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Budget 2021 - Time for leadership
Budget 2021 must:
- Outline a three-year stabilisation programme targeted at supporting incomes, restoring demand for labour, and sustaining strategic firms and institutions; and,
- Commence the major economic and social reforms that we need to meet the United Nations’ Sustainable Development Goals and address the deep structural challenges of poverty and inequality that confront us.
Do not fear debt and borrowing
The approach we are proposing will require Ireland to borrow, which will see the national debt grow. Less important than the absolute level of debt, however, is the ratio of debt to the size of the economy and the cost of servicing that debt. Competent investment of borrowed money should see debt ratios maintained or even falling. The additional servicing costs would be negligible, as Ireland’s borrowing costs remain at historic lows.
Social Justice Ireland’s message on Budget 2021 is simple: Lock in this cheap money for as long a timeframe as possible; do what already needed to be done on poverty and social exclusion, housing and health, Just Transition, and other infrastructure investment; and park the costs as cheap borrowing to be run down over several decades.
Borrowing cheaply for investment always makes good fiscal sense, but it makes sense now more than ever. If we look at the current economic crisis as being a situation to be managed over several years, or maybe even several decades, competent management of the stabilisation phase over the short term will ultimately minimise the long-term economic damage, and therefore minimise any overall fiscal adjustment that might be needed.
Don’t repeat past mistakes
There should be no repeat of mistakes made in 2010 in the aftermath of the last financial crisis, when the Eurozone and UK adopted an austerity-first fiscal strategy that led to inadequate investment, higher unemployment, and the growth in homelessness, child poverty and social exclusion.
Realise major investment is essential
During the last economic crisis Ireland’s austerity approach led to insufficient investment in social services, such as childcare and education, and in infrastructure such as social housing, public transport and rural broadband. Investment is essential for a number of reasons: a) to secure economic development; b) to protect communities (with initiatives such as Community Healthcare Networks); c) to keep unemployment as low as possible (with initiatives such as a substantial state-led childcare programme); d) to ensure critical infrastructure deficits are addressed; and e) to tackle climate change at the level required, and ensure that the transition to a low-carbon economy is just and fair.
A moment of opportunity
Budget 2021 must not only focus on stabilisation measures but must also outline the reforms required to:
- Build a stable and sustainable economy for all;
- Provide a broad and equitable tax-base capable of supporting increased public expenditure;
- Create a universal healthcare system free at the point of use, and place primary care and community healthcare networks at its core;
- Ensure sufficient provision of social housing and the elimination of homelessness;
- Recognise the changing nature of work and address it effectively;
- Take substantial steps to eliminate poverty, including the benchmarking of social welfare rates;
- Develop a universal, affordable childcare system;
- Tackle the urban/rural and regional divides;
- Restore the funding taken from the Community and Voluntary Sector following the crash of 2008/9;
- Put sustainability - environmental, economic and social - at the core of all decisions made.