Roy Keane’s most famous mantra: “Fail to prepare, prepare to fail” referred to the Saipan debacle at 2002’s World Cup finals, but it has been invoked repeatedly in reference to Ireland’s structural and economic challenges.
In recent weeks Stripe founder John Collison argued in an essay published in The Irish Times that the country was “going backwards” on housing and infrastructure planning and the Department of Finance published an analysis of the coming decades that Minister for Finance Paschal Donohoe described as “really alarming”.
According to the senior civil servants who penned the Future Forty document, unless action is taken, a future landscape dominated by deglobalisation, an ageing population and growing national debt awaits.
A central scenario points to the potential for declining corporation tax revenues and the risk of a major fiscal black-hole.
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Economic growth and living standards could easily fall in the years ahead with unavoidable costs around climate change and a growing pension bill.
The report warned that the housing crisis could last another 15 years.
It said that if policies were not changed, then the country’s debt would grow to almost 150 per cent of national income and “considerably hinder” the State’s ability to deal with crises or deliver public services.
“To avoid this outcome, increased taxation, reduced public expenditure, increased public sector productivity or a combination of all three might be required,” the document says.
Barra Roantree, associate professor in economics at Trinity College Dublin, says there is a glaring “disconnect” between what the document is warning against – and what the Government is doing.
“The Minister for Finance has gutted things like the universal social charge and the local property tax, and yet we are being told erosion of the tax base is a big serious issue. He is, in fact, making the job harder,” says Roantree.
Roantree speculates as to why the report was published now – and suggests that the Department of Finance might feel it is not being listened to.
“Maybe this is more about a political dispute within the Government – and maybe Finance is not winning that war,” he says.
“The department certainly doesn’t seem to be listened to when the budget comes out. There is a bit of a disconnect between what officials say and what the Minister actually does.”
Roantree sees the report’s publication as an opportunity to discuss wider issues, but says there is little real value in looking at specific numbers and forecasts over such a long-run period.
“The Minister has gone out and supported this, but when it comes to budget time he doesn’t seem to address these issues,” he says, noting how Donohoe launched the report and wrote an opinion article on it in The Irish Times.
Donohoe wrote that the document was not a “crystal ball” but a tool and a guide. He said the coming decade would offer the opportunity to confront “structural weaknesses” while laying groundwork for a more sustainable country.
Jim Stewart, adjunct professor in finance at Trinity Business School, has grappled with the so-called pensions “time bomb” for years.
He says while the report stresses the need for ongoing skilled inward migration to pay for retirees in the future, his broad view is that many of the concerns around the pension crunch are overdone.
“Our health sector, of course, is totally dependent on inward migration and certain areas of the construction industry are completely dominated by eastern European firms and individuals,” he says.
“But what’s happening is that the length of time that people work is increasing and will increase because many are fit and able, and want to continue working.”
He says this will “mitigate” the pension bill to some extent.
Stewart says a “huge amount” has gone into Future Forty but “one thing you can say for sure is – whatever you forecast about population will be wrong”.
He notes that there is no mention of military expenditure in the report beyond a passing reference to the conflict in Ukraine.
The report also precludes itself from imagining any constitutional change on the island over the next four decades.
Plenty of public figures have called for a more intense debate around the economics of a united Ireland so that voters don’t sleepwalk into a potential referendum over the coming years. Yet the report is based on an assumption that there will be no change.
Another imponderable is the future of foreign investment. The report warns that “deglobalisation” would affect Irish exports and the ability to bring multinational companies to Ireland.
Again, predicting developments here is next to impossible.
Stewart says there does seem to be a trend, however, where tech companies – as in the case of Facebook owner Meta – have committed to staying in Ireland but are reducing their headcount as much as possible.
While they might wish to remain here for the purpose of declaring profits, he says, declining employment is obviously not a positive for the Irish economy.
The question arises as to whether the use of artificial intelligence will lead to further declines in technology jobs – or have the opposite effect.
Short-term thinking by politicians is something that civil servants privately bemoan – and one of the reasons for the report’s commission and publication.
Mayor of Limerick John Moran, who was general secretary of the Department of Finance between 2012 and 2014, says if politicians are to think beyond the electoral cycle and plan more for the long-term they need to be closer to the consequences of their decision-making.
“Getting politicians to do this is easier when the decision they are making affects them personally,” he says.
“When I pedestrianise a street or plant a tree in Limerick I will be living with the impact of that decision beyond my term as I hope to live here for the rest of my life”.
Moran says Ireland’s problem is one of “over-centralisation”.
“For example, to relocate a Garda station in Kilmallock could require the Justice Minister representing the gardaí, the Energy Minister to sort out the electricity and the Transport Minister because the bus station is in the wrong location. The local mayor needs to have the authority and funding to be able to handle that.
“Without that delegation of authority, resolving interministerial conflicts would have to go all the way to the Taoiseach, who doesn’t have the time to be dealing with that sort of thing”.
Moran gives an example he was working on this week on funding for the maintenance of CCTV across Limerick and, compared with departmental budgets, the relatively small sum of €400,000. In order for a solution to be brokered, he says, it needed the input of the Minister for Housing and an “emergency meeting” in Dublin.
“No one can believe that the best use of James Browne’s time in the face of a housing crisis is to have to be present to sort out a local issue of this magnitude, even though all of us in Limerick were very appreciative he was willing to do so,” he says.
Moran’s comments echo the old notion about Irish politics being centred around “the parish pump”, where local concerns are pushed by TDs the whole way up to Government Buildings to the detriment of the bigger issues.
For Roantree, enhancing the State’s capacity to deliver on housing and infrastructure is key to changing how Ireland approaches its problems. He suggests that the removal of unnecessary roadblocks would go a long way to achieving this.
“We need to stop focusing on processes and procedures being sacrosanct and look at how we can lessen the delay of infrastructure,” he says.
