Oireachtas Joint and Select Committees

Thursday, 3 June 2021

Committee on Budgetary Oversight

Budget Priorities Exiting Covid-19 Pandemic: Discussion

Dr. Stephen Kinsella:

I would channel the savings into three places. First, I would channel them directly into our city centres. The idea is of the city centre as destination rather than simply as retail park. Second, I would channel the savings into Guaranteed Irish business. Third, I would channel them into the worst hit sectors. I am thinking of two in particular, namely, the arts and tourism. Such words are overused, but the arts sector in particular has been decimated. "Decimated" means that only one in ten of a number of things is destroyed, so the word is actually an underestimate by a factor of nine. Those are the areas. Regardless of that, I think most people, when they are allowed to spend money, will spend their money. We will be able to see in September and October where the damage the crisis has done has not been repaired. I think we can take an empirical approach to that.

To the Deputy's second point about youth unemployment, we should understand what youth unemployment does. A single year of unemployment between ages 16 and 24 reduces one's lifetime earnings, so it is not like one is out of work and then one gets back into work and it is grand for ever. It literally reduces the path of one's income for the rest of one's life. That results in lower living standards, poorer health and lower tax revenue for the State. As social ills go, youth unemployment is one of the worst. Dr. Healy was really strong on this, and I agree 100% that having as low a youth unemployment rate as possible is a very good measure of the well-being of a society.

To the third part of the Deputy's contribution, on the economic recovery plan, pages 14, 15 and 16, I think, of the plan have very reasonable measures relating to youth unemployment but, without being critical of them, they are all expansions of existing schemes, if I am not mistaken. What this effectively means is that by expanding the existing schemes, which are welcome, one tackles the kinds of problems those agencies and schemes were set up to deal with. The agencies and schemes might have been set up to deal with a problem in, say, 2014. That is not 2021's problem. There is probably a reasonable argument to tie together what Deputies Kieran O'Donnell and Mairéad Farrell said. There are vast infrastructural deficits in our country and an oversupply of labour in particular areas. It feels like training is the function to map one to the other. The question is what that training is and what it can be used for afterwards. While there is a focus on youth unemployment because of its long-term damage, I do not want to let the moment pass before noting that another area of significant damage is older workers who are, say, 52 but who are effectively barred from the labour market because the skills they have in the job that does not exist any more do not map to any existing labour market conditions. A policy suite that addressed both those ends would definitely be welcome because not only are we in the midst of a housing crisis that is taking up all the airwaves but we also have a massive pensions problem, which is the other big asset allocation issue of our time and which receives less than 1% of the coverage the housing issue receives. It is at least as important and is a deeply gendered issue because it affects women far more than men. It is one of the key issues. Deputy Moynihan asked me where there is something that needs to be done. The Pensions Commission is just about to start its work and we are talking about auto-enrolments. If one adds up auto-enrolments, increases in employer PRSI, which are being flagged, local property tax changes, which are being flagged, and any kind of income tax increase, that will feel a lot like a return to the 2014-16 period unless we get large amounts of growth.

Those are my unfortunately unstructured comments in response to the Deputy Moynihan's perceptive questions.