Written Answers Nos. 81-100
81. Deputy Richard Boyd Barrett asked the Minister for Finance the measures that he is planning to put in place to address inflation and wealth inequality; and if he will make a statement on the matter. [31322/22]
Amharc ar fhreagraWhile I am acutely aware of wealth inequality, it is important to stress that housing assets are the main source of divergence in wealth across the Irish population.
It is also important to acknowledge that a number of wealth taxes are in place, including Capital Gains Tax, Capital Acquisitions Tax and Local Property Tax. The Revenue Commissioners estimate that these taxes raised some €2.8 billion last year.
From a broader perspective, the Deputy will be aware that Ireland has one of the most progressive systems of taxes and social transfers of any EU or OECD country. Our tax system is strongly progressive, and when combined with our welfare system, contributes substantially to the redistribution of income and to the reduction of inequality.
In relation to the high rate of inflation, the Government is keenly aware of the challenges of rising price pressures. The Government has responded in a timely and forceful manner to address the impact of higher prices, with a suite of measures to help to ease the impact on businesses and households, particularly those on low incomes. On a cumulative basis, €2.4 billion has been announced in cost of living measures to date.
Many of these measures were strongly progressive, with the gains more keenly felt by those in the lower income deciles.
However, it is important to bear in mind that the causes of current price pressures are not within our control. Whilst the Government will continue to work to minimise the fall-out on those who are least-equipped to respond, resources are limited and it is not possible to insulate households and businesses from the entire impact of the current shock.
Furthermore, in calibrating how we respond to the current challenges, it is important that we strike the right balance and ensure policy does not inadvertently add further to inflationary pressures. The Government has to balance the appropriate response to the increased cost of living in Ireland with the unprecedented level of global economic uncertainty and macro-economic risk.
As the Deputy will be aware, the Summer Economic Statement will be published in the coming weeks and will set out the broad economic and fiscal parameters for Budget 2023 , taking into account the overall macro-fiscal position.
82. Deputy Richard Bruton asked the Minister for Finance the way in which the prospects for the forthcoming Budget will be impacted by the international turmoil currently being experienced and higher energy and interest costs; and if he will make a statement on the matter. [31243/22]
Amharc ar fhreagraThe war in Ukraine has fundamentally altered the economic outlook and generated significant economic headwinds, both in Ireland and throughout the world.
At the time of the Stability Programme Update 2022 (April), my Department projected growth in modified domestic demand - my preferred domestic indicator - of 4¼ per cent this year, followed by an increase of just below 4 per cent next year. These forecasts were produced against a backdrop of unprecedented uncertainty and geopolitical instability and, as such, the margin of error around these point estimates was very wide.
My Department identified several downside risks to the projections at the time and our best assessment is that many of these have now materialised. For example, inflation has proved to be higher, broader and more persistent than initially assumed, while the external environment is less benign. The stance of monetary policy has become less accommodative, and the higher cost of funds will have an impact for households, firms and government.
The Government has introduced a series of measures to ease the impact of rising prices, with €2.4 billion in announced cost of living measures so far, including measures announced in Budget 2022 . Whilst we will continue working to ensure the fallout is minimised for those who are least-equipped to respond, we cannot cushion the impact for all.
On a positive note, the labour market has remained resilient despite these challenges. Employment growth was strong in the first quarter, with a record 2½ million people in employment, while the unemployment rate fell to 4.7 per cent in May, its lowest rate since 2006. Wages are also growing strongly, in part as a result of shortages in some sectors.
The Government will publish the Summer Economic Statement in the coming weeks, setting out the fiscal and macroeconomic parameters that will underpin Budget 2023.
84. Deputy Pearse Doherty asked the Minister for Finance his views in relation to the observations made in the Organisation for Economic Cooperation and Development’s recent economic outlook which noted that measures introduced by the Government since the beginning of 2022 in response to the cost-of-living crisis provided limited protection to poorer households; and if he will make a statement on the matter. [31252/22]
Amharc ar fhreagraThe Government recognises the challenges of rising price pressures and has responded to help to ease the impact on businesses and households, particularly those on low incomes. Indeed, the OECD Economic Outlook notes the extent of supports that the Government has introduced to mitigate the adverse impact of inflationary pressures. On a cumulative basis, €2.4 billion has been announced in cost of living measures to date.
At the outset, Budget 2022 was framed within the context of these price pressures. It contained an income tax package to the value of €520 million, a social welfare package worth €558 million, and other supports, including health and childcare measures, to help to mitigate the cost of living.
Since the Budget, Russia’s invasion of Ukraine has exacerbated price pressures. The Government has introduced further measures to help to ease cost of living pressures, including a suite of measures in February amounting to €505 million. Further supports were announced in March and April, including an energy credit, a reduction in the VAT rate for electricity and gas, and reductions in excise duties. In May, the Government announced an extension of the 9 per cent VAT rate for the tourism and hospitality industry for a further six months.
The Government is acutely aware of the differential impacts of rising inflation across household groups and has introduced this range of targeted measures to help alleviate the burden on those worst affected by current price pressures.
The tax and welfare changes introduced in Budget 2022 and more recent measures to mitigate the increase in the cost of living were strongly progressive, with the gains from measures more keenly felt by those in the lower income deciles.
However, it is important to bear in mind that the causes of current price pressures are not within our control. Whilst the Government will continue to work to minimise the fall-out on those who are least-equipped to respond, resources are limited and we cannot cushion households and businesses from the entire impact of the current shock.
Furthermore, in calibrating how we respond to the current challenges, it is important that we strike the right balance and ensure policy does not inadvertently add further inflationary pressures.
89. Deputy James Lawless asked the Minister for Public Expenditure and Reform if he will provide details of the first elements of the Inflation/Supply Chain Delay Co-operation Framework Agreement; and if he will make a statement on the matter. [30066/22]
Amharc ar fhreagraThe Inflation/Supply Chain Co-operation Framework sets down the approaches and the parameters within which the parties to a public works contract can operate to determine the additional costs attributable to inflation and to share that financial burden in a proportionate manner.
The Office of Government Procurement has published guidance material, template letters of agreement and workbooks to allow public bodies and their contractors to establish a framework that will sit alongside the public works contract. It will facilitate engagement and a speedy determination of the impacts of exceptional inflation and supply chain disruption.
The first element of the framework was published on 20 May 2022 for projects with values in excess of €1m.
The second element was published on 3 June 2022 for projects with values less than €1m.
Where the first element is concerned there are two strands, depending on whether the project is operating under the older form of contract; published before 7 January 2022, or the new form; published on 7 January 2022. For the older forms, the framework covers materials and energy price increases. For the new forms, only energy price increases are covered as these forms were amended to allow for materials price inflation.
Where the completion of the works is delayed due to supply chain disruption, contractors will not be held liable for any liquidated damages payments for the late delivery of the works.
It will operate from the point at which the parties enter the framework until project completion. It also permits inflation cost recovery on payments already made on projects from 1 January 2022 in recognition that inflationary pressures were further building from this point in anticipation of the invasion of Ukraine.
Inflation-related costs are determined according to a standardised approach using specified price indices published by the CSO. These additional costs are apportioned between the parties, with, subject to budgetary constraints, the State bearing up to 70% of the additional inflationary related costs on an ex gratia basis.
The use of the framework is voluntary, but participation by the parties is strongly encouraged. It represents a pragmatic response to the current challenges caused by inflation that are not within either party’s control.
93. Deputy Róisín Shortall asked the Minister for Public Expenditure and Reform if he will provide an update on the overpayment of rent at a location (details supplied); the contacts that his officials have had with the landlord since November 2021; if any solutions have been identified; and when he expects to recoup this overpayment. [31177/22]
Amharc ar fhreagraI thank the Deputy for her continued interest in the resolution of this case.
Since we previously spoke on this issue, intensive discussions have taken place at a senior level in the OPW and senior management representing the landlord. In fact, in excess of 20 contacts have been made between the parties ranging from meetings, telephone discussions and other communications in the past number of months. The intensity of this engagement illustrates the complexity of matters that needed to be resolved. I am pleased to report that, with significant goodwill on both sides, the parties have now arrived at an agreement in principle that will resolve the matter. Currently legal representatives are finalising the necessary formal documentation following which the OPW expects to be in a position to complete the agreement.
The OPW envisages that the matter will be formally brought to a conclusion in a manner that is acceptable to both parties over the coming weeks.
The Deputy will appreciate that the matters under consideration involve complex, commercial, property transactions and the issue remains sensitive until finalised.
The rent being paid by the Commissioners of Public Works (OPW) in respect of the offices at Block 1, Miesian Plaza continues to be in accordance with the terms of the lease.
95. Deputy Marc Ó Cathasaigh asked the Minister for Public Expenditure and Reform the steps that the OPW will be taking to address the ecological and environmental impact of arterial drainage works given the comments made by the Taoiseach regarding the need for a new era of stewardship of the natural world in Ireland; the steps that his Department will take to integrate ecological engineering approaches and nature-based solutions into flood relief works; and if he will make a statement on the matter. [31306/22]
Amharc ar fhreagraThe OPW has an extensive evidence based environmental management programme across all of its flood risk management activities.
Under the Arterial Drainage Act 1945, the OPW has completed thirty-four Arterial Drainage Schemes on river catchments, along with five estuarine embankment schemes. The OPW, through its arterial drainage works, meets its statutory duty to maintain these completed schemes in proper repair and effective condition.
In terms of best practice and national guidance for these arterial maintenance works, the OPW has developed and published the national ‘Environmental Guidance: Drainage Maintenance and Construction ’. This sets out a framework for the arterial drainage maintenance service to minimise potential environmental impact and maximise the environmental gain through proactive initiatives such as the river enhancement programme. This guidance was developed in consultation with the National Parks and Wildlife Service and Inland Fisheries Ireland.
The Arterial Drainage Maintenance Service also operates a national framework of multi-annual Appropriate Assessments for thirty-one catchments. All associated Screening reports, Natura Impact Assessments and Appropriate Assessment Determinations, including those for specific sites are published on the OPW website. A public consultation is to commence shortly to inform the next 6-year Strategic Environmental Assessment for the National Arterial Drainage Maintenance Programme.
The OPW is currently delivering some 150 flood relief schemes as part of the Government’s €1.3bn investment under the National Development Plan to 2030.
The design of all flood relief schemes involves an extensive series of environmental assessments. As well as meeting the statutory and regulatory requirements these detailed assessments help to inform how the environment can be integrated into a viable scheme design. To that end, there is a specific requirement for all design consultancy services to assess the potential for nature-based solutions for catchment management as an integral part of the overall viable scheme design options. Where feasible, these measures are being implemented helping to manage the flood risk for a community and provide many co-benefits including for agriculture, aquaculture potential through improving water quality and biodiversity by creating habitats and reducing pollution.
The OPW in its Biodiversity Action Strategy 2021-2026 is enhancing the ways in which it works with flood relief and arterial drainage works to include creative solutions, balancing biodiversity with social impacts, minimising environmental impacts where they are unavoidable and creating opportunities to achieve Net Gain for both biodiversity and flood protection through sound policies, procedures and research.
As a proactive contributor and participant in a wide range of studies and research projects, the OPW continues to inform and improve its approach to environmental assessments and nature-based solutions. In this way, the OPW is continuing to take an evidence-based approach and meet the highest standards.
100. Deputy Ged Nash asked the Minister for Public Expenditure and Reform the details of plans for a new climate division in his Department; if he will confirm its staffing structure; its overall responsibilities and the function it will play in the allocation, implementation and enforcement of sectoral carbon budgets and ceilings across Government; and if he will make a statement on the matter. [31012/22]
Amharc ar fhreagraIn recognition of the scale and urgency of the challenge of meeting Ireland’s climate action targets, a new Climate Action Division has been established within the Department of Public Expenditure and Reform.
Climate Action is a key Programme for Government commitment and the Civil and Public Service will play a central role in driving the changes necessary to achieve net zero by 2050. The new Climate Action Division aims to maximise the contribution which the Department can make in this area. The Division will bring together key expenditure areas with a strong climate dimension, including adaptation, mitigation and climate finance. A core responsibility will be to ensure that climate impacts are fully considered in the development of policies and actions for which the Department is responsible.
The Division will be led at Assistant Secretary level and will be comprised of five discrete units. Functions of the new Division will encompass the National Investment Office; climate policy coordination, performance budgeting and wellbeing; climate action research and analysis; as well as oversight of sectoral spending in the Departments of Transport, Agriculture, Environment, Climate and Communications, and the Office of Public Works, amongst others.
Regarding sectoral climate ceilings, each relevant Government Minister will be responsible for achieving the legally-binding targets for their own sector, with each Minister accounting for their performance towards sectoral targets and actions before an Oireachtas Committee annually.
Within the overall expenditure framework set by my Department, it will be the responsibility of each Minister to ensure that their Departments’ priorities and spending allocations are aligned with the emissions ceilings in their sectors.
