Monday, 12 July 2021
Finance (Covid-19 and Miscellaneous Provisions) Bill 2021: Second Stage
I am pleased to have the opportunity to introduce the Finance (Covid-19 and Miscellaneous Provisions) Bill 2021 to the House. This legislation will give effect to some of the decisions announced on 1 June as part of the Government's economic plan, which sets out a new phase of supports for this next stage of recovery as businesses reopen. This Bill is relatively short but it provides certainty to businesses as public health restrictions are eased and allows them to plan ahead as they reopen and resume normal activity. I take the opportunity to acknowledge the efforts of the Revenue Commissioners and the staff who operated the various schemes, including the employment wage subsidy scheme, EWSS, and the Covid restrictions support scheme, CRSS, that provided much needed support to businesses in a very responsive way.
The Bill is relatively short and contains 16 sections. In the time available to me, I will run through some of the detail of the main sections of the Bill. In brief, the first 12 sections deal with the various business supports and the later sections deal with amendments to the Stamp Duties Consolidation Act 1999 and the financial resolution passed by the Dáil on 19 May.
Section 2 provides for the extension of the employment wage subsidy scheme to 31 December 2021 and the retention of the current enhanced subsidy rates until 30 September 2021. The EWSS is a central pillar of our response to this pandemic, supporting businesses, encouraging employment and helping to maintain the link between employers and employees. As of 8 July 2021, direct subsidy payments of over €3.8 billion have been made with an additional €627 million given in PRSI relief to over 50,500 employers in respect of over 609,700 workers.
Sections 3 and 4 make a number of changes in respect of the Covid restrictions support scheme, including the extension of the scheme to September 2021. In addition, section 4 provides for enhanced restart week payments under the scheme for businesses reopening after a period of restrictions. The section also provides for a double week payment of the CRSS from the week commencing 5 July for a period of two weeks, subject to the statutory cap of €5,000 per week. I remain convinced that this scheme has achieved its objective of providing targeted support to businesses that were forced to close or restrict access to their premises on foot of public health restrictions. As of 8 July, there are 22,800 businesses with 26,800 premises registered with Revenue for the CRSS. Some €647 million has been claimed by businesses under the scheme, with almost 12,000 premises claiming restart payments as the economy has begun to reopen.
Section 5 provides for the business resumption support scheme, BRSS, which is a new support for businesses that were significantly impacted throughout the Covid-19 pandemic. To qualify under the scheme, a business must be able to demonstrate that its turnover during the defined specified period of 1 September 2020 to 31 August 2021 will be no more than 25% of its turnover in 2019. Qualifying businesses will be able to make a claim for a payment calculated on the basis of three weeks at 10% of the first €20,000 weekly turnover, and 5% thereafter, based on average turnover for 2019-----
I hope somebody will be able to get them. I knew I brought them over. I am sorry about that. I appreciate the Senator's intervention. It is important that people have a copy of the script. Qualifying businesses will be able to make a claim for a payment calculated on the basis of three weeks at 10% of the first €20,000 weekly turnover, and 5% thereafter, based on average turnover for 2019, and will be subject to a maximum payment of €15,000.
This new scheme is designed to support some of the businesses worst affected by the pandemic, especially those that continue to be significantly impacted even after the easing of public health restrictions. Anchors necessarily included in the CRSS, such as the requirement to have a fixed business premises and that access to this premises was restricted or prohibited, are not included in the BRSS. That is very important issue that many raised with regard to businesses that were impacted but which did not have a business premises which was restricted during the course of the pandemic. That will help many wholesalers and so on who do not have a premises people come to. Therefore, businesses such as taxi drivers and musicians who meet the eligibility criteria will receive this payment. In addition, the scheme will be open to certain sectors which did not qualify for CRSS because of specific tax treatments, such as charities and sporting bodies. It is intended that the registration for the BRSS will open in September.
Section 6 provides that the reduced rate of VAT of 9% applying on a temporary basis to hospitality and tourism related goods and services will be extended until 31 August 2022. That represents quite an extension at this stage. The next sections of the Bill, sections 7 to 12, deal with tax debt warehousing. The period where liabilities arising can be warehoused will be extended to the end of 2021 for all eligible taxpayers, with an interest free period during 2022. Overpayments of the EWSS will also be included in the scheme. Debt warehousing has provided more than 86,000 individual businesses with vital liquidity support. At the end of June, some €2.4 billion of tax debt had been warehoused. The main components were VAT at €1.3 billion and employer PAYE at €1.1 billion.
I will now talk about the 10% rate of stamp duty charge which was introduced through a financial resolution on 19 May 2021. The Stamp Duties Consolidation Act 1999 was amended by the insertion of a new section 31E titled "Stamp duty on certain acquisitions of residential property".The purpose of this new stamp duty is to provide a significant disincentive to the practice of multiple purchases by institutional investors of large parts or, indeed, of whole housing estates before they reach the market, thus denying first-time buyers the opportunity to purchase a home. It does this by imposing a 10% charge where ten or more liable residential units are required in any 12-month period. However, apartments are exempt from this charge, as are houses purchased by local authorities and approved housing bodies. There is a requirement to put this resolution on a permanent statutory footing within four months of commencement. I am doing this through section 13 of this Bill. Senators should note that aside from a number of technical amendments, this section reflects what is contained in the financial resolution.
In addition to the above, I bring Senators’ attention to two significant changes being made in relation to the stamp duty exemption in the Bill. First, section 14 provides for an exemption from the 10% stamp duty rate for private sector participants in the mortgage-to-rent scheme. That scheme provides for an approved housing body or, since 2018, a private company, to acquire ownership of a property with an unsustainable private mortgage from a lender if it enables the householder to remain in their home as a social housing tenant. While approved housing bodies were exempt from the 10% rate under the terms of the financial resolution, the private company aspect was not. Section 14 corrects that.
Second, section 15 was introduced to this Bill by way of a Dáil Committee Stage amendment. It provides that where a residential unit that is subject to the new rate of stamp duty is acquired and then within 24 months is leased to a local authority for social housing purposes, the stamp duty paid over and above the pre-existing rates that apply to acquisitions of residential property will be refunded. This provision, contained in both sections 14 and 15, was introduced on the advice of the Minister for Housing, Local Government and Heritage, Deputy Darragh O’Brien.
In conclusion, the Government has kept its promise that there will be no cliff-edge supports to businesses. It is extending and enhancing the supports to businesses as they reopen. The new business resumption support scheme will provide additional support to businesses that have been worst affected by the restrictions imposed due to the pandemic. The EWSS and CRSS will be extended. The tax debt warehousing scheme will be extended to the end of this year, with no interest charged throughout 2022. In addition, the Bill places the financial resolution agreed in the Dáil on 19 May 2021 on a permanent legislative footing and addresses certain other aspects of stamp duty from multiple purchases of houses. I commend this Bill to the House.
I welcome the Minister of State, Deputy Seán Fleming, to the House to talk about this important Bill. First, we have seen an unprecedented level of support by the State for businesses since March 2020 and throughout the Covid-19 pandemic. It has not just been for businesses, of course, but also for employees, for the protection of jobs and for the links between employees and employers. This has been important to sustain businesses throughout the pandemic.
Unfortunately, when this started, nobody realised the length of time that it would involve. Thankfully, changes were made within the European Union fiscal rules to allow for sufficient borrowing to support businesses. Those supports have been directed to keep jobs and businesses afloat, and to provide the various range of supports including the pandemic unemployment payment. I welcome this Bill, which allows for the continuation of various supports, including the EWSS, the CRSS and new schemes, such as the new business resumption support scheme. All of these schemes constitute an unprecedented level of support.
The debt warehousing initiative is important for business and corporations to provide financial security, as well as certainty for when they have to pay debts. It provides that certainty for businesses. A fixed date will provide clarity and certainty to businesses in relation to their tax liabilities for the remainder of 2021. In 2019, the VAT rate was reduced to 9% for a number of years for the hospitality sector to try to kick-start that sector in difficult economic times and to create jobs in tourism and in all areas of the hospitality and tourism sector. That rate was increased a number of years ago and reduced again as a response to the pandemic and its threat to jobs within the hospitality and tourism sector. They have gone through a difficult period over the last 14 to 15 months. This measure provides certainty out to 31 August 2022.
The stamp duty issue hit the headlines a number of weeks ago, particularly in relation to an estate in Kildare. The Government acted quickly to respond to that by making changes to the rate of stamp duty applying to certain acquisitions of ten or more residential properties. It was important to provide certainty on this because it was a great concern to many would-be first-time buyers to see properties and whole estates being snapped up by institutional investors. Therefore, I welcome the change that was made at that time and has now been put into legislation. There has been some confusion in the last couple of weeks about the coming change with regard to the 2,400 homes that are being leased back to the State. There will still be calls for clarity to ensure it relates to those with pre-existing arrangements that were made prior to the changes being implemented on 19 May 2021. This is an important area because we need homes. We certainly do not need disincentives to the provision of homes, whether they are social homes, affordable homes or anything like that. At the same time, we need to ensure this is not a sweetheart deal but is there to ensure those homes are being provided for genuine people who are on the housing list and are living in this country. I know that the Minister of State has given some clarity on that. I am sure it could be debated further on Committee Stage or Report Stage. I thank the Minister of State for being here today to discuss this important legislation.
The Minister of State is very welcome to the House. I spoke before on the Finance (Covid-19 and Miscellaneous Provisions) Bill 2021. I welcome all the things the Minister of State has done to date, but I have some concerns.
KPMG has issued an informative report on the Finance (Covid-19 and Miscellaneous Provisions) Bill 2021, calling it “an important step in providing clarity and support for businesses as they reopen and resume normal trading following Covid-19 restrictions”. I agree that businesses require clarity. I agree that businesses require further supports. I agree that this is what the Bill aims to achieve. However, I do not agree that we are working towards reopening and resuming trade for business in this country. I do not agree that more money equates to more clarity or support. I do not agree with all aspects of this Bill. For example, I do not agree with the fact that the Government refuses to rectify and continues to cover up the economic mess that Covid-19 restrictions have caused.
It is necessary to extend supports because we continue to leave enterprise in this country in complete darkness. Over the last 18 months, businesses in the service industry have not known when they can open, or how long they can remain open for. Extending supports will keep them floating in the uncertainty this Government has created. However, extending supports is not a fix. Support is not indefinite. Financial supports use taxpayers’ money to mask the problems that the Government will not face.
We are facing problems. Per head of population, Ireland is set to have the highest debt in Europe this year. According to officials in the Department of Finance, it will be one of the highest per capitadebts in the world. This debt is not forecast to fall, but to rise. We are €20,000 above the EU average. We will be even more above this average unless we take action.What does action mean? Action does not mean more financial supports. Action does not mean waiting to see. Action means opening up. Action means getting business back. Action means changing course because the one we are on is clearly not working. If the Government refuses to take action, this Bill is necessary. We cannot let businesses suffer at the hands of Government-imposed restrictions on their trade.
There is a provision in this Bill that cannot be supported in or out of lockdown, namely, section 15. Section 15 allows vulture funds to profit from their bulk-purchasing of housing in this country. For how long have we spent telling the Government that this is wrong? For how long have we discussed vulture funds and cuckoo funds? For how long are we going to have to talk about them still? The Minister for Finance placed a 10% stamp duty on bulk purchases a short while ago. He claimed this would be a "deterrent" to developers who buy up all residential property in the country. Now, going back on its assurances, the Government has devised section 15. Section 15 states that if the houses that vulture funds snap up are leased back to the local authority, the stamp duty is dropped. The vulture funds profit. The housing crisis continues.
We adopt short-term solutions in this country. I have said before that this Bill masks one problem, the troubling economic situation we are ignoring, and it creates another, an opportunity for vulture funds to profit. This is not a viable way to legislate. Businesses need our support, but support involves more than money. Support is action, and that support does not involve giving vulture funds a free pass.
Little did we know in March 2020 that we would still be dealing with a pandemic in July 2021. It must be acknowledged that, without the support of the Government, most businesses would have collapsed. We must also acknowledge how the Government reacted when it came across things that were not working out or did not quite fit specific sectors. It rearranged supports to suit them. I would not be in business today without the support. The employment wage subsidy scheme has been a godsend to the industry, and the Covid restrictions support scheme has been vital for us in staying afloat.
This Bill is introducing another support for businesses that were left out of the loop. It shows that the Government is willing to listen and determine how it can support business. The business resumption support scheme is new, and that has to be recognised.
The VAT reduction for my industry has been vital. I have always said openly, including here, that this was all about trying to get the margin to a level that allowed businesses to pay their bills. The reduction of 4.5% is critical in this regard.
I would like to see the warehousing scheme tweaked a little further. The Minister of State cannot extend it until 2023 or 2024. Warehousing is a great concept and the scheme is great. It is a winner for everybody. It does not cost the State any money but provides a huge amount of working capital credit and cash liquidity for businesses on the ground. I recognise the amendments that have been made regarding the scheme.
It would be remiss of me not to focus on section 15, which has already been referred to and which is the sole section the Opposition has jumped on for the past week. It covers the 10% stamp duty rebate on long-term leasing. It must be acknowledged that the Government acknowledges this is not the best way to do business but it is a way of dealing with housing and delivering homes in the short term. While we try to turn the vehicle in a different direction, it is delivering homes. It is delivering homes today. Members of the Opposition, when on the radio, keep mentioning vulture funds, cuckoo funds and investment funds but never say where the houses are going. They never talk about the people who are getting them. They never say the houses are for social housing. They are for people with complex needs, including people who have been on the social housing list for seven, eight, nine or ten years. I wonder whether the very same politicians would not send out a letter congratulating an applicant on getting a house under the scheme. Would they recommend that the applicant not accept a house under the scheme because of the 10% stamp duty rebate? Would they advise the applicant not to take the house because they do not agree with the scheme? We will not hear them saying that because they will not say it. They will send out a letter saying they are glad to assist the applicant in securing a 25-year lease on a home. They will not mention the stamp duty refund.
This comes with a little frustration over what happened in Wicklow last week. With all due respect to Senator Gavan, I am not referring to him directly, but his party has to be called out on its hypocrisy. Wicklow has 4,500 families on the housing list. Bray, whose land is so scarce, proposed a scheme for social housing on public land but the Sinn Féin councillors decided they did not want that. The party's members have to stop talking from both sides of their mouths. If Sinn Féin is not supportive of this scheme, it should not send out a letter saying it is glad to have worked on an applicant's behalf and delighted to have secured him or her a home. Rather, it should say the home should be returned to the State because there is a 10% tax rebate. The hypocrisy of the Opposition needs to be called out at this stage.
Most of the points have been raised. As a businessperson who has employed many people and who has been able to keep many of them in employment because of the EWSS, I thank the Minister of State. I thank him for his continuous, active response to circumstances on the ground and his support.
The Minister of State is welcome. It is good to see him back in the House.
Let us remember that behind every business, there is a family. Behind every business, there are several workers. The Government has stepped up to the plate when it comes to supporting workers. I fundamentally believe this Bill is what we have all been calling for, that is, a measure to make sure we do not have a cliff edge for businesses, families and workers. That is what this Bill is all about. The Minister of State said it is a small Bill but it is so far-reaching. There are so many schemes under it. We should remember how much has already been invested in some of the schemes. Some €4.2 billion has already been spent by the State on the EWSS.
People have been worrying about whether they will be taken off the larger schemes we have been talking about in September. This Bill states the period will be extended until December, or that the Minister will have the ability to do that.
Another couple of points in the Bill are welcome. The Minister of State has alluded to them. One relates to non-rateable businesses. Those operating businesses from their homes or vehicles will also be taken into account. That means we have been listening. Last September, in the presence of the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, I believe, I asked that a reduction of the VAT rate for the tourism sector be considered. Despite everything else the Government was trying to do, it was just not doing enough for tourism and hospitality. The Department is now extending the rate reduction. All of these measures are incredibly welcome, and they are all contained within this Bill. Let us celebrate that. It is a good day for businesses across the State. We are supporting a large number of SMEs in this country.
I would like to refer to the housing issue. I hope every party agrees that long-term leasing arrangements for local authorities are poor value for money. Nobody wants them. Everybody wants local authorities to have their own homes.The Affordable Housing Bill and the Land Development Agency Bill predominantly allow us to build houses on public land and for the State to own those.
We have a cost-rental provision for the first time, for which the Green Party has been calling for decades. That is all part of the housing strategy. I would love that 10% to be extended to those who are leasing to local authorities. I take on the board the senior Minister's previous comments that 2,400 families require these homes. We have to find an arrangement for that. Some 10,000 people are in emergency accommodation, nearly 2,500 of whom are children. We are in a state of emergency and we have to use everything we can. I hope that in the housing for all strategy, we can finally deal with these issues in a way that is sustainable in the long term, that we can see the State owning and not selling off its houses, which it did in the past, and that this Government finally tackles this problem. We have had record funding for housing under this Government. I appreciate people's frustration in that they cannot see the homes now, although, as Senator Casey pointed out, local authorities are attempting to deliver if councillors will facilitate that. It is frustrating when we call to people's doors, as we have all done in the past month, to hear people ask where the homes are. Delivering these homes takes time. The combined effect of these measures is what delivers those homes. I want what is in housing for all to be put in place, which will ensure we have a sustainable model. Some temporary measures are required as well as all those measures we have put in place under the Affordable Housing Bill and the Land Development Agency Bill. Those are what will deliver for people. The Minister of State does not have responsibility for housing but the Government, as a whole, must tackle the issue of vacancy, particularly for rural communities. There are vacant homes and they need to be brought back into use.
It is nice to see the Minister of State. As he will be aware, we have been very constructive in supporting these financial provisions Acts regarding the pandemic but we will not be supporting this one because of the outrageous clauses that reward cuckoo funds and vulture funds with sweetheart tax deals. That is exactly what they are. Interestingly, the history of these ridiculous schemes where instead of buying and building houses local councils lease houses from investment funds was started by Fianna Fáil in 2009 along with the Green Party. For the dozens of people who might be watching these proceedings at home, effectively, I am saying we pour millions into investment funds in terms of rents at the end of which the council owns nothing. We are literally pouring money into a black hole. To be clear, it appears to be Fine Gael and Fianna Fáil policy. It is interesting to note there is not a cigarette paper’s worth of difference between Fine Gael and Fianna Fáil, which possibly explains the result we had last Friday in the by-election.
I want to be clear on this. With this amendment, the Minister brazenly gives investment funds a tax break when they snap up homes from under the noses of struggling home buyers if they lease them to local authorities, with the latter and taxpayers picking up the Bill and paying their rent to the investment funds for 25 years. The funds do not pay a cent in corporation tax on the rent that is paid them. The tax arrangements have been facilitated by the Government, including by the Minister for Finance. You literally could not make this up. Not only will the legislation allow funds to continue to push struggling home buyers out of the markets, but it will also deliver poor value for money for the taxpayer. This is not only the view of Sinn Féin; it is also the view of officials in the Minister of State’s Department. Not only are investment funds outbidding prospective home buyers, but they are also outbidding approved housing bodies by as much as €80,000 per unit. They can do so because the Government has introduced sweetheart tax deals that allow them that type of firepower. It is doubling down on those with today’s sneaky slotting of this provision into this particular Covid Bill.
Let us remember that only a few weeks ago, the Taoiseach said: “Let this go out loud and clear no county council should be engaging in a long term lease with these institutional investors”. He said that on 4 May, but in classic Fianna Fáil style it is a case of this Government saying one thing and doing the opposite. Our Seanad colleague, Senator Fitzpatrick of Fianna Fáil, said “I specifically call on the Minister for Finance to end tax incentives for investment funds to facilitate the wholesale purchase of first-time buyers’ homes. Yet, how will she vote today? It is quite outrageous. With this latest tax wheeze, increasing amounts of social housing will be in the hands of cuckoo funds, which pay no taxes to the State but will be in receipt of taxpayers’ money each year in the form of rent received. What we are seeing is the marketisation of social housing. That is what it is about. It is about another form of privatising housing and the State walking away from it. It is outrageous. It is a loophole deal that the Sicilian Mafia would be proud to deliver and it is courtesy of this Fine Gael-Fianna Fáil-Green Party Government.
The Tánaiste justified this scam by saying they had consulted the builders and they told the Government this tax, ridiculously small as it is, would not be a good idea. Of course, they said that. They are getting money from these investment funds. What would we expect them to say? There is a simple answer to this and I will put it to the Minister of State. There is a false choice that if we do not give these tax incentives people will miss out on homes. Of course, we should be building our own housing and excluding these entities but, if in the short term we have to source some housing from private developers as a stopgap, we should purchase it directly from the developers, not lease it from an intermediary, namely, a cuckoo fund or vulture fund. That is incredibly bad value for money. I am genuinely shocked because the Taoiseach said one thing a matter of weeks ago and now the Minister is doing the exact opposite. It is nothing less than a sweetheart deal for investment funds. It is in that great Fianna Fáil tradition, in particular, of cuddling up to these people.
I heard Senator Casey’s speech last Friday and would remind the Minister of State of two things. The first is that Fianna Fáil had a hell of a role in creating this crisis. It propped up a disastrous Fine Gael Government for four years. The second is this Government will not solve the housing crisis. The Economic and Social Research Institute, ESRI, has said the Government is only spending half of what is required to solve the housing crisis. Let us be clear on this. The Government is not delivering for the people and by its own sums, as set out by the ESRI, there is no prospect of delivery. It is failing on housing again.
I thank the Minister of State for coming into the House. We all need to recognise the necessity for the extensions contained within the Bill as they relate to the EWSS and the CRSS. In that context, we would have been minded to support the Bill were it not for section 13 and the railroading of section 14 into the Bill, which means we cannot support it. Before I deal with those sections I want to refer to the extension of the EWSS and the CRSS. For many months we have raised the pointed exclusion of non-rateable businesses from the Government's enterprise supports. The business resumption support scheme is welcome in that regard. It strikes me as unfair that we have provisions for another round of funding for the restart grant yet under the business resumption support scheme it is an advance on the trading expenses and there is a difference for non-rateable businesses, particularly for those businesses that are struggling most. Arts enterprises, events businesses and many others are non-rateable. The Government can go further than it has with the business restrictions support scheme. I ask it to extend the restart grant to the non-rateable businesses.
The other striking element in the Bill is lack of medium-term thinking. In some sectors there will not be any springing back to normal when they fully reopen. Other than the VAT rate being extended into next year, we do not have targeted supports to maintain employment in some of the firms in the events, leisure arts, retail and other sectors. I am reminded that last December, when the hospitality sector was fully open other than the pubs in Dublin, we still had an unemployment rate of 53%.Just under 100,000 people aged between 15 and 24 years were unemployed. There was no springing back to normal for that age cohort, a large proportion of who are employed in the hospitality sector. It is disappointing that we have seen no effort made towards a short-time working scheme within those sectors, some of which will not survive. Some will but they will need a great deal of additional support because it is not only the pandemic but also Brexit that is a great challenge.
The Labour Party's main objection to the Bill relates to stamp duty changes. I am conscious that the Affordable Housing Bill and the Land Development Agency Bill will be discussed here this evening. I understand the intent behind both, notwithstanding my huge reservations and concerns about the mechanisms employed in both of those Bills. However, I can tell the Minister that what is contained in section 13 of this Bill and the exemption of apartments will have a devastating impact on the area I know best, Dublin's north side, on the prospect of conventional apartments or houses ever being built. With the stamp duty changes, there is a double incentive for developers to never build conventional apartments or house. There is no incentive to build a house because of the stamp duty changes. With the build-to-rent model, why would people ever build a conventional apartment when they can get away with a smaller floor area, less storage provisions and a lower construction standard? Another issue in Dublin is that it is only developers with deep pockets who can afford to buy land in the city. Section 14 is the other really egregious part of the Bill because of its exemptions for those who will lease residential housing to local authorities on a long-term basis. We have to ask about the direction this Government is going. There has almost been a doubling of reliance by local authorities and housing bodies on leasing between 2017 and 2020.
Senator Casey asked about the impact on individuals. I speak as someone who, as a new councillor, voted for O'Devaney Gardens, and hated doing so, because it was already in the works for many years, and as a person who has had to tell people about the housing assistance payment, and hated doing so because of its less secure tenure. We have an opportunity to get this Bill right but the Government is walking away from that. It is walking away from the chance to ensure that we deliver housing directly, that we do not let places like the north side of Dublin, or, indeed, the south side, be left out to dry and have no conventional apartments or housing built over the coming years. It is a real disgrace that the Government is allowing these sections into the Bill.
I should mention and remind the House that we have the largest budget ever dedicated to housing in this State at over €3 billion. The raft of legislation before the House today is to support businesses. That is what this Bill is about. It is about supporting small and micro companies and medium-size companies. It is incredible. Previously, there was legislation about the Government providing more accessible and cost-efficient ways to help rescue companies and restructure them as needed, especially when going through difficult trading periods. It is crucial that we highlight the three things mentioned by the Minister. The employment wage subsidy scheme, which the Minister mentioned in his opening remarks, has supported over 50,000 employers, with 600,000 people having received support from the scheme which was brought in by this Government to support employees during the lockdown and the crisis last year.
I also welcomed the restart week. That is between 2 June and 31 December, which equals three weeks at double rate of pay. That is very welcome. I am thinking in particular of micro enterprises, which have between three and nine employees. That is over 90% of businesses in Ireland. These are the ones that need our support and are going through a huge crisis. They could include the construction sector or subcontractors, and shops in our local towns and villages, particularly in the areas I come from in Roscommon and Galway, where it is crucial. Some of these micro enterprises have been shown to have the highest level of ambition in the west. They target themselves and see themselves as exporting abroad as well as operating in Ireland. These supports are crucial to keeping these businesses going. More than one third of our micro enterprises are female-led.
The extension of the 9% VAT rate until 31 August is crucial for hospitality and tourism. We are trying to support a safe and sustainable reopening in the coming months, so that is very welcome. The debate so far has focused on one section of the Bill. It has prompted many different opinions. It is crucial that we get housing built. Look at all the local authorities. Housing is in such demand. There is no housing in my area and local authorities have none. How will we ensure that social, public housing is available for local authorities? We need action and we need to get moving. That is what this Government is about. That is the budget that we put in place this year and in coming years to get social housing done as quick as possible. If certain parties are voting against housing, how will that support us in delivering what we need for this country now?
I welcome this Bill in that it gives businesses and particularly small and family-owned firms, some clarity in relation to the reopening post-Covid. Earlier this afternoon I welcomed the introduction of the Companies (Rescue Process for Small and Micro Companies) Bill, and this Bill provides some welcome supports which will hopefully help to minimise the number of businesses that are threatened with failure over the coming months and years. However, I do worry that the sheer scale of the challenges facing the economy over the next 18 months are being underestimated. We have been borrowing the equivalent of €1.5 billion per month throughout the crisis to pay for the various supports which are in place. This has acted as an economic comfort-blanket of sorts, but it has also acted as a comfort blanket to the Government and the political system. There will eventually come a point where this cannot continue, and I worry that the political and economic awakenings will be very rude indeed, and that we are not preparing ourselves sufficiently for that.
Clearly, as we recover, small enterprises, particularly those in hospitality and tourism, have to be our focus, because they are areas of huge potential job creation. The Bill extends the Covid restrictions support scheme until September, and the employment wage subsidy scheme until the end of the year. I welcome this, but again I do worry about what will happen when these schemes come to an end. We need to be careful that this will not be like hitting a brick wall for some businesses. Businesses need to be eased back to normality, with supports being tapered to the greatest extent possible.
I particularly welcome the idea of the business resumption support scheme, which will allow businesses in effect to claim an advance tax credit of up to €15,000 to deal with reopening expenses. This is exactly the kind of cushion we need to be putting in place to ensure soft landings and that there will be no cliff-edge when other supports are ended.
The warehousing of tax liabilities will be extended by the Bill, continuing until the end of 2021.As I said earlier this afternoon on the Companies (Rescue Process for Small and Micro Companies) Bill, this only puts off the evil day for a significant number of companies. Eventually, these will need to confront their existing tax liabilities and we need to consider whether we are doing enough to ensure small businesses will not be pushed to the brink of danger by having to do so.
The continuation of the reduced 9% VAT rate in hospitality is to be supported. The decision to increase that rate back to 13.5% in late 2018 was ridiculous and something that I opposed at the time. It was a simple revenue grab. It was an increase in stealth taxes to fund runaway Government spending in a range of areas and fill out the coffers ahead of a looming general election. Increasing taxes on a sector that supports so many jobs and where prices paid by consumers are so competitive was a strange move. The spectre of Fine Gael, a party that professes to support small enterprises, presiding over and defending increased taxes on a sector almost entirely made up of such businesses, seems strange. Sadly, it took the onset of the Covid-19 crisis to convince the party of the errors of its ways. The 9% rate will allow the hospitality sector to be more competitive on prices or to retain more of its takings, so that is clearly the right thing to do. The rate should be retained long after the crisis has passed.
I listened carefully to Senator Sherlock, as always. I always think that her contributions are thoughtful. I do not like to see any situation where people take advantage of the housing crisis and economic situation to create a future for homeowners that involves them having poorer facilities than what they deserve and I worry about that.
The 10% rate of stamp duty for vulture funds and the Bill's provisions for this apply to funds that will buy up multiple units in new developments, with an exemption for those units which are leased back to local authorities. This proposal was in the news last week and led to much of the usual sloganeering. I wonder why it caused such a stir. The reality is that we have a serious housing shortage. I agree that local authorities need to build more houses themselves but that will take time. It makes sense in the short term to incentivise the leasing of properties to local authorities at fair rates. It is not a long-term solution but it is not one that we should turn our nose up for ideological or populist reasons. I am not suggesting that those are the reasons of any particular reason. I am not convinced by the reasons put forward to oppose that measure. It seems that it is a small price to pay if it increases the number of units available to the councils in the short term.
I welcome the Minister of State and thank him for his work on insurance. We have seen payouts come down by 50%, which will surely lead to a situation where people's premiums come down. I know he will keep a watchful eye on that. Over recent years, we have all seen issues, especially in the area of leisure and amenity, where children's playgrounds and play areas had huge insurance bills. We look forward to this changing. I ask the Minister of State and all of those involved in insurance to make sure that happens.
This legislation is welcome. It is a key part of the economic recovery plan to support businesses as public health restrictions are eased. As I mentioned in another debate, when research was done into the 2008 recession, small businesses were the key to revitalising and recovering our economy. We have to do everything that we can to help to support them. In my county, Kildare, 92% of our business world is in the SME sector. Some 92% of the rates in Kildare are paid by businesses that have a workforce of under ten, which is quite surprising considering that the north of the county is lucky enough to have such companies as Intel and Hewlett-Packard.
There is no doubt that the businesses we are talking about, many of which are family-owned, are the backbone of our economy. They have been hit especially badly by Covid and this feels like a time warp. This time last year, we were here to try to ensure that everything was in place to reopen in September, then it was Christmas, then Easter, and now we are here, hoping that we will have that opening on 19 July on a gradual basis and that things will be normal enough in September. We have a good vaccination uptake rate, which will certainly help us.
I know that what the Minister of State has contained in this measure acknowledges the frail nature of businesses and firms in certain sectors as they emerge from the impact of the public health restrictions. The Bill aims to ensure that such firms can continue to benefit from the EWSS and are not precluded from availing of it because business picks up in quarter 3, which is important. The extension and enhancement of the Covid restrictions support scheme has given a lifeline to businesses and companies over the past few months. That gives certainty to businesses, so it is welcome. I also welcome the new business support scheme. That is for businesses with reduced turnover as a result of public health restrictions. That will be implemented in September. As well as continuing with some of the proven mechanisms that have helped to keep our businesses alive, being able to add additional months is important. The extension of the reduced rate of VAT of 9% until 31 August is key.
The announcement that the reopening of indoor dining was not proceeding as planned on 5 July led to significant disappointment from those in the sector and those who were hoping to avail of it. It was a difficult call for Government. We are now close to seeing the implementation of a system to verify vaccination or immunity, so businesses which remain closed or are significantly restricted by public health restrictions can make a claim for additional support under the CRSS for a further two weeks from 5 July. This amendment of the scheme to allow for an extra two weeks recognises the difficulties that places are in. This is good legislation, which can be extended if needed. We hope that it will not. I wish businesses well in the weeks and months ahead as we start reopening society.
I welcome the Minister of State. Senator Mullen's contribution is one that we have a debate on in this House, to address the future of how we will pay. Some live in the land of milk and honey and therein lies part of our difficulty. Others of us live in the land of realism and recognise that we have rightly spent and borrowed billions of euro to support SMEs and workers. I would love to have an ideological question addressed by Members opposite, in particular, who will go to social media platforms with clips of all of us which they will use erroneously to further their own aims. That is a disgrace. No Government has ever had to face the pandemic that we have had. That is why it is important that we recognise the importance of a focus on small and medium enterprises which, as Senator O'Loughlin said, are at the heart of how our society and economy develops. These are entrepreneurs who we know in our own communities.
I welcome this debate and the fact that today, as announced by IDA Ireland, foreign direct investment is close to pre-pandemic levels. That is a vote of confidence in our country, our people, and our goods, services and products.Today, the Government announced a new pathways to work strategy to bring 75,000 people back into the workforce again. That is positive.
Senator Mullen is no longer here but I remind him that we are the pro-enterprise, pro-jobs party. We are the party that believes in rewarding work, enterprise and equality of opportunity. In the past 15 or 16 months we have taken decisions to underpin support to our businesses and those who work in our economy and our country.
I will comment on our reimagined cities and towns. We have seen, for example, 17 streets pedestrianised in the city of Cork, where I am. It gives us a new type of city. It is the biggest ever investment under the urban regeneration and development fund in Cork city. I invite the Minister of State and the Ministers, Deputies Paschal Donohoe and Michael McGrath, to visit parts of Cork city where we can be imaginative in incentivising developers, local authority and private citizens including those on the social housing list to buy, rent and do up old properties so we have regeneration, re-gentrification and re-living in our cities and towns.
We must ensure we do not go back to the old ways. It is not the Minister of State's Department and it is slightly askew from this debate but Senator Casey will agree, I hope, that it is critical we do not miss the deadline for the Covid digital certification. Our tourism and hospitality sector require and deserve our Government to be ready.
I will yield my time to Senator Cummins but I remind Senator Mullen, who is back, that the Fianna Fáil Party is the pro-jobs, pro-small and medium enterprise party and nobody else will ever assume that mantle and deliver like we have done and will continue to do.
Much of the debate has focused on sections 14 and 15 of the Bill and it has turned into a housing discussion so I felt it necessary to comment on the Bill. I echo much of what Senator Mullen said. We are in a housing crisis and, in such a crisis, one must use every tool at one's disposal to tackle the problem. My party and the Government is all about delivery over ideology. We believe we can deliver houses by any mechanism possible, be that councils, approved housing bodies, the Land Development Agency, public-private partnerships, private builders or leases.
I guarantee Senator Gavan that any individual or family that has got a leased property in recent years is not getting hung up on the ideological debate about this. They are happy to be out of hotel or emergency accommodation. That is what the Government is doing in delivering units for families and individuals to live in. Leases have a part to play in that.
I will leave some important facts on the record of the House. I invite the media to scrutinise the Sinn Féin policy on housing. It promises to deliver 100,000 social and affordable units over a 15-year period. On page 5 of that document, it states that, in the period 2016 to 2021, Sinn Féin would deliver 36,500 social and affordable homes. According to the CSO, this Government has delivered 39,524 houses in the past four years, without taking account of the 2021 figures. Some of those are leases, but Senator Gavan should ask any of the individuals or families in those homes and no longer in hotel accommodation whether they care for the ideological debate in this Chamber.
I thank the Senators who made a contribution today and I will respond as best I can. There will be an opportunity to go into detail on the Bill on a section by section basis when it is examined on Committee Stage tomorrow morning. The Bill gives effect to some of the decisions announced on 1 June as part of the Government's economic plan, which sets out a new phase of supports for this next stage of recovery as businesses reopen. Many speakers acknowledged the scale and speed of the Government's response with various schemes which have been practical and helped many businesses and individuals.
It extends the EWSS to 31 December 2021 and provides for the retention of the current enhanced subsidy rates until 30 September 2021. It extends the CRSS and provides for additional payments on reopening. It provides for a new business resumption support scheme. This new scheme is designed to support some of the worst affected businesses in the pandemic, especially those that continue to be significantly impacted even after the easing of public health restrictions. It provides that the reduced rate of VAT of 9% applying on a temporary basis to hospitality and tourism-related goods and services will be extended until 31 August 2022. It provides for the extension of tax debt warehousing, with debts now warehoused throughout 2021, remaining interest free throughout 2022 and with a reduced interest rate of 3% starting in 2023 until the debt is paid.
Finally, it provides for a new stamp duty rate which will be a significant disincentive to the practice of multiple purchase by institutional investors of large parts of or whole housing estates before they reach the market, thus denying first-time buyers an opportunity to purchase a home. It does this by imposing the 10% charge where ten or more liable residential units are acquired in a 12-month period. The Minister made it clear when the financial resolution was passed by the Dáil on 19 May that he would place the resolution on a permanent statutory footing in the next number of weeks and this Bill will achieve that. Multiple purchases of houses by local authorities, affordable housing bodies, and the Housing Agency are exempt from the 10% charge, as are private sector participants in the mortgage-to-rent area.
The Government has decided that apartments are also exempt from the 10% rate. Otherwise, there would be a significant risk that developers would exit from the apartment building market, as such projects would no longer be viable and an important element of our future housing strategy would be lost. A person who has paid stamp duty at the 10% rate on the acquisition of a residential unit will be able to claim a refund of part of the stamp duty paid if and when the residential unit is leased to a local authority or an approved housing body for social housing purposes. It is very specific to such cases. I hope, given this situation where we need many housing units for so many people on waiting lists, that people will not object to the principle that the stamp duty be refunded in those cases. Otherwise, who will pay for it? It will be the local authorities in increased rents. Where does that money come from? The taxpayer. It is important to stress that.
This will address the concern that the charging of additional stamp duty on the acquisition of such residential units will act as a disincentive to persons who might have been planning to acquire multiple units for onward leasing to a local authority or an approved housing body and thereby reduce the supply of social housing. It is important to make the move at this stage rather than coming back in six or 12 months time to find this has been a cause of problem and delay. The people opposite will be the first to say we should have foreseen this. We are foreseeing it now, preventing the issue becoming a problem before it arises, dealing with it up front on a proactive basis to make sure it does not become an issue.
Assertions that the exemption provided in this Bill for the acquisition of houses that are then leased to local authorities for social housing purposes was somehow underhandedly inserted at the last minute do no stand up to scrutiny when examined against the facts of the situation. The financial resolution when introduced on 19 May was an emergency measure to address the immediate issue of the multiple purchase of homes by institutional investors. There was limited time available for drafting the measure. Therefore, it focused on addressing the basic requirements only.However, in doing this the Minister was always aware that he could broaden the scope of the exemption, if he thought it necessary when putting the financial resolution on a permanent basis. In this regard, he stated in the House on 19 May: "Other social or affordable housing arrangements will be considered as part of the legislation which will be brought before the Houses in the next few months to permanently underpin this resolution." That statement was a very clear signal that, aside from the existing local authority and approved housing body exemptions, other social and affordable housing exemptions were being considered. That was flagged and stated in public, but because of the emergency nature of measures - we all remember how quickly we had the debate - the full details could not be worked out at very short notice. However, there was a clear signal that it was on its way. When the Minister of State, Deputy Ossian Smyth, introduced the Bill to the Dáil on Second Stage on 1 July, he announced the Minister for Finance's intention, which was: "on the advice of the Minister for Housing, Local Government and Heritage, to introduce an amendment on Committee Stage to facilitate an exemption from the 10% stamp duty charge in circumstances where houses are bought by investors for leasing to local authorities". Therefore the path was laid for this leasing measure on 19 May when the Minister indicated that other social and affordable housing exemptions were being examined. At the first available opportunity, the Minister of State subsequently confirmed that it would be introduced as a Committee Stage amendment. Therefore, I do not accept that anything inappropriate or untoward has taken place, since standard due process has been followed in relation to the introduction of this measure. I look forward to further examination of the Bill on Committee Stage tomorrow.
The Government has responded to the impact of the pandemic with a broad range of supports across a range of Departments, which have made a real difference to people's lives throughout the country. The economic summer statement is due shortly, which will outline and deal with the requests people made about the long-term debt cost to the Exchequer. As we have shown, when it is necessary in these emergency situations to run a deficit, we will do so, and as soon as is practicable and appropriate we will move back to a balanced budget. I look forward to discussing the details of the Bill on Committee Stage tomorrow.
Niall Blaney, Paddy Burke, Jerry Buttimer, Malcolm Byrne, , Pat Casey, Shane Cassells, Lorraine Clifford-Lee, Ollie Crowe, John Cummins, Emer Currie, Aidan Davitt, Regina Doherty, Aisling Dolan, Mary Fitzpatrick, Robbie Gallagher, Róisín Garvey, Pippa Hackett, , Seán Kyne, Tim Lombard, John McGahon, Rónán Mullen, Eugene Murphy, Fiona O'Loughlin, Pauline O'Reilly, Ned O'Sullivan, Mary Seery Kearney, Barry Ward, Diarmuid Wilson.