A KEY member of the EU-ECB-IMF troika has questioned whether large-scale capital investments in Ireland are appropriate at the current time.
In a letter to David Begg, general secretary of the Irish Congress of Trade Unions (Ictu), EU representative István Székely said it was correct to point out that economy-wide investment had reached very low levels in Ireland (just over 10 per cent of GDP in 2011). He said this was down considerably from peak levels in 2007 and was also low compared to other advanced economies.
“But while the level is low it does not immediately follow that large-scale projects are appropriate given Ireland’s particular circumstances at this time. On the demand side, it is difficult to maintain that Ireland suffers from a substantial infrastructure deficit given the very high level of public investment undertaken in the 2005-2010 period in response to identified deficiencies earlier in the decade.”
In his comments, which were set out in a technical response to Ictu proposals for jobs and growth, Mr Székely said the document had drawn attention to the high level of public investment in those years while arguing that it had not necessarily translated into “‘superior’ levels of education, health and telecommunications facilities.”
“It would be interesting to know your views about why this discrepancy exists, ie why did previously high levels of infrastructure investment not lead to improved facilities and outcome for Ireland? In other words should more attention be given to improving the efficiency of public expenditure, including capital expenditure.”
Mr Székely said his comments should not be interpreted as a policy position of the EU or any other party in the troika.
Both trade unions and the campaign group Social Justice Ireland yesterday criticised the troika. Mr Begg said unions had told the troika they did not think the austerity programme was working.
“We said the cost was not worth it. We went through the employment effects of it, that we have 15 per cent unemployment and 60 per cent of people unemployed are now long-term unemployed.”
Ictu vice-president Patricia King said the union delegation had asked the troika whether it had any view on the Croke Park agreement. She said the troika had said “absolutely not”.
The director of Social Justice Ireland Fr Seán Healy said the troika had used data very selectively which had led it to inaccurate conclusions which was producing questionable policy recommendations. “For example, one of their recent documents said that poverty has remained steady over a number of years when in actual fact it has been rising dramatically in the last couple of years.
“Another example would be that they are basically saying that the Government has been fair in term of how it allocated the hits in budgets. Yet the most recent study from the European Commission shows that Ireland is one of only two countries in the EU where the richest 25 per cent of the population did not take the major hit.”
