Bailing out the banks vs Current account deficit

[Purple]

Ah the old 'Have you stopped beating your wife yet' style of questioning returns.

To quote Roland Reagan, "There you go again".

 

[Husker]

They're seperate events though. If we didn't have to inject capital into the banks we'd still have to borrow to meet current expenditure

Are they really? Won't the additional interest payments on the national debt mean that current expenditure needs to be shaved further?

 

[brigade]

I take it then (post 16) that you are happy for us to borrow 140m a week for pay?

So as I asked in post 3, is the answer to cut PS pay by 35%?

 

[Complainer]

I take it then (post 16) that you are happy for us to borrow 140m a week for pay?

It is a false premise. How come you decided that the money being borrowed is the money to pay for public services? How come it isn't the money going to the banks that is being borrowed? Or the money to pay social welfare? Or the money lost to landlords and developers of private medical clinics through tax reliefs? Or the money being paid out to employers to pay for 'work experience' schemes?

 

[Purple]

Or the money to pay social welfare? Or the money lost to landlords and developers of private medical clinics through tax reliefs?

That's not where the big money goes; how about the massive payments to GP's for medical card lists? On top of the average od €165 per year per head they also get 100% payments for some staff members (depending on how many punters they have on their list) and payments for equipment etc. All of which can and does get used for their private list.

 

[Firefly]

Are they really? Won't the additional interest payments on the national debt mean that current expenditure needs to be shaved further?

I take your point but the interest payments on the additional national debt will be small change compared to the annual 20BN shortfall we have at the moment

 

[Firefly]

It is a false premise. How come you decided that the money being borrowed is the money to pay for public services? How come it isn't the money going to the banks that is being borrowed? Or the money to pay social welfare? Or the money lost to landlords and developers of private medical clinics through tax reliefs? Or the money being paid out to employers to pay for 'work experience' schemes?

From the link I provided (Page 18):

"Pay as a % of Gross current spending 35%"

Given we are borrowing 400m a week it seems reasonable to me that 35% of this is to meet pay requirements.

 

[Complainer]

"Pay as a % of Gross current spending 35%"

Given we are borrowing 400m a week it seems reasonable to me that 35% of this is to meet pay requirements.

Indeed, but the 35% figure is only relevant within the context of all the other spending. You are choosing to ignore all other spending, and focus on spending on public services as the problem area. You also choose to focus solely on pay as the problem, without looking at all at the essential public services that are being provided for this pay. You also fail to consider the deflationary impact on the economy of cuts in pay. Like I said, it's a false premise.

 

[Firefly]

Indeed, but the 35% figure is only relevant within the context of all the other spending. You are choosing to ignore all other spending, and focus on spending on public services as the problem area. You also choose to focus solely on pay as the problem, without looking at all at the essential public services that are being provided for this pay. You also fail to consider the deflationary impact on the economy of cuts in pay. Like I said, it's a false premise.

I think government spending across the board should be reduced. However as 1/3 of all spending is on pay, clearly reducing this would reduce a lot of borrowing.

I agree the PS provides essential services. However I don't think we should be borrowing 140m a week to pay for these. Why can't the same services be provided for less pay?

Nobody in either the private or public sectors seem to be spending money so not sure of any additional deflationary impacts on the economy. If you could provide a link to this I'd be interested.

 

[Complainer]

Taking the HSE as anexample, 75% of the health budget goes on pay ( and grossly inflated pay at that) while the remaining 25% goes on actually providing services for patients.

There is simply little return for the taxpayer nor commnity and society from public sector pay.

This kind of foolishness that highlights the futility of trying to have any sensible discussion on AAM. Perhaps you haven't noticed, but the purpose of spending money on pay is to have public servants in place to provide services. In the case of the 75% of the HSE budget that goes on pay, the doctors/nurses/paramedics provide services every day for this money. That is its purpose.

I think government spending across the board should be reduced. However as 1/3 of all spending is on pay, clearly reducing this would reduce a lot of borrowing.

I agree the PS provides essential services. However I don't think we should be borrowing 140m a week to pay for these. Why can't the same services be provided for less pay?

If you pay peanuts, you get monkeys. While there aren't too many other employment options available at the moment, this will improve over the next 2/4/6 years. If you cut pay, you will strip the public sector of quality staff, and you will directly impact the quality of service.

Nobody in either the private or public sectors seem to be spending money so not sure of any additional deflationary impacts on the economy. If you could provide a link to this I'd be interested.

http://notesonthefront.typepad.com/...5-standards-the-argument-that-irish-publ.html

 

[Complainer]

Unfortunately for you, the facts don't support your two anecdotal stories. The facts show that Irish public sector labour costs were 10th out of the EU-15, BEFORE the pension levy and last round of cuts were made. See http://notesonthefront.typepad.com/...th-revisiting-a-couple-of-issues-in-rela.html

And of course, when you consider the huge cost of buying or renting accomodation in Ireland (even after a couple of years of sliding property prices), the stories about inflated wages just look a bit silly.

 

[Firefly]

If you pay peanuts, you get monkeys.

This is a poor cliche. The pay rates here are way higher than most other EU countries - are you saying staff in these countries are monkeys?

Also, there's a hiring freeze. There is no scope for "monkeys" to be hired

And where are they going to go....the private sector?

 

[shnaek]

Pat Neary got paid a lot more than peanuts, but ended up being somewhat of a monkey. In fact, the civil servants who we trusted with running the country have hardly covered themselves in glory over the past ten years - and they were hardly underpaid.

 

[Complainer]

This is a poor cliche. The pay rates here are way higher than most other EU countries - are you saying staff in these countries are monkeys?

Perhaps you'd like to have a look at numbers of Ireland's public service labour costs at the link I posted above and revise your post?

Also, there's a hiring freeze. There is no scope for "monkeys" to be hired
And where are they going to go....the private sector?

Perhaps you'd like to reread my post above where the context of my concerns were already explained, i.e. "While there aren't too many other employment options available at the moment, this will improve over the next 2/4/6 years. If you cut pay, you will strip the public sector of quality staff, and you will directly impact the quality of service."

Pat Neary got paid a lot more than peanuts, but ended up being somewhat of a monkey. In fact, the civil servants who we trusted with running the country have hardly covered themselves in glory over the past ten years - and they were hardly underpaid.

Indeed, Neary's performance was disgraceful, as was his payoff/golden handshake. However, he was operating within the context of a 'light touch' regulatory environment put in place by his political masters. This was at the behest of Fitzpatrick et al, who didn't want their 'wealth creation' activities hindered by mere bureaucrats.

And indeed, the same can be said for much of the public service environment. The public servants don't set the policy, and are dependant on the politicians for this. The Central Bank did sound some warnings about property prices in the past, but Bertie suggested that they go and kill themselves instead.

 

[Purple]

Perhaps you'd like to reread my post above where the context of my concerns were already explained, i.e. "While there aren't too many other employment options available at the moment, this will improve over the next 2/4/6 years. If you cut pay, you will strip the public sector of quality staff, and you will directly impact the quality of service."

If that happens then pay rates will have to be increased in order to get/retain the right staff.

Indeed, Neary's performance was disgraceful, as was his payoff/golden handshake. However, he was operating within the context of a 'light touch' regulatory environment put in place by his political masters. This was at the behest of Fitzpatrick et al, who didn't want their 'wealth creation' activities hindered by mere bureaucrats.

That's a bit glib, if the regulations as they existed were enforced correctly there wouldn't have been anything like the problems we have now.

And indeed, the same can be said for much of the public service environment. The public servants don't set the policy, and are dependant on the politicians for this. The Central Bank did sound some warnings about property prices in the past, but Bertie suggested that they go and kill themselves instead.

I agree that policy was seriously deficient but the problem didn't stop there.

 

[Complainer]

What's 'a bit silly' is trying to defend unaffordable public sector pay rates. The stance of the unions and some PS employees are devoid of reality and will literally bankrupt the country if the government continues to capitulate.

In these dire circumstances the unions need to be disbanded, pay reductions of 35%+ ( 50-70% for the likes of doctors and the judiciary) applied, present defined benefit pension scheme to be replaced with defined contribution scheme and reviewable contracts based upon performance introduced.

This would have a deflationary effect on the CPI and private sector wages and competitiveness would be restored without the need for the euro to be abandoned or currency devaluation. Then Ireland would be a model for decisive action rather than the banana republic it is at the moment.

Public service should be as it is entitled with pay rates at subsistence level. It should never have become a source of personal enrichment and wealth building.

Like I said above, "This kind of foolishness that highlights the futility of trying to have any sensible discussion on AAM.". You ignore hard evidence showing that Irish pay rates were (before the pension levy and recent cuts) 10th out of the EU-15 countries. I can only guess at what your confused 'subsistence level' comment is supposed to mean, but public servants aren't on a vocation. They are entitled to fair payment for their services, and the public are entitled to excellent quality of services.

Ireland's economic woes have nothing to do with public pay rates. Our economic woes are down to the 10's of billions of euros leaving the public purse to shore up our banking system. Don't expect public servants to take any of this poor-mouthing seriously, when Richie Boucher gets a €1.5million pension contribution for a post with a salary cap of €500k, because of his 'contractual obligations'. What about the 'contractual obligations' to 350,000 public servants?

 

[Firefly]

Perhaps you'd like to have a look at numbers of Ireland's public service labour costs at the link I posted above and revise your post?


Perhaps you'd like to reread my post above where the context of my concerns were already explained, i.e. "While there aren't too many other employment options available at the moment, this will improve over the next 2/4/6 years. If you cut pay, you will strip the public sector of quality staff, and you will directly impact the quality of service."

That link is blocked where I work, so if I have time tonight I'll take a look.

We don't know that things will improve in 2/4/6 years as you say. If we keep our heads in the sand and hope for a recovery of sorts, we will be adding 20BN per year to our national debt (35% of which will fund pay).

As there are no jobs in the private sector, reducing the wages in PS will not have any impact on the numbers in the PS.

 

[Sunny]

Ireland's economic woes have nothing to do with public pay rates. Our economic woes are down to the 10's of billions of euros leaving the public purse to shore up our banking system. Don't expect public servants to take any of this poor-mouthing seriously, when Richie Boucher gets a €1.5million pension contribution for a post with a salary cap of €500k, because of his 'contractual obligations'. What about the 'contractual obligations' to 350,000 public servants?

No its not. Why do you keep repeating that? What 10's of billions have left the public purse so far? The deficit that the Government is trying to solve has nothing to do with the banks. It is to do with the fact that paying for our public services including public sector pay and numbers were based on tax revenues that were unsustainable. Even if we were to raise tax by huges amounts so we were the most taxed Country in Europe, we wouldn't be able to close the gap. Therefore the expenditure side has to be cut. We have to deliver public services more efficiently and cheaper. Whether that is done through pay cuts or reform is up to the public sector workers. I don't want my girlfriend who is a nurse taking a paycut. I do however see that like Aer Lingus cabin crew, she has to face economic reality.

Richie Boucher and other top bankers who won't accept the new reality are a disgrace. It doesn't change the reality of the public finances though.

The economic reality is that we either do this ourselves or we let other people do it for us. That's not scaremongering. Greece will be getting a bailout in the next 1-2 weeks. Look at the conditions that are attached to the deal. The same conditions will be applied here if we go looking. I don't like being a slave to the international bond markets but we are because of gross incompetence and greed by this Country's leaders.

 

[Firefly]

Ireland's economic woes have nothing to do with public pay rates. Our economic woes are down to the 10's of billions of euros leaving the public purse to shore up our banking system.

This is exactly what I was referring to in my opening post.

 

[Complainer]

That link is blocked where I work, so if I have time tonight I'll take a look.

We don't know that things will improve in 2/4/6 years as you say. If we keep our heads in the sand and hope for a recovery of sorts, we will be adding 20BN per year to our national debt (35% of which will fund pay).

As there are no jobs in the private sector, reducing the wages in PS will not have any impact on the numbers in the PS.

Any chance that you could avoid using 'PS' in a debate about two PS's? It is just a bit confusing.

This is nothing to do with a 'head in the sand' approach. This is about focusing Government spending on providing public services, as opposed to focusing spending on Richie Boucher's pension and other people in the financial sector. This is about avoid deflationary actions that could bury us in deep recession for a generation (see MIchael Taft's analysis again).

And your comment about 'no jobs in the private sector' is nonsense. There are many jobs in the private sector. There are many people in the private sector who have seen no cuts. There are many private sector organisations continuing to pay at same or increased levels. There are some private sector organisations recruiting staff.