Decrepit public services are the big issue

Decrepit public services are the big issue
IBEC CEO, Danny McCoy, and European Investment Bank vice-president, Andrew McDowell. Picture: Julien Behal Photography

POLITICAL weather vanes pop up in the strangest places. If you want to know what the next general election will be about, the answer was contained in a recent speech and interview with the head of the employers’ body, Ibec.

Like all lobby groups, Ibec has a standard shtick. Its members are interested in reducing public spending to increase room for tax cuts. Yet, in a speech entitled ‘Business Drove Ireland’s Comeback Decade’, Ibec director genera Danny McCoy sounded, in places, as if he was reading from a trade unionist hymn sheet.

McCoy spelt out the staggering detail of how this country emerged from a savage recession.

“Ireland’s growth since 2011 has been spectacular, averaging north of 5% annually,” he said.

“This is not just double, but triple, the rate of growth seen elsewhere in the EU. On the back of this, our 2020 employment target, of 2m people, was reached in 2015, five years early. Today, there are 2.3m people at work in the economy and output per capita is amongst the top 10 regions in Europe. This incredible recovery has been driven by the private sector, which has created over 400,000 net new jobs.”

Naturally, McCoy attributes the success to Ibec members. He ignored the contribution of the public sector and of employees in the private sector, who all adapted to straitened circumstances to create the environment for the recovery.

Leaving that aside, however, he addressed where the country now stands.

“Yet, despite the remarkable economic recovery driven by the private sector, this has not translated fully into relative improvements in people’s quality of life,” said McCoy.

“Today, Ireland is 16th in the OECD better-life index, no better than its rank in 2010. As private investment took off from 2011 onward, the level of public investment has struggled to keep pace.”

You heard that correctly: A business leader is saying that we are not spending enough public money.

In an interview with Shane Coleman, on Newstalk Breakfast during the week, McCoy expanded on the speech. He said that there was plenty of money out there, visible in the number of people flying out of airports, in the proliferation of coffee shops, and in the attendances at sporting events.

Coleman cited the societal increase in the consumption of cocaine, which tends to track the health of an economy. All of these suggest a country that is, on the whole, doing well.

Yet, in terms of public services, the place is decrepit. One only need look at the housing emergency, the level of homelessness, the constant crises in the health service, the shortcomings in public transport and childcare, cities choking in traffic, and underfunding of education.

One example of this was the row about the budget for Dublin City council. The capital has been by far the greatest beneficiary in the proliferation of private wealth in recent years. Yet city manager Owen Keegan has told councillors that new charges would have to be imposed and services cut, because of “inadequacies” in funding from central government.

Back on Newstalk Breakfast, Coleman suggested to McCoy that what he was describing might be termed, “private wealth, public squalor”. The business leader agreed.

When a business leader is mulling over the paucity of quality of life and decrying a lack of public spending, goalposts are shifting. This is notable. It has been an article of faith in the Irish political system for over two decades that general elections are, to a great extent, all about offering tax cuts. Bertie Ahern’s governments perfected this tactic.

Following the economic collapse in 2008, more pressing issues had to be prioritised. Then, in the 2016 election, Fine Gael borrowed Bertie’s clothes, with a big idea to abolish the universal service charge tax. Interestingly, Micheál Martin veered slightly from the standard script in that election, putting greater emphasis on services. And his party duly accelerated towards their own electoral recovery as a result.

All of which suggests that the next election will be all about public services and public infrastructure, rather than cutting taxes. Spending on housing, health, and transport will dominate, but there will also be room for reform of childcare and a pitch to improve general quality of life issues, rather than putting money into people’s pockets.

The outstanding question will be how exactly these improvements can be funded. The obvious answer is through taxation.

Shane Coleman put this to Danny McCoy in their interview.

“We certainly need to redirect some of the overheating in the economy and taxation is a way to do that, but we don’t necessarily have to take money off people forever,” McCoy said.

“Money is out there and we need channels to put it into the right investment. Right now, it’s being spent and, unfortunately, on conspicuous consumption, and that’s not sustainable.”

Before you choke on your cornflakes at the thought of a business leader advocating more taxes, McCoy did suggest that something akin to Charlie McCreevy’s special savings incentive account could be used for infrastructure investment. That idea would most likely get short shrift in any political campaign, as it is entirely skewed towards benefiting the better-off.

The question persists: Where will the money be found to improve the quality of life for everybody? Nobody is advocating an increase in income tax. Corporate tax is famously low, but is any government going to gamble that foreign direct investment won’t dry up if tax rates increase?

Then you turn to indirect taxes. The persistent trend in this regard has been to put any changes or new charges on the long finger. Look at the property tax, which is now hopelessly out of line with real valuations. Don’t mention water. The funding of third-level education has been long-fingered repeatedly, despite a growing crisis.

The broadcast charge has been shoved out way beyond the next election. And so it goes with anything that might cause controversy or protest.

So, where is the money going to come from? Right now, the smart boys and girls in the political parties are devising palatable answers to that. Form suggests they will attempt to present solutions that, on the face of it, will not involve any section of society stumping up more than is currently the case. In the first instance, expect to see the term ‘efficiencies’ flogged to death during the campaign. Beyond that, what we need is a little honesty. Will any of them be willing to tell some unpalatable truths about where the money will come from?

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