The Irish economy can continue to outperform the EU average in the medium term if economic policy shifts away from grants and subsidies and into investment in infrastructure, according to Dr Peter Bacon. The economic consultant told delegates at the annual Irish Association of Pension Funds (IAPF) conference yesterday that public spending on employment and training grants should now be reduced while spending on housing, transport and labour must be accelerated to overcome serious obstacles to growth.
"This includes investment in areas of shortage, which include housing, transport and labour, where a significant shortfall existed not only for skilled but for unskilled workers," he said.
Dr Bacon also stressed the need to attract knowledge-based industries to the Republic to underpin economic growth in the future. This requires a greater focus on research and development and a shift away from grants designed to overcome competitive advantages which no longer exist, he stated.
The conference, titled "How long can the party last?", again highlighted the IAPF's anger at changes made in the Budget to the use of pension savings at retirement. IAPF chairman, Mr Paul O'Faherty, said he "regretted" that the Minister for Finance failed to take on board the valid concerns of the association and others in the industry during the passage of the Finance Bill.
"The old rules were very restrictive and for some time IAPF has been advocating greater flexibility, but the current changes go too far and undermine retirement security for the majority of ordinary pensioners who do not have other assets on which to fall back," he told the conference.
He insisted that it is still not too late to debate the long-term implications of the legislative changes before any move is made to extend this beyond the self-employed and owner directors.
Mr Sean Farren, SDLP spokesman on the economy, highlighted the increasing attractiveness of Northern Ireland as a location for overseas investors. "The challenge is to maximise the opportunities and ensure that the adjustments that must be made, including reducing dependence on the public sector, will be achieved without negative impacts," he said.
The implementation of North-South bodies for trade and business development, inland waterways, EU programmes and enhanced co-operation in tourism and transport all contain important implications for investment and economic development, he said.
