Sean Barrett (Independent) | Oireachtas source

I welcome our visitors. I have misgivings about what the Commission is up to. The fiscal council has shown that, in terms of gains being made in a small, open economy, there is no multiplier. On Senator Thomas Byrne's point, we had to cut capital spending because of the debt burden, partly due to the bank guarantee. Prior to that happening, however, we did not run too many Government deficits, but there were many capital projects which did not yield a return. We need an appraisal from people like our guests to be published in advance to determine if projects would be worthwhile. We must determine if they would be the fruit of lobbying by those looking for soft financial conditions or a sop to the construction industry, as happened frequently in the past. Spending on such projects reduces the efficiency of the overall economy.

I was a member of a cross-Border committee which was told that the first cost estimate for the construction of the Narrow Water bridge was €12 million. Someone then heard that the European Union was involved in providing finance and the estimate jumped to €40 million. The money is now being spent instead on the Enterprise service, but they are probably both dud projects in terms of yielding a return.

Interest rates are at a record low level in Europe, but the private sector is not investing. Is this just the provision of a subsidy for the banking and construction sectors by a different route? Will it really stimulate output?

Is it the problem in the United States of Wall Street versus Main Street? As for a strong public sector with good project appraisal, I have written some appraisals for the Institute of Public Administration and so on, but in respect of the mixtures, I always fear that the taxpayer gets stuck with the dud ones and stuck with the debt. I am particularly concerned about the off-balance sheet financing of Irish Water. While it has not yet been sanctioned by EUROSTAT, there is an element of illusion about it. In the past, I thought that Transport 21 was the worst one in that it was just grandiose projects whereby engineers feel better, the construction industry thinks they are great but nothing happens in terms of the growth of the economy. While one can assume these are great projects and so on, after all that has happened to us since 2008 one needs really strong evidence that they are.

I do not know what will happen in Greece on Sunday but how much of the economy in a place like Greece would be stimulated by having a flexible exchange rate to get into the market economy or if it had the ability to set its own interest rates? It is the economics of being locked into something that obviously is not working and, unfortunately, we came at the very end. Is there any way in which we can substitute for the rigidity the eurozone imposes on us while thanking the Lord that the United Kingdom and United States are buying lots of stuff from us? As a country that has just come out of a rescue plan, it is very difficult for Ireland in particular to reform Europe but, as it stands, the system is highly deficient. Projects are determined by who lobbies or by who has the biggest public relations department. Perhaps the studies have all been done and are being kept in secret somewhere in Brussels or Frankfurt but when some of them are announced, people just think there will be a massive cost overrun, there usually is and it does not really have any great impact. When one robs Peter to pay Paul, although Paul, his accountant, his tax lawyer and his banker usually think it is a great idea, what about the rest of us?

While I do not know what will emerge tomorrow when Mr. Draghi is to decide, it should be something other than being construction-based. As housing has been mentioned, I note that Mr. Brendan Burgess appeared before the joint committee recently and sat in the seat currently occupied by Mr. John McCarthy. He reckoned that approximately €67,000 of the average house price is accounted for by taxes, levies, planning and so on. Would reducing the price of houses by €67,000 not be the best way? That would get the markets going. However, if one pours in more demand, one starts out with the problem with prices and I support Professor Honohan on the 20% deposit. I am not sure that Brussels and Frankfurt inspire the brightest ideas for what is wrong with the Irish economy at present. That could be a reaction to Monday's conference at which we were patted on the back, told we were very good and so on. Not many people in the audience felt very good; the last session sort of collapsed. There must be something better coming from Brussels in respect of economic policy. I know what the Minister, Deputy Noonan, seeks tomorrow and I wish him well in that regard. These projects are almost a Joe Stalin kind of economics, except that the private sector gets a substantial bailout from them. I do not know how the projects are chosen, how they are evaluated or where one can read what they are worth and so on, but I must express disquiet about the process. I will leave it at that and thank the four witnesses.