Vol. 997 No. 4
Sin críoch leis na ráitis maidir le poist a chosaint agus tacaíocht a thabhairt do ghnó. Táimid ag dul ar aghaidh anois go dtí an chéad phíosa oibre eile, sé sin ráitis maidir leis an gcaiteachas mar fhreagairt ar ghéarchéim Covid-19.
I now call on the Minister for Public Expenditure and Reform, Deputy Michael McGrath, who has 30 minutes for his opening statement.
I will be sharing time with the Ministers of State, Deputies O'Donovan and Ossian Smyth.
I welcome the opportunity to open this debate and to set out from the Government's perspective the very significant response that has been made to the evolving situation regarding Covid-19. As we all know, the onset of this pandemic earlier this year has had an enormous impact on society and on economic activity in this State.
The rapidly evolving nature of the public health situation required the previous Government and the new Government to act quickly to address the challenges facing our citizens as a result. In light of this, the Government has introduced a series of critical expenditure measures designed to support incomes, employers, jobs and the wider economy from the unprecedented shock of Covid-19 and, of course, to provide the necessary funding to our health service to fight this pandemic.
In July, the Government announced a series of measures designed to save small and medium-sized businesses and to help people to get back to work. There is no doubt the income and business supports that were introduced then continue to have a beneficial impact. As we learn as a society how to live with Covid-19, we will have to continue to extend that support to businesses and households.
Approximately €16 billion in additional Covid-19-related expenditure supports will have been provided this year by the Government, which represents a very substantial investment. It equates to roughly 9% of GNI* and is equivalent to over five times the original increase in gross voted expenditure planned for this year, as set out in the Revised Estimates for Public Services published last December. Looking at the position at the end of August, gross voted expenditure was €10 billion, or 24%, ahead of the same period in 2019. The main drivers of this increase are in the areas of social protection, health and business support. The increase is reflective of the additional Covid-19-related expenditure introduced by the Government to date. All told, it is currently estimated that gross voted expenditure for this year will be over €86 billion, an increase of over €19 billion, or almost 30%, relative to the outturn last year, or 23% higher than was originally budgeted for 2020.
The House will get a sense of the scale of the response from Government and the impact that has had on the overall expenditure profile of our country. The uncertainty that the virus brings makes it an even greater challenge to formulate a budget. In addition, we must assume that the UK and EU will be trading on WTO terms on 1 January 2021. This all means that spending in the upcoming budget will have to be focused on the policies that help the economy to recover, support businesses and get as many people back to work as possible. Having to deal with one of the challenges of Covid-19 or Brexit in the lead-up to a budget would represent a huge challenge, but having to deal with two at the same time makes the task ahead all the more difficult.
As Deputies will know, first and foremost, aiming to safeguard the health and well-being of our citizens is the number one priority for Government. Building a healthcare system that can cope with Covid-19 is no easy task but it is one we must meet. We must further increase capacity in our healthcare system to prepare for the months ahead and we need even quicker turnaround times for Covid testing. These measures will prove critical during the upcoming winter months.
This House approved the additional Covid-19 health expenditure when it voted through a Revised Estimate in July, including a €2 billion increase relative to the health allocation set out in the forecast published in December last year. This funding has allowed the HSE to put in place important and extraordinary public health measures across a number of key areas, including testing and tracing, nursing home supports, special arrangements with GPs and enhanced procurement, with a focus on PPE and the temporary arrangements that were put in place as a precautionary measure with private hospitals in order to ensure that capacity was increased in the system. Also of vital importance, of course, was the funding that enabled a scale-up in intensive care units and hospital bed capacity generally. Those are supports that we must continue with over the period ahead, particularly when we look at the current trajectory of the virus and the latest figures that have been published.
Further resources have recently been agreed to, for example, extend the scope of the flu vaccination to vulnerable categories. Yesterday, the Government approved €600 million for the 2020-2021 winter initiative to ensure our that health service has the capacity and resources needed to deal with what is forecast to be a very challenging period ahead for the State's health services. The details of that winter initiative will be published by the Minister and the HSE in the next number of days.
Looking ahead, officials in my Department are actively engaging with their counterparts in the Department of Health and the HSE in respect of all of these headings and others with a view to allowing us to return to the House next month with a workable, sustainable and comprehensive allocation for the Department of Health in the context of the 2021 Estimates and budget processes. Overall, the additional expenditure in health this year will be somewhere between €2 billion and €3 billion above what was originally envisaged. We have to now establish what will be the requirement to ensure we have a health service that is fit for purpose to deal with the situation that will arise in the winter months and that will be sustained right through 2021 against the assumption we have to make that Covid-19 will be prevalent throughout that period.
Aside from the public health aspect, the labour market has, as we all know, taken the brunt of the restrictions put in place to tackle the virus, and how this impact evolves into next year will have to be monitored very closely. We are already seeing signs of recovery, but that recovery is uneven and the longer-term scarring effects on the labour market will need to be addressed. This is why so many supports over the past six months have focused on household income and employment supports. As the economy has gradually reopened, much of the damage that was done to individual sectors has been revealed and continues to reveal itself. The impact of that scarring is something that will have to be considered very carefully to ensure we provide the supports that are needed.
The pandemic unemployment payment, PUP, for example, has been shown to be an extremely effective support in responding to the economic impact of Covid-19 and in cushioning the population from sudden income shocks. Currently, just over 200,000 people are in receipt of the payment. This represents a drop of nearly two thirds on the almost 600,000 people who were on the payment at the peak in the first week of May. The payment will continue to run until the beginning of April and we have decided, as a Government, that the scheme will remain open for new applicants until the end of the year, albeit at the reduced rates which kick in this week.
In addition, in support of businesses and their efforts to retain existing jobs and create new ones, the new employment wage support scheme has now succeeded the previous temporary wage subsidy scheme. The new scheme will run until April 2021. As part of it, employers whose turnover has fallen by 30% will receive a flat-rate subsidy of up to €203 per week per employee, including for seasonal staff and for new hires - for people who are taken on - which was one of the main issues raised by employers in the feedback they gave on the initial temporary wage subsidy scheme.
Further supports to the business community continue to be rolled out. The restart grant and the restart grant plus, which is currently available, bring total funding of the restart grant to €550 million, with up to €25,000 available to SMEs under the grant scheme. This Government is committed to supporting our businesses through the crisis. I will continue to consider further measures that can help to support SMEs as the economy continues to reopen, and as we respond to the evolving health situation. With the new plan that has been published, there may be a requirement in different parts of the country to move from one level to another, and we have to be adaptable and agile, as a Government, and be in a position to respond and to provide supports as and when, and where, they are needed throughout the period ahead.
As Deputies will be aware, the Minister for Education and Skills, Deputy Foley, published a roadmap for the full return to school on 27 July and, in support of this plan, additional funding at a cost of over €375 million was provided. Further to this, updated guidelines, including in regard to the use of PPE and enhanced hygiene in schools, were published by the Minister.
The roadmap, supported by the additional funding, succeeded in getting almost 1 million students back to school. By and large, it has gone very well. It is not just important for the young people who have returned to school and who have already borne a heavy burden as a result of this pandemic, it has also proven important for parents and society in general in returning to a sense of normality in these new times.
This funding has enabled schools to prepare for reopening, including making adjustments to the physical arrangement and layout of classrooms. In addition, the funding has facilitated the recruitment of additional staff. In this regard, the measures in the roadmap include over 1,000 additional teachers being made available to post-primary schools under the free scheme and enhanced supervision supports. Funding is being provided for additional supervision to support the management of physical distancing in secondary schools. To support the availability of substitute teachers in the primary sector, the Department is extending the current pilot supply panels on a nationwide basis for the school year that has now commenced. This will involve the additional allocation of approximately 200 teaching posts.
The Government also recognises the importance of investing in the higher education sector and the essential role this sector can play in driving recovery across regions and in preparing for the opportunities and challenges of what is now a changing economy. As part of the July stimulus plans, a substantial investment of up to €100 million was allocated to the higher education and further education and training sectors, providing over 35,000 additional places in undergraduate, postgraduate, upskilling and reskilling programmes. The new Department with responsibility for further and higher education received an additional €150 million in Exchequer funding to help reduce the impacts from Covid-19 on the higher education and further education sectors. A few examples include supports for ICT, health and safety, mental health supports and increased student access supports. The Exchequer has also provided for an additional 2,225 places in the higher education sector to address the impact of the new calculated grades model and Central Applications Office, CAO, offers in the higher education sector for this academic year.
The Government recognises the positive impact that investment in capital infrastructure can have on the economy. To this end, as part of the July stimulus programme, an additional €500 million was allocated for capital works projects for the remainder of this year, with about €100 million spilling over into 2021. A commitment was also made to invest over €9 billion in capital expenditure next year. This sends a very positive signal to the construction sector and gives it the certainty it needs to plan ahead for next year. There are companies that will invest in Ireland, keep on workers and hire more workers as a direct consequence of these decisions to back capital investment. In finalising the list of projects to be in receipt of funding from the July stimulus package, particular emphasis was placed on supporting projects that had the maximum jobs impact and contributed to key missions of the Government in the areas of climate change and housing.
Looking forward, the programme for Government committed to a substantive mid-term review of the national development plan, NDP. This review will afford the Government the opportunity of reappraising the NDP and realigning it with the new priorities set out in the programme for Government and to ensure it is consistent with the Project Ireland 2040 plan. We intend to set out an overall capital envelope for the next decade to 2030 and provide individual ceilings for Departments for the next five years. This will give them a high degree of certainty in order that they can plan the delivery of projects under their areas of responsibility for the next number of ears. That is important.
Ensuring the provision of the necessary funding to support our citizens and to protect vital public services over the next phase of the Covid-19 pandemic will be the overarching priority in budget 2021. While directing resources to these areas, we will also ensure that existing services are preserved and that the increases in capital investment set out in the NDP are implemented in order to support the recovery in the economy. Over the next four weeks, the Minister for Finance, Deputy Donohoe, and I will intensify the preparations that are well under way at this stage for budget 2021. We have set out some of the main assumptions underpinning our approach to that budget. The assumption, unfortunately, of there being no trade deal in the context of Brexit is one we all hope will not materialise. There is also the assumption that we will have to deal with Covid-19 through next year. We are determined to be agile and responsive to the needs of the economy next year and that is why we intend to put in place a recovery fund. We will outline the details of that in the Budget Statement. In addition, the Government will publish a new national economic plan in the middle of November which will set out its policies for the next number of years in key areas. I refer, for example, to enterprise policy, the policy on reskilling and policies on the development of a new green economy. We look forward to all that work.
All of this has had a profound impact on the public finances. We are facing a deficit this year in the range of €25 billion to €30 billion. Next year, on the basis of no policy change and looking at the amount of Covid-related expenditure we will have to incur in the health, education and transport systems and in other areas, there will be a need to borrow between €15 billion and €19 billion in cash. That is before we make new decisions about implementing programme for Government commitments and undertaking new policy initiatives. This gives a sense of the scale of the impact on our economy, our budgetary position and the fiscal outlook within which the Government will have to work. We are in a period of unprecedented and extraordinary uncertainty, but the Government is determined to respond to that in the best way it can by supporting our citizens, protecting vital public services and ensuring we provide supports for businesses through next year. We are putting the recovery fund in place to be able to respond to the emerging and evolving needs.
As outlined by the Minister, the Government has taken significant action to support our key public services, particularly the health service, and to provide funding for workers and businesses impacted by the Covid-19 pandemic. The estimated cost of these measures is approximately €16 billion. This leaves overall gross voted expenditure for the year at more than €86 billion.
The first phase of the expenditure response to the Covid-19 pandemic involved significant additional funding for the health service to support scaling up capacity in acute and community settings, for equipment such as ventilators and PPE and to secure the full capacity of private hospitals for a three-month period. In this phase, the emergency measures of the PUP and temporary wage subsidy scheme were also introduced to support workers and businesses. In early May, with significant restrictions on economic activity in place, there were almost 600,000 people in receipt of the PUP. In tandem with these income support schemes, a number of emergency business supports have also been introduced. These include liquidity supports, restart grants for businesses negatively impacted by Covid-19 and a commercial rates waiver.
The next phase of the Government's response seeks to minimise the potential longer-term effects of the crisis on our economy. By supporting the connection between workers and employers and providing targeted supports to business, the objective of policy has been to facilitate business restarts as public health restrictions are eased. Expanding on these initial supports, the July stimulus package includes a number of measures designed to support the economy as businesses and society reopen. The purpose of these measures is to provide additional targeted supports to stimulate activity across the economy, assist firms and support employment. Critically, the July stimulus package included the following measures: extending the PUP and wage subsidy scheme to the end of March next year; the provision of further grants to enterprises and an extension of the commercial rates waivers to six months; targeted investment programme in the life sciences and a specific tourism initiative; additional capital works across a number of sectors to support necessary infrastructure development.
Of critical importance is the fact that this Government recognises the impact that investment in our capital infrastructure can make on the lives of our citizens. To this end, job-rich projects that contribute to key missions of the Government, such as climate change or housing, have been targeted.
With a view to supporting better transport infrastructure across the country, the stimulus package for transport includes the following measures: €40 million for pedestrian infrastructure; €42 million to support urban and rural cyclists; €21 million towards improving rail journeys; and €10 million for the adaptation of the road network to protect it from climate change.
With regard to housing, 2,000 social housing units will be targeted for refurbishment in order to be re-let to individuals and families struggling with homelessness or who may be on the social housing list. Further to this, housing retrofitting is a major part of the Government's climate action plan. In light of this, as part of the July stimulus, an additional €100 million has been committed in 2021 to the energy efficiency national retrofit programme. This will double the overall impact of the programme in 2021 and will provide certainty to the industry regarding the Government's ambition in and commitment to this area, thus encouraging a focus on long-term capacity building for the remainder of this year.
More broadly, looking forward, delivering on our commitments on capital investment will be important in supporting the recovery in the economy. In this regard, the Government recommitted to the previously published gross voted capital expenditure amount of €9.1 billion for next year in the July stimulus plan. This represents an increase of €1 billion on the capital expenditure amount for 2020 set out in the Revised Estimates for public services 2020, published in December last year. In this regard, the decision to bring forward the review of the national development plan from 2022 is of critical importance. In carrying out this review, it is important to note that this Government has committed to recognising the importance of balanced regional development, clustered and compact growth and improved connectivity to deliver economic prosperity and environmental sustainability. The review will include an overview of the macroeconomic context and justification for the planned level of expenditure, taking into account demand and supply side constraints. This is critically important as enhanced investment in new infrastructure, such as new healthcare centres, schools, affordable housing units, public transport and renewable energy will create jobs and deliver tangible assets that will fuel the long-term economic growth we need to help restore our public finances and improve the delivery of public services for our citizens.
I will speak specifically to my own area of responsibility, namely, the Office of Public Works, OPW, which has three main focuses: heritage services, flood risk management and estate management. As an organisation, the OPW provides a wide spectrum of essential services and has largely continued to function in many areas during this period. The OPW has implemented considerable business continuity measures throughout the various phases of restrictions to ensure that services deemed essential to the public, including Departments and local authorities, could continue during a shutdown of workplaces. Throughout this period, a wide network of regional offices has continued to maintain the safe and ongoing operation of up to 2,000 public service buildings, where, in turn, essential services in health, social welfare and other areas have been provided to the public. Drainage maintenance services in our workplaces across the country continue to implement work plans during the optimal maintenance season and have minimised the impact of restrictions on much critical seasonal work.
As regards construction and maintenance works under both the flooding and property management programmes, many of the services and contract works, while initially stalled, have continued and recovered to original timelines and profiled budgets. The safe operation of construction sites for major capital projects was achieved in partnership with contractors from 18 May, when the Government allowed for the return of critical projects, and many have recovered to their original delivery timeframes. This has all been facilitated by more than 1,000 staff within the OPW who have been successfully set up to operate from home. Gradually, these staff are now returning to the workplace, which has been made safe for their return through the installation of measures to comply with physical distancing and a secure place to work.
The OPW was also very pleased to be able to play a critical role in advising other Departments and offices across the public service on how to safely return to the workplace. Through a series of well-received webinars and meetings, the OPW reached out to several hundred officials to provide advice and support on the issue of returning to the workplace. My office was also centrally involved in the provision of expert advice on enabling major contractors to also return to critical and strategically important building sites across the country, thus ensuring an efficient and rapid upscaling in economic activity.
The OPW has also worked closely with the HSE, An Garda Síochána and other front-line agencies to assist them in issues relating to the provision of emergency property solutions. This continuity of service has been facilitated and achieved through risk management and business continuity plans for each business area, delivered within an overall Covid-19 response plan for the office, which is a living document reviewed on an ongoing basis in consultation with OPW managers and workers, while constantly being steered by the Government's Roadmap for Reopening Society and Business. The plans will now be adapted to align with measures in the Resilience and Recovery 2020-2021: Plan for Living with Covid-19 document, which was published this week.
An assessment of the business impact of Covid-19 continues across the main work programmes of the OPW. However, with the co-operation of staff and contractors, the impact on financial outturns and work output has largely been minimised in 2020, which in turn has ensured a continuity of services within the wider economy.
Within the heritage estate, many of the visitor sites had to close for a period, yet access to parks and outside areas was an important facility available to the public during the restrictions and included dedicated space and time for many people who were required to cocoon in recent months. I am pleased that most visitor sites have adapted to the new requirements and are now safely open to the public. They will continue to play an important role in the recovery of the tourism industry and will be a much-needed recreational facility for the public in the period to come. The value of the heritage sector has never been more apparent. It is a tremendous asset for the people that is protected, presented and maintained by the OPW. In support of this, I announced an initiative that waives admission charges to many OPW heritage sites as part of the Government's July stimulus package, in an effort to encourage domestic tourism and support the tourism economy.
The OPW has now moved to considering the role we can play in the ongoing recovery. I welcome the provision of an additional €10 million funding from the Government under the recent economic stimulus programme, which will allow for the acceleration of well-distributed work programmes of essential works at Government-occupied buildings and heritage properties.
Widespread restrictions are difficult on us all, individually and as a society. Together, we need to reduce the opportunity for the virus to spread from person to person. We need to do this individually and collectively so that we can continue to prioritise protecting the most vulnerable, our healthcare system and our education services. Over the coming months, our objective is to suppress the virus to the lowest possible level in order that we can continue our lives to the greatest possible level.
As Minister of State with responsibility for the OPW, I note that this building is maintained by OPW staff, as are all other Department buildings. I acknowledge the contributions they have made during a very difficult time, as well as those of staff in Leinster House and the Ceann Comhairle. OPW staff often go unnoticed in a very quiet way in the maintenance of this and other public buildings and they have kept the cogs of the State turning at the same time.
I am sharing time with Deputies Pearse Doherty and Brian Stanley.
Gabhaim buíochas leis an Aire agus an Aire Stáit as an méid a dúirt siad. Ní fhéadfaí beag is fiú a dhéanamh de thionchar an choróinvíris ar ár ngeilleagar, ár bpobal agus, ar ndóigh, ar shaol na cosmhuintire. Cailleadh daoine le linn na paindéime seo, chaill teaghlaigh a n-ioncaim ar fad agus níl a fhios ag go leor daoine céard atá i ndán dóibh. Teastaíonn infheistíocht inár ndaoine, inár ngnóthaí agus inár bpobal. Cinntíonn infheistíocht níos airde go gearrthéarmach costas níos ísle eacnamaíochta agus sóisialta go fadtéarmach.
It is hard to overstate the devastating impact Covid-19 has had on our economy, our communities and people's lives. We have heard this pandemic and our battle with this virus being likened to a wartime situation and I think that language is fitting. Families have lost loved ones, whole households have lost their incomes, and many people have no idea what the future holds. These unprecedented times have required us to take the kinds of drastic measures that would be unheard of outside of a wartime situation. The various income support measures that were introduced have been essential in keeping the economy going, keeping people in jobs and preventing the mass immiseration of people. However, many feel they have been completely forgotten during this pandemic, such as the people who have gathered outside this building on Kildare Street and on Merrion Square; the taxi drivers who protested outside yesterday; the Debenhams workers, about whom we had a robust debate earlier; carers and many others. We are in extraordinary times and it is worth noting that when the Revised Estimates were debated in May and additional expenditure was sought, we knew that much of it had already been spent. That is reflective of the extreme fluidity and uncertainty of the situation in which we are living.
Voted spending is now well above pre-pandemic forecasts, with social protection and health naturally accounting for the lion's share. While on the face of it this might seem shocking in magnitude, it is matched in scale only by the level of the crisis. Higher expenditure in the short term is necessary to avoid long-term social and economic devastation.
I recognise the Government having taken on board much of the constructive criticism that has been made by me and colleagues and the various anomalies we have highlighted, especially in income and business supports. Several of the shortcomings we highlighted were addressed, such as our work to increase the subsidy for low-paid workers under the temporary wage subsidy scheme and to include SMEs that were initially excluded from grants. There are, however, ongoing issues with the lack of an appeals process for the PUP and the eligibility for certain groups, including artists, musicians and others in the entertainment industry. We have heard how difficult they have had it in contributions this evening and through the various representations made by that sector to all of us in recent days. There is also the fact that under the new EWSS, employees with gross weekly income of less than €152 per week will not be eligible for any subsidy. It is still my hope that these issues, in addition to the many others we raised, will be recognised in the forthcoming budget.
We know that on the path ahead the fiscal rules have been abandoned and no timeline for their reintroduction has been proposed. Restrictive rules for government spending at a time of unprecedented crisis are a recipe for disaster, as the period of harsh fiscal austerity clearly demonstrated. The Irish Fiscal Advisory Council, an institution known for its cautious conservatism, has forecast that our deficit will fall dramatically over the next five years, and that is without the need for austerity measures. The programme for Government states that budget 2021 will set out a medium-term roadmap detailing how Ireland will reduce the deficit and return to a broadly balanced budget, but this phrasing concerns me slightly. Surely the Government has learned the lessons of the previous crisis. Past Governments have tended to have a poor record on counter-cyclical spending and have often reflected that old Charlie McCreevy mantra of "When we have it, we spend it, and when we do not have it, we do not spend it."
Deficit reduction should not be the guide for our economic policy over the medium term. What matters now is not the size of our deficit but the sustainability of our debt. We know from the financial crisis that the victims of premature deficit reduction are always infrastructure and public services, and times such as this pandemic show how vital these services are and how much more vulnerable a lack of investment made us when battling Covid-19. I acknowledge that the Minister stated building a healthcare system that can cope with Covid-19 is no easy task but that it is one we must meet, and I hope that will remain crucial to any further spending decisions. It would be a more progressive and pragmatic strategy for the Government to adopt the golden rule approach to budgetary spending, whereby the Government borrows to fund capital investment projects that will benefit future generations by enhancing accessibility and facilitating trade, improving mobility, generating greater employment opportunities and boosting overall economic productivity.
We need to remember that investment is not a cost but something that can increase our productive capacity and boost future growth. This was done in the late 1980s and helped to reduce our debt-to-GDP ratio by almost 50%. The major difference is that today we can borrow to fund this capital investment at historically low rates and it would be negligent not to do so. Last week, the National Treasury Management Agency, our debt management agency, sold €1 billion worth of bonds at a negative rate of 0.098%. This essentially means investors are paying the State to borrow their money. It offers a significant opportunity for major capital investment projects that can put people back to work in good jobs with good pay and addresses serious deficiencies in housing and health that have spanned numerous Governments, helping to bring about more inclusive growth that will shrink our debt as a proportion of economic growth.
The Minister stated last week that this should be an investment-led recovery and I agree. This certainly seems to be the approach taken by some member states. The French President, Emmanuel Macron, has just announced the France relaunch stimulus programme, which proposes €100 million in spending on jobs, businesses and large environmental capital projects. Earlier this summer the German Government announced plans for €40 billion in green projects as part of its €120 billion stimulus package. We need to replicate this in our own right.
Some commentators in the Irish media have tried to downplay the severity and scale of the economic crisis. They have sought refuge in our headline GDP figures, which demonstrated the lowest year-on-year decline of all EU member states for the second quarter. We shed less than 3%, whereas Spain's GDP shrank by a whopping 22.5%. As my colleague, Deputy Doherty, noted last Tuesday, when examined from a jobs point of view, which should be the real measure of resilience, we exhibited the second highest number of job losses, narrowly losing out to Spain. How can we be the best performing economy in terms of GDP and yet second only to Spain, the country with the worst rate of job losses? I do not wish to go into the details because we all know the issues with using GDP as a measure of the health of the economy, but recent data from the Parliamentary Budgetary Office show that, to date, annual corporation tax receipts have outperformed forecasts, with August receipts being 31.5% higher than the same period last year. This is being driven mainly by the multinational sector, with the likes of big pharma and big tech taken into consideration, but we should not forget that SMEs account for more than 99% of active enterprises in the State and almost 70% of employment. This sector is struggling. As a recent Economic and Social Research Institute report showed, almost 50% of SMEs do not have enough cash reserves to cover one month's expenses, so it is little wonder that Ireland is currently the worse EU country for investment.
A simple way of measuring investment within the economy is to look at gross fixed capital formation, which is a component of the expenditure method of calculating GDP and includes spending on the likes of plant machinery, equipment purchases, land improvements, and the construction of railways, roads, residential dwellings and industrial and commercial buildings. It takes account of how much is being built and the kinds of productive assets that help bring about even more production. According to European statistics, we are the worst in this class. Gross fixed capital formation has fallen off a cliff, which means we are currently the second worst in the EU in terms of job losses and the worst in terms of investing in production. This is where the State needs to step in, not merely with current spending but also with capital expenditure.
Tá sé soiléir dúinn ar fad go bhfuil dúshlán mór romhainn. Baineann an dúshlán sin le cúrsaí sláinte, eacnamaíochta agus sóisialta. Tá go leor plé déanta againn ar na himpleachtaí atá ag an ngéarchéim seo ar mheabhairshláinte na ndaoine. Nuair atáimid ag déileáil leis an bhfadhb seo agus ag iarraidh athshlánú eacnamaíochta a dhéanamh, ba cheart dúinn a chinntiú go bhfuil na daoine agus na pobail i gcroílár chuile shórt atá á dhéanamh againn. Nuair atáimid ag cruthú post maith a íocann go maith, ba chóir dúinn a chinntiú go bhfuil siad sna ceantracha éagsúla agus ní hamháin sna cathracha. Sna blianta atá amach romhainn, agus muid ag breathnú siar ar an bpaindéim seo, tá súil agam go mbeidh Stát níos cothroime againn ná mar atá againn anois.
Cuirim fáilte roimh an díospóireacht seo. Déanaim comhghairdeas leis an Aire agus leis an Aire Stáit as na róil nua atá acu. Ní bhfuair mé deis é sin a rá ar urlár na Dála roimhe seo.
Léiríonn an phaindéim seo dúinn go bhfuil sé ar chumas an Stáit bogadh go gasta le ioncaim, le sláinte agus le poist a chosaint má tá an toil ann. While the level of spending to confront this threat has been considerable, it is not unparalleled and we should remind ourselves of that. On previous occasions, the State poured €44 billion into the banks a decade ago, following a famous era of Government mismanagement. In comparison, the State committed an additional €7.8 billion in expenditure to respond to Covid-19 to the end of August of this year. So, as we begin to hear some of the usual voices bang the drum of deficit reduction and fiscal prudence, this comparison from ten years ago is worth bearing in mind. To be clear, the additional expenditure in our economy and public services was not an option; it was simply necessary. The alternative was social and economic ruin. Had the Department of Health not spent an additional €1.2 billion to the end of August, the consequences for our health, our citizens, those at risk and our healthcare workers would have been devastating.
Had the Department of Employment Affairs and Social Protection not spent an additional €6.2 billion to the end of August, the 600,000 people who had lost their jobs throughout this period would have faced tremendous hardship. That is the context in which we must view additional expenditures to respond to the Covid-19 crisis. It was not an option; it was a necessity. I also wish to note that the conditions for such spending have been particularly favourable for this State with the cost of borrowing at historic low levels. We know that the NTMA has issued €21 billion in bonds this year with an average yield of 0.25% and that is welcome. Some of the most recent issuances, as Deputy Farrell pointed out, have been at negative interest rates. These conditions are likely to continue and the capacity of the State to manage and increase stock of public debt in a sustainable manner will be largely determined by this Government's ability to protect incomes and invest in the future in a prudent way.
Spending across all Vote groups to the end of August stood at €52 billion, which is 18% ahead of the pre-pandemic profile. The increase in expenditure was mostly driven, as we know, from current expenditure, with health and social protection comprising most of the increases. Since the beginning of the pandemic a number of schemes and additional supports were introduced by the Department of Employment Affairs and Social Protection, including the pandemic unemployment payment, PUP, the temporary wage subsidy scheme and recently, unfortunately, the new, flawed employment wage subsidy scheme. The pandemic unemployment payment was introduced to ensure that workers and families did not face an income cliff brought about by a sudden and unexpected unemployment. The very introduction of this payment was itself recognition by this House and society that the existing social protection system was not fit for purpose. To date, payments totalling €3.5 billion have been made under PUP, reflecting the damage caused to jobs and to incomes.
Figures recently published by EUROSTAT show that Ireland suffered the second highest job losses in Europe from April to July this year. The figure in this regard is twice the European average. While the virus is the same across Europe at different levels and different degrees, the consequence here in this State has been twice as many jobs losses than the European average. As Deputy Farrell outlined, we are second only to Spain in terms of topping the league. Ós rud é go bhfuil an ráta dífhostaíochta is airde ar fud na hEorpa againn mar gheall ar Covid-19, caithfidh sé nach bhfuil ag éirí go maith leis an Rialtas maidir leis seo.
With the possibility of stricter public health measures in the time ahead, unemployment is likely to remain persistently high. This will be exasperated, in my view, by the new employment wage subsidy scheme. The temporary wage subsidy scheme was a crucial policy measure and one that Sinn Féin supported. Having submitted our proposals to the Minister for Finance in mid-March of this year, we worked constructively with him to address the deficiencies. We were successful in ensuring that there was an increase in rent supplement for lower income workers and also to ensure that women returning from maternity leave were not locked out of the scheme. By the end of August, it had provided €2.8 billion in crucial supports to 663,000 employees and 65,000 employers. Then came 1 September and a new scheme has been introduced to replace the old one that will run to the end of March 2021. I have concerns in regard to the design of this scheme, which I have raised previously in the Dáil with the Minister and I raised again earlier this evening. It is outrageous that 153,000 workers, those who are the lowest income earners in this State and earn below €151.50, are completely locked out of this scheme. Not one cent of support will come from Government for those workers to their employers. That is scandalous. I also believe that the cuts to the level of wage supports of other workers through their employers is not warranted given the economic shock and situation we are in. The scheme amounts to a blanket reduction in wage support, failing to take into account the unequal impact of public health measures across our economy. While it is claimed that this will generate savings to the State, in my view this scheme will cost the State because jobs that could have been saved will be lost and businesses that could have been rescued will close or go into liquidation and close. I am, therefore, calling on the Minister to change course in government to end the blanket reduction in wage supports that give no regard to the unequal impact felt across the sector and that locks 153,000 workers out of the scheme.
We know that the health Vote to the end of August was up €1.2 billion above its pre-pandemic profile, with the majority of additional spending arising from acute hospital care, procurement of PPE and community care. The level of additional expenditure in our health service is not a fiscal concern but is a public health requirement. If we are to contain the spread of the virus, further spending and investment will be required for the remainder of 2020 and the years ahead. I will reiterate a point I made already because it needs to be made. The reason we have such severe restrictions in this State is because we under-invested in our health system for well over a decade. We have a serious issue of capacity, which is one of the factors in terms of what type of restrictions will be placed on society. That is a problem and we need to rectify it. We can never again find ourselves in a situation where our health system is so weak such strict impositions have to be placed on communities, people and businesses.
I echo what has been said by my colleague, Deputy Farrell, on the future direction. We need to see an end to the fiscal conservatism in respect not only of this year's budget but beyond. We need to take a leaf out of the book of some of the governments across Europe. The French Prime Minister was mentioned earlier by my colleague in regard to the €100 billion recovery plan announced, €5 billion of it in railway infrastructure, €7 billion in retrofitting and €30 billion in social cohesion projects, including employment projects and skills training for the French youth. In Germany, a €130 billion recovery plan was announced in June. This is the type of path we need to follow. We need to ensure that the things that were failed by Fianna Fáil and Fine Gael over the past ten years are rectified. Let us build the houses to house our people. Let us fix the capacity issue in our hospitals. Let us make sure that life is affordable for ordinary people and let us make sure that we continue to support businesses in a real and adequate way and that there is a proper social security net for those who fall on hard times.
I am disappointed that the Minister is bragging about a €9 billion capital investment. It is not near what we need in this year's budget, it needs to go way above that. There are shovel ready projects that need the go-ahead at this point in time. I give the example of Finn Harps stadium in Donegal. More than €1.2 million was spent on it by Government years ago. It is lying idle now with grass growing over it. It is shovel ready and has planning permission. It could lead to a return to work for people in a county that has the highest level of unemployment per proportion of people on the pandemic unemployment payment but the Government will not sanction it. Instead, it leaves the €1.2 million spent withering on the ground. This is not acceptable. These types of projects exist across the State. This is the way we can get our people back to work. We need to get the economy going and we need to invest our way out of the difficulties we have at this point in time.
The HSE is forecasting that it will spend more than €1 billion this year on PPE. From Sinn Féin's point of view it is essential that we retain as much of that money as possible in the Irish economy. This means purchasing as much PPE as possible from businesses in Ireland and developing domestic capacity over time. This will help to relieve pressure on the Exchequer, it will stimulate job creation and it will allow us to recirculate a significant amount of money within the Irish economy. Prior to Covid-19, the HSE typically spent €20 million per annum on PPE with little or no indigenous production. It, therefore, makes perfect sense us to begin to develop our own capacity of PPE supply chains not just for Covid-19 but for post-Covid-19 when the health sector will require a larger supply.
From the information released by the HSE we can see that only a fraction of the HSE spend is being retained in Ireland. One particular Chinese company, China Resources Pharmaceutical Group, has been paid more than €225 million this year for PPE. We accept that PPE had to be purchased but we should not be facing into a crisis in that way. Surely, we can find a more practical way of providing PPE which represents better value for money. There are many small firms, including in my own constituency of Laois-Offaly, that are involved in fabrics and upholstery etc. that could produce masks, gowns and visors, etc.. I am proposing to the Minister that he put in place a scheme through the local enterprise offices to identify companies and to work with local businesses to establish local supply chains and to begin developing the capacity to produce PPE in this country.
It is important for the taxpayer that this Government secures a better deal with the private hospitals this winter than we have had to date. Again, this was the right thing to do to increase capacity at the time but we did not get a good deal. We know from the figures released by the HSE that the State paid €115 million per month to private hospitals and a grand total of €338 million in three months. We need to ask why we paid €44,000 per bed when the United Kingdom secured private hospital beds at a cost of €10,000 each.
Why are we paying €592,000 per ventilator when the United Kingdom pays €68,000? What are we doing this time around to ensure the new deal represents value for taxpayers' money?
What work has the Department of Health done to increase public hospital intensive care unit capacity during the Covid-19 pandemic? This is not just about temporary capacity but rather long-term capacity. Prior to the pandemic Ireland had only six intensive care unit beds per 100,000 people, which is only half the European Union average and much lower than what is available in Germany. In Tullamore hospital, for example, there are just four intensive care unit beds and Portlaoise hospital, critically, has only two such beds. That is for a population catchment area of more than 160,000 people. It leaves us in a tricky position if there is a surge in Covid-19 numbers.
These are matters in our health services that must be addressed regardless of whether the pandemic continues. We could have a win in the health area and for the economy by addressing them.
I will ask Deputy Nash to adjourn the debate at 11 p.m. There are approximately nine minutes left.
We are approaching that time. I will not waste any more of my time so.
It is no exaggeration to say we are at an absolutely critical juncture in our history and Covid-19 has exposed some of the existing strains and inequalities in our society and economy. Putting it frankly, there should be no going back to business as usual or to an inequitable and unfair economic model that sees over 20% of our workers on low pay. There should be no going back to a services model where those with the wherewithal get to see a doctor first because they can pay for it. There should be no going back either to a housing system of endless rent rises and a life of precarity for those forced to rent because the State has decided it will not or cannot house them securely.
The recent July stimulus initiative was a missed opportunity to chart what I might describe as a new course for our country. As I said at the time, in truth all we really got was more of the same from the tired Fianna Fáil and Fine Gael toolbox. The upcoming budget and national economic recovery plan will be an opportunity to do things differently. In many ways it may be a last-chance saloon for the Government to put its imprint on a new economic model and social contract. Unfortunately, the early indications are of some concern.
The presentation of the narrative from some people in Government Buildings when it comes to so-called fiscal sustainability is a little worrying, for example. What is more, this is completely out of kilter with the zeitgeist and winds of change sweeping across Europe. Of course, we will know the colour of the money from the Ministers for Finance and Public Expenditure and Reform on budget day. I look forward to getting a greater understanding of how the national economic recovery fund is designed to work, although we will have to wait until next spring to hear more detail from the Minister on how he proposes to balance the books in future.
Such is the scale of the economic challenge facing us we see fiscal conservatives such as German Chancellor Angela Merkel backing a bigger European Union budget and so-called corona bonds as part of a Keynesian approach to a Covid-19 recovery. The Italian Prime Minister, who leads one of the worst-hit countries on the Continent, has recently stated that Covid-19 is "an opportunity ... to design a better Italy, to work on a serious, comprehensive investment plan that will make the country more modern, greener and more socially inclusive". That is a sentiment backed by other countries right across the Continent.
In contrast, we are hearing clarion calls from certain quarters about the need for a clear and credible deficit and debt reduction plan and the need to return to a balanced budget as quickly as possible. My advice to the Minister is to tread carefully on that front. To be clear, the Minister cannot cut his way out of this crisis and he admitted as much, in fairness to him, in a recent Sunday Business Post interview. I will hold him to account on that commitment not just at the next budget - it will be an unusual budget - but over the lifetime of this Government. To go about cutting now risks turning a health and short-term economic crisis into a long-term social crisis, with the Economic and Social Research Institute already warning against moving too quickly to try to rein in the budget deficit.
Make no mistake, this crisis is fundamentally different from that of 2009, when Ireland suffered a banking, public finance and economic crisis as well as social and reputational damage. We now have options. Put simply, in 2009 we could not borrow but now we can do so at practically negative interest rates. We also have access to a substantial level of grants and low-cost loans as part of an unprecedented European Union recovery plan. Not only may we borrow to invest but it makes practical sense to do so.
OECD evidence demonstrates that when the public capital stock and interest rates are low, borrowing for capital investment in badly needed housing projects, public retrofitting and transport infrastructure, for example, more than pays for itself in the long run. Such State investment is badly needed with the massive drop in private investment within the domestic economy, which has been measured at upwards of 16%. For example, in housing alone, private sector investment outpaces public investment by more than two to one but it is now inevitable that we will see a major drop-off in investment from the private sector while we still have nearly 70,000 people on the social housing waiting list and 10,000 people homeless. One does not need to be an economist to see first-hand what years of underinvestment has done, whether it is in housing, the caring economy or climate action. We are well behind the curve.
Before Covid-19 Ireland already had the lowest rate of general government expenditure in both the European Union and OECD so we are effectively playing catch-up on our European Union counterparts. Increased public investment is required and now is no time for fiscal conservatism.
It would, of course, be churlish of me and my party not to acknowledge the unprecedented and expensive measures that have been taken, many of them paid for with borrowed money over the past few months. They have kept people in work and businesses afloat. The Minister admitted in his contribution that more needs to be done over the short to medium term. In the short term we must absolutely maintain supports for workers and businesses and in the long run we must focus on capital investment and retraining to create the new sustainable jobs and opportunities of the future.
This, however, does not give the Government carte blanche to write blank cheques without care or consequences. It is interesting that over the past few months there has been a lack of clarity in the reporting and oversight of money being spent in response to the pandemic. That is not my opinion but rather what the Parliamentary Budget Office has intimated.
For example, despite the Minister's role being that of guardian of public expenditure, he has repeatedly allowed Cabinet colleagues to come before the House this summer with Revised Estimates allocating billions of euro in additional spending without any concrete or clear indication of the intended outcomes of the expenditure. It is no way to do business and I hope it is a once-off experience.
The July stimulus represented another multi-billion euro bailout to many big businesses. There were very important initiatives for our small and medium enterprise and main street businesses but many big and very profitable businesses benefited from handouts from the Government without any social or environmental conditionality attached whatever, such as the requirement to pay a living wage or commitments to carbon reductions.
We also saw some ill-targeted tax reliefs for people on higher incomes, including an extended help-to-buy scheme and bike-to-work schemes. These kinds of handouts to higher earners will undoubtedly represent a dead-weight loss to the Exchequer; the initial help-to-buy scheme, for example, already proved to be such a loss. I often wonder why the Minister allowed such measures to be signed off but it seems from some of the documentation we have seen that some of the measures were introduced against the advice of expert officials.
With regard to pay increases for the public sector, I note with interest the Minister's recent comments to the media on the 2% pay restoration for public services. Quite frankly and with respect, it was disingenuous of the Minister to suggest the decision to award the pay restoration - not pay rise - was on the basis of public servants doing "a really good job over the past six months". I wonder if these are the same public servants that have been lying on the couch watching box sets, according to the Minister's Fianna Fáil colleague, Deputy MacSharry. As the Minister well knows, the Government had to honour a signed agreement and it was not offering some sort of award to public servants for their good service.
I ask the Deputy to propose the adjournment. He will have just under two minutes left in his slot. I am sure a number of us want to get home to watch those box sets at this hour of the night.
Indeed.
