Analysis: Given the benefits and future returns from increased spending on sport, this is one Budget 2025 demand the Government should run with
Over the summer months, suggestions as to how the government should allocate resources in the October budget are ubiquitous in the media. Post Olympics, politicians have promised increased spending on sport infrastructure and high performance programmes. Given the success of Team Ireland this year, voters could well be supportive of this increased investment in sport.
But budgeting decisions always involve the allocation of scarce resources; increased spending in one area generally means reducing spending elsewhere. The question therefore arises, where would this money come from - and is increased spending in sport value for money?
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From RTÉ Radio 1's This Week, Minister for Sport Thomas Byrne on funding the resources needed to build on Irish success at the Paris Olympic Games
Looking at the headline figures, Ireland is in an enviable position in advance of the upcoming budget, one of only four EU countries running a surplus last year. However, as the Government themselves acknowledged in their Summer Economic Statement, this headline position masks underlying vulnerabilities. The public purse is overly reliant on excess or 'windfall' corporation tax receipts; receipts collected in excess of what we would expect given the performance of the domestic economy.
Corporation tax now accounts for almost one in every four euro of Government revenue and half of these receipts come from just 10 foreign multinationals. If we exclude windfall receipts, current Government spending plans would actually mean Ireland running a budget deficit for 19 years in a row, out to 2026.
There is near consensus among Irish economists that excess corporation tax receipts should not be used to fund increases in core spending in the upcoming budget. This is due to the riskiness and volatility of these sums and the fact that the economy is running at capacity. The Government recently established two sovereign wealth funds, allocated about half of the excess receipts this year to these funds and outlined plans to contribute annually to them up to 2035.
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From RTÉ Radio 1's Morning Ireland in April 2024, corporation tax receipts for Q1 2024 down 25% compared to the same period last year
However, policy choices involve trade-offs. As I recently pointed out at the MacGill Summer School, our current level of spending on sport and recreation is the second lowest in the EU as a percentage of total expenditure,. The focus of spending decisions is often on material living standards such as income, consumption and wealth. Although these are important, wellbeing is multidimensional and these macroeconomic measures should not be the sole focus of government decision making.
The arguments for increased investment in sport post Olympics highlight the need to support and develop future and current Olympians, but there are additional societal benefits and spillover effects of increasing spending on sport. In fact, there is a strong argument that increasing spending on sport and recreation substantially now would reduce future health spending, improve wellbeing and address many of the societal problems we face as a country.
Increasing the levels of participation in sport and physical activity in Ireland would improve mental and physical health. Physical inactivity is one of the leading risk factors for global mortality and it is estimated that one in seven adults in Ireland are completely inactive. A recent EU-wide survey found that Ireland is the loneliest country in the EU, with over 20% of adults feeling lonely most or all of the time. Additionally, a Eurobarometer survey found that 63% of Irish adults had experienced emotional or psychosocial problems such as depression or anxiety in the last 12 months, well above the EU average.
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From RTÉ Radio 1's News at One, one in five Irish people don't get enough exercise
Studies have consistently shown that exercise plays both a moderating and protective role on mental health and wellbeing, so improving the mental and physical health of citizens would have the additional benefit of reducing the burden on the health service. Currently, one in every five euro spent by the Government is on health, the second highest proportional spending on health in the OECD. Reducing demand for health services could decrease this high level of spending, or allow current health funds to be spent more efficiently.
Targeted spending to increase physical activity could have further additional benefits. Increasing the number of people engaging in active travel, particularly cycling, would reduce carbon emissions, helping us mitigate climate change and reach our climate targets. Although we reduced emissions last year overall in Ireland, transport emissions actually increased by 0.3%. Almost seven in 10 journeys in Ireland are made by car; in comparison just two in 100 journeys taken are by bike. Switching from driving to cycling for short trips reduces carbon emissions by about 75%, an important co-benefit to the health and wellbeing impacts of increased exercise.
It would also be possible to improve gender equality in Ireland with targeted increased spending on increasing women’s participation in sport and recreation. According to the Gender Equality Index, progress towards equality in Ireland has stalled. Since 2020 we’ve become more unequal and have experienced the biggest decline in equality across all EU countries.
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From RTÉ Radio 1's Ray D'Arcy Show, Sport Ireland's Nora Stapleton on HER Outdoors week which encourages more women to take part in outdoor physical activities
The primary driver for this reduction in gender equality is the "domain of time use", where there are large and increasing gender gaps. Only 10% of working women engage in sporting, cultural or leisure activities outside of their home at least several times a week, compared to 24% of men. These time use differences are reflected in the gender gap for membership of sports clubs; just three in 10 women in Ireland have club membership, in comparison to over four in 10 men.
As Budget day approaches and calls for increased spending in different areas grow louder, the Government will face trade-offs; they won’t be able to satisfy all demands. As we bask in the glow of our most successful medal haul ever at the Olympics, public support for increased spending on sports and recreation is likely to be high. Given the myriad of societal benefits and the future returns from increased spending in sport, of all the demands, I think that is the one the Government should run with.
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The views expressed here are those of the author and do not represent or reflect the views of RTÉ
