National Recovery Fund will provide stimulus in 2021
:: McGrath remains tight-lipped on how much will be set aside
PUBLIC Expenditure Minister Michael McGrath told TDs the Government’s Budget strategy will be to prioritise crisis management to meet the challenges posed by Covid-19 and Brexit while preserving existing levels of State services.
In two hours of questioning by the Budgetary Oversight
Committee he gave little away about specific measures in next Tuesday’s big announcement.
But he did offer hints on the Government’s plan for a National Recovery Fund and on deliberations over the future of the Covid-19 Employment Wage Subsidy Scheme (EWSS).
Here are five things we learned.
The ‘bunny out of the hat’
Mr McGrath said around €9bn will be spent on Covid-19 next year with around €3bn more being provided in 2021 for current and capital expenditure.
He also said there will be a National Recovery Fund to provide a stimulus to the economy.
The minister was tightlipped on how much will be in the fund despite persistent questioning by Sinn Féin’s Pearse Doherty. He asked if it would be €550m or €5bn, but to no avail. Mr McGrath insisted the sum is not finalised yet.
Extending Employment Wage Subsidy Scheme
The current EWSS is due to end on March 31, although nobody believes the pandemic will be over by then. Labour TD Ged Nash put it to the minister that it will need to be extended in some form. He said businesses and workers need certainty. Mr McGrath said €2.7bn has been spent on wage subsidies so far and it has been extended for almost another six months from now. He said the issue is being “considered in the context of the Budget”. He added: “We are under no illusions about the level of dependence that many employers have on that scheme now. We need to think very carefully about the future of that scheme and particularly around an abrupt end to it.” He told Mr Nash: “We hear your message.”
‘Large increase’ in transport spending
The Government is reviewing the National Development Plan which details capital spending like road, rail and other infrastructure and building projects.
Mr McGrath said that €9.2bn is set aside for the NDP for next year – around €1bn more than had originally been planned for 2020.
Mr McGrath didn’t name any specific projects like Metrolink, BusConnects or the M20 motorway between Cork and Limerick. Mr McGrath also told TDs that preparations at Dublin Airport and Rosslare Europort for Brexit have been completed but some work at Dublin Port will go into 2021.
‘Costly lesson’ learned on the NCH overspend
The cost of the National Children’s Hospital has spiralled to more than €1.7bn and there
have been predictions it will top €2bn.
Mr Nash asked how the lessons learned on the project can be applied. Mr McGrath said he’s been briefed on the NCH project and lessons do need to be learned about project management. He said of the children’s hospital project: “It’s a costly lesson. But it’s one that we’re determined to have learned.”
We can’t assume we can borrow forever
Mr McGrath predicted that the deficit for 2020 will be around €25bn amid the pandemic.
He said: “Next year’s deficit will also be very significant – less than €20bn but still very significant.”
Fine Gael’s Bernard Durkan asked if the State has adequate borrowing resources. Mr McGrath said: “There is borrowing capacity there at the moment but we can’t assume that will be there forever and that is why we have to make sure that we make the right decisions, that we focus on the recovery of our economy as well as maintaining and improving public services and that we try to bring about greater employment.”