Dáil debates

Tuesday, 14 July 2020

Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions

Covid-19 Pandemic Supports

4:50 pm

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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16. To ask the Minister for Jobs, Enterprise and Innovation the modelling that has been undertaken to quantify the impact of Covid-19 on the sectors he plans to provide assistance to in the context of the proposed July stimulus; the persons that conducted the modelling and analysis; if it will be factored into the stimulus measures; if he has consulted with his Ministerial colleagues in the Departments of Finance and Public Expenditure and Reform in relation to the stimulus; and if aspects will require an early budget. [16040/20]

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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This question relates to the modelling or analysis that has been done to date. Who has conducted the analysis in advance of the stimulus package, including the impact it will have had on various sectors such as jobs losses and the viability of sectors and companies? Was the analysis done in-house across the various Departments or who carried it out?

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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Extensive modelling and analysis were undertaken for the three Economic Considerations for Reinstating Economic Activity papers developed by my Department at phases 1, 2 and 3 of the Roadmap for Reopening Society and Business. These three papers, which are available on my Department's website gov.ie, were developed in conjunction with the Department of Finance and the Department of Public Expenditure and Reform and provide an assessment of the economic impact of the Covid-19 pandemic. Some other Departments also provided sectoral input based on their analyses. The papers also drew on international analysis from organisations such as the OECD, the ECB, Copenhagen Economics and Oxford University.

The economic impact of Covid-19 has not been uniform across all sectors of the economy. Based on the analysis from the Department of Finance's stability programme update and a more detailed sectoral and labour market analysis provided by the Department of Public Expenditure and Reform, the most heavily-impacted sectors are accommodation, food, construction, administration and support services, wholesale and retail and other personal services. Evidence for this includes the number of employees availing of the temporary wage subsidy and the pandemic unemployment payment. Sectors like finance, service activities and information and communications technology are the least affected. These sectors rely much less on direct contact with consumers and service providers and much activity can be completed from home.

There has also been less of a direct impact on the manufacturing sector. Many manufacturing industries were considered as essential during the restrictions and continued operations, albeit adapting to ensure safe workplaces with social distancing. The fall in output will be limited given that pharmaceutical and other medical devices sectors account for the majority of output. Indeed, activity in the pharmaceutical sector largely continued throughout the restrictions. However, production in the indigenous sector is expected to be adversely affected, reflected in an annual decline in manufacturing production in the traditional sector in February and March this year.

There are some welcome signs of improvement in business activity and the economy. However, sectors that employ a lot of people, such as tourism, hospitality, arts, entertainment and other services that rely on social interaction, remain in serious difficulty and their recovery prospects are uncertain.

I am out of practice doing this. I will get shorter replies next time.

Additional information not given on the floor of the House.

The July stimulus package, to be announced shortly, will be of scale and speed. In considering the analyses, I see five areas which we should focus on in helping our enterprises in the future: income support, direct grants for businesses, cheaper finance, new opportunities for future jobs and support for the hardest hit sectors.

5:00 pm

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Obviously there will be a number of opportunities to have a targeted approach to stimulating the economy and ensuring the maximum number of people continue to be employed. It is essential this analysis is done, and continues to be done, in order that there is a targeted approach. Is the approach of the stimulation that it will be jobs rich? It is one thing to make sure businesses recover but it is another that they recover and that good quality employment is provided where public money is invested in that recovery. What are the principles behind the analysis that was done? It is very welcome that the analysis was done. It is something that was called for at the Covid committee very recently by some of the employer organisations. They were quite critical that it was not done until very late in the day after the last crash. They made a point of saying it needed to be done to have a targeted approach in the recovery.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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I thank the Deputy. The truth is, as the Deputy will acknowledge, that any analysis and projection as to how Covid will impact on our economy is a good educated guess. Nobody really knows how long this pandemic will go on for, how many waves there may or may not be or what they will look like. It is everyone's best guess as to what the impact will be but it is better to have some analysis and projection than none. We have to be honest with people that the analysis could change significantly over the coming months, depending on what happens with the virus and whether a vaccine is developed, and all of the things that everyone in the House appreciates already.

To answer the Deputy's question, if we have anything to do with the recovery, it will be jobs rich and jobs led. The priority is to get people back to their old jobs where possible. We acknowledge this may not be possible in all cases because some firms may fail and some sectors may not recover for a very long time. We need to make sure alternative employment is created in other sectors, such as climate action, green tech and green energy. It will also be in construction building some of the many houses we desperately need, and in areas such as care, where we need to increase the number of staff in that part of the public service and other parts of the public service.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Were consultancy firms brought in to do work? Was this done in-house, relying on some of the data already available? I completely acknowledge that there is a degree of the crystal ball associated with this, in the absence of a vaccine being available and some degree of certainty about when the crisis is likely to abate and we get back to the new normality post Covid.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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I might be wrong but I think it was all done in-house and drew on existing papers and other papers from the European Central Bank, Copenhagen Economics and Oxford University. We had the report from Copenhagen Economics on Brexit and the Oxford work on Covid. I think it was done in-house with the assistance of external reports but not with external consultancy. If I am wrong about that I will come back to the Deputy and let her know.