Fiscal Adjustment is Needed But Budget 2011 Has to Focus on Growth and Creating Confidence

22nd October 2010

According to Mr O’Mahoney, “The business community are concerned by the apparent lack of purpose and urgency on the political systems part in preserving and creating much needed employment given the current economic circumstances. While significant fiscal adjustment is needed, cognisance must to be given to balanced adjustments and the need for a stimulus package for enterprise and employment in Budget 2011. This is key to economic recovery and growth. Government has a duty as a matter of urgency to provide leadership and instil confidence to reinvigorate the labour market. Palliative and piecemeal remedies are not sufficient to deal with the current challenge”.

“Cork Chamber also calls on Government to establish a Business Leaders Council consisting of ten of Ireland’s business leaders to act as a consultative body to the Government. This Council would enable business leaders to make a major contribution to solving the country’s economic challenges, as we believe that both the political and the permanent government, working in collaboration with the business sector would present the best solutions to the difficulties we now find ourselves in”, stated Mr O’Mahoney.

“It is about time that we confronted the taboo of public sector reform in a realistic fashion. We all know that the size and cost of the public sector in Ireland is not fit for purpose, yet there is no realistic idea of what the potential savings under the Croke Park agreement could be, as specific targets and firm timelines have not been set, with no consequences if targets are not achieved. You can’t manage what you don’t measure. A metric should be put on the total cost saving that should be achieved from the Croke Park deal. To the extent that these cost savings are not achieved, the shortfall should be met by a corresponding reduction in public sector employment costs. The lesson is clear. If the public sector is not reformed, any effort to restore fiscal sustainability is futile”.

“As far back as 2008, the OECD[1] have been calling for boldness in developing a programme for public sector reform in Ireland and terming our public sector and Quangos “an organisational zoo”. Regrettably, we are now at the point where reports such as the McCarthy report and the Local Government Efficiency Review are gathering dust. All of the reports cannot be wrong in their assessment of the existing shortcomings in the system. Public sector wages continue to remain high by international standards. In Ireland the public sector wage bill eats up 30% of Government expenditure, in Germany for example that figure’s 15%[2]”.

“Now more than ever, we need to see strong leadership from Government in advancing public sector reform and ensuring value for money, which in turn will lead to an increase in consumer confidence”, concluded Mr O’Mahoney.

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