Ibec urges Government to abandon its ‘austerity fetish’

The Government needs to abandon its “austerity fetish”, double its current spending on infrastructure, and take an all-island approach to planning if it is to meet the needs of a growing population, according to Ibec.

In tandem with a submission to the public consultation on the new national development plan, the business group has also called on the Government to reverse its 10 per cent cap on annual exchequer spending on public-private partnerships (PPPs) to boost the level of private sector funding in infrastructure provision.

“The problem with the current Government is we don’t think it is being ambitious enough. It is still very much locked into an austerity mindset, and the danger with this is there is huge demographic change coming our way and we have to have a genuine ambitious vision for this country that is backed by real investment,” Fergal O’Brien, Ibec’s director of policy and chief economist, told The Irish Times.

“There are trade-offs here, and you can’t create better infrastructure while at the same time reducing debt.” he added.

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His comments come days after preliminary census statistics showed further evidence of falling populations in some western counties as more people relocate to the Dublin region.

They also come as estimates suggest Ireland’s population will have increased by about one million by 2040, leading to a need for more homes, services and infrastructure.

Final document

Minister for Planning Simon Coveney unveiled the latest national planning framework, known as Ireland 2040, in February.

The plan, a successor to the much derided National Spatial Strategy, attempts to map out the State’s population growth over the next 25 years.

A final document is to be put before the Dáil this year in advance of October’s budget.

While welcoming the proposed framework, Ibec has expressed concerns that in seeking to implement it, the Government will make the same mistakes that undermined previous plans.

“We haven’t planned well either physically or spatially in Ireland in the past, and while we are optimistic that the new framework can work, that will only happen if tough decisions are made which include accepting that not every county or town is going to get the same level of funding,” said Mr O’Brien.

“Right now we have over 40 per cent of economic activity happening inside the M50 and that is not sustainable,” he added, reiterating Ibec’s call for an “Atlantic cities strategy” to act as a counterbalance to Dublin and deliver growth to urban areas such as Limerick, Galway, Waterford and Cork.

The organisation also wants to see plans made to connect the northwest to the capital.

Arbitrary cap

While accepting the Government actions may be restricted by EU rules on fiscal spending, Ibec said the plan to reduce debt and its “self-imposed arbitrary cap on private finance” was something it could move on.

“One of the specifics in Government policy that really concerns us is that not being happy enough to get our debt down to an EU target of 60 per cent, it has now said it wants to go further and push it down to 45 per cent, a target that is completely unnecessary, particularly at a time when we are not investing enough in infrastructure,” Mr O’Brien said.

“A second step is the Government won’t allocate more than 10 per cent in exchequer spending to public-private partnerships.

“In doing this it is shutting out incredibly cheap, easily available money, and essentially saying we don’t want to do any more PPPs.”

Ibec said it was heartened by Mr Coveney’s recognition that more must be done to deliver growth to regional cities.

However, Mr O’Brien expressed concern this might not be acted upon.

“There may be a narrative of ambition, and clearly there has been some modest improvement in investments made, but it is nowhere near enough and we need a radical rethink of macro and fiscal economic policies.

“If the Government perseveres with its austerity fetish and its excessive debt reduction plan, it won’t be able to follow through on a plan to build a better country.”