Our goal should be creation of a sustainable economy AND a just society

The resources to build a future for Ireland based on a vibrant economy, decent services, just taxation, good governance and long term sustainability exist and it is now just a question of political choices, argues Fr Sean Healy of Social Justice Ireland.

Our goal should be creation of a sustainable economy AND a just society

ON the face of it, Ireland’s current situation is healthy and the future is looking bright.

Recent economic growth has been dramatic, as Ireland recorded the highest rate of economic growth in the Eurozone in 2015.

Challenging fiscal targets have been exceeded. The number of jobs in the economy is rising and unemployment is falling. Exports are growing, strongly supported by the weakening of the Euro, and we have been going through a period of historically low interest rates.

But such a reading would ignore some vital facts.

When one considers the persistent rise in poverty and social exclusion, the continuing high levels of public and private debt and the failure to reverse the multiple hits taken by the vulnerable since the crash of 2008, it is clear that improvements in the economic position have not been to the benefit of all.

High levels of emigration and youth unemployment combined with a failure to address key issues in rural Ireland compound this negative reading of the situation.

It is clear that the social impact of austerity policies was not considered from the beginning of the crisis and, as a result, a great many people have suffered unnecessarily.

Social Justice Ireland has consistently argued that Government could have achieved its fiscal targets in a manner that cared more for those who were vulnerable and had a less negative impact in areas such as employment.

Admittedly, Government has not been helped by the failure to adequately rectify flaws in the Eurozone’s design, and by the decision of the European Commission and the European Central Bank to persist with policy frameworks that have resulted in the monetary union’s spectacularly poor performance.

The continuing refusal to recognise that creditors, as well as debtors, are responsible for their actions has also made the situation unjustifiably difficult for Ireland.

As Ireland reflects on the legacy of the crisis there is a widespread desire among ordinary citizens that the conditions that led to the crash in the first place are not recreated, and a hope that those in a position to ensure this does not happen have learned from the mistakes of the pre-crisis period.

However, there is an equally widespread concern that decision-making patterns are reverting to those which have already failed us in the past.

In its latest annual Socio-Economic Review Social Justice Ireland has set out its guiding vision and a policy framework that would see Ireland avoid the mistakes of the past and instead guarantee a just society with a just future for all.

It has also published a draft Framework for a Programme for Government.

There are five core outcomes any programme should be focused on delivering:

  • A vibrant economy
  • Decent services and infrastructure
  • Just taxation
  • Good governance
  • Sustainability.

In recent years the focus has been on the economy with the false expectation that everything else would follow in due course.

This theory of ‘trickle-down economics’ has long been discredited and should be abandoned in Ireland.

For example, it is essential that there Ireland has a good education system a good public transport system, effective broadband and adequate housing if the economy is to thrive.

The five areas identified above should be developed simultaneously. Otherwise Ireland will continue with its lop-sided development which is putting economic and social stability at risk. This is especially true of the regions.

Rural areas have higher poverty rates, lower median incomes, lower employment rates and access to fewer public services than urban areas.

The poverty rate in rural Ireland is 4.5 percentage points higher than in urban Ireland. The Border, Midlands and Western Region (BMW) has the highest poverty rate and the lowest median income in the state.

Worryingly, the BMW region has also seen one of the greatest reductions in full-time employment since 2008 and has one of the lowest levels of IDA supported employment.

At present there is a mismatch between a Government policy aimed at attracting Foreign Direct Investment and rural areas which are dominated by micro-businesses and small and medium enterprises.

Government should design policies that will support investment in micro enterprises and small and medium businesses.

Ireland regions, outside the main cities, urgently need investment in the provision of public services such as transport, training, and childcare. The provision of quality broadband to all rural households and businesses must be a priority.

State intervention in this area must be prioritised in order to prevent the two tier digital divide growing any wider.

This will require a substantial increase in the current level of investment, over a protracted period, but would generate an increase in the number of full-time jobs available. It would also stimulate domestic consumption and improve the long run productivity of the Irish economy.

To finance part of the required increase in investment, Ireland’s total tax-take should rise from its current low level (29% of GDP) to 34.9% of GDP which would still keep Ireland as a low-tax economy.

Social Justice Ireland has proposed a range of initiatives to achieve this target including the introduction of a minimum effective corporate tax rate, the introduction of a Site Value Tax and a Financial Transactions tax.

Sustainability should also be at the core of all decisions made. If some economic or social or environmental initiative is not sustainable then it should not proceed. Issues such as carbon emissions and climate justice are of particular concern in this area.

Sustainability also requires balanced regional and rural development. Some regions have fared far worse than others over the past eight years. The regions further away from Dublin continue to fall behind.

This is not good for the economy or for society.

Ireland is facing serious questions concerning its future. Decisions should be based on developing a vibrant economy, decent services and infrastructure, just taxation, good governance and sustainability.

The resources to build such a future exist currently. It is now a question of political choices.

Fr Sean Healy is the Director of Social Justice Ireland

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