Thursday 27 October 2016

Government 'not investing in people' says Nevin think tank

Published 28/09/2016 | 02:30

Union-funded think tank criticises State’s spend per pupil
Union-funded think tank criticises State’s spend per pupil

Government spending on research and development (R&D), education and capital investment is below the EU average and lags other European economies, a think-tank has warned.

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The Nevin Economic Research Institute (NERI) said Ireland "isn't investing in its people" to the same extent as countries like Denmark, Sweden and Switzerland.

Data published with NERI's latest economic commentary shows that Government spending on education here was just 4.3pc of the value of the economy in 2014, compared with 4.9pc for the EU as a whole, 5.2pc for the UK, 6.5pc for Sweden and 7.2pc for Denmark.

"The Republic lags on a 'per pupil' basis in terms of spending on primary and tertiary education," Nevin said in its report.

"Increasing the per capita spend on education to Nordic country levels would increase the Republic's long-run growth potential by enhancing labour force and economy-wide innovative and productive capacity."

The trade union-funded think tank said a similar point can be made about total government and higher education R&D spending.

Ireland spent €166 on public sector R&D in 2014, compared to more than €200 in the UK, €462 in Sweden and more than €500 in Denmark and Norway.

NERI said the economy is expected to grow, in GDP terms, by 4.1pc this year and by 3.7pc in 2017.

The jobless rate should dip below 7pc by the end of 2018.

But the think tank warned that the wriggle room for tax cuts or spending increases over the next five years was limited, with demographics and inflation taking up much of the so-called fiscal space.

The Department of Finance has estimated the available fiscal space at about €11.3bn over the period, but the Fiscal Council, the State's budgetary watchdog, said almost half of that is stripped away when you take the effects of an ageing population and inflation into consideration.

NERI argued against tax cuts in Budget 2017.

"Average rates of combined income tax and employee social security contributions are significantly below OECD averages for both low and middle income earners," it said.

Meanwhile, the Hibernia Forum, an advocacy groupwhich describes itself as being dedicated to the principles of a free market, said the Government should favour tax cuts over spending increases in the Budget.

Irish Independent

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