Pascal Donohue, the finance minister who presided over huge increases in state expenditure

[Purple]

For sure, and the rest.

What good all this precarious corporation tax receipts if it is not spent?

Spending lots of money in which capacity is constrained by other factors such as labour supply, existing infrastructure and technical ability causes inflation and is very wasteful.

The question is it being spent well?

That is the question. We don't invest in the longer term, preferring to increase wages and staff numbers instead of fixing the underlying structural issues. It's like we have a cold house due to lack of insulation but instead of saving up to fix it and putting up with the cold in the short to medium term we instead keep the central heating up at full blast, knowing that at some point we'll run out of money for fuel.

That is always going to be political notwithstanding that there could always be more efficiencies.

The problem is the electorate. Pascal and the last few governments have doubled the size of the State sector, increased welfare and pensions ahead of inflation and thrown money at people who don't need it (why do I get an energy credit? Why do my wealthy parents get free travel and such highly subsidised healthcare? etc). Despite this the opposition say really stupid things like accusing them of being neo-cons and complain that they aren't spending enough.

 

[Sister Sara]

Spending lots of money in which capacity is constrained by other factors such as labour supply, existing infrastructure and technical ability causes inflation and is very wasteful.

Thats true, but to allieve capacity constraints such as labour supply and infrastructure deficits money has to be spent to make the conditions for those who can fix the issues possible and attractive.
If we need labour supply, a high level of immigration is a good thing. Those workers need to be able to live somewhere, with affordable rates. So house building is critical. With labour constraints, and housing constraints what is the solution?

The problem is the electorate.

Im starting to worry about you @Purple, do you think we need a dictator to take the reigns and sort out the mess?

The electorate isn't the problem, neither the parliament. The parliament is just a circus.
The real problems are labour constraints and infrastructural deficits.
If you turn off the central heating while waiting for the insulators to arrive to fix things you are going to have a bigger mess on your hands.

 

[Purple]

Thats true, but to allieve capacity constraints such as labour supply and infrastructure deficits money has to be spent to make the conditions for those who can fix the issues possible and attractive.

So short term inflationary policies which hurt working people in the medium term aren't the solution.
That's your lot in Sinn Fein out of the equation then.

If we need labour supply, a high level of immigration is a good thing.

I agree. Essential even.

Those workers need to be able to live somewhere, with affordable rates.

I agree. HAP is a big part of that problem.

So house building is critical. With labour constraints, and housing constraints what is the solution?

Less Government and State interference. Less legal industry leeching. More free market capitalism.

Im starting to worry about you @Purple, do you think we need a dictator to take the reigns and sort out the mess?

No, I'm not a socialist. I'm a democrat.

The electorate isn't the problem, neither the parliament. The parliament is just a circus.

So a parliament that is a circus isn't a problem?

The real problems are labour constraints and infrastructural deficits.

So spend money and allocate resources there instead of expanding other areas of the State.

If you turn off the central heating while waiting for the insulators to arrive to fix things you are going to have a bigger mess on your hands.

Not if you have a warm coat and it's not actually that cold.

 

[Sister Sara]

Less legal industry leeching. More free market capitalism.

What is this legal industry leeching? The law is the law, if it needs changing change it. God knows the governing parties have had long enough to do it.
To elaborate, the parliamentary debates are a circus. It is the job of the opposition to oppose, regardless. When in power the opposition invariably sing a different tune. The Irish Labour party are great examples of it.

So spend money and allocate resources there instead of expanding other areas of the State.

Ok, spend money on labour constraints - what is the most effective way for government to allieviate labour constraints? Some would say cutting taxes on labour?
Infrastructural deficits - the most prominent being the inability of the next generation of working people being able to house themselves in affordable accommodation. The government have, over decades, relinquished the house building sector to the free market. The house building sector is a boom-bust industry when it should be the most stable, incremental growth industry.
We have a problem with re-cycling homes back into the market at maximum prices. Houses are a resource that provide multi-generational shelter. A house that cost £2000 IR punt in 1960 to build will be re-cycled into the market for new owners today to pay €500,000.

Something that cost £2,000IR punt that is 65yrs old will be re-cycled into the property market for €500,000, or whatever the maximum price of the market is.
That is a structural deficit in my opinion, allowing a vital resource such as housing to be bought and sold and re-sold by way of paper contracts when the actual cost of it has been paid for.

Not if you have a warm coat and it's not actually that cold.

Then why are you wasting money by ordering insulation then!

 

[Purple]

What is this legal industry leeching? The law is the law, if it needs changing change it. God knows the governing parties have had long enough to do it.
To elaborate, the parliamentary debates are a circus. It is the job of the opposition to oppose, regardless. When in power the opposition invariably sing a different tune. The Irish Labour party are great examples of it.

Ok, spend money on labour constraints - what is the most effective way for government to allieviate labour constraints?

Get out of the way.

Some would say cutting taxes on labour?

Some would.

Infrastructural deficits - the most prominent being the inability of the next generation of working people being able to house themselves in affordable accommodation. The government have, over decades, relinquished the house building sector to the free market. The house building sector is a boom-bust industry when it should be the most stable, incremental growth industry.
We have a problem with re-cycling homes back into the market at maximum prices. Houses are a resource that provide multi-generational shelter. A house that cost £2000 IR punt in 1960 to build will be re-cycled into the market for new owners today to pay €500,000.
Something that cost £2,000IR punt that is 65yrs old will be re-cycled into the property market for €500,000, or whatever the maximum price of the market is.

That is a structural deficit in my opinion, allowing a vital resource such as housing to be bought and sold and re-sold by way of paper contracts when the actual cost of it has been paid for.

You have no understanding of economics.
Your solution is more government interference in the market.

Then why are you wasting money by ordering insulation then!

To reduce the ongoing cost of heating the house and free up resources for wealth building activities.

 

[Sister Sara]

You have no understanding of economics.

Its almost as if you cannot understand that the wealth being generated and being locked into non-productive resource that burdens future generations with high debt, or simply no prospect of owning a home of their own, is not only a gross mis-allocation of resources but ingredient for social unrest?

Instead you have identified a real significant factor causing Irelands doubling of expenditure during the period we are talking about.

50,000 in the Charity industry

Talk about identifying the lowest of low-hanging fruit as a means to explaining one reason why govt spending has nearly doubled in 7yrs!

To reduce the ongoing cost of heating the house and free up resources for wealth building activities.

But you have

a warm coat and it's not actually that cold.

so you don't need to keep running the central heating and you dont need to insulate.

 

[Purple]

Its almost as if you cannot understand that the wealth being generated and being locked into non-productive resource that burdens future generations with high debt, or simply no prospect of owning a home of their own, is not only a gross mis-allocation of resources but ingredient for social unrest?

I've spoken about that numerous times on this forum. Your lack of understanding of economics is apparent in the solution you propose. You cannot buck the market. Every times it's been tried, by those on the left or the right, has ended badly. Your lot in Sinn Fein want to abolish wealth tax, also known as property tax, and increase pensions. Therefore you want to make rich people richer and keep young people locked out of the wealth owning middle class.

Instead you have identified a real significant factor causing Irelands doubling of expenditure during the period we are talking about.

I don't think it is but you are entitled to your opinion. I was just correcting your erroneous statistic about the size of the State sector.

But you have

But your lot want the government to keep the heat on. You complain that the temperature isn't high enough.

so you don't need to keep running the central heating

Tell that to all the left wing Parties.

and you dont need to insulate.

It's always a good idea to insulate in case it gets very cold in the future.

 

[Sister Sara]

in the solution you propose

I didnt propose a solution. I identified a problem, that is a mis-allocation of wealth resource in property prices.

Your lot in Sinn Fein

I dont have 'a lot'. I have no party political allegience.

want to abolish wealth tax, also known as property tax, and increase pensions

and you want to impose property tax, but call for free-market capitalism. This is government interference in trying to buck the market and talking out the other of your mouth simulataneously.

 

[Purple]

I didnt propose a solution. I identified a problem, that is a mis-allocation of wealth resource in property prices.

Nobody allocated the capital. It's flows like water.

I dont have 'a lot'. I have no party political allegience.

Hhhmmm....

and you want to impose property tax, but call for free-market capitalism.

I've never called for free market capitalism.

This is government interference in trying to buck the market and talking out the other of your mouth simulataneously.

Taxation is required for there to be a government. Taking a portion of the flow of capital through taxation is what centralist economics does. Attempting to make water flow up hill is what you are talking about.
There are two issues. The first is the cost of housing and the second is how we tax income and wealth.
In the case of the latter we hardly tax wealth at all and we tax income at a very high rate.

In the case of the former when I hear people spouting the utter nonsense what a home is not a commodity and housing should not be treated like other wealth I despair. What gives a commodity a value is its usefulness and housing is very useful. A housing policy that ignored economic reality is doomed to fail, just as our current left wing housing policy is failing. We have a housing problem because demand outstrips supply. That's all. HAP and rent freezes and all the other stuff won't stop capital doing what it always does. It'll just make things worse. It is making things worse. We need to build more homes. That's where 100% of the energy should be focused. Make sure that all available capital is allocated. Make sure all supply chain constraints are minimised. Make sure that capital is being utilised in the best and most efficient way so that the greatest number of suitable homes can be built and the greatest social good is served.

 

[Sister Sara]

We need to build more homes.

Agreed.

HAP and rent freezes are not a cause of the current crisis, they are a reaction to it. I do not agree with such measures in a stable functioning property market. However, we do not have such a market rather a dysfunctional failed market.

In 2004 some 230,000 people were employed in the construction industry. In 2025, it is estimated to be around 175,000. This despite the fact that our population has increased by 30% + in the same period.

HAP and rent freezes are only periphery issues. HAP has about 50,000 tenancies, rents are at historically high prices along with house prices. Neither higher rents or more landlords build more houses. Landlords compete with prospective owner-occupiers for property driving prices higher. If owner-occupier returned to its historical high of 80+% this would assist in some part to alleviate pressures for those wanting to buy but caught in the spiraling rental market.

The issues are far deeper and, significantly wider afield. Across many EU countries, in the UK, in the US, Australia the issue of unaffordable housing, shortage of construction labour and high levels of homelessness are common experiences.

This is the consequence of the crash from 2008 and the bankruptcy of dozens (hundreds?) of construction companies. As you know, construction companies are heavily capitalised and simply cannot re-brand and pop-up as something new following insolvency.

I'm in favour of property tax but not as it is currently designed. A couple starting out with home valued €240,000 (say mortgage of €216,000) are paying tax on the entire €240,000. It may only be a small amount but it is an annual fee charged primarily on the mortgage. It is not a wealth tax, it is debt tax.
The only wealth created is when the property value increases above the purchase price.
Property tax is a means of re-allocating wealth and if thought out properly could be used as a means to invoke more mobilisation in the market (ie down-sizing when the kids have flown the nest).

 

[Marsupial]

Ok, spend money on labour constraints - what is the most effective way for government to allieviate labour constraints?

Stop paying the tuition fees for the 65% of our young people who go to third level - the higest percentage in the EU. Consider introducing student loans, which should help to filter out the wasters.

Stop enabling second rate, third level institutions staffed by overpaid, mediocre academics often teaching spurious third level courses and awarding degrees that, literally, aren't worth the parchment that they're printed on.

And stop dumbing down the Leaving Cert which enables this nonsense.

Instead, focus on developing and improving the various apprenticeships schemes that will deliver more of the competent tradespersons that we so badly need.

 

[Purple]

@Sister Sara I broadly agree with that post (given the number of posts and replies we’ve had it was bound to happen eventually).
I disagree that HAP and government interference in allocation of housing at the supply side hasn’t made things worse. Prices are set on the margins and buying existing private homes to turn into social housing is an unforgivable and appalling betrayal of young people.

 

[Purple]

I agree completely @Marsupial. I have 2 kids in college. Both have changed courses. The quality of lecturers in TUD is appalling and the number of times they quit/are sacked and are replaced is even worse.

I did an apprenticeship in precision engineering. The same course doesn’t exist any more. We are employing people from all over the world because we can’t get skilled Irish labour and the local people we do employ and train end up with no qualification. They are well paid jobs, between €45k and €85 on the factory floor, higher in some cases.

 

[Sister Sara]

Stop paying the tuition fees for the 65% of our young people who go to third level - the higest percentage in the EU. Consider introducing student loans, which should help to filter out the wasters.

That's one of the worst ideas I've heard in a while - reducing investment in education. The savings made to filter out the 'wasters' would be chicken-feed and the unnecessary financial burden to some families would induce higher levels of non-participation in 3rd level education. Generally considered a terrible idea.

Instead, focus on developing and improving the various apprenticeships schemes that will deliver more of the competent tradespersons that we so badly need.

I agree with this but as with everything it cannot be done overnight.

 

[Marsupial]

That's one of the worst ideas I've heard in a while - reducing investment in education.

That isn't what I proposed. But fair dues to you for your unquestioning acceptance that every cent expended on the provision of spurious, valueless third level courses is taxpayers' money well spent. It's exactly what I'd expect from you.

 

[Sister Sara]

That isn't what I proposed.

Well it was actually. You identified 65% of our young people who go to third benefit from the State paying tuition fees and you suggested that they take out loans instead.

But fair dues to you for your unquestioning acceptance that every cent expended on the provision of spurious, valueless third level courses is taxpayers' money well spent.

I never said it was. And for "spurious, valueless third level courses", I'd agree with you, take them out and replace them with meaningful, valuable courses delivered by well paid high quality academics.

Probably have to pay more and increase govt spending further, which kind of goes against the grain of the topic here.

 

[Purple]

Well it was actually. You identified 65% of our young people who go to third benefit from the State paying tuition fees and you suggested that they take out loans instead.

That doesn't mean a reduction in funding for third level education.

I never said it was. And for "spurious, valueless third level courses", I'd agree with you, take them out and replace them with meaningful, valuable courses delivered by well paid high quality academics.

Where will we get those academics?
A close friend works in a new university, formerly a technical college. He said that the standard of lecturers and the quality of the courses has deteriorated massively since they became a university.
My daughter went to TUD. My son goes to UCD. There is no comparison between them when it comes to the quality of the lecturers or the quality of the course material. How could there be; UCD has had over 150 years to get it right.

Probably have to pay more and increase govt spending further,

There may well be a difference between high quality academics and highly qualified academics. We probably have the latter but we seem to be short of the former.

which kind of goes against the grain of the topic here.

No it doesn't. Not wasting money is what's being discussed here. Getting better outcomes for the same or less money, but better outcomes is the topic.

 

[Sister Sara]

That doesn't mean a reduction in funding for third level education.

Well if it wasn't a cost saving measure then it was a 'better outcome' measure which has nothing to substantiate it. One persons 'better outcome' is another's, alleged "waster" outcome, denied access to 3rd level education on account of their ability to afford tutition fees.

Not wasting money is what's being discussed here. Getting better outcomes for the same or less money, but better outcomes is the topic.

The topic is about how €60bn turned into €117bn since 2018 and what value we get from it. Tinkering around the edges with selective individual items such as tuition fee's and OAP PRSI contributions is wasteful of time. There isn't a solitary organisation in the world spending €117bn (or more) that if under any modest scrutiny waste could not be identified.

The real way to measure is against our peers in Europe, UK and US and compare outcomes - debt ratios, educational participation, employment, wages, investment, business opportunities, healthcare, overall standard of living (I think there was a thread recently that put us 2nd in the world for best place to live or something like that?).

 

[Purple]

Well if it wasn't a cost saving measure then it was a 'better outcome' measure which has nothing to substantiate it. One persons 'better outcome' is another's, alleged "waster" outcome, denied access to 3rd level education on account of their ability to afford tutition fees.

If the same money is allocated in a way which produced better outcomes then there is no reduction in spending and no reduction in cost. Training people for skills which are needed and which will provide an income for the person with those skills is, I suggest, a better outcome than instead training them in a second rate degree in a second rate university with second rate lecturers producing a degree with little value to the person, society or the economy.

The topic is about how €60bn turned into €117bn since 2018 and what value we get from it. Tinkering around the edges with selective individual items such as tuition fee's and OAP PRSI contributions is wasteful of time. There isn't a solitary organisation in the world spending €117bn (or more) that if under any modest scrutiny waste could not be identified.

Is there a solitary organisation which doubles it's spend in a decade and has negligence improvements to show for it?

The real way to measure is against our peers in Europe, UK and US and compare outcomes

Agreed. All of the above are struggling with extremism, a dispossessed youth, unsustainable elderly care costs and a housing shortage.

- debt ratios, educational participation, employment, wages, investment, business opportunities, healthcare, overall standard of living (I think there was a thread recently that put us 2nd in the world for best place to live or something like that?).

It's nice to see that you think the FG/FF led governments over the last decade have done a great job but I think that they, and more importantly the Permanent Government that has so much of the real power, could have done a much better job. Especially so when you consider that we have the Foreign Multinationals here which generate the taxes that pay for over half of everything.

 

[Sister Sara]

If the same money is allocated in a way which produced better outcomes then there is no reduction in spending and no reduction in cost. Training people for skills which are needed and which will provide an income for the person with those skills is, I suggest, a better outcome than instead training them in a second rate degree in a second rate university with second rate lecturers producing a degree with little value to the person, society or the economy.

That is stating the blindingly obvious. Where does the students loans for tuition fees fit in then?

Is there a solitary organisation which doubles it's spend in a decade and has negligence improvements to show for it?

You are making an assertion that living standards have disimproved since 2018? Since 2018, in some respects yes, in other respects no. Someone who loses their job through no fault of their own will receive a higher welfare payment today than in 2018 - that is an improvement for that person. Others will think it is not an improvement, like you.

It's nice to see that you think the FG/FF led governments over the last decade have done a great job but I think that they, and more importantly the Permanent Government that has so much of the real power, could have done a much better job.

I always think there is room for improvement but the suggestion here in this topic that there has been no, or neglible improvements, is just nonsense.

Agreed. All of the above are struggling with extremism, a dispossessed youth, unsustainable elderly care costs and a housing shortage.

And if govt spending remained at €60bn, or only increased in line with inflation, do you think that would dampen extremism and resolve elderly care costs?