I wish to share time with Deputy Liz McManus.
Motor Vehicle (Duties and Licences) Bill 2008: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time."
Is that agreed? Agreed.
Sinn Féin supports measures taken to encourage the use of vehicles with lower carbon dioxide emissions and has been calling for this for some time, long before the Government decided to act. Nonetheless, any steps in this direction are welcome. Encouraging people to use vehicles with lower emissions is obviously an important aspect of any strategy to reduce overall emission levels. It is also necessary to create initiatives. Any initiative that can reduce carbon dioxide emissions is welcome.
It will be interesting to see whether the tax changes introduced in the budget will have the effect of reducing the sale of bigger cars, which have enjoyed a significant increase in market share in recent years. Over the past ten years, there has been an explosion in the use of higher horse power cars and in the importation of cars with an engine capacity of 1,900 cu. cm. and higher from countries such as Japan and England, thus contributing to increased emissions. On the other hand, there is significant evidence that motorists are becoming increasingly aware of the importance of reducing emissions and of their role in this regard. In recent years, this has led to an increase in the market share of new vehicles that produce fewer emissions. These accounted for almost 10% of new sales in 2006, while the second lowest category of vehicles accounted for another 22%. In 2006, 32% of sales were of vehicles with engine capacity of under 1,400 cu. cm. It seems certain, therefore, that tax incentives with lower carbon dioxide emissions will further increase this trend.
Some have argued that tax on lower-emission vehicles should have been frozen and that the shortfall should have been made up by higher taxes on those cars with much higher emission levels. Given the price involved, the disincentive to buying larger vehicles is perhaps not as great as imagined. Freezing the tax on lower-emission vehicles would serve as a great incentive to buy and own such vehicles.
Unfortunately, even the most optimistic projections regarding the reduction in carbon dioxide emissions accept that measures currently designed to reduce vehicle emissions will only make a small contribution to the overall target for reducing carbon dioxide emissions in Ireland. It is Sinn Féin's belief that the focus on tackling emissions from motor vehicles ought to be more pronounced and that an increase in the use of public transport should be achieved. If there were a better funded and more efficient public transport system, there would not be so strong an incentive for so many people to drive to work and elsewhere in private cars. I refer in particular to rural areas, where public transport is almost gone completely. In many areas, there is none at all and people have no option but to use private vehicles.
There have been some small successes regarding public transport in Dublin and the Luas serves as an example. However, there needs to be a much broader approach if large numbers of people are to be persuaded to leave their cars at home. If this were achieved, there would be far more significant reductions in carbon dioxide emissions than would be possible through changing the vehicle taxation regime.
The considerable incentive that exists for improving public transport as part of a strategy to reduce carbon dioxide emissions is evident from the extremely small role public transport plays in generating emissions. In 2006, the sector contributed just 4.1% of the total emissions in the State. This figure decreased from 5.3% in 1990 and this is due to the reduction in rail transport emissions. Emissions from private cars accounted for almost 37% of the total in 2006, although this figure also represented a decrease from that of 1990, mainly due to greater fuel efficiency, even though car ownership and use increased greatly over the same period. The car testing system has been a major contributor to reducing emissions in that it put many deficient, unsafe cars off the road, which cars were contributing significantly to emission levels.
The overall share of emissions produced by the transport sector has risen to 35%. It is as clear as day that an increase in public transport use would have a significant and positive effect on emission levels and, for this reason alone, regardless of any other social benefits, it would be well worth investing more to achieve this.
Many other issues concerning motor vehicles are of concern. Although the initial decision of last year on provisional licence holders was deferred, such that it would come into effect this summer, it will still cause problems for many. While the motivation behind the announcement was undoubtedly to enhance road safety and encourage motorists with provisional licences to improve their driving skills and pass the test rather than be taken off the road as a result of failing it consistently, the longer waiting list has made it difficult for people in this category to pass their tests before June.
The effects of the decision may not be known. It was pointed out at the time of the decision, yet there is still a long waiting list for a driving test due to the failure to provide more testers at testing centres. This will mean many motorists who are genuinely trying to pass their tests will not be able to qualify before the deadline or before their provisional licences expire, and thus they will be put off the road. This will have a serious effect in many parts of the country, particularly more rural areas in which people are highly dependent on cars for transport. This is another argument in favour of improving public transport provision. It would also reduce the number of vehicles on the road.
I must refer to road safety and the considerable carnage on our roads. I believe firmly that driver training should be part of the school curriculum. It is very important that young people learn good habits when they start driving. Low insurance costs for cars with low engine capacities should act as an incentive. If young people learn the rules of driving at a young age, it will carry them forward. I urge the Minister of State and the relevant Departments to consider this.
There is general understanding and consensus that transport is the big offender in the creation of CO2 emissions. The level of carbon emissions in the transport sector has increased more than 200% since 1990 and projections show that the level will increase rather can decrease into the future. Major measures need to be taken and a massive shift from private car use to use of public transport is required. I would not hold my breath in terms of waiting for the Government to make that shift but it is clear that is what is needed.
Regrettably, under the Transport 21 agenda, the public transport projects have fallen behind and, in some cases, are subject to considerable delays, whereas the road projects, in some cases, are ahead of schedule. That shows there is still a mindset that favours the private car use over public transport use.
The idea of using the taxation system to favour low carbon emission cars makes sense and it has general support. The question I pose is whether the Minister has thought this out properly and in a way that will achieve the desired result. That result must be twofold. It must deal with the issue of carbon emissions but, equally important, it must be fair. That is something that has not been taken on board in the argument about climate change to the extent that is required. There is also the question of efficiency. Any scheme comprising seven bands is fraught with the potential to be overly bureaucratic. A seven-band scheme is in place in this regard and that shows a certain muddled thinking in terms of how to make the changes to meet the required objective.
Surprisingly, anomalies have been generated by the scheme unnecessarily, to which I will refer shortly. This scheme was not initiated by the new Government. Many people are of the view that the Green Party in government is responsible for it, but to be fair to the Tánaiste, Deputy Cowen, he outlined in the previous budget in some detail his intention to engage in consultation on changing VRT to meet environmental requirements. He said that the reasons for making such a move include the environmental aspects, the impact on the Exchequer, equity, administrative taxation and economic efficiency aspects. These were all aspects that were required to be taken into account when making the move. He also made an interesting point that many of us have forgotten. In his previous budget speech he maintained that the Minister for the Environment, Heritage and Local Government would also consult on the matter and there would be a complementary rebalancing of annual motor tax. He said this would provide a further incentive through the motor tax system for the motoring public to drive cleaner cars. He said this would apply to vehicles registered on or after 1 January 2008. The Greens are in government and such a scheme has been introduced, but it will not come into effect until 1 July 2008.
Some people took the Minister, Deputy Cowen, at his word and ordered cars with low emissions on 1 January 2008, but they feel damned sore about this matter. I am sure other Deputies have received e-mails from people who took the Minister at his word and bought a low emissions car, but now find that for the lifetime of their use of that car, they will be penalised.
One person who e-mailed me on the matter wrote:
As an early adopter of the green message . . . I ordered a diesel vehicle . . . with the full intention and knowledge that I was doing my piece for the environment. My new car's CO2 rating is certified at 128g, which would mean under the new regime a VRT reduction from 30% to 16%, and an annual motor tax reduction from approx 560 to 90 euro.
This unfortunate man has now discovered to his cost that is not the case. He has been caught even though he did the right thing and was guided by the indicators in the Government policy on changes in this area. He went on to make the point that:
Further compounding the injustice of the Minister's action in not amending the system, is the fact that imported second hand cars, with the relevant CO2 clearance, are to be taxed after July 1st on emissions and not engine capacity. This means that a car bought in the UK on the same date as my diesel car . . . can be imported into the state [and will be subject to the new regime for its lifetime].
He made the further point that ". . . it also opens up the possibility that a car purchased on the same date in Ireland prior to July the 1st 2008, could be exported out of the state and then re-imported after July 1st . . . at the lower taxation rate!" These are the types of anomalies that have been brought to our attention. They indicate a certain lack of coherence and consistency in terms of the policy, even though the policy is sound.
It is a small measure if one reflects on the totality of what needs to be done. The biggest single political challenge we face is climate change. An interesting presentation on bio-fuels was made at the Joint Committee on Climate Change and Energy Security today. Concern has been expressed about the efficiency of bio-fuels, the bio-fuels that should be developed and their energy usage. Rapeseed, which was considered to be the way to proceed in terms of the development of bio-fuels, has a very low energy yield and many difficulties are attached to its production, which make it inefficient in terms of its usage.
The most common crop we grow, by far, is grass. Interestingly, it was clear from today's presentation that we could, if we chose to do so, convert grass to gas to service fleets of buses, transport and even trains. That is an interesting idea given that another natural resource, wind energy, is readily available in view of our climate and is also appropriate to meeting needs. Efforts have been made by the Department responsible to encourage the development of wind energy to generate electricity, but no efforts have been made by the Minister for Transport or his Department to encourage research and development into bio-fuels to meet the need to reduce carbon emissions in the transport sector.
I did not know that there was such a thing as belly grass. It is grass that is extracted from the carcasses of cows and pigs in the slaughter house. This grass is perfect for conversion to gas, which can be used as a fuel in transport. This is the type of development that is required. Such development has happened in other countries, which such fuel is being used in an economic fashion, but such development is not taking place here.
I have great concerns that the Minister for Transport who appeared before the committee to which I referred relatively recently gave a presentation which did not show the understanding, concern, commitment, focus and information one would require from a Minister dealing with the sector that creates the biggest problem in terms of the level of carbon emissions. A sea change by the Government is needed in this area. I criticised the Taoiseach this morning for not showing leadership in this regard. If he spoke out on the issue on climate change, it would help to generate a sea change in terms of what needs to be done in different sectors.
I am happy to support the Green Party in its efforts. It is making a genuine effort in its fields of environment and energy. I would criticise it if it were not doing that well enough, but I agree with its fundamentals. The big change has to occur in other sectors such as agriculture and transport, however. If it does not happen in those sectors we will have no chance of meeting not just the Kyoto targets — which we have overshot completely — but the 3% reduction per annum target set by the Government. Everybody in Government will look pretty foolish at the end of five short years if they have not made a real dent in terms of moving the tank around. A 3% reduction is a big challenge, but it is in line with the directive, in effect, coming from the EU as regards what this country has to do. We cannot rely simply on shelling out money for carbon credits. That is not feasible into the future.
This particular measure in terms of vehicle taxation and VRT is a good one, within the bigger picture. I wish it had been a great measure and that the Minister had sorted out the anomalies——
The Deputy sounds like Dunphy.
Not always. However, I wish he had got to grips with the anomalies. People went back to the Minister for Finance's commitment in the previous year. The public understood that environmental taxes of this nature were coming down the tracks. It was not just seen as a threat. Many people welcome change that will enable better practice, more conservation and reduced carbon emissions. Those who accepted the Minister for Finance's commitments and statements in the previous budget were very disappointed to find that a Green Party Minister was not, in fact, living up to them. I find that anomalous in itself, and that people who chose the most appropriate cars in terms of saving the planet now find they will be penalised for that. That seems to be a very regrettable outcome, not in the spirit of this taxation measure.
The other area the Minister needs to consider seriously — and it cannot be hived off to the Commission on Taxation — is how this might affect local authority funding. The local government fund depends on motor tax to a great extent. I believe it is about 70% of the fund. We have not had a clear answer in terms of what the impact will be on local authority funding. When the Tánaiste and Minister for Finance, Deputy Cowen, spoke about this in the previous year, he said it would be neutral in terms of taxation, but we do not have a guarantee now as regards local authority funding, which is a crucial issue that needs to be addressed.
I wish to share time with Deputy Cregan, with the permission of the House. I do not have much experience of belly grass but we have an enormous challenge in front of us. I fully support the implementation of the Motor Vehicle (Duties and Licences) Bill because it is one of the most important steps we must take if we are to seriously meet the challenge of reducing our CO2 emissions. It is a major challenge, not just for Ireland. We have all seen the documentaries and films, and listened to the various NGOs and groups involved in this area. It is a global challenge and this country's gas emissions currently amount to some 70 million tonnes. This has to be reduced to an annual average of 63 million tonnes between now and 2012 in order to meet our Kyoto commitments.
Each of us contributes to carbon emissions. Research shows that transport represents about 20% of emissions, energy accounts for 22%, industry around 17% and agriculture 28%. It is in all our interests to take on that challenge. Changing the way we pay our VRT from July this year means that everyone buying a new car will have its VRT rate determined by its carbon dioxide emission rating and it will no longer be related to engine size. I would request we get some form of standardisation in measurements, particularly among the car manufacturers, because that is an issue we shall have to take into account when we are introducing these measures.
Motor tax also increases under the Bill depending on the size of the engine. For example, the motor tax changes are 9.5% for cars below 2.5 litres and 11% for vehicles above that threshold. When it is considered that since the last increase in 2004, there has been a 15% hike in inflation, this is well within that limit. Car owners, of whom I am one, are prepared to contribute towards reducing CO2 emissions. This is reflected in the fact that 95% of cars on Irish roads are under 2 litres. I believe car owners are in favour of the fact that the additional funds raised from VRT and motor tax will be used primarily to finance the development of regional and local roads. Again, it is a matter of guaranteeing and showing people that they are getting value for money in terms of where their money is going. When one looks at the manner in which the bin charges were introduced, for instance, there was a great deal of furore initially. People then saw the benefits and the system is now working quite well. The reinvestment of these taxes into the development of regional and local roads is essential. We have all seen the improvements that have taken place on primary routes and motorways throughout the country.
This positive action is only one of the many initiatives we must implement if we are to reduce the need for the use of cars and ultimately CO2 emissions. In Dublin, for example, more and more commuters are availing of additional public transport services to get to and from the city. We have good quality bus corridors in place, which are very successful. We have increased train and DART services. The introduction of Luas along with the opening of the port tunnel has taken more cars and trucks out of the city than any increase in car tax could possibly do. I see the benefits of this at first hand. Deputy Finian McGrath mentioned the port tunnel, and I see the enormous difference that has made to areas such as the East Wall and North Wall, not just to the climate and environment, but to living conditions.
We must continue to improve our infrastructure and public transport service. I am delighted that national and local government have ring-fenced funding to achieve this through the national development plan. However, as a public representative for Dublin Central, I ask that those involved in bringing in the new public transport services do so in a co-ordinated, properly planned and managed manner. All of us who work and live in the city centre suffered as a result of the delays in the introductions of the Luas and the port tunnel, for instance. Both of these projects took much more time than originally planned. As a result, residents in central Dublin and hundreds of thousands of people coming to work every day were subjected to long traffic jams. We had queues of buses, cars, goods vehicles and taxis all stuck on the major arteries coming in and out of the city. They were sitting there for long periods, emitting a great deal of CO2. I have always held that the whole thrust of traffic management in Dublin should be towards facilitating a fast throughput of traffic through the city. Whether that is by means of integrated traffic lights, priority being given to buses and trams or other measures, it is an essential part of any forward planning that needs to be done.
In Dublin city in particular, we are now facing into a series of major construction projects over the next decade. The Railway Procurement Agency, RPA, is currently planning for the construction of the new metro line from Swords to St. Stephen's Green, the construction of a new rail interconnector line between Heuston and Connolly stations and a link between the two Luas routes, all essential projects for which the city is crying out. In addition, major construction works are due to commence in many parts of the inner city, for instance the old Carlton cinema site in O'Connell Street, the Department of Health and Children offices in Hawkins Street and the old offices of The Irish Times. Work on a new Macken Street bridge on the Liffey is to begin shortly and there is also major construction at the Mater hospital site. All this work is due to take place over the next few years. Unless it is properly planned, however, Dublin city will be a building site, totally unsuited to work in or live in and totally inaccessible to visitors. That is in nobody’s interest. We need to be logical about how these projects are put in place. I welcome the Minister for Transport’s common-sense approach in stopping the introduction of any congestion charges until such time as the public transport work is carried out.
I ask all the relevant agencies and the construction companies to adopt a similar common sense approach to this work which is essential to the future of Dublin city. Those living and working in the city still remember the problems, the congestion and the effects on the environment of construction projects that took twice as long to complete than originally planned. I refer to the Luas project. Ten or 12 years ago, we spent five years fighting to get the Luas in place and now that it is up and running and paid for, it is the best thing since sliced bread. These projects must be properly planned and must be completed as efficiently and as quickly as possible.
I note the improvements which have taken place, in particular in the area of planning. Proper planning is essential if we want to make a difference to the environment. It is important to ensure the plans are not limited solely to engineering requirements but that they take into account the needs of the families living in the area and the shops and the shop workers whose livelihood relies on a regular flow of visitors to the city. All these elements must be considered. I note the bids system which is operational in Dublin city which will also facilitate planning.
Allowing engineers to take over the livelihood and the living conditions of the people of Dublin is not acceptable nor is it acceptable to allow engineers to take double the time to complete construction projects. This creates traffic jams, wreaks havoc on the city and does nothing to reduce the CO2 emissions but rather increases them. These projects must be planned and managed properly as this is the only way to effect the changes proposed in this Bill.
This work is vital for the city and I support it. However, Dublin City Council and the new proposed traffic authority need to take control of the co-ordination of work to ensure that the city can continue to live and breathe. If this is achieved and the new public transport services are delivered on time with the minimum disruption to the people who use the city, we can make a real difference. The measures proposed will have the desired effect. The reduction in reliance on car use will contribute to emissions reductions that are required. It has been proven that commuters will use the new services. Dublin Bus passenger numbers have increased significantly since the introduction of the QBCs. The DART has been a success and its construction was a major project. There was much scepticism at the time as to whether people would use the service. In the end the service had to be expanded, extra rolling stock was purchased and station platforms were extended.
In supporting the introduction of this new Motor Vehicle (Duties and Licences)Bill 2008, the timely introduction of a proper public transport service will ensure the proposed changes will make a real difference in the efforts to reduce emissions. I compliment both Ministers on this legislation. We have all listened to what we should and should not do. The previous speaker pointed out that the Minister for Finance had included many of these measures in his projections in previous budgets. The implementation of this legislation will ensure that the required effect is obtained from the changes made. People are willing to make change. It is in everybody's interest and in the interests of the generations to come.
The purpose of this Bill is twofold: to provide a permanent legislative basis for the motor tax increases approved by the Dáil by way of a financial resolution on budget day and to give statutory effect to the new carbon dioxide-based motor tax system for new and pre-owned imported cars registered on or after 1 July 2008.
Road transport generates approximately one fifth of the EU's CO2 emissions, with passenger cars responsible for approximately 12%. Although recent years have seen improvements in vehicle technology, particularly in fuel-efficiency which translates into lower CO2 emissions, this has not been sufficient to stem the growth in emissions due mainly to increased car ownership and increased car size. While the EU reduced overall emissions of greenhouse gases by almost 5% between 1990 and 2004, our CO2 emissions from road transport rose by 26%. This was despite a reduction of more than 12% in average new car CO2 emissions between 1995 and 2004.
The situation in Ireland is even more stark. While road transport accounts for a similar portion of total emissions, we have seen an increase in emissions from road transport by more than 180% between 1990 and 2006. This reflects growth from relatively low car ownership levels in 1990 and is a trend that seems set to continue.
In this context the Government has decided to move from a motor tax regime where the charge is based on the engine size, to one based on carbon emissions. This was first mooted by the Minister for Finance, Deputy Brian Cowen, when he introduced the budget before last. The then Minister for the Environment, Heritage and Local Government, would have commenced the consultative process. I commend the current Minister, Deputy John Gormley for continuing this initiative and for introducing this measure.
I have a problem with the legislation and I made a statement outside the House in this regard. I wish to be consistent and put my remarks on the record of the House. My difficulty is with the six-month lead-in period from January to July. As other speakers said, we are setting out to reward those who are responsible and who buy cars with lower emissions and to penalise those who want to be irresponsible and make the choice to drive the gas guzzlers. In taking this action, I see a serious anomaly being created in this legislation. In the period 1 January to 1 July, a car with lower emissions would attract a discount on VRT after 1 July and lower motor tax after 1 July. Buyers are being penalised because for the lifetime of such a car it will always be taxed as a high taxation car. A comparable car bought a month later will be far more attractive.
Statistics show that new car sales were up 3% in the month of January. I was a little taken aback because it was defeating the purpose of my argument but when I delved further I found that much of that increase was attributed to cars having been pre-booked in October and November by people who were probably not au fait with what was going to happen after July.
I am open to correction but I understand there is a substantial drop in car sales for the month of February. I am at a loss to understand why the motor trade is not saying something. I have been contacted by constituents who have chosen to cancel their new car orders and wait until after July. I wonder where this leaves the jobs in the motor trade.
I fully support the thrust of the Bill and the shift from engine size taxation to emissions taxation and this goes without saying. However, if this legislation is passed by the Oireachtas, I am at a loss to understand why we must wait until July.
I understand the Minister addressed some of these questions in his speech. He stated it would be unfair to penalise people for a purchasing decision made in the past. It is equally unfair to penalise a person who is doing the right thing and purchasing a car with lower emissions. I ask the Minister to examine this proposal with a view to lessening that penalty on the people who are making the right decision and doing the right thing.
We have made great strides in other aspects of reducing CO2 emissions but the most difficult challenge is in the area of transportation and CO2 emissions from cars. I greatly welcome the thrust of the Bill which will ensure we will make a big impact and live up to our responsibilities.
Climate change is profound in its implications for the planet and its inhabitants and represents a very significant challenge for society. It cuts to the core of modern living and commercial activity. The solution is clear. We must reduce human induced emission of greenhouse gases quickly if we are to avoid the worst impact of climate change. We all have a responsibility to play our part. While in global terms Ireland's emissions may be relatively small, it is essential that we apply the resourcefulness and initiative that has delivered very significant economic success in the past decade to the challenge of adapting to a low carbon society.
Along with our EU colleagues we have been to the forefront in bringing the Kyoto Protocol into force. Our efforts to secure global agreement and deep cuts in emissions must be backed up with a commensurate level of ambition at home. The programme for government and the carbon budget, which the Minister delivered in December, make it clear that we are up for that challenge. I commend the Minister. An earlier speaker referred to the role being played by the Ministers, Deputies Gormley and Ryan, as Green Party Ministers in the Government. I commend them in playing a very positive role in the Government in recent months. I work closely with the Minister, Deputy Ryan, through my chairmanship of the Oireachtas Joint Committee on Communications, Energy and Natural Resources. That relationship has been very positive and I am sure others have the same experience with the Minister, Deputy Gormley. I commend them because they have been criticised. They have been tough enough to take that criticism and continue with the job of work at hand and remain focused. They have both been involved in introducing important legislation into the House, which I am satisfied and proud to support.
The local government fund, which is very important, has been mentioned. The ring fencing of motor taxation for local government usage is also important. I welcome that it will continue. It is put to very good use. We depend on it for the maintenance and upgrading of our roads in all local authority areas. It is important that it is maintained at a high level. The highways being built throughout the country are the responsibility of the National Roads Authority and billions of euro are being spent on them. That is fine until a driver comes off those highways and motorways into rural areas of Limerick, Cork, Kerry or wherever. People who are paying decent money for their motor vehicles should be entitled to drive with a high level of safety and comfort. The low cost safety improvement works scheme was mentioned recently. It has specific funding allowing local authorities to identify problem areas and black spots, and have remedial work carried out. Such funding is also very important because local funding may not be adequate.
I welcome the Bill. I appeal to the Minister to carry out a final review with a view to trying to ensure that the maximum number of people, who are responsible and doing the right thing, and who are doing as we ask and buying cars with lower emissions, can get the benefit of this at the earliest possible date. I would have no difficulty if somebody missed out in the first six months and could not get the benefit. However, I have considerable difficulty when somebody doing the right thing will never be able to get the benefit during the lifetime of that car because the passport does not cover that.
I wish to share time with Deputy Breen.
Is that agreed? Agreed.
The Bill has two purposes. The first objective is to increase motor tax, which was the purpose of the Financial Resolution passed on budget night on 5 December. The Bill simply gives effect to that. I cannot welcome that portion of the Bill. It is just a tax measure, which increases motor tax by an amount far in excess of the rate of inflation. What happened was quite clear. During the Estimates campaign, conducted by the Minister for Finance, there was a shortage of money in the Department of the Environment, Heritage and Local Government. After the required cuts were made, the Minister was allowed by the Minister for Finance to recover money lost in the Estimates campaign by increasing motor tax.
He increased the tax on cars of less than 2.5 litre by 9.5% and he increased the tax on cars of more than 2.5 litre by 11%. According to the Minister for Finance the projected rate of inflation for 2008 is 3.5%, which means that the increase for cars more than 2.5 litre is three times the rate of inflation and the increase for cars less than 2.5 litre is 2.5 times the rate of inflation. This is purely a tax collection measure that has nothing to do with green policies or protecting the environment. There is a nod in that direction by having a 2% differential between the greater than 2.5 litre cars and the less than 2.5 litre cars. That 2% will make no difference in customer practice or in people purchasing cars. They will not change their minds about what they want for the sake of a 2% differential in the increase in car tax.
The Minister knew what he was doing and on his own figures he will collect €83 million in a full year on this measure. That is just a tax increase, cleverly signed off by the Minister for Finance into the remit of the Minister or the Environment, Heritage and Local Government. We have the novel thing, a carbon budget, in which the Minister for the Environment, Heritage and Local Government was allowed the privilege of announcing an €83 million imposition on the private motorist the day after the budget. It is an unfair tax increase, which when considered with all the other costs of motoring, is a heavy burden on taxpayers. I resent that it is being presented as some kind of environmental measure — it is not. It is just a way to collect tax.
Yesterday the price of oil exceeded $100 again. There is no doubt that this will be followed by significant increase at the pumps. Cars are expensive. Car tax is expensive. VRT is expensive. Petrol and diesel are expensive, and tolls are becoming increasingly expensive. One of the anomalies of Government policy is that the more disadvantaged areas of the country with less economic growth will be the areas with the highest frequency of tolls on roads. That is perverse and should not happen. It happened because the roads were priority listed. At the top of the list were the roads to be funded by the public capital programme and consequently had no tolls applied. Further down the roads programme list were roads that could only be constructed with a private sector involvement.
In my and Deputy Breen's part of the country we will be paying tolls to travel under the Shannon in the Shannon tunnel through which we hope to be driving in two years' time. However, if I were in Cork I could drive through the Jack Lynch Tunnel as many times a day as I liked free of charge. Many people living on my side of the river work in Deputy Breen's constituency at Shannon Airport. They will be paying the tolls at least twice a day. Many others living on Deputy Breen's side of the river in the Caherdavin area work in the Raheen Industrial Estate and go home for lunch. They would pay four tolls a day if they are not to jam up the traffic in the city centre as is happening at present.
When the other project in our area is completed, the road from Limerick to Nenagh, it will also have a toll. When it links with the motorway from Castletown near Portlaoise we will have another toll to get to Portlaoise. Drivers will be able to travel from the economically advantaged part of the country, from Dublin to Portlaoise, without paying any toll. However, those driving from west of the Shannon, through Limerick and up to Portlaoise will need to pay two tolls, one to get under the Shannon and another after reaching Annacotty on the way up from Nenagh to Portlaoise. One might say these are small impositions on the private motorist and while they add to the cost of motoring they do not influence the terms of competition or trade. They are a major imposition on the carriage of freight, however, and make our part of the country uncompetitive. I would like this matter to be re-examined.
I welcome the Bill's second proposal. It is not before time that car tax moved from the basis of engine capacity to emissions. While it is a good measure, it is a pity that it simply borrows the UK system without looking at local conditions or attempting to remove anomalies. Under the terms of the Bill, a low-emission car imported from Britain or Northern Ireland will have a lower road tax than a car of the same model and year that is being driven around the roads of Ireland at present or that is bought secondhand off the forecourt. In the long term, it is not feasible to have two different tax regimes for the same cars with the same emissions and same year of purchase. The market will decide the issue because low-emission cars will be brought in from the United Kingdom, whereas high emission cars will not. The first problem will be that low-emission cars on Irish forecourts will not be sold and will therefore decrease in value. As low and high-emission cars lose value it probably will not have any influence in the long term on customer choice, which was promulgated by the Minister as the primary purpose of this Bill — that is, to influence the choice exercised by motorists when purchasing new cars.
My final point concerns the general VRT issue, which I mentioned before. According to a schedule published in The Irish Times the car I drive, which is a BMW 320 diesel, would carry a VRT rate of approximately €12,900 before the changes are introduced. After the changes, if it were a new car, the VRT rate would be reduced to approximately €6,800. I am driving a green car but according to the Minister’s proposals the value of my car will fall by approximately €6,000 from 1 July 2008. I might recover that if I were to exchange like with like on a trade-in, but if I change models and want to buy something else the trade-in value of my low-emission car will go down. I will be penalised further because under the new schedule it will carry a lower car tax after 1 July if it is a new car, but because it is secondhand I will not get the advantage of the lower tax. I will, therefore, be paying a higher rate of tax than a person who imports a 2004 BMW 320 diesel from the United Kingdom. That is anomalous, unfair and should not happen. The Minister and his departmental advisers need to reconsider the matter in order to remove those anomalies from the system.
I welcome the opportunity to highlight some of the pitfalls of the Bill currently before us. I concur with my colleague, Deputy Noonan, that some of the Bill's measures are unfair and I urge the Minister to consider changes to the current proposals. We all welcome the move to address Ireland's greenhouse gas emissions. The EU considers Ireland to have a high carbon footprint and has demanded that we reduce our greenhouse gases by 20% from 2005 levels by 2020. We are one of three countries to be so targeted, along with Denmark and Luxembourg. The argument is often made about climate change that we must choose between the economy and the environment but this is not the case. We can effect change at little cost if the Government takes action and its policies give people time to adapt.
When he attends meetings around the world, Al Gore's message is that we should drive less. If the Government is serious about tackling climate change it needs to invest in rail infrastructure so that consumers have a reliable and efficient alternative. I welcome the Government's commitment to open the western rail corridor, for which we all campaigned. It is a good move and I hope the railway line will be open by next year. However, I have some concerns about the Limerick-Galway line. Many Members will have seen on television recently that part of the Ennis-Limerick line is flooded. The line has been closed for about three weeks due to flooding at Ballycar, Newmarket-on-Fergus, which is affecting many people. Between 600 and 700 people a day use that service from Ennis to Limerick, but as a result of the line closure they must drive their cars, thus congesting the roads, or take buses into Limerick. However, buses do not constitute the most efficient means of travel. I urge the Minister and his officials to address this difficulty. The OPW and Iarnród Éireann have had talks on the situation but I urge the Government and Iarnród Éireann to take steps to raise the line at Ballycar in order to resolve the problem. This work was to have been undertaken ten years ago but unfortunately it was not done. If the railway continues to be flooded for one or two months per year it will affect the line's viability. In addition, if the matter is not resolved, it will also affect the viability of the Ennis to Galway line which is due to open next year.
A commuter stop at Crusheen on the Ennis-Athenry line was included in the north Clare area plan. Clare County Council is supportive of the project but Iarnród Éireann has said it will not locate a stop there. I had hoped the matter could be resolved as Crusheen is a large growth area with a catchment including Tulla, Clooney, Ruan and Barefield. It would help if people could park their cars at Crusheen before commuting to Galway, Ennis or Limerick. Therefore I urge Iarnród Éireann to establish a stop at Crusheen on this commuter line.
To revert to the essence of what we are discussing in the context of this Bill, the car industry is already adapting to the development of fuel-efficient cars but the German Government has reservations about it. The EU was trying to cut down pollution late last year but the German Chancellor, Angela Merkel, said she was not in favour of the proposal which would not be economically favourable for Germany given the fact that many large car manufacturers are located there, such as Porsche, Mercedes and BMW. The latter company is totally against the new EU measures, which it believes will distort the market. Meanwhile, French car manufacturers such as Peugeot say the measures will favour non-European car makers.
Car ownership in Ireland is growing at 5% annually and passenger cars account for over 10% of CO2 emissions. According to the latest census figures, 84.8% of households in County Clare own at least one car. With public transport not an option in rural Ireland, people need cars to travel to work. Some commuters have already chosen to drive low-emission cars and many to whom I have spoken are critical of the new motor taxation system which they feel is unfair. Instead of encouraging motorists to contribute to climate change, the system penalises them.
I am delighted to see the Minister, Deputy Gormley, in the Chamber again. I listened to his earlier contribution as I was doing some research this morning. He said his officials had examined the alternatives but that they were not appropriate. He also said that no data on CO2 emissions were available for cars prior to 2001. The Minister has rushed this proposal through without looking at the implications, so he should re-examine the matter.
My understanding is that CO2 emissions ratings relate to cars manufactured since 2001. I know a person who bought a Volkswagen Golf 1.9 TDI last week and paid motor tax of some €560. If this person bought the same car after 1 July, the emissions tax payable would be only €150. A system where one person must pay more than another to purchase the same model of car, manufactured in the same country and producing the same emissions is unfair. To add insult to injury, owners of existing cars that are still being taxed at the old rate are facing an increase of 11%. This is another stealth tax. How can one justify the increase in respect of small cars that are already environmentally friendly?
Motor manufacturers are trying to curb this EU move to reduce carbon pollution. Many German manufacturers, for example, are concerned at what will become of the motor industry in that country. Problems will arise after 1 July in regard to the purchase of second-hand cars. In particular, garages near the Border will experience difficulties because it will be cheaper for people to purchase second-hand cars in the North. Second-hand cars will be left on the forecourts of garages. We saw what happened in garages in Border areas some years ago as a consequence of the difference in the price of petrol and diesel in the two jurisdictions. Many of these garages closed down.
The Minister should review these unfair provisions. Deputy Noonan referred to them as a mere tax collection measure. The Government must begin thinking outside the box in an effort to reduce Ireland's greenhouse gas emissions. The programme for Government commits to a 3% reduction per year. However, if the Government continues to introduce ill thought out proposals such as these, it will not reach its target. I ask the Minister to consider the example I gave of the car that is subject to motor tax of €560 now but only €150 in four months' time. This is representative of an inequitable and unfair system that must be reviewed.
I welcome the opportunity to speak on this Bill. Most people, not least the Minister, would agree that in terms of reducing CO2 emissions and meeting our Kyoto commitments, this is not a time for timid measures. Rather, we must take a brave and far-reaching approach. That is why it is such a surprise that the provisions announced at the time of the budget and introduced in this Bill amount merely to a blanket increase in motor tax, just like most other years.
If the Minister were serious about reducing CO2 emissions, he would not have introduced a flat tax that is scarcely related to engine size and not at all related to emissions or usage. As my colleagues observed, it applies to all existing cars purchased before 1 July. No matter how small or efficient these cars, the increase in tax must be paid over the lifetime of the car. This makes no sense. As my colleague, Deputy Noonan, said, it is not fair to penalise somebody who has made a sound environmental decision by choosing a car with low emissions. Such persons will be penalised until they sell that car. On the other hand, these provisions will reward those who postpone the decision to make an environmentally friendly choice.
Why was July chosen? Most people purchase cars in January and few do so in July. It occurred to me that this may be some type of sop to the motor industry to give them a second January in the year, but I am sure there is nothing so Machiavellian at play. The reality, however, is that few people buy a car in the second half of the year. Any impact, therefore, will be delayed for another year. This is certainly not a brave and far-reaching measure.
One cannot escape the conclusion that these provisions, dressed up to look as though they arise from environmental concern, are purely about raising revenue. It is estimated the new system will bring in some €83 million for the Exchequer. All this will do, however, is raise the cost of motoring, which is already expensive. It will not be a deterrent but it will raise the cost. Green Party Ministers, especially the Minister for the Environment, Heritage and Local Government, are beginning to look like patsies for Fianna Fáil, the Ministers who raise taxes and take all the associated criticism. They are patted on the back by Fianna Fáil for being environmentally aware but are essentially merely raising taxes on that party's behalf.
I am not even sure it is legal to charge people different tax rates for the same car and to do so indefinitely. If it is legal, it is extremely unfair. Those unfortunate persons who have already purchased efficient cars or do so before 1 July not only will derive no benefit but they will be taxed at a higher rate and will lose out in terms of the resale value of their cars. It is a double whammy.
There is a thorough lack of planning, coherence, logic and consistency in Government efforts to reduce CO2 emissions and greenhouse gases and to deal with environmental issues generally. Perhaps this is because a degree of panic is setting in now that it seems increasingly unlikely we will meet the 3% target set by the Government and for which the EU is constantly pushing. There is even less chance of reaching that target if we continue to treat the public like recalcitrant children. There is significant enthusiasm among the public to change behaviours and take responsibility for protecting the environment. However, people require assistance, encouragement and information, together with fiscal and financial incentives in any way the Government can provide. It seems bizarre that it is a Green Party Minister who is concentrating on the stick rather than the carrot.
Since this Government was formed, the penal approach has been taken in the case of several environmental measures. There is the promised ban on traditional light bulbs, an increase in landfill tax, this proposal in regard to motor tax, threats of carbon taxes and the purchase of carbon taxes in our name. Where was the Minister when the Government made the decision not to introduce competition in the bus service? All these measures will merely antagonise the public and will certainly not encourage people to waste less, drive less and save energy in any way. There seems to be no realistic, workable plan to bring people on board to work together towards reducing our carbon credit requirements or at least make sizeable progress in that direction. It is a common project upon which we must all embark and it is not something the Government can impose only through the stick and without any carrot.
The two main sources of our emissions are transport, which is an area of significant growth, and domestic heating. To suppose that new building standards for future builds will make a significant difference is nonsense. It is undoubtedly important that we have new standards for new builds, but what about the existing housing stock which is the bulk of capital? In the past ten years, some 500,000 new homes have been built. The housing capital formation for this generation has happened. It is there and it is abysmally insulated, as the Minister knows. The houses in question were built using hollow blocks, which is just about the worst way to build a house in terms of insulation. That was done over many years with the blessing of the Government. What does the Government propose to do to reduce the substantial heating bills faced by Irish people? What will it do to make any kind of significant inroads into our carbon emissions?
Given that Ireland's climate is quite mild, despite what we have experienced over recent days, a properly constructed and insulated house can almost be heated with a candle, as the Minister is probably aware. However, we are pumping out gas and oil to try to heat the atmosphere. We are literally trying to heat the sky as we bring up the temperature of our houses. Such behaviour is costing every home a great deal of money, destroying the environment, increasing our dependence on fuel imports, affecting this country's balance of payments, creating an unpleasant living environment and causing a catastrophic increase in carbon emissions. Energy and carbon credits which might be used fruitfully by Irish industry are being pumped away as part of a futile attempt to heat our homes.
The single most useful thing the Government could do to reduce carbon emissions and meet our Kyoto commitments would be to launch a major drive to transform the insulation value of existing Irish homes. The big stick will not work. People need information and a fiscal incentive. If the Government does not favour the introduction of a grant scheme — I do not see why that should be the case — it should consider the provision of a system of tax relief or any other system that would act as a carrot in incentivising people to follow a good example. The existing housing stock of the entire nation must be upgraded. It is a waste of time to talk about new builds because there will be very little new building over the next few years. If the attic insulation of every home were to be increased to 18 in, it would have an substantial impact on heating bills throughout the country. Why is such a scheme not being introduced? Not only would it be a "no-brainer" for any Government that is interested in taking a big and brave step, but it would also be infinitely more attractive than threatening people with carbon taxes if they do not stop heating their homes.
The imposition of additional taxes on the owners of cars, particularly taxes which are not related to engine size, emissions or frequency of car use, is a blunt and ineffective instrument when trying to change behaviour. People in rural Ireland need cars to travel to work and to socialise. In the absence of a suitable rail freight system — the existing system suffers from the attitude of our train company and the indifference of the Government — hauliers need to use the roads to transport goods. Some people have to use their cars but, given that most of our population now lives in our cities, most people could use public transport if a decent system were available to them. We will have to wait at least 20 years for the metro, etc., to be completed and an adequate public transport network to be in place. It will be too late by then. We need buses now. Where are the buses? No progress has been made in that regard, despite ten years of promises. The percentage of commuters travelling by bus is decreasing every year. A decision has been taken to stick with the old system. As the Taoiseach said yesterday, "there is no change in the system that has been operating for the past ten years".
We are penalising people by introducing landfill taxes without offering alternatives. I do not know whether the Minister is aware that his plan to prevent local authorities, or anybody else, from securing a guaranteed stream of waste is leading to absolute chaos. If he proceeds with that plan, there will be problems. The local authority in my local area is constructing a ground waste facility, but it does not know whether it will have any waste to put in it. We should be making planned and careful decisions about the environment, but instead there is absolute chaos. Consumers make choices every day — they decide what to buy, how to travel and how to heat their homes, for example. The Minister should encourage people to make sound environmental choices and to change their purchasing behaviour.
Last week, when the House debated services for people with autism, Deputies spoke about the applied behaviour analysis method as if they knew what it is all about. Anyone who knows anything about behavioural analysis or even about human nature — one would not need to have any background in psychology — will appreciate that the carrot is more effective than the stick. If one penalises people with taxes, one will change their behaviour temporarily. If one really wants to engender enthusiastic and long-term change, one must use the carrot. If one wants people to buy into the concept of resource conservation, one must give them personal and compelling incentives to change their behaviour. The proposed tax, which is marginally related to engine size and certainly not related to usage or emissions, is simply in the interests of nobody except the Minister for Finance.
Perhaps the Minister can clarify what is meant by "green emissions". I have just been at a meeting with representatives of a company that is planning to build an incinerator in my home village of Nobber. They said that incineration is the greenest way of disposing of our waste. Perhaps the Minister will give his opinion on that some day. I am very confused.
I hope the Deputy will come back to the Motor Vehicle (Duties and Licences) Bill 2008.
I will. Everything I say relates to emissions and greenhouse gases, etc. Perhaps the Minister will clarify the matter I have raised some day.
The proposed increase in motor taxation will not work. The bottom line is that people do not have the money. The money is not there anymore. It is wrong for us to meddle in the middle of the year. People do not know whether they should buy new cars here or in England. It is difficult to understand why this system is being introduced halfway through the year. I suspect that the Minister will be challenged by someone in this instance, just as he was in the case of the Ward Union hunt. I hope common sense will prevail on this occasion, just as it did with the Ward Union hunt. One cannot simply do away with something that has been there for a long time. I was glad to see the judgment that was made in the case of the Ward Union hunt earlier this week.
It is wrong to try to impose an increase in car tax of 11% or 9.5% on anyone. I refer in particular to people in rural areas, who depend on their cars to get to work and to make a living. The Government's VAT and income tax receipts have decreased significantly as a consequence of the decline in the building industry. We made a mess of the drinks industry when we started to allow cheap drink to be imported from all over the world. We are losing out as a result of social problems, including bad behaviour, which are caused by people who have bought drink for half nothing. The same thing will happen in this case if the Minister proceeds with his proposal to increase car tax. People will travel to Northern Ireland or England. Such meddling with the system will destroy the whole car industry, of which we are all proud. Everyone likes to get a new car, regardless of whether it is big or small, just as everyone likes to get a new motorbike or bicycle.
It is wrong to meddle with the car industry in the middle of the summer. This legislation will leave the whole thing open for total destruction. If these changes were to be introduced on 1 January next, we would think about them. People would decide not to change their cars until 1 January 2009. I totally agree with the Minister on those parts of the Bill which are right. I admire the Green Party's work on certain issues. However, this plan must have been conceived in the last few minutes before the Cabinet signed off on the budget. It has not been properly thought out. There is no sense or reason to these proposals. This is not the way to reduce emissions from the transport sector.
Deputy Mitchell spoke about the public transport system in the greater Dublin area. I have only been a Deputy for three years, and I am obviously very slow to learn, but I have learned certain things in that time. I was interested to hear the comments of the four county managers in the greater Dublin area on the transport issue. They mentioned that bus lanes have been developed from Dunshaughlin and Navan to Dublin. I will be present at a meeting to be addressed by the Meath county manager next week. If I travel from Dunshaughlin to Dublin along the N3, it will take 45 minutes longer than it would if I travelled along the M1 or the Ashbourne road. Very few buses use the bus lane between Dunshaughlin and Dublin. No Minister is responsible. We have had no Taoiseach for the past six months. We have nobody to lead us. There is nobody to bring the county managers and the officials from Bus Éireann, Dublin Bus and Iarnród Éireann together in one room.
The Deputy is straying somewhat from the legislation.
I am not straying. I am talking about the use of the tax system to reduce emissions, which is what the legislation is supposed to be about. We have been told that the Bill will help the country to get its green areas right. That is what it is about. There are no buses on the bus lanes which, according to the Dublin county managers, have been built. Day in, day out, commuters sit in queues of cars while bus lanes are idle.
Three years ago integrated ticketing was proposed but it was never introduced. The Government cannot get the stakeholders into a room and nobody has taken responsibility for it, whether that is the Minister for the Environment, Heritage and Local Government, the Minister for Transport or the Taoiseach, who has been non-existent for the past six months. This legislation will not work but we will be subject to the same scene as last week when Government backbenchers, in front of numerous people involved in autism organisations who expected one of them to stand out of the crowd, walked through the lobbies behind the Minister who has absolutely no interest in children who do not have the privilege of having everything 100% right. They will do the same again later. As Deputy Tom Hayes rightly said, this is hypocrisy of the highest order.
The Minister has good ideas and there is no question that we will support them but how can he introduce a taxation measure six months into the year and leave himself open to a court action? Six months ago he received a great deal of advice regarding the Ward Union issue and it is an absolute mess now. The Government will be sued and that will also happen with this legislation. People should sit down and work this out. If it does not need to be introduced for another six months, why is that not being done? The measure is not worth talking about because it will not happen. The sum of €83 million in revenue to which Deputy Noonan referred will not be collected because people do not have money to pay for the increase. The numbers not paying car tax will increase. Between 10% and 15% of motorists do not pay insurance or car tax and that will increase to 20%. The nation's debt has been planted on the people. The country is up to its ears in debt and we were issued with a good warning about that yesterday. However, the Government intends to land another tax on people. The money is not available.
This measure will destroy the car industry, which provides many jobs. Everybody loves a car but industry sources say this proposal will damage them because people will travel to England and Northern Ireland to buy cars, which will result in more job losses. I do not know where we are coming from. There is no sense or meaning to this House for the past six months. An idea, which looks good on paper, is thrown out and pushed through. Jobs are being lost left, right and centre throughout the country. Ministers are busy but I am surprised backbenchers from the Government parties will not stand up and be counted. They know what is going on in the country and they know it is wrong to increase taxes. Why have they come into the House to row in behind the Minster like they did last week behind the Minister for Education and Science before going on radio speaking hypocritically? This measure should be abandoned until 1 January and the Minister should rethink it. It will be challenged in the courts and if it is introduced, it will destroy the car industry, which we do not want.
Many Members have said this measure has not been thought through. It seemed like a good idea in principle but it has emerged following the budget that there are issues which the Minister and the Government did not anticipate. For example, some motorists will unfairly benefit from this measure while there could be a shortfall in local government funding and, as Deputy McEntee said, some people might try to get around the system. This measure did not need to be rushed. The Minister has a tendency to say his proposals are a response to climate change and they need to be implemented urgently. However, measures such as this make little difference to our carbon emissions. A table was appended to his carbon budget report, which predicted reductions in our emissions over the next five years but no calculation was provided for the VRT and motor taxation changes.
This measure assumes our continued dependence on cars and it is part of an approach that will permit a sustained increase in transport emissions. It will not change people's behaviour but it will allow some people who can afford it to buy different cars from other people. Its intention is to make them consume one car instead of another. It does nothing to get people out of their cars to use public transport, thereby reducing transport emissions.
The Minister needs to learn that he should consult first prior to taking action. He needs to consult industry and users.
There was a great deal of consultation.
There was not enough because the Minister did not anticipate the changes required and he stated earlier other issues need to be examined. He should consult industry. The same problem arose regarding his proposal for light bulbs.
The Deputy is wrong.
I am not wrong. The Minister cannot introduce that proposal under EU law by January 2009. Time will tell but industry is important. Labour is the party for people's jobs — traditionally we are not the party for industry but even we recognise all stakeholders should be consulted, including the industry. This proposal should have been examined by the taxation commission. If the Minister was serious about reducing carbon emissions in the budget, he would have ensured major public transport projects were fast-tracked.
The easiest project to undertake is investment in Dublin Bus. I attended a meeting as a councillor in 1999 or 2000 at which the DTO made a presentation on its Platform for Change. Its strategy was to invest in Dublin Bus as a short-term measure followed by investment in the existing rail infrastructure and then the Luas and metro. However, eight years later, none of this has been done. Dublin Bus is still being held back in the provision of appropriate bus services throughout the city. This comes down to ideology. The Government does not want to invest in Dublin Bus, provide additional buses and encourage people out of their cars. It has dithered about public transport. Transport 21, environmental impact assessments and so on are not needed to ensure something is done about Dublin Bus. The Minister should order the buses and commission them. The Labour Party has proposed the subsidising of fares and the introduction of a €1 bus fare. Such an initiative would have been given priority if the Green Party and its Government partners were serious about tackling transport emissions. This legislation will ensure a sustained increase in these emissions. According to the Irish Independent over Christmas, it is predicted such emissions will be 260% above 1990 levels by 2016 if something is not done about public transport.
This is about ideology. The Minister does not need to introduce a Dublin transport authority Bill or to get Dublin Bus, Bus Éireann and the RPA together to agree anything. He should begin with Dublin Bus and give the company the buses it was promised years ago.
Debate adjourned.