A fully costed, sustainable recovery

The Government does not have to pursue such a painful road to recovery. There are other choices we can take, writes Sean Healy.

A fully costed, sustainable recovery

WHAT would real recovery look like? This was the title of Social Justice Ireland’s annual socio-economic review for 2013, published yesterday. The 360-page review analyses and critiques the current situation and challenges the Government’s approach to recovery.

But it goes much further than that. It also sets out a five-point plan that would move Ireland towards real recovery while simultaneously paying our way and reducing Government borrowing each year as required by the bailout agreement with the troika.

Every year since the crash of 2008, Social Justice Ireland has produced a budget briefing setting out a fully costed budget for the following year. We will do the same for 2014 in the coming months.

Each year we show what Government could do within the fiscal parameters that must be honoured if we are to reduce our borrowing by the amount required. Our costings are based on figures supplied by Government departments or by reliable agencies such as the CSO.

Choices do exist. Government does have options in the budget choices it makes each year. Social Justice Ireland proposes that these choices should be guided by a vision of Ireland based on the common good.

From this perspective, a just society would be one where human rights are respected, human dignity is protected, human development is facilitated, and the environment is respected and protected.

Current Government policy is moving in a different direction; it is producing a fractured society, a weak economy, persistently high unemployment and emigration. This is not real recovery. Ireland needs a new approach which prioritises investment, promotes public services, protects vulnerable people and communities, and ensures its development is underpinned by an equitable tax system.

Core challenges for leadership at this point are: To identify what the current reality is; to clarify what future possibilities exist; to identify the pathways that can be travelled to deliver a sustainable future; and to clarify what can be done to move along such pathways as quickly as possible.

It is crucial that there be no fudging of the core challenges or of the pathways to recovery. It is also essential that proposals are fully costed. Social Justice Ireland is very aware of these challenges and embraces them in all its work.

Take the issue of investment as an example. Without investment there will be no jobs. Without jobs there will be no recovery. Without recovery we will be stuck in austerity for the foreseeable future.

The level of investment currently proposed by Government is nowhere near what is required to reduce unemployment significantly.

The depressed nature of the domestic economy, and in particular domestic demand, highlights the extent of Ireland’s dependency on external economic growth and exports for economic recovery and job creation prospects.

Social Justice Ireland believes that, given the current weakness of the economy, the Government needs to adopt policies which will stimulate the domestic economy. This could be achieved through the adoption of a major capital investment programme on a substantially larger scale than currently proposed by Government.

A large-scale capital investment programme is attractive because it would create new economic activity and jobs, particularly in the depressed construction sector.

Furthermore, pursuing justifiable investment projects which make good long-term socio-economic sense is especially appropriate given the current economic and unemployment crisis. The scale and ambition of the stimulus programme announced by the Government in mid-2012 is far short of what is needed to have a real, long overdue impact on the socio-economic deficits and the unemployment crisis.

Such an investment programme could be funded entirely from off-balance sheet sources such as the European Investment Bank (which could provide half the funding required, ie €3.5bn, to invest in infrastructure projects); the National Pension Reserve Fund (€2.5bn of this could be directed towards funding this investment package); and a further €1bn could be raised through domestic and international sources to bring the total to €7bn.

Such a multibillion-euro programme, implemented over the next three to four years, would offer the prospect of simultaneously creating employment and addressing some of the socio-economic deficits that persist in Irish society. The focus should be on initiatives that strengthen social infrastructure such as school building, social housing, a nationwide high-speed broadband network, water-system investment (pipes and meters, for example), green energy, childcare, and rural transport.

This is simply one example of the concrete, costed proposals presented by Social Justice Ireland. There are many others contained in the Socio-Economic Review showing what could be done within the current fiscal parameters to address the five priority areas we identify: To ensure macro-economic stability, to move towards just taxation, to enhance social protection, to reform governance, and to create a sustainable Ireland.

Together these form a framework that would ensure policies were integrated, sustainable, and focused on delivering the common good.

* Dr Sean Healy (SMA) is director of Social Justice Ireland. The full text of the review may be downloaded free of charge at: www.socialjustice.ie

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