Sunday 23 July 2017

The economy is strong but pay demands are stronger

Signs of weakness have receded but as pay talks loom, there is a strong case for decentralised deals, writes Dan O'Brien

Beware: The latest round of public sector pay talks may have an adverse effect on the recovering economy, the performance of which has given Michael Noonan reason to feel a little bullish. Photo: Tony Gavin
Beware: The latest round of public sector pay talks may have an adverse effect on the recovering economy, the performance of which has given Michael Noonan reason to feel a little bullish. Photo: Tony Gavin
Dan O'Brien

Dan O'Brien

The Minister for Finance Michael Noonan spoke recently about what is sometimes called "the lucky country". He noted in a speech a couple of weeks ago that Australia has enjoyed 25 years of uninterrupted economic growth. But he didn't merely muse that this resource-rich country on the other side of the world has not experienced a recession in more than a quarter of a century. Its success, he suggested, means that other economies need not be condemned to suffer inevitable cycles of growth followed by recession.

When politicians begin contemplating never-ending economic expansion, it can be worrisome. Elected representatives everywhere tend to have a largesse-dispensing gene absent in the DNA of normal people. The prospect of permanent economic growth is nirvana for politicians because it allows them to think of ways of doling out goodies without end.

In fairness to Michael Noonan, he did not suggest that Ireland could only get "boomier", to borrow an ill-fated phrase coined by one of his predecessors. Nor did he brush aside those who keep a weather eye on the risks to the economy, as was the wont of politicians a decade ago. Indeed, he discussed some of those risks in the same speech.

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