July Stimulus lacks real ambition and fails Labour’s five tests

Ged Nash TD
23 July 2020
  • Labour call for VAT cut endorsed by plan, but reduction must find its way into people’s pockets

The Government has failed to meet Labour’s Five Tests for the July Stimulus, said Labour Finance and Public Spending spokesperson Ged Nash TD.

The package, he said, lacks ambition and fails to put real money in people’s pockets that would be spent locally sustaining jobs and businesses.

Deputy Nash said;

“Labour set out five tests for the July Stimulus. It needed to be big enough to reverse the economic harm of COVID-19 and to boost the economy in advance of Brexit at the end of the year.

“It must help the creation of good jobs, especially for younger workers who have been hardest hit by the current crisis.

“More than that, the July Stimulus should have seized this one-off opportunity to direct our economy in a new more caring and sustainable direction, to reduce economic and income inequality and to invest in public services like healthcare, housing and education.

“I welcome some of the initiatives in the Government’s stimulus package, including an extension of the Temporary Wage Subsidy Scheme as a short-time working scheme, which is something Labour has called for repeatedly. The devil will be in the detail and the scheme must come with strings attached in terms of lay-offs, training and the displacement of existing full-time jobs.

“I also welcome the announcement of a major training and upskilling programme though its scale is underwhelming and appears to fall short of Labour’s call to triple investment in skills.

“Labour’s call for a 2% cut in the standard rate of VAT has been endorsed by plan, but the reduction must find its way into people’s pockets.”

Labour’s Finance spokesperson continued;

“The ambition in the plan is sadly lacking. Labour called for at least €10 billion of investment to be frontloaded to counteract the expected loss of €36 billion from economic output this year compared to last year.

“However, the Government seems to only be willing to invest €5.4billion and has massaged the figures by including a full €2 billion to cover the cost of the full potential State liability under Credit Guarantee Scheme.

 “There is a serious risk of the July Stimulus being too little to save many viable jobs. As a result, it will cost more to get people back into new jobs and businesses in the future by not thinking big now.

“The Government’s decision to fund restart grants makes sense as many businesses have to make physical alterations to their premises for COVID-19 precautions. But where is the conditionality for public money?

“Businesses in receipt of cash should be required to meet high standards of employment and environmental protection, and the State should have the ability to claw back grants from companies that breach these standards.

“It is also a fundamental mistake for the Government to focus support on businesses exclusively rather than consumers too. Labour called for a €10 rise in social protection payments as we know this money will be well spent in local areas, boosting businesses on main streets across the country.

“The Government needs to immediately move to repair the balance sheets of local government to cover the loss of commercial rates. Local government has also taken on extra costs to cope with COVID-19 and it would be timely to boost their revenue to support local initiatives like town centre revival and pedestrianisation schemes.

“While the tax refund ‘Stay and Spend’ scheme for hospitality may help the tourism sector, it fails the test of economic inequality. Those on the lowest incomes and those who have lost their jobs will not be able to avail of this scheme as it appears to require spending of at least €600. 

“It is also not likely to create good quality jobs, as tourism is a low wage sector with many precarious and part-time jobs. This is a missed opportunity to invest in areas that will provide higher quality jobs and to force the sector to comply with legislation to engage in sectoral collective bargaining 

“The investment in town centres, cycling infrastructure and school minor works is a welcome investment in public services.

“Overall, I acknowledge that the Government has made some headway towards meeting Labour’s five tests, but they have still failed to do enough to match Labour’s ambition for this country.”

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