Michael Taft: Ireland needs a new foundation for our public finances

Siptu's progressive fiscal framework has the capacity to combine the needs of the economy, society and public finances for the benefit of everyone

The Government needs to spend the resources necessary to shore up the productive economy. Picture: Pexels

We are entering into a decade of considerable challenges including the economic repair following the pandemic along with the prospect of a no-deal Brexit, climate chaos and the disruptive technologies of automation. In the long term we also face years of low growth as we head towards the mid-century. These challenges require a new foundation for our public finances to support the productive economy, shared prosperity, climate justice and a Just Transition.

In a policy document published today, Siptu proposes a new fiscal framework to meet these challenges. The Government needs to spend the resources necessary to shore up the productive economy. Over the medium term, it should abandon the Programme for Government’s balanced budget target. Instead, it should adopt the golden rule whereby the current budget (day-to-day spending) is brought into balance or even a small surplus while productive investment is deficit-financed, or borrowed.