Carol Nolan (Laois-Offaly, Independent) | Oireachtas source

I am happy to speak on this important but technical Bill. As we know, the purpose of the Bill is in part to provide access to funding sources by enabling the State to participate in European instruments designed to deal with economic impacts of Covid-19. One of the main instruments is the European scheme for temporary support to mitigate unemployment risks in an emergency, SURE. With respect to this scheme, as I understand it from reports in the Financial Times, at least 18 member states have submitted expressions of interest for loans totalling €94.5 billion from the SURE programme. This selling of almost €100 billion of new debt will make the EU the largest issuer of bonds in Europe, aside from the national governments. This is in addition to the €50 billion of bonds that are outstanding, most of which were used to fund loans to Ireland during the debt crisis. From what I can see, these bonds will be backed by a system of voluntary guarantees from the EU's national governments worth €25 billion. Can the Minister, Deputy Donohoe, provide some clarity on the nature of Ireland's relationship to the voluntary guarantee aspect of the SURE scheme? This is important because we need to know if Ireland will be financially exposed, given the high levels of Europe-wide debt about to be created.

The Minister of State, Deputy Fleming, accepted during a debate on this Bill in the Seanad recently that one of the most important and prudent conditions on the instrument is the requirement that no more than 10% of all loans will fall due for payment in any one year. He also mentioned that one of the benefits of this guarantee mechanism is that it ensures member states do not have to pay any money upfront. I seek more detail on when the money will have to be repaid and when will the period of not-upfront run out. I acknowledge that there is a sense among some EU observers that, while SURE goes some way towards creating much needed lending capacity, it is far too modest to have a significant impact on the EU's fiscal response to the Covid-19 crisis. According to the Bruegel think tank, the main limitation of SURE is that it solves the wrong problem.

The think tank also notes that access to finance is not an issue for euro area countries at this stage, thanks in large part to the massive intervention by the European Central Bank since mid-March but that were access to finance to become a real problem for some countries, SURE would then become too small. I raise this particular aspect because of my concern that our capacity in Ireland to access finance certainly will become more of an issue in the months and years ahead. I refer here to the rather sizeable elephant in the room, namely, the scale of our national debt. We know from the Oireachtas's Parliamentary Budget Office that Ireland's debt-to-GDP ratio is currently 59%, which is below the EU average and the 60% threshold set by the Stability and Growth Pact. However, using a more appropriate measure of economic activity for Ireland, we see that the debt-to-GNI ratio is 100.2%, which is significantly higher than the EU average. I have concerns that because we are now part of the voluntary guarantee aspect of the SURE scheme, any future exposure might make life very difficult for us.

I will conclude by referring to the VAT rate of 13.5% applying to some sectors, which was increased some time ago from 9%. Will that rate be lowered given that businesses in the tourism sector are really struggling? Many hairdressing businesses are trying to get back on their feet and rebuild their business after a significant period of unprecedented disruption. Will a lower rate be sought in their case? I understand the Government does not have the power to reduce the VAT rate, but will it seek to have it lowered for the sectors that need it? I would be grateful if the Minister could answer those questions.

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