What’s More Important – Public Health Or Enterprise?

Accountancy firms have an insider’s view of the financial stress on clients caused by Covid trading restrictions. Most senior executives in the sector believe government’s response to the pandemic has been correct, writes Emily Styles

The unwinding of the third and longest lockdown is proving to be painfully slow for enterprises in the most restricted sectors. These firms have been maintained on life support by state wage subsidies, rates waivers and other schemes such as the CRSS, now extended out to June 2021.

Accountants and business advisors across the spectrum give ministers credit for these supports, though they are concerned about what happens when the supports are withdrawn. For the professionals themselves, most report that they coped well with the sudden lockdown a year ago, thanks to prior investment in IT systems. Ongoing operational issues continue to surround keeping spirits up among their remote workers, particularly recent hires. Consultancy has become more challenging in the absence of face-to-face meetings with clients, as has the audit process.

The official mantra since the start of the Covid-19 crisis is that restrictions and lockdowns are the only way to suppress the virus in order to prevent hospitals being overwhelmed with patients, and to save lives. For a substantial minority in Irish society, including thousands of the accounts firms’ clients, the trade-off has been much-reduced income, financial and personal stress, and unemployment. For the state, there is a soaring national debt burden that young people, not at risk from the disease, will have to service in future decades through taxation on their earnings.

So has government struck the right balance between public health and protecting enterprise and employment? Yes, with some caveats, seems to be the consensus among leaders in accountancy firms.

Paul Wyse, Smith & Williamson My dad’s favourite saying was ‘your health is your wealth’, so health always has to come first, and I think the government has tried its best to ensure that the health of the nation has been placed before everything else. As we move through 2021 and the vaccine roll-out continues, we will need certainty from government around re-opening the economy and driving business confidence. What businesses could do without is last-minute changes to re-opening dates and more uncertainty.

Frank O’Keeffe, EY Ireland Trying to find that balance between economic imperatives and human health is incredibly challenging for governments all over the world. On top of the sizeable challenges they were already facing, governments, including both administrations on this island, are grappling with the enormous human, economic and social costs of the pandemic. While some governments have managed relatively well to minimise these costs, they all have big decisions to make about what they’ll prioritise when this crisis finally passes.

Today’s decisions will shape tomorrow’s world. From global trade to travel and tourism, the crisis offers governments a chance to rethink their operations and to build back better for the sake of all of their citizens. Millions of jobs and livelihoods depend on it.

Ned Murphy, Moore Ireland This is undoubtedly a ‘Sophie’s Choice’ scenario as both outcomes are equally so important. The true test for the economy will be government supports post-pandemic.

Vivian E. Nathan, Roberts Nathan There is way too much focus on public health and not enough on enterprise and employment. The government is completely under the control of the main media organs, and frame their entire response around that. We need to move past this, but the media won’t allow it, and thus the government seems powerless to do so.

John Donoghue, ifac Health comes first. When you aren’t directly affected by Covid, it is easy to lose sight of how deadly the virus is. We are very lucky to be in professional services and in a position to continue working and earning our incomes. There is little doubt that Covid restrictions and loss of income are major contributors to mental health issues. Vaccinating the most vulnerable as soon as we can is vital.

Michael Fitzpatrick, Fitzpatrick & Associates The government tried its best and it had to do something or there would have been a tsunami of insolvencies. The longer we are in revolving lockdowns, the greater the risk of large-scale business failure when government supports eventually come to an end.

I worry that many businesses are simply on ‘life support’ and may not recover post-Covid. Many businesses were also still dealing with legacy issues from the financial crash when Covid struck, while vulture funds have not gone away. It is critical to get the economy opened again in a safe way, with no more lockdowns.

Dylan Byrne, OSK It was always going to be difficult to strike the correct balance. We are in uncharted waters, and only time will tell. When the government first introduced the Covid-19 restrictions in March 2020, there was widespread buy-in by the public, and everyone appreciated the speed at which they introduced the initial TWSS and other business supports, relative to other countries. However, as time has moved on, it is less clear that ministers are striking the right balance between public health and protecting enterprise and employment.

Michael Costello, BDO Ireland Striking the right balance between suppressing the spread of Covid-19 and protecting enterprise has been an ongoing issue throughout the world’s economies since the pandemic began. It’s an ever-changing balancing act that depends entirely on how prevalent the virus is at any one time. In this context, government has done a good job of implementing protective measures to sustain employment levels and providing temporary supports.

There won’t be a healthy economy without the suppression of the virus. Until a vaccine has been administered nationally, ongoing supports and schemes will be required to ensure the long-term sustainability of businesses.

Donal O’Leary, PKF O’Connor, Leddy & Holmes The government should have stopped international travel, and they still have not managed this correctly. If the internal economy were able to function like New Zealand’s, then the economic impact would have been lessened. The government is too slow in making decisions to allow parts of the economy that have less risk to function.

Naoise Cosgrove, Crowe There are so many competing interests and stakeholders, that no matter what decisions are made, ministers cannot keep everyone happy. The pandemic has proven to be very unpredictable, which makes planning incredibly difficult. While business owners and employees would like certainty around lockdown timelines and the easing of restrictions, this has not been possible. At this point the priority should be to accelerate the vaccine roll-out, so that we can safely re-open the economy.

Frank Walsh, Walsh O’Brien Harnett This is a global pandemic and governments across the world have made mistakes in how they have handled the balance between public health, business and employment interests. In Ireland it is clear that protecting our public health is in the best interest of business and employment in the longterm. While the timing of measures may seem incorrect at times, the objective of protecting the people from the pandemic is mainly being achieved, and government should be commended for this.

I think we have all learned the importance of clear, transparent communication in dealing with all stakeholders in our businesses. Perhaps the government would be better served in having a clearer message and being more open and transparent with the public.

Jim Stafford, Friel Stafford The government needs to be faster in passing helpful legislation. There is still no sign of the promised legislation to lift the €3m cap on Personal Insolvency Arrangements. There is also an urgent need to pass the legislation for the promised Summary Rescue Process. The Company Law Review Group provided a detailed report to the minister last October on the proposed SRP to help rescue SMEs in financial difficulty. Instead of immediately drafting legislation, the government issued a consultation paper in February. I recall the original examinership legislation was passed in just a couple of days. SMEs urgently need this low-cost rescue mechanism to deal with creditors, particularly unreasonable landlords.

Ciara FitzGerald, BKRM Nexus The government reacted well in terms of supporting domestic businesses with the various schemes. However, policy on Covid restrictions could have been managed better. Hopefully the government can work out a plan to allow hairdressers, restaurants, construction and even wet pubs to re-open once the infection rate is under control. Most of these businesses operate in controlled, managed environments and are willing to work within government guidelines, if it means they can open their doors.

Owen Sheehy, McInerney Saunders Public health and safety had to be the priority first and foremost, and the government response at the outset of the pandemic to support businesses was swift and decisive. The level of supports for businesses, whether trading or closed, has ensured the survival of many businesses that surely would have otherwise ceased trading.

With these supports, businesses in the worst-hit sectors such as hospitality, personal services and non-essential retail can survive, and hopefully resume normal activity when restrictions are lifted and the country gets back to some form of normality.

Paul Doran, DBASS It is very difficult to protect enterprise and employment in the midst of an everchanging pandemic. One thing is certain – we should have learnt a lot by now in relation to the stop-start nature of lockdowns and the effect travel and movement has had on reintroducing problems. To be fair, our story has been repeated across almost the entire western world.

The longer this goes on, the more chance there is of people’s spending and behaviour patterns not returning to what they once were, and this will result in a lot of family businesses closing. It may also make us more willing to shut down the country again in the future. We certainly need a long-term plan for dealing with public-health emergencies in case this is not just a once in a hundred years event.

Harry Goddard, Deloitte Ireland While our enterprise has not been significantly impacted through the pandemic, it is unfortunate to see good businesses closing down, with accompanying job losses. Despite this, I do believe that we have no economy without an environment that is safe for our citizens and our society, and as such, I think the government has got the balance about right.

Michael McAteer, Grant Thornton As we all know, the pandemic situation is unprecedented in our lifetime and the government had to act as quickly as possible.

I think their first priority was – and is – to protect and save lives and not overwhelm the health system. On this score they did a good job.

Politicians and policy makers have done their utmost to protect and preserve businesses and employment. Unfortunately, however, there will be unavoidable permanent business closures and employee reductions due to the pandemic. Once the worst of the pandemic is over and the vaccination deployment is ramped up, government will have to concentrate its effort and supports on those industries worst hit, such as hospitality and aviation. While I believe these sectors will recover, they may need additional supports to get there.

Seamus Hand, KPMG Ireland In the past few months, our entire society has learned so much about the importance of our public-health agenda and how devastating a virus like this can be for a society. We have also seen the deeply negative impacts of lockdown on business and on our economy, our society and our mental health. While there will be lessons for all when we emerge from this pandemic, I believe the efforts of government and the public sector have demonstrated strong leadership, and provided stability to protect the vulnerable and our economy.

Mark Kennedy, Mazars To flatten the infection curve and protect public health, restrictions on public activity and business activities are necessary. While support schemes such as CRSS and EWSS have been helpful, what is needed now is a clear roadmap for business re-opening, how they will be supported, and for how long. Businesses need to plan and need to know the parameters within which they can do so.

Government should withdraw Covid-19 supports for businesses on a phased basis for different sectors, especially for smaller companies and those exposed to Brexit that face a particularly challenging period. This type of approach would allow businesses to reorganise and restructure, as there is concern among the business community about an immediate return to normal.

Mark Butler, HLB Sheehan Quinn The current supports are necessary expenditure and are sufficient for firms without substantial debt. A lot of those businesses will have a challenge in redefining and pivoting their operating model. However, there is no doubt that the pandemic will have changed the landscape for many in the retail and hospitality sectors.

David Gleeson, RBK Ministers have done a good job in very difficult circumstances. The challenge will be to provide the appropriate level of supports when the country starts to come out of the crisis, so that viable businesses can survive, by giving them appropriate time to repay debt warehoused during the crisis. This may also include some element of debt forgiveness.

John Glennon, RSM Ireland Our clients in the hospitality, construction and artistic worlds have been the most affected. Perhaps the true result of the economic damage to these sectors won’t be visible until the supports are withdrawn. Balanced against this is that the changing landscape has provided opportunities, and we have seen many of our clients adapt their businesses in a positive way. In recent months, we have also experienced the pickup in globally active clients coming to Ireland or expanding their existing operations in Ireland.

We have a significant globally active client base, and if we have learnt one thing during this pandemic, is that no country or economy is an island. It may be a longer haul and certainly a global haul before international business can return to normal pre-pandemic conditions.

Until the virus is tackled globally, business travel and trade won’t return to its optimal level. So governments everywhere need to do whatever it takes to finalise the vaccination of all countries, so that we can return to necessary business travel to generate trade, and normal FDI flow is resumed. So it’s an urgent global issue, as well as being an Irish government issue.