Closing speech by the Minister for Finance & Public Expenditure and Reform, Paschal Donohoe, at the National Economic Dialogue

29.06.17

Closing speech by the Minister for Finance & Public Expenditure and Reform, Paschal Donohoe, at the National Economic Dialogue

Transcript of excerpts from NED closing speech….

In wrapping up here this morning, I'm going to reflect on another meeting I was asked to attend a week and a half ago. I'm going to move on then to observations that I've had on the debate and the dialogue of the last day and a half. And then look at plans and decisions from Government that we are going to deliver across the second half of this year, and indeed even before the summer.

So if I begin by touching on a meeting that I was at two weeks ago, and some other experiences that I've had since then, and relate that then to the dialogue and debate that we've had. And some of you that participated in the session that I chaired yesterday afternoon, will have heard me comment on this.

One of the first external engagements that I had as Minister for Finance and Public Expenditure and Reform was to participate in a Euro Group Meeting, literally the night after I was appointed. That was the latest in a set of meetings in relation to how the European Union is dealing with the sustainability of the Greek economy….What's striking about being in those meetings, is our friends and neighbours from Greece sit right beside Ireland.…I left that meeting with a serious sense of how vital it is that our country, our citizens and our democracy never get near that point again. And that the vortex and the gravitational forces that can be generated by that level of crisis, that when an open economy hits them again, and particularly a small and open economy, that we have a better ability to navigate that than we had in the past. And we make sure that the fate that was long enough for our people that went on for years in dealing with that, and a prolonged fate, that our friends in Greece are dealing with, that we ensure that we're in a better place to deal with that now, than we were then. And it's actually been the moment of greatest resonance for me now, in my early weeks as a Minister for both Departments.

And then that leads onto a local experience that I had, as somebody, let me be clear about this, I am as in touch as any of you are, with the living experiences of citizens within our State. Because I represent them. I have been re-elected by them. I have not been elected by them on a number of occasions. And I am as in touch with the hopes and the fears and at time the difficulties of our citizens as anyone who is here. And when I knock on a door, in a community that I am privileged to represent, and the door opens up, and I meet three generations of a family living in the same house. I meet the parents, I meet their children, and I meet their grandchildren, all living in the same house; frequently two generations in the same bedroom. I am as aware of what that means to a family, what that means to their children, what that means to the kind of hopes that we want them to have, as anybody else who can speak about them.

Alongside that, what I'm also aware of, and I think the debate that we've had has been of help in beginning to discuss this. I am aware also of other things that I see happening within our country as well. For so long I had the experience of meeting people who thought they'd never have a job again. They thought they would never work again. And when I meet those citizens now, and I use the word citizen, because citizen is not a word that is in the domain of any political group in our State. We are a Republic. When I meet those citizens now, and I see them in work, the change is existential, it's profound. Now it's not to say they don't have other needs and other worries that have been created. It is not to say that for a moment. But it is simply to note, that to be in a place and to be in a society, that now has over two million people at work, is a prospect that is very different to where we were a number of years ago. It's not to deny that that has not created new challenges. And not reawakened old anxieties and fears. But it is a place now that is important.

On the concept of investment, and the ability to deliver integrated investment, I look at what's happening now in different parts of our country. I look at the effect that the National Children's Hospital is already having and the foundations, for they're just being laid. I look at the prospect of what is happening in a part of Dublin I know well. Where I see DIT Grangegorman, coming together with LUAS Cross City, coming together with urban regeneration. And then I see the effect that's having on local labour markets. Not to mention local communities. And we have much of that happening in other parts of the country.

So in terms of the debate that we have had, and the dialogue that's happened over the last number of days, let me move into the middle part of my contribution and observations on that. The debate and dialogue that we had last year, had a material effect on choices that I made in last year's budget. And it will be the same again for the budget that will be coming up in Budget 2018. And what I'm struck by, is what I have heard in the discussion, that there is a degree of consensus in this room, there is a degree of engaging with each other, that we shouldn't take for granted. That of itself that is a valuable public good.

That kind of discussion, and the kind of dialogue that has happened, and the consensus that is there, is valuable. And what I want to signal very clearly to all of you, is that I and both my Departments, are committed to continuing that dialogue.…Because the fact that we had difficulties with a form of dialogue in the past, should not blind us to the fact that there were many parts of that kind of dialogue, and a big part of this kind of dialogue, that did also help our country, and can help our country in the future.

And we have had some engagement recently, through the Labour Employer Economic Forum, that offers a way which that could be done. And we want to build on that now across the coming years. Because we're not just open to debate, we're open to disagreement. We're opened to being challenged. But as part of that, expect us to put the other side back too. And maybe at the end of it then, we'll emerge then in a different and in a better place.

So in acknowledging the consensus that I hear, and heard here, let me also openly acknowledge the things that I didn't hear. In some of the Groups that happened, there was not agreement. There wasn't consensus on many things. People may have agreed on where to go. They were not agreeing about how to get there. If I look at all of the different contributions and points that have been raised here; the State does not have the ability, in a single year, to deliver all of the things that people are looking for, in their entirety. We do not have, even amidst the €58 billion of resources that we're spending this year, even amidst all of the different tax choices and options that are open, we cannot deliver the entirety of any one agenda that is represented here.

But what we can do, is we can make steady and incremental progress on many of the issues that are being raised. We can do that. But what I would ask all of you to take account of, is then please don't say that incremental or steady progress is the same thing as no progress at all. Because we can make progress on many of the issues that are raised. But it needs to be in a steady, year by year way. And that is what I and our new Taoiseach are committed to doing.

In relation to another area that I didn't hear as much of as I thought I might of, given that we are just still battling our way through an environment where we had to grapple with the inability of the State to borrow. We had to grapple with the inability of the State to deal with a very high level of debt. I was struck how in the discussion that we had, those issues did not feature as prominently as they have to feature in choices that I make. And again to challenge the discussion that we've had. With a few exceptions, people who did acknowledge them, then called also for additional expenditure as well.

And that is not a luxury that the Government has. We have to make choices….If I look at what we need to do from a deficit and debt point of view. I heard many people correctly make the point that we need to invest, and we need to borrow, at moments of difficulty. Well of course the opposite to that then is at a point in which our economy is growing, and is steady in many ways, we do need to have a path of getting our debt down. And we do need to have a path of getting our deficit to a point that it is genuinely affordable, and then turn that into a surplus that accelerates getting the debt down, and allows us to fund other investment choices. And I want next year to be the point at which, when we have had the focus on all of the uncertainties that are aboard, at least we're in a position to manage those uncertainties, with stronger budgetary foundations than we have had in the past.

Now as I make that point, let me also make an acknowledgment, and it was touched on by some of my friends from the NERI Institute, that an old way of saying, the conventional way of saying what Government's responsibilities to an economy were, across the 80s, 90s and the early part of the 00s, before we hit the pre-crisis period, was crudely saying that it's the collective responsibility of Governments and Central Banks to get the deficit down, and to get inflation down. And that was just about it. And we have learned to the vast cost of our citizens, how wrong that approach was.

What I believe the approach of Government should be, in many many different areas, is to create the Republic of Opportunity that I note a lot of you at least have quizzed, and have began to debate what that means, which I think is great. And the economic foundations of that are broader than we have conventionally thought in the past. It is doing the right thing by what we need to do with deficit and debt and so on, and I've touched on that. But it is also something that again I didn't hear discussed in this session. It's about the value of regulation, about the value of regulating our banks and having a steady regulatory structure on things that move the needle in a small open economy. It's about the value of having diverse sources of growth, as opposed to one or two engines that our economy is depending on, and then using the proceeds of all of that, to realise what our citizens deserve and what they need. And that's the journey in which we're looking to make.

And then the final point I'll make on the dialogue and debate that we've had, is for an economy that was seared by the experience of it overheating, again I was struck by the low reference to that in the dialogue and debate that we had. Now what I'm not saying is the economy is overheating. I'm explicitly not stating that. But what I would have thought we would have more of a discussion about, is in certain key markets, how can we make sure we make choices that ensure that we don't get back to a place that we have an economy that is generating a level of activity that ultimately creates a cost that we then have to deal with, and how we can avoid that happening again. Because politically, and in terms of our society, an overheating economy is a public bad, it's a public bad, but it does confer some private benefits. And we collectively have to work to make sure that it's a place we don't go back to. Because the experience of that, and the searing cost of that is so recent. And we have, I believe, a shared duty to look at how we respond back to such a vista.

So that leads onto the final part of my contribution, in terms of what we are going to do, to look to move this forward. First I think there are four clear pillars in relation to it. The First Pillar is what the Government's response back to the National Mitigation Plan on Climate Change will be. And I acknowledge this with my Colleague Denis yesterday. This is an area that the response to of which cannot sit with Denis alone. It is a response that will have to come from across Government. I'm also conscious of the fact that when we begin to talk about what that response is, many will still say, and argue, that more needs to be done. And that's fine. That's part of the debate we need to have in a democracy. And we'll engage in that. But I want to send out the message to all, that in choices that we're going to need to make from a capital perspective, and I'll come onto the framework on that in a moment. That is something that will need renewed consideration from all of us.

The next area then will be the Budget. But let me emphasise a point that the Taoiseach made there yesterday, the Budget always focuses, and the political focus is always on, the increments. It's what extra we are doing. The extra that we are doing is always going to be a fraction of what we are already doing. And what will run, up to Budget Day, will be the culmination of a comprehensive spending review, that the Department of Public Expenditure and Reform are leading, to look at what we can do to spend the money that we have better. And we have to integrate both of those two mechanisms together. And we have to keep on doing it year after year after year. And in the Budget Speech, and in all that will follow after that, we will try to make steady and affordable progress on many of the issues that have been raised. But we'll do so with a renewed focus, and looking at all we are doing, as opposed to the new resources that we are committing.

The third area will be the Ten Year Capital Plan and the National Planning and Spatial Framework that will be launched later on in the year. And the decision that I have already made, is that we're going to try and do both together. Or if we can't do them together, we'll do them sequentially. But one is going to inform the other. That is not going to equal no debate and complete consensus though. We're going to have to make choices all over again. We'll make some choices on Budget Day, but the Taoiseach has made clear that he wants a longer term Capital Framework. He wants a pathway to affordably increasing investment in infrastructure. We will deliver that in the second half of the year. But we will deliver it in a way that is informed by the Future Ireland Plan that Minister Murphy will be concluding later on in the year.

And then finally, the Fourth Pillar of all of this, and I want to signal this out, is my intention, later on in the year, if and when I hope we reach agreement with our colleagues in the broader trade union movement, in relation the Lansdowne Road II Agreement, and in relation to the future of FEMPI Legislation, that is something that I want to conclude later on in the year. I've already indicated, and am going to indicate it again tonight in the Dáil, that my ambition is, later on in the year, to come up with a Framework that offers a clear path to affordable wage growth, for those who work within our economy and those who work in our public services, in a way that is embedded in how we respond back to other challenges that we have. Such as how we fund our pensions in the future. Such as how we can make sure we have greater resources available for what we need to do with services. And I hope to be in a place, after the very difficult negotiations that we had, and they were difficult on both sides of the table, to see that process conclude later on in the year. Because if we can achieve that, that is a very valuable objective for our entire economy and society to deliver. And this is a matter that I know many of us are working on, at the moment. It's also a very big sign of how we're hoping to see our economy evolve.

I return frequently back to what happens on the sporting field, and what happens in our Art and Literature, as offering the odd insight that can be of help to where we're trying to get to. And there's a novel by Colum McCann called Transatlantic that actually touches on many of the things our country is about. About how it engages with the outside world. And there's a gorgeous line in it, in which he says `’The world spins, we stumble on, it is enough’. Can't be anymore. Can't be about stumbling on. It has to be about how we have a framework and a debate for doing far better than that. Because if as a country we have been capable of dealing with challenges in our history, that looked undoable. And if in our recent history we have been capable of responding back to challenges that many thought were unconquerable, then surely we have within our grasp the ability to respond back to the challenges and opportunities that now face us……

Ends