MACRO-ECONOMIC BACKGROUND 27
15 Consistent poverty is measured in NAPS as households who are experiencing
enforced basic deprivation and whose income is less than 60 per cent of mean household income.
which are Sligo, Letterkenny (working closely with Derry), Dundalk and, fourth, the linked gateway of Athlone, Tullamore and Mullingar. Nine ‘hubs’ then complete the network.
While the NDP did not have the benefit of the NSS when it was prepared, some of its Measures did make provision for what such a NSS might contain. However, there are significant areas of the NDP that could be better tailored to implementing the long-term strategy of the NSS. The changes in emphasis, which it requires, are reflected later in this report in the recommendations for reallocation and retargeting of resources in the NDP. In addition, the development of regional spatial strategies, when they are published and adopted, may warrant support under the NDP/CSF.
NATIONAL ANTI
-
POVERTY STRATEGY(NAPS)
Over the period of the Plan there have been significant policy developments on social exclusion in the form of the National Anti- Poverty Strategy (NAPS) and the Irish National Action Plans against Poverty and Social Exclusion (NAPincl). The NDP Measures are expected to contribute towards meeting the targets set by NAPS.
The ten year National Anti-Poverty Strategy was launched in 1997 to help achieve the objective of eliminating poverty in Ireland. A detailed review of the National Anti-Poverty Strategy was carried out in 2000-2001, and the results are contained in the new NAPS document Building an Inclusive Society: Review of the National Anti-Poverty Strategy (2002). It defines poverty in the following way:
People are living in poverty if their income and resources (material, cultural and social) are so inadequate as to preclude them from having a standard of living, which is regarded as acceptable by Irish society generally. As a result of inadequate income and resources, people may be excluded and marginalised from participating in activities, which are considered the norm for other people in society.
The global poverty target set in the revised NAPS is to reduce consistent poverty to below 2 per cent by 2007.15 In addition to this
general target NAPS also addresses poverty issues within a number of key themes and defines targets within each of these themes:
• Income Adequacy;
• Employment and Unemployment;
• Educational Disadvantage;
• Health;
• Housing and Accommodation;
• Rural Disadvantage;
Within education there is a target to eliminate early school leaving before Junior Certificate and to increase the percentage of children completing the senior cycle to 90 per cent by 2006. There are also a number of literacy targets. Both these targets are addressed through Measures in the EHRD OP. In the area of employment one of the targets is to eliminate long-term unemployment by 2007. The housing targets are explicitly linked to the commitments in the NDP. The health targets relate to health outcomes for different groups. In the health area there is less integration between the NAPS process and the NDP.
The first NAPS identified eight groups at risk of poverty – the unemployed (particularly the long-term unemployed), children (especially those in large families), single adult households, households headed by someone working in the home, lone parents, people with disabilities, travellers and homeless people. The revised NAPS mentions seven vulnerable groups: children, women, older people, travellers, people with disabilities, migrants and members of ethnic minority groups.
Running in parallel to this national process, the European Union requires each member state to prepare National Action Plans Against Poverty and Social Inclusion. The first plan for the period 2001-2003 was submitted to the EU in 2001 and a plan for 2003- 2005 has recently been published. The key objectives are:
• Sustain economic growth and employment;
• Provide levels of income support to those relying on social welfare sufficient to sustain dignity and avoid poverty, while facilitating participation in employment, and economic independence if possible;
• Address the specific needs of groups at high risk of poverty;
• Support disadvantaged communities;
• Provide high quality public services to all.
Policy commitments to tackling social exclusion have also been developed in the context of the National Partnership Agreements,
Programme for Prosperity and Fairness (PPF)and Sustaining Progress. For example, the RAPID programme, which identifies the most disadvantaged areas in the country and targets a proportion of NDP funding to these areas, was set up under the PPF Agreement. Key social inclusion issues in Sustaining Progress, which are also central to the NDP, relate to housing/accommodation, long-term unemployment, tackling educational disadvantage, ending child poverty and providing care services (for children, those with disabilities and older people).
THE EUROPEAN EMPLOYMENT STRATEGY
The European Employment Strategy (EES), devised in 1997/98 in the context of high unemployment in Europe, focused on interventions to tackle unemployment and social exclusion. More recently it was agreed that Europe should aim to become ‘the most dynamic knowledge-based economy in the world, leading to more
MACRO-ECONOMIC BACKGROUND 29
and better jobs and greater social cohesion’ (Lisbon Summit, March 2000).
The European Employment Strategy is organised around four key pillars: Employability; Entrepreneurship; Adaptability; Equal opportunities between men and women. Co-ordination of national policies is through an annual cycle of Council Guidelines and Recommendations and National Action Plans drawn up by member states, which describe how the guidelines are put into practice at national level.
Two themes have been emphasised in the annual Council recommendations:
• the need to strengthen efforts to mobilise and integrate into the labour market economically inactive people, particularly women. In this respect, the 2002 NEAP notes that the Government is committed under the NDP to supporting the development of childcare services that are accessible and of high quality;
• the need to pursue efforts to sustain productivity growth and upgrade skills – in-company training and lifelong learning places. The Managing Authority of the EHRD OP has engaged in efforts to increase spending on the In-Company Training Measures throughout the NDP/CSF period.
The Mid-Term Evaluation of the EHRD OP notes that, while this process provides for a substantial degree of coherence in policy- making in relation to employment across the EU, there is some tension between a multi-annual planning and budgetary process, as in the EHRD OP, and an annual process of policy review and adoption of new strategic directions, as represented by the annual Guidelines, Recommendations and Employment Action Plans. While the objectives of the EHRD OP have been consistent with the overall policy direction of the EES process, greater coherence may be achieved with the streamlining of the policy co-ordination cycle and the shift to a multi-annual process for setting medium- term guidelines, recommendations and action plans from Spring 2003.
REPORT OF THE TASK FORCE ON LIFELONG LEARNING
The Report of the Task Force on Lifelong Learning, published in October 2002, argues that lifelong learning should be seen in the context of individual development, active citizenship, social inclusion and the economic well-being of society as a whole. The Task Force concluded that:
• Lifelong Learning requires a significant, systemic shift within the education, training and certification systems and the enterprise sector along with a change of culture on the part of society and individual citizens;
• Lifelong Learning is not achievable with incremental or short-term approaches and requires a long-term commitment on the part of government and citizens;
The Task Force established a Framework for Lifelong Learning consisting of five key elements: National Framework of Qualifications; Basic skills; Guidance and Information; Delivery, access and funding issues; Learning in the workplace. The Task Force made detailed recommendations in relation to each of the five elements in the Framework. In addition it made three overall recommendations as follows:
• The Government should establish an overarching structure to co-ordinate, review and report on the implementation of the framework and recommendations set out in the Task Force report;
• That structure should develop implementation plans and associated costings for the Task Force recommendations and oversee their fulfilment;
• The structure should report to both Government and to the national social partnership framework.
THE EMPLOYMENT EQUALITY ACT
(1998)
AND EQUAL STATUS ACT(2000)
The Employment Equality Act 1998 prohibits discrimination in the workplace on nine grounds and the Equal Status Act 2000 extends these rights to the non-employment sphere. The nine grounds are gender, marital status, family status, sexual orientation, age, disability, religion, race and membership of the Traveller Community.
Individuals and organisations responsible for the provision of labour market initiatives have certain obligations under both acts as employers, educational and training bodies and service providers. These Acts aim to promote equality of opportunity and prohibit discrimination on specified grounds in employment, vocational training, training or experience, access to employment and conditions of employment, service provision and educational establishments.
The particular provisions of the Employment Equality Act (1998) and Equal Status Act (2000) are to:
• prohibit direct and indirect discrimination (and
discrimination by association by service providers and educational establishments);
• prohibit sexual harassment and harassment on the
discriminatory grounds;
• require employers, educational and training bodies, service providers and educational establishments to provide reasonable accommodation for people with disabilities unless it costs more than nominal cost;
• allow positive action Measures under the Employment
MACRO-ECONOMIC BACKGROUND 31
over 50; people with a disability; members of the Travelling Community; training or work experience (provided by or on behalf of the State) for any disadvantaged group (if the Minister certifies that it is unlikely that the group would otherwise receive similar training or work);
• allow positive action Measures under the Equal Status Act, 2000 in relation to disadvantaged groups or Measures which cater for the special needs of persons.
The Equal Status Act 2000 comes at a time when staff in Implementing Bodies are experiencing increased involvement with members of the relevant groups. A number of factors are believed to be driving these trends, such as recent policy developments, namely the NEAP Preventive Strategy and the transfer of responsibility for vocational training and pathways to employment for people with disabilities from the National Rehabilitation Board to FÁS, as part of the mainstreaming of services for people with a disability. Other factors include the recent upward trend in numbers in some of the groups (e.g. lone parents, refugees and ethnic minority groups) and the changing composition of short-term and long-term unemployed people.
ENVIRONMENTAL POLICY
Since 1999 there have been several policy developments in various critical areas of the environment. These areas include climate change, land use, pollution control/environmental services, and protection of wildlife.
The government published its Climate Change Strategy in November 2000, which set out a ten-year framework of actions to reduce greenhouse gas emissions. The strategy commits the government to the introduction of carbon taxation on a phased incremental basis, to supporting the phase-out of coal burning at Moneypoint by 2008 and to Measures that address emissions from transport by means such as fuel efficiency and changes in transport modes. In May 2002 the Minister ratified the Kyoto Protocol under which Ireland is internationally legally bound to constrain growth in emissions to their 1990 level plus 13 per cent, by 2008-2012.
The European Parliament and Council agreed a directive on emissions trading in July this year. The emitters of large amounts of carbon dioxide emissions will be allocated emission permits on an annual basis through national allocation plans, mostly for free. The idea is that companies reducing emissions to a level below their limit can sell this over-achievement to other companies that are above their limit, or ‘keep’ the permits for future use. The cost to companies of emissions abatement in the EU will determine the price of permits in the market, and this will encourage abatement that is least costly to be taken on. The scheme will operate from January 2005 onwards.
Reforms in environmental services are addressed in the Protection of the Environment Bill. This was published in January 2003 and the Measures aim, among other things, to enhance the
licensing system that regulates industrial and other activities, with full transposition into Irish law of the EU Directive on IPPC licensing (Integrated Pollution Prevention and Control). Currently some 505 licenses are in force under the original system. The new system will put increased emphasis on energy efficiency and emissions. Also included are new Waste Management Measures that give local authorities explicit powers to charge for waste and to increase litter fines. In relation to litter, the Plastic Bags Levy came into effect in March 2002 and it has succeeded in its aim of reducing the number of plastic bags in use.
With respect to the environmental services dealing with water, the EU’s Water Framework Directive entered into force in December 2000 and has the objective of achieving ‘good status’ for waters by 2015. It relates to water quality in rivers, lakes, canals, groundwater, to water in estuaries and to coastal waters out to a distance of at least one nautical mile. The directive provides guidance for management, including active involvement by interested parties, catchment-based management and full cost recovery of water services. The government is in the process of applying full cost recovery and metering by 2006 in the case of non- domestic users. Meanwhile, implementation of the Nitrates Directive (91/676/EEC) is progressing with the development of an action programme that limits the amount of nitrogen that can be applied to land, having regard for the derogation provisions.
At the start of 2004 new regulations come into force that transpose the EU directive on the quality of water intended for human consumption. The regulations set standards in relation to water quality, prescribing parametric values, which include a reduction to be achieved in the amount of lead.
Wildlife, or in particular their habitats (Special Areas of Conservation), are the subject of a three month consultation process, which will include the issue of compensation for restrictions arising from Regulations. Restrictions in general are not anticipated to go beyond what is required by the Nitrates Directive and Good Farming Practice (Department of Agriculture and Food, 2001).
Finally, Strategic Environmental Assessment (‘SEA Directive’ 2001/42/EC) is not required to be applied to projects co-financed under the current round of structural funds, though Environmental Impact Assessment does apply where relevant. Succinctly, SEA considers alternative options whereas EIA is constrained to dealing with alternatives within the proposed project.
STABILITY PROGRAMME
Since the NDP/CSF was finalised in 1999, fiscal policy has followed a roller-coaster ride. For the period 2000 to 2002 policy was broadly stimulatory. The very strong performance of the economy in 2000, slowing through 2001, meant that the public finances were in a very strong position at the beginning of the planning period. However, the slowdown in economic activity from 2001 onwards, together with stimulatory policies, has seen a
MACRO-ECONOMIC BACKGROUND 33
significant deterioration in the public finance position. However, the overall budgetary position still remains fairly robust. This is reflected in the updated Stability Programme for Ireland published with the 2003 Budget in December 2002.
The updated Stability Programme envisages a fairly tight fiscal policy in 2004, putting the public finances on a path that would produce a very small cyclically-adjusted budget surplus in 2005. While the macro-economic assessment underlying this report, described in Section 2.2, would suggest a somewhat more favourable budgetary position, the assumptions concerning the underlying fiscal stance are broadly similar. Also the Stability Programme includes as one of the key objectives of government budgetary and economic policy the tackling of the infrastructural deficit. This is fully consistent with the underlying strategy of the NDP/CSF.
T
he very rapid growth in the domestic economy in the 1990s led to significant shortages in physical infrastructure, in particular housing and transport infrastructure. If not dealt with, potential bottlenecks in these areas would give rise to even higher production costs in the tradable sector and ultimately would adversely affect Irish competitiveness.In the future, the growth in the potential output of the Irish economy is likely to be similar to that envisaged at the time the NDP/CSF was drawn up. This means that the investment needs are also likely to be broadly unchanged. The broad strategy of the NDP/CSF is, therefore, appropriate to the needs of the economy. On the basis of the medium-term forecasts, financing the appropriate level of investment should not pose a major problem for the State.
Even when a range of alternative scenarios for future growth is considered, the NDP/CSF strategy is still seen to be robust. However, a major delay in the economic recovery, for example through a collapse in the dollar, would require a significant increase in taxation or reduction in spending to make available the necessary resources to undertake the desired level of investment.
Since the NDP/CSF was drawn up interest rates have been significantly lower than expected – reducing the cost of capital for investors. While interest rates remain low today, they will rise when the Euro Area economy returns to growth, and it would be inappropriate to significantly change the discount rate used in deciding on priorities for investment.
The changes in the economy that have taken place since 1999 will require some reorientation of priorities, as will the changes in the broad external environment, including the enlargement of the EU from 2004. The problem of inflation, and the capacity constraints in the building and construction sector, especially housing, require special attention.
Inflation in the civil engineering sector is currently under control and there is scope for some increase in investment in non-housing