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Irish Times
01-07-2025
- Business
- Irish Times
Ireland's water infrastructure now main block on growth, committee hears
Ireland's water infrastructure is now one of the main constraints on the economy, limiting the supply of housing and other infrastructure, the Oireachtas Committee on Budgetary Oversight was told on Tuesday. 'Ireland is a very heavy user of water and that's why we're struggling to keep up,' Irish Fiscal Advisory Council's (Ifac) chief economist Niall Conroy told the committee. Members of Ifac appeared before the committee on Tuesday to discuss the economy and other issues. 'When we looked at how Ireland's infrastructure compares to other countries in Europe, we actually found that Ireland, for water, was about average, which we were surprised at,' he said. READ MORE The problem lies more with demand, he said, noting the State's pharma, data centre and tech industries were big users of water. Uisce Éireann , formerly Irish Water, has already stated that it will not be able to support much more than 35,000 new house completions a year 'in terms of connecting them up' without additional funding, he said. [ Coalition spending overrun likely to be more than €2bn this year Opens in new window ] Ifac chairman Seamus Coffey said there was capacity within the economy to ramp up the production of the water infrastructure 'but it is certainly a bottleneck that is slowing down the economy'. In his opening address to the committee, Mr Coffey said Ireland's infrastructure was about 25 per cent behind its peers. 'Regardless of what happens to the international environment, these infrastructure deficits need to be addressed,' he said. 'If the economy weathers the changing environment, it will have high levels of employment and high demand for infrastructure,' Mr Coffey said. IATA Director General Willie Walsh on airline profits, air fares and why the Dublin Airport passenger cap makes Ireland a laughing stock Listen | 35:56 'If there is some form of downturn, then having adequate infrastructure would be key to restoring low unemployment and a prosperous society,' he said. Mr Coffey said the Government needed to ensure budgetary policy reduces the ups and downs of the economic cycle. 'This means showing restraint when the economy is strong and being more generous when the economy is struggling,' he said. Mr Coffey warned that overruns in day-to-day public spending are likely to top €2 billion this year. [ EU's new fiscal rules pose risk to public finances - Ifac Opens in new window ] 'The Government needs to improve how it forecasts spending. When formulating Budget 2025, the department didn't account for the money they were going to overspend in 2024 when planning for 2025,' he said. 'This created unrealistic budget figures from the beginning – a problem that keeps recurring. To avoid repeating this mistake, Budget 2026 and future medium-term plans must start with accurate baseline figures that includes all likely overspends in 2025,' he said. 'Otherwise, spending projections will be wrong from the outset,' he said. Ifac has previously criticised the Government for pursuing what it describes as an 'everything now' approach to spending by simultaneously presiding over tax cuts, higher day-to-day spending, a continued ramp-up in capital investment and for fuelling domestic price pressures by providing across the board cost-of-living supports. Mr Coffey also said Ireland currently had no effective framework for fiscal policy. 'The European fiscal rules don't work well for Ireland. They rely on GDP (gross domestic product) and ignore the risks linked to corporation tax,' he said. 'As a result, Ireland is unlikely to face external scrutiny at an EU level,' he said.
Irish Times
28-05-2025
- Business
- Irish Times
Corporate tax receipts forecast to rise despite Trump tariff threat
Despite the threat from US tariffs, the Irish Fiscal Advisory Council (Ifac) believes corporate tax receipts will increase in the short term, shoring up the Government's budgetary position. However, a more protracted trade war between Europe and the US would pose a risk to the Government's tax base, it said. As EU and US negotiators try to broker a deal that would avoid US president Donald Trump's 50 per cent tariffs , due to come into force on July 9th, the Government's budgetary watchdog noted that the biggest payers of corporate tax here were in the tech and pharmaceutical sectors. 'Neither of these are affected by tariffs under current policies,' Ifac's acting chief economist Niall Conroy told The Irish Times, while noting that firms in these sectors were still 'highly profitable'. READ MORE He also highlighted the 'enormous increase in pharmaceutical exports' seen earlier this year, a reflection of firms stockpiling produce in the US ahead of tariffs, which is also likely to boost receipts in the short term. 'This could be offset by lower exports later in the year, but it still points to strong corporation tax this year,' Mr Conroy said. Corporate tax receipts rose to a record €39 billion last year, although this included approximately €11 billion from the Apple tax case . Mr Conroy warned that 'things are more uncertain in the medium term'. 'For example, if tariffs were to directly impact the tech and pharmaceutical sector, corporation tax receipts could suffer,' he said. While pharma has – so far – escaped tariffs, the White House is waiting on a report that could yet see specific tariffs applied to the sector that would have a direct impact on Ireland, as pharmaceuticals constitute a major part of State's exports to the US. Separately, Minister for Public Expenditure Jack Chambers has admitted that infrastructure delivery is in a 'state of paralysis'. 'It's not being accelerated, it's not being advanced,' Mr Chambers told the Global Economic Summit in Kerry. 'That's affecting investment decisions and it's affecting our wider economic growth.' He said 'the acid test' of the new Government would be its ability to deliver big infrastructural projects and that a special infrastructural taskforce within his department had been set up to 'forensically examine' blockages in the system. Mr Chambers said the Government would prioritise the delivery of housing, transport, water and energy infrastructure and that an additional €20 billion would be added to capital investment between 2026 and 2030. A review of the Government's €165 billion National Development Plan will be delivered in July, he confirmed. Mick Mulvaney, former White House chief of staff during Mr Trump's first term of office, told the summit on Monday that there were 'no free traders left in the White House'. 'There's going to be the protectionist wing, which is the Peter Navarro (Trump's trade adviser) wing, and the sort of nuanced wing which is – let's use tariffs as leverage to get better trade deals,' he said. Mr Mulvaney also said fears of third Trump term were unfounded. 'I think he put that to bed on a Sunday talk show a couple weeks back. Of all the things you might want to worry about, you can probably take that one off your list,' the former Republican congressman said.
