Summary & Link to Jim Power Covid Study
Lots of people asking for this after our most recent podcast discussion
The economic, financial, social, and health impact of COVID-19 and the Government response to it has been devastating and the legacy will be felt for many years to come. The dominant approach of the Irish Government, at the behest of NPHET, in seeking to control the virus has been characterised by stringent restrictions on social and economic activity. No attempt has been made to carry out a cost-benefit analysis of this approach, nor has there been a scientific approach to risk assessment. Ireland has had amongst the toughest set of lockdown restrictions in the world over the past year, and unfortunately serious restrictions look set to remain in place for the foreseeable future.
Government policy has been dictated by NPHET. That body was given a very one-dimensional mandate relating to COVID-19, and was not given any mandate to even consider broader issues relating to business, the economy or society. NPHET also did not have any members with business acumen. The Government in the main, went along with the recommendations of NPHET, with a few exceptions.
Government failed to put in place proper testing, tracing and tracking, or rapid antigen testing, but largely relied on a scorched earth policy of rolling lockdowns. This represents a policy failure and at the end of this crisis, a cost-benefit analysis is unlikely to show the Irish authorities in a good light.
Lockdowns have saved some lives and controlled pressure on the hospital service, but are contributing to higher unemployment; business failure; poverty; inequality; interrupted preventative, diagnostic, and therapeutic healthcare; interrupted education; loneliness; mental health issues; and domestic violence. These externalities have not been given anything remotely resembling proper consideration in Ireland’s stringent lockdown strategy.
The economic costs include lost economic output; the permanent loss of many jobs and many businesses; dramatic damage to vital sectors; a legacy of very dangerous levels of Government debt, which will impact on future taxation and the funding of essential public services; and the damage to entrepreneurship and investment in the economy. Many of the jobs lost will not be recovered for the foreseeable future, and many of the businesses forced to shut down or seriously restrict activity, will either not re-open or struggle to survive once they do.
At the end of February, there was 655,549 people either on the Live Register or the Pandemic Unemployment Payment. This is equivalent to 28 per cent of total employment in the economy in 2019. At the end of March, there was 617,441 still on either the Live Register or the PUP, equivalent to 26.4 per cent of employment in 2019. This is a catastrophic labour market situation.
It is inevitable that Government expenditure on healthcare, water and sewage, education, social services, infrastructure, transport, housing, clean energy and childcare, will be constrained over the coming years by the economic and fiscal costs of the very stringent restrictions regime that the Irish Government has pursued since the beginning of the pandemic. This will undermine future quality of life and wellness.
It is estimated that on a very conservative basis, COVID-19 and the government response has cost at least €15 billion in lost output in 2020. Given that the early months of 2021 are characterised by ongoing stringent Level 5 restrictions, the loss of output in 2021 has the potential to be as significant, unless the policy approach changes quickly.
Ireland’s international connectivity has been seriously damaged, and may not return. The notion that life can quickly return to normal once restrictions eventually ease is naïve in the extreme. This will inevitably damage tourism and international business for years to come.
COVID-19 has had and continues to have a dramatic impact on the public finances. At the end of 2020, the public debt to GDP ratio stood at 62.6 per cent, up from 57.4 per cent at the end of 2019. It is expected to reach 66.6 per cent at the end of 2021. The debt to modified gross national income (GNI*) ratio, which is the more realistic measure of economic activity, stood at 107.8 per cent at the end of 2020, up from 95.6 per cent at the end of 2019. This is projected to reach 114.7 per cent at end of 2021. In monetary terms, the public debt amounted to an estimated €218.6 billion at the end of 2020, up from €204.2 billion at the end of 2019. This is equivalent to €44,000 for every person resident in the State. This is amongst the highest in the developed world and is expected to increase to €47,700 by the end of 2021, with public debt projected to reach €239 billion.
Data collected by the EU Commission suggests that in 2020, Ireland ranked last in the EU for the amount of state aid given to companies expressed as a percentage of GDP. It estimates that Ireland doled out the equivalent of 0.26 per cent of GDP, compared to 7.3 per cent in Spain and 6.4 per cent in France. This is despite the fact that the Oxford Stringency Index shows that Ireland has had amongst the most restrictive regimes in the developed world over the past year.
The social and health costs of COVID-19 and the approach adopted by the Irish Government will be immense, but these costs will only become apparent over time. The costs include diagnosis and treatment delays; social isolation and loneliness, particularly for older people; the social development of young children; the social impact on teenagers and adolescents; the inability to participate in sport; the deprivation of education; increased social inequality; mental health issues; and domestic abuse.
The Irish health system was in a difficult position coming into the COVID-19 crisis after years of inadequate investment, and a total failure to effectively reform the delivery of health services. This has resulted in a situation where the lack of capacity and systems has resulted in the Irish Government implementing amongst the most severe restrictions on economic activity and personal freedom than any other country in the world.
Waiting lists have increased dramatically as the focus of healthcare has switched to COVID-19 at the expense of other health services. The latest data from the National Treatment Purchase Fund (NTPF) shows that at the end of February 2021, 80,936 people were waiting for inpatient/day case care, which is 21.3 per cent higher than a year earlier. Of these, 22,832 were waiting for a year or longer, which is 136 per cent higher than a year earlier. 626,895 people were waiting for outpatient appointments, which is 12.2 per cent higher than a year earlier. Of these, 280,717 were waiting for more than a year, which is 62.1 per cent higher than a year earlier. The ultimate implications of these unacceptable waiting lists are likely to be severe for illness, quality of life, costs to the health service, and ultimately higher and needless mortality. Long waiting lists delay diagnosis and treatment; cause undue mental strain; result in more serious illness; undermine quality of life; and increase mortality.
It is estimated that 2,000 cancers went undetected in 2020. The HSE plan to restore non-COVID services envisages that cancer care will not be back to 90 per cent until the end of 2021; screening services will operate at reduced capacity until June, with the aim of having it up to 90 per cent from July; and from March to June, it will aim to address backlogs in areas such as surgery, CT and MRI scans. These delays will inevitably result in increased deaths over the coming years, and the impact will be felt most significantly by less well-off patients who do not have private health insurance and who cannot afford private care. The ultimate result is likely to be higher mortality, and increased costs involved in the provision of more intensive care as the disease progresses.