Robert Troy (Longford-Westmeath, Fianna Fail) | Oireachtas source

I thank Senators Casey and Ryan for bringing this motion before the House this evening. I welcome the opportunity to speak on the recently published annual progress report and the Government’s response to recent energy price pressures.

The annual progress report is a key part of both the annual budgetary cycle and the European fiscal framework. It sets out the Department of Finance’s latest assessment in respect of the economic and fiscal outlook, as well as the risks we face in the years ahead. Before turning to the economic outlook, it is important to contextualise the forecasts. This year’s report was, once again, prepared against the backdrop of heightened global uncertainty. In recent weeks we have seen a major shock to global energy markets with disruption affecting more than 20 million barrels of oil per day. While recent steps towards de-escalation are welcome, volatility remains and even if the current ceasefire holds, the economic effects are likely to take time to fully unwind. We have seen significant damage to oil and gas infrastructure which, even if hostilities were to permanently end today, will take years to repair and return to their full capacity.

As a small, highly open economy and, importantly, a net energy importer, Ireland is exposed to movements in international energy prices. Indeed, recent price increases are already placing real pressures on households and businesses across the country. That is why the Government has acted decisively with a €750 million package to reduce costs at the petrol pump, support those most at risk of energy poverty and assist key sectors including haulage, construction, agriculture, fisheries and quarries that are critical to keeping our economy moving.

Before going into further details on the measures we have introduced, I would like to give Members an update on the assessment of the Irish economy as set out in the annual progress report. Despite external pressures facing the Irish economy, domestic activity has shown considerable resilience. Nowhere is that more evident than in the labour market. Employment stands at 2.83 million, a record high, and is expected to exceed 3 million within the next five years. Likewise, the unemployment rate remains low, having stayed below 5%, a level consistent with full employment, for 16 consecutive quarters. This robust labour market has supported consumer spending and domestic demand. Modified domestic demand, a proxy for underlying domestic activity, grew by 4.9% in 2025. This performance reflects the strength of our enterprise base and the policy choices this Government has made in recent years. However, this resilience must not give rise to complacency. In the current environment, risks remain clearly tilted to the downside.

I will now turn to the economic outlook. Given fast-moving geopolitical developments, the endorsed projections in the annual progress report should be viewed as a reference or baseline scenario, providing a useful benchmark against which new developments will be assessed. Indeed, in recognition of the turbulent backdrop, the report also includes two alternative scenarios examining how the outlook could vary under different energy-price developments. Importantly however, despite the varying levels of economic effects, under each scenario the economy is expected to continue to grow. In the near term, the outlook is largely shaped by external developments beyond our control. Under the baseline scenario, inflation is projected at 3.3% this year, based on relatively benign assumptions regarding developments in the Middle East. Under a severe scenario, however, inflation could rise to around 4.5%, with adverse effects on both growth and employment. While I would very much stress that this is a severe scenario, it is something that the Government must be prepared for.Indeed, the Government has consistently argued for running budgetary surpluses precisely so that we have the fiscal capacity to respond when shocks arise.

Looking beyond the short term, the outlook is shaped by more structural factors. Demographic change will significantly affect the economy, influencing labour supply while increasing pressures on public services. At the same time, advances in artificial intelligence are reshaping how we work, the nature of the jobs we work in and the skills required for those jobs. Many of these factors are assessed in the report via scenario analysis. While these transformational changes come along with challenges, they also present major opportunities and we must prepare accordingly. That is why the Government continues to invest in critical infrastructure, including energy, water, housing and transport, and in people, making Ireland an attractive location in which to invest, to work and to live into the future.

I now want to say a few words about the public finances. For this year, the Department of Finance is projecting a general Government surplus of €9.2 billion, equivalent to 2% per cent of modified national income. This surplus has been underpinned by the economic resilience I have been referring to. However, we must also be realistic about the risks ahead. Our revenue base remains heavily reliant on volatile windfall corporate tax receipts, leaving us exposed to any downturn in the multinational sector. To give Senators a sense of what that looks like in practice, income tax, corporation tax, VAT and excise duties account for over 90% of all tax revenue. Last year, corporation tax generated around one third of our tax revenue. That is a significant portion of the funding model for this country and whilewe are projecting to run a surplus this year, we must be honest that interventions and once-off measures reduce our ability to prioritise day-to-day services and spending. That is why we continue to build long-term resilience through the Future Ireland Fund and the Infrastructure, Climate and Nature Fund. I am happy to say that close to €23 billion will have been transferred into these funds by the end of this year.

More broadly, we are committed to making the critical investments needed consistent with sound public finances, as outlined in our medium-term fiscal structural plan. Indeed, this approach will continue to give us the flexibility to respond quickly and effectively to challenges that may arise. We must also focus on diversification of our tax base where possible to continue to future-proof our economy. This is an area I am focused on through Ireland for Finance, the Government strategy for the international financial services sector. This is a sector which can continue to develop, while also generating opportunities for indigenous firms to scale. We have a competitive edge here. From research and development tax credits to the national enterprise hub and local enterprise offices, we are implementing policy which supports diversification and innovation. Last week, I had the opportunity to highlight this on the international stage in south-east Asia, and it is regrettable that a recent multi-ministerial visit to Canada had to be postponed. These are new markets we need to exploit and tap into to ensure we continue to run budgetary surpluses.

Today we announced a package of fuel supports that will help those who are at the forefront of the global energy crisis, which has been instigated far from our borders. Under the fuel support scheme, approximately 120,000 farmers and 1,500 full-time agricultural contractors will receive Government support. This package, along with previously announced supports, will deliver an effective reduction of €274 in the purchase of 1,000 litres of green diesel. We have reduced the rates of excise duty applying to petrol, auto diesel and marked gas oil, commonly known as "green diesel". Additionally, the National Oil Reserve Agency levy has been reduced by 2 cent per litre of fuel. These reductions will remain in effect until 31 July 2026. The total reductions will reduce the cost of petrol by 27 cent per litre, diesel by 32 cent per litre and green diesel by 7.4 cent per litre. In addition, the Government also deferred the planned increase in carbon tax scheduled for 1 May until October. This will provide additional support for consumers of green diesel and other affected fuels, such as kerosene heating oil, natural gas and solid fuels.

To protect those at risk of fuel poverty, the Government has extended the fuel allowance season, which would have normally run for 28 weeks, by a further four weeks. This will result in additional payments of €152 to each of the nearly 470,000 fuel allowance recipients who comprise over one quarter of households in Ireland. This means that a typical household receiving fuel allowance will have received €1,216 over the course of the fuel allowance season. In budget 2026, the Government previously announced that VAT on electricity and gas will remain at the lowest possible level of 9% until the end of 2030 to help to mitigate costs and address energy poverty.

Further to this, we have increased the maximum repayment allowable under the diesel rebate scheme from 7.5 cent up to 12 cent per litre of diesel. This is a scheme which is available to qualifying licensed haulage and passenger transport operators and has been backdated to January and will apply until 30 June 2026. These changes will keep the economy moving.

Ultimately, it is clear that we need to decouple from our reliance on fossil fuels to ensure energy independence. As an example of recent progress, Ireland has recently achieved 8 GW of installed onshore renewable electricity capacity, marking a significant step forward in the transition to securing our future with homegrown renewable energy.

Senator Duffy made the point that we need to be concentrated and moving towards renewable energy. The old saying is that we should never waste a crisis. This should focus the Government's efforts. We must redouble our efforts in the transition to renewable energy. We need, in particular, to exploit the vast amounts of renewable energy on the western seaboard.

l am conscious, despite what some may project, that no Government across the world can fully shield all households and businesses from rising fuel and energy costs. Any fair-minded person would say that the suite of measures announced by the Government and costed at over €750 million is a significant response to real pressures being felt across Ireland, and globally, and is one of the most comprehensive support packages per capitain the European Union.

This year's annual progress report highlights that the global environment has become more uncertain and unpredictable. At the same time, Ireland is entering this period from a position of strength. Employment is at record levels, the public finances are in surplus and the economy has repeatedly demonstrated its capacity to adapt and recover from shocks. This resilience has not happened by chance. It reflects deliberate choices to strengthen the foundations of the economy and to manage the public finances in a prudent and sustainable way. That prudence and the position it has put us in does not give us licence to spend unsustainably, but does allow us to act in a responsible and targeted manner. That is the approach this Government will continue to take.

I will address a number of the specific points raised in the course of the debate. Senator Ryan made a number of suggestions. The Government has been clear that as we frame budget 2027, it is very much our intention to ensure that working families get a break. The most recent budget took the decision to invest heavily in housing and infrastructure and supporting jobs, but it is acknowledged that we need to ensure that working families get the support they deserve and need in the upcoming budget.

Senator Conway spoke about hearing anecdotally that some people are staying longer in bed because of the cost of fuel. The point I would make is that we are all constituency operators. Nobody should be doing that. If there is somebody who is unintentionally falling through the net, the community welfare officer is there to ensure that people can get that extra benefit on top of their fuel allowance and old age pension. Exceptional needs payments are available. I ask everybody to use their good offices in their respective constituencies to ensure that people are aware of that additional support and do not feel ashamed or embarrassed to come forward to avail of it.It is there to be used and I encourage people to use it. I thank all Senators for their contributions this evening. I look forward to engaging with them in the months ahead.