| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

We provide access to live business television and business related videos from: Bloomberg TV; The Wall Street Journal; CNBC and the Financial Times. Click image:

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax 2008

Climate Change Reports

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : Irish Last Updated: Dec 23, 2009 - 8:40:12 AM


OECD’s Economic Survey of Ireland: Lenihan says report should be "compulsory reading"; Warns about "false economic scientists"
By Michael Hennigan, Founder and Editor of Finfacts
Nov 4, 2009 - 4:57:46 PM

Email this article
 Printer friendly page

The OECD’s Economic Survey of Ireland was launched in Dublin today by Angel Gurría, Secretary General of the Paris-based OECD, the Organisation for Economic Cooperation and Development - - the think tank for 30 mainly developed countries - - and the Minister for Finance, Brian Lenihan. The Minister welcomed what he termed the OECD’s fair and balanced assessment of the Irish economy and said it should be "compulsory reading" for understanding the challenges the country faces. The Minister warned about "false economic scientists" and told Finfacts at the launch press conference that he supported administrative transparency on public spending and cited the merit of publishing politicians' expenses.

Secretary General Angel Gurría, a former finance minister and foreign minister of Mexico, said Ireland cannot afford to go into another economic cycle, without the reform of property taxation. He said "government expenditure in recent years increased rapidly: spending was 50% higher in real terms last year than five years before."

Gurría said some of this was justified but, "this level of spending cannot be sustained and must now be adjusted."

He referred to the Bord Snip/McCarthy report recommendations and said Ireland "needs to make sure that it has first-class policies to help the unemployed back to work" and said unemployment benefits should be aligned with lower pay levels to avoid work becoming unattractive.

The OECD survey said weaknesses in the fiscal framework are partly responsible for the current situation and reforms would add to the credibility of the consolidation. Multi-annual plans for current spending should be made permanent and overall expenditure ceilings introduced. Consideration should be given to the creation of an independent body to advise on fiscal sustainability issues. Stronger budgetary institutions could help make policy more counter-cyclical. Consideration should be given to the publication of a complete balance sheet for the public sector in line with practice in some other countries.

The survey says the Central Bank should be given a more explicit macro-prudential mandate. The Financial Stability Report (FSR) should continue to be published annually. To ensure that the tensions identified in the FSR are addressed, consideration should be given to the development of more effective macro-prudential instruments. These could include an overall leverage ratio and either dynamic provisioning or counter-cyclical capital requirements, as well as tools regarding liquidity rules and risk management practices.

The OECD says the aftermath of this housing cycle should be a good time to deal with the poorly designed policies towards housing that contributed to the over-heating of the economy. The tax system is biased towards property, housing and homeownership. This leads to more expensive housing and greater volatility. A path towards the reduction of mortgage interest tax relief, beginning with new borrowers, should be set out. The introduction of a property tax would help to ensure that housing is adequately taxed, together with providing a tax base for funding local services. Policy to provide housing for those in need should be made more effective: more support should be provided through meeting the cost of accommodation in private housing rather than the construction or subsidised sale of public housing. The housing downturn may create good opportunities to use private housing to meet public needs.

The survey says the public sector has over-expanded and there is scope to increase efficiency. It says health spending can be reduced by cutting costs and redeploying manpower more effectively. The Medical Card scheme should be reviewed to ensure that it is meeting its objectives in the most efficient way. There is also scope for better value-for-money in education spending. Secondary-level class sizes could be raised without necessarily reducing the quality of education. Third-level tuition fees should be introduced, supported by a system of loans, to raise funding, improve incentives and make the system fairer.

The OECD says after the severe economic adjustment, Ireland’s potential output is likely to be permanently lower and recent developments call into question how much of the good performance over the most recent years was structural rather than cyclical. This underlines the importance of policy settings that promote sustainable long-run growth. Policies to boost competition in the sheltered services sector would make the economy more efficient in the long run, but would also contribute more immediately to reducing costs and improving international competitiveness. The effectiveness of competition law should be enhanced. Restrictions and barriers to competition should be removed in the electricity market, the retail sector, doctors, pharmacies, the licensed trade, the legal professions and bus transport. To increase retail competition, planning laws should be changed to remove barriers to entry and facilitate new types of store.

The report says on social partnership that one problem is that union coverage is unbalanced between the private and public sectors. These agreements therefore risk extending a public sector deal to the entire economy. It says this carries particular risks as productivity is difficult to assess in the public sector and therefore the bargained wage that results may not be closely linked to the factors relevant for the private sector. The OECD also says that this raises the question of whether the social partnership process remains useful in the present circumstances, particularly as regards wage setting.

Full Report: OECD Economic Surveys: Ireland 2009

Related Articles
Related Articles


© Copyright 2009 by Finfacts.com

Top of Page

Irish
Latest Headlines
Ryanair revises up full-year profit guidance
AIB bank profitable in third quarter
Ryanair announces half-year profits up 32% to €795m
Ryanair benefits from improved customer service
Ryanair to buy 100 new Boeing 737 MAX 200
Finfacts server migration Thursday
State-owned Allied Irish Banks reports H1 2014 profit as bad loan charges plunge
Ryanair reports profit in its financial first quarter soared 152%
UK firm opens van dealership in Dublin
Ryanair reports 8% fall in full-year profit; US services to commence in 2019
Global Financial Centres Index: New York overtakes London; Dublin slips to 66 of 83 cities
Bank of Ireland reports “significant” improvement in 2013 results
Sale process of IBRC UK projects Rock and Salt completed
CRH says 2014 will be year of profit growth after reporting 2013 loss
Ryanair reports third-quarter loss
Irish Water says it saved €100m in setup costs
RSA Insurance fires two Irish executives for large loss/ accounting irregularities
Bank of Ireland will have to raise provisions by €1.4bn; AIB says it's "well capitalised"
CRH reports slightly improved third quarter
Central Bank says ownership of Newbridge Credit Union transferred to permanent tsb
Ryanair reports H1 profits rose by 1% to €602m
Dublin Web Summit: Irish Stock Exchange and NASDAQ OMX announce dual listing plan
Irish pension managed funds returned to growth during September
Dan O’Brien resigns as economics editor of The Irish Times
Central Bank says no action required on Anglo tapes revelations
Ryanair flew 9m passengers and Aer Lingus carried 1.1m in August
UK Competition Commission says Ryanair must cut Aer Lingus stake to 5%
CRH reports H1 2013 revenue dip and loss
Vodafone refunded UK after discovery of Irish tax haven deal
RBS reports half year profit; Ulster Bank posts reduced loss
Bank of Ireland cuts pretax losses in HI 2013 to €504m
Irish State-owned Allied Irish Banks reports losses of €758m in H1 2013
Service Announcement
Irish managed pension funds declined in June
VHI reports 2012 surplus of €54.3m; Health insurance made loss
Ex- Elan director says management / board "not competent to run a business"
Aer Lingus to put €140m in employees pensions fund; Ryanair apoplectic
Wednesday Newspaper Review - Irish Business News and International Stories - - May 22, 2013
Tuesday Newspaper Review - Irish Business News and International Stories - - May 21, 2013
Ryanair, Europe’s biggest low cost carrier, announced Monday record annual profits of €569m - - up 13%