Róisín Shortall (Dublin North West, Social Democrats) | Oireachtas source

I welcome the opportunity to speak on the Bill and to outline some concerns regarding business supports in the short term but probably more importantly in the medium term. Before that I would like to take moment to reflect on the past two years and the role of the State during this period. While we in the Social Democrats might have done some things differently during the pandemic, we all accept that major efforts were made to scale up radically the role of the State, efforts which many possibly on the Government benches could not have imagined themselves undertaking.

While this is not necessarily the view of the Minister present, I know some of his colleagues would be very much in favour of a small state. We had been moving in that direction somewhat with the provision of particular public services. However, that changed very radically and we only survived the pandemic by the State becoming very heavily involved in many aspects of our country and economy. It is a matter of some regret that we seem to be unwinding that approach to a certain extent, and there is a strong case for us to learn from the experience of the past two years of the critical importance of the State taking responsibility for the provision of particular services - obviously housing, healthcare and childcare.

The experience of the past two years also exposed very substantial weaknesses in how we provide our key public services, certainly in the housing area where the State had to move to introduce a ban on rent increases, how publicly provided housing had to be made available very quickly for people who were especially vulnerable, and where the State had to move to create a single tier-health service. That worked very well and we would not have survived if we had not brought in capacity from the private sector. It highlighted many weaknesses in how we provide services and it is important we learn lessons from that. It took a crisis to teach small government proponents the critical role of the State in society and in our economy. People across the board would recognise that and certainly the business community recognises it now.

I was at that recent IBEC seminar where the Minister was a guest speaker. This goes back a few weeks before the developments in Ukraine. I was a bit concerned that people were talking about the top-line figures. While the top-line figures for the performance of the economy are very strong, and all credit for that, when we look below those and see what is actually happening in our society, it does not paint a such a good picture. The prime issue is the impact of the unaffordability of housing on so many people. In addition, many other people are denied timely access to healthcare. Childcare is very expensive and takes up so much of family budgets. They are the real world matters people are dealing with in their day-to-day lives and it is regrettable there was not much recognition of that. While credit is due regarding the top-line figures, we also need to consider what is happening with the so-called lived experiences of many people. In the key areas of public provision, the picture is certainly not so rosy.

I hope the Government does not have a short memory regarding the role of the State. Instead of unwinding the role of the State, it should strengthen it, particularly in respect of public provision of services. I think that is now being recognised in the childcare area where there have been important developments in the budget. Although we still have a very long way to go, the principles are recognised. The principles of Sláintecare are also recognised and set out in the all-party plan, but we have not yet fully committed to implementing that. It would appear those lessons have not been learned yet on the housing front.

The employment wage subsidy scheme and the Covid restrictions support scheme were examples of major of Government interventions that would have been unthinkable not so long ago. They proved to be invaluable supports for businesses throughout the pandemic. We now look forward to the weaning-off phase, which by its nature must be slow. Those supports kept many businesses and workers afloat by critically keeping staff connected to their place of employment and their employers during an exceptionally difficult period. All of those principles were very good and I recognise what has been done. Credit is due to the Minister and others who have been involved in providing those supports.

However, the difficulties facing businesses, as we all know, have not gone away. They have just receded somewhat in many cases. We are seeing a rapid and welcome bounce-back, but the medium and long-term future of a certain cohort of businesses could still be a doubt. While the disruptive force of Covid has, thankfully, waned considerably, its effects are still deeply felt by many small and medium-sized businesses in particular, especially those in sectors that were forced to close completely for periods of time or seriously curtailed their operations in some cases on an ongoing basis. Therefore, these changes to the EWSS and the CRSS are very welcome, especially for businesses that missed out on the all-important Christmas trade or were only established during the pandemic. However, more targeted supports will, of course, be needed. I think there is a recognition of that, especially for businesses that bore the brunt of the rolling lockdowns.

While the Government has established schemes for the entertainment and tourism industries, ongoing engagement with these sectors is needed to ensure their survival to the greatest extent possible. I believe there is recognition of that. The relatively high number of jobs lost in these sectors during the pandemic was clear evidence, if any were needed, of the size and importance of our tourism and hospitality industry.

Those small and medium-sized businesses, which is what they are in the main, may continue to need Government supports to remain viable in the medium term. Without these businesses, the very heartbeat of so many of our villages, towns and cities would be lost. Such losses would further compound the dereliction found across a large number of towns and villages since the recession.

Notwithstanding the importance of these schemes, it should be noted that there have been abuses of business supports throughout the pandemic. We have to recognise that, and those abuses must be dealt with. While we all accept that the vast majority of companies that availed of Covid-19 wage supports did so absolutely legitimately, it has been widely reported that some companies exploited them and that there was an element of gaming the system. I remember the Tánaiste talking about this in the early days of the pandemic. I think he was Taoiseach at the time. He spoke about the importance of being aware of the potential for that and having systems in place to deal with it. The exploitation took the form of businesses paying out dividends to shareholders while claiming wage subsidies. That is abhorrent to many people. Obviously, it has been an exceptionally difficult time for so many of our people, and the idea of some of our big and successful companies gaming the system, as I said, leaves a very unpleasant taste in the mouth and should not have been allowed. One of the most egregious examples of abuse of taxpayers' money, and it has been reported as such, was by O'Flaherty Holdings, which distributes Mercedes-Benz products in Ireland. That company claimed almost €1.8 million in wage subsidies in 2020 before then paying a similar amount in a dividend to an offshore company in the Isle of Man. Lest we forget, a huge amount of money, over €7 billion, was paid out to private companies, so the importance of robust checks and balances cannot be overstated. That profitable companies effectively hoarded large sums of taxpayers' money is absolutely reprehensible. Conditionalities to ensure that dividends could not be paid out from companies receiving state supports were applied in the UK. There is no valid reason, as far as I can see, why that could not have been replicated here, aside from some kind of unwillingness to upset that particular community. While I appreciate that these schemes were set up in a hurry and in very much crisis circumstances and, on balance, have been hugely successful, their design must be evaluated and an audit of firms that paid out dividends should be carried out. Although the Minister has said he is keeping the schemes under review, I wonder what exactly that means and why the Minister refused to ban wage-supported companies from paying dividends to shareholders. I just cannot understand the rationale for doing that. Some members of this Government have previously been quick to highlight social welfare fraud or misuse by individuals, but they are not so quick to do so when it is large private businesses involved in fraud. It seems sometimes that ideology clouds their reading of the numbers.

I wish to talk for a few minutes about the PUP. I recognise that it is a somewhat separate issue but it is on a related note. I wish to raise some concerns about the planned review of PUP claimants. My colleague, Deputy Catherine Murphy, is pursuing this issue at the Committee of Public Accounts, but I would like to flag these concerns with the Minister now. While I understand that work on this is only commencing, many questions have arisen. For instance, will this retrospective review lead to sanctions or penalties where non-compliance is identified? Will there be a payment or a tax credit adjustment? We just do not know how the Government intends to pursue this. If something wrong has occurred, we should ensure that people make amends, but how exactly is it proposed to do so? These are quite important questions, and a degree of understanding will be needed in many cases - for instance, where a worker did not return to work as his or her employer was not following public health advice or enforcing public health measures. Regrettably, there were quite a few instances of those problems. Also, I think many of us had raised with us instances in which a worker or family member was in what was regarded as a very high-risk category and his or her workplace was not a safe environment. I am sure the Minister, like the rest of us, had such cases brought to his attention. There were people who had very vulnerable people at home or had very serious underlying conditions themselves, which put them at a very high risk, but they were expected to go into work. That could have been a life-threatening situation to put themselves in. They did not go into work and claimed the PUP. It is therefore important that there is a recognition of the difficulties involved for many people and that a sympathetic view is taken in pursuing this issue.

Finally on this matter, there are legitimate concerns about the review of self-employed PUP claimants. I understand that Revenue data such as self-employment PRSI returns and business analytics tools will be used in this exercise. It would be very important to establish whether there is a legal basis for that data exchange first. We had those difficulties in the past, with question marks around the public services card. Before any of those data are shared, the exchange has to be in keeping with data protection law.

Those are just some of the issues that must be addressed. I ask the Government not to turn this review into any kind of scapegoating exercise against all PUP recipients, not least when the same level of scrutiny is clearly not applied to powerful private companies.

Another scheme that kept many businesses afloat during the pandemic was debt warehousing. According to Revenue figures, 105,000 businesses availed of that scheme, while €3.2 billion worth of tax owed has been warehoused. The decision to extend the period during which tax liabilities can be warehoused will be a welcome relief to businesses that have been most impacted by the pandemic. A lot of debt has built up, however, and for many businesses, particularly small and medium-sized businesses, that looming horizon is a cause for much concern.

The Department of Finance's annual taxation report, published last August, depicted a positive outlook, with income tax revenues declining by just 1% to €22.7 billion. The fact that some businesses did exceptionally well during the pandemic must be borne in mind. I am talking about IT businesses, pharma businesses and so on. It was a very profitable period for some, and that skews the figures somewhat. However, that does not accurately reflect the picture on the ground for so many businesses that are concerned about their futures. As the report identifies, tax revenue held up strongly because the biggest disruption to the labour market was concentrated in sectors that are relatively income tax poor. These include the hospitality industry and other service sectors, which were especially devastated by the lockdowns. This in itself speaks volumes about the extent of the low pay issue in our economy, which brings its own problems and needs to be addressed in its own right. When we look past the headline figures, we can see clearly that small and medium-sized businesses in these sectors are the most vulnerable. While many are experiencing a bounceback, with 57% of SMEs having reported profit during 2021, which is extremely welcome, compared with just 31% in 2020, many fear that this could be just short-term. We must not forget that a large number of businesses are still burdened by warehoused debt. When it comes time to pay that back, it could have a major impact on profitability and even viability.

This is where the medium-term problems arise, especially for those who will require phased payment arrangements. Flexibility and understanding for the individual circumstances of small and medium-sized businesses will be of the utmost importance. We cannot allow a situation where local businesses which would be viable in normal circumstances were it not for the inability to repay warehoused tax are forced to shut their doors. These businesses are in this position because they followed public health advice. For hospitality businesses, in particular, the loss of the Christmas trade had a major impact on turnover. Now that they are recovering, they should not be punished for past restrictions on their business. We need to be patient.

The legislation also deals with the Covid-19 recognition payment for front-line workers. Since this payment was announced in January, it has been mired in controversy and confusion. The Government mismanaged the announcement by drip-feeding information from the start. Almost two months later, it is still not entirely clear who is entitled to get the payment. The Government has often been accused of kite-flying and it would be difficult to find a clearer example than this recognition payment. There has been a vacuum of information since January, leading to somewhat of a bidding war. Why is that? It is because the Government's definition of a front-line worker is too narrow. For example, will section 39 workers be included? They are front-line workers who donned PPE every day and were central to keeping health services going. They experience a lesser status than their HSE counterparts and are paid at a lower rate, even though, in many cases, they do exactly the same work. Ultimately, I believe front-line workers would prefer better pay and conditions and reform in the health and social care sector. A recent EU report was critical of those health and social care services.

I hope the Government will bear in mind some of those points as this legislation makes its way through the Houses.

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