Initiatives need social dimension
BEATING THE DOWNTURN:Better infrastructure and disposal of State firms can bring social and economic benefits, writes PHILIP LYNCH
THE CURRENT economic difficulties are very real and serious and are now impacting on the "real economy".
Global issues - the credit crunch, spiralling energy costs, food inflation - have all seemingly conspired in a manner that constricts our ability to deal with our own domestic issues, but then this is the price of a being part of a truly global economy.
In the midst of increasingly constant negativity, we must remain focused on all the positives Ireland Inc has going for it in this global economy. We must remain focused on where we have come from, what it took to get us to where we are and what we must do now to position ourselves into the future.
Ireland is a vastly different place today from its historical counterpart and is well equipped to deal with the issues that it faces. These issues require both short-term and long-term solutions.
The role of Government is central to how the current situation is dealt with.
Only the Government can put in place the structures, give the direction and, most importantly of all, give the leadership now urgently needed.
Confronting and dealing with the issues that our relatively small, open economy faces is central to how Ireland functions in the decades ahead.
There are a number of initiatives that I believe could, if introduced, have a fundamental influence over how effectively we deal with the problems that we face:
1. National critical infrastructure, including relevant surplus housing stock, should be purchased at a discount by the National Pension Reserve Board.
Such a move would fundamentally increase the supply of social and affordable housing at an appropriate time.
This would have the added benefit of reducing the oversupply of housing. While it could be criticised as a back-door recapitalising for the banks, I would argue that the social benefits and savings to the exchequer should be the primary focus.
Furthermore, the National Pensions Fund should increase its allocation to infrastructural projects that are not centrally funded via the NDP or Transport 21. In addition, key projects that are central to Ireland's growth in the years ahead should be undertaken, including:
• a rail link to Dublin airport, Metro North and Metro West;
• increased power generation using wind, solar and water;
• health facilities for an ageing population.
2. The Government should initiate the process of withdrawing from direct involvement in businesses that no longer fit with State ownership and as a result free up funding for infrastructure that is fundamental to our long-term competitiveness.This should be done at the same time as critical infrastructure projects are being developed.
This would involve the orderly disposal to private-sector interests, both Irish and non-Irish, of the Dublin Airport Authority; Bord Gáis Éireann; Bord na Móna; the ESB; Irish Rail, Dublin Bus and Coillte.
There is no longer any need for the Government to be directly involved in these businesses. Indeed, much comment has been made on the need for reform within the public sector. I believe that this would be a fundamental move in the direction of such reform.
For example, Coillte should be sold back to the farmers of Ireland as part of a new drive to restart our ailing agriculture and food sectors.
The orderly privatisation of these businesses - all of them with considerable growth potential - would raise substantial funding for other public-sector projects that are in need of further expenditure, eg healthcare, education, research and development.
3.The time has come for those that are described as tax exiles to be encouraged back to Ireland.
There are several highly successful Irish individuals who do not reside in Ireland. These are individuals who have become global players in various businesses and have succeeded at the highest levels.
These are individuals who have enormous energy, ability, contacts and vision.
At a time when Ireland needs to refocus on its creativity and add value, the Government should encourage these key individuals to return to Ireland with an innovative set of proposals including a request that they pay a defined contribution to the Revenue Commissioners and further increase their level of investment in Ireland in sectors of their expertise.
4. Taoiseach Brian Cowen should immediately appoint a national economic taskforce to address the issues of greatest and most urgent economic importance made up of:
• some of Ireland's most successful entrepreneurs;
• Cabinet Ministers in economic portfolios;
• a select number of senior and retired civil servants.
I would also recommend that Charlie McCreevy be asked to stand down as EU commissioner and return to become the chairman of the proposed economic task force.
In addition, I would suggest that both Ray MacSharry and Alan Dukes be appointed to this proposed taskforce.
I would envisage that the task force would make a series of immediate recommendations within a four-week period and a series of longer-term recommendations over the next six months.
The support of Fine Gael, Labour and Opposition parties should be enlisted for what would be a Tallaght Strategy 2.
The notion that always and ultimately "the market will or should decide" is flawed.
We have seen how selfish market forces are driving up the price of oil and driving down the stock markets. It is the role of Government to give direction and leadership. We are all well used to, and generally welcome, political initiatives that are designed for the greater good.
Let us be clear that many of our problems are deep-rooted, while certain recent spikes - food prices, energy prices and interest rates - have accelerated the need for reform and remedial action.
In recent months, the price of oil has soared to levels that in decades past would have prompted predictions of global meltdown.
But what is Ireland doing about reducing its dependence on oil? We need an aggressive strategy, supported by incentives, to rapidly gear up on green energy production. We have the wind and the water to become increasingly self-sufficient in energy.
The technologies exist to allow all buildings - industrial and domestic - to be built and operated using optimum green energy. Ireland could dramatically reduce its dependence on oil.
A major issue for families is the constant increase in food prices, foods that are largely imported.
Ireland has some of the finest land in Europe and yet every year less and less food is produced by Irish farmers. Why? Because there are more incentives for Irish farmers not to farm.
Farming in Ireland needs to be radically overhauled to put our enormous land resource back to work.
In addition, our land should be more effectively worked to become part of a national plan to generate more green energy.
The financial and social benefits of such an initiative would be very significant and they would also help to maintain a very important element of Ireland's social fabric.
Finally, while we must maintain our competitiveness, it is important that families on low incomes do not suffer from a pay freeze for all.
Many people derived little or no benefit from the buoyant economic period. The larger pay sacrifices should be made by those who benefited most in the recent past.
Any economic downturn can have widespread financial consequences, but it is when the social dynamic for families and individuals is interfered with that it can have the greatest consequences, for example, the loss of a job or the inability to provide for children.
For this reason, economic initiatives must not lose sight of the social and community implications for our fellow citizens.
• Philip Lynch is chief executive of One51, the investment and advisory group with interests in environmental services, renewable energy, food and property.
Tomorrow: Denis O'Brien of Digicel, Communicorp Group and Independent News Media