UNEVEN LANDSCAPE Household disposable income per person in 2019. Pic: CSO
The trouble with the Northern and Western Regional Assembly and the five-city development model
Everyone loves a league table. We judge ourselves relative to others, whom we see as competitors, rather than in terms of how we ourselves have done. Are we up? Are we down? If we are doing better than the neighbours, we attribute this to our own efforts. But if the neighbours are doing better than us, we complain that the system is unfair or neglectful of our needs.
Some nice examples of this can be seen in the reaction to the publication last week by the CSO of county personal income league tables. The Northern and Western Regional Assembly (NWRA) latched on to these data and highlighted the ‘rising gap’ in the levels of personal disposable income between the NW region (eight western and north-western counties) and the rich plutocrats of the leafy suburbs of Dublin.
What solution does the NWRA propose? It calls for positive discrimination by the State in favour of the NW region, specifically public investment in infrastructure and human capital. What is its vision? Is it a county income league table for the year 2040 (the current time horizon for official visioning) that is perfectly flat? No winners. No losers. We all get a prize.
This is a misguided and ineffective way to draw policy conclusions from the CSO data. So, let’s stand back and try to think things through.
Personal income really matters to people and is a measure of achievement and welfare that is not distorted by the tax-shielding behaviour of foreign multinationals that renders GDP useless as a measure of regional success.
Remember ‘Leprechaun Economics’? It’s what you earn as wages, from self-employment, from rent and in interest and dividends. To that income the State kicks in social transfers, with one hand, and takes some back in the form of income tax, with the other hand. What you are left with is called ‘personal disposable income’. You get to spend this on anything that takes your fancy, at which point, of course, you pay VAT and excise taxes. There are people who even manage to save some for a rainy day.
The newly published CSO data cover 2019, the year before Covid-19 hit, and 2020, the first dreadful year of lockdown. Did the State ignore the regions or discriminate in favour of the opulent east? It did not.
In 2019 social transfers made up 18 percent of total household income (before tax) in the entire state. In 2020, this rose to 22 percent, when massive income support was directed to people whose jobs were lost in the lockdown. In the NW region as a whole, the figures were 24 percent (2019) and 28 percent (2020). In Mayo, 25 percent (2019) and 30 percent (2020).
But here’s the dilemma. The State makes an effort to support people who struggle to maintain their standard of living from their own income. There are many reasons why social income support transfers are needed in all regions, even in prosperous Dublin. But the decline of agriculture in Mayo, a very rural county with relatively small market towns, left the county with a higher dependence on social transfers than even Laois, the county with the lowest level of personal disposable income per head in Ireland. Mayo is only slowly emerging from that dependence.
Mayo just squeaks into the bottom ten counties in terms of the level of income per head. It is tenth, and is better off than Laois, Offaly, Longford, Donegal, Westmeath, Cavan, Monaghan, Roscommon and Tipperary. You will have noticed that half of the bottom ten are not in the NW region.
The map of income distribution gives a strong hint as to where the development problems that create inequality arise. The rich folk with the higher paying jobs cluster near Dublin, Cork and Limerick. Waterford, Galway, Sligo and Dundalk get a look in. But it’s basically Dublin-Cork-Limerick.
What should be done to address this challenge? The real tragedy of the manner in which the NWRA was set up under the aegis of Project Ireland 2040, is that it is constrained to function within the ‘five cities’ development model (Dublin, Cork, Limerick, Galway and Waterford).
While the Dublin-directed regional development planners promise to develop the NW region, under current plans, economic activity will continue to form even larger agglomerations around the five cities.
Everyone agrees that increased regional investment is needed. Even the five cities have infrastructure that is long overdue for upgrading. But of far greater importance is the need for a complete change in mindsets and regional administration.
If the five-cities development model continues to form the basis of regional thinking, and the NWRA continues to be run (effectively) by Dublin planners using a five-cities model, change will never come.
The NWRA has no dedicated budget under its direct control. At best it can plead the case for the west, but Dublin has other priorities and tin ears. The most likely outcome will be that CSO county income league tables for future years will show ever increasing inequalities. I may not be around for it, but the 2040 CSO county income report will make depressing reading.
John Bradley was a professor at the ESRI and has published on the island economy of Ireland, EU development policy, industrial strategy and economic modelling.