Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I welcome the opportunity to speak on what is now the third Bill with financial provisions in response to the pandemic. For the third time, Sinn Féin will support the financial provisions which will support our economy and ensure that it is in a position to recover strongly from the impact of this pandemic.

In this regard I draw attention to recent comments made by the Minister for Finance during his election campaign in Dublin Bay South, during which it is reported that he said that Sinn Féin are against all of the measures that laid the foundations for us to be able to help our country during the pandemic. This is such nonsense from the Minister. It seems that the Minister has truly lost the run of himself and has chosen to respond to the fact the Government is not getting the reception that it expected by making groundless accusations.

As the Minister knows, my party supported the previous two financial provisions Bills in response to Covid-19. Indeed, we sought to improve that legislation and the schemes it introduced. For example, we sought to ensure that women returning from maternity leave would not be excluded from the temporary wage subsidy scheme. Such changes subsequently came to pass. In a similar vein, Sinn Féin will support this legislation for the very reason that it will support our economy and businesses while protecting the jobs and incomes of workers and families. That is what we have sought to do. We will also engage with this legislation and seek to improve it where it falls short, in our opinion. In that regard we will submit amendments to sections 13 and 14 of the Bill, which give investment funds free rein in the housing market to price struggling buyers out of homeownership. Before that, however, I wish to speak about the earlier provisions of the Bill and the background against which they are being introduced.

As public health measures and restrictions have been eased, the economy has rebounded strongly. With the continued roll-out of the vaccine, a return to regular consumer spending and supportive policy measures, we are in a strong position to see a recovery in jobs and economic activity. This view has been given by both the ESRI in recent weeks and the Central Bank today. The pandemic and the public health restrictions to suppress its spread were always a temporary and Government-imposed pause on economic activity, different from any economic shock we have experienced thus far. The responsibility of the State is to respond to that shock and that was the clear objective. The clear objective was to protect incomes and to support businesses while preventing any long-term scarring of the economy. A refusal to act quickly and to do whatever it takes would have undermined recovery and magnified the impact and duration of the economic damage that has been done.

Sinn Féin played a constructive role in ensuring that that objective was met. In March of last year I wrote to the Minister outlining a set of principles and policies that should underpin the State's response to the economic impact of the pandemic at a time when we were just learning of the potential impact of that same pandemic. In that correspondence I argued for a suite of measures ranging from a wage subsidy scheme to direct fiscal supports for businesses. Throughout this period, Sinn Féin has supported and facilitated the introduction of measures that have offset and cushioned the economic shock of the past 16 months. This has been done through the accelerated passage of legislation, which is definitely not the norm and should not be the norm in these Houses.

As the vaccination roll-out gathers pace and restrictions ease, the broader economy is expected to recover in headline terms. The Economic and Social Research Institute, ESRI, has projected economic growth of 11.1% this year and 6.9% next year. While the Central Bank's projections are less optimistic than those of the ESRI, they still point to robust growth this year and next year. We know the growth is largely driven - and we will not be fooled by the numbers - by a strong performance not only in the export of pharmaceutical goods and ICT services but also in contract manufacturing. However, those figures fail to reflect the uneven impact of the pandemic and the level of damage still felt in the domestic economy, in particular in sectors such as tourism and hospitality, which we have spoken so much of in the past.

The pandemic unemployment payment and the employment wage subsidy scheme have been crucial in protecting incomes, supporting businesses and maintaining the link between employers and workers to ensure a successful return to employment for as many as possible. Before the easing of restrictions in May, almost a third of the workforce was in receipt of a payment or subsidy through either the PUP or the EWSS. Last year Sinn Féin called on the Government to reverse its planned decision to cut the pandemic unemployment payment, a call that was heard and implemented by the Government, albeit late in the day. Sinn Féin engaged with the Minister and the Government on all iterations of the wage subsidy scheme, successfully arguing for changes that provided greater support for workers and employers. These included provision for those returning from maternity leave, an increase in the bottom rate of payment so as to ensure that workers were not provided with less support through the scheme than they would have had through the PUP, and an increase in rates under the employment wage subsidy scheme, which were subsequently acted on by the Government in October 2020. We will continue to engage to improve and to amend these schemes and to make sure they are fit for purpose for the times we live in.

The majority of provisions in this Bill give legislative effect to a number of actions recently announced as part of the economic recovery plan. Section 2 provides for the extension of the EWSS until the end of the year, with the current rates of subsidy under the scheme remaining until 30 September. The legislation also modifies the reference period for the assessment of eligibility. Sinn Féin supports this extension, which offers critical support for employers and workers in the retention of jobs. With the wage subsidy scheme to be extended until the end of the year, Sinn Féin has argued for the introduction on a permanent basis of a short-time working scheme that could act as an automatic stabiliser in response to downturns as a means to retain employment and stave off the threat of long-term unemployment. Such a scheme has served other countries such as Germany well as a countercyclical tool to reduce unemployment when the business cycle would do otherwise. I encourage the Government to look at our proposals and to take them on board.

Sections 3 and 4 would provide for the extension and enhancement of the Covid restrictions support scheme for consumer-facing businesses impacted by the public health restrictions. I note that this legislation does not provide for the double week payment from 5 July for a period of two weeks in response to the delay in the reopening of indoor dining. I ask the Minister of State to clarify whether it is necessary to amend the legislation to provide for this double payment or whether it can be provided through other means. Since the introduction of the Covid restrictions support scheme, Sinn Féin has been critical of the number and types of businesses that have been excluded from the scheme despite the impact of public health measures on their trading, including those with non-rateable premises and suppliers. We have made that point time and time again. We therefore welcomed the Government's introduction of the small business assistance scheme in March, despite its late introduction.

Section 5 of the Bill introduces a new scheme, the business resumption support scheme, which will provide support for businesses that continue to be impacted by the pandemic - and we know that many will - and is set to be introduced in September. It is crucial that the eligibility criteria for this scheme do not exclude affected businesses as the CRSS did.

Section 6 of the Bill extends the reduced 9% rate of VAT for the hospitality and tourism sector until 31 August 2022, a measure my party and I welcome. Sinn Féin argued for the introduction of the 9% rate for the hospitality and tourism sector in our submission to the July stimulus programme last year. The Government ignored this and did not implement the rate then but did so on 1 November of that year. Again, delay is better than inaction. The reduced rate will allow businesses in the sector to absorb the reduction on their balance sheets and support their cash margins.

Sections 7 to 12, inclusive, provide for the extension of the tax debt warehousing scheme, allowing for the period in which tax liabilities can be warehoused to be extended until the end of the year, with an interest-free period in 2022. I note also that section 7 allows for overpayments under the EWSS to be warehoused in a similar manner. On a related issue, I ask the Minister of State and Revenue to ensure that efforts to claw back overpayments under the scheme, through either accident or abuse of the scheme, are adequately resourced and funded. Any attempt by certain employers to receive payments under the scheme with the consequence of reduced pay for their workers where there was no entitlement to the scheme should be thoroughly investigated, with appropriate repercussions following. I reiterate that my party welcomes the extension of these supports, which are crucial to protect jobs and to avoid any long-term scarring of the economy or undermining of the recovery.

Sections 13 and 14 provide for different measures entirely and are in response to the scandal of investment funds snapping up homes under the noses of struggling homebuyers. This is a system that has been facilitated and encouraged by Government policy through tax advantages and exemptions which Sinn Féin have opposed for years. Sections 13 and 14 of the Bill give legislative effect to the financial resolutions passed by the Dáil last month.

I reiterate that in response to the measures announced in the context of that financial resolution, the share price of leading institutional investors in the Irish housing market rose. That speaks volumes. These measures were introduced in response to public outrage at something that is neither new nor accidental, namely, the block purchase of homes, during a housing crisis. It has been taking place for a number of years and is a direct result of Government policy. The block purchase of homes in Maynooth was simply the straw that broke the camel's back.

The Government has since scrambled to introduce measures that give the appearance of action. The tax status enjoyed by these funds for several years has given them financial firepower against which struggling home buyers could never compete, with no corporation tax on their rental profits, no capital gains tax on disposals and minimal stamp duty. That is what allowed investment funds to price struggling home buyers out of the housing market and led to increases in house prices and the amounts paid by struggling renters. It allowed them to make combined operating profits of €3 billion from 2017 to 2019. Year after year, Sinn Féin has called for these tax advantages to be ended and has tabled amendments to successive Finance Bills to facilitate this. Every year, those amendments were opposed by Fine Gael. Only last year, Fine Gael, Fianna Fáil and the Green Party opposed our amendment suggesting the introduction of a stamp duty surcharge on these investment funds, acting against the interests of struggling home buyers and in favour of investment funds and private developers.

This legislation is the Minister's response. It is the bare minimum. He takes those in the Dáil and the public for fools. The Minister has set a stamp duty charge so low that it cannot act as an effective deterrent. Such a charge will only reduce the rental yield for these funds by 10%, a hit they can easily absorb, and will either lead to them increasing rents over a period by 10% or splitting the difference. The charge is too low and Sinn Féin will be tabling amendments to have it increased.

Worse still, the provisions of this legislation are littered with gaps and exemptions. Forward purchase agreements that have already been made between funds and developers will avoid the stamp duty charge, despite the residential units having not yet been built. The Minister cannot even tell us how many homes bought up by investment funds will avoid this stamp duty charge as a result. Under section 31E(7), the Minister has ensured that apartments are excluded from the charge, ignoring the advice of a senior official in his own Department who warned that "by having no extra stamp duty on the bulk purchase of apartments, you potentially drive the individual home purchaser out of that market". That is exactly what will happen. The same official argued for a proposal that would ensure that these funds could not buy up full apartment blocks but the Government ignored this advice and took the side of institutional investor against the interests of struggling home buyers. There is no surprise here.

The Government has simply put a sign over Dublin city, where the majority of new builds are apartments, which says “Aspiring homeowners need not enter”. The reality is that the Government has waved the white flag. It has surrendered this city to the vulture funds by not imposing that surcharge on apartments to this funds. Worse, the Minister of State has come before the House to say that the Minister for Housing, Local Government and Heritage, Deputy Darragh O'Brien, rather than the Minister for Finance, Deputy Donohoe, who is bringing forward an amendment to the legislation on Committee Stage which will exempt the funds that buy houses from the increased stamp duty if they lease them back to local authorities. Let me put on record what the Taoiseach said in the House just three weeks ago in response to the scandal in Maynooth where an investment fund bought up these homes under the noses of aspiring house purchasers. He said:

Let [the] message go out loud and clear from Government. No local authority should be on the other side of this, engaging in a long lease with these institutional investors...

Now we are told that the Government is going to do the exact opposite of what the Taoiseach said. The Minister is going to exempt these funds from buying homes if they sell them to local authorities. You could not make this up.

The Bill is riddled with holes. It is pro-investment funds legislation because the Government has exempted apartments and created another loophole through which funds will drive a horse and carriage. Anyone who understands what is happening in the market knows this is why they are piling into Ireland. It is because there is a scheme whereby they can buy this stock, push up the prices and then sell the homes involved back to local authorities through a long-term scheme which the Taoiseach said does not offer value for money.

See this speech in context