Government should spend €1bn fiscal space on infrastructure

Posted on Monday, 18 July 2016

Government should spend €1bn fiscal space on infrastructure to improve productivity and competitiveness in Budget 2017.  This would be a far better use of resources than giving tax cuts as incentives to attract ‘Brexit refugees’ from the City of London to Dublin.  Investment is crucial to addressing Ireland’s infrastructure deficits and to delivering a vibrant, productive, competitive and sustainable economy and a just society.  Investment is the cornerstone of our policy briefing Budget Choices 2017.

Productivity and competitiveness should improve the living standards of everyone in society.  Key to improving our performance in these areas is investment in infrastructure and services.

Investing €400m of the fiscal space to deliver broadband to rural areas will have a much better impact on productivity and competitiveness than tax cuts.  It will create jobs, support rural entrepreneurs and local business and rejuvenate rural towns and.  It will also demonstrate Government’s commitment to rural Ireland and to ensuring a more balanced spread of job creation.

The social housing crisis is a further example of the need to prioritise investment in infrastructure and we propose that Government allocate €600m of the fiscal space to social housing in Budget 2017. We also set out proposals for Government to access substantial additional resources for social housing within the fiscal rules.

Investment in social housing and broadband will have a positive impact on social inclusion, quality of life and living standards as well as improving Ireland’s productivity and competitiveness.

Main proposals:

Investment Packages

  • Additional €600m to support the Social Housing Strategy, with new ‘Off Balance Sheet’ proposal to get access to low cost finance to build additional social housing.
  • A rural and regional investment of €710m for Broadband, Rural Transport and a Rural Enterprise Scheme.
  • €327m investment in Health to support Primary Care Teams, with additional measures to support older people, Disability and to tackle Obesity.
  • €350m investment in Education including Adult Literacy, after school care and early childhood education.
  • A Social Welfare package including an increase of €6.50 per week in Social Welfare Payments and a Cost of Disability Allowance.

Tax reform

  • Make tax credits refundable in Budget 2017 in order to make work pay for the ‘working poor’.
  • Increase the PAYE credit by €6.50 per week to benefit all workers.
  • Standard rate all discretionary tax expenditures and pension contributions.
  • Introduce a minimum effective corporate tax rate of 6%.

The briefing is available to download here.