Taoiseach admits ‘echos of Celtic Tiger’ exist but says debt is falling

Taoiseach admits ‘echos of Celtic Tiger’ exist but says debt is falling
Taoiseach Leo Varadkar at the MacGill summer school in Glenties, Donegal, with director Joe Mulholland. Picture: Michael McHugh

Taoiseach Leo Varadkar has criticised those predicting a crash “around every corner” amid warnings from spending watchdogs over excess Government spending.

At the MacGill Summer School in Donegal, he admitted there were “echoes of the Celtic Tiger” today, but Government spending was lower than other countries.

His attack on critics mirror remarks by former Taoiseach Bertie Ahern who, in 2007, went on the offensive against those criticising the economy. 

On Thursday at the Glenties economist Seamus Coffey said Government spending was high. The UCC economics lecturer highlighted unplanned spending on health since 2015 and also questioned if the Government was ready for a possible economic slowdown.

Mr Coffey is chairman of the Irish Fiscal Advisory Council, a body that warns the Government over its spending and budgets.

Asked about Mr Coffey’s points, Mr Varadkar told the packed hall: “There is a bit of a tendency at the moment for individuals and institutions that missed the last crash to now predict a new one around every corner, an almost over-correction in that sense.

“People talk about echoes of the Celtic Tiger period being seen today. There may well be echoes, but bear in mind one thing — we are increasing spending now at half the rate it was increasing during the Celtic Tiger period.”

He said that period was characterised by a credit bubble, by debt, and borrowing increasing by 20% a year.

“Household debt is actually going down in Ireland,” he said. “Economists look at things in a certain way, politicians have to look at things as well. Where would you propose that we not increase spending? Should we spend less on housing and less on health, less on education? Even if you look at the percentage of spending to the proportion of GDP, it is lower than many other countries.”

In 2007, Bertie Ahern had to apologise after he told an ICTU conference that “sitting on the sidelines, cribbing and moaning is a lost opportunity” and he didn’t “know how people who engage in that don’t commit suicide”.

Mr Varadkar also questioned why health scandals in Ireland were so political. He said this was not the case in other countries. When controversies escalated to a political level, they were harder to resolve, he added.

It was “not normal” for a minister to get the “personal blame” for what goes wrong, he said.

Mr Varadkar also revealed there will be a voluntary redundancy package in the health service overseen by new CEO Paul Reid. This follows a commitment to split health into six regional areas.

He said the mix of public and private health service systems was “bizarre”. Unravelling this, particularly in hospitals, could cost an extra €800m, he conceded. And there was also the possibility that some consultants might want to then only work in their private practices.

On housing, Mr Varadkar said he wanted the banks to change mortgage lending rules so that they would have to consider the level of rent a tenant paid when assessing ability to repay a mortgage.

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