Unaffordable housing, insecure energy supplies and rising debt interest cloud the economic outlook. Soft options have been exhausted, spin and counter-spin substitute for analysis and public discontent flourishes.
aralysis has come to dominate Irish economic policy, an unwillingness to face awkward decisions and to acknowledge unwelcome trade-offs. It afflicts Government, opposition and the mainstream media.
Government postpones choices and kicks to touch while opposition parties deny there are trade-offs at all, insisting that conflicting objectives can effortlessly be reconciled.
The mainstream media echoes public unhappiness, part of their job, but also fuels the demand for costless solutions, which encourages Government and opposition to offer magic instead of policy.
The paralysis is evident in housing policy, in energy policy and in the kick-and-hope attitude to public financial management.
Political parties profess devotion to lower rents but only for rhetorical purposes. Almost without exception elected officials oppose building more apartments in their local areas.
Especially in Dublin, not a single proposal for a new block of apartments, for sale or for rent, gets through planning and judicial review without vocal opposition from vote-hunting councillors and TDs from all parties.
The leader of Sinn Féin, Mary Lou McDonald, led the opposition to the construction of 1,600 apartments for rent on the derelict site of the former Clonliffe College in Dublin, abetted to be fair by local politicians of all persuasions.
The site is walking distance from the city centre, and a short hop beyond Croke Park.
Some prominent politicians have even acquired a reputation for expertise in housing policy while maintaining that construction of new rental properties will not help contain rents.
Politicians must have concluded that the home-owning Nimbys are planning to vote while Generation Rent are not paying attention.
The housing crisis is most acute in Dublin but is national in character. The supply shortfall is exacerbated by excessive delegation to local authorities of responsibility for planning, and there is a blatant conflict of interest.
Why support extra supply locally when prices are comfortingly high and the fear of depressing prices is accepted by An Bord Pleanála, and the High Court, as a legitimate ground for objection?
And when deputies to the national parliament as well as councillors represent small geographical areas? Excessive cost for whatever apartments might be built in Dublin is being inflated further by restrictions on design and on the proportion of one and two-bed units, courtesy of the planners at Dublin City Council.
There is almost zero demand for larger apartments in Dublin according to developers and actual housing experts familiar with the demographic data. But a planning official at the council was quoted in the online Currency magazine as stating: “Affordability is not our primary responsibility. Our plan is about land use and building typology.”
Councils, in whom primary powers over housing supply have been invested, have effectively surrendered to the Nimby interest. Populist politicians of left and right compete through indulging the naked self-interest of residents’ associations, so the inter-generational heist proceeds unchallenged.
The Government is reluctant to publish the report it commissioned on energy security for fear it recommends unpalatable policy actions.
London firm CEPA has prepared a report which was due for release last May. It will doubtless highlight weaknesses in Ireland’s supply infrastructure for gas and electricity. There is no gas storage, no importation terminal for liquefied gas (LNG), declining domestic production from the Corrib field and a single import pipeline from Scotland. Electricity interconnection is exclusively from Britain.
Next winter there could be electricity blackouts and rationing for large-volume gas users, including food processing companies. The department responsible, Environment and Climate Action, has informed RTÉ that the report, commissioned in May last year, is delayed until September.
One reason is the Government has ruled out an LNG terminal while most other countries in Europe are building them, scrambling to expand alternatives to Russian gas.
Eamon Ryan has declared his confidence that existing infrastructure will suffice even though the UK will be outside whatever gas-sharing arrangements are brought forward by the European Commission. A gas shortage means inadequate electricity, since most power supply relies on gas.
An expert report on energy security does not sit well with declared opposition to any measures which might make a difference, at least in the medium term. In the short-term the policy is reliant on the trustworthiness of the UK, itself short of reserve capacity in energy — and of trustworthiness.
What precisely is the point in deferring release of this report?
Last week the European Central Bank (ECB) finally acknowledged that the inflation surge in Europe needs to be addressed and there will be interest rate hikes and a gradual end to monetary financing of government borrowing.
This process is already under way in the US, the UK and elsewhere — the ECB persisted longer with easy money in the hope that the inflation spike would prove transitory.
The risk now is that the economic slowdown caused by the Russian invasion of Ukraine will be exacerbated by monetary tightening but the 2pc inflation target will not be abandoned.
Ireland is one of the more heavily indebted eurozone members and will come under the radar of bond markets as the ECB withdraws support.
That means the holiday from public expenditure control, and from raising taxes and government charges, cannot continue. But every demand for extra current and capital spending is endorsed by politicians of all flavours while further reductions in taxes and charges are sought and promised.
All politicians, without embarrassment, declare simultaneously their concern about excessive borrowing and more debt while endorsing public expectations of more giveaways.
The mainstream media will have played an enabling role if the political indecision ends in tears, less than a decade since the country exited the Troika programme.
It is not adequate to report the public’s distress at declining living standards, caused entirely by external events, without acknowledging the limits to what can prudently be done by an over-borrowed government.
