LAST UPDATE | 3 Mar 2022
INNOVATIVE RESPONSES WILL be needed to respond to inflation and the disruption to critical supply chains caused by the war in Ukraine, ministers were told this afternoon.
The Taoiseach chaired a ministerial meeting on the latest situation regarding Ukraine and potential implications for Ireland.
The meeting comes after Tánaiste Leo Varadkar said the Government might have to look at reducing excise duty on petrol and diesel as prices hit €2 per litre on some forecourts today.
The Journal reported earlier this week that senior sources said that should the €2 per litre mark be breached, the Government would have no choice but to step in.
About 60% of pump prices are due to tax, including VAT and carbon tax, according to AA figures.
“We are more concerned about energy prices and everyone driving by the forecourt this morning will have seen the price of petrol the price of diesel at psychological €2 euros per litre being seen in some some stations at the moment,” Varadkar told the Dáil.
“We’ve already seen increases in our in our gas bills and our electricity bills and unfortunately, because of the events in Ukraine, we’re likely to see further raises over the next couple of weeks. So government will respond,” he said.
Tánaiste Leo Varadkar, Environment Minister Eamon Ryan, Justice Minister Helen McEntee, Minister for Finance Paschal Donohoe, Minister for Public Expenditure Michael McGrath and Reform, Minister for Foreign Affairs Simon Coveney, Minister for Children Roderic O’Gorman, and Education Minister Norma Foley were all in attendance at this afternoon’s meeting.
The ministers discussed how the economic aspects of the crisis, including sanctions and possible countermeasures, will be significant.
Energy supply and costs are likely to be particularly impacted, with the Government stating that it is working with the European Commission and Member States as part of a coordinated response.
It was agreed that weekly meetings of Secretaries General of Government Departments will be held to monitor developments and coordinate necessary actions.
They will also give weekly reports to Government. It was also agreed that further more focused sub-groups may be established to deal with specific issues as required.
The Taoiseach warned today that growth in energy prices will have a serious impact on the costs of transport, industry and farming sectors.
Micheál Martin said the implications of the outbreak of war in Ukraine will be felt for some time, and will be “fundamental” to the continent of Europe.
He said there has been an “exponential growth” in energy prices in recent weeks, and that food security will be an issue across Europe.
“In teeth of the war, they are growing even further,” Martin added.
“We have an open mind in what is the optimal route for Ireland to take to make sure industry continues, and the economy continues to operate.
“We are moving out of the worst of the winter but there are very serious issues in terms of input costs, in terms of the transport industry, farming and fertiliser and other costs.
“Food security will be an issue across Europe. These are enormous issues facing us.”
Martin added: “The situation is very serious and I am of a view that the implications will be with us for some time, and they will be quite fundamental in terms of the continent of Europe and the world.
“There is a sense now that this is going to be a longer situation than might have been originally viewed and therefore, areas around accommodation, economy, energy, the impact on energy will be significant,” Martin added.
“This is a wartime situation and we’ve got to get our mindset focused on that.
“We have to look through everything through the prism that this is a wartime situation, which changes everything.
“We have to look at the energy issue. We have to look at the food issue in terms of the continent, and in terms of what does this do to food patterns now in terms of the capacity of Ukraine, and Russia jointly exporting massive amounts of grain and so on.”
Speaking during Leaders’ Questions today, Varadkar said the inflation package will already see people getting a household discount for electricity bills, but added “we’re looking at other ways that we can respond”.
He said “we need to look at excise I think in particular to see if we might do something there”.
Senior sources have indicated that the Green Party would not like such a move, it was also suggested that the Finance Minister Paschal Donohoe would also not be keen on any changes in excise before the Budget.
Varadkar added: “But we’d be dishonest if we didn’t say to people and to business that the reason for the increases in price are largely outside of our control.”
Varadkar said the Government are confident “at least at this stage, that we won’t face any disruption in terms of the supply of gas, petrol, diesel, or electricity”.
Ireland doesn’t have a lot of direct trade with Ukraine, Belarus or Russia, but there will be indirect effects, he said.
“So even though the coal in Moneypoint now comes from Colombia, not from Russia, even though our gas supplies don’t come from Russia, the impact of Russian gas being slowed or potentially even being stopped, potentially will cause price rises,” he said.
Discussions at a European level and how to cushion price hikes is already underway, he said.
Neutrality
Discussing the issue of neutrality, Varadkar said if the European Union was worth building, it’s worth defending, and if our independence was worth securing, it’s also worth defending.
Replying to People Before Profit’s Mick Barry, he said: “And like you, I don’t agree that we should increase defense spending up to €3 billion. I think that would be too much. There are other priorities and other demands.
“But I do think we need to increase defence spending. We need to pay our military personnel more. We need better equipment, we need to be able to guard our own seas. We need to be able to have radar over our own airspace.
“And the assumption that we’ve made for 70 years now is that nobody would attack us because we’re a country that’s neutral militarily. Ukraine was neutral militarily. It wasn’t part of any military alliance. They were attacked because it was politically part of the West, or at least wanted to be politically part of the West.
“And we make the assumption that even if we are attacked, the British and the Americans will come and save us anyway. And I’m not sure that’s the kind of assumption a sovereign country like ours should make,” he said.
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