OECD: Health, pen­sion spend will push up debt

Irish Examiner - - Front Page - Ea­mon Quinn

Spend­ing on health and con­tin­u­ing to fund the State pen­sion age at 65 will in­evitably add a sig­nif­i­cant amount to Ire­land’s debt, the Or­gan­i­sa­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment (OECD) has said.

In a ma­jor report on the Ir­ish econ­omy, the Paris­based or­gan­i­sa­tion ef­fec­tively laid down chal­lenges to any po­ten­tial new left­lean­ing Sinn Féin gov­ern­ment by say­ing it wants reg­u­lar as­sess­ments of the lo­cal prop­erty tax to take ac­count of changes in house prices and by urg­ing fur­ther car­bon tax hikes for the coun­try to hit its cli­mate obli­ga­tions.

The rec­om­men­da­tions of the OECD come af­ter an elec­tion cam­paign marked by pledges by most po­lit­i­cal par­ties to keep the State re­tire­ment age at 65 and to in­vest sig­nif­i­cant amounts in healthcare.

The report also urges care­ful mon­i­tor­ing of the ris­ing inequality caused by the dis­par­ity in eco­nomic clout be­tween Dublin and other re­gions.

Launch­ing the report, OECD chief econ­o­mist Lau­rence Boone said that, if there were no changes to cur­rent poli­cies on healthcare and the re­tire­ment age, the gov­ern­ment’s debt level would rise sig­nif­i­cantly in the com­ing decades.

She said Ire­land is spend­ing sig­nif­i­cant amounts com­pared with other OECD coun­tries in fund­ing healthcare and its hos­pi­tals, but is get­ting poor out­comes in terms of bet­ter health pro­vi­sion in re­turn.

Ire­land is the only western Euro­pean coun­try with­out uni­ver­sal healthcare and the health of its people is suf­fer­ing as a re­sult, said the report.

On ways to boost the build­ing of new homes, Ms Boone said the OECD favours in­cen­tives such as re­zon­ing pub­licly owned land for res­i­den­tial homes and pro­vid­ing pub­lic trans­port for res­i­den­tial sites but not other mea­sures that would only in­crease de­mand.

Asked about the po­lit­i­cal un­cer­tainty and the OECD’s views on the po­ten­tial of a high-spend­ing, left-lean­ing gov­ern­ment com­ing to power, Ms Boone said the report was about ad­dress­ing struc­tural is­sues in Ire­land and ways in which the coun­try can con­tinue to thrive by broad­en­ing its re­liance on tax rev­enues be­yond the multi­na­tional com­pa­nies.

The chief econ­o­mist re­it­er­ated that suc­ces­sive Ir­ish bud­gets had ben­e­fit­ted from wind­fall cor­po­rate tax re­ceipts, of which the bulk is col­lected from multi­na­tion­als.

This mat­ters as any set­back to world trade that af­fects for­eign-owned firms could harm Ir­ish gov­ern­ment rev­enues, said Ms Boone.

The OECD Eco­nomic Sur­vey of Ire­land runs to 118 pages and de­tails scores of rec­om­men­da­tions for an in­com­ing gov­ern­ment.

Spend­ing on health and con­tin­u­ing to fund the State pen­sion age at 65 will add sig­nif­i­cant amounts to Ire­land’s debt, the OECD has said.

In a ma­jor report, the Or­gan­i­sa­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment also said it wants to main­tain the prop­erty tax and for it be as­sessed at reg­u­lar in­ter­vals, and also seeks fur­ther car­bon hikes for Ire­land to hit its obli­ga­tions to re­duce cli­mate­warm­ing emis­sions.

The rec­om­men­da­tions come af­ter an elec­tion cam­paign that was marked by pledges by most po­lit­i­cal par­ties to keep the State re­tire­ment age at 65 and to in­vest sig­nif­i­cant amounts in healthcare.

Launch­ing the report, OECD chief econ­o­mist Lau­rence Boone said if there were no changes to cur­rent poli­cies on healthcare and the re­tire­ment age, that the Gov­ern­ment’s debt level would rise sig­nif­i­cantly in the com­ing decades.

She told re­porters said the or­gan­i­sa­tion favours gov­ern­ments across the world rais­ing the re­tire­ment age to 68, as people live longer, while Ire­land is spend­ing sig­nif­i­cant amounts com­pared with other OECD coun­tries in fund­ing healthcare, but get­ting poor out­comes in terms of health pro­vi­sion.

Ire­land is the only western Euro­pean coun­try with­out uni­ver­sal healthcare and the health of its people is suf­fer­ing as a re­sult, which re­quires much bet­ter con­trol over health bud­gets as in­vest­ment in­creases, Ms Boone said.

On ways to boost the build­ing of new homes, she said the OECD favours in­cen­tives such as re­zon­ing pub­licly-owned land for res­i­den­tial homes and pro­vide pub­lic trans­port for res­i­den­tial sites over other mea­sures that would only in­crease de­mand.

Asked about the po­lit­i­cal un­cer­tainty and the OECD’s views on the po­ten­tial of a high-spend­ing, left-lean­ing gov­ern­ment com­ing to power, Ms Boone said the report was about ad­dress­ing struc­tural is­sues in Ire­land and ways in which the coun­try can con­tinue to thrive by broad­en­ing its re­liance on tax rev­enues be­yond the multi­na­tion­als.

The chief econ­o­mist re­it­er­ated suc­ces­sive bud­gets had ben­e­fit­ted from wind­fall cor­po­rate tax re­ceipts, of which the bulk is col­lected from multi­na­tion­als.

This mat­ters be­cause any set­back to world trade that af­fects for­eign-owned firms could harm Ir­ish gov­ern­ment rev­enues, she said.

The OECD Eco­nomic Sur­vey of Ire­land runs to 118 pages and de­tails scores of rec­om­men­da­tions for an in­com­ing gov­ern­ment.

It wants taxes to rise “some­what” should the UK agree a Brexit deal, and it wants the cor­po­rate tax rev­enues to pay down debt.

The report rec­om­mends reg­u­lar updates of house values to as­sess the lo­cal prop­erty tax and to help low-in­come house­holds most af­fected by the charge.

Over­all, the report finds that the Ir­ish econ­omy will con­tinue to grow strongly in the short term, while facing sig­nif­i­cant prob­lems in help­ing people to reskill to nar­row the skills gap.

The econ­omy faces sig­nif­i­cant chal­lenges over world trade in the com­ing years and from an age­ing pop­u­la­tion in the long term.

Separately, the Euro­pean Com­mis­sion pro­jected Ir­ish GDP will con­tinue to ex­pand strongly, by 3.6% this year and by 3.2% in 2021.

In its win­ter fore­casts, it said growth has slowed in 2019 from 5.7%, the fastest rate in the EU.

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.