The Government can pursue economic recovery in the present climate.
I believe we have turned the corner with the Irish turning their backs on their voting policies of the past to sound a loud warning to any politician who does not put the country before all else. Hope fully we have broken with tradition and from now the best man or woman will get the number one vote. As was clear to see previous governments bought votes to the countries determent.
The EU and IMF will no doubt guide us in the right direction and once and for all put a stop to election concerns interfering with economic policy whether it is in semi state companies or on budgetary issues. One of the most important changes for the countries future and clear warning to the people in power was written in to the EU IMF deal and that was that the protected sectors must be opened up to competition and scrutiny i.e. the legal and medical professions. This comes on the back of the previous heath minister moving against another one of our protected sectors the pharmacists. In order for Ireland’s economy to recover it is vital that all sectors of the economy are competitive.
Source NCCIreland has become a low tax high cost economy especially in the last number of boom years when low income tax on top of high wages allowed costs to spiral out of control. For many years now business groups along with our multinationals have been pointing out the increasing costs of doing business in Ireland however with them benefiting so much from the low corporation tax of 12.5 % it allowed them to absorb the costs at same time making massive profits. Ireland’s labour costs have now got so expensive that we can only encourage high Tech companies to invest here. The minimum wage is nearly the highest in Europe and sets the base rate pretty high as you require a more skilled workforce. The national recovery plan sets out a 7 point plan however it’s not very clear and has no mention of high cost base
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1. Achieving and maintaining higher levels of economic growth in economy.
2. Adopting specific measures to deal with problem areas-e.g. retraining workers made unemployed, special job schemes for young workers, infrastructural investment in disadvantaged regions etc.
3. Improving job information services.
4. Matching education programs to future job needs in economy.
5. Job sharing schemes.
6. Incentives for those with enterprising ideas.
7. Lower tax rates on employed.’
Source National Recovery Plan
The national recovery plan centres around job creation however fails deal to with one major problem and that is the fact many of our new and long term unemployed are poorly educated not suited for high Tech investors or the new smart economy being purposed. The minimum wage is discouraging low Tech companies investing in Ireland and therefore the minimum wage is having a negative effect on many of the people it is in place to protect. The new government’s proposal to reverse the previous cuts in the minimum wage shows a lack of basic understanding of the difficulties the country face.
Source NCC
Source NCC Ireland has two economies were constantly told the Export and The domestic economy. I believe we do have two economies but not the domestic and export the economies we have are the people with money and the people without. Ireland has crippling private sector debt but it is not held equally by all its citizens leaving many people benefiting for the high wages and low tax whilst the others attempt to pay off mortgage and other loans that were giving out in the boom. Yes it is their own fault and yes they should have to pay them back and no I don’t want to help them to pay. The reality is however that only 40% or 791,500 of the counties houses have a mortgage and there is 148 Billion lent out on them. These mortgage holders are currently benefiting for the lowest interest rates ever but will soon face increasing cost as the prices of commodities forces the European Central Bank to increase rates in order to stem the rise of inflation. Many of these mortgages are already under great strain due pay cuts, over time bans and income tax increases. A recent report on mortgage arrears pointed out the worst affect group were self-employed and living in Cavan or Longford. The mortgage holders are so important to the recovery of the Irish economy for several reasons the main one is the 148 billion they have to pay back .Of the 40 % of home owners that have a mortgage possible only 50% of them hold the bulk of the debt lent out in the boom, there a constant uncertainty about these loans and until there is a solution found and final losses written down Ireland now publicly owner banking system will not recover. 
We can all believe more fairytales about growth and smart economy but if we want to recover we need to tackle the underlining problems. The domestic economy is dying a slow death and needs to be put out of its misery. It is subsidised by low taxes and high wages to the extent that a two week holiday in Spain is cheaper than a weekend holidaying in Ireland. The low taxes and high wages are only possible due to kindness of our neighbours in Europe allowing us to cover over a 17 Billion yearly deficit all be it for their own self interest. This excessive spending power of the Irish public has resulted in the collapse of our tourism industry. The Tourism industry is a key area of employment for our vast amount of poorly educated unemployed.
We need to cut the subsidized money supply in the country in order to regain some of our lost competitiveness. We then need to help the people buried in debt to help themselves. I would suggest we stop toying with the problem are tackle it head on and forget about subsidizing the domestic economy and rebuild it on back of job growth. I purpose we reduce the money supply and redirect it.
· Start the tax band at zero instead of 15,000.This would capture everyone at once including pensioners, Social welfare recipient, Public and private sector employed.
· The self employed should have to pay the full rate of PRSI; this would allow them a constant source of income and a reduction in their prices.
· All benefits should be calculated and taxed to reduces the Dole trap effect where it is more beneficial for a couple with children to claim unemployment benefit then take on poorly paid jobs.
· Child benefit should be means tested and reduced by 80 %. Additional assistance and help should be made available where necessary.
· Temporally remove the tax Relief on pensions.
· Increase vat on goods to 25%, reducing personal consumption.
Ø Decrease vat on services to 10% to reduce costs on employment.
Ø Increase interest Relief for mortgage holders.
Ø Encourage overpayment of mortgages. By allowing tax relief at the higher rate of income tax for yearly over payments of 100% or more. This would have to coincide with the banks agreeing not to charge interest for any year when 100% overpayment occurred. This could reduce the average mortgage by up to 100 thousand in 3 years making them more affordable.
Ø Get the builders back to work at the same time reduce the amount of money wasted on energy costs. By allowing Tax relief at the higher rate for any building costs incurred improving the energy efficiency of your home by 40% or more.
Ø Remove all charges to do with planes and tourists landing in Ireland and allow our airports compete against each other.
Ø Remove the VRT ,Vat and all other duties on the sale of the most energy efficient cars sold to hire companies. This would only apply to short term hire vehicles and has a 3 pronged aim .Encourage tourist outside the main cities, Improve the energy efficiency of the countries vehicles whilst removing the need to buy cars for many by making it much more cost beneficial to hire when required rather than incurred all the related costs of owning and running a vehicle. One of Ireland’s largest imports is fuel!
Ø We should encourage home owners to install water meters by allowing them free water to value of 200% of the costs. This would again create employment and start the roll out of the water meters.
Ø We need a data base of all achieved house prices with immediate effect to remove much of the hype and spin from the market. This would give everyone a clear understanding of the market.
Irelands over optimistic people who believed the boom would go on forever have now done a full U turn and believe the country and its people are doomed. The conversations that were dominated by house prices are now dominated by emigration, corruption and lost opportunities. The baby has well and truly been thrown out with the bath water. Every public statement is viewed as more lies, stating facts is no good unless there are pessimistic. The basic economic fundamentals which drove the economy are still there.
The country is now in a position to move away from the past and correct the wrongs and corruption that was part of Ireland past and we are starting our recovery from a very strong position. We can rebuild our economy on the foundations of some very true and reliable facts.
Ø Higher educated work force per head in comparison with our competitors 45% of people between the ages of 25 & 34 have a third level degree.
Ø We have a young population and do not suffer many of the cost associated with an older population.
Ø At least 80% of the work force is employed.
Ø 60 % of homes have no mortgage.
Ø We paid 10 billion of our personal debt last year while saving another 10.
Ø We have one of the most open economies in the world.
Ø We have a very flexible work force able to adapt quickly to change.
Ø The physical infrastructure of the country has improved dramatically.
Ø Ireland has one of the highest rates of foreign direct investment in the world.
Ø Ireland is one of the most profitable places in the world for US companies to be based.
Ø We are the only English speaking country in the euro.
Ø We have suffered greatly due to currency movements in recent years with our main trading partners and a reversal to some degree is likely.
Ø Labour costs have reduced dramatically mainly due to the oversupply of well educated young employees.
Ø Construction costs and rents of industrial and commercial buildings have fallen by over 40%.
Ø Industrial electricity costs fell by 24 % in 2009 and brought us back in line with our European neighbours.
Ø Our biggest export markets are the US & UK at present giving us a massive growth market in the euro zone away from currency fluctuations.
Ø If our friends in the north get their way and are allowed to reduce their corporation tax rate to 12.5% from 29% the whole island would benefit.
Ø Students will now study for high tech jobs instead of traditional sectors driving down wages encouraging investors.
If we do not tackle our own problems the EU & IMF will, the rise in commodity prises and interest rates will force the decision on us.
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