Wednesday July 8, 2020

Comment: Economic recovery requires a new government now

The programme for government might not be perfect but as the country faces crises on multiples fronts, we can’t risk falling further behind. It is time to stop talking and get on with the job of governing

22nd June, 2020
Rocks Jewellers on Grafton Street in Dublin preparing to reopen earlier this month: More businesses are back up and running but they need greater supports and a government is required to deliver them

The programme for government is no doubt ambitious but, by its very nature, it is a platform from which to work. While I know there are critics, we must look past politics now and consider the bigger picture.

We have a healthcare crisis, a housing crisis, a climate crisis, and we are on the verge of an economic crisis. On a micro level, there is a serious need for reform in our childcare sector, our insurance industry and in areas such as online safety.

To address these issues, we need a number of things to align, but most importantly, for now, we need a government and a strong economy.

Ireland is already at a competitive disadvantage in terms of its response to the Covid-19 crisis. This comes down to the fact that we did not put liquidity measures in place early enough. As we did not have a new government in place, we could not enact legislation to provide the standard state-guaranteed lending facilities which other businesses across the world are now accessing.

Government-backed business loan schemes in Germany, France and Switzerland have been in operation for months. The UK, our closest trading neighbour, was out of the blocks in March, introducing a number of lending schemes to assist in the liquidity needs of businesses such as the Coronavirus Business Interruption Loan Scheme which charges no interest for 12 months and is 80 per cent government guaranteed. It also introduced a Bounce Back Loan Scheme in April which offers loans of up to £50,000 and which is 100 per cent government guaranteed.

The US has extensive state-backed measures in place too running through the Small Business Administration agency and the federal government, while in India an economic package for the micro, small and medium enterprises sector has been providing liquidity to companies for months.

The government made great strides with the Temporary Covid-19 Wage Subsidy Scheme and even the Restart Grant, but there is a lot more that needs to be done – and it requires a functioning parliament. Measures such as the Start-up Relief for Entrepreneurs scheme, warehouse business tax liabilities or establishing the purposed code of conduct between landlords and commercial tenants all require a government.

Put plainly, we are falling drastically behind, and it will have a knock-on effect on our ability to recover.

Without coming across as an alarmist, we are also facing a steep uphill battle with Brexit. If a deal is not reached, we are looking at the introduction of the World Trade Organisation (WTO) tariffs on goods between the UK and the EU. To give this some context, under the WTO rules, cars would be taxed at 10 per cent and dairy products on average 35 per cent. When you compare that to existing EU tariffs of an average of 2.8 per cent, this is far from ideal.

On a more global footing, we have difficult conversations on the horizon about the EU proposed digital tax and trying to defend our domestic and foreign-direct-investment interests in the upcoming OECD tax reform debates. These conversations are not years away, and they require leadership.

The economic effect is not the only reason I am supporting this programme for government, but it must be a key consideration. Irish businesses, and especially SMEs, cannot stand still for much longer as they wait for us to get our act together.

Let’s look at it through another lens – the impact on crime and public safety. Two laws aimed at the membership of criminal organisations and organised crime are due to lapse on June 29. They can only be extended if passed by both the Dáil and the Seanad. The ramifications of failing to extend these laws could have a significant impact on many communities.

The proposed programme for government involving Fianna Fáil, Fine Gael and the Greens has taken time to emerge. Granted, it was a complicated process considering the intrinsic differences between the parties involved, our membership bases and the Covid-19 crisis. Still, we are here now, and we owe it to the country to get on with it and govern.

Robert Troy is a Fianna Fáil TD for the Longford-Westmeath constituency and his party’s spokesman for Business, Enterprise and Innovation

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