Thursday, 23 April 2020
Irish Economy: Statements
None of the talk here today will count for anything and none of the projections will come to pass unless we get one thing right, namely, the question of tracing and testing. The entire strategy for addressing the pandemic in this country is to have a substantial testing and tracing regime in place such that a minimum of 15,000 people per day are tested. There has been talk about that for several weeks. Currently, only 5,000 people are being tested per day. None of the proposals being made today will matter or come to pass unless a substantial testing and tracing regime is put in place.
Talk about lifting the restrictions and getting back to any kind of normality is without any basis unless the testing is put in place. We know that if there is any relaxation of the lockdown, there is a high probability there will be a second wave of this pandemic. The only way to address and be prepared for that is to have a full test and trace regime in place. That is the number one priority we must all focus on and we are far from being in a position of having that regime fully up and running.
The stability programme update, SPU, announced by the Minister yesterday was unsurprising in many ways, given what we have come through in recent months. On behalf of the Social Democrats, I support the Government in the main in the action that has been taken. I certainly support the approach that has been taken on the health front in following the advice of the Chief Medical Officer, notwithstanding the serious issues in nursing homes which I will come back to later on with the Minister for Health. We also support the approach that has been taken to move quickly to protect people's incomes to the greatest extent possible. It is important, however, to point out that the kind of projections set out in the SPU yesterday envisage a three-month horizon for restrictions being lifted. There is no certainty about that. That brings us back to the question of testing and of our ability to test.
The other matter I am concerned about with the stark picture and the huge economic challenges that were set out yesterday is the Government's approach to funding this substantial deficit of a minimum of €23 billion this year. That could well come up to €30 billion or even €40 billion unless we get everything right in the health response. The question then arises of who will pay this substantial bill. I am quite concerned about the Minister's approach as set out today in his speech where he says we have sufficient reserves ourselves and that the NTMA has a lot of cash on hand and will be able to raise loans. While we recognise that interest rates are low at the moment, there is no way we should be put in a position where we are put at the mercy of the bond markets. My big fear is we will have a repeat of the kind of responses we had to the earlier housing and banking crisis of ten to 12 years ago. I fear that we will end up in a situation where, rather than having stimulus in our economy, we will be talking about retrenchment and austerity. When we look at what happened in the last recession, we see that the burden of that austerity fell on the shoulders of ordinary families. We are still living with the legacy of that austerity and people are still trying to recover from the huge hit they took in their lives and incomes during that period. I am not encouraged by what the Minister is saying about who and how we will pay for this enormous deficit that is facing us in the coming months and years.
I am concerned about the approach Ireland seems to be taking at EU level. We know the Taoiseach is joining with his counterparts in other European states this afternoon. The message coming from the Irish Government on the approach to European funding is quite ambivalent. On the one hand, the Government has signed the letter with the other eight states saying all of the European firepower should be made available to address this. On the other hand, the Government is sending the message that it will deal with this itself by raising its own loans. The implications of that are enormous for the Irish people if the Government goes down that road.
This is a crisis that is affecting every state across the eurozone. The response to that has to be a Europe-wide one. There is substantial economic and fiscal firepower in the EU and there is no reason Ireland should not be arguing as strongly as it possibly can for an EU response that concerns some kind of instrument that will ensure that people across Europe do not have to pay the price for this pandemic, over which they had no control whatsoever.
There is huge potential if we learn from what happened after the First World War, for example, when many loans were made available to Germany and the UK which were repayable over 100 years, making them effectively meaningless as it was in many ways free money. Money is currently available at zero or negative rates of interest. There is no reason an instrument cannot be put in place to ensure that European money is made available to member states to allow them to deal with the huge deficits which arise from the pandemic. That must be the approach. It is the only fair approach that can be taken. The future of the eurozone is at stake. We need to see substantial evidence of solidarity across the EU and to do that, we must recognise that the huge debt hanging over all the EU states must be mutualised. Any other response will inevitably lead Ireland into further years of austerity.
The rules for the wage subsidy scheme are overly strict. Its lack of flexibility is really hitting small business. Businesses have contacted the Minister on this. If they are even a day late in making their payroll returns they are refused the wage subsidy scheme, which makes no sense, and there is no appeals system in place either. The purpose of the scheme is to keep people attached to their employment but the strict operation of these rules works against the scheme's intention. I ask the Minister to re-examine this and address the issue.
There are other issues around the mortgage breaks which my colleague, Deputy Cian O'Callaghan, raised yesterday. He appealed for an extension to the mortgage repayment breaks from three to six months. It is really important that happens. Some 45,000 households are affected by that. In the main, those who applied for the three month break have not seen their circumstances improve, if anything they have disimproved. There is a very strong case to extend that to six months. There is a wider issue of why people in Ireland are paying 3% interest on their mortgages. If the Minister was serious about addressing this, he would ensure that our banks pass on the kind of favourable interest rates, which are practically 0%, to their mortgage customers. There is no reason mortgage holders in this country should be paying anything like 2% or 3% interest rates, it should be 1%. The Minister should be leading the way with the banks that are owned by the State. AIB should be forced to provide those kinds of mortgages.
The position on pandemic payments for those over 66 years is very unfair. There has been an appeal to the Minister that he ensure that people who have been working and are over 66 years can have their State pension topped up to the level of the pandemic payment of €350. It is only fair.
As I said, there is a definite need for the response to this situation to be a stimulus package rather than austerity. The pandemic has exposed huge frailties in how things are done in this country in terms of how we provide public services, including healthcare, nursing home care, access to affordable housing and childcare, all of which are inadequate. There is also low pay and poor working conditions.