Targeting cost-of-living supports
Deputy Ged Nash says working families are being left behind and criticises VAT cuts for fast-food businesses instead of broader relief for workers. The Tánaiste defends the €750 million package and argues that targeted support for fuel-intensive sectors and small businesses is justified during a fuel crisis.
Hundreds of thousands of working families have been left asking why they have been left behind by this Government. They are left wondering what it will take for the Government to act to help them. Which piece of road or which port should they blockade before the Government takes notice? Over the past six months, Fianna Fáil, Fine Gael and Independents made deliberate decisions which left those workers behind and worse off. It decided on plain silly VAT cuts for fast food firms, paid for by PAYE workers, because it chose not to index income tax bands and credits. Only now does Fianna Fáil appear to have a problem with that stroke.
The Government made a decision to withdraw critical, once-off payments and energy credits. For three years families relied on a couple of hundred euro to ease the burden of Europe’s highest electricity prices. The Government left them at a loss with less money in their pockets. They are now getting bills for €300, €400 or €500 at a time. That decision is now coming back to haunt the Tánaiste and his colleagues.
The Iran war will nearly double inflation this year. Construction and food prices will rise further, making a complete mockery of the Government’s VAT-cut misadventure. Grocery prices were already increasing at over 6% and electricity prices will rise even more, adding €150 to average bills which were already sky-high. Before Easter, the Tánaiste and other members of the Government were talking about tax cuts for the richest in our society on inheritance and for special investment accounts. Quite frankly, that was tone deaf. That consideration once again ignored the needs of many who are struggling to pay their bills. Now it seems the Government has realised finally realised the error of its ways.
In the past week, the Government has flown many budget kites, including income tax cuts, energy credits and increased retrofit grants; you name it. Why do PAYE workers have to wait more than six months for relief when protesters only had to wait for a week? Those sectors did need some support but why are the needs of the real drivers of the economy being blanked by the Government? Yesterday, the Commission laid out the measures the Government can take to address the impact of the energy crisis. There are many policy options available to the Government in this toolbox such as a windfall tax on energy profits, price controls, energy vouchers, social tariffs and income support schemes for households.
People know there is a massive surplus. Why? Because the Government keeps telling us. They also know we cannot spend it all at once and that services need to be paid for. People saw that the Government very quickly found €750 million over the past month for sectoral interests. They need help now and there are ways for the Government to responsibly do a mini-budget now to provide real relief for PAYE workers. It could reverse the VAT cuts, introduce a windfall tax on energy companies and use the money for targeted energy credits of €400 for average income households. It could introduce the income tax indexation it promised during the general election but abandoned last October, and offer real supports for families with grocery bills and school costs. It can use existing laws to place maximum-price orders on home heating oil. Will the Tánaiste now move to help working people through a mini budget?
Comment on this
We will not be bringing forward a mini budget but we did introduce a €750 million package, the second largest in the European Union and two and a half times the European average, less than two weeks ago. I take some of the points the Deputy made on sectoral interests versus everybody. There is something in that. However, I will make two points regarding that. First, there are some sectors where it simply makes sense when there is a fuel crisis to prioritise an intervention. We are not all the same in terms of our fuel consumption. A haulier or a farm contractor has a very significant fuel bill. It made sense for all of us to keep our supply chains in certain crucial sectors of the Irish economy going. I do not think the Deputy and I disagree on that; he has acknowledged some sectors need help. Beyond that, I make the point that the package we brought forward is one everybody benefits from. I will explain why. The chief economist in the Department of Finance has estimated, and he said this on the day we published the spring forecast, that whatever inflation ends up being - we all want to suppress any increase - will be approximately 0.6% lower each of the months of May, June and July then it would otherwise have been. That person the Deputy quite rightly mentioned, and we all know them, who is in the supermarket and worried about the cost of food going up - by keeping inflation down through the package, we are having a positive impact on what that supermarket bill would have been otherwise.
On VAT 9%, and the Deputy got a lot of mileage since the previous budget out of the old burger baron cut, I want to ask him about it. I was in the Deputy's constituency this week. I doubt when he goes into his local café in Drogheda, and we all have a local café in our community, he looks at the man or woman behind the counter and says good afternoon to Mr. or Mrs baron because he knows in his heart of hearts, as a former Minister in the Department of enterprise, that the overwhelming majority of hospitality businesses are small businesses. He knows they are the heartbeat of rural and regional Ireland and they employ four, five or ten people. He knows that whatever the merits or demerits, and I accept we have a full policy difference, of our position on the budget, it is more essential we reduce their cost base. What would the Deputy be saying to me if we had not done anything to support the hospitality sector in the budget? A sector that employs well over 140,000 people directly needs our support. I am not flying any kites but when I am asked a question I try to answer it. I was asked whether there will be a personal income tax package in the budget; yes, there will.
I want to make another point as the Deputy has raised this with me many times. The country we saw in recent weeks regarding blockades is not who we are. We all know we are better than that as a people. People are angry and frustrated and there are real issues; I get that. However, we have to have really good structures for engagement in place with democratically constituted national bodies. We had a very good meeting in the past week of the Labour Employer Economic Forum, LEEF, with the ICTU, and others. It made points not too dissimilar to the Deputy’s. There is a need to intensify that engagement in the weeks ahead.
Comment on this
There are other and better ways of targeting supports to businesses which may need them, not a blanket VAT cut that is going to disproportionately benefit the burger barons like Ronald McDonald and his friends. That is a very poor use of taxpayer money and is being paid for directly by PAYE workers. That is the reality. The Tánaiste is now trying to retroactively justify that by the increased energy costs that businesses will be experiencing. I simply do not buy that. The Tánaiste is going to have to explain, with great difficulty, to workers who are going to continue to find it very difficult to pay their bills this summer when the VAT cut is introduced in July, why he is continuing to justify that. Lobbyists do a great job for the hospitality business. They did a number on the Tánaiste. Hauliers did a great job in terms of how they acted. They got the Tánaiste to respond. They have done the business for the people they represent. It is about time now the Tánaiste and his Fianna Fáil and Independent colleagues did the business for working people.
Comment on this
We will not get into it but the Deputy knows Ronald McDonald does not own the McDonald's in Bray. He knows there are franchises in relation to many of these places. It is important to point that out.
Comment on this
Whether it is a franchise or a small independent business, there are hardworking, decent people running these places too. They employ PAYE workers too. I will stand in any of these cafés, restaurants or rural pubs that serve food and say to people that the reduction we have brought about from July on VAT is a reduction in the cost base of that business. At a time of real pressure, reducing costs on business is good. We can disagree on that point and agree on a broader point. There is a need to have broader engagement with wider society and representative groups on how we get ourselves through this moment of challenge. I found, and I certainly do not mean they were not tough on us or that they agree with us on everything, that the engagement we had with ICTU, IBEC and members of the LEEF to be very good.
What we need to do is have a much more intensive process now to engage with workers, their representatives and business representative bodies in the weeks ahead.