Mr. Neil McDonnell:

We thank the committee for the invitation to attend and give our views. When we issued our pre-budget submission to the Oireachtas in May we asked members to cast their minds back to the summer of 2008. Back then, new house prices were only €18,000 off their 2007 peak but they were not plummeting. The soft landing was on its way and the dismal scientists had got it wrong. Shortly afterwards, things started to happen in America and we had a 31% fall in new and second-hand house prices. The rest is history. Back then, we had national debt of only €50 billion. We were able to borrow our way out of the hole then. Today, our debt is more than four times higher, excluding our pension debt. We will not be able to borrow our way out of the next crisis.

In our pre-budget submission we pointed out the many macroeconomic risks to Ireland. There are arguably more internal and external risks to the health of the State now than there were in the run-up to the 2008 recession. Unfortunately, in the current political environment we see little appetite to acknowledge and confront these risks.

Our country and its citizens are too heavily in debt. At the same time, Ireland has suffered a decade of underinvestment, which is being felt in the state of housing, health, education and childcare. Yet, the clamour for spending is all weighted to the current side. Despite a persistent gap of 40% between the wage bill of public and private sector workers, the majority of our so-called fiscal space is being diverted into the public payroll. This impacts our public competitiveness, which has disimproved from sixth to 12th place according to the recent IMD World Competitiveness Center measure. Our pre-budget submission called for this gap to be closed to 10% by 2025. The public-private sector pay gap is not to be found in any other advanced economy in northern Europe. If Ireland is to thrive, there must be a rebalancing of our spending priorities and the way we address the cost of living and cost of business issues.

We are entering an era of unprecedented volatility in international trade and our relationship with our nearest neighbour, yet everything we are doing domestically is reducing our ability to compete internationally. Despite investing in the creation of the National Competitiveness Council, we ignore its findings, as if allowing the council to simply write reports is an adequate outcome. Ireland is a high wage economy, the fourth highest in Europe in employer-borne wage costs. The issue is not our domestic wage levels but rather the cost of living for Irish workers. Ireland is consistently the fourth most costly European economy to live in. The spending of our citizens is 23% above the EU average on a like-for-like basis, but there is little appetite to understand the reasons. The cost of accommodation for our workers is now a material deterrent to those workers living in Dublin. It is nonsense to think that this cost of accommodation issue can be bridged by employers paying more. That money will simply pass from employers to the owners of accommodation via their employees.

Our electricity prices are the fourth most expensive in Europe. Yet, our regulator is considering further increasing the public service obligation levy, a charge which makes it more difficult for businesses to invest in low-carbon technology. We are the second worst performing country in Europe in greenhouse gas reduction. Our insurance costs remain farcically high because we refuse to tackle known issues with our legal system, Central Bank insurance data, insurers, the book of quantum and our Judiciary. Other countries tackled these problems decades ago. We simply pass the costs to business, charities, sports clubs and citizens in ever higher insurance costs and health costs. This rent-seeking behaviour by the legal profession is not merely immoral; it is having a detrimental effect on the health of our children, for example, through no-running policies in schools, and on our social and civic fabric of life. Most of the remedies to these issues are legislative.

We remain dangerously overdependent on a small number of pillar banks, whose only priority is balance sheet repair. Meanwhile, small and medium enterprises, SMEs, if they can access working capital, are paying significantly more to access it than their competitors in other countries.

We agree with the Irish Congress of Trade Unions, ICTU, that Ireland has the highest rate of people who are not in education, employment or training, known as NEETs, in Europe, yet all our focus is on our underfunded university sector. We need fewer, better universities and a far greater spend on skills, technological training, vocational training and lifelong learning.

We regret to observe that successive budgets have prioritised multinational corporations rather than indigenous SMEs. This is despite the fact that SMEs employ 950,000 people, almost three times as many as the multinational sector. Our businesses are local, native, and ubiquitous, but since the Culliton and Telesis reports we have had no independent strategic review of our industrial policy. Indigenous enterprise will not be tempted to move out of Ireland by changes in US corporation tax rates. We ask the committee to bear that in mind as it considers budget 2019. Measures introduced previously, such as the employment and investment incentive scheme, the knowledge development box, and the key employee engagement programme, KEEP, are so complex that small business cannot use them.

Our pre-budget submission for 2019 asks the committee to "think SME". In view of the political and economic threats that are present today, we believe it is extremely important that it does so.