I welcome the Minister of State, Deputy O'Sullivan.

It is great to see the Minister of State in here today.

Across the country, local authorities are undertaking significant transport, cycling and public realm projects. These projects often have major implications for local communities, businesses, commuters and residents.

Public consultation is presented as an opportunity for people to have their say. Citizens invest considerable time preparing detailed submissions, attending information events and engaging in good faith. However, many people increasingly feel that once a preferred option is published, the outcome is already decided. This perception is damaging, especially when people are being encouraged and given the option to give their input.

I firmly believe that consultation should not become a box-ticking exercise where submissions are acknowledged but have little or no influence on the final design. The purpose of consultation is surely to improve projects by drawing on local knowledge, identifying unintended consequences and testing assumptions before decisions are finalised.

I have recently received communication from people in Tallaght regarding the proposed Old Bawn Road active travel scheme in south Dublin. Whether people support or oppose elements of the scheme is not the point I am making today but what concerns me is that, while many people believe they will be raising significant issues, they may ultimately have very little bearing on the final decision.

In the context of the Tallaght village enhancement scheme, where many residents, businesses and community stakeholders have expressed concern that they felt unheard despite making detailed submissions and attending the information sessions during the consultation process, I would like the Minister of State to outline whether consideration is being given to strengthening transparency and accountability and requiring local authorities to clearly demonstrate how issues raised through public consultation have influenced the final design and decision-making process.

My concerns are not unique to one project. It is something I am hearing more and more in regard to the Part 8 planning process and the section 38 roads scheme throughout the country. People want to know how the submissions are assessed and who evaluates them. Is every submission read individually? Are independent technical reviews ever commissioned where substantial evidence is presented? How often have public submissions resulted in significant amendments to a scheme? How many schemes have been materially changed following consultation? If hundreds of submissions raise the same issue, how is that reflected in the final recommendation? I think these are all very reasonable questions but I am unclear on the answers.

Consultation is not simply about counting submissions for or against. A single, well-researched submission containing technical evidence may identify an issue that deserves serious consideration. Equally, local residents often possess practical knowledge about traffic patterns, school travel, flooding, accessibility or road safety that may not be fully reflected in modelling exercises. If people believe their views are ignored regardless of the quality of their submissions, confidence in public consultation will decline.

I ask the Minister of State to outline what measures are currently in place to assess the effectiveness of public consultation under Part 8 and section 38 procedures. Specifically, is there any national framework that measures whether public submissions have influenced final decisions? Are local authorities required to demonstrate how significant issues raised during consultation have been addressed? Does the Minister of State believe there is scope to strengthen transparency by requiring councils to publish a clear response explaining which recommendations were accepted, which were rejected, and the evidence supporting those decisions?

I thank Senator Costello for raising this issue. It is an interesting one and certainly provides food for thought in regard to the Part 8 process, how it works and how effective it is. I will go through the Part 8 process to explain how it works and then add a couple of comments afterwards.

The local authority own development approval process, commonly referred to as the Part 8 process, is set out under section 179 of the Planning and Development Act 2000, as amended, and the associated Part 8 of the Planning and Development Regulations 2001, as amended. Part 8 approval is a reserved function of elected members.

Part 8 of the Planning and Development Regulations 2001 establishes the statutory procedure through which a local authority may undertake development on its own behalf. The process is designed to ensure transparency, public participation and democratic oversight in relation to development projects. Article 81 of the Planning and Development Regulations 2001 requires that the local authority give notice of a proposed development in an approved newspaper and must fix a site notice or site notices on the land on which the proposed development would be situated. Article 81(2) of the Planning and Development Regulations 2001 sets out the information that must be included in the public notice for a proposed Part 8 development by a local authority.

The plans and particulars relating to a proposed development are required to be available for inspection for a period of not less than four weeks beginning on the day of the publication of the notice. Any submissions or observations in respect of a proposed development can be made during this period or a period of not less than two weeks after the end of the period for inspection. This equates to a period of not less than six weeks for the public to submit any observations or submissions. The planning authority sends similar notices during this period of time to prescribed bodies to afford them the opportunity for input.

Following on from the end of the consultation period, the chief executive of the planning authority is required to prepare a report summarising and outlining the submissions received, while evaluating the planning merits of the proposal. The report includes a list of the persons or bodies who made submissions in accordance with regulations and may also include recommendations regarding amendments or mitigation measures where appropriate. The elected members are required to consider the report before making a decision on the proposal in the interests of proper planning and development. The statutory process affords the opportunity for consultation before a decision is made by the elected members on a Part 8 proposal.

I guess that outlines the Part 8 process. The Senator already knew that; she already knows exactly how it works. To answer her question in terms of transparency, the comments on each submission and why submissions may have been rejected or accepted, it appears to be down to each local authority and there seems to be a bit of a case-by-case basis involved.

I am not sure if the Senator was ever involved in a Part 8 process. I certainly was. In Cork, there certainly were examples where there might have been a major housing development that was given planning permission under Part 8, and where there was quite a lengthy back-and-forth process between the chief executive and his team and the members of the council. I found it quite effective in that where local residents might have raised concerns, we were able to tease them out. I think the whole point of the Part 8 process is that it does actually in many ways give more of an input from the public. They have two opportunities to have a say in the in the final scheme. They can place a submission during the public consultation period, but also they have their members who, at the end of the day, will be the ones making the decision.

What I picked up from the reply was that the chief executive may include a comment on each individual submission. Maybe that is where things can be teased out further going forward. Maybe there should be requirements to actually put in a comment on each submission. I get the Senator's point. There may be valid submissions made, but the chief executive's report may not include a detailed response as to why that submission was not taken into account.

During my time as a councillor, I was involved with Part 8 developments. I have huge respect for South Dublin County Council. To be parochial, these developments have transformed my area of Tallaght. We have fabulous parks. I was involved in a Part 8 process for an older persons' housing developments. The community's views were seen and heard. It is a lovely place to live. Those houses are like gold dust now.

I really worry about the section 38 developments, particularly because councillors do not get to vote on it. It goes out to public consultation. People are just so annoyed in my area with all of the road works that are going on, all the roads being narrowed, all the disruption, yet the elected representatives do not get to vote on it. All they can do is point people towards a public consultation. I have stood at the side of the road myself giving out about a particular junction that was narrowed. People do not feel heard when it comes to this. They feel like things are being pushed through without their feelings being heard.

I get the Senator's point about section 38 developments. In a Part 8 process, the members of the council have a vote. Ultimately, if there is an overwhelming feeling that the scheme will not work, they can take that democratic decision. In situations where that is taken away, I understand the difficulty the Senator outlined. Sometimes there may be an attitude that the council knows best, and not enough cognisance is taken of the submissions that are made. I have seen this happen time and time again. There have been incidents where we get it wrong, though. I remember in my town of Clonakilty, a Part 8 process happened and I was vehemently opposed to the redevelopment of a square. It has turned out to be probably one of the best things that has ever happened to my home town. It is tricky and tough. The Senator's overarching point is something that we need to take back to the senior Department to try to get more oversight in terms of the effectiveness of submissions. When a scheme is designed, it cannot just be a fait accompli . If there is genuine feedback, it has to be taken into account in some way, as opposed to there just being a box-ticking exercise.

I welcome the Minister of State and thank him for taking this matter. I want to begin by recognising the significant progress that has been made with the housing adaptation grant scheme. The publication of the 2024 review led to real, meaningful reform, and I welcome the fact that many of the recommendations have been implemented from that review. The increase of more than 30% in the grant limits, the increase in the income thresholds, the reduction in the local authority contribution from 20% to 15% and the changes to the means test have made a real difference to older people and people with disabilities. They demonstrate the Government's commitment to supporting independent living. This scheme really does change lives. It allows people to remain in their homes that they have built up and built their lives in. It gives people with disabilities greater independence and dignity. It also makes good economic sense. Every adaptation that keeps somebody safely at home reduces pressure on our hospitals and our long-term residential care. As the review recognises, supporting people to age at home is better for families and communities. It is also better value for the State.

While we have improved the scheme, there is now an opportunity to make it more responsive to the realities people are facing today. Recently an elderly lady contacted me. She lives alone and relies completely on a stairlift because she cannot safely use the stairs. Her home cannot be adapted to have a downstairs bedroom or bathroom. Her concern is very simple and very real. I have raised this before and the Minister of State will be familiar with it. We suffer a lot of power outages and her stairlift is badly affected during them, so she is effectively trapped between floors when her stairlift goes out. I tried to find a practical solution, such as a battery back-up or another assistive technology, but there appears to be no mechanism within the current schemes to support this type of adaptation. In 2024, the review specifically recommended updating guidance on assistive technologies to reflect the rapidly evolving nature of these products. Will the Department now consider expanding the range of eligible works to include modern assistive technologies that improve safety, resilience and independent living?

I also want to raise another case. A family seeking an accessible extension for their child in a wheelchair with a disability had their application refused following a means test assessment,. The review in 2024 rightly recognised that assessed income based solely on the previous tax year can create an unfair outcome, and recommended the annualisation of in-year earnings based on the previous 13 weeks in certain circumstances. However, families continue to find themselves excluded in the context of changes in income relating to someone other than the main applicant. In this case, it was the applicant's child who they were trying to find. The child needs this adaptation and I would ask whether local authorities can apply more discretion in evaluating these cases. Is there scope to review how these provisions operate in practice, to ensure that deserving families are not unintentionally excluded?

While funding for 2026 has increased to over €152 million, enough to fund an estimated 17,000 grants, we already know that several local authorities in the month of June have had to close or restrict applications because their allocations are already exhausted. Without national data on applications, waiting lists or priority categories, it is impossible to know whether funding is truly keeping pace with demand. I support the recommendation by Alone, who were in the audiovisual room yesterday, that this information should be collected and published nationally. Better data will lead to better budgeting, fairer allocations and year-round access to these vital grants. This is an excellent scheme. It is improving lives every day. My request is not simply for more funding, but for it to develop as a scheme that keeps pace with technology, reflects real family circumstances and is informed by robust national data.

I thank Senator Scahill. There are three main asks in his opening remarks, namely, broadening the scope when it comes to assistive technology, means-testing and assessment of income and better data, which is also a good point.

I will outline the scheme. The Senator already mentioned how it has been expanded and improved. The Department of Housing, Local Government and Heritage provides funding to local authorities under the housing adaptation grants for older people and the disabled people scheme to assist people in private houses to make their accommodation more suitable for their needs. These grants are available to people with an enduring physical, sensory, mental health or intellectual disability, as well as to older people who experience mobility issues or require essential repairs to their home in order that they can continue to live independently at home.

In budget 2026 we provided an annual increase of €30 million, with almost €130 million in Exchequer funding available for the scheme, or over €152 million when accounting for the local authority contribution. As the Senator has said, this significant increase in funding will support the payment of some 17,000 grant claims, as well as the continued implementation of the revised grant limits, income thresholds and the increase in the Exchequer contribution from 80% to 85%. The detailed administration of the scheme, including the assessment, approval, prioritisation and budgetary apportionment is the responsibility of local authorities. The housing adaptation grant for disabled people is available to carry out works of adaptation that, in the opinion of the local authority, are reasonably necessary for the purposes of rendering a house more suitable for a member of a household who has an enduring physical, sensory, mental health or intellectual disability.

In general, these grant schemes can be used for works such as level-access showers, accessible bathrooms, access ramps, stair lifts, fixed-track hoists or extensions. Grant aid may also be considered for assistive technologies which are infrastructure related or essential technological adaptations to the fixtures and fittings of a property. Works which may be considered include adjustable height countertops and automated or voice-activated doors, lighting and heat controls.

The Department of Housing, Local Government and Heritage completed a review of the housing adaptation grant for older people and the people with a disability scheme in 2024. The regulations for the housing adaptation grants for older people and disabled people, which came into effect on 1 December 2024, provide the legal basis for the introduction of the recommendations set out in the review. The key changes included an increase in the grant limits of over 30% and a 25% increase in the income thresholds, while also revising the means test. The legislation also adjusts the burden sharing for local authorities by reducing the local authority funding contribution to 15%, as the Senator also outlined.

The review also recommended that the Department of housing provide updated guidance to local authorities on housing adaptation assistive technologies relating to the fixtures and fittings of a property which qualify within the schemes having regard to the evolving nature of such technology. My Department has provided guidance to local authorities and will continue to do so as technologies evolve. The key point in regard to assistive technologies is that guidance is provided. Assistive technologies are allowed. Perhaps we need to examine if they are too prescriptive, whether they need to be broader and if we need to give a bit more discretion to local authorities on assistive technology. I hear a phone ringing. I feel a bit like Roy Keane now. Whose phone was that? In cases where assistive technology is clearly beneficial then perhaps a bit more scope should be given but the schemes allow for some assistive technologies.

The changes to the means test have been significant in terms of the increased income allowed. Senator Scahill is talking about a particular instance when it applies to individual whom the grant is for.

I totally accept his point about better data. If we can collect better data it will lead to better decision-making and possibly shape the scheme going forward. We are always open to adapting and improving the schemes and to review them, as has been seen with the current schemes.

That ringtone certainly had a Roy Keane vibe.

I need assistive technology for the ringtone. I thank the Minister of State very much for his response. The review of the schemes took place in 2024. An awful lot of the recommendations have been enacted, which is wonderful. That is not something we are used to. It shows that the Minister has listened and adapted and changed the schemes.

There is a scheme to provide solar panels to medically vulnerable individuals. I was trying to see if I could get a generator or a back-up battery to support the individual. It is quite a unique case. In most cases the council could put a bathroom and bedroom downstairs. Local authorities must have discretion to evaluate cases that do not fall within the parameters. It is the same with accessible extensions for children. The local authority listened to the review, and applied the recommendations to the applicants – the income generators in the house, who are the mother and father – but the child was not factored in. Perhaps that is the element that we need. In this situation we cannot wait for the child's condition to deteriorate and then react to it. We need to be proactive in these situations.

ALONE produced a pre-budget submission. There is a lot in it about house adaptations and accessibility. Perhaps it is something we could have a chat about offline. I thank the Minister of State very much.

Absolutely. I know the Department is aware of ALONE's submission, which will be taken into account. The review was quite recent. Senator Scahill makes some very good points. Assistive technology is allowed and is catered for but we need to give better support to the local authorities to allow them to have a bit more discretion. It probably has to be within reason. There has to be a definite, obvious benefit to the person who is applying. The cases the Senator has given clearly prove that. We have a much enhanced scheme. More funding is going into it. I get the point that local authorities are oversubscribed. That is a good thing in some ways as it indicates awareness that the grants are out there. Anyone who has served on a local authority is fully aware of how the grants can change lives. We need to ensure that as many people as possible who need them can get them.

I welcome the Minister of State to the Seanad this morning. My Commencement matter is about the need for the Minister for Enterprise, Tourism and Employment to make a statement in support of the recent proposals made by the Vintners Federation of Ireland in its pre-budget submission for budget 2027.

I was in the audiovisual room last week where there was standing-room only for the presentation by the Vintners Federation of Ireland to Oireachtas Members. It was looking for support for the businesses its members operate. We heard about the reality and the concerns about the wet bar – I do not really like the term - which refers to the traditional bar – and the pressures these people are under in our communities.

I ask the Government to recognise the vital role wet bars and traditional pubs play in communities across Ireland, and to provide meaningful support to help them to survive. For many people, especially in rural Ireland, the local pub is far more than a business. It is the heart of the community. It is where families and neighbours come together to celebrate life's milestones and support one another through difficult times in events from christenings, to confirmations, 21st birthdays, engagements, weddings, the afters of weddings, anniversaries and gatherings following funerals. To use a phrase I used last week, it is from the cradle to the grave. That is what the rural pub means to the community. It is woven into the fabric of Irish family and community life.

This Saturday, as the Minister of State himself knows, people will be in the local pub down the road watching his home county, Mayo, take on Cork, and my county, Kerry, taking on Tyrone. Next Saturday, rural local pubs will be central to that, yet they are under enormous pressure.

More than 2,200 pubs have closed across Ireland since 2005 and closures continue at an alarming rate. Every pub that closes represents not only a lost business but a lost meeting place, employer and community asset. Currently, publicans face unsustainable business cost increases. Electricity costs have risen by about 70%, wages have risen by 40% and water charges have increased significantly.

While recent VAT measures have helped establishments that serve food, they offer little or no benefit to the majority of small rural wet pubs that do not serve hot food. The on-trade sustainability scheme proposed by the vintners would work by giving pubs financial supports based on the amount of draught products they purchase from suppliers each year. These supports would come in the form of a tax credit, helping publicans offset rises in electricity, wage and utility costs, among others. For example, if a small rural pub in Cork has significant supply costs throughout the year, it could qualify for a tax credit worth several thousand euro. This credit could then be used to reduce its tax bill. If the pub had little or no tax liability, it could be paid out as a direct cash support. The scheme would be capped at €20,000 per annum per pub, ensuring that support would be targeted at small and medium-sized family-run pubs rather than the large operators in the bigger cities.

The Government already recognises the importance of supporting sectors that contribute to Ireland's economy and culture. Our pubs deserve the same recognition. It cannot be right that production companies can receive tax relief for filming in a pub while the pub in question struggles to keep its doors open. If we value vibrant villages, thriving towns, rural tourism, local employment and social connection, which is vital in rural Ireland, we must value and protect our pubs. Once a pub closes, it is often gone forever and the community loses a piece of its identity. I call on the Government to act, to engage with the Vintners Federation of Ireland's proposals and to provide the supports necessary to safeguard these essential community hubs for future generations.

I thank Senator Kennelly for raising this really important issue. I am very conscious of the significant pressures that pubs and the wider hospitality sector are facing, particularly in recent years as the result of rising costs across energy, labour, insurance and compliance. We need to be clear that the Government fully recognises the importance of the pub sector and specifically its social and cultural importance to communities right across Ireland rather than just its economic importance.

I am aware of the proposal made by the Vintners Federation of Ireland to introduce a tax credit to support the on-trade sector, which would be linked to the supply of draught products. It merits careful consideration. It is my understanding that the proposed scheme would provide a tax credit of €20 for every 50 litre keg of draught beer and cider, based on verified purchases from the previous year and capped at €20,000 per premises per year. I further understand that the intention is to support smaller pubs in particular.

With regard to the specifics, I understand that this is a proposal that will be advanced in the preparation of the upcoming budget. However, I am cognisant that the measure would need to be considered in light of the available fiscal parameters for budget 2027 and the wider range of priorities for the budget. It is my understanding that the Vintners Federation of Ireland has estimated the cost of the proposed scheme to be in the region of €75 million annually. The measure would also need to be considered with reference to the Department of Finance's tax expenditure guidelines, which provide for the evaluation of tax expenditures, including tax credits, to give consideration as to when these are best used.

As the Tánaiste and Minister for Finance has stated previously, this measure would need to be considered in line with the alcohol structures directive, which provides for a harmonised framework for the taxation of alcohol across the EU. The Tánaiste has stated that it is unclear whether the proposed on-trade sustainability scheme would be permissible under that directive if its effect, in practice, would be to give relief from the rate of excise duty paid on alcohol products. The directive does not allow for differentiated excise duty rates between the on-trade and off-trade sectors. This means that Ireland cannot apply reduced excise duty rates to alcohol sold in pubs, restaurants or other licensed premises. Any changes to alcohol excise duty must make no distinction as to the point of sale. As this is a targeted tax measure, from an EU state aid perspective, consideration would need to be given as to whether it would be compliant with state aid rules. Ultimately, I also note that any changes to tax policy as part of the budget are a matter for the Minister for Finance.

I accept the importance of small pubs in rural Ireland and their significant decline over recent years. They remain a real focal point for communities, providing a social environment where people can engage and find a bit of belonging and connectivity. I thank the Senator for raising this important matter.

I thank the Minister of State for his reply. It is really encouraging. He said that the proposal merits careful consideration. That is one thing I can take back to the Vintners Federation of Ireland, its members and local families. I grew up in a pub. I have three nephews who are in the pub business. I can see the struggles and the hardship. Every cut goes onto the price of a pint. I will again put this in football terms. Ballymacelligott won the all-Ireland junior club final. There are two pubs in the village. An Ghaeltacht won the intermediate all-Ireland final. There are three pubs in that area. It was all centralised around that. That is where the social inclusion and community elements come in. If those pubs were not there, that element of community would be lost. It is not about major profits in rural Ireland. It is about keeping our culture and our identity through the pub business. I really welcome the Minister of State's comments.

I again thank Senator Kennelly for his contribution on this really important issue. I wish Kerry the very best of luck at the weekend. I know that he, a strong Kerry supporter, will be shouting for Mayo on Saturday. I know he will want us to get the job done. I am sure Senator Eileen Lynch, who is beside him, will have a different opinion on that. She is wearing red today.

To get back to this really important issue, the pub sector and the wider hospitality industry remain a vital part of the Irish economy and the social fabric. We recognise the cost pressures the sector is facing. The proposal from the Vintners Federation of Ireland is very constructive. As I said earlier, it is targeted. It will be given full consideration in advance of the budget. As with any other measure, it will be assessed against the financial, legal and European constraints as part of the budgetary process. I am sure the Minister of Finance will carefully review and analyse this proposal, based on our discussion today and the discussions that will happen over the coming weeks and months, with a view to supporting the sector, which we all want to see grow and thrive into the future.

We now know that Kerry's secret to improving clubs' level of football skills is to get pubs into small villages.

There are too many pubs in Dublin.

Based on Dublin's performance, there are obviously many closing down.

Senator Lynch is next and she is wearing the Cork colours.

Yes. It is a big weekend ahead.

I thank the Minister of State for coming to the House. I am raising the matter of the introduction of budget measures to prevent the closure of rural pubs. It is very similar to the matter that was just raised by my colleague Senator Kennelly, which was directed at the Minister for enterprise, whereas this is directed at the Minister for Finance. Senator Kennelly has raised the idea and now I am looking for the funding.

The Minister of State is well aware of these issues within his own constituency. It is an issue not just across all of rural Ireland but also increasingly in our towns and cities. Since 2005, more than 2,200 pubs have closed across Ireland. That is a decline of 25% in the total number of licensed premises nationally. It is an incredibly stark statistic. Even more concerning than that is that the rate of closure is actually accelerating. The average annual rate of closure now stands at 128 pubs per year. Recent survey findings from the Vintners’ Federation of Ireland, VFI, show that 65% of publicans believe rising business costs are having an unsustainable impact on operations. Forty-one percent of them say trading conditions are worse than what they were 12 months ago and almost 42% lack confidence in the future of their business. Twenty-two percent of pubs report reduced staffing levels over the past year as they struggled to absorb rising costs.

The pub is at the heart of community life in many of our villages across the country. It is a key part of our national identity. It is a social spot. It is a local employer. Pubs are part of the social fabric of rural Ireland. It is a cultural thing for us and when a pub closes, a community loses far more than just a business.

In my own area of rural mid-Cork in Cork North-West, my local pub has been closed since March. We have seen the impact that has had within the community. We are hopeful it will open again. This is a pub in a village called Bealnamorive. There is a school and a church; that is it. We do not have a community hall. We do not have anywhere else within that area where people can gather. The pub was a fantastic social outlet. A neighbouring village, Rylane, has not had a pub since 2016 and in my other neighbouring village of Aghabullogue, the pub is open four nights per week. That one pub that is open four nights per week provides a serious social outlet for many people who are living on their own in the area. It helps a lot with rural isolation and we have to acknowledge that important role of the pub.

It is important to say that our drinking habits as a nation have changed and that is not necessarily a bad thing. Therefore, there is less of a market there for pubs. That is why we also need to encourage pubs to diversify. I welcome the Minister, Deputy O'Donovan's night-time economy grant that was announced recently. I am aware of pubs in my vicinity that are taking advantage of that and it is a way of diversifying your business. A lot of businesses are starting to do more trade in terms of book clubs, tea and coffee evenings and these kinds of thing, so there are measures like that that pubs need to look at. We need to encourage them.

I also want to acknowledge the important step that was the 9% VAT reduction, but that only helps pubs that are serving food. It does not help these "wet pubs" - I hate that phrase. Two thirds of pubs do not actually serve food, so they will not benefit even though they make up the vast majority of pubs across our towns and villages.

That is why VFI has proposed a practical and targeted solution. Senator Kennelly has spoken about it already this morning but I am asking that the finance be found for it in the upcoming budget. The proposal is very straightforward. It would provide a tax credit to pubs based on verified purchases of draught products, with supports capped at €20,000 per premises per annum. Credit could be offset against tax liabilities or paid where liabilities are insufficient. Importantly, it is specifically designed to support smaller pubs and help to protect the viability of businesses that are under the greatest pressure.

As part of the reply Senator Kennelly received, the Minister of State raised the point as to whether this measure would be compliant with the EU alcohol structures directive, which does not allow a reduction, rebate or offset to excise duty. If that is a concern, I would like to confirm that the proposal is compliant with it. It is a targeted business credit, similar to schemes we have seen introduced in other sectors such as film, television, unscripted television and gaming. I urge the Government to consider this matter ahead of the budget.

I thank the Senator for raising this important issue and highlighting the role that pubs and the hospitality sector play in Irish life and culture by providing a central hub and meeting place in towns and villages across all of rural Ireland, which she articulated very well. I am taking this matter on behalf of the Tánaiste and Minister for Finance, Simon Harris.

The Government’s commitment to the sector was most recently demonstrated by the reduction in the VAT rate to 9%, recognising that the sector was highly labour intensive. Senator Lynch acknowledged that reduction. The sector forms a key part of the domestic economy and is expected to support over 150,000 jobs across the country. While acknowledging that the VAT reduction will not apply to all, it will help to keep the doors of many open, including those pubs that offer food and hot drinks as part of their trade.

The Department of Finance receives pre-budget submissions from a wide range of stakeholders in advance of each budget and all are given consideration as part of the annual policy cycle. With regard to rural pubs, the particular point raised by Senator Lynch, I am aware that the Department has received and acknowledged a submission from VFI outlining a proposal for a payable tax credit for pubs. The proposed payable credit would be linked to the number of draught product kegs purchased by a business, and the proposed credit would be subject to a per premises cap of €20,000. Proposals for new tax expenditures are examined by reference to the Department’s tax expenditure guidelines, which outline the Government’s approach to when tax expenditures are best used, noting that these narrow the tax base, and how they should be evaluated.

In the case of a proposal for a targeted tax incentive, such as that put forward by the VFI, consideration must also be given to European state aid requirements. Measures that may confer a selective advantage on a specific sector, such as incentives to support rural pubs, have the potential to constitute a state aid and, therefore, could not be introduced unless compliant with an existing framework or undertaking a full notification process. The VFI submission references the tax credits available for film and digital games and their relevance to supporting Irish culture. It is noted, however, that these are all approved state aids, largely under the terms set out in the EU’s “Communication from the Commission on State aid for films and other audiovisual works”, which would not have relevance to the on-trade sector.

Additionally, any tax credit given to rural pubs or, indeed, to all pubs would potentially be contrary to the alcohol structures directive where it is based on the supplies of alcohol products to those pubs. I am aware that the VFI has, in the past, proposed a general reduction in alcohol excise. However, this proposal was not taken forward, as excise duty on alcohol is governed by EU law, with which Irish excise law is obliged to conform. It is worth noting that there has been no general increase in excise duty rates for alcohol since 2014. While the retail price of beer has risen over that period, the excise duty has remained unchanged and, therefore, the total tax as a percentage of the retail price of each pint is now lower than it was more than a decade ago.

I am aware that recent years have been challenging for the hospitality sector as a whole, particularly through the period of Covid-19 restrictions. The Government is conscious of the challenges facing pubs, including rural pubs, and all other businesses in the current economic climate, and the cost of business advisory forum is working to look at the structural issues that are driving up costs and the steps that could be taken to mitigate them.

There are also a number of existing tax supports available to all businesses, including the on-trade, to encourage investment in the economy and, in particular, indigenous SMEs. These include the employment investment incentive, the start-up relief for entrepreneurs and the start-up capital investment. A range of direct expenditure supports are also available to businesses, and details can be found online on the national enterprise hub.

Notwithstanding the above, I the Senator that the matters raised in the submissions by VFI will continue to inform ongoing policy considerations in the context of the budgetary process.

I note the content of the reply and there are a few things I will respond to. This proposal from the VFI is compliant with the alcohol structures directive. Obviously, there is a question to be answered in terms of state aid but I would be confident that, given the role of the pub in rural society, the proposal does not fall under the state aid provision and would not interference through state aid. The Minister of State's reply does not specify whether it is.

I take the Minister of State's point on excise. We have seen a reduction in excise and, as a proportion of the price of a pint, it has fallen over time, but the cost pressures facing pubs have not.

Electricity costs have increased by 17% over the last five years. Wage costs have increased by 40%. Water tariffs increased by 30% in 2024 and a further 10% this year. Pubs are facing a barrage of ongoing costs. If we want them to remain open as rural hubs in our communities, we have to give them the support they need. Many pubs around the country are pretty much just providing a community service at this point. The proprietors are not making any profit out of it, but they are providing a community service. If we continue on this current path, many of the pubs we are talking about today simply will not be open by the end of this year. For that reason, I urge the Minister of State to bring forward this proposal.

I thank Senator Lynch for raising this important matter. As I stated earlier, I am taking this debate on behalf of An Tánaiste and Minister for Finance, Deputy Harris. I am fully aware of the importance of local pubs to Irish culture and the Irish economy, particularly the local and rural economy. Like all businesses, the on-trade is facing challenges from increased costs. The Government is taking steps to alleviate these challenges, particularly through work being co-ordinated through the Department of Enterprise, Tourism and Employment and the cost of business advisory forum on the action plan for competitiveness and productivity.

Action has already been taken to support the hospitality sector; for example, as I mentioned earlier, through the VAT reduction to 9%, which will take effect from July. This will be of benefit to pubs selling food and hot drinks. In addition, the Government announced two energy support packages earlier this year. These are temporary excise reductions for auto diesel and marked-gas diesel in an enhancement to the diesel rebate scheme.

The Government also announced the deferral of the planned 1 May carbon tax rate increase until 14 October 2026. While no Government can fully insulate against energy price shocks, these measures provide support to households and the broader economy by alleviating some of the financial pressures arising as a result of fuel price increases. I will bring the points the Senator has raised to the attention of the Department of Finance officials and the Tánaiste and Minister for Finance. The Government will continue to focus on supporting businesses across Ireland, including pubs, as we develop options for budget 2027.

Before we suspend, I would like to welcome Deputy Michael Cahill and his guests to the Gallery. I hope they have an interesting visit.