Carbon tax and farmers
Deputy Harkin says the budget offered little new for agriculture and asks whether promised carbon-tax money is ready to be spent on farm programmes. The Tánaiste replies that carbon-tax revenue is funding fuel allowance, retrofitting, rural schemes and that €1.5 billion will be ring-fenced for farmers.
It is not an exaggeration to say that budget 2022 ghosted agriculture. By and large, it did not feature. I accept that schemes were rolled over and some small but very welcome investments were made in forestry, organic farming, etc., but there was nothing new. There was nothing substantial for a sector that is supposed to do much of the heavy lifting when it comes to reducing emissions. Current programmes will not deliver those reductions. Farmers were waiting for policy options and support in the interim between now and the start of the new Common Agricultural Policy, CAP, in 2023. If past experience is anything to go by, it can take quite a period of time for a lot of those programmes to bed in.
Farmers have been promised a just transition. What is the evidence of change so far? The evidence is we are importing peat from Latvia. Latvia is in the European Union and it has the same laws as we have. We are importing wood from Scotland. There is a real possibility of significantly increasing the importation of tonnages of beef from Brazil. That is the reality on the ground for farmers.
It was not just that agriculture was overlooked when it came to new supports. The sting in the tail is when it comes for example to the reduction in the flat rate VAT, from 5.6% to 5.5%. While 0.1% does not sound like much, it means €7 million to farmers.
It was also the fact that €49 million in carbon tax receipts that was supposed to go into agriculture have been deferred to social welfare. Is there no policy or programme to support the agricultural sector in decarbonising? A statement from the Department of Agriculture, Food and the Marine tells us: "The needs of the Department of Agriculture for 2022 were met without recourse to carbon tax. This is simply a matter of scheduling." The needs of the Department may have been met, but the needs of farmers were not. There is a narrative out there that we wait for the CAP and it will sort out all the problems. I am running out of time, but I will outline one fact: 25% of the basic payment on which farmers rely is now for eco schemes under increased requirements. Farmers are being asked to do more with less.
Comment on this
Deputy Harkin raises a valid question on the ring-fencing of some of the carbon tax for green schemes and farmers, but I do not think it is the full picture in terms of the budget. What we agreed to when the Government was formed was that a proportion of the carbon tax would be ring-fenced for social welfare to increase the fuel allowance. We did that and we stand over it, but also that a significant proportion of the carbon tax would be ring-fenced for climate action. That includes retrofitting, most of which is happening in rural Ireland, but also for farmers as well. Farmers will benefit to the tune of €1.5 billion this decade directly from the proceeds of the carbon tax. I stand over that commitment. The Minister for the Environment, Climate and Communications, Deputy Ryan, repeated it yesterday in his speech here in the Dáil, and the Minister for Agriculture, Food and the Marine, Deputy McConalogue, stands over that too. The sum of €1.5 billion in carbon tax proceeds will go to farmers this decade. A decision was taken to start that in 2023 in line with the new CAP. The Minister for Agriculture, Food and the Marine, Deputy McConalogue, can explain the details of that, but it does make sense to do it at the start of the new CAP period in 2023. Farmers will get the full €1.5 billion between 2023 and 2030. I reiterate that commitment here today.
In terms of the budget as a whole, it contained €4 billion for farmers: €1.86 billion through the Department of Agriculture, Food and the Marine and €1.2 billion through EU schemes. It is a 2% increase on 2021 and an 11% increase on budget 2020.
As Deputy Harkin indicated, all the major farm schemes are protected, and that is real money to real farmers. There were a number of new measures, for example, €4 million was allocated for the establishment of the national food ombudsman and the food regulator. That is an important body we want to set up. It is being done very much at the request of farmers and will have a role in ensuring farmers get a fair price for beef and the other products they sell to the market.
In tax, the stamp duty relief for young, trained farmers and stock relief was renewed. The budget for Teagasc has been increased by €7 million, which is important as well in terms of science and research into agricultural issues. As well as that, it is important to bear in mind that farmers are workers and members of society too, and they will benefit from many of the changes made in the budget. Farmers pay income tax, so they will benefit from the reductions in income tax announced in the budget. Many farmers are in receipt of welfare payments. Some are pensioners, some are carers and some receive farm assist. All of those payments increased in the budget. Some will benefit from the healthcare changes such as reduced medicine costs, for example. Many have students going to college who may benefit from the increase in the student grant or the fact the distance changes are being made, which is quite important for rural Ireland too. Others have children in childcare, and they will potentially benefit from the freeze in fees. It is true to say that there were new measures that will benefit farmers and rural Ireland in particular.
Comment on this
The Tánaiste is correct that the families of farmers are all members of society and they benefit from some of the changes in the budget, but it was promised that there would be a ring-fencing of a certain proportion of the money from the carbon tax for agriculture and we are being told farmers will get it but not yet. My question still stands, which is whether the Department is ready to roll out programmes so that this money can be spent.
The Tánaiste states there was a 2% increase. I am not an expert on looking at budgets, but when we look at the appropriations-in-aid, in fact, the spend in 2022 is 2% less than the spend in 2021. There has been an increase in administration, animal welfare and other areas. When it comes to farmers having money in the back pocket, there is nothing specifically for them in this budget.
My final point relates to carbon tax. If we look at the ESRI report, it tells us on page 22 that rural households face significantly higher prices than urban households when it comes to carbon tax. In the same budget, we see that what was supposed to be ring-fenced is not going back to the sector.
Comment on this
A large portion of the carbon tax proceeds will go towards increasing the fuel allowance and a lot of people in rural Ireland will get that increase. In fact, they are getting it this week, and if not this week then next week. A lot of the retrofitting that is happening is in rural areas too. The same goes for the rewetting of bogs and so on. A very large amount of the money that is raised from the carbon tax is going back into rural areas.
I restate the commitment the Government has made: €1.5 billion in proceeds from carbon tax will be ring-fenced for farmers for agricultural schemes between 2023 and 2030. It will come online with the new CAP. The Government has taken a decision that the right time to do that is when the new CAP comes into place in 2023 and we have all the new schemes. We are just rolling over the existing schemes at the moment. That €1.5 billion will start flowing into farmers' pockets and yards in little over a year from now.