LAST UPDATE | 2 May 2020

INCREASED PRESSURE HAS now been placed on political parties to form a government, as it was revealed that some of the Covid-19 pandemic measures for businesses will require new legislation.

Tax liability measures and credit guarantee scheme will both require legislation, Finance Minister Paschal Donohoe said at a briefing this afternoon – putting pressure on parties to form a government.

The “warehousing” of tax liability for 1 year after that business begins trading again, means that no debt enforcement action will be taken by Revenue, and no interest will be charged on that ‘warehoused’ debt.

The SME Credit Guarantee Scheme aims to encourage additional lending to small to medium businesses (from 10 to 100 employees) by offering a partial government guarantee to banks against losses on qualifying loans to small businesses.

Fianna Fáil’s finance spokesperson Michael McGrath said that the new legislation meant “more urgency” was needed to form a government. 

Two of the key measures – credit guarantee scheme for firms & warehousing of tax liabilities – require legislation which in turn requires a new government. More urgency needed on that front.

Earlier, Taoiseach Leo Varadkar urged the Greens to enter formal coalition talks as he expressed a willingness to meet their carbon emissions target.

Varadkar, who said he did not think a new government will be formed until June at the earliest, said Ireland’s economic recovery from Covid-19 could be “green not brown”.

Following February’s inconclusive election, Fine Gael and Fianna Fáil are courting the Greens, Labour and the Social Democrats as potential junior partners in a three or four party coalition.

The Greens’ pre-condition of only entering a government committed to a 7% reduction in carbon emissions has emerged as a potential deal breaker.

On RTE’s Late Late Show, Varadkar said he hoped another election could be avoided.

He said he was keen to meet the 7% target but said it had to be done with the buy-in of the farming and business communities.

“I am someone who believes and accepts we need to be more ambitious when it comes to climate action,” he said.

We’re very keen to meet that 7% target.

“We really want to sit down with them and work out how that can be done, but I think one of the things that has emerged that there are people, a lot of our farmers, people in rural Ireland, who are a little bit worried about what climate action might mean for them and their livelihoods and their business, a lot of people in the business community too who are worried about carbon tax and haulage and so on.

“We need to see more ambitious climate action as an opportunity, as an opportunity to remake agriculture, to give much better and secure incomes to our farmers for diversifying; creating lots of jobs around retrofit for example; becoming a net exporter of energy – so instead of importing all that oil and gas, exporting our wind power to other parts of the word.

“So climate action can actually be a big economy success story for Ireland. We can have a recovery that’s green not brown. That means bringing rural Ireland, bringing farmers, bringing the business community with us.”

Varadkar said a Fine Gael, Fianna Fail and Green alliance would be the right political mix to achieve that consensus. He has repeatedly ruled out going into government with Sinn Féin, which earned the highest proportion of first preference votes and 37 seats in February’s general election. 

“We are the parties that can do that, whereas a left-wing government they would be fighting with business and fighting with employers, it wouldn’t work,” he said.

Varadkar said it was unlikely a government could be formed in May, because even if a coalition deal was struck, all the parties would then have to seek the endorsement of their respective memberships.

“I think we could have a new government in June,” he said.

“I really hope we do by the way, because the country actually needs it.

The current government is functioning well at the moment but can’t go on like this forever, we’re making decisions at the moment without a parliamentary mandate in many ways.

- with reporting from Gráinne Ní Aodha