Judge us on how we solve housing crisis – Donohoe
Minister’s tax vow FF will not be seen as ‘part of establishment’ — Cowen
FINANCE Minister Paschal Donohoe has admitted that the “success” of the Government will be determined by its ability to tackle the housing crisis next year.
In an article in the Sunday Independent today, Mr Donohoe said that “serious inroads” would be made in the area of housing in 2018.
Describing the housing issue as the “most pressing problem of a generation”, Mr Donohoe said the Government “must and will build more homes, tackle housing waiting lists and reduce homelessness” next year.
He also said the Government “will do all it can” to avoid the economy overheating next year, and anticipated that more people can expect a pay rise and tax cuts in the years ahead.
However, in the article, he effectively staked the Government’s reputation on resolving the housing issue.
His comments followed an impassioned debate in the Dail last week in which Fianna Fail said the next election would be about housing and not the economy or Brexit, on which there was “almost universal acceptance of and approval for the policy thrust and direction”.
It would be about tackling homelessness; those on housing waiting lists; those paying crippling rents; those unable to afford a home; those facing repossession or eviction; and children who are “having their childhood stolen”.
In that debate, Fianna Fail’s housing spokesman, Barry Cowen, also went so far as to say his party “will not be seen as part of the establishment’’.
He added: “The Irish people must regain a bit of trust in the political and democratic system and see that we are not all the same. We can do things differently.”
Today, Mr Donohoe writes: “I believe we cannot live up to the expectations of a modern democracy if we do not do all
we can to ensure that everyone has shelter and a roof over their heads.” He added: “Our success in this area will be a mark of our success as a caring, compassionate country.”
In his article, Mr Donohoe also addressed positive developments related to the rapidly growing economy, which last quarter recorded a growth rate of 10.5pc year on year.
He writes: “More people found work and left the dole queues. Emigrants returned home and new people came to live here. And while there is still much to do, we improved, and invested more in, public services and our country’s infrastructure.”
He believed it was possible next year to achieve full employment, and that the State’s books would be “broadly” balanced, meaning a reduced cost in servicing debt, leaving more money for public services.
He also predicted tax cuts and pay increases in the “years to come” as well as further capital expenditure and public service investment “to help our society heal” such as increased spending on transport, health and education.
In the debate on family and child homelessness, which was attended by just 19 TDs, Mr Cowen said it was “time for an extraordinary solution to an extraordinary crisis” and he said that his party would bring forward a significant new proposal to tackle the housing crisis early next year.
He said: “It is now time for me and others like me to say that there is a different direction in which we can go in order to help ameliorate the current situation.”
This related to a need for the Housing Authority to “take control” of the issue, to be given terms of reference and a funding mechanism to “ensure the job can be done properly”. The authority, he said, could go “off-balance sheet” with 51pc investment from private sector elements, such as credit unions, pension funds and Irish private equity funds that wish to invest in capital projects.
This could be complemented with government-backed funds in which citizens could invest. “The 49pc from the State could include the acres of land not being used.”
Mr Cowen acknowledged the “economy is improving”, that the deficit will be a thing of the past, which would allow the Government to promote growth in industry and innovation, leading to an increase in revenues, which could be reinvested in areas that have been subject to under-investment in recent years.
However, he said the Government’s success, “when it is ultimately adjudicated upon” would not necessarily be on the economy or on Brexit: “It will be adjudicated on how it has performed and met the challenge in respect of those who are less-well-off, the poor, the disadvantaged and those who have been left behind through no fault of their own.”
The Dail debate heard that there will be 1,463 families and 3,194 children in emergency accommodation on Christmas Eve. It was also stated that, since 2011, when Fine Gael took office, the number of children in emergency ac- commodation has increased by more than 300pc.
Since 2016, when the current Government took office, the rate has increased by more than 20pc.
Since Housing Minister Eoghan Murphy was appointed, the number of children in emergency accommodation on a given night has risen by 299. The length of time children are spending in emergency accommodation has increased, from six months in 2014 to two years on average now.
While there was some praise for measures which the current administration has put it place, there was also a view that government housing policies were not working.
There was also criticism of Taoiseach Leo Varadkar’s recent statements that the level of homelessness in Ireland was, relatively, better than internationally; and also his view that while a citizen had a right to a home, he did not believe that everybody should be housed for free.
LAST Friday saw the publication of the latest economic growth numbers. It was the culmination of a busy period which saw heaps of data on the economy released. Friday’s figures, together with a range of other indicators, paint a pleasingly rosy picture as the year draws to a close.
Some mid-year signs of softness have been overcome and almost every measure on the economy’s dashboard of indicators shows an expansion that is powering ahead. With the euro-area economy having one of its best years since the single currency was created, the US expanding strongly and Brexit Britain doing better than many economists had expected, the outlook for 2018 is positive.
Before looking at broader issues around economic growth, consider an issue closer to home for most people: pay and how pay levels are changing. Just six months ago, your columnist was writing about “earningless growth” following a conversation with the editor of this newspaper about how too many people were feeling that they were not benefiting from the recovery.
The statistics available then were showing that average earnings growth had been low during the recovery. Nor was it accelerating by much, something that would normally happen in an economy that is growing at a healthy lick. Since then, however, things have changed. Figures for the middle chunk of the year — April to September — show a surge in earnings growth. Both of the measures used by the State’s statisticians — hourly and weekly earnings — are on course to grow far more rapidly in 2017 than in any year since the recession. This is exactly what economists would expect: as unemployment falls, workers are in a stronger position to seek bigger pay increases.
And the news gets better because inflation isn’t eating into pay rises as it has done so often in the past. Stronger economic growth and a tightening labour market could usually be expected to push up prices of goods and services (a downside of which is the erosion of wage gains). Things can run out of control if wages and prices start chasing each other. Mercifully, nothing like such an inflationary overheating spiral is in evidence.
Last Thursday saw the latest consumer prices figures published. The remarkable and extended period of dodo-dead inflation continued in November. The representative basket of goods and services used to measure prices facing consumers was lower last month than the month before. It fell in October, too. Astonishingly, it remains lower now than it did at its peak in 2008.
Some prices, such as healthcare, have soared over the period. But these increases have been offset by the falling prices of food, clothing and furniture. This mostly reflects unusually low inflationary pressures across the rich world, but greater competition in the Irish retail sector has also been a factor.
Regardless of the reasons, what matters to most people is that a combination of no inflation and accelerating pay growth equals strong increases in real incomes. Better still, there is every prospect of further gains next year. An ever-growing number of people are set to feel the recovery where it counts.
Now back to last Friday’s economic growth numbers. As is widely known, Irish gross domestic product (GDP) figures are not a reliable indicator on what is happening in the economy. That is because internationalised companies distort old-fashioned economic measures, such as GDP, which were invented when national economies experienced only a fraction of the daily flows of trade and investment that they do today. As Ireland has an unusually large number of big, internationalised firms operating out of the country, it has unusually unreliable GDP readings.
All that said, the GDP and related numbers still provide some information that is not distorted by the multinationals. The most important of these are the figures on consumer spending across the economy. People’s purchases of goods and services not only account for a big chunk of the overall economy, but how they change and evolve impacts more businesses and individuals than other components, such as exports (despite the Irish economy being unusually open, most economic activity is still accounted for by humdrum daily transactions in villages, towns and cities across the country).
Three months ago, the last batch of GDP figures showed that consumer spending unexpectedly fell in the second quarter of the year. That was partly explained by a sudden halt in jobs growth. This, together with some other more timely indicators, gave some cause for concern that the economy could be slowing. As the year comes to a close, those concerns can be put to bed.
Although the release of new jobs figures has been delayed (the statisticians are introducing a new way of measuring employment), last Friday’s news that consumer spending bounced back strongly suggests that the economy hit a soft patch in the second quarter of the year which was temporary rather than the beginning of a slowdown.
Other indicators, such as the ESRI/KBC sentiment index and retail sales, also point to the consumer continuing to drive growth.
But this needs to be put in perspective because the figures triggered more talk of the economy “overheating” and that it was “the fastest growing in Europe”. The latter claim is made because the headline GDP growth figure in the third quarter of this year was more than 10pc higher than the same period in 2016. This was indeed the fastest growth among the EU 28 countries over that period, but as anyone who understands Irish GDP numbers knows, those growth figures are meaningless. Comparing a meaningless figure to other figures is meaningless.
A more meaningful handle on how well the Irish economy is doing compared to its European peers is to look at the aforementioned consumer spend. In Ireland it grew by almost 3pc in the year to the third quarter. That was well above the EU average of 2pc and the sort of strong and sustainable growth one would wish to see. But it was nowhere near the strongest in Europe. That is not to rain on anyone’s parade, but it is important that we avoid believing that we must always be locked in a cycle of boom or bust.
Overall, 2017 has been the best year for the economy since the crash. Unemployment has fallen and job opportunities are increasingly available to anyone who wants to work. Debt levels continue to come down and household balance sheets have been strengthened. Companies are investing in productive capacity and the export sector is generally doing fine.
While there are plenty of risks out there, the only one that looks capable of halting growth in the first half of 2018 is the bursting of what appears to be a bubble in international financial markets. If that doesn’t happen, the outlook for the new year looks set to remain bright.
‘Many more people are set to feel the recovery where it counts’