Dáil Éireann Debate, Wednesday - 23 October 2019
42. Deputy Willie O'Dea asked the Minister for Employment Affairs and Social Protection the way in which her Department has calculated that an increase in the fuel allowance as announced in budget 2020 will compensate for the increase in carbon tax; and if she will make a statement on the matter. [43653/19]
Amharc ar fhreagraI raise this question because, to the best of my recollection, in his budget speech the Minister for Finance, Deputy Donohoe, linked the fuel allowance increases to the introduction of carbon tax. He suggested that the reason fuel allowance was being increased was to compensate people for the imposition of carbon tax. I would like the Minister to elaborate on this matter.
In budget 2020, we increased the fuel allowance payment by €2 to €24.50 per week. That is an increase of just under 9% and that will increase the annual fuel allowance rate from €630 to €686, which is an increase of €56 for the year. The annual cost of this increase in the fuel allowance is €21 million and that is funded via a ring-fenced allocation from the approximately €90 million that it is expected will be raised from the carbon tax increase. This is the largest single allocation and it is directly aimed at protecting our most vulnerable citizens.
Last year, the Economic and Social Research Institute, ESRI, published its report, "The Economic and Environmental Impacts of Increasing the Irish Carbon Tax". This followed its detailed analysis of the impact of increasing carbon tax at various rates. It included a treatment of the effect on households at each income decile and shows that the increase in the carbon tax of €6 per tonne will cost the poorest households an additional €28.08 per annum, rising to €51.17 per annum for those in the third lowest income decile.
Accordingly, it is intended that the €56 annual increase in fuel allowance that we have announced will more than compensate the three lowest income deciles, the very people toward whom the fuel allowance is targeted. We hope this will ensure that the most vulnerable in society are protected from the increased carbon tax. It is also important to note that while the fuel allowance increases will come into effect from 6 January 2020, the carbon tax increase for home heating fuels will not take effect until May 2020. That will, hopefully, give such households additional headroom while we introduce that increase.
The Taoiseach referred to various studies on this matter which threw up similar figures. I presume those are the same studies to which the Minister is referring. Is it the Government's intention to continue in this vein? I ask that because it is anticipated that there will be further increases in carbon tax between now and 2020, as laid out in the budget speech. Will the Minister confirm that it is the Government's intention to compensate for those future increases by way of using the fuel allowance mechanism? Is that the case or is an alternative method being considered to compensate people in the poorest families?
The studies the Taoiseach referred to are the only ones of which I am aware. I refer to the ESRI impact assessments done on the worst affected and the people with the lowest incomes in society. I will check with the Taoiseach to see if he knows something I do not.
I state this tongue in cheek, but I cannot really answer the question as to the intentions of future Governments. If Deputy O'Dea and his party are willing to extend the confidence and supply agreement, and I am in this post this time next year, then it will certainly be my intention to protect the most vulnerable in society from any future increases. We all know, however, where we are in the cycle of life at the moment.
I genuinely believe that whoever is privileged enough to be in my position has a responsibility to protect the living standards and the livelihood of those who are totally reliant on the single income that they receive from the State and it is incumbent upon us all to make sure that happens regardless of who is in power.
The Minister is asking questions which are way above my pay grade. The point I want to put to the Minister is that not everybody gets a fuel allowance. For example, what about somebody on jobseeker's allowance? What about a pensioner who is not living alone and, therefore, will not qualify for the living alone allowance? What about those on invalidity pension, disability allowance, single parents etc.? They are not compensated for the increase in carbon tax by the fuel allowance increase. The Minister will be aware that because their rates did not rise, they are not compensated for inflation either and inflation for that group tends to be rather higher than the headline figure of inflation. Is it not true to say that those who are already living in poverty or at risk of poverty will be suffering from a double whammy? They have got no increase in their basic allowance and they cannot benefit from the increase in fuel allowance because they do not get it.
To answer the Deputy's question, as I noted earlier on, of the ring-fenced €90 million that will be raised through the carbon tax this year, the single biggest investment of €21 million is coming to my Department to try to shield those who are most vulnerable.
The Minister for Communications, Climate Action and Environment has the sole responsibility, with the Minister for Finance, for reducing energy poverty and introducing measures to improve the energy efficiency of Irish homes. In 2016, the Government launched a comprehensive strategy to combat energy poverty followed by extensive public consultation and that strategy is spearheaded by the Minister, Deputy Bruton. It sets out the Government's commitment to protecting vulnerable households from energy poverty through a combination of supports, investments in schemes to improve energy efficiency and energy efficiency awareness initiatives.
For my part, the best route out of poverty that we can help with the Department is to ensure that anybody who wants to get a job has the support and services to help him or her get a job. We have all accepted that in the past number of years there have been some successes in that particular project but there is still a long way to go, given that 4.8% of the people are on the unemployment register.
