Ireland unveils Ir pounds 20bn plan: Spending scheme comes under attack from economists and opposition

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The Independent Online
THE IRISH Prime Minister, Albert Reynolds, yesterday announced Ir pounds 20bn (pounds 19m) in European Community, state and private investment spanning road building, tourism, training and the film industry over the next six years.

But the proposed spree sparked criticism from economists and the opposition that the funds could distract the government from executing essential structural reforms in taxation, social welfare and debt reduction.

Ireland's proposals for spending EC structural and cohesion funds, submitted to Brussels on Friday, involve Ir pounds 8bn of Community funding secured after Dublin threatened to use its EC veto in July and a further Ir pounds 12bn of state and private investment.

Mr Reynolds said the 'worst case scenario' would see the national development plan yield a net gain of 52,000 jobs by the year 2000, rising to 80,000-100,000 if circumstances, including European growth rates, prove more favourable.

He said the projected Irish GDP growth rate used in the formulation of the plan was 3.5 per cent, 1 per cent below the actual average rate seen over the four years of the last EC-backed national plan. The proposals now have to be evaluated by EC officials.

But domestic critics have warned that Ireland, with the second-worst unemployment rate in the EC, cannot expect, on past performance, a surge of new long-term jobs.

George Lee, an economist, said at the weekend that Ireland 'gobbled up hand-outs of Ir pounds 11.7bn between 1985 and 1992' but now had 70,000 more unemployed than eight years ago, while thousands more jobless were deemed pre-retired and excluded from unemployment figures.

John Bruton, the Fine Gael leader, warned that unless Mr Reynolds' government moved to tackle obstacles to employers taking on workers, such as high tax levels, the money would go to the few and not the many. He claimed that it cost Ir pounds 3.33 for every employer to pay an employee Ir pounds 1 after tax. He argued that most of the jobs that the plan would create through infrastructural spending would be temporary.