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    Oxymoron

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    By 2040 we expect that an additional one million people will live in Ireland, an additional two-thirds of a million people will work here. An ageing population and smaller family size mean that we will need an additional half a million homes to accommodate this growth. Project Ireland 2040 purports to address this. It consists of the National Planning Framework which sets out a spatial strategy for Ireland, to accommodate in a “sustainable and balanced” fashion these significant demographic changes. It is the overall Plan from which other, more detailed plans including city and county development plans and regional strategies will take their lead. Learning from past experience, the NPF is backed up by an infrastructure investment programme, the National Development Plan. This National Development Plan sets out the significant level of investment, almost €116 billion, which will underpin the NPF and drive its implementation over the next ten years. €91 billion in Exchequer funding for public capital investment has been allocated and will be supplemented with substantial investment by commercial State Owned Enterprises. This increased level of resources is expected to move Ireland close to the top of the international league table for public investment, from a low post-crash base. In short, the State’s infrastructure investment – the money – should be guided by and follow the Plan. That is what makes Project Ireland 2040 different and a significant innovation in Irish public policy. What is not different is that it does not have teeth, particularly to stop market-driven development that is incompatible with the vision. Project Ireland 2040 is about enabling all parts of Ireland to achieve their full potential. It seeks to move away from the current, developer-led, business as usual pattern of development, to one informed by the needs and requirements of society. This means seeking to disrupt trends that have been apparent over the last fifty years and have accelerated over the past twenty. It purports to aim to ensure that rather than have excessive population growth focused on Dublin – as is the current trend – that 75% of all population growth occurs in the rest of the country.The immediate priority is to increase overall housing supply to a baseline level of 25,000 homes a year by 2020, and then a likely level of 30-35,000 annually up to 2027. 112,000 households are expected to obtain social housing over the decade. A new €2 billion Urban Regeneration and Development Fund will aim to achieve sustainable growth in Ireland’s five cities – Dublin, Cork, Limerick, Waterford and Galway – and other large urban centres, incentivising collaborative approaches to development by public and private sectors. It aims to secure at least 40% of future housing needs by building and renewing within our existing built-up areas, whether they be in the many villages and towns in need of regeneration or in our cities and larger towns where there are also huge opportunities for city and town centre regeneration. Of course the corollary of this is that an unsustainable 60% of future housing need will be met on green-field sites. It targets a level of growth in the Northern and Western, and Southern, Regions combined to at least match that projected for the East and Midland Region. It will support the future growth of Dublin as Ireland’s leading global city of scale, by better managing Ireland’s growth to ensure that more of it can be accommodated within and close to the city. It supports ambitious growth targets to enable the four cities of Cork, Limerick, Galway and Waterford to each grow by at least 50% to 2040 and to enhance their significant potential to become cities of scale. It recognises the extent to which Sligo in the North West and Athlone in the Midlands fulfil the role of regional centres. It recognises Letterkenny in the context of the North-West Gateway Initiative and Drogheda- Dundalk in the context of the Dublin- Belfast economic corridor. It seeks to strengthen our rural fabric, by reversing town/village and rural population decline, by encouraging new roles and functions for buildings, streets and sites, and supporting the sustainable growth of rural communities, to include development in rural areas. That’s one- off housing. Anyone who follows this will see that there’s not much sense of anything being ruled out, and indeed almost everything seems to be ruled in. That suggests it won’t all happen. And the determinant of what happens and what doesn’t will, as usual, be the market – which will skew to Dublin and its hinterland, and of course one-off housing whose site costs are negligible (for those lucky enough to own rural land) but which pose difficulties for sustainability: economic, social and environmental. It costs more to service far-flung housing with broadband, and everything else. One might quibble with elements of the plan. Dr Edgar Morgenroth – Professor of Economics at DCU and a primary author of the document – said that plans for the €850m motorway between Cork and Limerick would undermine the proper growth of “second tier” cities in Ireland. He rejected claims by An Taoiseach Leo Varadkar that the motorway would encourage the cities to grow faster saying it would instead lead to sprawl. He told ‘Morning Ireland’ it was important “to put the infrastructure into the cities, not between them”. “Once you put the motorway between two cities what you’re doing is getting more sprawl. So you’re undermining your own strategy”, he said. Morgenroth also said that building a new motorway undermined a commitment by government to reduce carbon emissions. The NPF will also have “statutory backing” overseen, quasi-independently, by the new Office of the Planning Regulator (OPR) – a key recommendation of the Mahon Tribunal.   Unfortunately this particulator Regulator will not regulate but rather advise others whose motivation may be political and short-termist. A regulator who does not regulate. There has been much light-free heat, led by Sinn Féin which even claimed to be seeking a legal opinion, about the failure of the government to put the NPF to a parliamentary vote but instead to include

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    Independence in a Vassal State

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    In his 1976 poem, ‘A Part of Speech’, Joseph Brodsky says Russian narratives of the future and of history are informed by language, not facts. “… and when “the future” is uttered, swarms of mice rush out of the Russian language and gnaw a piece of ripened memory which is twice as hole-ridden as real cheese”. Current events in Ireland import his observations to our own milieu. March and April mark the peak of the Centennial celebrations season in Ireland – the months of remembering, interpreting and occasionally re-writing the already troubled historical narratives of the nation to reflect the distant 1916 Easter Rising. The ripened memory is hole-ridden by interpretations and narrations, though the factual history of the event could easily be explained in simple timelines. Thus the focus of many analysts has drifted from the original Easter Rebellion to the future. The culmination of this was a rather simple, yet far-reaching, observation by President Michael D Higgins that modern Ireland is a society that has yet to achieve the core perceived objectives of the Rising: the story of Ireland is still being told. This notion of Irish sovereign incompleteness, one hundred years from the Rising, is an important and complex one. To some, extracting relevance from the Rising means projecting historical myopia into an evolving future: the ideal of national independence defined by physical boundaries. Nationalist rhetoric, historically apt, but backward-looking, has been one of the significant themes in the Centenary. For others, including myself, relevance is less about the ideals of the original Rebellion, and more about the nature of the Irish state and its elites within the context of the modern reality, framed forcefully by the memory of the Global Financial Crisis. Put simply, irrespective of the wishes of the 1916 leaders and the generations of Irish national leaders who followed them today’s Ireland is, economically-speaking, a vassal state, dependent on fortunes, choices and policies determined well beyond our shores. Perhaps the saddest part of this truth is that this state of affairs is the direct outcome of the willful co-opting of Irish elites by our external masters: the technocracies of Europe and the Multinational Corporations. As in 1916, today Ireland has little control over its own destiny. And just as in 1916, there is only a small minority of the Irish people willing to confront this reality. No matter what the Irish President declares about the ‘Irish story’ being a continuing saga, we are subjects of the world order that our leaders, aided by the silent majority of us, have not the will to alter. Still less the capacity. Over the hundred years that separate the Easter Rebellion and today, Ireland has travelled an impressive path of economic growth – a path that is still new but which is celebrated today as our major achievement. However, attributing the economic success of today to the struggle for independence in the past is a false narrative. Apart from the fact that on average Irish citizens were doing well before the Rising, asserting Ireland’s economic independence from the UK required a period of painful and exceptionally protracted misery that stretched from the Rebellion into the early 1970s. When we finally did get growth to ourish, we squandered its fruits. And though we have growth it has not yielded independence. The economic renaissance after 1973, attributed to TK Whitaker-promoted economic openness and FDI-focused development, did not mark meaningful economic sovereignty for the country. Rather it represented a shift in Irish economic dependency from reluctant participation in UK-centric trade, investment and labour markets to an enthusiastic embrace of the EU as an opportunity for the beggarthy-neighbour model of tax arbitrage policies and to comprehensive prostration to corporate markets, first represented by the ‘civilised’ foreign direct investors, lately – by the blackmail-wielding bondholders and vultures. The overall outcome was belated prosperity, but also atrophying leadership. Economic growth came with policy de a- tion through Social Partnership, the perceived and real demands of FDI, and reliance on the importation of social, cultural and economic ideas (and institutions) from the EU. A nation once subjugated to the UK found itself subjugated to a virulent blend of nationalism and religion and, finally, to yet another set of hegemonies.By the end of the 1990s, the Irish model of commerce, traditionally defined by the triumvirate of the local councilor, local priest and local bank manager presiding over economic resources gave way to the Social Partnership model where those three agents were supplemented by a motley crew of social and business groups and state bureaucrats whose sole preoccupation was to make sure that the wishes of the MNCs and Brussels were not trampled by mere local selfishness. The fruits of 100 years of striving for independence is an economic culture of dependency. Which, in cold and impersonal language of economic statistics, looks like this: In 2014, Ireland spent more than the EU and euro-area average as a percentage of GNP – 0.87-0.88% – on social housing, against the Euro area’s roughly 0.72%. In return, we got a spiralling homelessness crisis and a ratcheting length and duration of social housing queues. We posted the second highest GDP per capita figure, based on EU purchasing power parity, but only average (for the euro area) levels of actual real individual consumption. We got the fastest growing economy in the EU, with OECD-topping investment figures. But we also have average or below average growth rates in construction spending (+3.1% in the first nine months of 2015 compared to the same period of 2014) and our companies’ investments in machinery and equipment was down almost 18%. In fact, January- September 2015, total investment growth, excluding intellectual property – domain of smoke and mirrors generated by the tax-shifting MNCs – was down 9.5%, just as official total investment figures for the economy were up 26.8%. Consider the following simple exercise. We used to believe that the true state of the Irish economy was described by our Gross National Product (GNP) because, unlike GDP, it ‘accounts’ for profit

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    If we can borrow it, we will spend it

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    Two recent events highlight the true nature of the ongoing Irish economic recovery. Firstly, ahead of the infamous Ireland-Argentina Rugby World Cup match, the press office of the main governing party, Fine Gael, produced a rather brash infographic. Charting projected growth rates in real GDP for 2015 across all Rugby World Cup countries, the graph put Ireland at the top of the league with 6.2 percent forecast growth. “FACT: If the Rugby World Cup was based on economic growth, Ireland would win hands down”, shouted the headline. Having put forward a valiant performance, the Irish team went on to lose the game to Argentina, ending its incipient ascendancy. Secondly, within weeks of publication, Budget 2016 – billed by the Government as a programme for the ‘New Ireland’ – has been discounted by a range of analysts, including those with close proximity to the State, as representing the return of a fiscal policy of …electioneering. Worse, judging by the public opinion polls, even the average punter out there has been left with a pesky aftertaste from the political wedding cake produced by Merrion Street on October 13th. Tasteful or not, the public gloating about headline growth figures and the fiscal chest-thumping that accompanied Budget 2016 did not stretch far from reality. Official growth is roaring, public finances are in rude health, and the Government is back in the business of handing out candies to kids on every street corner. The air is filled with the sunshine of recovery and talk about the Celtic Tiger Redux is back on the menu for South Dublin along with the fennelised lamb. Ireland by the numbers On budget day the government projected full-year 2015 inflation-adjusted growth of 6.2 percent followed by 4.3 percent in 2016. Extraordinarily optimistic, “one minister acknowledged that the growth figure for this year is likely to end up nearer to 10% than the 6.2% estimated just 6 weeks ago”, according to a story on the front page of the Sunday Business Post in late November. Much less optimistic, the IMF has the figures at 4.9 percent and 3.8 percent, respectively. Still, this ranks Ireland at the top of the advanced economies’ growth league, with second place Iceland at 4.8 percent and 3.7 percent, respectively. The only other advanced economy expected to post above 4 percent growth in 2015 is Luxembourg. Which is dramatically telling: of all euro-area member states, the two most exposed to tax optimisation schemes are growing the fastest. Though only one has a Government gushing publicly about that fact. No medals for guessing which one. The problem is: the headline official GDP growth for Ireland means preciously little as far as the real economy is concerned. The reason for this is the composition of that growth by source and, specifically, the role of the Multinational Corporations trading from Ireland. We all know this, but keep harping on about the said ‘metric’ as if it mattered. Based on the figures for the first half of 2015 (the latest available through the official national accounts), the Irish economy grew by €6.4 bn or 6.9 percent in real GDP compared to the first half of 2014. Gross National Product, or GDP accounting for the officially declared net profits of multinational companies, expanded by a more modest 6.6 percent over the same period. Other distortions arising from this structural anomaly at the heart of the Irish economic miracle are the effects of foreign investment funds and companies on the capital side of the National Accounts. Back in 2014 the European Union reclassified R&D spending as investment, superficially inflating both GDP and GNP growth figures. Since then, our investment has been booming, outpacing both job creation and domestic public and private sector demand. In more recent quarters, capital investment has been outperforming exports growth too. Which compels a question: what are these investments about if not a tail sign of corporate inversions past and a forewarning of the changes in the pattern of economic output in anticipation of our heralded ‘Knowledge Development Box’? Beyond this, the legacy of the financial crisis has compounded the artificiality of growth statistics. Irish ‘bad bank’, Nama, and its vulture-fund clients are aggressively disposing of real estate loans and other assets bought at regrettable cost to the taxpayer. Any profits booked by these entities are counted as new investment here. Once again, GDP and GNP go up even if there is virtually nothing happening to buildings and sites which are being flipped by these investors. And while we are on the subject of the old ways, last month Ireland was announced as the domicile of choice for an upcoming merger between Pfizer and Allergan – two giants of the global pharma world. Despite numerous claims that Ireland no longer tolerates so- called ‘tax-driven corporate inversions’ (a practice whereby US multinationals domicile themselves in Ireland for tax purposes), it appears that we are back in the old game. Just as we are apparently back revenue shifting (another corporate tax practice that sets Ireland as a centre for the booking of global sales revenues despite no underlying activity taking place here), as exemplified by the Spanish Grifols announcement earlier in October. Just when we thought we were out they pull us back in! All of these growth sources also benefit from the weaker euro relative to the dollar and sterling, courtesy of ECB printing presses. Looking at the national accounts for January-June 2015, Gross Fixed Capital Formation accounted for €3.8 bn or almost 60 percent of total GDP growth over the last 12 months, and nearly three quarters of total GNP growth. In simple terms, the real economy in Ireland has been growing at closer to 3.5 or 4 percent annually in 2015 – still significant, but less impressive than the 6-percent-plus figures suggest. exchequer kindness Still, the above growth has worked well for the Irish Government. In the nine months up to September 2015, Irish Exchequer total tax receipts rose a strong €2.75 bn, or 9.5 percent year-on- year.

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