Jim Power, the Clonea Power-born economist, spoke at a special Budget briefing in Waterford last Thursday morning hosted by PWC and Waterford Chamber of Commerce.
He described the budget overall as sensible in reacting to changes in the economy but a little boring.
There were some positive points on stamp duty but it could be too little too late, as the market was already soft, with property prices down over 4.0 per cent.
Mr Power, Chief Economist with Friends First, felt it should bring stability to the property market and was a step in the right direction after last year. It could have gone further he feels, but it will help transactions movement and general sentiment. The Government finances were affected by lower transactions and hence reduced stamp duty income and now this could be reversed.
Jim McLeane of Price Waterhouse Coopers similarly felt it was a positive step, but did not think the measures would have a huge effect in the local market except where transactions were valued over 500,000 euro.
The impact would be more concentrated in the capital where values were higher.
The high stamp duty rate on commercial property was still a problem and was a disincentive for those businesses wishing to move from their existing property.
The 9 per cent rate applies to values over 150,000 and some more lobbying may be needed here.
Stamp duty said Jim McCleane started in Holland in 1624 then financed wars for England against France and America. Now is a permanent fixture because it is easy to collect.
Jim Power said the stamp duty measures were last minute almost and were a reaction by the Department of Finance to the low take from this sector.
A U turn prompted by fear was not necessarily a good thing.
He reckoned that there were a major number of houses out there to be sold, that needed to be cleared from sales inventory and perhaps this change will be an impetus to clear the backlog in the next 3-6 months and where some of the asking prices may need to be adjusted downwards to achieve a sale.
Housing is a substantial part of the Irish economy in the last decade and therefore a slowdown has major effects on tax revenue. The composition of economic growth and the dependence on housing are troubling.
The measures including some boosts to small business with research and development grants increased should add to economic growth, added Mr Power.
Growth this year will be 3 per cent which is still better than most of Europe and next year 3.3 per cent. Inflation of around 3 per cent is forecast and he worries that it might come out slightly more than this with oil and other factors.
Benchmarking two could be a danger and he did not think a rise was justified and even suggested the opposite on some measures.
The criteria for benchmarking, he felt was not transparent, therefore its benefits could not be substantiated and he questioned the benefit of it.
On the NDP or National Development Plan, he reckoned that this should go ahead and be the economic stimulus. It is still a 3 hour drive from Dublin To his native Waterford and infrastructure deficit must be reduced.
Our disadvantages are well known and need to be rectified. Ireland’s costly environment for homes and firms is well known, it is unfavourable and this needs attention from the Government, including the infrastructure issue.
He referred to the high profile job losses like Abbott and more close to this area, Waterford Crystal with its 490 jobs going.
This has undermined business confidence, but the job figures show that the business climate is generally good, with 67,000 new jobs this year, of which half are part time.
The extra spending from SSIA has helped spending and the retail sector, but this cannot be sustained.
Exports are still good in products and services. Overall Jim said it would be one of the tougher years in this decade.
Ireland needs to build a parallel economy on small business and new industries that is not dependent on construction but more on services, whether tourism, finance or high value goods. The money on R and D will help this challenge.