Fabric Stock BEATING THE DOWNTURN:

 Better infrastructure and disposal of State firms can bring socialand economic benefits, writes

PHILIP LYNCH

    THE CURRENT economic difficulties are very real and serious and arenow impacting on the "real economy".

    Global issues - the credit crunch, spiralling energy costs, foodinflation - have all seemingly conspired in a manner thatconstricts our ability to deal with our own domestic issues, butthen this is the price of a being part of a truly global economy.

    In the midst of increasingly constant negativity, we must remainfocused on all the positives Ireland Inc has going for it in thisglobal economy. We must remain focused on where we have come from,what it took to get us to where we are and what we must do now toposition ourselves into the future.

    Ireland is a vastly different place today from its historicalcounterpart and is well equipped to deal with the issues that itfaces. These issues require both short-term and long-termsolutions.

    The role of Government is central to how the current situation isdealt with.

    Only the Government can put in place the structures, give thedirection and, most importantly of all, give the leadership nowurgently needed.

    Confronting and dealing with the issues that our relatively small,open economy faces is central to how Ireland functions in thedecades ahead.

    There are a number of initiatives that I believe could, ifintroduced, have a fundamental influence over how effectively wedeal with the problems that we face:

    1. National critical infrastructure, including relevant surplushousing stock, should be purchased at a discount by the NationalPension Reserve Board.

    Such a move would fundamentally increase the supply of social andaffordable housing at an appropriate time.

    This would have the added benefit of reducing the oversupply ofhousing. While it could be criticised as a back-door recapitalisingfor the banks, I would argue that the social benefits and savingsto the exchequer should be the primary focus.

    Furthermore, the National Pensions Fund should increase itsallocation to infrastructural projects that are not centrallyfunded via the NDP or Transport 21. In addition, key projects thatare central to Ireland's growth in the years ahead should beundertaken, including:

    • a rail link to Dublin airport, Metro North and Metro West;

    • increased power generation using wind, solar and water;

    • health facilities for an ageing population.

    2. The Government should initiate the process of withdrawing fromdirect involvement in businesses that no longer fit with Stateownership and as a result free up funding for infrastructure thatis fundamental to our long-term competitiveness.This should be doneat the same time as critical infrastructure projects are beingdeveloped.

    This would involve the orderly disposal to private-sectorinterests, both Irish and non-Irish, of the Dublin AirportAuthority; Bord Gáis Éireann; Bord na Móna; the ESB;Irish Rail, Dublin Bus and Coillte.

    There is no longer any need for the Government to be directlyinvolved in these businesses. Indeed, much comment has been made onthe need for reform within the public sector. I believe that thiswould be a fundamental move in the direction of such reform.

    For example, Coillte should be sold back to the farmers of Irelandas part of a new drive to restart our ailing agriculture and foodsectors.

    The orderly privatisation of these businesses - all of them withconsiderable growth potential - would raise substantial funding forother public-sector projects that are in need of furtherexpenditure, eg healthcare, education, research and development.

    3.The time has come for those that are described as tax exiles tobe encouraged back to Ireland.

    There are several highly successful Irish individuals who do notreside in Ireland. These are individuals who have become globalplayers in various businesses and have succeeded at the highestlevels.

    These are individuals who have enormous energy, ability, contactsand vision.

    At a time when Ireland needs to refocus on its creativity and addvalue, the Government should encourage these key individuals toreturn to Ireland with an innovative set of proposals including arequest that they pay a defined contribution to the RevenueCommissioners and further increase their level of investment inIreland in sectors of their expertise.

    4. Taoiseach Brian Cowen should immediately appoint a nationaleconomic taskforce to address the issues of greatest and mosturgent economic importance made up of:

    • some of Ireland's most successful entrepreneurs;

    • Cabinet Ministers in economic portfolios;

    • a select number of senior and retired civil servants.

    I would also recommend that Charlie McCreevy be asked to stand downas EU commissioner and return to become the chairman of theproposed economic task force.

    In addition, I would suggest that both Ray MacSharry and Alan Dukesbe appointed to this proposed taskforce.

    I would envisage that the task force would make a series ofimmediate recommendations within a four-week period and a series oflonger-term recommendations over the next six months.

    The support of Fine Gael, Labour and Opposition parties should beenlisted for what would be a Tallaght Strategy 2.

    The notion that always and ultimately "the market will or shoulddecide" is flawed.

    We have seen how selfish market forces are driving up the price ofoil and driving down the stock markets. It is the role ofGovernment to give direction and leadership. We are all well usedto, and generally welcome, political initiatives that are designedfor the greater good.

    Let us be clear that many of our problems are deep-rooted, whilecertain recent spikes - food prices, energy prices and interestrates - have accelerated the need for reform and remedial action.

    In recent months, the price of oil has soared to levels that indecades past would have prompted predictions of global meltdown.

    But what is Ireland doing about reducing its dependence on oil Weneed an aggressive strategy, supported by incentives, to rapidlygear up on green energy production. We have the wind and the waterto become increasingly self-sufficient in energy.

    The technologies exist to allow all buildings - industrial anddomestic - to be built and operated using optimum green energy.Ireland could dramatically reduce its dependence on oil.

    A major issue for families is the constant increase in food prices,foods that are largely imported.

    Ireland has some of the finest land in Europe and yet every yearless and less food is produced by Irish farmers. Why Because thereare more incentives for Irish farmers not to farm.

    Farming in Ireland needs to be radically overhauled to put ourenormous land resource back to work.

    In addition, our land should be more effectively worked to becomepart of a national plan to generate more green energy.

    The financial and social benefits of such an initiative would bevery significant and they would also help to maintain a veryimportant element of Ireland's social fabric.

    Finally, while we must maintain our competitiveness, it isimportant that families on low incomes do not suffer from a payfreeze for all.

    Many people derived little or no benefit from the buoyant economicperiod. The larger pay sacrifices should be made by those whobenefited most in the recent past.

    Any economic downturn can have widespread financial consequences,but it is when the social dynamic for families and individuals isinterfered with that it can have the greatest consequences, forexample, the loss of a job or the inability to provide forchildren.

    For this reason, economic initiatives must not lose sight of thesocial and community implications for our fellow citizens.

    • Philip Lynch is chief executive of One51, the investmentand advisory group with interests in environmental services,renewable energy, food and property.

    Tomorrow: Denis O'Brien of Digicel, Communicorp Group andIndependent News Media

    © 2008 The Irish Times

    This article appears in the print edition of the Irish Times

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