Budget 2024 must deliver on infrastructural and social investment capacity
Ibec, the group that represents Irish business, says that Budget 2024 must focus on creating greater economic capacity through both infrastructural and social investment. Ibec argues that delaying investment in the short term to mitigate the risk of overheating will hinder future economic expansion and negatively impact Ireland's long-term competitiveness. A lack of investment has led to systemic congestion in both access to physical assets like housing and infrastructure and to the ability of households to access services which should be afforded in a wealthy society.
Additionally, Ibec highlights the ongoing challenge of significant planned increases in employment costs for many businesses and urges the Government to provide an offset mechanism for companies struggling with new labour market measures.
“Budget 2024 presents a significant opportunity to invest in infrastructural capacity while concurrently strengthening social investment, ensuring the benefits of economic progress are felt by all,” said Fergal O’Brien, Executive Director of Lobbying and Influence at Ibec.
“Demand in the Irish economy, driven primarily by external factors, underscores the urgent need to enhance domestic supply capacity to alleviate significant congestion. The country's current structural challenges can be attributed to the failure to invest in absorptive capacity, including skills, housing, and infrastructure, despite significant private sector investment.”
“With unprecedented employment levels, we must also encourage higher levels of innovation and productivity while safeguarding businesses' cost base, ensuring the continued prosperity of our economy.”
To ensure continuous investment in infrastructure regardless of economic conditions, Ibec proposes the establishment of a National Infrastructure Fund. This fund, supported by a substantial portion of the budget surpluses, aims to address Ireland's significant social, economic, and environmental infrastructure needs over the next decade. Our proposed target is to provide an additional €30 billion for infrastructure spending by 2030.
Innovation and Productivity
Ireland cannot afford to be complacent when it comes to innovation, productivity and skills. In a highly competitive global environment, it is crucial to foster, enhance, and promote high value investment. This requires a focus on future-proofing the talent pipeline, particularly in areas of digital, climate action proficiency, and Industry 5.0. As part of this drive, Budget 2024 should unlock the €1.5bn surplus of the National Training Fund to help deliver the key skills for the 21st century. Furthermore, Ibec recommends a €710 million investment to boost research, innovation, and digital capacity, along with €307 million in university funding and €225 million to support the growth of Irish exporting businesses. Ibec also proposes investing €650 million to advance net zero carbon goals and allocating €500 million from the National Training Fund (NTF) for measures promoting workforce development over the coming years.
Budget 2024 must recognise the implications of rising employment and operating costs, as well as general inflation. Implementing measures such as providing support to counter the impact of increasing regulated employment costs, ensuring tax rates and bands are indexed, and preserving the 9% VAT rate for the experience economy are among Ibec’s recommendations to address these challenges. Additionally, Budget 2024 must also set out a plan to ensure the introduction of a Living Wage does not interact with the tax and welfare system in such a way as to impact on people’s incentive to work. Further supports for those firms severely impacted by high energy costs are also required.
To ensure meaningful social investment is delivered, Ibec is calling for a €125 million budget allocation to enhance state capacity and modernise systems for improved infrastructure delivery by ensuring adequate staffing, specialisation and in key regulatory and delivery bodies and invest in administrative modernisation through increased use of automation and digitisation of public service deliver for organisations and citizens. Additionally, Ibec recommends allocating €700 million to enhance housing delivery and €200 million to expand childcare accessibility, including increased subsidies, support for out-of-school hours care, and assistance for carers, workers with disabilities, and the introduction of an Access Employment Programme.Ibec Budget Submission 2024 pdf | 8571.7 kb