A State Led Investment Model(i)

We can no longer rely overwhelmingly on the market to meet our economic needs. Brexit is merely the latest in a long line of threats and crisis that have afflicted the Irish economy. Taking control means reducing our dependence on Foreign Direct Investment by creating employment directly through the state. To give some sense of what is possible, research by the Nevin Institute is instructive. According to their economic models, state led investment of €1 billion would create in the region of 10,000 new jobs. This is a conservative figure that assumes a cost of €100,000 per new job created. The same study estimates that the positive spill over effects would create a further 6,750 jobs. When the tax increases and welfare reductions are factored in, the cost of these jobs falls to €575 million.

In our submission for budget 2018 Solidarity-People Before Profit showed how a fund of more than €11 billion could be created almost immediately. With the political will, the state could immediately begin to address the legacy of decades of underinvestment in our physical, social and industrial infrastructure. This type of state investment will involve greater involvement and control by its workforce. Through such a model, we can unleash the creative energies of employees and resist any tendencies towards bureaucratisation.

We list some of the key areas for state investment and employment below.

  • Public Banking – Stop the Privatisation of banks. Private ownership of Irish banks has failed. Their speculative practices cost Irish tax payers in the region of €64 billion in the years between 2008 and 2012. Since then, they have engaged in illegality by taking people off tracker mortgages and charged over the odds for business loans. They also restricted credit to repair their balance sheets, retarding the economic recovery. The Irish economy would be less unstable with a state led banking model. Credit would be more available for public projects that better society – and for co-operative and small enterprises.
  • A State Run Construction Company. Ireland is caught in the grip of a major homelessness and housing crisis. In Budget 2018 we showed how it would be possible to build 20,000 new units next year via a state run construction company. This would work with local authorities to supply 100,000 extra houses over the next five years. This would have a transformational effect on the housing market. It would also end the scourge of bogus self-employment and provide well paid and secure jobs for construction workers. New construction projects are also needed to retro-fit homes, to build up our water infrastructure and to develop heath care, educational and childcare facilities.
  • State Led Oil and Gas Exploration. People Before Profit is dedicated to making Ireland carbon neutral by 2035. We are also opposed to the issuing of any more licences for oil and gas. Instead, we need to take control of all existing operations and prospecting in order use some of the available oil and gas to provide the resources to make the transition. Following the Norwegian model, People Before Profit would take our natural resources into public ownership. These would then be used to develop a world leading green energy sector.
  • Become a Leader in Renewable Energy. Because of its location, Ireland has the potential to be a leader in the development of renewable energy worldwide. The state could enable a transition from fossil fuels to renewable energy and become a manufacturer and exporter of renewable energy components. Wind and wave technologies have enormous potential here. A recent report by the Economic and Social Research Institute (ESRI) outlined how investment in additional wind capacity of 4000 MW mostly offshore would create 36,000 jobs. A large scale reforestation programme would also benefit both the economy and the environment. In Budget 2018 we showed how an extra €500 million could be found for green energy employment. This would create an additional 5,000 green energy jobs. We would also spend €500 million on green research and development (R&D) and €100 million on afforestation.
  • Generic Pharmaceutical Industry. The Irish state currently gives around €700 million to companies in order to do research and development (R&D) here. People Before Profit would begin to redirect that money into a state run pharmaceutical industry dedicated to producing drugs that could be sold below the cost of branded alternatives. Thanks to years of neoliberal tax breaks, Ireland already has the people and the facilities to make a state run pharmaceutical industry a success.
  • A New Deal for Small and Medium Sized Farmers. Big business dominates the agri sector. In meat processing for example, three companies – ABP, Dawn Meats and Kepak – dominate the industry. People Before Profit wants a new deal for the agri sector. We would promote the development of local processors, local farmers markets and cooperative models of farming. We would also impose a levy on the major supermarkets and food processors to be redistributed to small and medium enterprises who prioritise nutritious food and environmental protection.

The election of Donald Trump and the impending threat of Brexit mean that now is the time to move to a radically new employment model. Using a conservative estimate, our capital proposals would create in the region of 115,000 jobs. This would not only bolster the economy in a time of increased uncertainty, it would also lead to positive spill over effects and increased tax revenue. In addition, investment in green energy, housing and services would simultaneously rebuild our social infrastructure after years of austerity.

  1. All of the estimates in this economic document have come from official sources. The majority were sourced through Parliamentary Questions submitted to the Department of Finance. Beyond this, we used the Central Statics Office, Central Bank Quarterly Reports and the various other government department for the relevant information.