Ditch troika and increase spending, union think-tank says
THE Government should abandon efforts to meet the troika's targets and increase spending to stimulate the economy, the Nevin Economic Research Institute has said in a report published today.
The trade union-funded think-tank said we should increase taxes for the wealthy to help fund the extra spending needed to stimulate the economy.
Ireland needs to move towards "a different economic and social model over the coming 10 years -- one that is closer to EU norms of public spending and taxation," the Nevin Institute said in its quarterly report.
Ireland taxes less than other countries. The State collected about 36pc of gross domestic product (GDP) last year compared to a eurozone average of 44.6pc, the institute said. Spending in Ireland in 2017 is projected to be 36.1pc or just 30.6pc of GDP once interest payments are excluded. That would be the lowest in the EU.
"I would contest the view that public spending was out of control in 2008," institute director Tom Healy said before publication of the report.
The increases in spending seen under the previous government were appropriate for the levels of economic growth seen at the time, he added.
Mr Healy said the Government should now cancel further cuts and boost spending.
"A discontinuation of cuts in overall current and capital spending is justifiable in order to arrest the haemorrhaging of domestic demand and restore confidence among consumers and investors," he said.
"The key message for Government is: 'Invest and do no further harm'," he added.
The latest quarterly report by the think-tank -- which was established earlier this year -- took issue with the latest report from the Economic and Social Research Institute which rejected calls for a stimulus package.
The Nevin Institute, named after economist Donal Nevin who was a major figure in the trade union movement, argued that a stimulus package can work in a small, open economy while the ESRI said it has little effect because most of the benefits are exported.
Turning to the economic recovery, Mr Healy said that it would probably be 2014 before there was any resumption in growth.
"It's a very gloomy scenario," he added.