Dáil Éireann Debate, Thursday - 16 June 2022
10. Deputy Fergus O'Dowd asked the Minister for Finance if further measures are being considered to help with the cost of living given the decrease in consumer spending in the first quarter of 2022; and if he will make a statement on the matter. [31335/22]
Amharc ar fhreagra27. Deputy Ruairí Ó Murchú asked the Minister for Finance if he will introduce an emergency budget and targeted measures to support struggling households following a research paper (details supplied); and if he will make a statement on the matter. [30059/22]
Amharc ar fhreagraThere has been a significant amount of to and fro today arising from the fact that a huge number of people are now in serious financial difficulty due to rising costs. I accept the Government cannot do everything but we need to see it doing more. We want to see an emergency budget, but I will not get into that now. We could talk about the Economic and Social Research Institute, ESRI, report and the views of the Irish Fiscal Advisory Council, IFAC, and the Central Bank. What promises will be made with a view to mitigating the difficulties people are experiencing?
I propose to take Questions Nos. 10 and 27 together.
I thank the Deputies for their questions. The decline in consumer spending in the first quarter of this year was mainly due to the mobility restrictions introduced because of the omicron wave of the pandemic. The Deputy referred to recent engagement with the Central Statistics Office, CSO, in his question. On the question of the cost of living, the Government has acted swiftly and frequently to address this issue, including through budget 2022 measures and more recent measures, adding up to €2.4 billion, which have been introduced to ease the burden on households, including with measures targeted at those in need.
In October, as part of the budget, the Government provided more than €1 billion in direct relief, incorporating a reduction in personal income tax and a social welfare package. Inflationary pressures intensified because of pent-up demand in the economy after the pandemic-related restrictions. There were also restrictions on getting products into the country due to various backlogs in production lines and those problems are still there and have added to inflation. The Putin war has also exacerbated the situation, primarily in its effect on the price of fuel, which affects people coming to and going from work, home-heating costs and the cost of running a business. That has exacerbated the situation.
The Government acted again in February with a package of €505 million to deal directly with the issue of rising energy prices. This included a €200 credit towards the cost of energy bills for every household in the country, a lump sum payment in respect of the fuel allowance and a cut to public transport fares.
The Deputy mentioned the ESRI report. It stated that the types of measures we introduced, such as the lump sum payments to help with household energy bills, were better targeted than an across-the-board fuel increase from which everybody, including wealthy people, would benefit. As the report stated, even though the same amount of €200 was given to each household, we know that lower income families have higher energy costs proportionally relative to their incomes. Therefore, the lump sum payment was proportionally more beneficial to those people. Those were the words of the ESRI this morning.
We all know the situation we are in. We are not taking away from what has been done by the Government to date but the fact is we are in a crisis and a disaster, to use terminology that is interchangeable now. We need to see action. It is no more than what any of us hear when we go around canvassing. No one is very interested in what has been done because they are more interested in what is going to be done. Given the circumstances people are in, we need action.
What we want to see is what is proposed in many of these reports. We need supports to be targeted at those who need it most. That is going to be difficult. We all know that a considerable amount of people have no choice about their use of fuel because they have to travel. We all know what we need to do with regard to wind energy, electric cars, infrastructure and public transport. We need to facilitate people who do not have those alternatives now. What are we going to do? We are heading towards the Dáil recess and unless we take action soon, none of this will be dealt with before September, October or later. That will be critical.
I will not go through the full list of measures we have introduced on an almost bimonthly basis since 1 January. Most recently, we reduced the rate of VAT for the hospitality sector to increase employment. The main task we have is getting people back to work. The best way of dealing with poverty in a household is to have an earned income in the house. That is better than the alternative. That measure was intended to get people back working in the hospitality industry, in our pubs, restaurants and hotels. There are now 2.5 million people in the workforce. The policies we are introducing are paying off. That is the highest number of people ever in the workforce.
In the coming weeks, the Government will publish the summer economic statement, which will set out the budgetary framework within which we will consider the measures to be introduced next October. The budgetary strategy will be aimed at restoring the public finances to a stable trajectory in the uncertain times ahead. We are going to see that in the coming weeks and it will set the framework for where the Government goes. It would be remiss of me not to acknowledge the fact that interest rates are rising and the taxpayer has a high level of national debt. We must be conscious of the extra cost of that debt on the Irish public.
We all accept we are in a situation that is far from perfect. We know that interest rates, inflation rates and all the rates one would not want to rise are rising. Unfortunately, the consumer, householder and citizen can feel all of this on a day-by-day basis. We must be able to offer them something so they can get through it. We all accept that employment, particularly highly paid employment, is a means of breaking poverty. However, a considerable number of people are falling into fuel poverty and becoming the working poor. We must facilitate them. They do not have alternatives to putting petrol or diesel in their cars. I understand we can still reduce their costs but it needs to be done straightaway. We also need to consider the cost of home-heating oil. We need to know what sorts of conversations the Government has had with the European Commission. What are the possibilities for cross-European mitigations? People need support as soon as possible. They are in dire need.
We will continue to assist households in dealing with the cost of living where it is possible to do so. It is imperative that policies are designed in a manner that does not increase inflation. Putting more Government and taxpayer money into the economy to try to counteract the effects every time there is an increase in inflation rates would add to the inflationary pressure. Budgetary policy must be carefully crafted to avoid becoming a part of the very problem we are trying to address.
The pandemic continued into this year. Some €7 billion was ear-marked for issues relating to Covid-19 this year. More than €3 billion of that was allocated and a further €4 billion remains unallocated and is in the contingency fund. There are ongoing costs relating to Covid so we cannot dip into that fund at this point because we do not know what will happen with the virus in the next six to eight months. We hope we will not need to fund a further response. Some of that money may have to be used because of the extra costs caused by the Putin war, including in dealing with the 35,000 Ukrainian refugees. None of us can dispute that if we have money to spare, we must look after families who are fleeing a war-torn economy. Nonetheless, we have put €2.5 billion into the Irish economy this year.
