Irish political update – Final week of Government negotiations

The final week of talks is expected to be filled with difficult conversations and decisions as the talks centre on housing, transport, agriculture and potentially Brexit. As negotiations near the finish line, we can begin to speculate about what we may see included in the anticipated draft programme for Government.  

There is growing uncertainty surrounding the UK’s future trading agreement with the European Union, and as a result, Tánaiste Simon Coveney is looking for the approval to draft a new omnibus bill that will deal with the likelihood of a no-deal Brexit. The issue will be discussed at a Cabinet meeting today, and although Covid-19 has controlled much of the debate in recent weeks, Brexit will need to be a high point of consideration among the parties looking to form a new Government.  

A slow and phased return to work 

While some sectors are still facing lockdown, some have gradually been given the green light to reopen their doors to customers. At one point, we saw over 1,250,000 people in receipt of some sort of social welfare payment, be it through the Temporary Wage Subsidy Scheme, the Covid-19 Pandemic Unemployment Payment, illness benefit or another form of social protection or jobseeker’s allowance.  

The reopening of construction sites and other sectors saw many resume work last week, which later saw over 33,000 people receive their final €350 payment. As we progress through the reopening phases, and continue to suppress the virus, this figure will grow and simultaneously ease the burden on the Department of Social Protection and Employment Affairs, however, the reality is stark; some businesses will no longer be viable and people will be without jobs more long-term as a result of the pandemic outbreak.  

What should we expect to see in the draft programme for Government? 

Business supports and the financing of the economy have dominated the negotiations in recent days. The new programme for Government will need to address the many challenges facing small and medium sized businesses as well as the new rise in unemployment figures. The outlook is uncertain, and many business owners will be hoping for security in the form of zero-interest business loans or grants to get them through the recession.  

Educating and reskilling the workforce 

Reskilling workers post-Covid will be crucial if the State is to achieve such low figures of unemployment again. The Government will need to work with further and higher education institutes, as well as other adult training centres, to create accessible streams of education that will meet the new requirements of the Irish economy and workforce. In an already struggling and underfunded education sector, managing the potential influx of learners will be difficult and will require a well-thought-out strategy.  

With a shift towards automation and digitisation due, recognising the country’s skills shortages and putting in place a focused programme of support that will include apprenticeships, new education and training opportunities and the creation of new jobs will be an important factor of the recovery.  

Apprenticeships 

This week we saw the Teaching Council announce that newly qualified teachers will have to complete any outstanding time left in their induction process when schools reopen. The announcement has been criticised as many of these teachers have been working remotely during the school closures.  Apprenticeships are now facing a similar issue because of the forced restrictions and how this will affect them and the completion of their apprenticeship programme will surely have featured in the new Government formation discussions.   

Construction workers 

During the last recession, many construction workers emigrated to find new work as construction growth experienced a sharp decline and capital infrastructure projects were put on hold. To avoid such an occurrence again, the new Government will need to ensure capital projects are protected so that Ireland will not experience a bottleneck of production in years to come. With the Green Party’s involvement, green construction will be on the agenda and any rollout of largescale retrofitting programmes will require necessary training for these construction workers.  

SME supports 

We have previously discussed soundings of an SME Taskforce to help the sector through Covid-19, which at this stage would be a shock if it were not included in the programme for Government. This has been a key feature of industry group proposals alongside the establishment of a new commission on taxation which will review current taxation measures which may need to be altered in response to Covid-19 and longer-term taxation issues such as environmental taxes. 

In budget 2020, the Government was criticised for not going far enough with its changes to the Key Employee Engagement Programme leaving the scheme inaccessible for many start-ups and fintech firms. These firms will be hoping to see their criticisms addressed in the new programme for Government which could prove largely beneficial in retaining employees. 

The Public Services and Procurement (Social Value) Bill fell with the dissolution of the 32nd Dáil, but we can expect to see this Bill return either in its original format or with some amendments to give more opportunity to Irish SMEs that wish to compete in a procurements process for public projects.  

The introduction of the Online Trading Voucher Scheme and the Covid-19 Online Retail Scheme which aim to support businesses to increase their capacity to trade online has been welcomed and has assisted many businesses to continue trading. If the predicted acceleration in the shift towards digital systems, services, and operations is true, businesses will need further support in transitioning to a majority online business model. The obvious solution would be to continue the rollout of these SME supports or to expand them to include further upskilling and training spends.  

Some parties have been calling for zero-interest loans for businesses to support them in returning to profitability, yet there has been no indication as to whether this has been achieved between the parties involved in forming the next Government. 

Insurance industry 

Pressure has been mounting on the Fine Gael led Government for months to tackle the insurance industry and if it is not heavily featured in the next programme for Government, Sinn Féin’s Pearse Doherty will be sure to lead the opposition in slamming the new Government for its avoidance. Insurance companies have felt the brunt of negative media attention during the crisis for their handling of business interruption cover and whether businesses would be compensated for losses endured during Covid-19.  

A new insurance committee has been mooted as a potential mechanism of examining the current situation in-depth and producing recommendations to Government that will address the problems within the insurance industry.  

Ireland’s recognisably high cost of insurance is an alleged result of the claims-culture we have here, so in order to truly tackle the cost of insurance, the new Government will also need to look at the extend of fraudulent cases and work out a way to minimise the negative impacts on the industry so that insurance prices can fall for customers. Towards the end of last year, conversation also included a ban on insurance dual pricing which could potentially be legislated for during the next Government’s term.   

Looking ahead? 

Government formation talks continue into what is expected to be the final week on Monday. Tougher discussions on issues such as housing, transport and agriculture are leading to a slight delay in decision making among the negotiation teams.  

Parties are moving towards preparing their memberships and Ard Comhairle for a postal ballot. However, by the time approval is sought from memberships on the new programme for Government, it could be the final week in June before we see a vote on the new Taoiseach.  

One of the first ports of call for the newly formed Government will be to pass legislation which will allow the banks to provide the agreed €2 billion credit guarantee scheme.  

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