Emergency Measures – Human Rights and Cost Implications - and COVID-19

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Two important pieces of legislation dealing with emergency measures as a result of COVID-19 were published last month. On the 20th March 2020, the Health (Preservation and Protection and other Emergency Measures in the Public Interest) Act 2020 was passed into law, having been initiated just four days earlier.  One week later, the Emergency Measures in the Public Interest (COVID-19) Act 2020 was passed.  These were the first pieces of “Emergency Powers” legislation in Ireland to follow the advent of the COVID-19 pandemic. 

Health (Preservation and Protection and other Emergency Measures in the Public Interest) Act 2020

On the 20th March 2020, the Health (Preservation and Protection and other Emergency Measures in the Public Interest) Act 2020 (the 2020 Health Act) was passed into law.  Part 2 of the 2020 Act introduced amendments to the Social Welfare Acts, 2005 to expedite the processing of COVID-19 illness payments, ensuring that these payments could be made immediately to those affected, rather than disregarding the first three days of non-employment, as is usually the case.  It is also payable to the self-employed. 

The sections of the 2020 Health Act relating to social welfare payments are to continue in operation until the 9th May 2020. Social Justice Ireland welcomed the introduction of these payments, the Government’s tacit acknowledgement that €203 per week (the basic welfae rate) is insufficient, and commends the Department of Employment Affairs and Social Protection for stepping up their payment capacity to deal with the hundreds of thousands of applicants within a short space of time.  We further hope that Government will extend the operation of Part 2 of the 2020 Health Act until such time as those in receipt of the COVID-19 payments return to employment.

Part 3 of the 2020 Health Act, and specifically the Statutory Instruments passed to give it effect[1], introduced a series of restrictions on travel, movement within the State and public gatherings, cognisant of the “immediate and manifest risk to human life and public health” caused by COVID-19.  It further[2] allows the Gardaí to arrest, without warrant, any person who they reasonably believe to have contravened the 2020 Health Act. 

While the operation of the Statutory Instrument was limited to the 12th April 2020 (and subsequently amended by another Statutory Instrument until the 5th May 2020), Part 3 of the 2020 Act conferring these emergency powers on the Minister for Health to make these regulations remains in operation until the 9th November 2020.  It is important that this legislation is retracted once this crisis passes and these emergency powers are no longer capable of being operationalised.

In its statement following the enactment of the 2020 Health Act, the Irish Council for Civil Liberties (ICCL) agreed that these limitations were “necessary to protect our rights to life and health” welcoming, in particular, the sunset clause placing a time limit on their use, but warned that exercise of these powers should be proportionate in the protection of public health[3].  In a subsequent statement, following the extension of the exercise of these emergency powers until the 5th May 2020, the ICCL called for the extraordinary powers of the Gardaí not to be used and, instead, for Gardaí to take a “community policing approach” to enforcing the legislation[4].  In addition to the very real civil liberties concerned, this is an important consideration for the preservation of relationships between the Gardaí and communities in a post-COVID-19 society.

Emergency Measures in the Public Interest (COVID-19) Act 2020

On the 27th March 2020, the Emergency Measures in the Public Interest (COVID-19) Act 2020 (the 2020 Emergency Measures Act) was enacted.  While still concerned with the “grave risk to human life and public health” posed by COVID-19, this Act also sought to mitigate the “adverse economic consequences resulting, or likely to result from the spread of that disease and to mitigate its impact on the administration of vital public service functions”.  This Act remains in operation until the 9th November 2020.

One of the headlines from this piece of legislation was that it introduced, in Part 2, a prohibition on evictions for a period of three months[5].  This three month period will not count for the purpose of conferring rights on tenants in place for less than six months that they would not otherwise have had under the Residential Tenancies Act 2004, nor is it counted as part of the notice period where tenants have been served with notices of termination by their landlord and the termination date falls within the three month emergency period.  The three months are essentially frozen. 

Another headline issue arising from this piece of legislation was a “rent freeze”.  This means that landlords are not only prohibited from increasing rents during the three month period, they cannot backdate any intended rent increases during this time as arrears of rent due to them when the crisis passes.

What would, just a few months ago, have been seen as an insurmountable breach of the Constitutional rights of landlords was possible to enact in an emergency in a matter of days. 

Part 7 of the 2020 Emergency Measures Act introduced the Temporary Wage Subsidy, a scheme available to employers whose business has been adversely affected by the pandemic.  In order to be eligible for the scheme employers must be experiencing “significant economic disruption” from the crisis; have a demonstrated decline in turnover of at least 25 per cent; be unable to pay normal wages and outgoings; and be retaining their employees on the payroll[6]. 

The subsidy will account for up to 70 per cent of an employee’s wages (increased to 85 per cent for employees with an average wage of less than €412 per week, and €350 for employees previously earning between €412 and €586 per week[7]).

Social Justice Ireland welcomed this subsidy and the Governments further implicit acknowledgement that basic social welfare rates do not provide adequate income replacement.  We further welcome Part 8, which explicitly excludes any temporary lay-offs as a result of this crisis from redundancy calculations.  However, there needs to be greater awareness of the tax implications for employees who avail of payments under the Temporary Wage Subsidy who may not be aware that while the calculation for the payment is based on their net (i.e. after tax) wages, payments received may themselves be subject to tax “on review at the end of the year”[8].  This potentially means that workers who experienced a 15-30 per cent reduction in take-home pay during the crisis will be liable for an additional tax bill at the end of the year.  Social Justice Ireland urges the Government and Revenue Commissioners to take a hardship approach to the calculation and collection of any such tax liabilities.

Parts 3 to 6 of the 2020 Emergency Measures Act concern extensions to time periods for planning, registration of certain health care professionals and defence force personnel and amendments to the Mental Health Act 2001.  While part 9 concerns amendments to the Civil Registration Act 2004.

The Economic Cost of Emergency Measures

Over 507,000 people have been issued with the COVID-19 Pandemic Unemployment Payment[9] and over 41,000 employers have registered for the Temporary Wage Subsidy Scheme, with 219,400 employees having received at least one payment[10].

The Government’s Parliamentary Budget Office recently published its analysis of the Emergency Measures in the Public Interest (COVID-19) Act 2020 estimating an additional €3 billion in spending in Social Welfare, Healthcare and Business supports, increases of 11 per cent, 18.8 per cent and 1.2 per cent respectively on what had been allocated following Budget 2020.  Neither this estimate, nor the estimated package of €3.7 billion in respect of the Health (Preservation and Protection and other Emergency Measures in the Public Interest) Act 2020 are clear on any additional employment costs for the public sector as a result of re-registering essential personnel, overtime, working from home allowances and so on.  These costs do assume a total of 800,000 people accessing either the Wage Subsidy Scheme or the social welfare payments for 12 weeks and additional qualified adult rates for those in receipt of standard jobseeker and illness payments.

On the 21st April 2020, the Department of Finance published its Draft Stability Programme Update showing a “fundamentally changed” economic landscape.  This estimated total expenditure of €8 billion on COVID-19 measures and the associated impact on income supports in the second half of the year.  Given that COVID-19 payments are set to stop after six months under the current legislation, it is unclear what is projected within these estimates on income supports – the continuation of the specific payments or a transfer from this payment to the basic Jobseekers rates.

In addition to this estimated €6.7 billion in expenditure, is the cost of revenue foregone.  The Draft Stability Programme Update estimated a fall in GDP of 10.5 per cent and a projected general Government deficit of €23 billion this year.

Total taxation revenue is set to decline by 16.4 per cent to €49.6 billion.  Reductions in the national wage bill, employment and earnings per capita, are expected to lead to an annual decline in income taxes of €4.7 billion, reductions in consumer spending (predominantly due to temporary closures of non-essential retail outlets) is expected to result in a decrease in VAT of €2.8 billion and excise of €0.8 billion on last year.  Corporation tax receipts, which have resulted in windfalls for the Exchequer in previous years, are expected to decline by 6.5 per cent, a decrease of €0.7 billion on last year.    

Estimated increases in expenditure of between €6.7 and €8 billion and projected decreases in revenue of €9 billion bring the total estimated cost of emergency measures to up to €17 billion, not including other associated expenditure increases and losses in smaller taxes. 

Conclusion

The Emergency Measures introduced in response to the COVID-19 have raised both human rights and fiscal concerns.  Human rights experts, while acknowledging the public health and safety concerns, have called for proportionality in respect of the restriction of movement and, in particular, the use of enforcement powers which can disproportionately impact certain groups.  Others, including Social Justice Ireland, have welcomed the increase in income supports, rent freezes and prohibition on termination notices and will continue to monitor the impact of the withdrawal of these emergency measures.  We believe that such withdrawal should be phased, with a clear transition plan developed to support the most vulnerable.

The Draft Stability Programme Update estimates an Exchequer deficit of €15.6 billion for the year, assuming a relaxation of containment measures over the Summer and the resumption of economic activity in the Autumn.  How this will be paid for is uncertain.  The Government projects increases in direct and indirect taxes in 2021 as people return to employment and consumption grows.  This may not, however, be the case as households fearful of a return to austerity may choose to save rather than spend to provide some buffer. 

Social Justice Ireland has repeatedly called on Government to broaden the tax base and increase the total tax take to provide a more stable, and just, taxation system.  The latest edition of our Socioeconomic Review contains details on how this might be achieved.  Over the coming weeks we will explore in detail what this just taxation might look like and how it could be introduced to support Ireland’s recovery post-COVID-19 and the creation of a new Social Contract.

[1] http://www.irishstatutebook.ie/eli/2020/si/121/made/en/print?q=COVID

[2] In Section 10

[3] https://www.iccl.ie/news/exercise-emergency-powers-only-to-protect-health/

[4] https://www.iccl.ie/news/iccl-extraordinary-police-powers-should-not-be-...

[5] If this three month emergency period takes place within the first six month of a tenancy, it doesn’t count for the purposes of Part 4 of the Residential Tenancies Act 2004 which confers greater rights on tenants after the initial six months of a tenancy.

[6] https://www.revenue.ie/en/corporate/communications/covid19/temporary-cov...

[7] https://www.gov.ie/en/news/c3e1eb-minister-donohoe-announces-update-to-t...

[8] https://www.revenue.ie/en/corporate/communications/covid19/temporary-cov...

[9] As of 6th April 2020, https://www.gov.ie/en/press-release/88a055-update-on-payments-awarded-fo...

[10] As of 9th April 2020, https://www.revenue.ie/en/corporate/documents/statistics/registrations/w...