Cuirim fáilte roimh an Aire Stáit.
Energy (Windfall Gains in the Energy Sector) (Temporary Solidarity Contribution) Bill 2023: Second Stage
Minister of State at the Department of Environment, Climate and Communications (Deputy Ossian Smyth)
I move: "That the Bill be now read a Second Time."
I am pleased to address the House on the Second Stage of the Energy (Windfall Gains in the Energy Sector) (Temporary Solidarity Contribution) Bill 2023. As Deputies are aware, the Russian invasion of Ukraine in early 2022 led to exceptionally high energy prices. The wholesale price of natural gas increased significantly from a long-term average of circa 50 pence per therm to over ten times this level in August 2022. The price level has since reduced and is now approximately twice the long-term average.
The Irish Government is aware of the financial strain on households and businesses in Ireland because of the exceptionally high energy prices and has introduced numerous supports to offset the increase in energy prices for homes and businesses. The Government implemented a €2.4 billion package of supports during 2022 and a package of once-off measures worth €2.5 billion, which were included in budget 2023. Council Regulation 2022/1854 on an emergency intervention to address high energy prices came into force in October 2022, which provided for a mandatory temporary solidarity contribution, TSC, on fossil fuel production and refining and a cap on market revenues of certain electricity generators that earn unexpected surplus profits due to unforeseen circumstances. The regulation also provides for reductions in electricity demand consumption by member states.
Under the regulation, the calculation of the TSC is to be at least 33% of the taxable profits for the fiscal years 2022 or 2023. It is 33% on those profits that are more than 20% above the average taxable profits in 2018 to 2021. On 22 November 2022, the Government decided that the TSC will apply for 2022 and 2023; that the taxable profits that are more than 20% above the baseline period from 2018 to 2021 will be subject to a rate of 75%; that losses from previous years will not be taken into account in the calculation of the taxable profits; and that the Revenue Commissioners will administer the temporary solidarity contribution.
The Bill will implement the TSC. The cap on market revenues will be implemented through a separate Bill, the energy (windfall gains in the energy sector) (cap on market revenues) Bill 2023, which will be published before the summer recess, and the reductions in electricity demand consumption measures have been implemented. The main purpose of the Bill before us is to provide for the temporary solidarity contribution of Council Regulation 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices, in accordance with the Government decisions on the implementation of this regulation. This Bill also provides for the TSC to be under the care and management of the Revenue Commissioners. This Bill contains four Parts, 26 sections, and one Schedule. The Bill amends the Taxes Consolidation Act 1997, the Act of 1997, through the insertion of a new Part 24 B, which provides for the definition of taxable profits, the definition of average taxable profits for the purposes of TSC, and the deductibility of the TSC from corporation tax.
I will begin by providing a brief overview of the most important measures the Bill addresses before discussing them in more detail. The legislation will provide for TSC to be payable by companies with activities in the fossil fuel sector, such as production or refining of natural gas, coal, petroleum, or manufacture of coke oven products, carried on in the State for the fiscal years 2022 and 2023. The TSC is 75% of taxable profits, which are 20% above the average of taxable profits in a baseline period of 2018 to 2021.
This Bill amends the Act of 1997 through the insertion of a new Part 24 B, which provides for the definition of taxable profits, the definition of average taxable profits for the purposes of TSC, and the deductibility of the TSC from corporation tax. These definitions for taxable profits and average taxable profits for the purposes of TSC provide for a calculation of TSC in the same manner as profits chargeable to corporation tax, subject to the exceptions I shall now outline.
Losses prior to 1 January 2018 will not be deductible in calculating taxable profits and average taxable profits for each of the years 2018 to 2023 for the purposes of the TSC. Losses post 31 December 2023 will not be deductible in calculating taxable profits for the purposes of the TSC. Group relief claimed in an accounting period falling wholly or partly in the years 2018 to 2023 will not be deductible in calculating taxable profits for the purposes of the TSC. Group relief surrendered in an accounting period falling wholly or partly in 2018 to 2023 will be disregarded and therefore deductible in calculating taxable profits for the purposes of the TSC.
Capital expenditure on the acquisition or construction of allowable tangible assets will be deductible in full, in calculating taxable profits in respect of 2018 to 2023 for the purposes of the TSC, in the calendar year that such assets are brought into use. Such capital expenditure will be deductible in addition to relevant capital allowances which may already have been deducted in calculating taxable profits as per normal corporation tax rules.
The TSC is not a tax. As a result, the Revenue Commissioners require powers in order for TSC to be brought under their remit and management. The Bill provides the Revenue Commissioners with powers to administer, collect, undertake assessments of returns and enforce, through surcharge, interest, penalties and offences, the TSC. The purpose of this is to ensure timely and efficient collection of the TSC from companies. This money will then be remitted to the Exchequer. The Bill also provides an appeal mechanism to the Appeals Commissioners - the Tax Appeals Commission - for companies that are aggrieved by assessments made by Revenue Commissioners.
I propose to provide a more detailed overview of the Bill and each of its four Parts. Part 1 contains standard legislative provisions that cover the Short Title, commencement, definitions of terms used and a standard provision enabling the expenses of the Minister to be paid out of moneys provided by the Oireachtas.
Section 2 defines relevant activities as meaning: "economic activities, carried on in the State or in a designated area (within the meaning of the Maritime Jurisdiction Act 2021), in the field of the extraction, mining or refining of natural gas, coal, petroleum or manufacture of coke oven products as referred to in Regulation (EC) No. 1893/2006 of the European Parliament and of the Council of 20 December 2006." The TSC will be calculated in the same manner as profits chargeable to corporation tax, subject to certain adjustments. Corporation tax in Ireland is based on worldwide profits. Therefore, the relevant activities have been restricted to the Irish State, onshore and offshore, in order to avoid the potential for Irish tax-resident companies with activities in other member states being subjected to the TSC by both member states. The section defines an energy company as meaning a company that generates at least 75% of its turnover in a chargeable period from relevant activities. The chargeable period means the 12-month period commencing on 1 January in each of the years 2022 and 2023.
Part 2 provides for the calculation of the TSC, for TSC to be under the care and management of the Revenue Commissioners and a mechanism to allow appeals to the Appeals Commissioners. This Part also provides for energy companies’ obligations with regard to registering, making returns to the Revenue Commissioners and retaining records.
I wish to draw particular attention to the following provisions of Part 2. Section 4 provides for a levy to be known as the temporary solidarity contribution on the taxable profits of each energy company in respect of each chargeable period. It also provides for the calculation of the TSC with a 75% rate and for the TSC to be payable to the Revenue Commissioners on or before the specified date, 23 September 2023 and 23 September 2024.
Section 5 provides that where an arrangement is not made for bona fide commercial reasons or made to reduce or avoid the amount of payable TSC will not be taken into account in the calculation of taxable profits for the purposes of the TSC.
Section 6 provides for the TSC to be under the care and management of the Revenue Commissioners.
Sections 7, 8 and 16 provide for the obligations of an energy company with respect to the TSC. These obligations include issuing notifications to the Revenue Commissioners by certain dates, the preparation and delivery of returns in respect of the TSC and the retention of records that are required to make returns in respect of the TSC.
Section 15 provides for an energy company to make an appeal to the Appeal Commissioners in respect of a Revenue assessment or amended assessment within 30 days after the date of notice of the assessment or amended assessment. It also provides that a surcharge, a self-assessment or the amount of taxable profits specified in a self-assessment cannot be appealed.
Part 3 provides for enforcement measures for the TSC to ensure a timely and efficient collection of it by the Revenue Commissioners.
I wish to draw attention to the following provisions of Part 3. Section 17 provides for a percentage increase or surcharge on the TSC returns that are not delivered by the specified date. The surcharge to be applied is 5% where a return is not delivered within three to six months of a specified date and 10% where a return is not delivered within six months of a specified date. Due to the short time in between the potential enactment date of the Bill and the first payment date on 23 September 2023, it was considered fair not to impose a surcharge for the first three months. Section 17(2) provides for caps on the amount of surcharge that can be added to a late return.
Section 18 provides for interest on overdue amounts based on a formula that is set out in the Bill. The formula is the amount of that TSC which remains unpaid multiplied by the number of days it remained unpaid multiplied by a rate set out in section 1080(2)(c)(i) of the Act of 1997.
Sections 19 to 21, inclusive, provide for a penalty of €3,000 where an energy company fails to deliver a return on or before a specified date, where an energy company fails to comply with a notice to make a particular item available for inspection or where an energy company fails to retain records in accordance with this Bill. Section 21 provides for other penalties, such as deliberately or carelessly making incorrect returns or failing to make certain returns, etc.
Section 22 provides for sections 1078 and 1079 of the 1997 Act in regard to certain revenue offences to be applicable to the TSC. Part 4 amends the Act of 1997 by means of the insertion of a new Part 24B and new sections 697R, 697S, 697T and 697U. I wish to draw attention to the following provisions of Part 4.
Section 23 inserts new section 6975S into the Act of 1997, which will provide for the calculation of taxable profits for purposes of the TSC, as for corporation tax, reduced by allowances for charges on income as per section 243(2) of the Act of 1997 and capital expenditure incurred on the construction or acquisition of a tangible asset used in the course of carrying on relevant activities in 2018 to 2023. The following shall not be taken in account in calculating taxable profits for purposes of the TSC as set out in section 23(4), namely, relief in respect of loss incurred in the carrying on of a trade consisting of relevant activities in an accounting period that ends on or before 31 December 2017 or an accounting period that commences on or after 1 January 2024, group relief set off or surrendered under sections 420 or 420A of the Act of 1997 or TSC incurred.
Section 23(5) provides for the treatment of losses in the calculation of taxable profits. Section 23(6) provides for the calculation of taxable profits where an energy company's accounting period does not align with a calendar year. In addition, section 23 inserts new section 697T into the Act of 1997. The latter will provide for the calculation of average taxable profits in a baseline period and for partial trading years and non-operating trading years in the baseline period. This section also provides that where the average taxable profits are less than zero, then the average taxable profits shall be zero for the calculation of the TSC.
The Schedule provides for consequential amendments to the Act of 1997. There are also amendments to the Ministers and Secretaries (Amendment) Act 2011 and the Finance (Tax Appeals) Act 2015 to include the Energy (Windfall Gains in the Energy Sector) (Temporary Solidarity Contribution) Act 2023.
The Bill also includes some consequential and technical amendments, but the provisions that I have outlined cover the principal issues. I commend the Bill to the House and look forward to the debate on it.
I have an announcement to make. For clarification, the proceedings on this legislation shall be adjourned at 7.34 p.m. and will resume on Thursday. I call Deputy Darren O'Rourke.
I am sharing time with Deputies Gould and Mac Lochlainn. Deputy Gould will take the second slot. Deputy Mac Lochlainn has not yet arrived.
I am pleased to be here finally to see the introduction of this measure.
We are used to the Government dragging its feet and prevaricating, but we can all agree, even in relative terms, that this legislation has been quite the saga. The EU introduced its regulation in October 2022. The Government announced its intentions in November. Here we are, four days from the beginning of July, and we are still at the drawing board. We saw the first draft in March. Pre-legislative scrutiny was completed in May. Almost one month later, the Minister, Deputy Eamon Ryan, announced he would be splitting the Bill in two.
The result is that we only have weak and, from the perspective of Sinn Féin, incomplete legislation for the TSC. That is why we will be tabling a number of amendments to this legislation. The first will be to increase the prospective revenues raised. The second will be to strengthen enforcement and make it more robust in terms of avoidance. The third will be to ensure that the moneys raised urgently reduce the cost of energy and offset the increase in the cost-of-living pressures for households. Households should feel the benefit straight away. When it comes to the cap on market revenues, we are still none the wiser. These delays would be unacceptable under any circumstances, but are shocking in the current context. Despite the Government having this measure and a range of others to reduce the cost of energy at its fingertips for quite some time, Ireland remains in the same position it has always been. Energy companies have earned exorbitant and eye-watering profits while ordinary families and workers suffer.
Ireland has some of the highest energy prices in Europe. In the 12 months to March 2023, overall consumer energy prices rose by an eye-watering 72%. During the same period, wholesale energy prices decreased by 50%. Household energy costs have more than doubled in the past two years, with the average home now paying approximately €2,000 per year for electricity alone. Moreover, almost one in four gas customers is in arrears. The number in this regard is rising. It is of little surprise, but it is shocking that almost one in three people are living in energy poverty. The Government says the reason for all of the stops and starts with this legislation is that it is extremely complex. Is it telling us that it has failed to do what 18 other European countries have already done because it is too difficult for them? An admission of such gross incompetence could only be a cover for gross negligence. The reality is that the Government never wanted a windfall tax in the first place. As late as May 2022, the then Minister for Finance, Deputy Donohoe, made clear the Government's opposition to any tax on windfall profits. This Government has continually ignored the calls of Sinn Féin and others for a windfall tax. It has blocked all of our attempts to introduce one, which we have been doing since it became possible when REPowerEU was introduced in March 2022. The Government only moved because the EU, as a whole, moved. In reality, the Government has been determined to protect the profits of powerful energy companies, prioritising them over the needs of ordinary workers and families.
I want to ask the Minister of State about the fact that energy companies will be able to deduct losses incurred and capital expenditure from their contributions. Does he think it is remotely appropriate that energy companies will be freely able to significantly reduce the proportion of their eye-watering superprofits that can be targeted? I remind him that these profits were made on the back of war in Europe and the pandemic, both of which took place alongside a cost-of-living crisis. Will he explain the justification for this? Is this not simply a continuation of business as usual in the energy sector? It is hardly surprising that the Government is proposing a weak version of the EU regulation. They defend this by saying they are simply following the regulation. I remind them that this regulation was introduced as an emergency measure to address high energy prices in a sufficiently timely manner in October 2022. Does this feel sufficiently timely to the Minister of State? Does it feel as if the Government is acting like there is an emergency? I feel that it is absolutely not the case. When challenged on these sky-high energy bills, the Government points to the war in Ukraine and claim it is out of its hands. The fact is that Ireland is an outlier when it comes to bloated energy bills.
Sinn Féin is not the only one talking about this. In its most recent quarterly bulletin, the Central Bank reported that energy prices are falling all over Europe, yet Ireland's remain inflated. We are told that hedging is the reason for this prolonged lag. However, there is real concern that energy companies are carrying out rampant profiteering. Energy companies claim they will bring down energy prices as soon as they can. In reality, we have no idea whether or not this is true. This is because the Commission for Regulation of Utilities, CRU, does not have oversight of hedging practices and because we have a Government unwilling to give it the power and resources to do so. All the CRU can do to get to grips with the situation is encourage energy companies to pass reductions on to customers. This is not good enough. If the past 18 months have taught us anything it is that the seemingly lawless energy market urgently needs proper regulation. While the Government might claim we are wrong, and everything is under control, clearly Sinn Féin is not the only one that is concerned. A recent report in the Irish Independent asked Electric Ireland, Bord Gáis Energy, SSE Airtricity and Energia to comment on what proportion of wholesale energy they use in hedging, and when each of these contracts will unwind. Unsurprisingly, the report indicated that the companies were not forthcoming with answers.
Sinn Féin would urgently get to grips with this situation by resourcing and mandating the CRU to oversee hedging and to regulate standing charges. Furthermore, we would ensure that energy companies give the Irish public the answers it deserves. Despite the Government promising us time and again that energy prices would come down, and that they would hold energy companies to account, nothing has changed. I would like to remind it of its promises. In February, the Minister, Deputy Eamon Ryan, told us that wholesale prices were falling and energy costs should come down. On 15 March, the Taoiseach told us the Government was going to put pressure on the energy companies to bring down their prices because we should see those fall this year and not next year. He repeated this on 21 April. The Tánaiste confirmed at the same time that the time was coming for reduced prices.
Then came last week's U-turn when the Taoiseach stated that energy costs would remain very high this winter. Moreover, talk of holding energy companies to account has all but disappeared. This calls into question how genuine the Government's claims were in the first place. The Irish people deserve better. Without urgent intervention. the situation will deteriorate further. The Society of St. Vincent de Paul recently told the Joint Committee on Environment and Climate Action that it has seen a 40% increase in energy-related requests in 2022, with the figure rising to a staggering 50% in 2023. Moreover, Irish living standards have already fallen further behind other European countries. This decline is a continuation of a downward trend since Fine Gael entered power almost a decade ago. In fact, we are now in the bottom half of the European league table. How does this Government expect to turn this around if it delays and dodges all of the actions necessary to provide urgent relief to households? I remind the Government that these are not just figures. This is a devastating reality for millions of ordinary workers and families who are crippled under the strain of astronomical bills, and who are having to manage rip-off prices in energy and food in the face of increasing mortgage payments and rents. The Irish people deserve a government that will do better and that is willing to fight for them and their future. We can turn this around, but decisive action is needed. Windfall taxes are an essential element, but they need to be robust and fit for purpose.
Sinn Féin will table a number of amendments to strengthen this legislation. We will introduce an amendment to ensure that the revenues raised will be used to reduce the cost of electricity for households, making sure that the savings land in people's pockets straight away rather than the snail's pace at which this Government is operating. We will table an amendment to increase the revenue generated. This will increase the proportion of profits that can be considered taxable, thus providing more of the relief that households desperately need. We will table amendments to strengthen compliance enforcement and anti-avoidance measures. I urge the Government to adopt these amendments and to urgently introduce measures to reduce people's household energy bills. People have waited long enough.
I ask for some latitude at the start. I am taking a brief moment to send best wishes to Denise O'Sullivan and the Irish women's soccer team, who are heading off to Australia. Denise is from Knocknaheeny, County Cork, where I am from. She is a great ambassador for her community and her family. I want to send her and all of the ladies and everyone involved the very best wishes. I know we are all proud of them, and this is my only opportunity to let Denise, the girls and everyone know, that we stand behind them and wish them the best of luck.
Unlike the Irish women's soccer team, this Government has let the country down. The Government has not moved in the 264 days since the windfall tax was sanctioned by the EU last October. During those 264 days when energy bills kept going up and during the two years when energy bills doubled, ordinary families bore the brunt of the Government's lack of action and suffered because of its inability to take action. State-owned ESB more than doubled its profits last year. What was the Government doing while this was happening?
Sinn Féin has been urging the Government to bring this in for months but the Government spent more time arguing with Sinn Féin, including Deputies O'Rourke, Doherty and McDonald, about bringing in a proper windfall tax. Here we are tonight with a windfall tax that is too little too late.
At the same time, families are paying thousands of euro in electricity bills they are struggling to pay and that many cannot afford. Parents are having to make the choice between heating and what they can feed their children and how they can support their families. Pensioners are telling us how they wore jumpers and tried to keep the electricity off because they are so terrified by the cost of it. A family consisting of two adults and two children contacted me at the end of May. Its bill was more than €600. Here we had two working parents who were out working for most of the day. They did not know how they were going to pay it. When we hear stories from families who are struggling, we can see they are at their wits' end.
Then the Government comes along with this soft measure. It should have been a proper windfall tax. Companies were making profits off the backs of ordinary people. Eighteen European countries brought this measure in. We are bringing in a half-hearted effort at the end of June. This money needs to go to the people who need support the most. We need to cut bills and to support people but time and again, we debate legislation from the Government that does not go far enough. Only last week the Minister for the Environment, Climate and Communications announced there would be more delays to this legislation. We have waited 264 days. Eighteen other countries have done it.
We are calling for this legislation to be more robust. We are asking the Government to take on board the amendments our colleagues will bring forward because people need to know this Government cares. There is a crisis in housing, a crisis in healthcare and a cost-of-living crisis but this Government is more worried about tackling big energy companies and their big profits. This is what it should be doing. It should be letting the energy companies know that what is happening is unacceptable.
One in four people is in arrears when it comes to their gas bills while one in three people is in energy poverty. The profits of the energy companies are doubling or trebling. They are off the charts. Do the maths. The Minister of State is an intelligent man. He can see the figures. This is not just Sinn Féin saying this. Barnardos, the Society of St. Vincent de Paul and Cork Penny Dinners are saying it. I am talking to people on the ground. I was talking to Caitríona Twomey from Cork Penny Dinners last week. She told me about working families who cannot pay their bills and who are going into Penny Dinners to get hampers and dinners. How is that right?
How did it all go wrong? We had a story in this country of which we could be truly proud with the electrification of our country when times were really tough - Ardnacrusha. We built up an electricity supply sector that was publicly owned and the cheapest in Europe, something of which we could be immensely proud. When liberalisation policies were requested by Europe, we had Thatcherite governments that could not move quickly enough to sell off the family jewels. Remember when they privatised our services. Today because of those Thatcherite policies by the governments in place at the time, we have the second most expensive electricity in Europe compared to once having the cheapest with a publicly owned supply of which we could have been proud. We just allowed the private energy companies to screw our people again and again.
When the most devastating recent increases were being introduced, incredibly, our Government was reluctant to look at a windfall tax. Sinn Féin called for it again and again. It was ruled out. The then Minister for Finance, Deputy Donohoe, said it would undermine the economy and that it was the wrong thing to do. Then the European Commission moved on it but even when the European Commission moved on it and directed that it needed to happen in solidarity with families and businesses across Europe, our Government dithered and dithered. What is going on? To use the famous phrase, this is supposed to be a Government of the people by the people for the people. How can it be that there is such fear of standing up to profiteering and reckless policies by the energy companies? How can it be that we have no compassion for the stories the Minister of State has heard from this side of this Chamber again and again about the devastating impact of this on families and disgusting increases for something that is essential? It is essential for any family or business to have electricity. We have abandoned this to reckless profiteering and when the opportunity came from the European Commission and governments in other countries that would share the right-of-centre views of the current Government in Ireland, the Government still dithered. Even now, we are not clear about what it is going to do. We know that what is proposing does not go far enough, does not ask enough of the companies involved in this profiteering and does not secure enough revenue for our people and we do not know how the Government is going to disburse that revenue and make sure those who can least afford these increases will be assisted.
We have to make it clear that these were Thatcherite policies. They talk about Margaret Thatcher and Ronald Reagan, what they did and their ideology but we have governments in this country that were called centrist. They were supposedly reasonable pragmatists but, no, we had Thatcherite governments that sold our natural resources. The reason we are going to look at Corrib is that we handed away our natural resources around our coast. There is a lack of ambition for our people. The Government just hands everything to the private sector and allows it to do what it will. The implications of that ideology, particularly from Fine Gael and Fianna Fáil, have led to our housing crisis where we abandoned everything to the private sector, institutional investors and profiteers. We are also doing it with energy. This is Thatcherite right-wing ideology that has no ambition for our people and no ambition for our natural resources and ensures naked profiteering and greed win the day. Even when it is dragged kicking and screaming by the European Commission, the Government still dithers.
I look at the Minister of State and I wonder because I do not think that was his view when he entered politics. I do not think he is a Thatcherite but what is he doing in government with people like this? What is he doing voting for policies like this? He has to ask himself that question. There are people in the Green Party who share the vision of those of us on this side of the House. What is the Minister of State doing putting up with this? What is he doing defending and going along with this? He must ask himself that question because he knows in his heart that this was the abandonment of a proud policy and giving in to profiteering and greed. It has to stop some time.
We in the Labour Party welcome this Bill and the fact the Government has come around to the idea of a windfall tax, albeit, it must be said, at the behest of the European Commission. We would like to have seen this measure introduced much earlier. Exorbitant profits have been made by the energy companies over the past number of years in the midst of one of the worst cost-of-living crises in recent memory. The figures are very much unconscionable, especially when we consider the degree to which many people and households have struggled to keep their houses warm over the past two winter periods.
Thankfully, in the summer months, that issue is not quite so acute but the fact remains that consumers are still feeling the pinch on energy bills. I doubt there is a single one of us in this House who has not heard from our constituents on how it is affecting them. They continue to be charged very high prices on energy bills while we know that the cost of wholesale gas and oil is coming down. Energy companies were quick to hike their prices to take in record profits but they have been far slower in passing on cuts in their costs to household consumers. I listened intently to the Minister, Deputy McGrath, in the past week when this very question about the nature of the energy markets was put to him. The response, while empathetic to those households, suggested to me there was no clear intent on the part of the Government to hold these energy companies to account. The point has been made by Deputy Mac Lochlainn on the nature of the market. It has a pure and naked capitalistic formation which puts hundreds of thousands of households at its mercy. We need to critique that market because once there is an externality or an external shock of some sort, it seems the very people who suffer as a result of that are the households who we represent here tonight. Nobody seeks to critique the market or to change the very nature of the market. While we are trying to secure energy supply, there is no real mechanism from a legislative point of view at European level that allows for Government to intervene directly in the market to ensure it is critiqued or amended, so that the very essence of energy and security of supply and that principle is adhered to. We need to start critiquing these policies.
In the 12 months following our motion, Shell plc recorded $40 billion in profit while BP's profits doubled to $28 billion. Likewise, profits have soared at ESB and Centrica plc, the owner of Bord Gáis, while revenue at the Corrib gas field, which we in the Labour Party called to be temporarily nationalised, has risen considerably. Regular household consumers are sickened to see these figures while they struggle to keep the heating on. Reference has been made to the Society of St. Vincent de Paul report earlier this year which showed that 377,000 households were unable to adequately heat their homes last year. This figure should be compared with the figure of 166 households from 2021 when the true scale of the harm that is being caused by the energy crisis becomes abundantly clear. It has been a catastrophe. More and more people fell into energy poverty after the Government rejected the previous Labour Party motion.
I spoke to a person of pensionable age who is on a modest State pension and this person said that half a radiator cannot be heated and that half a lightbulb cannot be turned on. These are the stark choices people make where there is energy poverty. It is a case of heating one room and not heating the other one. Those are the stark choices people are faced with in the country we live in today. Until such time as we take on the might of the energy companies and until there is some sort of global political response to this, we will continue to see these supernormal profits being earned by these companies, with governments and nation states powerless to intervene to any great extent.
The windfall tax and this legislation is coming very late in the day. The excuse for delaying the windfall tax has been that the Government was waiting for EU regulation on the matter. I understand that but this was published in October and only now, eight months later, are we debating the issue. Several EU countries have been much quicker to implement the provisions of the EU’s regulation after it was published. Germany, for example, passed legislation on a windfall tax in December while France’s windfall tax has been operational since January. Austria and Greece all introduced legislation late last year, as did Slovakia, Portugal and Romania. Even the Tories in the UK introduced taxes on excess profits last year. Why has it taken us this long to begin to even have this formal discussion? The general scheme of this Bill was not published until late March of this year and every excuse the Government gives for this delay falls flat on its face when we look to what has been done by our European neighbours already.
On the substance of the Bill, we welcome the fact the windfall tax is now being imposed on the extraordinary profits which energy companies have seen of late and, ethically, it is the right thing to do. It would be deeply unfair if we were to allow some to exploit Russia’s brutal and illegal invasion of Ukraine for their own gain while others are experiencing real harm as a result of its knock-on effects.
Households have been taking a hit on all fronts between the energy crisis, inflation, interest rates, in food and in basic household essentials. Those hit hardest need to be given every support possible. There has been a palpable frustration among those who have struggled through this cost-of-living crisis when they see the profits being made within the energy sector. They deserve a break, to be fair.
I acknowledge the fact that, for instance, this Government has increased the income thresholds for fuel allowance. That has provided some alleviation and there have been once-off measures. We ask that sustainable measures be taken, using money garnered from this windfall tax, to ensure energy poverty, in the first instance, is dealt with and that it is done as quickly as possible.
We want to see a proper targeting of relief measures funded by the windfall tax. The revenue raised should go to those who need it most. We saw in the Society of St. Vincent de Paul report that more and more people are struggling to keep the heat on. These are the households we need to target with the proceeds from the windfall tax.
I represent the constituency of Cork East and the Whitegate oil refinery is situated in Whitegate in my constituency. I acknowledge Irving Oil and the transition it is involved in at present where there is a significant investment by it to, for instance, triple its production of renewable diesel so as to meet Ireland’s climate ambitions. I also acknowledge the company’s partnership with the Simply Blue Group which is about transforming or transitioning the Whitegate refinery into a renewable energy production hub which produces green hydrogen, for instance, and e-fuels, in full integration with floating offshore platforms.
This brings me to the point I will make about the next wave of wind energy. If we are serious about security of energy supply in this country and not having to be beholden to the global markets with regard to pricing mechanisms and buying forward, then the Government needs to put more resources into entities like the Maritime Area Regulatory Authority, MARA. We need to see what the next phase of floating offshore will look like. We need more concrete actions from Government in that respect because that is the only way we can stave off debates like this taking place. I acknowledge that some progress has been made in respect of phase 2 and the areas which have been determined but we need to move rapidly to phase 3 and to work with entities like Whitegate and Irving Oil. Whether we like it or not, oil is still part of the energy mix. It is 51%, if I am not mistaken, but I ask that the Government does not introduce legislation that stymies the potential of companies like Irving Oil to make that transition. That is my core point.
I welcome this legislation. I welcome that the energy companies will be returning significant amounts of money to the Government, the taxpayer and indeed the people who pay for the electricity. I agree it is very late in the day, but at least it is here. No Deputy in this House would say we should not proceed with the legislation as quickly as possible now that we have it.
Of course, there are questions over the policy and the organisation of companies like the ESB and EirGrid, which are State companies. As I understand it the ESB is what is called a vertically integrated company. It owns all of our electricity from production to supply. Some years ago, a report found that it should not have that dominant position in the market and that companies like EirGrid ought to have ownership and control of the distribution network which would result in a reduction in the price of electricity for consumers and for businesses alike. I do not know if the Minister has an up-to-date policy on that; I will submit a parliamentary question to him on it. I believe the State companies are not helping the consumer by the way they operate. Their profits are also exceptional and we need to examine all of that.
I once again raise an issue I have raised with the Taoiseach, the Tánaiste and the Minister, Deputy Eamon Ryan. It relates to those people who cannot benefit from the €600 electricity household support. Under this Minister and this Government, they cannot claim that benefit. Everybody with an electricity meter in their house, including Ryan Tubridy, Fergus O'Dowd or whoever, gets that €600. The problem is with those people who live in caravans in my constituency, whose principal private residence is a mobile home. They live with very poor insulation. Many of them are in very poor health. As they do not have an individual meter, they cannot benefit from the €600 because people need an individual meter to benefit from that. It is the park owner who supplies the energy to them. There are not too many of these people. I have given the names, addresses, phone numbers and other details to the Department of the Environment, Climate and Communications and still no contact has successfully been made with them to deal with this issue.
In reply to a parliamentary question, the Minister pointed to the exceptional needs payments and stated that the social welfare system will cater for these people. The answer is that it does not and cannot. Because they do not have an energy bill, the exceptional needs payment does not apply to them. Notwithstanding the wish of community welfare officers to give them the €600 they cannot give it to them because they do not have an energy bill. It is unacceptable that this still continues. In fairness to the Minister, everybody in the country gets it. People living in temporary or mobile homes, for instance people who are Travellers, have rightly and properly been supported and benefit from it. In that case the supplier is the local authority and there is no issue with them getting that funding.
However, why do we continue to discriminate against this very small group of people who as I said are in the worst health, have the poorest insulation and the greatest need? I am fed up raising it in the Dáil with the Taoiseach, the Tánaiste and the Minister, Deputy Eamon Ryan. The Minister of State may not be listening to me now but he should listen. He and his Department should do something about it because it is unacceptable that a very small cohort of people continue to be discriminated against because of a lack of interest in the Department in finding an appropriate solution for these people. It is a disgrace that this is continuing. I will submit a question to the senior Minister about it once more. I hope the Minister of State will listen, go back to his Department and tell the officials to sort this out now please.
I believe people have an inherent sense of fairness as we have seen with various issues. What is affecting this at the minute is conflict, war and multiple other things. That has undoubtedly been a significant factor in everything has happened with energy. When people see energy companies making very significant super profits that offends their sense of basic fairness. It is for that reason that we in Sinn Féin and other parties on the left advanced the case for a windfall tax when the big spike in energy prices took place accompanied by a big spike in profits.
We have undoubtedly seen huge pressures on workers, families and individuals right across the State because of what has been happening. Energy costs have doubled in the last two years with the average home now paying over €2,000 a year for electricity alone. Ireland has some of the highest energy prices in Europe. Workers and families are absolutely crippled by the strain. One in four gas customers are in arrears with the figure of 160,000 people, an increase of 20,000 compared with last year. It is no surprise that the number of people in energy poverty remains so high. It is in that context that we need very firm action on a windfall tax.
We will table a number of amendments on this Bill. The windfall tax needs to go further. It needs to increase the profits that would be considered taxable. The legislation needs to be more robust to ensure that avoidance is halted. We will also table an amendment to introduce clear guidelines on how the revenue should be spent to ensure the moneys raised reduce the price of electricity for households. It is the ordinary bill payers, the workers and families across the State - and in multiple other states as well - who are building up the profits of these energy companies. It is only right for the Government to claw back some of those super profits which should then be directed towards reducing the costs for those most in need. It is for that reason that we are tabling these amendments.
We would have introduced a windfall tax well over a year ago. This Bill is somewhat late and somewhat less ambitious than it should be. It is welcome that we are moving on this at all, but it should have been much more substantial. I hope the Minister of State will consider the Sinn Féin amendments to ensure that more profits can be taken into consideration.
The Social Democrats welcomes this Bill and the movement on the temporary solidarity contribution. We acknowledge that this is retrospective legislation which will deal with the windfall profits accrued by companies for 2022 and 2023. Is that correct? The Minister of State is looking confused there. Okay.
I acknowledge that this levy will be set at 75%. A company that hits 20% above normal and average profits will be levied at 75% of that which I understand is in excess of what the majority of other countries in the EU have done. I believe the EU had set a minimum of 33%. I welcome that the Government set it at 75%. However, I wonder whether it could have gone a bit further. Throughout this entire debate when we are having this discussion about this windfall tax or levy, we need to remember that the money we are talking about is money that has been directly accrued on the back of incredible hardships, war and the horrendous situation in Europe. In our own country many people are suffering from the incredible high prices and energy poverty. This money is accrued on the back of very difficult situations for thousands upon thousands, probably millions of people across Europe. No company should be allowed to profit in any way from that.
Even a 75% levy is being very generous to those energy companies. I would be keen to hear from the Minister of State as to why it was set at 75%.
What rationale was behind that? Was consideration given by the Government to removing the possibility of profits being available to companies based on those circumstances?
This windfall tax is important for a number of reasons. It is very important, as I said, that companies do not get to profit from war situations and it is very important for the public to see that the Government is ensuring companies cannot profit from such situations. I know it is very difficult for people when they see the headline figures on the profits various energy companies are making. When the people who see these headline figures are at the same time trying to scramble together money for their own family to pay electricity or heating bills or to try to put food on the table for their children while suffering so much because of high energy prices, it is very difficult to see the kind of profits coming out of energy companies. It is very important for people to see that the Government has this tax and that there is that collection of windfall profits.
It is also important because what we have seen over the past two years is the subsidisation of the energy sector to some degree. The Government has put in place certain measures and has given supports and credits to individuals, companies and businesses. However, when the Government uses taxpayers' money to subsidise a market where it has clearly failed, like the energy market, it is important this type of measure is put in place so there is no leakage from the subsidies into the energy companies' profits and so they do not go into the pockets of the energy companies but stay in the pockets of the public. Those are the sorts of protective measures the Government should put in whenever it subsidises any market. In regard to the housing market, I would say we are also seeing subsidisation of developers but there is no control of what developers are making at the other end, which is a clear policy flaw in how the Government is dealing with the failed housing market. This is the type of measure that should be put in place whenever there is serious and significant subsidisation by the Government of a particular sector.
What we need to see now is a broader discussion about how we are going to reform our energy markets. It is clear they are not fit for purpose in a changing geopolitical landscape but also in light of the climate crisis. We are moving into a very different sphere and the market structures that are there are not going to be sufficient for that changing environment. We need to have that broader discussion. I understand a majority of it would have to be at EU level but that is certainly where we need to be going. Nationally, we need to look at how we manage the markets in Ireland, and there is certainly scope to give the Commission for Regulation of Utilities greater powers. We need to see a lot more transparency in regard to how companies undertake processes such as hedging. There is an awful lot of work that could be done at a national level to bring a level of transparency into the market to give consumers faith that their best interests are at the heart of that market and it is not purely a profit-driven model, which it certainly is at the moment.
Debate adjourned.