Daniel McConnell: Government on a rocky road looks to turn the corner

Daniel McConnell: Government on a rocky road looks to turn the corner
Handout photo of Tanaiste Leo Varadkar and An Taoiseach Micheal Martin at the Post-Cabinet press briefing in Dublin Castle.

This Government’s start has been rocky, to say the very least.

In its 26 days in existence, we have seen an original Cabinet line-up engulfed in controversy, a ministerial resignation, delays to the easing of Covid restrictions, and now inner coalition tensions over the ‘green list’ of safe countries for travel.

All of these individual scandals and foul-ups has allowed the Opposition to pile in and present an image of a Government in chaos.

Some of the criticism is fair and warranted. Some of it is opportunistic and over the top.

Former Tánaiste Simon Coveney had little choice but to acknowledge on RTÉ Radio on Wednesday morning that it has been a “difficult start” to the life of this historic tripartite coalition.

Notwithstanding those initial teething problems and tensions, the publication of the July stimulus plan, of up to €7bn, represents the Government’s best opportunity to wipe the slate clean and start again.

Designed to respond to the challenges posed by the coronavirus pandemic, the scale and ambition of the plan is the third phase of the State’s response to the “severe recession” we find ourselves in as a result.

In keeping with the fine tradition of recent budgets, much of the plan has made its way into newspaper pages here and elsewhere.

One of the major elements of the plan will be the tax rebate to consumers who spend money in hotels and other tourist locations, which the Irish Examiner reported upon last Saturday.

As we are revealing this morning, this rebate is to be in place until 2022 — a clear sign that the tourism sector faces a very difficult time next year, as well as being decimated this year.

The reasoning for only introducing it from September is because hotels are already full in August, and any tax break would only benefit the establishment owners.

It seems the public will be able to use an app on their phones to scan their receipts and apply to Revenue for the rebate. 

We also know that the two major measures introduced by the last Government at the start of the crisis — namely the pandemic unemployment payment (PUP) and the temporary wage subsidy — will be extended until next April, while being phased down. 

These are significant and very costly extensions to the payments which have offset the harshest realities of the crash for thousands of businesses and hundreds of thousands of workers.

There will also be a huge emphasis on retraining people, with 35,000 apprenticeships included in the plan, as well as an enhancement of the so-called Restart grant which had been capped at €10,000.

But whatever about the substance of the plan, it is also a very important political milestone for the coalition.

For the likes of Michael McGrath and Paschal Donohoe, Simon Coveney and Dara Calleary, it is a chance to demonstrate as the “serious heads” in Cabinet that the two old enemies can actually work together.

For the Greens, they need to demonstrate that their fingerprints on the plan also, with Eamon Ryan and Catherine Martin likely to feature heavily, given the portfolios they hold.

The plan presents this shaky coalition a chance to lay the ghosts of the past four weeks to bed and demonstrate the capacity needed to run the country.

Let's see if they pass their first real test — or will their bad luck continue?

What's in the July stimulus plan?

  • Over €6bn divided between grants, stimulus, and tax rebates across all sectors;
  • Capital project spend this year will rise to €8.9bn in order to restart the construction sector;
  • The temporary wage subsidy scheme and the pandemic unemployment payment will be extended until April, but tapered over time, with the €350-per-week top rate cut by €50 in the coming weeks, and will be further reduced over nine months until it reaches €203-a-week, the current jobseekers' allowance rate;
  • 35,000 new apprenticeships created, with a particular focus on retraining people "in their 40s and 50s" whose jobs may not return after the pandemic;
  • €2bn credit guarantee scheme for businesses, increased business reopening grants, and an extension of the commercial rates waiver;
  • An additional €250m has been allocated for the Restart grant for businesses;
  • Consumer tax rebate from September to encourage domestic tourism, run by Revenue, will see an app created to scan receipts and may include hotel breaks and restaurant meals;
  • Department of Media, Tourism, Arts, Culture, Sport and the Gaeltacht has secured over €300m for entertainment support packages, grants for musicians through local authorities, TV production funds, and subsidies for sports centres;
  • A special entertainment grant will be set up for festivals or theatre productions to fund shows and events;
  • Department of Agriculture, Food and Marine to receive an additional €20.4m;
  • Department of Business, Enterprise and Innovation to receive nearly €500m;
  • The Department of Children and Youth Affairs will receive €14m for capital grants;
  • A total of €220m for additional capital funding will be allocated to the Department of Health for capacity expansion and new ICT.
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