Dáil debates

Wednesday, 14 October 2020

Financial Resolutions 2020 - Financial Resolution No. 7: General (Resumed)

 

1:10 pm

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I welcome the opportunity to speak today. Throughout this pandemic, Irish businesses, small and large, have shown remarkable grit, determination and adaptability. Business models have changed, premises have been refitted and staff retrained as enterprises find new and innovative ways to serve us, their customers, and keep everyone safe. It has been a long seven months and I know people are very weary.

This Government continues to stand in solidarity with every community, employer, employee and their families. As soon as this new Government was formed, our focus turned to the July stimulus. This included actions to help businesses to open, to help those already open to stay open, to get people back to work and to provide financial support and training to those who could not go back to their old jobs. Yesterday's budget was no different and continued the good work started in July. It showed that the Government will continue to back enterprise and our economy through targeted tax reductions and incentives, grants and employment subsidies, and low-cost finance.

Budget 2021 is an unprecedented budget for unprecedented times. In scale, it involves almost €90 billion of public spending and investment. Its purpose is to protect both the lives and livelihoods of everyone in the State. It is a budget for hope and gives us confidence that 2021 can be better.

The pandemic has exposed some of the weaknesses and inequalities in the way our economy is structured. It has prompted us to re-evaluate people's work, the importance of so-called low-skilled labour in our everyday lives, and our preconceptions and approach to public policy in areas such as sick pay, remote working, work-life balance and unemployment insurance.

The previous Government sought to act quickly on the areas that require immediate intervention, for example, the establishment of the pandemic unemployment payment and the enhanced illness benefit payment, but long-term change is also required.

I am determined to introduce legislation for statutory sick pay in 2021 following engagement with the Labour Employer Economic Forum, LEEF, which comprises the Government, business groups and unions, and a public consultation. The reduction in waiting days for illness benefit from six days to three days, as announced in the budget, is a significant first step. It means that all workers, regardless of the reason for an illness, can qualify for illness benefit on day four. It also means that those employers who provide sick pay will see more of that refunded to them out of the Social Insurance Fund.

As the House may be aware, the programme for Government commits to introducing a living wage over the lifetime of the Government. A living wage is different depending on how one defines it. Great Britain and Northern Ireland have a living wage, but it is significantly lower than our national minimum wage. That is not a model we would wish to follow. I am examining ways of transforming the Low Pay Commission into a living wage commission, one that would collect data, carry out research and advise us on fair wages in an independent and evidence-based way, moving towards a living wage over the period of this Government. I would welcome any submission from colleagues in the House on this matter.

I want workers and businesses to know that as we face into uncertain times, the Government is here for them and is on their side. In 2021, workers will see no increase in income tax, USC or PRSI and there will be a modest increase in the minimum wage and a reduction in the number of waiting days for illness benefit. There will be an extension of parent's benefit by a further three weeks to five weeks, building on the work of the previous Government, which introduced it. This will allow parents to spend more time at home with their kids. The earned income tax credit, which was introduced by the previous Government for the self-employed, has been increased to €1,650. This will equalise it with the employee, formerly PAYE, tax credit for the first time and will enable the self-employed to warehouse their 2020 preliminary tax liabilities, which will help to bring immediate relief. The self-employed in receipt of the pandemic unemployment payment, PUP, will be able to earn up to €480 per month, or €120 per week, without losing access to the payment. This will help many self-employed people to make the transition off welfare and back into full-time self-employment.

For business, we have the new Covid restrictions support scheme, CRSS, which will provide a weekly grant to businesses that, as a result of pandemic restrictions, are closed or have seen their turnovers fall by 80% or more. The maximum grant will be €5,000 per week compared to £4,000 per month in Northern Ireland and Britain. The extension of the employment wage subsidy scheme, EWSS, will be provided for well into 2021. As such, there will be no cliff-edge end of the scheme at the end of March. If it needs to continue, it will. If we are in a position to phase it out, we will do so gradually. The commercial rates holiday is being extended to the end of 2020, which will reduce the fixed costs of doing business. A reduced VAT rate from 13.5% to 9% for the hospitality, accommodation and tourism sectors will help hotels, pubs, restaurants and other businesses, including those in entertainment, tourism and hospitality, as well as personal services like hairdressers and barbers.

Regarding health infrastructure, there will be an increase in permanent capacity, with 1,280 extra hospital beds being budgeted for, 66 additional critical care beds and 1,250 community beds. These targets are not easy to deliver in one year, but we are determined to get them done.

The budget will allow many important school, third level, roads, sporting, transport and other projects to go ahead, including the national broadband plan, which is provided for by a significant increase in the budget for communications and is a project that no one opposes now.

This is a pro-business, pro-jobs and people-focused budget. It is aimed at building what was put in place in the July stimulus to help businesses and workers through this difficult time. The quantum and scope of funding provided by the Department of Business, Enterprise and Innovation to business has been extraordinary. The spend in 2020 has doubled, enabling the provision of targeted and timely grants and loans to business. This included the restart grant, the online retail scheme, trading online vouchers, business continuity vouchers and a range of low-cost loans through the Strategic Banking Corporation of Ireland and Microfinance Ireland, among others.

An employment-focused recovery is crucial to leading us out of this crisis and sustaining people in their work. That has been the cornerstone of the Government's approach in this budget. My Department's 2021 budget will be a total of €1.13 billion, which will fund our activities and programmes in 2021. That allocation is the highest ever secured for the Department and represents a 16% increase year on year. The capital allocation of €768 million has increased by some €136 million and the current funding allocation has increased by €16 million. In addition, the Department will have immediate access to at least €100 million from the recovery fund to help businesses to prepare for Brexit. It is worth highlighting that of the additional €136 million in capital funding, €35 million will be provided to IDA Ireland to enable it to provide a further €10 million to fund its property programme to attract foreign direct investment to all parts of the country. So far, seven of the 11 advance factories and facilities have been occupied. We want to provide more. The other €25 million will fund the expansion of the innovative Covid life sciences products scheme.

The value of these investments cannot be overestimated. At the end of 2019, a total of 246,096 people were employed by IDA client companies. While this recession is different from the last recession, it has something in common with it, which is that the multinational sector has held up well. If not for that, there would be a different picture of this year's tax take. The multinational traded sector will once again help to bring us out of recession and back to economic growth. For this reason, it needs to be protected and encouraged and not taken for granted. The Department of Business, Enterprise and Innovation is focused on planning and preparing for economic recovery and ensuring that Ireland remains a competitive and attractive location in which to do business.

Enterprise Ireland's capital funding will increase by €50 million, which will allow the agency to continue providing help for business under the sustaining enterprise fund, the clear custom financial support grant and the online retail scheme as businesses continue to adapt, diversify and go digital. There will be a further call under the regional enterprise development fund. Unlocking opportunity in all parts of Ireland is essential to underpinning the future performance of our indigenous companies and our country's economic recovery. Through Enterprise Ireland, the regional enterprise development fund will invest in projects with the greatest potential to create new jobs, support and sustain existing jobs, and strengthen the economy in individual regions. It will strengthen each region's capacity to innovate in ways that help our home-grown companies to develop into globally competitive successes.

In terms of access to loans, there is extra funding of €14.325 million. This will strengthen the lending capacity under the popular future growth loan scheme to €430 million. It will also further capitalise Microfinance Ireland by €5 million, allowing it to continue providing its tailored Covid loan scheme to microenterprises impacted by the pandemic. The drawdown and uptake rates of that scheme have been encouraging. The Covid credit guarantee scheme, which was launched last month, offers low-cost loans ranging from €10,000 to €1 million for terms of up to five and a half years. It is only getting started, but I believe that demand will be strong. For 2021, some €25 million is being provided to finance this guarantee.

Aside from these capital moneys, €60 million in additional current money will be allocated in 2021. This will mainly be directed at increasing resources for the Department's regulatory bodies as they respond to and prepare for Brexit and Covid-19. For example, €8 million will be provided to the Health and Safety Authority, HSA, the Competition and Consumer Protection Commission, CCPC, and the National Standards Authority, NSA. The HSA will have a new occupational illness department established within it to deal more with the issue of illnesses being picked up in workplaces, be those hospitals, meat plants or anywhere else. The additional money for the CCPC will enable it to increase its activities and powers under European law once transposed into Irish law, enabling it to fine companies directly that it finds to be in breach of competition law without having to go to court. This will be particularly useful in certain sectors, which I will expand on another day. There will be additional funding for the NSA. Demand for the services of these bodies, particularly in terms of market surveillance and certification, is expected to increase as a result of Brexit.

Additional current funding is also provided through the enterprise agencies to enable them to continue to expand their staffing, expand their global footprint and increase their promotional and awareness activities.

Aside from the challenge of Covid-19, the other major challenge facing many of our businesses is Brexit. Preparations for the possibility of having to trade with Britain on WTO terms have been intensifying for some time. Last week, I wrote personally to all 225,000 registered businesses in the country setting out once again what their owners need to do to get them ready for Britain's departure from the Single Market and the customs union at the end of the year. The letter included full information on where businesses can find advice and access funding. It outlined the specific measures introduced to help them navigate the regulatory environment post Brexit. Enterprise Ireland's ready for customs grant has been designed for businesses involved in exporting to and importing from Britain. Businesses can claim grants of up to €9,000 per eligible employee hired or redeployed within the business to a dedicated customs role. Skillnet Ireland's online customs training is available on a 24-7 basis. I strongly encourage all businesses to avail of these and other customs training offerings. The reality is that this new way of doing business is coming and it is coming soon.

There is a significant Brexit spend in budget 2021. Hundreds of millions of euro have been spent by many Departments and their agencies in preparation throughout 2020. There has been funding for compliance, investment in physical and ICT infrastructure and business supports for the agrifood and enterprise sectors. Yesterday's budget announcement provided an additional €100 million for my Department to help businesses to adapt to Brexit. This includes €8 million to undertake new market surveillance and certification, which will be required even if a free trade agreement is in place. There is a provision of €50 million to assist businesses to respond to changes to customs and tariffs, €7 million to help the food processing industry, including the beef and dairy sectors, to adapt, €11 million for local enterprise offices to meet the increased demand for their range of tailored services for small and microbusinesses in the context of Brexit and Covid, and a further €675,000 for InterTradeIreland to provide practical help to businesses trading across the Border.

I repeat that this is a budget for hope. The Government is safeguarding lives and livelihoods through unprecedented financial supports that will assist immediately and in the years to come. We built the budget on negative assumptions, namely, that there would be a no-free-trade-agreement Brexit, no Covid vaccine and the pandemic would continue throughout 2021. I am more optimistic. I think that if we can secure a free trade agreement on Brexit, find an affective and safe vaccine and develop rapid testing, we will find ourselves in a much better position next year than we are projecting at the moment. This is a budget that will sustain us through Covid-19 and Brexit, which are the twin crises we now face, while not forgetting the twin transition, which will be digital and green and for which we are also preparing.

I have listened carefully to the comments and remarks from members of the main Opposition party and I am very disappointed. We have heard the same single transferable speeches we have been hearing for the past ten years, which urge us to spend more, borrow more and promise everything to everyone everywhere. However, when we compare actions with words, we see something very different. We see talk of commitment to climate action but a baulking at the necessary and unpopular measures when put to a vote in the House. We see rents being increased for social housing tenants in Northern Ireland, contrasted with a call for a three-year rent freeze in this State. We see council rates being increased in the North during a pandemic when we chose to freeze the local property tax, LPT. I see eye-wateringly low income supports provided to people who have lost their jobs north of the Border while there is criticism of the fact that we have reduced some payments, even though they are still three times higher than what is available in the North. Only this month, I see the state pension age going up in the North, with all-party support, while we decided not to proceed with our plans to increase the pension age in this State. I see that we are offering a maximum closure grant for businesses that is worth €5,000 per week, whereas the maximum north of the Border is €4,000 a month. I see in Sinn Féin's alternative budget a great desire to stifle our recovery and to do down our country. The introduction of 19 separate tax increases would hit business really hard, just as the abolition of the help-to-buy scheme would hit first-time buyers really hard. I believe Sinn Féin's budget proposals would turn what should be a lost year for our country into another lost decade. The party has no coherent policies and no real vision, only left populism, to use the word it uses to describe its strategy.

Covid-19 and Brexit are undoubtedly the twin crises we must overcome, and overcome them we will. The budget announced yesterday is an important part of doing exactly that. I commend it to the House.

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