Gerald Nash (Louth, Labour) | Oireachtas source

We are approaching that time. I will not waste any more of my time so.

It is no exaggeration to say we are at an absolutely critical juncture in our history and Covid-19 has exposed some of the existing strains and inequalities in our society and economy. Putting it frankly, there should be no going back to business as usual or to an inequitable and unfair economic model that sees over 20% of our workers on low pay. There should be no going back to a services model where those with the wherewithal get to see a doctor first because they can pay for it. There should be no going back either to a housing system of endless rent rises and a life of precarity for those forced to rent because the State has decided it will not or cannot house them securely.

The recent July stimulus initiative was a missed opportunity to chart what I might describe as a new course for our country. As I said at the time, in truth all we really got was more of the same from the tired Fianna Fáil and Fine Gael toolbox. The upcoming budget and national economic recovery plan will be an opportunity to do things differently. In many ways it may be a last-chance saloon for the Government to put its imprint on a new economic model and social contract. Unfortunately, the early indications are of some concern.

The presentation of the narrative from some people in Government Buildings when it comes to so-called fiscal sustainability is a little worrying, for example. What is more, this is completely out of kilter with the zeitgeistand winds of change sweeping across Europe. Of course, we will know the colour of the money from the Ministers for Finance and Public Expenditure and Reform on budget day. I look forward to getting a greater understanding of how the national economic recovery fund is designed to work, although we will have to wait until next spring to hear more detail from the Minister on how he proposes to balance the books in future.

Such is the scale of the economic challenge facing us we see fiscal conservatives such as German Chancellor Angela Merkel backing a bigger European Union budget and so-called corona bonds as part of a Keynesian approach to a Covid-19 recovery. The Italian Prime Minister, who leads one of the worst-hit countries on the Continent, has recently stated that Covid-19 is "an opportunity ... to design a better Italy, to work on a serious, comprehensive investment plan that will make the country more modern, greener and more socially inclusive". That is a sentiment backed by other countries right across the Continent.

In contrast, we are hearing clarion calls from certain quarters about the need for a clear and credible deficit and debt reduction plan and the need to return to a balanced budget as quickly as possible. My advice to the Minister is to tread carefully on that front. To be clear, the Minister cannot cut his way out of this crisis and he admitted as much, in fairness to him, in a recent Sunday Business Postinterview. I will hold him to account on that commitment not just at the next budget - it will be an unusual budget - but over the lifetime of this Government. To go about cutting now risks turning a health and short-term economic crisis into a long-term social crisis, with the Economic and Social Research Institute already warning against moving too quickly to try to rein in the budget deficit.

Make no mistake, this crisis is fundamentally different from that of 2009, when Ireland suffered a banking, public finance and economic crisis as well as social and reputational damage. We now have options. Put simply, in 2009 we could not borrow but now we can do so at practically negative interest rates. We also have access to a substantial level of grants and low-cost loans as part of an unprecedented European Union recovery plan. Not only may we borrow to invest but it makes practical sense to do so.

OECD evidence demonstrates that when the public capital stock and interest rates are low, borrowing for capital investment in badly needed housing projects, public retrofitting and transport infrastructure, for example, more than pays for itself in the long run. Such State investment is badly needed with the massive drop in private investment within the domestic economy, which has been measured at upwards of 16%. For example, in housing alone, private sector investment outpaces public investment by more than two to one but it is now inevitable that we will see a major drop-off in investment from the private sector while we still have nearly 70,000 people on the social housing waiting list and 10,000 people homeless. One does not need to be an economist to see first-hand what years of underinvestment has done, whether it is in housing, the caring economy or climate action. We are well behind the curve.

Before Covid-19 Ireland already had the lowest rate of general government expenditure in both the European Union and OECD so we are effectively playing catch-up on our European Union counterparts. Increased public investment is required and now is no time for fiscal conservatism.

It would, of course, be churlish of me and my party not to acknowledge the unprecedented and expensive measures that have been taken, many of them paid for with borrowed money over the past few months. They have kept people in work and businesses afloat. The Minister admitted in his contribution that more needs to be done over the short to medium term. In the short term we must absolutely maintain supports for workers and businesses and in the long run we must focus on capital investment and retraining to create the new sustainable jobs and opportunities of the future.

This, however, does not give the Government carte blancheto write blank cheques without care or consequences. It is interesting that over the past few months there has been a lack of clarity in the reporting and oversight of money being spent in response to the pandemic. That is not my opinion but rather what the Parliamentary Budget Office has intimated.

For example, despite the Minister's role being that of guardian of public expenditure, he has repeatedly allowed Cabinet colleagues to come before the House this summer with Revised Estimates allocating billions of euro in additional spending without any concrete or clear indication of the intended outcomes of the expenditure. It is no way to do business and I hope it is a once-off experience.

The July stimulus represented another multi-billion euro bailout to many big businesses. There were very important initiatives for our small and medium enterprise and main street businesses but many big and very profitable businesses benefited from handouts from the Government without any social or environmental conditionality attached whatever, such as the requirement to pay a living wage or commitments to carbon reductions.

We also saw some ill-targeted tax reliefs for people on higher incomes, including an extended help-to-buy scheme and bike to work schemes. These kinds of handouts to higher earners will undoubtedly represent a dead weight loss to the Exchequer; the initial help-to-buy scheme, for example, already proved to be such a loss. I often wonder why the Minister allowed such measures to be signed off but it seems from some of the documentation we have seen that some of the measures were introduced against the advice of expert officials.

With regard to pay increases for the public sector, I note with interest the Minister's recent comments to the media on the 2% pay restoration for public services. Quite frankly and with respect, it was disingenuous of the Minister to suggest the decision to award the pay restoration - not pay rise - was on the basis of public servants doing "a really good job over the past six months". I wonder if these are the same public servants that have been lying on the couch watching box sets, according to the Minister's Fianna Fáil colleague, Deputy MacSharry. As the Minister well knows, the Government had to honour a signed agreement and it was not offering some sort of award to public servants for their good service.

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