Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

Since the public health emergency began, sectors of our economy have had to be closed down to contain the spread of the virus, with economic activity brought to a standstill. As a result, thousands of workers have been laid off with households losing much, in some cases all, of their income. With trading brought to a halt thousands of businesses are struggling to survive. This week's stability programme update offered a stark warning of the impact Covid-19 has had, and will continue to have, on jobs and our economy unless the Government acts.

The report forecasts that our economy will not recover until 2022 at the earliest, with 220,000 jobs lost this year and a rate of unemployment next year that will be twice that which obtained in 2019. This pandemic has plunged our economy into a deep recession. The forecasts published this week were made on the basis of no further Government response. That means the length and depth of the recession are not yet set in stone. It will depend on the success of our public health response and on the economic response of the Government. A severe downturn, long recession and cuts to living standards must be avoided. They can be avoided if the right decisions are made. The Government's response to this crisis must come in two stages, namely, containing the economic fallout now and building a recovery that rewards rather than punishes workers and families.

First however, just as we seek to contain the spread of the virus, we must move quickly to contain the economic damage it has caused. Last month, on 23 March, I wrote to the Minister for Finance outlining Sinn Féin's proposals for an immediate response to the crisis. They were based on the principles of acting fast and doing whatever it takes to protect incomes, to support businesses and to prepare for economic recovery. Among the measures we outlined was an income support scheme that would subsidise 100% of workers' net weekly pay up to a maximum of €525 per week. The wage subsidy scheme that was rolled out by the Government later that month fell short of these proposals in a number of areas. Employers were only required to pay 70% of employees' wages and workers with weekly take-home pay of less than €500 were receiving less than they would on the Covid-19 pandemic unemployment payment. This gap led to a reduced uptake in the scheme. I welcome the fact that the minimum payment of €350 was introduced for employees with previous net pay of between €412 and €500 per week, but anomalies still remain in the scheme. A full-time worker on the minimum wage will receive less than €310 under the scheme, which is €40 less than the pandemic unemployment payment. Until this is addressed, fewer workers and employers will sign up to the scheme, increasing unemployment once we reach the other side of the emergency. The longer the relationship between worker and employer is broken, the more likely it is to remain permanently severed. The numbers speak for themselves. More than twice as many payments are being made through the pandemic unemployment payment than through the temporary wage subsidy scheme, and this needs to be reversed. Already we hear of Government preparing to taper off or cut these supports for people who have become unemployed and whose wages are currently being supported. To be clear, when the Department of Finance projects that as a result of this pandemic 220,000 people will still be unemployed at the end of this year, there is no way we should even be talking about reducing supports for these vulnerable individuals at this time. If anything, the crisis has shown us that our social protection system was not fit for purpose. This is not the time to cut income supports. It is an opportunity to rebuild a social protection system that provides adequacy and provides households with a floor beneath which no one can fall.

At a time of national emergency and with so many households in financial difficulty as a result of job losses, it is essential that all institutions play their role. This must include banks and the insurance industry but so far, this has not been the case. On 23 March, the Government and the five retail banks announced a three-month payment break for mortgage holders affected by the crisis. The Minister for Finance claimed that these actions provided real support for those most affected by Covid-19. The reality is very different. What is being offered by banks is not a break but a deferral, which comes at a very hefty price. I will give one example for the Minister. I spoke with one individual who is a customer of Permanent TSB, a bank owned by the Minister for Finance, Deputy Donohoe, on behalf of the people of the State. The person, a mortgage holder, applied for a three-month mortgage break. The bank replied to the customer that he would pay more interest over the term of the mortgage than if he did not avail of the payment break. Permanent TSB made clear to this customer that the change in the cost of the credit as a result of the payment break would be €7,739. This is the Covid-19 penalty that Permanent TSB, a State-owned bank, is imposing on an individual who is finding it tough at this time, along with many others who have lost their jobs and seen their household incomes destroyed by this crisis. They are being penalised by banks with additional debt as a result of this emergency. It is unacceptable. The interest should be waived during the period of the emergency for those who are unable to pay their mortgages or debts. These people should not be re-profiled with additional interest applied. I put it to the Minister that it can be done. It has been done by banks in other jurisdictions, including in European jurisdictions. This caretaker Government must demand action for the same from Irish retail banks, particularly those banks we either own or where we have major shareholdings. The Minister can start next Wednesday at the annual general meeting of AIB by demanding that it does the right thing.

Let me also make clear that there are major issues around the insurance industry. Despite calls by the Central Bank for the insurance industry to offer rebates to customers, the insurers are refusing to do so. They are still refusing to offer premium reductions or rebates to motorists despite a sharp decline in cars on the roads and in the numbers of claims being made.

For businesses the problems go much deeper than that and are no less challenging. As thousands of small businesses are battling for survival, insurance companies are determined to make that battle harder by refusing to pay out for business interruption despite this being included in black and white in insurance contracts. On 26 March, and again last week, I stood in this Chamber and raised the issue of FBD Insurance. Despite that insurance company giving written assurances to businesses that their policies would cover interruptions arising from an outbreak of Covid-19, it is now failing to pay out, forcing individuals to take it to court. We need to step in and to ensure that the Central Bank does as I have requested and audits the way in which insurance companies are handling these claims.

As I have said repeatedly, it is a disgrace that the Minister has refused to sign into law legislation that was passed by the Dáil and the Seanad on 26 September last. This legislation offers additional protections for individuals and businesses with regard to insurance contracts. In some of the court cases of which I am aware, that legislation would have provided additional protection. The Minister should do the right thing. These Houses have passed that legislation. The Minister should sign the letter to allow it to take effect.

The challenges faced by businesses are very great. Large swathes of our economy are in lockdown. Cash flow problems are becoming more severe and debt is mounting. Businesses' survival is on the line. They require immediate liquidity supports if they are to survive to the other end of this public health emergency. The Government-provided supports to date have been inadequate. Existing supports such as the SME credit guarantee scheme and the Covid-19 working capital scheme not only require additional funding, but reform. The working capital scheme in place to provide short-term liquidity to businesses charges rates of up to 4.5% and is subject to the banks' own credit procedures. I have spoken to businesses and they are not applying for these loans. They do not want additional debt at this time. They need zero-interest loans. At a time when we are borrowing at negative interest rates on the international markets, that is the least we could do for our companies.

Last month my colleague, the Minister for Finance, Conor Murphy MLA, rolled out a series of business grant schemes in the North that provided £10,000 to eligible businesses impacted by the pandemic. On Tuesday he provided grants of £25,000 for affected SMEs in the hospitality, tourism and retail sectors. Together with a commercial rate holiday, rather than a deferral, for affected SMEs, the Government should provide similar short-term liquidity supports for businesses.

I am running out of time as I am sharing mine with others. There is a need for a sector-by-sector economic recovery. This should be funded by stimulus and ensure that we build the homes, create the jobs, deliver on universal healthcare, and transform our social insurance system. There is role for Europe to play in this. I have written to the Minister about our proposals in that regard. Let me be clear; there can be no return to the way in which both Fianna Fáil and Fine Gael dealt with the last crisis, which was to implement austerity which deepens and lengthens the recession. We need to invest our way out. We need to use this opportunity to build social networks and safety nets for our people and citizens.

See this speech in context