Dáil debates

Wednesday, 29 July 2020

Financial Provisions (Covid-19) (No. 2) Bill 2020: Second Stage


10:00 am

Photo of Gerald NashGerald Nash (Louth, Labour) | Oireachtas source

The July stimulus, which was announced last week and is reflected in the measures we are considering today, was the first real test of the philosophy as well as the economic policies of this new Government. It was an opportunity to think and act big and to imagine a new economic model that would provide a better quality of life for all our citizens.

It could have been a belated first step towards a renegotiated social contract, one that ensured that working people could access a better quality of universal public services in, for example, healthcare, housing and childcare.

Some of the measures contained in the announcement last week are welcome. It would be churlish to suggest otherwise. In particular, I welcome in principle the 2% VAT cut and the reformed temporary wage subsidy scheme, TWSS. The Labour Party proposed those two measures in our alternative set of July stimulus proposals. In those proposals, and as I always said we would do in this Oireachtas, we sought to be helpful by publishing a number of distinct propositions. If adopted, they would have better targeted our available resources in order to achieve better social and economic outcomes in challenging times for our society and economy.

We will judge the package announced last week and reflected in some of this Bill's provisions on five separate terms. First, is it big enough to make a real difference, not just to the economic impact of the pandemic, but in the possible event of a no-deal Brexit? I would say "No". Our analysis suggests that what we needed was a cash injection into the economy of approximately €10 billion. Second, will it create good, sustainable jobs, particularly for young people, who have been disproportionately impacted by the effect of the crisis? We do not believe it will, at least not to the degree it should. Third, will it create a new and fairer economic model? It looks like it will not. It is more a case of meet the new Government, same as the old Government. There is no discernible difference in the economic direction being charted. Fourth, will it help to reduce income and economic inequality? It will not, given the no strings attached loans, the continuation of the no strings attached TWSS and the evolution of the employment wage subsidy scheme, EWSS. Fifth, will it strengthen the public services on which we all depend, for example, health and housing? It certainly will not if the signature piece on housing - the amended help-to-buy scheme - is anything to go by.

We welcome the transformation of the TWSS into the new EWSS. As the Minister knows, I have set out some amendments that would see strict social and employment conditions attached to access to those schemes. We support the move to the EWSS. I have been raising this matter in the House and the media since April. It is a natural evolution of the scheme. There will be employers who require such support to take people on as they dip their toes back into the water over the next few months.

However, the EWSS and its architecture will actively promote and subsidise in-work poverty and the profits of some bad employers and sectors that are addicted to precarity. The protection of workers is the raison d'êtreof similar wage subsidy schemes across the EU, but it does not even seem to be an afterthought in Ireland. For example, it will be more lucrative under the EWSS for some employers and sectors - the hospitality sector has traditionally focused on precarious working conditions and involuntary part-time work - to hire two separate minimum wage workers on 15 hours each as opposed to one whole-time equivalent. How could this be of any benefit in the longer term to any worker in the sector? These are predominantly younger workers and women, with a 2019 report from the Department of Public Expenditure and Reform on the quality of employment noting that the incidence of involuntary part-time work was concentrated among these cohorts, including those in sectors such as hospitality and parts of the retail sector. As such, it is not surprising that Ireland has more than 100,000 people in forced part-time work. People are underemployed simply so that employers with pooled labour have flexibility while workers are left with low pay and too much uncertainty.

Despite this, we now have a State-funded taxpayer bailout that will be taken up in large numbers by the hospitality sector, a sector that has refused to engage with the joint labour committee, which was a mechanism legislatively provided for in the 2012 Act to seek to set a minimum of pay and conditions in order to change the low-pay and precarious reality of those workers. According to an ESRI report published this week, those workers are the most at risk of Covid-19 and conditions that may cause increased complications.

Let us call a spade a spade. This is cash without conditions. It is a missed opportunity for the State to use its leverage to help get better outcomes for everyone. Instead of taking this opportunity to introduce reforms in low-paid sectors and move to a model based on high-quality services and higher levels of pay, it seems the Government has again chosen the low road, but now we expect taxpayers and workers to foot the bill. It is a case of us being back to the view that any job will do and at any cost.

As colleagues in Sinn Féin have asked, I wonder whether any of those who work in this sector will be able to afford the proposed staycation subsidy. Those who will predominantly benefit from that policy are the better off and, of course, the hospitality sector, which has to a large degree shown a blatant disregard for workers time and again. Not only will this dead weight policy increase prices for regular customers, but it could be a lose-lose situation all around for ordinary families and workers.

Fianna Fáil's dead weight help-to-buy policy is another Government giveaway to those least in need. It will simply push up developers' profits by using the taxes of ordinary people to subsidise home purchases. The Parliamentary Budget Office's analysis made that clear last year, but the Government has still increased relief under what is a failed policy in the middle of a pandemic, and all because of Fianna Fáil's ongoing obsession with and fetishisation of developers. What we really needed was investment in public and affordable housing to be fast-tracked, which would also have created badly needed jobs in construction.

I will briefly touch upon the bizarre increase in the cycle-to-work scheme, a sop to ABC1 greens. There is no economic rationale whatsoever for the increased limits proposed in the Bill, especially at this time. As a brief from the Department of Finance has shown, this will simply increase the number of people in the higher tax bracket availing of the scheme. It seems to be yet another policy on the hoof, one more about pleasing some Government partners than having a sensible stimulus policy. There is an incoherence in this matter. I would be interested in seeing what the average price of a bicycle is under the existing scheme, or even of a new bicycle. I am not sure who buys a so-called ordinary bike worth €1,250. Maybe if they are preparing for the Tour de France, but certainly not people who are commuting to work in Dublin and towns like Drogheda and Dundalk. This shows how out of touch some in the Green Party are with ordinary people when it comes to climate transition. They should instead be getting the basics right, for example, investing in the public bicycle scheme, which the Labour Party first introduced in Dublin under the then mayor, Mr. Andrew Montague. The measure in the Bill is yet another dead weight policy and taxpayer bailout of those least in need. It seems that there is one dead weight policy for every coalition partner.

Instead of change, we have seen a July stimulus package that continues to give cash without conditions to those least in need. It is a missed opportunity to change and reshape Ireland for the better. The Labour Party amendments, which I will speak to in detail later, seek to address some of those deficiencies in the Bill, particularly those pertaining to the EWSS, which is the most costly of the proposed measures at more than €2 billion. I agree with the Minister that the EWSS is necessary - it will be an important support for employers and workers - but it needs to be tweaked to ensure that we use this opportunity to shape a better outcome for working people and our country in the longer term.


No comments

Log in or join to post a public comment.