Fiscal council warns of difficult choices in housing

The State's fiscal watchdog has warned that difficult choices may have to be made around housing, including deciding between retrofitting and building new homes.

The Chair of the Fiscal Advisory Council, Seamus Coffey, said that some activities may have to be "scaled back or reduced" if housing needs are to be met.

Mr Coffey said that some of those choices "mightn't be palatable".

He told the Committee on Budgetary Oversight: "We'd like to do everything but we just don't have the capacity to do it".

The rollout of retrofitting of existing housing could continue, he said, or "perhaps we could focus on building new housing - if that's the priority," he added.

"Workers being used to build data centres etc, that perhaps they could be redirected to other areas," Mr Coffey suggested, noting the tight labour market.

Mr Coffey said that "just putting more money into something like housing isn't necessarily going to provide more housing".

He said that injecting corporation tax receipts into the economy through Government spending may "just end up driving up prices", which would be the same as imposing "an indirect tax on everybody".

Council warns of reliance on multinational tax receipts

The Fiscal Advisory Council has previously issued warnings over the Exchequer's reliance on corporation tax.

It estimates that "just three multinationals made up 43% of corporation tax receipts in 2022," Mr Coffey told the committee.

He also warned of "significant risks" arising from new EU rules on government spending which are "are unlikely to safeguard Ireland's public finances".

"Like a motorway with unenforced speed limits, Ireland will for the most part be left to its own devices," Mr Coffey said.

The new rules focus "heavily" on Gross Domestic Product and paint an "overly benign" picture of Ireland's finances, he added, and urged that Gross National Income (GNI) be used instead, as it "has a closer link to things that matter".

Last week, the Government submitted a five-year economic plan required under the new rules.

If a future Government breaks the new EU rules, Mr Coffey warned that it is "unclear what action, if any, the European Commission might take".

Mr Coffey said that in the past, Government spending meant that "the good times are when the problems built up", including during the Celtic Tiger era.

But he said that Covid-19 and the "energy shock" showed how Government fiscal action can help the economy.