Economist says government spend must be on capital projects and not on public sector pay

If Government is ramping up spending in the run up to a 2016 election, it should be directed at capital projects, rather than public sector pay.

And, it should also adjust personal taxation to put money back into the pockets of the squeezed personal sector, economist Jim Power told a property and business briefing in Dungarvan, Co Waterford.

Saying it’s better to help out people through a reduction in the direct tax burden rather than through wage increases, Mr Power also said that Central Bank changes on property borrowings made prudential sense in curbing any return to reckless bank lending. But, he cautioned “the new measures will have negative side effects, such as pushing some first-time buyers out of the market, and into a rental market that is already under strain. In the year to December 2014, private rents increased by 8%,” Mr power noted.