Call for housing borrowing binge will concern fiscal conservatives in Government

There are misgivings among some over breakdown in fiscal discipline among the Coalition leaders

The ESRI has recommended a major borrowing binge to double the existing level of capital investment on housing

The ESRI has recommended a major borrowing binge to double the existing level of capital investment on housing

 

Good morning - as we observed yesterday, Covid is (for the time being) in a relatively steady state, but a host of other risks face the Government. As our front page today shows, several of these risks can crystallise at once.

Eoin Burke-Kennedy and Cormac McQuinn report this morning that the Economic and Social Research Institute (ESRI) has recommended a major borrowing binge to double the existing level of capital investment on housing to €4 billion, running an annual budget deficit of €4 billion to €7 billion “on an ongoing basis”.

The ESRI report will cause furrowed brows among the Coalition’s fiscal sparrow hawks (after the year of spending just gone, I’m not sure there’s anything resembling a purebred fiscal hawk left in Government). There were already misgivings among some sources about a perceived breakdown in fiscal discipline among leaders grown so casually accustomed to spending billions. Ominous talk of how discipline would be severely tested in the budget run-up was beginning to do the rounds.

Elsewhere on the front page, Pat Leahy has a preview of an Oireachtas transport committee report, which will urge the Government to re-examine road building, road charges, and to look at targets for car-mileage reductions. These are the kind of difficult policy choices inherent in the climate-policy-rubber meeting the road (sorry).

The Green leadership, it seems, has made a strategic decision not to burn political capital being a watchdog in Government (see the Séamus Woulfe and Leo Leak controversies) and is willing to ship blows from its own backbenches on housing.

All this political powder is being kept dry for a reason – and that reason is likely climate. Backbenchers in the other parties intuit this, and the battles it may foreshadow. Asked about threats to Government stability over the summer earlier this week, one Fine Gael backbencher texted simply: “The Greens”.

Dealing with these issues presents different challenges for the Coalition. Borrowing to spend on housing is likely to prove fairly uncontroversial within or outside Government, but any tax hikes sought to soften the spending blow will be.

And even in an era of nearly unconstrained Government munificence, the significance and the potential pitfalls of plunging head-first into a sustained era of deficit spending will fray nerves among those who are instinctively more fiscally conservative or politically risk-averse.

In the short term, the risk of overheating from a wall of savings and Government spending has to be managed, as well as tackling skills-supply shortages and other bottlenecks.

On climate, the rows are likely to be more visible, and fall more easily into ideologically and economically delineated camps. Rural/urban and traditional/progressive rifts are hard to hide – the row over Glanbia’s cheese plant may be the canary in the coal mine here.

One backbencher opined this week that there are “pretty deep bonds being cemented between key personalities in the three Government parties”. Those foundations may be tested in the months ahead. But if they are found to be strong enough, the scale of the challenges facing the Government may force the Coalition to knuckle down and hope voters reward them for meeting them head on.

Elsewhere on the front, Carl O’Brien writes on how demographic trends are causing a teacher oversupply headache.

Paul Cullen has the latest vaccine and Covid developments.

Best reads

The political fallout from changes to the property tax seems manageable for the Government. But Brian Hutton and others analyse what it will mean for you.

Meanwhile, Harry McGee writes on the left’s opposition to the tax here.

Miriam Lord writes on some Cork-on-Cork unfriendly fire in the Dáil.

Jennifer Bray’s write-up of an all-too-brief peek into the inner workings of the Mother and Baby Homes Commission is here.

Ten years on from the bailout, Naomi O’Leary reports on Ireland’s scorecard from Brussels.

Playbook

Action in the Dáil kicks off with oral questions for Leo Varadkar at 9am, followed by the same for Heather Humphreys, with her Minister for Justice hat on, at 10.30am. Then it’s Leaders’ Questions from Sinn Féin, Labour, the Regional Group and the Rural Independent Group at midday, before questions on Promised Legislation at 12.34pm.

There’s Government statements on mental health during Covid and on Traveller accommodation at 1.44pm, and then topical issues at 7.12pm. Before wrapping up, the second stage of the Solidarity-PBP bill on a constitutional right to housing is at 8pm.

The Committee on Budgetary Oversight is hearing from Social Justice Ireland, and economist Stephen Kinsella, on budget priorities exiting Covid at 9.30am. At the same time, Minister of State Peter Burke is in front of the housing committee at the same time for consideration of the Land Development Agency Bill.

Eamon Ryan is in front of the Environment and Climate Action Committee for two sessions, both on committee-stage consideration of the climate action and low carbon development Bill. The first is at 9.30am, and the second at 3.30pm.

Simon Coveney and Colm Brophy are in front of the Committee on Foreign Affairs on revised estimates for the international co-operation and foreign affairs votes. That’s at 12.30pm, as is the Committee on Disability Matters, which is hearing from Transport Infrastructure Ireland and the National Transport Authority.

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