Michael D'Arcy (Fine Gael) | Oireachtas source

I wish the Minister of State, Deputy Fleming, the best of luck in his new role. It is a good role and one I occupied not long ago. I am a little surprised that my successor has already been replaced. In that regard, I congratulate the Minister of State's predecessor, the Minister of State, Deputy Jack Chambers, who has joined the Cabinet as Government Chief Whip.

This is a really good, strong and vibrant sector that has proven to be more resilient than many other sectors following Covid-19. I wish the Minister of State the best of luck in that regard.

I will discuss where we are with regard to the SURE and the EIB guarantee scheme, for which legislation is in place, and the quantum of funding provided by Europe. Some people seek to project Europe as a bunch of countries on the Continent but we are part of Europe. Ireland is a net contributor to the European Union and we are paying into this mechanism.

The European economy is broadly equivalent in value to the US economy. The most recent calculation, which was done in 2018 and included the UK, found that the EU economy had a value of $19 trillion. In 2019, the US economy had a value of approximately $20.5 trillion. As such, there is not a huge difference between the US and EU economies. To put the difference in the stimulus provided by the authorities in the US and the EU in context, the US Federal Reserve has the potential to put $6 trillion directly into the US economy in this calendar year. The body politic, whether at federal or state level, has already committed $3 trillion, which gives a total of $9 trillion. We are also told the US stimulus package will be increased, which could increase the stimulus provided by the Federal Reserve and US Administration to €10 trillion or €12 trillion. In contrast, the European Central Bank is talking about contributing €1.35 trillion, which is a fraction of what the equivalent authorities are doing on the other side of the ocean in an area of similar size measured by GDP.

The measures we are discussing are a beneficial start. I recognise that for some countries the SURE instrument is the first time we have had a Europe-wide instrument to allow member states to borrow on the markets backed by the European triple-A rating. This is a small but welcome start. We will need much more. All the analysis of the potential impact of the Covid-19 pandemic on the European Union and its individual member states, as well as the United States, shows that it has the capacity to be catastrophic. The purpose of this instrument is to deal with this. Having sat in the Minister of State's seat, it is my view that we need much more. I welcome the instrument as a start. I also welcome the election of the Minister for Finance, Deputy Donohoe, as president of the Eurogroup, the Council of Finance Ministers. He will hold a highly influential position for the next two and half years and, with luck, he will be hold it for a period thereafter also. Some jurisdictions refused point-blank to consider that this would happen. It has happened, however, and, as I said, we need a great deal more now and in the future. The US has committed $9 trillion to its stimulus whereas the EU has committed a sum, in trillions, that is in the single digits. Moreover, the US stimulus will move into double digits very quickly.

This is not yet the Hamiltonian moment that some people have described but that remains to be seen. The success of the Minister in progressing the capital markets union in the eurozone will determine whether Europe has a true Hamiltonian moment.

I very much welcome that the SURE instrument could be made available to fund the temporary wage subsidy scheme. As I stated last week, I would like to see the "T" removed from the TWSS. It cannot be temporary or apply for weeks; it must be extended.I know many people are pushing strongly for a reduction in VAT, as mentioned by Senator Casey, but a reduction in VAT does not matter if the business has no prospect of survival. However, direct cash into a business via the temporary wage scheme is, in my view, the determining factor in whether a business survives this period or not. How long it runs for, and what is the period in which we can continue to pay it, remains to be seen. None of us knows that and the pandemic, in particular a potential second wave, will determine it. For now, we need to remove the uncertainty and we need to remove the "T" – the temporary – and this must become a wage subsidy for employers. The subsidy should also go to the employer, who should get something back out of this as well.

When we look back, mid-March seems an eternity ago. The European response to a country in deep crisis was poor. The Italians were left to their own devices and there was not much solidarity early in the conversation, although it did move very quickly. Whether we are going to be successful will revolve around one thing, that is, getting people back into work. Nothing else will flow without having people back in work, contributing to corporate tax from businesses and income tax from individuals. That will be the test of whether we are successful or not. The amounts of money involved are large. The SURE programme is capped at €484 million and there are European investment funds of €167 million. These are very large amounts of money but they are what is required to be successful.

I have a serious concern that if this is prolonged longer than we anticipate, some countries may step back. There can be no stepping back from this, and that includes us. We are net contributors, so when people say that Europe should pay, that means we should pay more for other European countries which are net recipients of funding. That is something we should do because, unlike what happened at the start of the crisis for our Italian colleagues, European solidarity should be total. We will all come out of this together, not just Europe, the US or other jurisdictions. We will all come out of it together or we will fail. We have seen mass failure happen in times like the depression of the 1930s following the collapse in Wall Street in 1929. That is a danger we cannot ignore. This pandemic health crisis can become a depression. That risk was successfully staved off in 2008 in what became the great recession, not depression, but this could create a depression.