It is long past time when Ireland should set out for itself a coherent Plan for Economic Recovery to confront this crisis. Just as 50 years ago Whitaker and Lemass cast aside failed policies, and challenged a narrow economic orthodoxy with a new Programme for Economic Expansion, so we must do so again today.
Economic planning has not been in vogue in Ireland in recent years. In good times it was seen as a quaint folly that politicians or public servants would be poking their nose into things they knew little about. Now that we are in bad times it has been spurned too. The pervading view seems to be that it would be folly to try to plan, because everyone is so busy, things are changing so rapidly, and times are so uncertain. Many commentators would pour scorn on a person opening a corner shop without a business plan; yet they seem quite content to see a government which is at the centre of the entire economic web, proceed without any chart or compass nor a clear destination in mind.
The reality of course is that both in stormy conditions and in calm, a destination, a chart and a compass are vital. Ireland’s recent economic history is testimony to the folly of allowing the prevailing winds and rip currents to carry along the ship of state while its ‘party time’ crew chill out.
Set Correct Goals:
For countries just as much as for individuals, you can only lift a slough of despair if you start pursuing a coherent set of objectives with concrete actions. A Plan for Economic Recovery cannot be just about fixing the banks and fixing the public finances. We shall fail if we set these as the key goals. The key goal must be to fix people’s lives. They have been destroyed by the failure of systems which were supposed to protect them. The crises in the public finances and in the banks are not the goals of policy, they are constraints on this central objective which we must pursue. The new exclusive focus on a 4-year budget strategy betrays the continuing belief in government that the deficit must be the goal of all our efforts.
This is not just a difference of semantics. It goes to the very heart of the choices that we must make. Ireland has a choice to make between seeking to shore up a failed past or creating a new future. Most of the policy actions to date have been dominated by the instinct to shore up the failed past. These decisions follow the instinct of the insiders. Batten down the hatches and pull up the ladder behind you. Forget about those left outside exposed to the full rigours of the storm.
The outsiders are our young generation. In the last two years, over 80% of the jobs lost have been by those aged under the age of 30. Latest figures show emigration up 50% in twelve months – now 30,000 per year and heading rapidly. They are the building blocks of our recovery. They have the skills most equipped to compete in global markets.
The challenge for politics is to make the conscious choice to set about creating a new future.
STRENGTHS AND OPPORTUNITIES
A Plan for Economic Recovery would start from an honest assessment of the strengths, weaknesses, opportunities and threats that face our country. Despite the prevailing negative sentiment, we do have very significant strengths and opportunities.
• We have some very vibrant sectors with clusters of very strong enterprises and individuals. However, many of these sectors face bottlenecks that a Plan for Economic Recovery can target and remove.
• We have the flexible talent of a young and growing labour force but too many now see no other choice but to buy a one-way ticket out – a Plan for Economic Recovery will recognise that these are the building blocks of any recovery and set about keeping them at home – providing work experience and getting these people into companies who can utilise their skills.
• The State owns very significant commercial assets both in infrastructure in the ground and in the National Pension Reserve Fund, but the exploitation of these resources is seriously sub-optimal – a Plan for Economic Recovery will lever off these resources to kick-start a major improvement in the arteries of our economy and a concerted drive to deliver capital to new start-ups and viable businesses.
• We have 300,000 businesses and many people capable of starting one. They can turn this economy around – a Plan for Economic Recovery would purposefully set about making it easier for these businesses to survive and thrive.
All of these are real assets of the country. They are capable of yielding a good return, so long as we think beyond the present narrow perspective.
The crisis in our public finances and the crisis in the banking system do create serious constraints, but we are not powerless to make policy changes that put jobs first. Just as government was at the centre of the web that destroyed jobs, so it can do much to restore jobs if every dimension of government is adapted to the task.
WEAKNESSES AND THREATS
We do of course also have serious weaknesses and threats too. These also have to be honestly confronted in a Plan for Economic Recovery. One of the great achievements of the Whitaker/Lemass era was that they did not tip-toe around powerful interests who sought to obstruct the change that needed to be made. Instead they set out a powerful ambition for our nation, opening up to the wider world and building success by competing with the best. This gave them the authority to demand change and to see it through.
Among the major problems that we face are weak competitiveness, weak performance in some parts of our public service, and a growing number of people becoming dependent on a welfare system that does not fulfil their potential. Much of the debate about these problems is cast in terms of a “Zero Sum Game” where you can have improvement for one without equal loss for someone else. Such thinking breeds resistance. Instead we must see these as areas where there can be mutual gains. A Plan for Economic Recovery can set the problems in context.
• We now need a broad Prices and Incomes Policy in this country to help us through this crisis, because we don’t have the option of moving our exchange rate. This policy will not just be about competitiveness in payments made to those on the shop floor. It will also be about tackling rip-off, the excessive payments made in the board room, and the fees for services that are closed to competition.
• We need a Smart State Strategy which recognises that our public service is simply not fulfilling its potential and change is the only way in which it can preserve what is good in its traditions. We need to streamline government and harness the energy and enthusiasm of public service to the task of national reconstruction.
• We need a Welfare Reform Strategy that supports people to fulfil their potential rather than trapping them in idleness and dependency.
There is no doubt that these are difficult areas where people will feel under threat from change. People will have to give up on things that they have come to regard as their entitlements. However, a broad plan allows the country to create a vision of what a different Ireland can be like emerging from this crisis – a more authentic Ireland, where the sacrifices that people make will not be made to put greed and extravagance back into the saddle.
Even in these difficult areas where people are being asked to give things up, a plan can spell out the positive improvements that it will deliver.
• There will be no barriers to entry for people with the ingenuity or the enterprise to start a business
• There will be no obstacles to full information on price and performance.
• There will be no rip-off from well-defended shelters in our economy.
• There will be fair reward for fair effort in the public service.
• Public servants will be proud to stand over the quality of their work.
• Public service will deliver in the most cost-effective way that it can.
• The public service will use the best talent wherever it is to be found in order to deliver for our citizens.
• The public service will be quick to respond and eager to personalise to meet the needs of individual citizens.
• The public service will break down cycles of disadvantage that have left generations trapped in the margins of our community.
We must sketch out a future that we can justifiably ask people to make sacrifices to achieve. A Plan for Economic Recovery allows our nation to harness patriotism and commitment. It allows it face down resistance. Ireland must not be immobilised by fear or by the dogged certainties of those who feel they must shore up a failed past. The task of our nation now is to write an alternative future in which we can all have a stake.
Speech to the National Construction Conference