The Government should use this period of economic strength to invest in the future, writes Turlough O'Sullivan.
We are accustomed to intense concentration on the importance of Budget Day, but by far the greater part of Government intentions on income and expenditure is revealed beforehand, starting with the Book of Estimates due to be published on November 18th.
We need to apply much closer public scrutiny to the value we get from the spending of about €40 billion of taxpayers' money.
There are quite transparent ways of determining whether we are getting such value, but only after the money is spent: the Comptroller and Auditor General reports to the Public Accounts Committee of the Dáil. We do not have similarly open scrutiny of what we plan to spend. Throughout the year, individual Government Departments quietly make their cases to the Department of Finance: it is the business of Government to balance these demands within its overall fiscal policy.
We depend on this closed process to protect our interests but our interests were not protected in 2001-2002. The expenditure of the money you paid as a taxpayer was then spiralling out of control by over 20 per cent in 2001 and 15 per cent in 2002. The country had to suffer painful corrections after the general election. Writing in this paper three years ago, I said that this was unsustainable but there appeared to be no mechanism to bring this to a halt.
Now, roughly halfway through this Government's term, it is encouraging that there are (as yet) no signs that this sort of cycle of profligacy is about to be embarked upon again. The current rise in spending is more or less the same as the rate of economic growth.
The pressing issue now is for the Government to use this period of economic strength to invest prudently for the future. Government has committed to keep capital spending at about 5 per cent of what we produce (GNP). As we know, commitment to spending is not the same as effective delivery. Capital programmes delivered efficiently, on cost and on time, will transform the quality of life in Ireland as well as boosting competitiveness and investment.
Let us speed up the roads programme: we are one of the few countries in the developed world where you can be stuck behind a tractor for up to 10 miles on an inter-city road. The Government should lead public opinion to view modern and professionally run incineration as an important part of a clean environmental policy: we cannot persist with the option of exporting our waste or building up bigger rubbish tips and pretending that everything can be recycled.
We are also sadly lagging behind on telecommunications: businesses, especially small to medium sized ones, have inadequate access to broadband.
The Government should take to heart the letter and spirit of its recently published Enterprise Strategy report. Invest well now. The billions of euro we spend on health, education, social welfare and other services depend on Ireland trading profitably on the wide open sea that is the global market. We remain stuck at 30th place out of 104 countries in the world competitiveness league. As a country so dependent on external trade, we have to do better.
The real revolution that transformed Ireland from being a deadbeat economy into a roaring success was the almost universal acceptance in 1987 that high public spending, high taxes and high pay rises, led to high costs, which closed businesses, raised unemployment, raised public spending, and led to national impoverishment.
The trade unions, employers and others sat down with the Government to plan a way of breaking out of this vicious circle. In the Dáil, the main Opposition party broke the bonds of history and underwrote the 1988 Budget.
It is disappointing to see the ICTU now advocating a high-tax policy that would catapult us into the old vicious circle we all took such pains to get out of nearly 20 years ago. Pouring more taxpayers' money into services will not solve the problem. Government spending in key areas has increased by some 170 per cent over the past 7 years. Has service quality improved to the same extent? We need a resolute programme of reform.
The next revolution must also come from recognition of a stark reality. Only flexible businesses survive. We face competition from new places in a world that trades more freely. We can only survive by being prepared to make changes in our work practices a normal part of our lives.
All too often, investment and jobs are lost because elements of the trade union movement resist normal ongoing change or see it as an opportunity to increase pay costs. We must heed the warnings of the National Competitiveness Council and note the explosion in our costs and prices.
Preparedness to change is a source of security not a source of threat. For the Government's part, I urge them to use this time to invest in the infrastructure that will allow us to respond with alacrity to the shifts of the international market place.
I also ask them to prudently manage our hard-earned taxes, to deliver better value for money, not to add to inflation, to tackle bureaucracy and to continue to make Ireland an attractive place to do business. This will ensure a steady flow of jobs, which is the best anti-poverty strategy. It will also generate the necessary revenues to provide for the weaker sections of our society including the small number that are unable to join the workforce.
As in 1987, it is a time for decisiveness and clarity of purpose.
Turlough O'Sullivan is director general of IBEC.