Deputy Mary Lou McDonald- speech from 29 Mar 2022

I'm glad to see you well after your brush with Covid. And can I also offer my congratulations to Deputy Bacic as she takes on her leadership role. Every best wish to you, Deputy. Teashoek, workers and families face a cost-of-living crisis that demands an urgent response. Last week, Energia became the third energy supplier this year to announce a price increase for its customers. And the increase will come into effect next month and it will add €427 to the yearly household bill. This is the fourth price hike announced by Energia in the past year and it comes just a week after Board Gauche announced a massive price increase that will add a €775 additionality to the yearly household bills of its customers. So, these are frightening numbers and they come after 35 energy price hikes announced last year. Without action, Teashoek, low and middle income households face an income squeeze that they will struggle to withstand. And indeed, many are already unable to cope. St Vincent de Paul have seen requests for help soar with households facing the impossible and unacceptable choice as to whether to keep the heating on or to do the weekly food shop. Last week, the Central Bank told my colleague, Chukta Pierce-Doherty, that households would see energy and food costs rise by €1,900 this year. So, workers and families cannot bear these costs without very significant financial hardship. They need help. We recognise, Teashoek, the causes of this cost of living crisis and we know that households cannot be fully insulated from these costs. But they can and they must be supported as much as possible. So, the good news is that more can be done. Indeed, the responsibility of government is to ensure that more is done. For five months now, we in Sinn Féin have been calling on government and the Minister for Finance to work with the European Commission to remove VAT from household energy bills. And for months, that proposal has been dismissed. I welcome the fact, Teashoek, that you have now changed position, that you are now finally engaging with the Commission to allow for a reduction or removal in the level of VAT applied to fuels, just as we have been calling for. The conclusions published after the meeting of the European Council last week provide scope to engage with the Commission further on the issue of VAT. So, my questions to you are these. What specific ask have you made of the Commission? Have you sought scope for government to reduce VAT to zero for a period of time on domestic energy bills, as we have asked? Has government applied for a derogation from the current VAT rules? And when do you expect this process to be concluded so that customers can get the break that they need? Secondly, as you know, government could take measures now that would reduce the cost of home heating oil for hundreds of thousands of households. This month, the cost of filling a tank rose to more than €1,600. Taoiseach, many households simply cannot afford this, and we in Shinveyn have been calling on you to remove excise duty on home heating oil. Up to now you have ruled this out, but given the pressure that so many are now under, will you change your position and provide workers and families with additional support by removing excise duty from home heating oil? First of all, I want to thank the Deputy for your kind remarks and comments in relation to my brush with COVID and indeed all members of the House and many well-wishers in the aftermath of that. And thankfully, it was a light brush and probably points to the value of vaccination. And I'd urge anybody out there who's not vaccinated to go and get the booster. In relation to the cost of living, there's no doubt that there's been a very severe increase in the cost of living over the last number of months, and particularly as we emerged from COVID, we had an initial inflationary cycle, which was described by the Central Bank as a pandemic cycle of inflation because of the imbalance between supply and demand. Huge demand after people came out of COVID, societies came out of COVID, economies rebounded, supply chains were under strain, manufacturing couldn't keep up with the demand and prices rose. And then in the prior to the war on Ukraine, the energy market was being manipulated, in our view, to create spikes in prices and to create challenges around the energy. And there's no doubt now that the whole energy question is a leverage from Russia and the Russian Federation in respect of the conduct of this war. But the war itself is now significantly adding and making far worse the inflationary pressures on our economy, particularly on households and people more generally. And that's across the board, particularly in energy, food will also reflect on this or will manifest this, other commodities, particularly other metals. And we know that at the moment, you know, Russia and Ukraine account for about 30% of global exports of wheat, 7% of maize and more than 50% of sunflower seed oil. Together they produce 12% of calories consumed globally. And Ukraine supplies about a quarter of the European Union cereal and vegetable oil imports. So there's going to be ongoing impacts from this war over and above what we've already witnessed to date. The existing transport routes have been disrupted because of the war. So the costs of trade are increasing. So, for example, rail freight between Asia and Europe via Russia or Ukraine is interrupted. Trade has switched to sea freight, which is slower and more costly. Sea freight routes through the Black Sea are affected. Annual rate of inflation in Ireland rose to 5.7% in February. Euro area inflation 5.8%. Wholesale oil prices are now 40% compared to January average. And gas prices are up 60%. The cost of base metals and agricultural commodities have also surged. A barrel of oil costs $114 today on international markets, up from $96 on the 23rd of February. And UK natural gas on wholesale markets is trading at around 245 pence a term today. This day last year, a term of gas cost 47 pence. So that illustrates wages went up 4.7% in 2021. That was following a rise of 5.2% in 2020. But there's no doubt that this dramatic and phenomenal increase in prices is having impacts. The government to date has, from the budget on, produced now close to $2 billion in income supports and in targeted measures around energy in particular and other areas in terms of welfare payments in response to the increase in inflation. We've also targeted measures for hauliers, for tillage farmers, for the pigmeat sector, and are looking at different sectors. In terms of the European Union, we sought an amendment to conclusions to create the opportunity for flexibilities around the VAT directive and the energy tax directive, which do restrict us right now. That's why we weren't ignoring anything. We simply pointed out to you at the time that what you asked for couldn't be done at the time because of the regulations. We don't want to go back to 23% once this crisis is over in respect of oil. In terms of home heating oil, if I may say, you're saying basically to reduce the carbon tax, is what you're saying in essence. Let's call it spade to spade. You have VAT and you have carbon tax on home heating oil. We're way over time, Taoiseach. So, thank you. Taoiseach, you've described the problem. You've signposted very accurately that this will be an ongoing problem. So, the pressure that households are under, that will remain constant. You need to recognise, as I'm sure you do, the struggle that means for households and families right across the state. But what you didn't do is answer a series of very straightforward questions. So, firstly, on the issue of home heating oil, yes, we want the removal of excise from it. Yes, which is an excise charge on, well, revenue, describe it as excise. I don't care what it's, Micheál, I don't care what it's described, it needs to be removed. You need to be transparent. It needs to be removed. Taoiseach, will you remove the excise from home heating oil? That's the question. I believe you should do that and you should do it urgently to give relief to those who cannot now fill their tank and are struggling. Secondly, I ask you, what's the specific ask that you've made of the Commission? Have we sought a derogation in terms of the VAT directors? How long will this process take? What ask have you made? We believe, as you know, we should look for a zero rate for a defined period of time. Is that what you have sought? You know that, that's what I sought. I said this to you already, that we have sought a derogation in respect of the application of the rules around the VAT directive and the Energy Tax Directive, which covers excise. And basically we've sought that if we reduce our VAT rate, because we have historical derogation, we've wanted the lower rates on energy at the moment in terms of VAT, 13.5. If we bring that down, no, I don't think we should go to zero, but if we did bring it down, we'd go back up to 23% under the existing rules. And I've been saying this to you for two or three months, so has the Minister of Finance. I'm not stupid, I'm aware of that. Yes, you're correct, I'm correct. You're well aware of it, and you should know that. And therefore, we have been seeking from the Commission a change in the application of those rules, a temporary derogation from those rules, so that we could give ourselves and other states flexibility in terms of the application and VAT, or indeed excise duties. In terms of home heating on, its carbon tax is there at the moment with VAT. Those are your two options. Now, you're technically using different terms deliberately to avoid... Revenue, you use that term. You politically want to avoid the charge that you want to get rid of the carbon tax. No, no, I'm avoiding nothing. But that's what it means. That said, we want flexibility on the VAT side of it. I use the language that we're on the revenue. But I would make this point if I could. You're right in saying this is going to go right through to the end of the year. And that's how government have to react here. We can't every single week. We're bringing in separate measures. We have to prepare for the medium term. There's no fair use. In terms of helping people in managing the economy properly. There's no fair use. In terms of helping people in managing the economy properly.