Business Irish

Thursday 23 November 2017

Q&A: What are key issues at National Economic Dialogue event?

Paschal Donohoe and Leo Varadkar at the National Economic Dialogue event yesterday. Photo: Claire Godkin
Paschal Donohoe and Leo Varadkar at the National Economic Dialogue event yesterday. Photo: Claire Godkin
Secretary general of the Department of Public Expenditure and Reform Robert Watt, second from right, at the National Economic Dialogue. Photo: Department of Public Expenditure and Reform
Colm Kelpie

Colm Kelpie

Q: What is the National Economic Dialogue?

A: Now in its third year, the NED provides civil society groups the opportunity to make their arguments to the Government about the direction of the economy, ahead of October's Budget. It is particularly important now in the context of the challenges posed by Brexit.

The two-day event takes the form of a broad-based discussion in the first morning, with an opening by the Taoiseach, and then three-minute contributions from groups as diverse as trade unions, business lobby groups, St Vincent de Paul, Social Justice Ireland, the Irish Farmers Association and Irish Tourist Industry Confederation.

Afternoon sessions, which are closed to the press, are smaller and more focused on certain topics. They centred on topics such as productivity, supporting labour market participation, spatial planning, future skills needs and climate change.

Q: Sounds like a talking shop?

A: Ah you old cynic. To be fair, the first session where it feels like everybody is presenting wish lists with just three minutes each is a bit unwieldy, and one wonders what impact it really has. However, perhaps in an attempt to reassure weary attendees, Finance Minister Paschal Donohoe intervened near the end of yesterday's morning session to claim that what was said about childcare provision at last year's event specifically led to changes in childcare provision in Budget 2017.

Q: So what were the main issues raised at this year's event?

A: The lack of housing, underinvestment in infrastructure, the spending wriggle room available to the Government for Budget 2018, Brexit-proofing the economy and helping support sectors like agriculture and tourism to name a few.

Whether or not to retain the 9pc VAT rate for the hospitality sector was also raised.

Q: But the Government just can't give all these groups what they want?

A: Of course not. The spending wriggle room - the so-called fiscal space - for new tax cuts or spending hikes next year is pretty tight, at about €500m net.

With Taoiseach Leo Varadkar promising to ease the tax burden for people who work hard and "get up every day", numbers are tight. He also faces repeated calls for prudence from various quarters, including the Fiscal Council and ESRI, given the external challenges.

The fine line that has to be walked is to proof the exchequer against financial shocks without undermining future prosperity through underinvestment. The NED is better at raising the question than answering it.

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