There was no dispute at the national economic dialogue on the need for the Government to do more on childcare, elder care, pensions and a whole lot more.
Glaringly absent, however, was any agreement on how the State might pay for it all.
If the ancient conundrum of economics is the division of scarce resources between competing ends, the Dublin Castle talks can be seen as a demonstration of the problem writ large. As the economy recovers after prolonged retrenchment, the urge to increase public expenditure is huge. But it is not matched by an equal urge to raise tax to fund such spending.
About 140 figures from the worlds of business, trade unions, farming and the voluntary sector gathered last week with Government leaders and certain opposition politicians. Together with a few walk-on extras, this was the dramatis personae in the social partnership of old. The difference now is that there's no negotiation going on. This was a discussion on policy, no more than that.
An overview by Prof Alan Barrett, chairman of the plenary talks, noted a “degree of consensus” around the fiscal stance.
The Government has settled on a target range between €1.2 billion and €1.5 billion divided equally between tax cuts and spending increases. Although Prof Barrett noted that many delegates were less inclined to agree with the 50/50 split, he said the €1.2 billion-€1.5 billion range seemed to generally accepted.
Breakout session
“This is an important development because it suggests a degree of consensus around that overall fiscal stance. Such consensus was not present during the crisis years when there was much disagreement over the appropriate speed of fiscal adjustment.”
Apart from that, however, unity was scarce. Prof Barrett said a three-way division between current and capital spending and tax cuts would better meet the demands of delegates. Such demands are many, varied and expensive, as shown in “breakout session” talks with ministers.
In respect of pensions and healthcare, a discussion with Minister for Public Expenditure Brendan Howlin heard plenty of demands for increased public provision. “There was recognition that this would require additional resources but little agreement about how these could be raised,” wrote economist Séamus Coffey, rapporteur on this discussion. “There was general agreement that the State pension should continue to provide a minimum threshold for the elderly. There was less agreement about how people should provide for income continuance in employment. Most of the focus of discussion on health was on the model of delivery rather than the financing or funding. The central issue in education was the provision of early childcare services.”
Former civil servant Julie O’Neill, rapporteur on discussions with Minister for Jobs Richard Bruton, said childcare surfaced early in the talks as a “priority” for attention.
“There was a general consensus that support for affordable early-years childcare and education is in the long-term strategic interests of the economy, helps remove a key barrier to labour force participation and also has the potential to create sustainable jobs,” she wrote.
“However, as of now, the sector is dominated by low-skilled, low-paid jobs and the models of financial support available are insufficient to facilitate parents re-entering the jobs market.”
There was more. There was concern in a discussion on productivity and skills with Minister for Education Jan O’Sullivan that apprenticeships were “poorly regarded” by society. Former senator Joe O’Toole, rapporteur on the discussion, wrote that apprenticeship should be considered as a valid career pathway which was not currently the case.
“There should be provision for educational progression up to degree level within the the apprenticeship system.”
If it follows that there was no scarcity of ideas, the funding riddle remains.
While saying no single delegate suggested the Government’s budgetary range be ignored, Prof Barrett said proposed extra spending was considerable. “By contrast, proposals to raise extra revenue were limited.”
Constraints
Economist Dónal de Buitléir, rapporteur on discussions with Tánaiste Joan Burton, made exactly the same point. Numerous proposals which would increase spending had merit. “However, it is clear that all these cannot be accommodated within fiscal constraints. Hard choices and trade-offs must be made.”
There were deep divisions, too, on tax. Former Revenue chief Josephine Feehily, rapporteur on discussions with Minsiter for Finance Michael Noonan, noted there was no agreement on whether Ireland was over-taxed or under-taxed. “There was a discussion but no agreement about the appropriate total tax take for the Irish economy which, in many respects, is unique,” she wrote.
