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POLITICS

French MPs back €20bn package to address the cost of living crisis

France's parliament has voted on a €20 billion package to respond to rising inflation and potential energy shortages this winter. Here's what the government is proposing.

French MPs back €20bn package to address the cost of living crisis
French Finance Minister Bruno Le Maire addresses the Assemblé Nationale (Photo by Christophe ARCHAMBAULT / AFP)

After several days of debates, France’s Assemblé Nationale has agreed on a the first bill in a package of measures to address the cost of living crisis – although the bills still need to pass through the Senate.

The so-called “emergency purchasing power bill” passed with 341 MPs in favour, 116 against and 21 abstentions in a vote that took place shortly before 6am on Friday after an all-night sessions in parliament. Debates now continue of the next phases of the package.

The Macron government’s bill was backed by the centre-right Les Republicains and the far-right Rassemblement National party, while MPs from the far-left la France Insoumise denounced the bill as an ‘attack on wages.’

The bill, whose proposed budget is €20 billion, is intended to respond to rising inflation, as well as the energy crisis that may spell shortages this winter due to the ongoing war in Ukraine.

Energy crisis and possible shortages – The bill provides various means for addressing the risk of energy shortages this winter. One of the most controversial measures authorises the state to re-open a coal-fired power station in eastern France in the event of power shortages this winter.

President Emmanuel Macron had promised to close all coal-fired power plants in France by 2022, and a member of Macron’s party, Maud Bregeon, told AFP that “the return of coal is not good news,” but defended the plans as a “temporary” response to “an exceptional situation.”

It also includes plans for accelerating the supply of liquified natural gas, which, according to French daily Le Parisien, means the country “could see an influx of American shale gas.”

This too has already received pushback. Environmentalist and Nupes member responded, telling Franceinfo “France has banned hydraulic fracturing as well as the research and extraction of shale gas on its soil. We can not be complicit in the exploitation of the dirtiest fossil fuels internationally.” 

Tripling the ‘Macron bonus’ – The tax-free bonus companies can choose to pay out to their employees will be tripled to €6,000. The left coalition disagreed with this addition to the text, having instead called for wage increases and a higher minimum wage. 

Increases in pensions and benefits – Parliament voted to increase retirement pensions by four percent, along with several other benefits aimed at helping low-income families, which will be retroactively paid from July 1st. Other benefits impacted include family allowances and some social programmes such as the RSA (a work welfare benefit), the solidarity allowance for the elderly, or scholarships for students.

Cap on rent increases in France – This bill will provide a ‘rent shield’ – which is 3.5 percent cap on rent increases throughout the country. Given inflation levels, Finance Ministe Bruno Le Maire judged that rent increases could have risen by five to six percent without the cap

‘Deconjugating’ disability benefits – Earlier in the week, the Assembly voted almost unanimously to separate disability benefits from marital status, meaning the at the allowance given to disabled adults will not take into account their spouse’s income. 

Facilitating cancelling online subscriptions –  The ‘cancellation’ button will be made more accessible to consumers. Any company offering online subscriptions will have to provide easy and direct ways to cancel subscriptions. This will go into effect at the beginning of 2023.

Using frying oil as fuel – The  bill also allows and endorses the possible usage of frying oil as fuel for vehicles. Food oils would need to be ‘decanted and filtered,’ and after which they can be mixed with conventional fuel. This type of fuel – already in use to power vehicles in several other European countries – also ’emits less pollution and greenhouse gases,” according to Green Party representative Julien Bayou. 

What comes next?

However, the debates are not over yet. Although the cost-of-living bill passed, it is only the first in a series of plans to address inflation and the energy crisis – and the more controversial aspects are yet to come.

Later on Friday afternoon, parliament will resume debates for the “projet de loi de Finances rectificative” (the Amending finances bill) which includes the abolition of the audiovisual tax (TV licence) and the fuel subsidy.

The current fuel subsidy takes €0.18 off at the pump and is set to be gradually decreased before the end of the year. However opposition parties want to increase it to €0.30 cents – something the government says is a ‘red line’, and that the budget for fuel must not exceed 4.4 billion. Parliament will also consider the ‘worker’s fuel allowance,’ which was set to be a one-time benefit for low-income workers, as well as the ‘transport bonus‘ that employers can offer their employees.

The Assembly will also debate whether or not to maintain the current ‘energy shield’ which caps gas and electric price price hikes to four percent. This is currently set to remain in place until the end of the year (2022).

The representatives will also debate potentially taxing the profits of large companies who benefited from the post-Covid recovery period.

Parliament will consider plans for the ‘food voucher’ intended to assist low-income families.The current plan for the programme would impact up to eight million households in France, offering a benefit of 100 per household and an additional 50 per child. 

The Assembly will consider a broader tax exemption for overtime work (RTT). 

Once all the bills are agreed in the Assemblée nationale they must go before the Senate, which has the power to make further amendments which must be discussed again in the lower parliament. 

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POLITICS

Macron restarts reform drive as opponents prepare for battle

French President Emmanuel Macron will get a taste of public resistance to his second-term reform agenda this week during the first nationwide strike called since his re-election in April.

Macron restarts reform drive as opponents prepare for battle

The 44-year-old head of state has pledged to push ahead with raising the retirement age having backed away from the explosive issue during his first five years in power.

But having lost his parliamentary majority in June, the pro-business centrist faces severe difficulties passing legislation, while galloping inflation is souring the national mood.

Despite warnings from allies about the risk of failure, Macron has tasked his government with hiking the retirement age to 64 or 65 from 62 currently, with changes to start taking effect next year.

“I’m not pre-empting what the government and the parliament will do, but I’m convinced it’s a necessity,” Macron told the BFM news channel last Thursday.

With deficits spiralling and public debt at historic highs, the former investment banker argues that raising the retirement age and getting more people into jobs are the only ways the state can raise revenue without
increasing taxes.

On Thursday, France’s far-left CGT union, backed by left-wing political parties, has organised a national day of strikes, the opening shot in what is expected to be a months-long tussle.

Though the protests were originally planned to demand wage increases, they are now intended to signal broad opposition to the government’s plans.

“We’re against the raising of the retirement age,” Philippe Martinez, the head of the CGT, told the LCI broadcaster last week. “The government’s arguments don’t stack up.”   

Unpopular

Public opinion towards pension reform and the strikes is likely to be decisive in determining whether Macron succeeds with a reform he called off in 2020 in the face of protests and Covid-19.

An opinion poll last week from the Odoxa group found that 55 percent of respondents did not want the reform and 67 percent said they were ready to support protests against it.

But a separate survey from the Elabe group gave a more nuanced picture. It also found that only a minority, 21 percent, wanted the retirement age increased, but a total of 56 percent thought the current system no longer worked and 60 percent thought it was financially unsustainable.

“I don’t know anyone who wants to work for longer, but I don’t know anyone who thinks they are not going to work for longer,” a minister close to Macron told AFP last week on condition of anonymity.

“Maybe I’m mistaken but I’m not sure that the turnout will be as large as the unions and LFI are hoping for,” he said, referring to the hard-left France Unbowed (LFI) political party that has backed the strikes.

The second decisive factor will be how the government introduces the reform in parliament where Macron’s allies are around 40 seats short of a majority.

Some favour slipping it into a social security budget bill that will be voted on in October — a stealthy move that will be denounced as under-handed by critics.

Others think more time should be taken for consultations with trade unions and opposition parties, even though they have all ruled out working with the government.

Macron prefers the quicker option, one senior MP told AFP on condition of anonymity.

In both scenarios, observers expect the government to resort to a controversial constitutional mechanism called “article 49.3” that allows the executive to ram legislation through the national assembly without a vote.

If opposition parties unite against the measure or call a no-confidence motion in the government, they could trigger new elections.

The reform was “ballsy but dangerous,” one ally told French media last week.

Macron II

Success with the pension reform and separate changes to the unemployment benefits system will help the president re-launch his image as a reformer, experts say.

Since winning a historic second term in April, he has been caught up in the Ukraine war crisis amid reports the parliamentary election setback in June left him disoriented and even depressed.

“We’ve slightly lost the narrative of Macronism,” political scientist Bruno Cautres, a researcher at Sciences Po university in Paris, told AFP recently.

The challenge was giving the second term a “direction” and showing “how it builds on the results of the first”, he said.

“The essence of Macronism, which does not have a long history, is the leader and the programme,” added Benjamin Morel from Paris II university.

Since being elected as France’s youngest-ever president in 2017, Macron has made overhauling social security and workplace regulation part of his political DNA.

“Emmanuel Macron can’t easily back away from a reform because burying a reform, it’s like disavowing himself,” Morel said.

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