Developers and builders ‘should be left go to the wall’

BUILDERS and developers should be left to go to the wall if they can’t survive the economic downturn by their own efforts instead of looking for state intervention to prop them up, the head of the country’s leading economic think-tank has said.

Professor Frances Ruane, director of the Economic and Social Research Institute (ESRI) also said business bosses needed to cut their own salaries and bonuses to save their skins rather than taking the axe solely to the lower levels of their workforce.

Prof Ruane was speaking at a seminar held by the Institute of Public Administration to mark 50 years since the groundbreaking 1958 plan, Economic Development, was drawn up by civil servants led by Dr TK Whitaker to lift the country out of the poverty and backwardness that characterised the 1950s.

She said many of the ideas introduced then were equally valid now that the economy was again under pressure to be competitive, efficient, flexible and innovative, but she said bold leadership was essential to put those policies into practice, both in government and business.

The Government also had to stand firm against pressures to intervene in influential industries, she said.

“In the private sector, if the market generates large profits in a boom and losses in a recession, the Government needs to recognise that it should not try to protect enterprises in difficulty unless there are specific reasons to do this that go beyond the enterprise itself.

“Regrettably for the employees, it is wise for the Government not to intervene if some construction and property development companies are forced to close.”

Prof Ruane acknowledged that the pain would be spread across all levels — including those who had gained little from the boom — but she said restraint was crucial to putting the economy on a solid footing.

The public sector should not escape the shake-up either, she said, but she warned against cutbacks that were not accompanied by reform.