Sinn Féin - On Your Side

Morgan supports Dáil motion on inflation and calls on Government to develop all island economy

9 December, 2008


Speaking in the Dáil this evening on a private members' motion on inflation Sinn Féin Finance Spokesperson Arthur Morgan TD said increases in heating, fuel costs and daily living expenses have had a severe effect on working families on low and middle incomes. Deputy Morgan signalled Sinn Féin's support for the motion and called on the Government to give stop paying lip service to the development of the all island economy and give due consideration to the proposals of Sinn Féin and others on the subject.

Deputy Morgan said, "I would like to broadly support this motion and I would call on the Government to recognise that the increases in heating, fuel costs and daily living expenses have had a severe effect on working families on low and middle incomes, which has ultimately damaged our economy and made the path to economic recovery all the more difficult to find.

"While the Government will go on about low inflation or even the projected deflation for the next 12 months the fact of the matter is that in key areas such as home heating and everyday shopping, the Government have stood back while prices spiralled out of control. Energy and food costs have more than doubled over the past 12 months while a litany of charges and levies were sneaked in through the Budget 09.

"As a result of the Government has placing the burden of our economic difficulties on the shoulders of ordinary people, families have been prevented from using their own incomes to boost the Irish economy and are being forced to shop outside of the state.

"In relation to retailers, there is no doubt that price disparities are damaging shops and stores south of the border. The National Consumer Agency has found a margin of up to 30 per cent in food prices on either side of the Border. I have had representations from businesses in my own constituency who are being damaged by the numbers of shoppers who have are travelling north.

"But rather than coming to the aid of retailers - the Government has made matters worse by increasing VAT to 21.5%. This means that there is now a six and a half per cent difference between north and south. This has placed retailers at a competitive disadvantage which they may not be able to cope with. The decision is all the more bizarre in light of the shortfall in VAT revenue.

VAT receipts are down €2.1 billion and with this increase not only is the Government sending shoppers to the north but for those who will continue to shop in the south the Fianna Fáil/Green Government are removing up to €200 from their incomes.

"Sinn Féin have always highlighted the damage that is being done to the long term development of both economies through disparities in taxation. Ultimately the Government will have to go beyond the lip service it has been paying to the development of an all-island economy and to start taking on board our proposals and the proposals of a number of organisations, business groups and bodies such as Intertrade Ireland.

"We are all aware of the short fall in public finance and the economic downturn but the measures implemented by the Government can only serve to perpetuate this recession and exacerbate the dire state of our state finances." ENDS

Full text of Deputy Morgan's contribution follows:

PMB - 9th of December

Ceann comhairle I would like to broadly support this motion and I would call on the Government to recognise that the increases in heating, fuel costs and daily living expenses have had a severe effect on working families on low and middle incomes, which has ultimately damaged our economy and made the path to economic recovery all the more difficult to find.

While the Government will go on about low inflation or even the projected deflation for the next 12 months - the fact of the matter is that in key areas such as home heating and everyday shopping, the Government have stood back while prices spiralled out of control.

Energy and food costs have more than doubled over the past 12 months while a litany of charges and levies were sneaked in through the Budget 09.

As a result of the Government has placing the burden of our economic difficulties on the shoulders of ordinary people, families have been prevented from using their own incomes to boost the Irish economy and are being forced to shop outside of the state.

The failure of the Government to intervene at an earlier stage to halt inflation has a direct negative impact on area such as the retail sector. But while prices are that highest ever level and consumer confidence is at an all time low- there still options available and I would urge the Government for once to start listening to people on the other side of the house and to change the direction that they have taken.

We have all seen the recent figures released by the European Commission demonstrating that pre-tax petroleum prices in Ireland are 24% higher than the EU average.

The only explanation for the disparity in prices is greed on the part of certain motor fuel outlets and a laisez faire approach by a Fianna Fáil Government that chose to ignore the fact that people are being ripped off.

But the issue of high energy costs goes beyond petroleum. Over the last eight years Ireland has moved from being below the EU average for electricity costs in 2001 to becoming one of the most expensive EU countries for electricity. For industrial electricity prices, Ireland rates as the second highest of the EU 25.

While the Government will no doubt point to the recent freeze in electricity and gas prices - only last August the ESB was granted a 17.5% increase in tariffs while an Bord Gáis was given permission for a 20% hike.

Both state bodies had to withdraw their most recent applications for tariff increases as world energy prices have fallen by up to 60%.

But while global energy prices may have tumbled we have seen only a minuscule decrease of less than 1% in the ESB supplied electricity and nothing at all has been forthcoming from an Bord Gáis.

Despite claims to the contrary the decreases in international energy prices are not being passed on and it remains to be seen if the ESB and Bord Gáis end up passing on the decrease or whether they'll end up keeping the difference themselves.

High electricity and home heating costs impact most on low income families who spend a far greater proportion of their household budgets on these basic items.

Because people are spending more on their petrol, home heating and electricity- they now have less money to spend on other basic items such as food and clothing which has the inevitable consequence of damaging other sectors of the Irish economy such as retail.

There is undoubtedly a problem with statutory bodies such as the Commission for Energy Regulation sanctioning increases without having proper regard as to the consequences for families and for business.

While I support the proposal that would require Regulatory organisations to hold public meetings - I believe that more measures are necessary to ensure that the regulatory bodies take account of the effects of their decisions.

Another measure could be to oblige Regulatory Authorities to conduct proper impact assessments as to what are the likely effects on low income and middle income families and on businesses if they sanction increases. For there to be any transparency impact assessments would have to be published by the regulatory bodies as well.

In relation to retailers, there is no doubt that price disparities are damaging shops and stores south of the border. The National Consumer Agency has found a margin of up to 30 per cent in food prices on either side of the Border.

I have had representations from businesses in my own constituency who are being damaged by the numbers of shoppers who have are travelling north.

But rather than coming to the aid of retailers - the Government has made matters worse by increasing VAT to 21.5%.

By increasing VAT to 21.5% there is now a 6 and a half per cent difference between north and south. This has placed retailers at a competitive disadvantage which they may not be able to cope with.

The decision is all the more bizarre in light of the shortfall in VAT revenue.

VAT receipts are down €2.1 billion and with this increase not only is the Government sending shoppers to the north but for those who will continue to shop in the south the Fianna Fáil/Green Government are removing up to €200 from their incomes.

Sinn Féin have always highlighted the damage that is being done to the long term development of both economies through disparities in taxation. While at this point in time, it is retailers in the north who are benefiting at the expense of retailers in south, the situation could changes in the future and northern shops could end up suffering the same hardship.

Ultimately the Government will have to go beyond the lip service it has been paying to the development of an all-island economy and to start taking on board our proposals and the proposals of a number of organisations, business groups and bodies such as Intertrade Ireland.

One of our proposals is for VAT harmonisation and while we accept that there are many more measures must be taken to ensure a proper level playing field- a 2% reduction in VAT would make a significant difference.

On the issue of levies and charges through state agencies and departments, the increases made by the Government are hitting the vulnerable people the most. By increasing A&E and hospital charges the Government is effectively discouraging people who may be in need of urgent care from going to hospital. By increasing school transport charges the Government is making it more difficult for children from disadvantaged backgrounds to continue their education.

But these increases are not being done to improve or safeguard our services- they are being initiated while the health and education services are being cut back. The cut backs in health and education will do long lasting damage to our public services and I would urge the Government to bow to public pressure on this issue.

In terms of income levies, the 1% income levy on workers who earn more than €18,305 is unwarranted and will damage low income families. The levy should apply only on incomes in excess of €38,000 and we believe that the threshold for the 3% levy should be reduced to incomes in excess above €200,000. Our proposal to remove the PRSI ceiling would have had the double effect of raising much needed tax revenue while cushioning those on low and middle incomes from the worst effects of the increase.

What all of these charges and levies amount to is over €1,000 being taken out of the pockets of families on moderate incomes at a time when they need it the most.

We are all aware of the short fall in public finance and the economic downturn- but the measures implemented by the Government can only serve to perpetuate this recession and exacerbate the dire state of our state finances.

Tá mé ag tabhairt tacaíocht don rúin seo agus iarraim ar an Rialtas dul i ngleic leis na fadhbanna. Go raibh maith agat.

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