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Policy issues concerning Economy

We are well aware of the short-term health, social and economic impacts of Covid-19.  But what about the long-term impacts that the pandemic has caused, partciularly the disruption to education and learning.  The latest research indicates that students impacted are facing at least a 3 per cent loss of income compared to peers in previous years throughout their lifetimes, with disadvantaged students being worst affected.  

The National Economic Plan - to be published on Budget day - must give equal weight to environmental, social and economic considerations. Otherwise, this Government will simply repeat the mistakes of the past and many will be left behind.  The National Economic Plan must be underpinned by a new social contract that treats our environment, society and economy equally

Ireland's Quarterly National Accounts, published earlier this week, serve to underline the detachment between many of Ireland's headline economic statistics and life on the ground.

Over one million people were in receipt of  COVID-19-related income supports as of May this year.  584,641 were in receipt of the Pandemic Unemployment Payment (PUP) and 473,500 people had availed of the Temporary Wage Subsidy Scheme (TWSS).  These numbers have been decreasing as the economy slowly starts to open again, those who needed to avail of loan repayment breaks and rent freezes will face likely financial distress.

The most competitive economies of Europe all collect substantially more tax than Ireland does. The evidence suggests that a low tax, low service strategy for attracting investment is short-sighted and that quality education, infrastructure and services are far more important.

A vibrant economy is most important if Ireland is to produce a fairer future for all.  To secure such a future requires us to learn from our mistakes in the past.   Solid policies are required that secure the best future for all. 

As we look towards the future and rebuilding our society and our economy the new Government must consider how we can ensure that our recovery package and investment priorities post COVID-19 help us build a sustainable society and economy, and also move us towards a just transition and meeting our climate targets by 2030.

COVID-19 will have many implications for Budget 2021.  Not least should be the recognition of the need for a functioning society for all underpinned and supported by a vibrant and sustainable economy.  Last year, New Zealand’s Government launched its first “wellbeing budget”, basing its allocations on wellbeing priorities for its citizens.  Speaking at the launch, the Finance Minister stated: “Success is making New Zealand a great place to make a living and a great place to make a life”.   Could such an approach work for Ireland?  We believe it could, and it seems that the parties discussing the formation of a new Government agree.  Here, we discuss some practical proposals that can be introduced in Budget 2021 that will deliver such a Wellbeing Budget. 

All plans for recovery from the present crisis must ensure that the economy and society are treated equally and addressed simultaneously.  Analysing the Stability Programme Update (SPU) recently published by Government and reflecting on the commentary on its implications, it is clear that Ireland is in danger of repeating the mistakes of the past.  One of the major lessons to be learned from the crisis of 2008/9 and the subsequent recovery is that giving priority to the economy over all else simply leads to some parts of society doing very well while great swathes are left further and further behind.

It is clear that tax policy will play a vital role both in the immediate Government response to support people and businesses, and in rebuilding our society and economy once the worst of the health impacts are contained.  The new Government has an opportunity to reform and broaden our tax base and lay the foundations to increase our total tax take now to ensure we are well prepared to meet any future shocks.  We have a once in a generation opportunity to build a new society, a new economy and a new country that reflects the lessons we have learned in recent weeks. 

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