National Competitiveness Council backs student loans

The Government should introduce a student loan system to help increase higher education funding, while unsustainable “quick fixes” to the housing crisis should be avoided, the National Competitiveness Council (NCC) has recommended.

“While controversial, if we are to avoid damaging Ireland’s competitiveness, we have no option but to introduce a funding model for higher education that combines increased State funding, alongside deferred payment of fees through income-contingent loans,” the NCC said in a new report.

It adds that this proposed system, which is similar to the student loan debt model that exists in the UK, would “require careful design” in order to “minimise any regressive effects” and ensure supports are available “to assist those most in need”.

The NCC suggests “moderate” fees of €4,000-€5,000 might be applied.

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At present, the maximum rate of the student contribution is €3,000 per academic year.

Demands on the higher education system are increasing, but the level of resourcing per student “is significantly lower than in most of our competitor countries”, it said.

Infrastructure bottlenecks

On housing, the NCC said the shortage in housing supply risks undermining Ireland’s competitiveness, in an echo of the recent past.

It calls on the Government to “pursue medium-term solutions” and resist introducing policies that promise, but fail, to deliver “a quick fix” to the problem.

“Courageous decisions” should be taken today in order to secure prosperity in the future, according to the independent body, which advises and reports to the Taoiseach on ways to improve the competitiveness of the Irish economy.

NCC chairman Prof Peter Clinch said there were “significant causes for concern and immediate threats” to the Irish economy’s ability to compete internationally.

“Brexit, in particular, presents us with far-reaching and ongoing structural implications,” he said.

“It brings into sharp focus infrastructure bottlenecks, including broadband deficits and skills mismatches, which have also become more acute.”

The NCC has also called for a broadening of the tax base, arguing that the tax system “should support and reward risk-taking, investment and entrepreneurship”.

Property taxes, VAT and environmental taxes should be prioritised over increases in direct personal taxation, it said.

Policy priorities

However, it is also advising that more people should be added to the income tax net.

A “clear plan” should be developed for the funding of water and waste-water infrastructure, the NCC added, while a National Planning Framework for capital investment, to help regions “realise their potential”, is also identified among its recommended policy priorities.

Recent improvements in Ireland’s international competitiveness are largely due to “positive external factors”, it said, but the global economic and political climate is now more uncertain.

A sustainable recovery in Irish competitiveness will therefore “require some difficult decisions”, Prof Clinch said.