Dear Senator,
I am writing to you on the issue of jobs. I would like to see a rigorous and more determined effort to create jobs in our economy. Given that all of our budget cuts in recent years have been almost completely consumed by the increase in social welfare payments, it seems that job creation is not only vital for the unemployed, but for the country as a whole.
FORGET ABOUT RETAIL/DEMAND
The way I see it, jobs cannot come from a demand side boom. Talk of restoring old levels of consumption and investment is pie-in-the-sky, while Irish citizens are so burdened with debt and fearful of financial upheaval. I believe all fillips to the retail sector are consequently a waste of time. The sad truth is that we have all consumed and invested far more in the last decade than we were able to afford and we must pay back some of the borrowed money for this previous consumption and investment before there can be a rise in domestic demand. While there are things individual retailers can do to boost their own position, Ireland's recovery simply will not be led by retail -that is a sad but inescapable fact.
COMPETITIVENESS/EXPORTS
Instead, we must focus on competitiveness and the boosting of our ability to trade and export. Our hands are further tied in that we cannot afford to spend any money on job creation, and therefore must focus on reforming our economy (starting with legislation) and also directing our capital budget to those things which will most improve our competitiveness. By competitiveness, I do not mean (as Chambers and IBEC usually plead) lower business taxation or lower workers rights, but reforms tackling unproductive input costs including insurance premia, rents and energy.
LEGAL COSTS/INSURANCE COSTS
Reforms of legal services to reduce costs is a very good place to start as this is a significant burden on businesses, the State and the citizen at large through their insurance premia. Though I have no wish to malign any group working in the legal field, it cannot be denied that this expenditure is out of all proportion to the service provided by our judicial system. The publication of the legal services Bill is an important start, although it unfortunately delays a number of key actions while reports and further legislation is drawn up. I feel this is a mistake, we should include a mandate for the new legal services regulatory body to begin licencing educational institutions and preparing for the introduction of dedicated conveyancers immediately. Furthermore, we should look to urgently reduce the number of remand cases and the unnecessary length of delays caused by remanding of cases. Having courts sit for longer would be a good place to start.
TRANSPORT COSTS
Reforms to transport services will also do much to boost competitiveness. The excessive rents for commercial and residential properties in parts of the country (especially Dublin) is driven primarily by the absence of a good transport system. If it was possible for people to move and commute freely, the concentration of all development in the capital would be reduced and rents (and consumables) would equalise across the region. Businesses would be able to avail of a wider selection of staff and suppliers, consumers/workers would be able to avail of a wider selection of retailers/employers. This would have a dramatic effect on the costs of business and living (even larger than that of legal services). As rents gradually equalised, the spending power of businesses and consumers would rise allowing for either increased consumption, investment or debt repayments (all are to be welcomed).
For this reason, I believe we have made a mistake to refocus the capital budget on schools and construction work. Though schools are obviously necessary, their construction should not be prioritised as a job creation measure. By building schools, we may create more immediate jobs, but once this construction work is complete, the job boosting effect is lost. Whereas with a railtunnel transporting thousands into and out of the city each day, we would be reducing rents and cost of living across the Dublin region and having a long term impact on national competitiveness that would boost jobs in the long run.
I would advocate a realignment of the capital budget back to major transport projects. I would also advocate the sale of both dublin bus and bus eireann (2 profitable companies that will thrive in private ownership and which need to maintain investment levels far greater than they can manage within State ownership for the foreseeable future). I further believe that the DAA should be partially privatised to allow for some external scrutiny of their activities. It does not hurt to include more heads in evaluating major operations like the DAA.
ENERGY COSTS
Finally, I believe strongly that the electricity grid which is currently owned by ESB, but operated by Eirgrid, should be transferred wholly to Eirgrid. As we are about to sell a stake in ESB (possibly the remainder of the company in subsequent years), it is crucial that we transfer this ownership now before we lose ownership. Selling the grid as part of ESB, while retaining the operation of it in another company (Eirgrid), ensures that we will not get the full value of the asset being sold. What investor would be prepared to buy this asset at its full value when they know they will not be allowed to operate it? This is a nonsensical way to sell a grid. If we are truly committed to selling a stake in the grid (I hope not), then at least let us sell it under the ownership of Eirgrid. Selling the asset as part of Eirgrid gives us at least a fighting chance of gaining the full value of the asset -investors will hopefully be willing to pay full price for a share of the grid if they are also buying the right to operate it.
These are merely a menu of options, but I urge you to look at competitiveness as not merely the best, but quite literally the only way out of our present crisis. Restoring credit and/or demand is a fantasy in our current predicament.
No comments:
Post a Comment