Business Irish

Tuesday 16 January 2018

Water charges, property tax and home repossession numbers low - OECD Ireland report

Minister for Finance Michael Noonan and Minister for Public Expenditure Brendan Howlin speaking at the Spring Economic Statement at Government Buildings.
Minister for Finance Michael Noonan and Minister for Public Expenditure Brendan Howlin speaking at the Spring Economic Statement at Government Buildings.
Traffic at a stand- still on Dawson street during the water charge protest to the Dail yesterday..Pic Tom Burke 10/12/2014 newsdesk

Ireland's budget deficit remains too large and public spending pressures here are rising, a global think tank has warned.

In its latest assessment of Ireland, the Paris-based Organisation for Economic Cooperation and Development (OECD) said today that the tax base must be broadened and more must be done to control health spending although it did acknowledge that economic recovery is underway.

It welcome the introduction of water charges, but noted that they remain among the lowest in the OECD. Revenue from the property tax, the OECD said, is also low by international standards. 

It also said more must be done to accelerate through the courts the resolution of non-performing home loans that require repossession.

The organisation said rising property prices pose risks, and advised more housing supply was needed and a more developed rental market, but it cautioned against giving any subsidies to first time buyers.

The Paris-based organisation also warned that productivity growth here has been falling for some time.

"Although Ireland's multinational sector thrived during the crisis, the domestic SME sector is still lagging behind despite the shift away from the low productivity construction sector, with much lower levels of competitiveness, productivity and R&D spending," the report said.

The report said strengthening competition in the legal sector and in the ports is required.

The OECD said more must be done to increase investment in water quality, as quality fails EPA standards in some areas, as well as more supports for the long-term unemployed, as well as disadvantaged schools.

It said economic growth in Ireland last year was the fastest in the OECD.

The organisation is forecasting growth here of 5pc this year and 4pc next year.

The report, however, did say that strong economic growth had returned to the country and that a robust, broad based recovery was underway.

Finance Minister Michael Noonan said the survey acknowledges the significant progress that Ireland has made.

 "The survey provides a prescient analysis of the challenges now faced by Ireland and of the policies to address these in areas such as fiscal sustainability, financial stability, inclusive growth, productivity an environmental sustainability."

Angel Gurria, OECD Secretary General, said Ireland is likely to be the fastest growing economy in the OECD this year for the second year in a row.

"Ireland is the 'comeback kid' of Europe's crisis-hit economies and much of the credit for this strong recovery goes to the Government's steadfast commitment to reform," he said.

 "To avoid repeating mistakes of the past, now is the time to build resilience against future nasty surprises while ensuring the recovery is sustained, and its benefits broadly shared."

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