Marc Coleman, economist and founder of Octavian Consulting, discusses the proposed Programme for Government.
It couldn’t have happened soon enough. A draft Programme for Government is now published and – as called for in ‘An Economic Response to Covid-19′ – it commits to probably the most important measure that could be taken to stave off the worst of the recession to come: A July stimulus package. This author would prefer a full-fledged budget, but politics is the art of what’s possible. So the business community should welcome whatever we can get given the political constraints we face.
To some, the draft’s opening sentiments on issues like cycling and walking lanes seem a little out of kilter with the dire emergency facing the economy. But on reflection, it shouldn’t. Aimed as much at party activists – especially in the Green party – who must ratify the deal as at business, the wording will help to deliver agreement to a government. Provided subsequent policy formation reflects the majority interest, there is nothing necessarily wrong with this.
As far as the economy is concerned, the draft identifies to five broad areas of action and makes outline commitments under each. These are as follows:
- Education and training: The creation of an Apprenticeship Action plan, a doubling of lifelong learning targets, creating regional technology clusters and the use of the National Training Fund to support employment relevant training.
- Investment and Stimulus: A July stimulus package including a scheme to retrofit 500,000 homes for energy efficiency and a bringing forward of both the National Development Plan and 2040 Climate Action Plan.
- Enterprise policy: A commitment to update the jobs policy framework, to create and SME growth Task Force and a review of Enterprise Ireland and SBCI supports as well as an expansion in the role of Local Enterprise Offices and in SME training and funding.
- Business Financing A commitment to create a partnership between Government, Financial Institutions, Multinationals and SMEs to support the latter, a plan to manage SME and corporate debt, enhancing the mandate of the SBCI and promoting Credit Unions as expanded providers of community business finance
- Regulation and Costs This section contains a commitment to review the impact of regulators on business and review the Companies Act, the impact of legal costs on business and the powers of key regulators like Comreg and the Competition and Consumer Protection Commission in enforcing greater competition in the economy. There are several references to addressing insurance costs by establishing a cabinet sub-committee on the matter and providing stronger support to the role of the Personal Injury Guideline Committee and Personal Injury Assessment Board.
Will it do the job of rescuing the economy? Here the document should take advice from an old saying “A stitch in time saves nine”. Saving businesses from collapse is far cheaper than dealing with the consequences – economic, business, financial and social – of that collapse. For every additional euro spent now on business recovery and support, an additional nine euro can be saved in examinership costs, redundancy payments, job search costs, retraining and other supports. In this sense the document needs a more managerial and strategic prioritisation and ordering of its otherwise mostly good recommendations. In that regard the 4th pillar of the 5 pill economic plan (business financing) arguably needs to be made the first and priority pillar for the foreseeable future.
On spending it needs to take a far more evidence and fact base approach. Commitments on education, for instance, need to be more evidence based. Our primary school sizes – often with 1 teacher for every 25 students – are the largest in the EU and a far greater drawback to both equality and economic progress than other areas of education spending. By contrast some Universities have 1 staff member for every five students! Clearly educational spending must strongly focus on redressing empirically provable gaps between Ireland’s underperformance in crucial early life education against EU norms. After that, the provision of agile, more cost efficient, employment relevant and digital forms of further and higher education must be prioritised
The document also waxes lyrical about “consulting experts in the public service, academics and NGOs” with the private sector trailing a distant fourth in the priority of consultation. But right now the “experts” we need most to listen to are those who for the second time in a decade face the double burden or rebuilding their own businesses and careers and taking risks to generate employment and tax revenues. Almost 100 per cent of our tax revenues are originally generated by the private sector. 80 per cent of our workers are employed in the private sector. And yet public spending is forecast to reach 55 per cent of GNI* this year and over 90 per cent of policy decision makers are in the public sector. In an increasingly brittle political situation, policy making must become more balanced and reflective of majority interests.