A directive by the Department of the Environment that local authorities must secure prior approval for all new housing developments is yet another poorly-thought-out attempt to rein in public expenditure.
Last month, as projected Government revenues continued to fall, members of the Cabinet agreed to a range of spending cuts, amounting to some €300 million, in an attempt to bring public expenditure under control. But ministers went on their holidays without giving details to the public of the specific savings being sought, or how they might be achieved. The result has been a drip-feed of information from a range of public agencies as schemes are choked off and developments shelved. It is not what was promised by Fianna Fail and the Progressive Democrats in the recent election. But it reflects the concerns expressed earlier this week by the Department of Finance in its "Economic Review and Outlook".
Forecasts for growth, inflation, tax-take, spending and unemployment have all failed to meet their targets. A much gloomier economic picture now exists than was presented to the electorate during the election campaign.
Further hard decisions will have to be taken in the coming months. And three former public servants have been asked to identify where the axe should fall. The choice will inevitably fall between election promises and needed infrastructure, because ministers are reluctant to consider an increase in taxation.
In the meantime, cutbacks in both current and capital spending are going ahead. A circular dated July 30th advised local authorities that, due to budgetary constraints, sanction must be sought for all new social housing schemes before contracts are signed with builders. In addition, local authorities have been banned from using so-called "turnkey schemes" where they purchase entire developments from builders in order to meet their public housing needs. Such schemes are likely to account for one-fifth of all local authorities homes being provided this year.
The National Development Plan warns that a shortage of affordable housing may act as a major constraint on the economy, slowing economic growth through its effect on wage demands and labour supply. Because of that, any Government decision that would slow the provision of social or affordable housing is short-sighted in the extreme. Not only will inflationary pressures be kept high to the detriment of the economy, but social cohesion will be damaged as the least well off and the homeless are left to fend for themselves.
A slash-and-burn response to current difficulties is not the answer. Long-term economic planning requires the provision of not just motorways and other major infrastructural projects, but adequate housing, health and education facilities. A balanced response to the economic downturn should mean that all citizens bear an equitable share of the burden.