Gerald Nash (Louth, Labour) | Oireachtas source

The Labour Party and I are happy to support the continuation of the schemes as outlined in the Bill. The scale of the support provided to businesses and to working people who may have lost their work through no fault of their own in the last 16 to 17 months is unprecedented. We all agree that there should be no cliff edge facing any business or worker with the removal of any of these critical supports at a very sensitive time in the pandemic and our economic recovery. This week has told us how unpredictable the virus is and will continue to be, and we have to be very careful how we proceed. We are still far from the shore and there may still be choppy waters ahead.

While there may be no cliff edge for many businesses and many thousands of workers with the maintenance of the EWSS, the CRSS and the extension of the tax warehousing scheme, which is very generous indeed, the same really cannot be said for those who may have to continue to have a decent floor of social protection through the PUP. In light of what we know about the impact of the Delta variant and what public health experts tell us may be coming down the tracks, I would ask the Government to review the position in respect of to the PUP and any possible reductions. There are sectors like the arts and entertainment that are most unlikely to come back strongly as soon as we would all like. A decent safety net has to be continued for those workers and others who are likely to be the last to get back to anything close to normal operating levels any time soon.

While we welcome its extension, this is another missed opportunity to reform the EWSS into a German-style short-time work and training scheme and make it a permanent feature of our labour market. I note that recently, Sinn Féin has started to be supportive of the position originally enunciated by the Labour Party in 2019 in the context of Brexit and business unemployment supports that we believed were required then. Likewise, with the ever-growing challenge of climate change, a permanent wage-subsidy scheme with an appropriate retraining element will be a crucial tool for ensuring a just transition, ensuring that workers are upskilled and remain productive and our businesses remain competitive in uncertain times as our industrial and economic model changes.

Labour has consistently called for a training element to be incorporated into the wage subsidy scheme like other equivalent EU schemes. The Central Bank and OECD and other august think tanks are on the same page. I would like to hear from the Minister of State, and maybe on another occasion from the Minister for Finance, on the current thinking on the introduction of a training element, conditional on access to any reform of the wage subsidy scheme, that maybe under consideration.

Time and again, I have raised the obstacles faced by some mortgage applicants whose employers are accessing the EWSS, even though the applicants may not be paid through it themselves. I note the growing numbers of mortgage drawdowns for first time buyers but I think that masks the very real and worrying problems faced by some mortgage applicants who are now being put to the back of the queue because some lenders are now making calls not only on their personal circumstances but also on the viability of the firms where they work because the company has made an appearance on the Revenue’s wage subsidy scheme list.

I do not expect the Minister to make an intervention but I know the Minister of State would agree with me, and the Minister for Finance and other Ministers are on record as saying, that banks must treat people fairly during the pandemic. That is the position of the Central Bank too, but in my experience the evidence of this is scant, certainly in regard to the obstacles being placed in the way of those who are working with companies that may be dependent on the wage subsidy scheme, even though the owners are not being paid through the scheme.

I ask that the Minister examine, as a once-off gesture, scrapping the tax bills associated with the TWSS from last year and the PUP. This has been dismissed previously by some who should know better as something of a populist move. It is nothing of the kind. It makes economic sense and can act as a form of stimulus for towns across the country. It would cost less than what the Government allocated to the doomed stay-and-spend scheme. By and large, those who are on the TWSS and PUP are most unlikely to have been among the group who managed to save €12 billion in exceptional savings that we hope will be unleashed into the economy in the short to medium term. This is something worth revisiting. It would be a gesture of solidarity to a lot of younger workers in particular.

I will now turn to the section dealing with the CRSS. There is an anomaly for the likes of travel agents which are caught in a real trap. Travel agents in Louth and elsewhere have been advised by Revenue that under the reopening of non-essential retail, they no longer qualify for the CRSS. This is nonsensical given the particular set of circumstances in which they find themselves. Many have seen turnover plummet by up to 95% compared with 2019, and they are still not trading to any great degree. Even when forward bookings are made for 2022, the agents will not necessarily get any real income from the bookings until eight weeks before clients are due to travel. That is my understanding of how the industry operates. These businesses are in a desperate situation. Technically, they are open for business, but from what I can see, their work mostly involves advising existing customers on previous bookings, organising refunds and changing travel plans. Although they are open, they are not generating much income. They are servicing the needs of existing customers and not generating much by way of income or turnover. Could a discrete support be designed to assist them in what is a fairly unique situation?

I strongly welcome the move on the new business resumption support scheme, BRSS. Those businesses that do not pay rates and do not operate bricks and mortar premises have been neglected for too long. I made the case for a scheme such as this months ago and it is very welcome.

I will move now to the extension of the 9% VAT rate cut. I do not question the motivation because I know we all want to do everything we possibly can to help a bruised and battered sector that has been through the mill in the past 15 or 16 months. However, this is a very expensive subsidy for a sector that, in truth, has been hampered by a public health problem, not one of demand. Will the Minister of State provide a figure for the anticipated cost of this extension? Does he or do his Government colleagues have any concerns in respect of the deadweight effect experienced the last time such a cut was introduced after two years of operation of the previous scheme?

The Tánaiste keeps telling us he wants to see pay and workers' rights improved as a consequence of the pandemic. He says he wants to focus his priorities on the needs of private sector workers, many of whom are not members of trade unions, where trade unions may not be recognised and where the pay and conditions of workers need to be improved. I take that with a very liberal pinch of salt. He should insist on the hospitality sector engaging in the joint labour committee, JLC, provided for in law since 2012, as a condition of this support going forward in order to provide improved collectively bargained pay and conditions for hospitality workers. Until he does that, I take issue with his commitment to the interests of younger workers in the hospitality sector and elsewhere. He could make a decision on that overnight and encourage the actors in the sector to come together under the sectoral bargaining system that is robust and constitutionally sound. That would achieve the kinds of outcomes the Tánaiste says he wants.

In respect of the provision of the 10% stamp duty on bulk purchases of homes, I agree that it is a mistake not to include apartments. As I have said before, I am pleased that the exemption will also be provided to approved housing bodies, AHBs, that are active in the mortgage-to-rent space. There was consternation when they were not included in the initial instrument and I am pleased that they are now. I was in contact with both the Department of Finance and the Department of Housing, Local Government and Heritage in this regard in recent weeks. Mortgage-to-rent is a viable, good and sustainable solution for many who have distressed mortgages and the move to exclude mortgage-to-rent providers from the charge of 10% makes sense.

There was a strong focus this week at the national economic dialogue, NED, on the need to avoid a procyclical stance. I understand that. There is much talk about medium-term targets for the deficit and how permanent increases in spending might be funded in a sustainable way. We need to have a serious debate about the utility of the current EU fiscal rules framework. I have no doubt that this is a hot topic of discussion in EU capitals and within the Eurogroup over which the Minister for Finance currently presides. As we know, these rules were agreed at another time entirely and they need to be reviewed. It appears that the low interest rate environment will be maintained for some time. I am reassured by recent comments made by the head of the NTMA when, to paraphrase him, he said he is not overly worried about borrowing costs in the near and medium-term future. Mr. Philip Lane of the ECB also recently said "there is no risk of a new period of exceptionally high price growth" when addressing concerns expressed across Europe on the potential for inflation.

We are not certain when the EU fiscal rules will kick in again. Mr. Klaas Knot of the ECB said at the start of June that "fiscal flexibility is needed and has to be an integral feature of the framework". I agree with him, as do my Labour Party colleagues. In saying all of that, we will have to avoid an overly procyclical stance. Everybody accepts that. Growth looks set to be strong, but as the Central Bank stated in its review today, it will be uneven. Nobody is saying that we should spend too much of what we do not have on current spending, but now is the time to use the propitious environment we are in to borrow a bit more to crack housing, health, climate and childcare.

Before Covid, Ireland had the lowest level of general government expenditure of our peer countries. We can and should invest wisely and strategically to address the deficits we have. It is not just me saying that. IBEC, the American Chamber of Commerce and others are making this case too. Our debt levels are high, but so are everyone else's. There is much concern in Merrion Street about this level of debt and how and when we might address it. There is not much wrong with running a modest budget deficit for a little longer than some would like, if we decide to use borrowing, for example, to double investment in housing. The ESRI made a very cogent case for that only two or three weeks ago. Nobody in their right mind is saying that we should not concern ourselves with the deficit, and its size. However, it would be irresponsible if we did not concern ourselves with it. That said, balancing the budget should not be a policy end in itself. Nor should any of us be ideologically blinded or too dogmatic about this. We are in a different set of circumstances now than we were in 2008 and 2009. It is not a mortal sin to run a modest, medium-sized and serviceable budget deficit if it is being done for the right reasons and not to run up current spending in an irresponsible way.

The ESRI and the Parliamentary Budget Office, PBO, have done important work and the latter has shown how we can, to a large degree, grow our way out of our current indebtedness. That is provided responsible public investment decisions are taken. By all means, let us get the deficit down, but we should do it in a gradual and structured way that does not kill the patient or damage the recovery or our plans to invest sensibly in the future.

Before Covid-19 struck, Ireland had the lowest general government expenditure in the league of rich nations. Now is the time to get rid of the innate conservatism that has dominated Irish politics and economic thinking and take advantage of the circumstances, build homes and tackle the infrastructural bottlenecks that are holding our economy and progress back.

If we look at our demographics, the issues that will be facing us for years are clear. The population is getting older. There will be fewer workers to provide the tax euro we need. We need to use the current climate to do the things we may not be able to do in 20 years, and it will be too late then in any case.

I look forward to a debate on the summer economic statement, which will no doubt seek to address some of these very live issues. I hope the summer economic statement is published before the Dáil's summer recess because it is important, at this pivotal time for our economy, that this House has the opportunity to hold the Government to account and to provide our own input into the future direction of this economy. Another live debate is the question of how we, as a State, can fund the permanent increases in spending that Covid has ushered in, and this is a perspective that dominated the national economic dialogue this week. When we are discussing this Bill, Government supports and so on, we cannot be immune to that. We need to figure out how to resource the additional spending that most of us in this House agree needs to occur over the next few years.

The Irish Fiscal Advisory Council, IFAC, and others see, in terms of health spending and other big spending areas, additional expenditure of approximately €5 billion a year. That is in the base and it is not going away. Of course, the Government was rebuked by IFAC only a matter of weeks ago and its spending plans and economic forecasts were dismissed. IFAC does not see the plans as credible; I do not either and I do not think the public do either.

The Covid experience has seen a greater understanding of the role of the State and how it is ultimately the State that we expect to deliver for us. I hope we are all agreed that the State has delivered - with all its expertise and its mandate and authority, it has delivered in our hour of extreme need. This is very clear in the context of the supports provided, which will be renewed and refreshed when this Bill passes all stages. We should credit people with understanding that a better healthcare system has to be funded, that better welfare supports will mean additional asks of the PRSI system and that if councils are to provide the amenities, then we will need to pay for them through a modest charge on residential property. We cannot be Boston and Berlin at the same time. A tax cutting agenda and a narrowing of the tax base, bizarrely advocated by some who claim to be of the left, will not mean better public services and most people will not be conned into believing that that trick can be pulled off. We need a serious conversation about tax and services in this country. We need to decide on what we want and how the services we say we want ought to be resourced.

I commend the Minister for Finance and the Government more generally on the setting up of the Commission on Taxation and Welfare, which is an important innovation. The one criticism I have is that it has not been placed on a permanent statutory footing. Pretty average workers on pretty average pay in this country have to pay similar amounts of income tax and other taxes to peers in analogous countries. It is not actually a high tax country, despite the rhetoric of some who do not believe in taxes at all, it seems to me, but who then cannot tell us where we are going to get the money to run the public services on which we all depend. Most wealth, as we know, is held not in income but in assets. Taxes on wealth and a very serious top-down review of very costly and poorly targeted reliefs and exemptions can, I believe, have the potential to help us fund a new direction for the country as we emerge from this great disruption - this great public health crisis but also economic crisis - and, I hope, help us on our way to forging a new social contract for the Irish people.

See this speech in context