Catherine Murphy (Kildare North, Social Democrats) | Oireachtas source

When we all knocked on doors in January and February this year, Covid-19 would have been the last thing we thought of. Job losses were not a predominant matter raised at doors and nobody knew what a pandemic unemployment payment or a temporary wage subsidy was. We did not think we would be spending €1 billion on personal protective equipment and most people did not know what it was. It has been a very strange year and most people cannot see beyond it now. As we discuss this budget, it would have been very difficult at the start of the year to imagine Brexit being pushed into second place.

This budget is for what will happen in 2021. When the Minister for Finance opened proceedings yesterday, he focused in his first few lines on the prudence of recent years. He argued that this permitted this Government to borrow during the pandemic. I will focus on this aspect as it should be challenged.

Fiscal conservatism or prudence has dominated, meaning we underinvested in public services like health, housing, childcare, disability services and so many more. When the pandemic hit, for example, we saw how exposed we were with the number of available ICU beds and hospital beds in general. Getting a short-term fix was very expensive, although it had to be done. There was also a knock-on effect on the economy. It is quite clear this underinvestment or failure to invest in the solution that is Sláintecare was far from prudent. It would be fair to say it was reckless.

We can see the way housing has been funded, with large sums of money being paid through temporary measures like the housing assistance payment, as opposed to dealing with the cost of land and embarking on a large-scale housing building programme of social housing, producing houses that are both affordable to rent and buy, with knock-on consequences for individuals and the economy. Again, I ask if that is prudent.

When the pandemic hit and we went into lockdown, those who could work from home were being advised to do so. Suddenly, childcare became a major issue, although it had been an issue for decades. Our failure to build a sustainable system of childcare that is child centred and affordable was significantly exposed, but yesterday's budget did little to reverse those policies. If we are to rebuild better after this pandemic has passed, different political choices and philosophies will be needed.

I will also speak about prudence in the context of borrowing. Our ability to borrow is about recognising that we are in a changed environment within the EU. There has been significant underinvestment in infrastructure in the past ten years in particular, with everything from broadband to public transport. The pandemic and the change in the way the EU functions is an opportunity to reverse this. Italy, with a much lower credit rating than Ireland, has this year sold three-year debt with a negative interest rate. There has been no difference in how EU supports have been given based on previous performance.

In yesterday's budget we included less than €600 million for capital infrastructure. We could have borrowed €1.5 billion to more than triple that capital expenditure to more than €2.1 billion to fund long-term investment in infrastructure. We have a huge amount of catching up to do in such investment. This is an opportunity to do it and we should and need to take it. We need to do it to catch up on what should have been done but also to provide good quality jobs.

The European Central Bank has provided €1.4 trillion in money to governments via the pandemic emergency purchase programme. Fiscal responsibility is not just about balancing books or fiscal conservatism. It is about having ambition for our country. It is about borrowing and spending wisely but getting value for money in return for wise investments that we must make. It is responsible to borrow and invest in our country, and yesterday, although the Government did that, it did the bare minimum.

In ten years we will look back at 2020 and realise that although it was an awful year, it was also a year that could have been a turning point. Yesterday we got 66 permanent ICU beds, which is welcome, but we know we need 250 of those beds. We saw little change in a housing policy that has not worked and which is wasteful and costly. Included in the package were long leases of up to 25 years at market rents, which would be equivalent to paying a monthly mortgage, and the developer will own the house at the end of that 25-year period. It just does not make sense.

The temporary wage subsidy scheme was introduced as part of the Covid-19 supports and it was the correct approach when the virus hit. I absolutely acknowledge that. It is really important we keep people connected to their jobs if those jobs can be sustained. The wage subsidy and pandemic unemployment payments have been essential, but the rates were cut in September and it is proposed that they be cut again in January, with the termination of the scheme at the end of March. This not only creates an added layer of fear for those who are already struggling but it will have a big impact on the spend in the domestic economy.

Those who are being supported through these payments are not putting the money in savings accounts but rather they are spending in the domestic economy. The proposed changes are short-sighted and damaging and they could lead to further jobs losses in the domestic sector.

The failure to provide assistance by continuing with the Covid-19 pandemic unemployment payment or benchmarking social welfare rates against minimum essential costs of living has left many people anxious for the future.

The timeline for the support to mitigate unemployment risks in an emergency, SURE, programme indicates that we will not be included in the first tranche of European Commission funding. On 7 October the Commission presented the European Council with proposals to grant fiscal support to 16 member states via the SURE instrument. Ireland would be eligible to recoup a substantial majority of the expenditure already incurred under the temporary Covid-19 wage subsidy scheme. This was confirmed to me in reply to a parliamentary question. This scheme is designed to support member states with efforts to protect workers and jobs, such as short-term work schemes, and to support some health-related measures. I asked about our application to this scheme over the summer months and was advised that the application was only at the preparation stage. Why was this the case?

The establishment of a €3.4 billion recovery fund promises additional resources to fund Government decisions next year. In one breath the fund is described as "targeted" and in the next it is "flexible". I do not understand what that means. It cannot be both. None of us has a crystal ball, but we can already see which sectors will be most impacted. Young people are over-represented among recipients of the Covid-19 pandemic unemployment payment. They are more likely to be unemployed and more likely to be on the payment's lower rate. I would have expected to see some specifics on the approach to be taken.

The State is driven by two economies. One is composed of multinationals, including the IT and pharmaceutical sectors, which are doing extremely well. Meanwhile the domestic economy is really struggling. Corporation tax rates have performed well, although they were categorised as "volatile" by the Comptroller and Auditor General in 2018. While the 12.5% rate is very favourable, many firms pay only a fraction of that. When the Committee of Public Accounts examined corporation tax receipts in 2018, our attention was drawn to the fact that 70% of all corporation tax is paid by the top 100 companies. Some 37% of corporation tax is paid by just ten companies. This clearly demonstrates the risk of our reliance on this tax take, which could begin to evaporate. Changes at the Organisation for Economic Co-operation and Development, OECD, are inevitable. The Minister for Finance, Deputy Donohoe, acknowledged this yesterday and stated that such changes would present challenges for Ireland by reducing the profits taxable here. Anticipated reduction in corporation tax revenue from that sector makes it all the more important to focus on building the indigenous economy to mitigate that risk. Doing so will build the resilience we know we will need. I expected a big focus on that in yesterday's risk assessment.

The performance of income tax during the pandemic, despite the high rates of unemployment, reflects the unequal effect the pandemic has had on workers. Job losses have primarily hit lower-paid and precarious workers in the hospitality, retail, entertainment and travel sectors. Fewer than half of the jobs lost this year will be recovered next year. Just as we need strategies for job retention, we need to be ambitious about job recovery. Investment in infrastructure could play a much stronger role. That form of investment is prudent.

The reductions in VAT for the hospitality and tourism sector will no doubt be welcomed by that sector, albeit with doors closed it is very difficult to see how that will have an immediate impact. We cannot tell what will happen in the medium term. Other supports may well be required. There is no question that the sector requires support, but there must be a quid pro quo in the form of an improvement in working conditions in that sector, which is characterised by poor pay and conditions.

The continued failure to introduce a national sick pay scheme has left the most vulnerable workers in Irish society facing further anxiety about their future. They are still completely reliant on their employers' willingness to pay sick pay. In the sectors most affected by the virus, a small minority of employers do so. Workers cannot be forced to choose between remaining at home when they are ill and putting food on the table. As well as being a detriment to workers' well-being and livelihoods, this is a glaring weakness of the Government's Covid-19 strategy. To see the damaging effects of this policy we do not need to look much further than the meat industry, in which an estimated 95% of workers have no access to a sick pay scheme and outbreaks of the virus have had catastrophic consequences.

The sectors which have been most affected by the pandemic, that is, hospitality, tourism, events, etc., are heavily reliant on young workers and precarious working conditions. Young workers can no longer turn to the sectors they have traditionally relied on for employment. Youth employment is now at 36.5%, with under-25s accounting for 21% of Covid-19 pandemic unemployment payment receipts despite constituting only 11% of the workforce. Ireland's young workers were locked out of secure employment and life choices following the last recession. There can be no return to that kind of normality. The normality of 2019, when 80% of our young people could only avail of precarious employment, represents a failure we must reverse. We can no longer export the crisis of youth unemployment and rely on other nations to provide young people with the opportunity and hope the State has consistently failed to offer.

Covid-19 means that many cannot see beyond 2020. Not only will Covid-19 continue into 2021; Brexit is also a looming concern. There is no doubt that there will be long-term consequences. International tourism was a really important component of recovery from the last recession. It is difficult to see how that could return in the medium term. We have to recognise that we are an island nation. Yesterday's budget included some money for ports and airports, but the 140,000 jobs directly and indirectly supported by the aviation sector and the estimated €8.7 billion of our GDP attributable to international tourism were not even referenced. This sector must be allowed to recover or at least survive. I would like to hear some specific proposals in that regard, because we will need our airlines and tourism sector.

Finally, despite a projected deficit of the order of €20 billion, Covid-19 has not reordered the priorities of this budget in the way people have changed theirs. That is the biggest missed opportunity in this budget. People want quality public services and they want their infrastructure brought up to scratch. They want secure jobs and they want inequality to be dealt with.

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