Fine Gael’s New ERA – 105,000 new jobs and counting…

Just what is Michael Noonan trying to tell us?

Fine Gael’s new Finance spokesperson is reported to have told a radio station that, in his opinion, ‘New ERA’, FG’s €18bn centre piece programme to revive the Irish economy, will not create the 105,000 new jobs that is its headline promise.

The 105,000 new jobs number may have been the product of some over-enthusiastic PR people, the FG Finance spokesperson said, in the process making his party leader, who trumpeted the 105,000 jobs promise in his Party Conference address last March, look ridiculous.

Noonan is both right and wrong: right in that nobody else believes that New ERA will magic up 105,000 new jobs over a four year period with 40,000 of them coming in the first year; wrong that the number was dreamed up from nowehere by some simple-minded PR guru.

Far from it, FG claims to have arrived at this figure from an interpretation of a model used by TCD economist Philip Lane and others in a paper assessing the impact of Government expenditure shocks on the Irish economy. FG even have a neat little table on their New ERA website, crediting Lane’s analysis as the source for their inspired calculations.

The Lane paper is freely available. Having read it, or more accurately, tried to read it, I’m far from sure how FG’s claim of 105,000 jobs can be extrapolated from it.

‘New ERA’, brainchild of then environment spokesperson, Simon Coveney, has been kicking around since 2009. It’s been launched three times, each time with the jobs’ claim front and centre. It has its own website. Apart from the jobs promise, it has yet to achieve much traction with the broader public.

‘New ERA’ stands for the New Economy and Recovery Authority, an overarching semi-State which would take over existing semi-states, including the ESB, Eirgrid, Bord Na Mona, Bord Gais, Coillte, and An Post. This new organisation would rationalise several of the existing semi-states. It would then lead a targeted investment programme in green energy generation, rollout of broadband and water services, financed by every political party’s favourite piggy bank, the National Pensions Reserve Fund, or through loans from the European Investment Bank or wherever. Borrowing in this way for investment purposes would be off balance sheet, FG argue; a further advantage of their policy.

There’s much in this radical proposal that’s worthy of serious public debate. What are we doing with so many semi-States anyway, and how best should that sector of service provision and wealth creating activity be organised for the future? Should some of the existing semi-States be sold off to the private sector to generate cash that could be invested in infrastructural development that in the long run will help create conditions for growth and economic expansion?

The plan gives rise to serious misgivings too; not least job displacement arising from the elimination of certain types of activity and whether wholesale investment in ‘green’ energy projects, for example, will ultimately yield the results anticipated or can even be economically justified.

It may be that Fine Gael initially launched their New ERA proposal at the wrong time and in the wrong way. It was pitched as their ‘stimulus’ response when it first appeared in March 2009; at a time when it was fair to bleedin’ obvious that the state of our public finances could not accommodate a grandiose stimulus plan of any sort. And from the outset, it has been inextricably bound up with the 105,000 jobs promise.

The leaders of any and all of our political parties are caught between a rock and a hard place on this one. As soon as they propose any policy, the first question they’re asked is how many jobs will that create?’ Were they to reply, truthfully, along the lines of: “We cannot put numbers on this; the most we can do is to state our belief that targeting economic activity in this way will generate growth and that such growth will inevitably result in increased employment opportunities,” they’d be laughed out of it.

Uniquely, it seems, in this country we are wed to the notion that Governments create jobs. They don’t. The most they can do is create conditions, by the policy choices they make, that may lead to productive and sustainable job creation, or minimise job losses within certain sectors of the domestic economy. That’s their job, not direct job creation or inventing fanciful figures for job numbers that may never be ultimately realised.

The primacy of the jobs fixation also serves as a distraction from evaluating the underlying philosophy and practicality of policy proposals, specifically whether or not they will transform our society, and our economy, in ways we find acceptable in the long term.

Right now, Michael Noonan may be wishing he’d never opened his mouth. In the meantime, he may well have done us all a service.