Ministers now fear carbon tax backlash
FG worried about how rural areas will react to ‘unnecessary’ financial burden
GOVERNMENT ministers fear an angry backlash from rural voters when they significantly increase carbon taxes which will push up the cost of petrol, diesel, heating oil and other fuels.
Fine Gael Cabinet ministers believe that the plan to hike carbon taxes by €6 to €7 per tonne could add an “unnecessary” financial burden on rural voters ahead of a fast-approaching general election.
Ministers are also concerned that Fianna Fail will backtrack on its decision to support the controversial climate action measure if the increases – which will add an extra €1.20 to the cost of an average tank of diesel or petrol – spark public anger.
The hike means 900 litres of home heating oil may increase in price by between €15 and €16, a 12.5kg bale of briquettes could cost around 15c more and a 40kg bag of coal may go up by more than 70c.
Finance Minister Paschal Donohoe is expected to delay the carbon tax hike on home heating oil and other fuels until May because of the increasing fears in Government over the political impact of the extra burden on rural families.
“It’s fine for people in Dublin, but people in rural Ireland are already angry enough about the cost of fuel which has gone up in recent weeks already,” a Fine Gael Cabinet minister said.
“If we are serious about climate change why are we not putting taxes on the aviation industry?”
Another Fine Gael Cabinet minister said Fianna Fail is “only just about” supporting the Government’s plans to increase carbon taxes. “I think Fianna Fail are watery on it and will probably turn around and tear into our Budget a few days after it is announced,” the minister said.
A senior Fianna Fail source said the party has been consistent in its support of climate action measures.
Another Fine Gael minister said they hoped the increases of about 2c per litre of petrol or diesel will be low enough not to enrage rural voters ahead of next year’s election. All money raised from the carbon tax increase is to be ring-fenced for climate action measures which will encourage voters to be more environmentally conscious.
The fears over the political cost of climate action come after Taoiseach Leo Varadkar last night suggested he would increase carbon taxes every year that he is in government.
Speaking at a Fine Gael presidential dinner in Dublin, Mr Varadkar said: “We will use the Budget to step up climate action,” before adding: “We must do that in every Budget from now on.”
The Taoiseach also used his speech to attack the Green Party over its suggestion that wolves should be reintroduced into rural Ireland to rejuvenate the countryside.
“I would have thought the Greens’ experience of being in government with Fianna Fail would have warned them off dangerous predators,” he said.
Mr Varadkar also took aim at Fianna Fail, saying Micheal Martin does not have a team of TDs capable of taking on responsibility for the Brexit negotiations.
“If we had a Fianna Fail-led government now and they were involved in Brexit negotiations now, who could they send who could match Simon Coveney or Helen McEntee?” the Taoiseach said. “When it comes to managing the economy and the public finances, dealing with really difficult industrial relations, issues with politeness, competence and
firmness — who do they have as good as Paschal Donohoe?” he added.
Meanwhile, it has emerged that Mr Donohoe is preparing to introduce some welfare increases in the Budget which will help older vulnerable people and children trapped in poverty. This could see the widow’s pension and the Living Alone allowance increased on Tuesday. However, other payments will not change including the State pension and Jobseeker’s Allowance.
Mr Donohoe is also under pressure form the Independent Alliance to find funding for its demands before the Budget is announced.
Transport Minister Shane Ross is continuing to push for an increase in the threshold for a family home to be exempt from inheritance taxes.
Mr Ross secured a €10,000 increase in the threshold to €320,000 last year and is expected to make a similar change on Tuesday.
Meanwhile, Disability Minister Finian McGrath is understood to believe that not enough progress has been made on securing funding for disability services.
Mr McGrath is also insisting on €350,000 for the design of the new cystic fibrosis unit in Beaumont Hospital in Dublin.
Speaking last night, the Taoiseach said: “This Budget is different. It’s a no-deal Budget so it has to be more conservative than previous budgets and what that means is no across-the-board income tax cuts and no across-theboard welfare increases. But there will be room for a package of modest ones targeted on the poorest and those most in need and there will be a tax package, albeit a minimal one, correcting some anomalies and unfairnesses that need to be corrected.”
Mr Varadkar said the exact amount that the Government will provide for Brexit contingency measures was not yet settled. But that it will involve a “financial package to save jobs and businesses that are viable in the long term but may be vulnerable as a consequence of Brexit”.
A major focus of the Government’s action on tourism will be luring new visitors from China and Japan to replace the significant drop in holidaymakers from Britain.
The Help to Buy scheme is set to be extended and no changes will be made to grants for first-time buyers. Fine Gael and Fianna Fail are also at odds over the cap for fast-tracking local authority spending on social housing construction. Fianna Fail wants to extend the cap from €2m to €6m, which it says would allow councils to construct more social housing more quickly.
However, Fine Gael is concerned that the move would mean the Department of Housing would have no oversight over how almost €2bn is being spent by local authorities.
Fine Gael ministers have also claimed there has been little or no interaction between Fianna Fail spokespeople during Budget negotiations because the party is focused on election preparations.
AT last Tuesday’s Cabinet meeting, Finance Minister Paschal Donohoe issued a warning to ministers.
Donohoe told them that if they did not come forward with realistic Budget proposals he would decide their department budgets without their input.
The minister’s warning was delivered with his usual politeness but the message was clear: get your house in order, or I’ll do it for you.
Ministers say Budget negotiations have been more difficult this year than previous ones. Resources are tight and the usual funding problems have not gone away. Then there’s Brexit. The cause of, and the answer to, all of the Government’s problems, to paraphrase Homer Simpson.
Brexit means the Government can’t be too generous with our money this year — so don’t bank on much more cash in your pocket in its wake.
We are expected to accept this because Brexit bedlam means the mere mention of the word reduces the average person to a terrified mess.
Fianna Fail has been happy to play along with Fine Gael, but Micheal Martin’s party say they have been taken aback by the state of the Government’s finances since Budget negotiations began.
Donohoe opened the books for Fianna Fail as part of the negotiations and it has revealed significant holes in several departmental budgets.
The Health budget is the worst performer, which is not a big surprise. But there have also been issues with Education — with teachers’ pensions being blamed for overruns — and in Justice, who are blaming US President Donald Trump’s visit for not balancing their books.
Last Friday, Fianna Fail ditched their annual boardroom-style media briefing on the Budget in favour of a doorstep in the courtyard of Leinster House.
Gone were the flashy proposal documents of previous years; all we got was Michael McGrath and Barry Cowen standing behind a podium, telling us there was less money for new Budget measures than expected while outlining a raft of expensive spending demands which there is no money to fund.
They also bemoaned the fact Budget negotiations were behind schedule this year, which they found “frustrating”. But you would wonder if their hearts are really in it at all. As one senior Fianna Fail TD put it last week: “This is the Budget that may never happen.” Fianna Fail TDs, both publicly and privately, have been very anxious to point out this will be the last budget of the Confidence and Supply agreement and most seem content to go with Taoiseach Leo Varadkar’s proposal of holding a general election in May 2020.
However, a touted six-month Brexit extension would move the current deadline for Britain leaving the EU from October 31 to April next year, and presumably Fianna Fail leader Micheal Martin would still be intent on offering Fine Gael his unflinching solidarity in the face of the political chaos in Westminster.
However, this would be a step too far for many of his TDs, who have long since checked out of the current governing arrangement.
With that view in mind, some of the most senior members of Fianna Fail consider the current Budget negotiations as a formality. Come next summer, a new administration will be in power and if Fianna Fail is leading the charge they can dump any of the policies they vote in favour of after Tuesday’s Budget unveiling. More so than any other year, Fianna Fail have entered these talks as political eunuchs. During previous budget negotiations, they were armed with the threat of general election if Fine Gael did not play nice. But Micheal Martin has made very clear that an election is not option this time around. There was a half-hearted attempt by Michael McGrath to raise the possibility of an election at his Budget press conference, but you could tell he didn’t mean it. Another noticeable trait of this year’s Budget talks are the attempts by Fianna Fail to distance themselves from the Government’s Budget. They claim they are only shown “broad brushstrokes” of Fine Gael’s plans and only have “minimal input” on the final package of measures.
Paschal Donohoe told it differently at his Budget press conference last Friday. The minister said he had been fully transparent with Fianna Fail and allowed the party’s team full access to each department’s budget. The truth may lie somewhere in the middle.
Fine Gael ministers also say there has been almost no engagement with Fianna Fail spokespersons this year compared to previous budgets.
However, Fianna Fail are reluctant to allow Fine Gael to unveil a raft of sweeteners ahead of the forthcoming general election. Tax cuts, pension hikes and grants galore would benefit the main governing party in the ballot box and Fianna Fail would have to be content with claiming they helped pass the Budget. For this reason, the party is happy to vote for a more regressive Budget as it evens the playing field before polling next summer. Fianna Fail’s strategy has been to sit back and play the role of responsible, or, as they say, “serious”, politicians, while hoping Brexit blows up in Leo Varadkar’s face.
The Budget will focus on policies which will provide the country with a safety net in the event of the UK crashing out of the EU, but as with all aspects of the entire Brexit process, it is near impossible to prepare for the unknown.
In the meantime, Fianna Fail will continue the box-ticking exercise of Budget talks and carry on the “serious politicians” routine while ensuring Fine Gael does not dish out too many Budget goodies.
‘FF entered these talks as political eunuchs’