The next government will have to consider tax hikes and spending cuts to deliver an economic recovery, the State's budget watchdog has warned.
With unemployment close to 30pc and the cost of the State's emergency measures now at over €13bn and rising, Fianna Fail, Fine Gael and the Greens are this weekend being told to reconsider the "very risky" proposal to keep the pension age at 66, as well as look at increases in property and inheritance taxes in programme for government talks.
The dire warnings came from the chair of the Irish Fiscal Advisory Council, Sebastian Barnes, who said the State is now facing the "most dramatic" recession in its history. His comments came as it emerged yesterday that the Department of Education's most senior official has raised major doubts about being able to reopen schools in September.
Sean O Foghlu, the department's secretary general, told Opposition TDs on Friday that there would be significant accommodation challenges presented by having to operate smaller classes to comply with social distancing in schools.
Mr Barnes also criticised the parties' promise not to increase tax or cut welfare while promising major spending on housing, health, transport and climate action.
"Given that hard choices are going to have to be made and the uncertainty, particularly because we don't know how things are going to pan out from the Covid crisis, I think it is risky to make these commitments without knowing what the whole picture is going to look like and it may complicate the hard fiscal choices that need to be made in the coming years," he told the Sunday Independent.
"They're going to be faced with a higher rate of unemployment, a higher level of public debt and the need to increase the budget balance so that debt is on a downward trajectory. All of those choices are going to be much harder.
"In that context, making commitments to taking large sections of tax or spending off the table are going to make it very hard to reach a good balance between the ambition on the spending side and what people want to do on tax.
"Given the uncertainty, I think it's very important to keep flexibility about those things so that when those hard choices are made, they're not made even harder."
With unprecedented welfare and wage support schemes due to expire next month, the Government is likely to extend them until August at least, with some modifications. Options being examined include transitioning as many people as possible who are on the €350 pandemic unemployment payment to the temporary wage subsidy scheme as they return to work. This scheme, which sees the State cover up to 85pc of an employee's net weekly wage up to €412, will be tapered down to reduce businesses' reliance on taxpayers' money.
For harder-hit sectors, such as tourism and hospitality, the Government is examining employee activation schemes involving reskilling or retraining workers for other roles. "There won't be a cliff edge. There will have to be an unwinding of these things with a more flexible and targeted scheme with the policy of getting people back into work. But all of that's going to be really expensive," a Government source said.
Mr Barnes said Fianna Fail leader Micheal Martin's commitment in this newspaper last month to scrap plans to increase the state pension age to 67 next year - which has been backed by the Green Party - was "very risky and may well complicate life down the road".
"Not increasing the pension age by a year costs €600m a year, and that cost will increase as more people reach retirement age," he said. "That's the kind of commitment that can be very costly and could bite very significantly into the amount of space they have for other things."
Figures in Fine Gael and Fianna Fail privately believe the pledge in their joint document not to increase income tax may not be sustainable over the next five years.
Mr Barnes said property and inheritance taxes, rather than income tax increases, should be kept on the table in government talks.
"Those kinds of taxes on wealth are areas that many countries are looking at. I think there's renewed interest partly as wealth inequality has gone up, partly as governments need to raise more revenue."
Mr Barnes said Ireland had seen the cost of operating unsustainable fiscal policy in the past and also raised specific warnings about "the State's over-reliance on corporation tax, which can't be sustained forever", and said major spending commitments on policies such as Slaintecare will require revenue-raising measures.
"So very difficult choices need to be made and so it's for that reason that taking things off the table now seems premature," he added.
It emerged yesterday that hundreds of workplaces are facing unannounced inspections and may be shut down in the coming weeks if they fail to comply with stringent new measures aimed at preventing the spread of Covid-19.
The Health and Safety Authority (HSA) has already carried out over 400 on-site inspections and investigations under occupational health and safety law since March and will now have the powers to enforce new mandatory public health guidance.
The Government's Return to Work safety protocol includes regulations for social distancing, hand hygiene and mental health support for returning workers.
Employees will also have to complete a pre-return to work form which will state that they have not been in contact with the virus.
Employers will have to appoint a worker representative, who will be in charge of ensuring that health measures are "strictly adhered to" by staff. Minister for Business Heather Humphreys said: "HSA inspectors will be able to take appropriate enforcement actions under the Health and Safety Act 2005. This means if a business does not co-operate and comply with public health guidelines after being asked to make improvements, the HSA will be able to order them to shut down the workplace."
HSA chief executive Dr Sharon McGuinness said every single complaint about a workplace would be followed up with an employer and this could include unannounced on-site inspections.