National dialogue to inform budget debate

Last week, representative of civic organisations crowded in for the “National Economic Dialogue”.

Several Government ministers were in attendance. New Finance Minister Paschal Donohoe insisted that the meeting would have real impact on the debate in the run-up to October’s Budget.

The conference chair, economist Alan Barrett, kept a tight grip on proceedings. Mercifully, the speeches were brief and to the point.

As lunchtime approached Robert Watt, Secretary General of the Department of Public Expenditure & Reform, suddenly laid into the begrudgers for implying that our little island can on occasions be a bit of a tip.

Earlier the results of a UK survey which put Ireland close to the top of the class in terms of quality of life had received short shrift from some attendees.

Suddenly, a Barney had blown up faster than a West of Ireland wind between Mr Watt and Seán Healy of Social Justice Ireland.

Back in 2003, Mr Healy persuaded Bertie Ahern’s government to veer left, boosting social spending during the boom.

On Wednesday last, Mr Watt and Mr Healy jousted for several minutes. Faces reddened before calm was restored.

Back in the real world, the key topics were housing and Brexit, with climate change also high up the agenda. Tax cuts appeared down the list of concerns.

Business organisations cited the high level of marginal tax, but Tom Healy, NERI director, pointed to Ireland’s relatively low overall tax take.

Mr Barrett, director at the Economic and Social Research Institute, backed up this point, citing our rather unrealistic desire for Scandinavian style services at low cost.

Everyone was calling for higher investment in infrastructure, with speakers focused on the need to wed spending more closely to spatial planning.

Ictu general secretary Patricia King called for a drive on the part of local authorities to build at least 10,000 social and affordable houses a year.

She described the current housing crisis as “one of the biggest policy failures since 1922” and sparked controversy by calling for an end to the low VAT rate on hospitality services.

Tourist business interests responded that the low rate is vital to economic activity in the regions.

Ibec chief economist Fergal O’Brien warned that Brexit presents Ireland with huge challenges and expressed concern about official “complacency”.

In his view, the promised “Brexit-proofed” budget did not materialise last year.

Sadly, many of the public appear to be a bit turned off the Brexit issue, literally switching off in discussions on this vital topic.

Alerting people to threats posed by climate change is another huge challenge.

Broadcaster and author, Duncan Stewart did his bit in this regard. Mr Stewart warned of “massive impacts over the next 10 years.”

He regretted the lack of information reaching the citizens at the grassroots. “We need fiscal measures to drive the change,” he said.

Speaking later with the Irish Examiner, he warned that we could expect flood surges to become the norm in a short number of years.

Mr Stewart welcomed the fact that Government ministers were no longer dismissing climate change as an issue but wants significant commitments to be made.

Projects could include a Thames-style barrage down river from Cork, and the construction of islands to act as storm barriers offshore in Dublin Bay ahead of the building of a Liffey barrage.

In a few years, by 2020, Ireland faces fines for breaches of failing to meet EU emission targets set which could run to many millions.

The hope was expressed that the fines could be made available by the EU for environmental projects, perhaps as part of a deal involving a boost in State spending.

Certainly, environmental planning needs to be integrated into capital investment, but important choices must be made. Spatial planning is critical.

Environment Minister Denis Naughten made it clear that he is listening to the environmentalists.

But his critics have pointed to his local support as a Roscommon TD for the turf cutters, a group little loved by the lobby.

All of which points to a continuing gap between mostly urban middle-class supporters of wildlife and other allied causes, and their rural counterparts keen not to part with traditional ways of life.

Can we continue to favour one-off housing and low-density developments?

Can politicians bite the bullet on issues such as the taxation of diesel products? Technological change too can affect priorities.

Professor John FitzGerald pointed out that clean electricity could reduce or remove the need for expensive retrofits of homes.

Reducing disparity between the regions and reviving rural districts were also key items on the agenda.

The debate also focused on the scope for a large boost in capital spending. Ibec chief executive Danny McCoy believes there is room for large increases as long as the EU can be won over to a more flexible attitude with respect to spending on capital projects.

He views the very high recorded GDP figures of recent years as real and not an indicator of “leprechaun economics”.

The social partners are at one on this.

Tom Parlon, director general at the Construction Industry Federation, sensed that opinion was running in favour of more capital spending, though the unions insist that the spending should be carried out through local authorities.

But just as spending options open up, a wage spiral threatens.

Last Thursday Mr Parlon was gloomy about the prospect of a rapid settlement to a crane drivers’ dispute affecting Dublin sites.

The mood was positive yet with evidence of frayed nerves.

As one speaker put it, the financial crisis had been “searing”.

In his concluding remarks, Mr Barrett described himself as “struck by the phenomenal demands for spending”. He said: “If you ( the gathering ) want these public services, you are going to have to talk seriously about taxation.” “There is a huge gap in the tax take in Ireland and that in other (European ) countries,” he added.

And Minister Donohoe made it clear he has settled into the austere world of Merrion Street, warning that “the State cannot deliver all the things people are looking for”.

He added: “What we can do is make steady, incremental progress .. and please don’t say that this is the same as no progress at all.”


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