Varadkar rules out ‘throwing money’ at problem areas

Taoiseach Leo Varadkar has said the economy is powering ahead but has ruled out “throwing money” at the State’s problems.

In an address to the National Economic Dialogue at Dublin Castle, Mr Varadkar said the external economic landscape had become more challenging which meant downside risks were increasing and not all expectations could be met.

He said the Government would adopt a prudent approach to the public finances, seek to pay down debt and move the budget into a surplus position in 2020.

The Taoiseach said this would still leave plenty of money for investment in infrastructure, transport, housing and health. He also signalled moves in the years ahead to raise the level at which workers are liable for higher tax rates.

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He said if anything had been learned from the run-in to the last financial crisis, it was that “throwing money” at problems did not actually solve them.

The National Economic Dialogue provides a forum for various groups such as trade unions, employer representatives, farming interests, environmentalists, social justice campaigners and others to set out their view on how available resources should be utilised in the budget.

‘Not affordable’

Patricia King, general secretary of the Irish Congress of Trade Unions, said tax cuts were “simply not affordable”. She criticised the lower 9 per cent Vat rate in place for the hospitality sector and said the Department of Finance believed its abolition could generate €500 million for the exchequer.

Eoghan O’Mara Walsh, of the Irish Tourism Industry Confederation, defended the reduced rate, saying any change to the arrangement would damage competitiveness at a time when Brexit threatened the sector.

In his remarks, Mr Varadkar pointedly criticised the health service, which he said was not working very well, adding that reform of the area was the biggest challenge facing the public service.

He said the €15 billion health budget, one of the highest levels of expenditure per person anywhere in the world, was “hard to justify” given Ireland’s relatively young population.

The education system, while not perfect, largely worked well, he said, adding that one reason for this was that schools and universities had their own boards and people in charge were accountable.

“That is something we do not have in the health service.”

Housing

The Taoiseach also said more progress was needed in housing and that his colleague, Minister for Housing Eoghan Murphy, had made moves including planning reforms, affordable housing schemes and the creation of a new agencies to encourage house building.

“The problem is that these policies take time to show their impact. This gives rise to genuine frustration. However, it is clear from all the indicators that construction is ramping up significantly,” he said.

Mr Varadkar said the economy was continuing to grow and that growth was increasingly spread around the country, which was in “a good place”.

However, he warned: “We have been here before and the people of Ireland paid dearly with a lost decade because the government of the day took their eye off the ball.”

Social Justice Ireland director Fr Seán Healy said the Govenment must focus on lifting people out of poverty as the damage of the last decade was still being felt by the vulnerable.

In its submission, employers group Ibec warned about capacity constraints in the economy while the Irish Farmers’ Association expressed concern at potential cuts to the EU’s Common Agricultural Policy.

The National Women’s Council called for for equality proofing to be put on a statutory basis as well as for the introduction of affordable, accessible childcare and for a closing of the gender pension gap of 37 per cent.