A news item on RTE reveals that the Construction Industry Federation has managed to wangle a meeting with the IMF/EU/ECB Troika today. “Arriving for the meeting CIF Director General Tom Parlon said they would be setting out the contribution the construction industry could make to the economic recovery.” A case of the Self-Preservation Society (as in the song from the Italian Job, interesting also about a bank raid) for developers and those who own construction businesses (and we’re talking the bosses here, CIF want a radical reduction in wages and terms and conditions for construction workers to increase competitiveness) or a real and vital contribution to helping Ireland recover?
Sometimes it’s difficult not to automatically rail against the CIF given that its members were a vital part of the country going bust, but in this case there is something here worthy of attention. Whilst we do not need any housing or offices or retail parks or hotels any time soon, investment in new public infrastructures such as green energy, next generation telecomms, public transport, hospitals, schools, etc. through capital expenditure would have the benefits of creating work whilst investing in developments that would attract inward investment and stimulate growth. The difficulty is that generating the finance for capital expenditure would necessitate further cuts elsewhere in government spend given that wider austerity measures mean that the markets are adverse to extending the state credit for such stimulus measures.
I think therefore it’s unlikely that the Troika will see anything differently after meeting the CIF. They will agree that in principle capital spending would be good, but it must be created by further austerity elsewhere; in other words it is up to Ireland to work out how to do this within its existing arrangements, rather than through a re-jigging of the Troika terms. That is likely to be politically inpalatable to the government. We’ll see.