Wednesday, 4 December 2019

Questions (37)

Willie O'Dea


37. Deputy Willie O'Dea asked the Minister for Employment Affairs and Social Protection the way in which she plans to compensate social welfare recipients who are not in receipt of fuel allowance for the increase in carbon tax; and if she will make a statement on the matter. [50498/19]

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Oral answers (6 contributions) (Question to Employment)

The question is on fuel poverty. It is self-explanatory so the Minister might respond to it.

I just have to say for the record that, as a woman, it is my prerogative to change my mind frequently, and I certainly do so.

In budget 2020, the Minister for Finance and Public Expenditure and Reform, Deputy Donohoe, announced an increase in the carbon tax rate. He has committed that all of the funds raised by increases in the carbon tax will be ring-fenced to protect those most exposed to higher fuel and energy costs, to support a just transition for displaced workers and to invest in new climate action measures. On 9 October 2019, the Department of Public Expenditure and Reform published the document, The Carbon Tax Increase - What it will be spent on, which sets out specific details on the allocation of these ring-fenced moneys for next year.

The fuel allowance scheme is a targeted measure to protect those who are most vulnerable from energy poverty. For this reason, the largest single allocation, of almost one quarter of the funds that will be raised next year owing to the increased carbon tax, will be devoted to ensuring that the least well-off in society are protected through increases in the fuel allowance payment and also through energy efficiency upgrades targeted at those in energy poverty. It is estimated that over 370,000 recipients will benefit from the increases and new activities in 2020. My Department also pays an electricity or gas allowance under the household benefits scheme, at an estimated cost of €188 million in 2019. In budget 2020, I extended the household benefits package to people under 70 who have another adult living with them. I also announced a €5 increase in the living alone allowance, which I hope will benefit approximately 216,000 recipients in 2020.

Under the supplementary welfare allowance scheme, a special heating supplement may be paid to assist people in certain circumstances with special heating needs. An exceptional needs payment may also be made under the supplementary welfare allowance scheme. This payment can be made to help meet an essential, once-off cost that customers are unable to meet out of their own resources. This may, and sometimes does, include exceptional heating costs.

My colleague, the Minister for Communications, Climate Action and Environment, has the role of reducing energy poverty by implementing measures, administered by the Sustainable Energy Authority of Ireland, SEAI, to improve the energy efficiency of homes.

The Minister will be aware that studies have shown that fuel poverty is rampant in this country. The latest study showed that approximately 400,000 families are affected by fuel poverty. I acknowledge the changes the Minister made in the budget but does she not agree that a number of people do not qualify for any of the improvements she mentioned? I can give examples. How are people on social welfare to be compensated for the increase in carbon tax?

The Minister will also be aware that more than 100,000 people working in low-paid employment are defined as living below the poverty line. How are they to be compensated for the increase in carbon tax? The Joint Committee on Climate Action recommended that a study be done on the extent of fuel poverty before the budgetary measure was introduced. The Minister can correct me if I am wrong but I understand that has not been done.

The specific cost to households of the increase in carbon tax would vary depending on a number of factors, notably, the energy efficiency of the homes of the fuel allowance recipients and the amount and type of fuel they use, among other factors.

Last year, the ESRI published its report on the economic and environmental impacts of increasing the Irish carbon tax. The report indicated that the additional cost of the carbon tax would be less than the weekly net value of the fuel allowance increases for those households living in the four lowest percentiles. The reason for the increase we chose was to protect the very people who are on the fuel allowance. The ESRI report stated that households in the lowest four percentiles will have an expected increase in fuel costs of €45 per annum in 2020. The increase in the fuel allowance by €2 per week amounts to approximately €56, which means there is some headroom should anything happen in the coming year. However, that is not the totality of what the Government is doing. Although one quarter of the €90 million that is expected to be ring-fenced from the carbon tax increases next year will go directly to supplement the people in the lowest four percentiles, many other initiatives such as the better energy warmer homes scheme will be rolled out across the country.

The problem is that all those initiatives announced by the Minister will come through other Departments and will benefit everybody equally. In the meantime, some people are being compensated for the increase in carbon tax while others are not being directly compensated. Does the Minister intend to continue to rely on increasing the fuel allowance as the mechanism for dealing with carbon tax? In doing so, is she aware of the problems of people who do not qualify for the fuel allowance?

I am not sure I agree with the statement Deputy O'Dea just made that the other schemes are open to everybody. The ambition in the plan is to address the houses that are most energy deficient before we get to people who live in more energy efficient homes. We have a plan to reach every household between now and 2030. We are all aware that the world is changing. The way we use energy will change to become more efficient. The way we travel and engage with the world of work will change. It is incumbent on us to have a whole-of-Government approach to ensure that from an income support perspective, which is what my Department is primarily responsible for, we look after those people who are most at risk of poverty. The survey on income and living conditions, SILC, numbers released last week show that we are, thankfully, making progress. It is up to all Departments, including the Departments of Transport, Tourism and Sport, and Communications, Climate Action and Environment, to ensure we reach the hardest hit citizens first and then work backwards between now and 2030.