Despite the threat of US tariffs to the Irish economy Social Democrats and Labour TDs have pushed back on the idea of reducing State spending.
Speaking to Gript outside Leinster House today, Social Democrats TD Gary Gannon said that Ireland still faced major infrastructure gaps, and that funding cuts would do more harm than good.
“One of the big things we have is infrastructural deficits in this country to actually record spending,” he said.
“Top of the list for that would be our housing services. We can’t remove any capacity for spend in that area – obviously disability provision, healthcare provision. We want to move towards Sláintecare.”
Gannon went on to argue that Ireland’s decision not to apply austerity measures during the COVID-19 pandemic had resulted in a faster economic recovery.
“For me, I’m a Social Democrat who believes in the politics of intervention,” he said.
“So I don’t believe removing money from our economy is going to benefit us. We’ve seen, in terms of COVID for example, when the state didn’t apply the same austerity that it applied during the recession – I mean, we very clearly had a quicker rebound.”
He added that investment in social infrastructure was essential, even if it came through borrowing at the EU level.
“We saw a couple of weeks ago in Europe what was effectively an arms conference, where they talked about €800 billion in loans now being made available,” he said.
“Look, we need social infrastructure. If that’s through the European Union, so be it.”
Labour TD George Lawlor similarly emphasised the need to support Ireland’s domestic industries, describing the tariff issue as a wake-up call.
When asked about possible cuts to non-essential spending, Lawlor said public sector efficiency should be examined continually.
“Cutting the fat, as you call it, is something we should be doing all the time,” he said.
“So that’s an issue we deal with on a case-by-case basis. And certainly, government efficiency is a pivotal point.”
At this point Labour TD Marie Sherlock interjected and warned against talk of cuts to public services, saying public finances remained in good shape.
“I think the critical point is that we’ve had surpluses for the last number of years,” she said.
“So it’s important that we don’t fall into the trap of talking about cuts to public services at this point in time.”
Independent Ireland TDs Ken O’Flynn and Richard O’Donoghue both took a different stance, calling for reduced wastage in government spending to avoid future austerity.
“Yes, we have to curtail spending,” said O’Flynn, who is party chairman.
“We’ve always agreed that there has to be value for money, that we have to stop the wastage, such as OPW, we have to stop the wastage in government departments.”
He warned that the effects of tariffs could creep in gradually over the coming year and said pre-emptive action was needed.
“The tariffs are slightly different in that way—that they’re going to be a knock-on effect that is going to creep in slowly but surely in the next 6 to 9 months,” he said. “That’s the reality of it.”
O’Flynn argued that inefficient spending needed to be tackled before any major decisions were made that might harm the vulnerable.
“The last thing we want to see is the most vulnerable being disciplined by this because of international tariffs,” he said.
“What we want to see is cutback, good value for money, ensuring that we’re not wasting money.”
Richard O’Donoghue also pointed to examples of waste in current State projects, criticising what he described as excessive administrative overheads.
“You’ve mentioned in your question about the money that’s been spent all around the country. We haven’t got value for money,” he said.
“We only have to look at the likes of a bicycle shed here, a hut—between the two of them it’s €2 million. What would that have done in different areas? That’s not value for money.”
He said that vulnerable services like Meals on Wheels were now facing cutbacks, and suggested savings could instead be found by streamlining government departments.
“Most of the projects are taken up on paperwork, administration at the very start of it,” he said.
“That’s four or five sectors doing the same job. That’s not fine…simplify the system. Get accountability. Get value for money.”
The Irish Exchequer recorded a surplus of €8.6 billion in 2023, largely driven by high corporate tax receipts from multinational companies. However, economists have warned that tariffs and geopolitical instability could begin to place pressure on Ireland’s economic model in the coming years.
The European Commission has also recently signalled that future borrowing by EU member states may be subject to new fiscal rules, including tighter oversight of government spending.