Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I will reply to the points made by different Senators. Senator Kyne inquired about the taxation of the pandemic recognition payment and whether tax can be alleviated on payments that were made in the past. The pandemic recognition payment should not have had taxed paid on it. When the Government made the announcement on it, we implemented it on an administrative basis through the Revenue Commissioners. This legislation gives legal effect to that. Anyone who has contacted the Senator about that €1,000 payment should not have paid tax on it.

The Senator also spoke about the extension of the 9% VAT rate, which was referred to by a number of other Senators as well. The rationale for the extension we have made today is that we recognise we are already in a position of rising prices and to increase VAT on top of that later in the year could be a step too far for many businesses, particularly when we are in the final stage of the employment wage subsidy scheme. There are many businesses that were receiving between €200 and €350 in respect of each employee on 1 December. By 1 June, it will be zero. While that is an appropriate and much-needed exit from this scheme, we also recognise that for many employers it is a very significant economic effect. I hope that the extension of the VAT rate gives a bit more certainty to businesses, and hospitality businesses in particular, at a time when they are exiting from a significant scheme that kept them going when we asked them to close.

Senator Keogan referred to the digital euro and asked about the risk of recession. It is worth acknowledging that, from a European point of view, even in the most severe economic scenarios published by the ECB, the economy of the euro area, that is, all those countries that share the euro, will still grow by above 2% this year and next year. The European Commission will be revising its forecasts regarding growth for this year and next year in a few weeks. Even with the significant changes happening in monetary policy at the moment, we will still be in a situation where the Irish and European economies are growing. They will just be growing at a very different pace to what we thought possible before this awful war in Ukraine added to the inflationary and supply chain pressures that we were already under.

On the digital euro, we are in the very early days of that project. Privacy has been recognised as a key concern by the ECB. In the public survey it conducted regarding the future of a digital euro, privacy was the number one issue participants raised. That is well understood by the ECB as it looks to the future of that project. An area on which the Senator and I would probably differ is that I believe we must be clear, as we develop a digital euro, that it is not about trying to liberate currencies from the State. That is certainly not what I would view it as being about. I am very sceptical about some of the wilder claims that have been made about the future of crypto and digital assets. The ability of central banks and governments to be the sole issuers of currency is something we must protect and is an essential part of the stability economies need in order to grow.

Senator Casey also touched on the 9% VAT rate and made a point about the cost-of-living pressure that many businesses and households are facing at the moment. As he said, the Government has done much already to try to help those who are coping with these new pressures. Everybody will always want us to do more but it is clear from the era of Covid that if we had done all we were being asked to do at that point, we would not be in the position we are now in, where the national finances are allowing us to do the additional things we are doing with the cost of living. We have to try to get the balance right between the demands we are facing today and the need for our public finances to be safe tomorrow. Every measure taken is criticised by some for not being enough and by others for being too much. You have to try to get the balance right and that is what we are here to do.

Senator Gavan reiterated some of the criticisms of these measures that have been articulated by his party in the Dáil. He referred to some of the things we are doing as punishing families. Far from it. We are trying to help families and businesses at a time when they are facing new pressures in the aftermath of a pandemic. There is a general understanding that the Government can help and is trying to help but the only money the Government has is the money we collect in taxes or money we borrow. There is no pot of money that I am not using because I am not compassionate enough to help people at a time of need. The money we have is either money we must repay or money we collect in taxes. We are doing as much as we believe is affordable to help those who are feeling the effect of the rise in the price of energy.

Senator Sherlock referred to the Covid recognition payment. I understand the Department of Health will be issuing a guideline and a circular regarding who will and will not receive the payment. This is imminent and will happen very soon. The majority of people who can receive the payment have already received it. We take a different view on the ability of companies to pay dividends while also being on the EWSS. When I implemented this scheme, the sole criteria was turnover and whether a company was tax-compliant. My view was that if we brought in an additional measure regarding the level of profit companies could or could not make, it would have undermined the ability of this scheme to protect employment and undermined the ability of employers to be viable as they exit from the pandemic. It is the case, as the Senator said, that some companies were profitable during the pandemic, but those profits would have been at far lower levels than in pre-Covid times. Surely profitability on the part of employers is a sign that they can be viable in the future, can retain the people they have in employment at the moment and will even be able to hire and employ more people in the time ahead.The number of companies which were profitable, let alone able to pay a dividend, is a small number relative to the total number of employers the employment wage subsidy scheme helped and protected.

Senator Garvey made the point about the pandemic recognition payment. I have acknowledged that and have tried to deal with some issues about it.

The rate of 4.7% is an extraordinary level of unemployment given all that our economy has gone through. I remember being in this House at times when we were making changes to the employment wage subsidy scheme with 600,000 people on the EWSS and hundreds of thousands of people on the pandemic unemployment payment. We have really come some way. However, as always, we need to look to the future and see how we can do better and guide our economy and our society to a better place.

Part of that will be the point that Senator Buttimer touched upon regarding the future of work. He already touched on the enormous change under way regarding work and workplaces in our economy. There are tremendous opportunities for the Irish economy overall, particularly for the distribution of employment. I am really encouraged when I meet colleagues who represent constituencies containing a significant share of towns. They point to the growth in confidence and the increase in employment happening there as we see some work that was happening, for example, in Dublin where we already had very high economic growth and very high employment growth, now being allocated throughout our country. That is an enormously positive development for our country overall. With the national broadband plan and the work that the Minister, Deputy Humphreys, is doing, we need to continue to support that trend which is full of opportunities.

We also need to be conscious of how we can have younger people who are enjoying employment for the first time participate in the environment and learn the skills that are at the heart of an economy which we want to be productive. As the Senator said, we are not just a people economy but also a skills economy. We rely on workplaces to provide the learning and development that is needed to allow those skills to continue to develop in the future.

A number of Senators said they hope this is the last Bill we ever need to debate that contains the word "Covid". Nobody hopes that more fervently than I do given the amount of emergency Covid legislation we had to introduce. Above all, it is not about weary legislators dealing with numerous pieces of legislation related to Covid, instead it is about the hope that people are never again forced to shut their businesses and make people unemployed due to this pandemic and that from a health point of view, we can put the darkest days of this pandemic behind us. It may not have gone away, as a number of Senators have said, but I think we can have confidence about our ability to treat this as a serious and highly infectious disease as opposed to pandemic that closed down our country for so long.

I again thank the Senators for the points they have made. I look forward to being back here next week to deal with Committee and Report Stages.