Carbon tax and cost of living
Deputy Mary Lou McDonald attacks the planned carbon tax rise as unfair during an energy and cost-of-living crisis. The Taoiseach argues the increase will be offset, global energy shocks are the main cause, and wider climate action and anti-profiteering measures are needed; exchanges become heated over the Government's response and rhetoric.
We are just three weeks away from the Government's carbon tax hike on 1 May. This is the same day that the latest round of energy price hikes from providers will kick in. The carbon tax will make life harder for workers and families who are already struggling to keep on top of their soaring energy bills. They live in dread, in panic and, in some cases, in fear. People are being fleeced by big energy companies, which are making bumper profits. It is crazy that the Government, which should act to protect households, will come along at the start of next month and pile on more pressure. Instead of supporting households, the Government will ratchet up pressure on families with a tax hike that adds to the already unaffordable price of home heating fuels. At the weekend, Ministers, including the Minister for the Environment, Climate and Communications, Deputy Eamon Ryan, vowed that the carbon tax increase will go ahead despite the extraordinary crisis that households face. Almost in the same breath, the Minister, Deputy Eamon Ryan, told workers and families to save money by taking shorter showers and by driving less.
That was the Government position on Sunday.
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Yesterday, the Taoiseach told the media the carbon tax is not a big issue in the grand scheme of things and that it was not a big deal. However, this is a big issue for households up and down the country where every euro counts and so a worn-out public is again left shaking their heads at the out-of-touch reaction from Ministers. People rightly ask where is the common sense and where is the sense of urgency or agility from the Government to respond to what is happening in people's daily lives. The carbon tax hike is the wrong decision at the wrong time. We have told the Government this time and again and more and more people are now coming to that view. Indeed, yesterday Dr. Cara Augustenborg of the Climate Change Advisory Council called for the hike to be deferred. This is an expert appointed by the Taoiseach's Minister to advise the Government on these matters. The Government's position is wrong and the Taoiseach must listen. People cannot afford a carbon tax increase. They do not have the money to give. Far too many lives are now defined by the awful choice between heating and eating. This hike can only make matters worse as it disproportionately affects those on low incomes, older people who struggle to stay warm and it will of course hit households in rural Ireland especially hard.
Tá an t-ardú ar an gcáin charbóin ar an 1 Bealtaine an rogha mícheart ag an am mícheart. Tá teaghlaigh ag streachailt cheana féin le billí fuinnimh atá ag ardú as cuimse agus ní féidir leo an t-ardú seo a íoc. Caithfear stop a chur leis. It is time for the Taoiseach and Government to see sense because households have been hammered by more than 35 energy price increases in the last year and people are saying they cannot take any more. I want the Taoiseach to tell hard-pressed workers and families the Government will not add to pressure already on them. I want him to tell them Government will scrap the carbon tax hike due on 1 May and I would like him to give people that assurance today.
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I thank the Deputy for raising the issue. In the first instance, we as a society and a country have come through a once-in-a-century event in the pandemic, which in 2020 brought about the greatest recession since 1939. Thankfully, because of the Government's interventions to underpin the economy and support companies and the whole range of measures we brought in, the economy bounced back very significantly as we emerged from the emergency phase of Covid-19. A record number of jobs were created in the process.
Notwithstanding that, the pandemic has still left its impact. Economists in the European Central Bank, ECB, described it as a pandemic cycle of inflation caused by the imbalance of supply and demand in manufacturing and global supply chains across the world as economies and societies collectively and at the same time started endeavouring to come back and grow their economies with huge demand on products and so on. On top of the pandemic cycle of inflation came a war. It is a war unprecedented since the Second World War. It is having very serious impacts on the global economy, the EU economy and on Ireland's economy. It has, beyond any doubt, exacerbated the inflationary pressures on our economy, especially when it comes to energy and to gas, oil and coal in particular. It is also feeding through into food security issues. That is concerning into the medium term. It is also affecting other commodities and products as well, such as wheat, corn, soya beans and so forth. Their prices are all going up because of this war.
The one thing we are certain about is the uncertainty. We cannot deal with this as a society on a week-to-week basis or on one tax alone, in isolation, as the Deputy has endeavoured to present it. That does not represent a coherent, sensible response of substance. What we actually require is an inclusive process involving the social partners and stakeholders in society to intelligently and sensibly respond to this crisis, now, in the middle of a war.
That means social dialogue, it means dealing with the pay issue, with welfare, tax and the costs across the economy that people have but it also means dealing with climate. We cannot ignore the climate issue in this respect. The tax to which the Deputy referred and the increase that is in the legislation this Oireachtas passed, would represent about €1.40 over a month. In the overall scheme of things, that is not the main issue by any yardstick and the Deputy admitted that herself on Sunday on RTÉ radio. She acknowledged that this was not anywhere near the very large increases we have experienced because of these global issues that are impacting on us.
The Government has responded. In the budget, we allocated €1 billion in tax and welfare changes. We agreed a further package of €500 million, including the €200 energy credit, which will start appearing on bills this month and which is essentially a cut in electricity bills, as well as a lump sum payment of €125 for those in receipt of the fuel allowance. On 9 March we announced a 20 cent reduction in the excise rate for petrol and a 15 cent reduction on auto diesel, with a proportionate reduction on the excise on green diesel. That will save consumers around €9 to €12 on every fill of petrol or diesel. Since coming into office, we have raised the fuel allowance from €630 to €1,039 and if one adds in the €200 rebate, that amounts to €1,239 for recipients of the fuel allowance.
The Government has moved very significantly on this but we do need a more comprehensive response now, which is the way we should go as a society.
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We have made the case to the Taoiseach for a more comprehensive response. In fact, we have advocated for a mini-budget to deal with the very many costs that people are struggling with including sky-high rents, childcare costs and insurance costs that are out of control but up until today, the Taoiseach has singularly failed to listen to or respond to that message.
Today I asked the Taoiseach about the carbon tax hike and I put it to him that it is neither intelligent nor sensible to add any level of additional cost to people's home expenses at a time of soaring inflation and at a time when we know there is more, and arguably worse, to come. I want to put the question to the Taoiseach again and I want him to confirm for the House and the watching public that this carbon tax hike will not proceed on 1 May. It makes no sense at a time when families are struggling so badly. Every euro in costs, including the additional €22 on a fill of oil or €17 on the annual gas bill, counts. I want the Taoiseach to demonstrate that he can act, as he put it, "intelligently and sensibly" and call this tax hike off.
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Any increase in the carbon tax will be offset, so there will be no additional cost to people.
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I said to the Deputy that we need an inclusive process here, involving and including climate change as well. Yesterday's report by the UN Intergovernmental Panel on Climate Change, IPCC, warned that it is now or never to avoid climate catastrophe. That is what the panel said. It warned that humanity has less than three years to halt the rise of planet-warming carbon emissions. The UN Secretary-General, Mr. António Guterres, called out doublespeak on climate. He said that some governments and business leaders were saying one thing but doing another. He said, "Simply put, they are lying. And the results will be catastrophic." That is the view of a number of people in this House, including the Sinn Féin Party. They doublespeak on climate.
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It seems to me that it is the St. Augustine approach you are taking to climate change; "Oh Lord, make me chaste but not yet". That is your approach-----
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I have told the Taoiseach before that attacking me is not an answer.
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My chastity or otherwise is not an answer-----
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I did not attack the Deputy at all. Do not be playing the victim here. I attacked her party and her party's policy.
That is what I did. The Deputy heard me very clearly.
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The Taoiseach refuses to answer questions. He refuses to.
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The Taoiseach is the Head of Government.
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I have made it very clear that we have already brought down, by about €9 and €12, what would have been the cost for petrol, diesel and so on.
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We will make sure that any increase in carbon tax will be offset, but we have to do much more than that. That is my point
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My earlier response was that it needs more substance. I heard what the Deputy said on Sunday morning about a mini-budget.
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Attacking people does not constitute answers.
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I thank the Ceann Comhairle. I was here for Leaders' Questions last week and I got an immediate response from the Taoiseach to my request that we expel the Russian ambassador when he informed the House that four senior Russian diplomats were to be expelled. That was something I very much welcomed. I renew my call to the Taoiseach to expel the Russian ambassador given the horrific news yesterday from Bucha and the growing evidence of atrocious war crimes and their committal by Russian forces in Ukraine.
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I am glad the Taoiseach mentioned yesterday's chilling report from the UN Intergovernmental Panel on Climate Change, IPCC, because it leaves us no room for doubt that time is running out to save our planet and ensure the future of humanity. The Labour Party and I believe that the Government response to the climate emergency has unfortunately been characterised by too many delays, an inadequacy of governance and a failure to address the clear interconnection between the climate crisis, the energy security crisis, which has been exacerbated by the horrific war in Ukraine, and the cost of living crisis that is biting so deep into so many households across our communities.
At the weekend, we heard very worrying news regarding emissions here. The Environmental Protection Agency, EPA, confirmed the extent to which our emissions are heading in the wrong direction and the extent to which we are seeing delays in ensuring that we are moving to meet our emissions reduction targets. We learned that emissions from electricity alone rose by 21% last year. The EPA branded this as disappointing, which is patently an understatement because this is clearly not the direction of travel in which we so urgently need to be going.
Last week, I raised with the Taoiseach the Labour Party's concerns about Ireland's over-reliance on imported gas - another sign of moving in the wrong direction - which will only worsen if we proceed to build eight new gas-fired electricity plants by 2024, particularly when we have no clarity as to from where the gas to power them will come. What we need to see urgently are dramatic reductions in fossil fuel reliance, rapid increases in our renewable capacity and usage and rapid moves to electrification of heat, transport and other sectors, along with drastic action on retrofitting and active travel infrastructure and a national green hydrogen strategy, for which I have been calling for some time. If we do not take these urgent actions, we know from the IPCC that the consequences will be catastrophic, we will fail to keep global temperatures below 1.5°C and that the chance to avoid the worst impacts of the climate crisis will be lost. This is an immediate and critical issue for us in Ireland. As I have said, all we have seen is delays and an inadequacy in governance.
Will the Taoiseach accept that we have a problem with rising emissions and that emissions are going in the wrong direction? Will he confirm the establishment immediately of a just transition commission to manage our transition to a decarbonised future, as the Just Transition Alliance has sought, and to ensure that our transition to decarbonisation is carried out in a fair and just way that will not adversely impact on those who are most severely affected by the cost-of-living crisis, the energy security crisis and the enormous hikes we have seen in energy bills for so many people in recent weeks? I am looking for an answer on the just transition commission in particular, but I also want to know where the gas for the eight new power plants that are projected to be built will come from.
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I agree that we face a huge challenge. I thank the Deputy for raising the issue. Yesterday's report from the IPCC is a stark warning to all governments and to all parliaments that it is going to be impossible to put this matter to one side or defer action. The first item on the agenda today was the carbon tax, as if it was the be all and end all of the increases in fuel energy when we all know it was not and is not. The overwhelming increases in oil and gas have been caused by our coming out of the pandemic and the war. We need honest debate about these things and we cannot always be falling back on what is politically convenient in the short term. Short-term political convenience will not save the planet. We passed legislation in this House.
It is interesting that people in the bottom four deciles of income are protected from the carbon tax. Some people are better off because all of that tax is given back in the form of increases to the fuel poverty allowance and energy efficiency measures. We need those resources to drive on retrofitting in our homes. That money is not going to come from fresh air. There is not an endless kitty in the Exchequer, as some people would like to believe. We need honesty and consensus on this issue, and to stop playing politics with it all the time. I am not saying the Deputy is playing politics but whenever the Government does anything, someone in this House wants to knock it back.
The legislation has been passed. We have been in government for 18 months. There is going to be an enormous challenge to meet our targets for 2030, including the reduction of greenhouse gas emissions by 51%. The decisions we take today are critical. We cannot put them off. We will deal with this energy crisis but as we do so, we must protect the edifice we have in place around climate change. That is my point. We should try to get consensus in this House and stop playing politics with this issue. That is what we should do if we are sincere about climate change. I am open to working with all parties in the House on climate change because it is an existential issue. The least we can do, as a Parliament, is to make sure that we give the generations coming after us some chance of a quality of life. What awaits future generations is truly horrendous if we continue on in denial.
We will be establishing a just transition commission. The Minister for the Environment, Climate and Communications, Deputy Eamon Ryan, is extending the contract of the current just transition commissioner, Mr. Kieran Mulvey, to the end of the year, and a full commission will be established. A great deal of progress has been made in respect of responses, particularly in the midlands. There was frustration at the acceleration and delivery of projects in that area but that is a very important part of it. The carbon budgets will happen. There have been intensive discussions with various Departments in respect of the different sectors and the contributions they have to make to carbon budgets arising from the legislation.
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I thank the Taoiseach for answering one of my questions, namely, the one on the just transition commission. I agree that there is a need to be honest and constructive in this debate. My party is serious about the environment and ensuring we take the urgent actions necessary to meet our ambitious targets. We support those ambitious targets because we see them as necessary. Indeed, the IPCC has clearly pointed out to us just how urgent it is that we start to take the necessary actions to meet our targets. However, our concern is that there simply is not sufficient urgency in the Government's responses. We need governance structures to be put in place to enable us to meet those targets.
I asked about the just transition commission. I am also asking about the climate action delivery board, which, I understand, failed to meet more than once last year. Has that board met in the past three months? If so, who attended? We need to get the governance right in order to ensure that we can meet those ambitious targets that we so urgently need to meet if we are to save the planet for our children and grandchildren. I agree with what the Taoiseach said about honesty and constructive debate. I am trying to engage in constructive debate, but I would like to hear some answers on governance.
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The Cabinet sub-committee on climate change has been meeting regularly. There is an overall Cabinet sub-committee, chaired by the Minister, Deputy Eamon Ryan, now dealing with climate change. My Department has a co-ordinating role in terms of the delivery of climate change policy. We have made progress. The Climate Action and Low Carbon Development (Amendment) Act, which is comprehensive legislation, became law in 2021, as the Deputy knows. That legislation fulfilled the commitments in the programme for Government to introduce the climate Bill, establish in law the 2050 target of net-zero emissions and make the adoption of five-year carbon budgets that set maximum emissions by sector a legal requirement.
At COP26, Ireland announced that it would more than double its climate finance contribution to developing countries to €225 million per year by 2025. A strategic roadmap setting out the delivery of those commitments will be published this year.
We are committed to the scaling and speeding up of our switch to alternative energy systems. The Maritime Area Planning Bill, which established the maritime area regulatory authority, MARA, was passed last year. We are working intensively on the wind energy piece in order to drive offshore wind energy projects that would enable us to be a net exporter of energy post 2030.
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The Taoiseach would have people believe that all the price increases are down to the pandemic and the Russian invasion of Ukraine, but the reality is that quite a few of them are down to profiteering here on the home front. Bord Gáis is increasing gas prices by 39%. Its parent company made a profit of more than €1 billion last year. The price of food goes up and up, but so too do retail profits. Tesco made £1.7 billion in profits in Britain and Ireland the year before last. The landlord class, who may well not have a word of Russian between them, jacked up rents at a rate equal to 10% per annum in the fourth quarter of last year.
What can the Government do about the cost-of-living crisis? I will tell the Taoiseach four things that can be done here and now. First, the Government can tell the ESB, which is a State-owned company, that 25% increases are just not on. This company made nearly €700 million profit last year. Tell the ESB it can break even this year - no more, no less - and that the profit margins can be used to at least freeze prices, if it cannot actually cut them. Second, the Government can send a cheque to households to ensure they can ride this crisis out. How much per cheque? I would suggest €2,000. How should we pay for it? By introducing an emergency 2% tax on the wealth of every millionaire household in the country. Allow them €1 million for their primary residences. I am talking about the €1 million on top of that. The tax would apply to the richest 5%. That would more than cover it. I will give the Taoiseach the maths if he wants me to.
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It is not rocket fuel for inflation. The Government would be redistributing wealth, not printing money. On the third measure, the Government says it cannot bring in cost-of-living packages every week. That ignores the fact that households are being hit with cost-of-living increases every week. Here is one thing it does not have to bring in at all; it just has to cancel something. Cancel the carbon tax increase planned for 1 May. The Government cannot be on the side of the people in a cost-of-living crisis and at the same time be heaping more taxes on them. Do not talk to us about a green agenda. If the Government wants to make the green agenda deeply unpopular, then it will do precisely what it is planning to do. Instead, it should bring in a tax on the big corporate carbon polluters.
Last but not least, and this will not cost a penny - it is a bit of advice from me and I will give it free of charge - the Government should stop with the Marie Antoinette stuff. Stop talking to people about spending less time in the shower. It is patronising. People do not want to be patronised; they want action from their Government. The Taoiseach might comment on my action proposals and tell us what the Government is actually going to do.
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The Deputy's first premise is wrong, in my view. The overwhelming causes of the increase in energy prices are global. They derive from the pandemic and from the war, without question.
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Anyone with any degree of intelligence knows that. I would appreciate if we had less of the heckling and nonsense that is going on here.
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You do not want to tell the truth. That is all that is wrong with you.
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Everybody knows the cause of this is an unprecedented war on the Continent of Europe that nobody anticipated. In advance of that war, there was a deliberate strategy to cut energy and fuel supplies. There is no question about that now, in the full light of day. Unfortunately, that has created very negative impacts on us all, particularly workers and people on very low incomes. That is why, as I said earlier, we need an inclusive, comprehensive and sensible response, as a country, to two major crises in a year.
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Does the Taoiseach know what sensible is?
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That means covering all aspects of this, including pay policy, tax, welfare and climate. To do it on a tax-by-tax basis makes no sense. It is incoherent. That is why I am not jumping to the political bait from the Deputy and others in the House who are attempting to make this about one issue or one tax., which is nowhere near the real cause of what is transpiring here. We have already brought down the excise duty on fuel by 15 to 20 cent. That equates to an average of between €9 and €12 when filling the average tank.
That is what we have done already but that on its own will not be a coherent enough response to this.
On the carbon tax, as I said earlier, lower income families, when you talk about redistribution, get more back from the carbon tax receipts than they pay. The ESRI's research shows that households in the bottom four income deciles see all the cost of the carbon tax increase offset, with the bottom three deciles being better off as a result of these measures. That said, any increase can be offset and neutralised by the Government while protecting a medium-term instrument and mechanism that is urgently needed for climate change in the future. I know the Deputy asked me not to mention climate change because everybody wants to postpone any tough actions or difficulties around that. The Minister, Deputy Eamon Ryan, did not mention showers by the way but people go on with that nonsense anyway.
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He mentioned the wolves all right.
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-----in energy efficiency, which is a legitimate pursuit and a good policy across the board, war or no war, and one of the most effective is to equip ordinary working people with the wherewithal to retrofit their homes so they can reduce their bills in the long and medium term. It is important that we do that work and that we are not deflected from it.
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The Taoiseach has tried to do it again with his three-card trick again and attempt to con the people. He said it is the pandemic and what is happening in Ukraine. Of course, it is the pandemic and what is happening in Ukraine; we debate those issues and their effect on prices with the Taoiseach every day. I raised the third card; the card the Taoiseach clearly ignored in his reply, which is the question of profiteering. The Taoiseach stayed silent on the fact that the parent company of Bord Gáis made profits of more than €1 billion last year. He remained silent on the point I put to him; that the ESB, a State company, made nearly €700 million last year and yet is increasing prices by 25% in the coming weeks. Why is the ESB doing that and, more to the point, why is the Taoiseach allowing it to do it? That is the key question I am asking the Taoiseach to answer.
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The only three-card trick I saw attempted in this House in the last month was from yourselves when at one stage, prior to the war, they had us believing the Russians were not going to start any war-----
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We never said that.
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-----and that NATO was the warmonger. That is what the Deputy and others said in this House.
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We never said that once.
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That is the only three-card trick I saw attempted in this House. I did not mention Deputy Boyd Barrett at all; he has been consistent enough but Deputies Barry, Paul Murphy and others had us believe that the warmongers in Europe and NATO were going to be the cause of this war. Now we know the truth of who caused the war. Less of that kind of trickery from the Deputy from time to time-----
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Is the Taoiseach going to answer?
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In terms of the ESB and any price gouging there is a Competition and Consumer Protection Commission in place to investigate all of that. The Deputy should present the evidence-----
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The Taoiseach represents the Government.
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What is the Government going to do?
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There should be no price gouging or exploitation of the situation. The ESB has a huge capital debt on the other side of that balance sheet by the way. It has that debt from investing in making sure we have energy security and supply, which are also very important. I did not get an opportunity to make that point in response to Deputy Bacik's question. There is a balance in the short term in energy and security of energy supply and gas will be a transitional fuel; let there be no doubt about that. As we need to dramatically increase our renewables, we will need gas as a transitional fuel.