InBus_Win09_1-55:InBusiness 1-61 11/12/2009 16:17 Page 29
Finance Report | FEATURE
A MIXTURE OF ILLS are already falling,” while in relation to the
“MY OWN VIEW, AND I
So what has the Government done to evade public sector, it stated that “the public sector
this prospect? Ireland has been unfortunate in pay bill should be further curtailed and
THINK THAT OF MANY
that it has suffered from not only the global benefit payments should be reduced at least
PEOPLE IN THE
recession, but an indigenous economic crisis as in line with falling prices.” It also said that
well, courtesy of our freefalling property sector, consideration should be given to reducing the MARKETS, IS THAT IF
an unsustainably narrow tax base and a bloated minimum wage over time and that continuing
LENIHAN WAS LEFT
and burdensome public service. to upgrade infrastructure and raising human
However, Government has, thus far, held an capital should remain priorities.
ALONE, HE’D ACTUALLY
emergency budget in April, published the
findings of two key reports (those of An Bord LOOKING TO THE FUTURE
DO THE RIGHT THING.”
Snip Nua and the Commission on Taxation), Irrespective of the historical events of 2009, in
– Alan McQuaid
established NAMA and held firmly to the view Alan McQuaid’s opinion Ireland’s recovery
that Budget 2010 will deliver €4bn in savings depends to a large degree on Budget 2010. handle on it. Brian Lenihan looked like a
on the current State payroll. Like Jim Power, the Bloxhams economist rabbit caught in the headlights at the start of
Although the aforementioned OECD report believes that the focus needs to be on the whole crisis but you have to hand it to
was a pointed publication, it was in part spending as opposed to tax hikes, but the him – he’s certainly learning on the job
supportive of these measures taken by amount of savings is not in doubt. quickly,” said McQuaid. “He’s introduced the
Government albeit with the caveat that “more “The €4bn is a no-brainer, that’s got measures that were needed and I think he
will need to be done.” to happen,’ he told InBusiness. “Taxes going recognises the seriousness of the problem –
It noted that “the National Asset forward are inevitable and higher taxes are probably more so than some of his
Management Agency should be implemented part of the solution, but at this point in time colleagues. My own view, and I think that
with assets purchased at the appropriate when the economy is still technically very of many people in the markets, is that if
price,” “international competitiveness needs to weak, spending cuts are the lesser of Lenihan was left alone, he’d actually do the
be restored, and prices and nominal wages two evils.” right thing.”
McQuaid also believes that the
competitiveness of Ireland plc – as has been INTRODUCING NAMA
pointed out in popular discourse time and The most notable event of 2009, however, is
time again – needs to be addressed. “We’re the establishment of NAMA. In McQuaid’s
out of kilter completely at this stage not only opinion, it’s now reality and we have to work
in terms of wages, but also in terms of energy with it.
costs, etc. These factors simply make the cost “The NAMA issue is still up in the air in
of doing business in Ireland exorbitant,” terms of ‘is this the right way to go?’ It’s the
he continued. option we’ve taken and nobody really knows.
The issue of economic stimulus is also a We haven’t been here before so no matter
well-debated point. Ireland Inc. has ambitions what you do it’s a risk,” he said. “From an
to become a knowledge economy but as far international market perspective, the sooner
as McQuaid can see, very little has been done NAMA gets up and running the better. To
to kick-start Ireland’s recovery over the course me, it’s not about bailing out the property
of the past year. “Obviously our hands are tied developers, it’s a form of quantitative easing
to a certain extent in the context of what we in itself.”
can do compared to other countries, but more The NAMA legislation was passed in mid-
Jim Power, Chief Economist, Friends First.
needs to be done,” he said. “One of the November but looking back on 2009, it’s very
“IF THAT TREND
angles being put forward is the amount of hard to predict how Ireland will weather the
money being wasted on social welfare costs. storm into 2010 and beyond – particularly
CONTINUES, IT WOULD
We probably could compensate for that by when interest rates begin creeping upwards –
implementing measures like reducing but Jim Power is cautiously optimistic about
MEAN THAT MORE THAN
employers’ PRSI or something along those the country’s prospects provided taxation
OUR TOTAL INCOME TAX-
lines. The Government needs to look at that, plays second fiddle to spending cuts for the
otherwise we will simply keep spending time being. “We have got to address the
TAKE WOULD GO ON
money on the social welfare bill.” spending side of the equation and a lot of the
SERVICING THE
But the question is, given that Government noises we’re hearing from Brian Lenihan –
has commissioned reports, sought advice and less so from Brian Cowen – would suggest to
NATIONAL DEBT.”
formulated policy, will it follow through to the me that we are going along the right track.”
bitter end after its relatively sluggish start? Nobody knows the next stop, but at least
– Jim Power
“The Government certainly took time to get a the train is finally in motion.
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