Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

The question of carbon tax is one on which many people have many views. The programme for Government is very clear on this matter and we gave a clear commitment on it in advance. During the election earlier this year, people were aware of our party's views on the carbon tax and that it would be increased. To compensate for that, there is an increase in the fuel allowance of €3.50 per week. This will compensate a broad range of lower-income households for the additional energy costs they may incur due to the increase in carbon tax. We have increased the qualifying child payment by €2 per week for children under 12 and €5 per week for children over 12. This will help low-income families. There is also an increase to the living alone allowance of €5 per week. This should help those people as well, especially those who are most vulnerable because of living on their own.

It has been asked why we do not tax the companies responsible for fossil fuels. Most of the fossil fuels we consume in Ireland are imported and most of our energy comes from fossil fuels. Certain sectors that do not pay carbon tax, such as those involved in electricity generation and certain energy-intensive work such as steel work and cement works, come under the scope of the EU emissions trading scheme. There is a separate scheme for large companies in Ireland, which includes very large institutions. Some of the larger hospitals, such as St. James's and so on, would be included in this emissions trading scheme. Several years ago, surveys were done of the 100 biggest polluters in Ireland, to call them exactly what they were. They are part of a European emissions trading scheme with a view to reducing their emissions. There is a market there and if they have to buy a carbon allowance or permit, it is at least €25 per tonne of CO2. While some companies are not directly caught by this tax, they are paying for these increases through a different method. I wanted to bring that to people's attention. The industry is being caught heavily. We would like to see these companies actually reducing their CO2 output in the first place rather than purchasing these allowance permits. The cost will bite them there and they will have to make reductions. The EPA enforces this scheme and can issue fines. It has issued fines to some large institutions in Ireland that have been in breach of their initial targets.

The ESRI has looked at carbon tax, poverty and the compensation options. It has recognised how we are going about this and said that such taxes would reduce emissions in Ireland with little wider economic effect. That is why we have targeted those increases at low-income families. This started to a small extent in last year's budget but was very much part of this year's budget with the allocation of carbon tax expenditures in 2021 being produced on budget day. It is all well and good to criticise the tax or to say we are not spending enough on social welfare. I agree with that and I was one of the people saying for the last two or three years that we must have a detailed explanation of where the carbon tax will go as part of budget day. We have it here and this document was published on budget day. It includes investment in residential and community energy efficiency projects. That means housing and community facilities and those projects come under the Department of the Environment, Climate and Communications. There is €100 million for housing retrofitting and various residential schemes. There is a targeted social protection intervention of €48 million for the measures on which I have just given the specifics. There is €20 million for pilot environmental programmes in agriculture. We have heard the debate about CO2 emissions in agriculture as recently as today. Everyone acknowledges that there are ways of improving and reducing those carbon emissions and €20 million will be dedicated to that in 2021 as a result of this carbon tax. There is also the continuation of the carbon tax investment programme of €70 million across various Departments. That adds up to €238 million, which is quite a lot of the carbon tax being collected and is way more than the increase. There is already some carbon tax in the system year in, year out from petrol, fuels, coal and so on. We are going a long way and we will be getting there very soon. Everything that gets collected in carbon tax in a year is dedicated to environmental measures.We went more than halfway in this regard in the budget we are now discussing in the Finance Bill. This is was published on budget day and these measures were outlined on that day. That is the single biggest achievement. People in Ireland are fair. They understand there is pollution if people are burning coal in their houses. We do not have to tell them that; they are aware of it. If people, however, are paying additional carbon tax on their fuel, diesel or whatever, they want to know where that money is going and whether it is going to help that problem. The answer is "Yes". This is what the €238 million that is being collected in carbon tax this year is being spent on. Perhaps the gap in communication is that we are not explaining the good, productive, environmental benefit we are going to get from this extra carbon tax. That is probably the next job we have to do. In future years we will have to do more of this, because it must be clearly identifiable in the public mind where what is collected is actually going. Some people call it a hypothecated tax, which is a technical word. It does not necessarily have to be that because once we can see a clear line of X amount of expenditure in the Estimates corresponding with what comes in, it does not have to be a hypothecated tax. That is one way of doing it and hypothecated is a kind of trendy word that some people use on occasion.

The most important and final point I want to make here relates to a valid point Senator Gavan has raised and Senator Chambers has followed up on. On budget day, the Government stated it will be increasing carbon tax over the next number of years. That is being put into legislation now in order that it does not have to be revisited, re-argued and re-debated every year. The question that has been raised here is about the support for low-income families during that period and why did we not specify the increases in social welfare. On budget day, the Minister, Deputy Michael McGrath, outlined in the Dáil Chamber the specific areas that would benefit from the increased funding in 2021. His Department published a note on these allocations, which I have just read out. He also confirmed that he is actively considering the best ways of giving effect to the programme for Government commitment to provide a legislative basis for ring-fencing the carbon tax funds in future years. Obviously, this has not happened yet, as we only have been in government for a couple of months but he went more than halfway by providing a detailed schedule of where €238 million of carbon tax is to be spent in 2021. He is actively pursuing the matter through a legislative basis, to ensure that it is ring-fenced such that if there is a change in the complexion of the Government, it cannot simply start robbing the carbon tax for some purpose other than the good environmental reasons it is there for. That is coming. It is not in this budget but there is a clear commitment that this is under consideration by the Government and will come through, in due course.

All in all, nobody likes having to pay extra tax but the Irish people are sensible. They will pay it once they see compensation for the low-income households and once they can see a chart of where the money which is being raised in carbon tax is actually being spent for the good of the environment. We are very closely heading in that direction and this is a great step forward.