Alan Dillon: Government response to energy price shocks

Thank you Comhairleach and I welcome the opportunity to close this debate and I want to thank Minister McConnellog for his opening remarks and I would like to expand on those. As Minister McConnellog outlined the government opposes this motion brought forward by the Independent Ireland deputies and this government is acutely aware of the pressures faced by many households and businesses right across the country as a result of the increased energy and price and fuel prices on the back of the ongoing conflict in the Middle East. In response we have taken a flexible approach helping in the very meaningful way across a number of areas and making sure ordinary people see the benefit of those interventions. Importantly we are doing this in a way that does not jeopardise our long-term objectives which are centred around permanent changes to our energy system so that the people do not have to face rapid price increases in future. To support those affected by the energy price spikes we have introduced a 750 million euro package worth of supports one of the largest packages across the European Union. The impact of these supports that we introduced have been significant 27 cent off a litre of petrol 32 cent off a litre of diesel 7.4 cent off a litre of green diesel we've extended the fuel allowance we've expanded the diesel rebate scheme we've reduced the NORA levy we've also opened the fuel support scheme for farmers with the scheme for whole years to follow in the coming weeks. The Department of Finance estimates that taking together this package has reduced the annual rate of inflation from April to July by 0.6 percentage points. These measures are targeted to support the essential sectors we depend on and those most vulnerable to price increases. Certainly they are while while they are temporary in nature time bound and proportionate they are in line with the longer term fiscal strategy. Of course these temporary supports are only one aspect of the government's response. They build on measures introduced over the past two budgets which provide real benefits for households and for businesses across the country. These include the 9% VAT rate for hospitality and hairdressing taking effect from the 1st of July that will support over a hundred and fifty thousand jobs. The reduced 9% VAT rate on electricity and gas will remain in place until the end of 2030 and this is one of the lowest rates across the EU. And finally the increases in core welfare rate benefits around one and a half million people including pensioners, people with disability, carers and low-income parents. These measures have been carefully designed a long-lasting and fiscally sustainable. In the long term our strategic dependence on fossil fuels has major economic implications. Moving towards domestic sources of renewable energy will reduce the impact of shocks like these and it will also help to insulate people from dramatic increases in energy costs we've seen over recent months and previously during the Russians invasion of Ukraine. This is why we are investing record levels in funding in the energy infrastructure to the national development plan. But we know that money alone is not the answer to every problem. In order to achieve our long-term success the institutions of the state and crucially the private sector needs to be able to deliver more efficiently and achieve better value for money. The accelerating infrastructure action plan will do just that and this plan is on track to speed up the delivery and therefore lower costs for critical infrastructure such as energy transmission. We recently achieved eight gigawatts of installed onshore renewable energy capacity, a major clean energy milestone on the path towards green energy efficiency and security. In addition to this budget 2026 allocated record funding for home retrofitting including fully funded upgrades to the warmer home scheme for those in energy poverty and these investments generate real benefits for households by making Irish homes more sustainable, more energy efficient and lowering energy costs. The national energy affordability task force which was established in June of 2025 will further accelerate on the implementation of measures to improve energy affordability and security. The task force for coming energy affordable task force will provide a coherent cross-government strategy for reducing energy costs for Irish businesses and consumers in the long term. In all of this it is vital to recognise that the government's ability to respond to energy shocks and to invest in strategic energy infrastructure is made possible by sensible management of the public finances. As we take decisive action to support businesses and households in the short term we also must maintain our ability to respond to future shocks and safeguard our economy into the long term. The medium-term fiscal and structural plan published in December last year allows us to do that. It provides a framework for maintaining sustainable budgetary strategy into the future and by setting out an overall medium-term expenditure path the medium-term plan provides government with the flexibility to respond to challenges in a timely and appropriate manner. By focusing on the medium term it safeguards overall fiscal sustainability. It is important to predict how external events will evolve and what new challenges will emerge into the future. Indeed the broader global environment remains incredibly uncertain as a small open economy. Ireland is particularly vulnerable and as such the best approach for government is to ensure that we remain flexible to the challenges that lie ahead. Over the long term we must continue to reduce our exposure to international energy markets by investing in secure domestic energy supply. Our fiscal strategy set out in the medium-term plan allows us to achieve both these aims and it ensures that we have the ability to respond to the challenges quickly and appropriately while maintaining the sustainability of the public finances and investing in the long term.