do that. It is one of the things that I definitely intend to do. I am also looking at other initiatives that might help, particularly around the longer term response.