Sean Barrett (Independent) | Oireachtas source

As always, I welcome the Minister of State to the House. Dr. Stephen Kinsella of the University of Limerick wrote about the spring exercise: "This balancing act deserves applause". What the Ministers, Deputies Noonan and Howlin, are trying to do is commendable, namely, that we not revert to a boom-and-bust cycle. Where I have just come from, the banking inquiry, will have a role to play in that. A new regulation of banks will be required to ensure that credit does not explode as it did to create the property bubble.

I will turn to the exercise that the Minister of State has attempted to set out before us.How many additional resources are coming on stream and how will the balance be achieved between reduced taxation and increased services? This is up for debate under the semester process and I look forward to seeing how public opinion develops in this regard.

The Minister of State outlined extensively the progress that we have made. An interesting analysis by Cormac Lucey indicates that the 2014 deficit was 0.9% of GDP ahead of target. The IMF observed that 0.3% of GDP growth came from EU accounting changes which incorporate the proceeds of crime and international output, 0.6% came from higher than expected tax revenues and 0.4% came from lower than expected interest charges. Any of these could turn against us, which is why the spring economic statement builds in sensitivity tests for current expenditure, while capital proposals will be evaluated later this year.

We tend to loose control over grandiose capital projects. The cost-benefit analysis guidelines which are expected in July will be important in this regard. I proposed amendments to the Roads Bill 2014 to make cost-benefit analyses obligatory. In regard to the track costs of roads, UK studies allocate maintenance costs at approximately 15% of capital costs, based on the number of axles on and torque power of various vehicles. The research suggests that we can get better value from money out of roads. The capacity of a motorway is 55,000 vehicles per day. There is no point in building them on routes with lower traffic volumes. In this new parsimonious era, I am sure that will be kept in mind.

Current expenditure between 2014 and 2020 is projected to remain virtually unchanged. The figures are €49.75 billion in 2014 and €48.375 in 2020. Approximately €1 billion of the adjustment will be made on the expenditure side. On the tax side, the projection increases from €41.2 billion in 2014 to €52.9 billion in 2020. That is where the major adjustment will take place. Perhaps that balance needs further investigation because people are wondering when GDP growth will mean something to them as taxpayers. Of course, they are also annoyed at being forced to bail out the banks. The spring economic statement projections are heavily dependent on increased tax revenue from growth. The projections for growth can be inaccurate. Few people besides Morgan Kelly noticed what was going wrong after 2005. Sometimes it is a good idea to slow down the forecasters and wait until we actually see growth before dividing up the benefits. Projections based on dividing growth between taxes and expenditure can become unstuck if the growth is not as expected.

We are currently educating more people than most other European countries, with about two thirds of school leavers going on to some form of further education. This is a major reason why firms come here. Between the €3,000 paid by students and the €8,000 provided by the Government, Irish third level institutions are achieving world rankings for €11,000 per student. It would cost four to five times that figure in the United States, from where we are attracting enterprises. People are sometimes pessimistic because of what is going wrong but this is one area that is doing well. The quality of our graduates is good and they are not as expensive as in other parts of the world. I am sure that is one of the reasons why the United States is a leading source of foreign direct investment to Ireland.

I will not bore Members with my opinions on tourism. However, continued growth in the tourism sector requires us not to sell Aer Lingus. It has developed nine routes into this country and it carries 4.8 million passengers across the north Atlantic. British Airways has not developed any routes from Scotland, Manchester, with a catchment population of 15 million, or Birmingham, with a catchment of 11 million. Let us allow our iconic brand to generate the returns this country needs in tourism.

I do not know the purpose of post codes given that 98% of post is already delivered by the next day. It appears to be a technological project which will cost us money but I do not know what it is supposed to achieve. It certainly is not doing anything for the postal system. I question the level of return on energy savings when energy prices are falling but I am sure the budget will be adjusted accordingly.

International comparisons are important, particularly given that house prices were far out of line with anywhere else. I recall the regular column in The Irish Timeswhich showed what €100,000 would buy in Dublin compared with everywhere else. One might purchase a castle in Germany or France for the same price as a semi-detached house in Dublin. That has to be our reference point. There is no sense in eroding economic competitiveness by using our hard-won gains to pay higher asset prices. I fear there are signs in the greater Dublin area that these problems may be reappearing. It is no secret that we will need stricter regulation of the financial sector.

Perhaps some of the social programmes deserve better scrutiny. I do not think it is socially progressive to extend medical services to those aged under six years or over 70 years regardless of income if at the same time we neglect those aged between seven years and 69 years who are short on income. Until we resolve these problems, income redistribution should be focused on the needy rather than being universal.

We should also reflect on the mistakes made in the establishment of Irish Water to ensure that we never repeat them. It was supposed to be a conservation exercise but even though we discovered that the public sector was actually the major waster of water we hired all of those engineers into the new company. As Professor John FitzGerald, formerly from the ESRI, has noted, Irish Water has low productivity. We spent €500 million from the pension fund on meters before we decided on an altogether different system of pricing. Senators tabled interesting amendments. It is a pity that the Government did not accept some of them.

The Seanad could also play a role in assisting the Government in preparing development plans. The spring economic statement contains a number of good ideas and this House will assist the Government in its further endeavours in that regard.