Wednesday 21 August 2019

Johnny Fallon: A proper stimulus package, or just another money and time wasting folly?

SINCE the times of the Romans, states have been building and improving roads. This is based on a very simple principle: roads increase the volume of people travelling, cut journey times, alleviate traffic pressures, and reduce the costs of transporting goods and workers from one place to another. It is therefore not hard to see why the government might prioritise roads in its stimulus package yesterday. It is one of the few areas an Irish government can invest in and see an immediate tangible benefit. It does, however, lack imagination.

A stimulus package in Ireland is always of questionable value. We are not as closed and small an economy as Iceland and we do not possess the large internal markets of the US or Germany. Therefore a stimulus can often fall flat on its face, delivering nothing but an outflow of cash, 1977 being an example of this. Yet something must be done to try and instil some life and confidence in our economy.

Driving out the N4 from Dublin, passing Celbridge on your right, there is a monument known as ‘Connolly’s Folly’. This was built as one of the famous famine relief programmes. Back then, although people were destitute and struggling to survive, there was a school of thought that reckoned people should not be given money for nothing and it was better to have them work for their ‘relief’.

Work schemes were introduced. Fine Gael junior Minister Shane McEntee might be familiar with the thinking as he, and a large number of others today, have a problem with welfare and seem to think it’s better to have people work on anything than have them in receipt of support. Of course, back in the famine days people did the work just to exist and the schemes were of questionable benefit to anyone. The Connolly’s built their monument to mark the extent of their properties, but getting the calculations wrong they actually built it beyond their property in someone else’s land.

A folly for sure.

Yesterday the government’s plan contained many welcome elements. Education facilities were a particular winner as were primary care centres. Now here is where budgetary policy gets complicated. Many wondered why some elements in the Department of Finance and the troika believed the sale of state assets should go toward reducing debt. The benefit for Ireland in such an approach was that you then reduce the outflow of cash but going for the high profile stimulus package creates better news. The problem is that it can only be spent on things like capital infrastructure. Therein lies the weakness of the stimulus plan. What happens when the stimulus is spent? What do we have to show for it? Is the investment sustainable?

Yesterday we announced a range of primary care facilities across the country. Today we are back to talking about cuts in health and reduction in services. What good are state of the art facilities if we cannot afford the people to staff them? What use is it to build such facilities if we are then going to cut the availability of vital services, if we cut the staff, if we cut the carers? Walking into a state of the art, modern building that is empty and does not provide the care or services you need is of no benefit to anyone.

It is a folly.

Providing new education facilities is welcome provided you can commit to maintaining staffing levels, that you can follow up the initial investment with plans to develop education and research facilities. The Grangegorman project has enormous potential but it does not end with building. It is back on the government’s plans as of yesterday, again its welcome but for a project that has been on and off more times than a page 3 models bikini top, there is a long way to go. We spent a lot of time talking recently about Ireland becoming a new Silicon valley, a new research hub, particularly in areas like medical research.

Yet there is nothing that suggests we have any real idea as to how we might do this and even less intention of risking any money in developing it when we can instead invest in buildings.

No doubt many of these projects will provide some initial construction employment. That will be welcome to a number of families. There are a lot more than construction workers on our dole queues however and this plan does not contain any long term strategy as to how the stimulus will change things or create opportunities for them. The plan can leave us with better facilities but without the money to run them. We are gambling again. The plan is devised to give us a short term boost in the hope that the world economy will have picked up and we will be beyond crisis point by the time these facilities come on stream.

It might work. If it does not then we have another problem.

Johnny Fallon is a political commentator

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