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

[Firefly]

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's an excellent analogy!

 

[Purple]

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

I thought that was blindingly obvious. The money that's spent on useless courses and subsidising the children of rich people could instead be spent on more subsidies for the children of poor people and more apprenticeships and courses that are properly structured and delivered.

You are making an assertion that living standards have disimproved since 2018?

No.

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.

See my previous answer.

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.

Do you think that the improvement has been commensurate with the increase in spending?

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?

It would have been part of the solution.



Do you agree that the FG/FF government has largely done a good job over the last 10 years?

 

[Sister Sara]

@Purple. The point I am making (perhaps not very well) is that the topic, based on the newspaper article, is a loaded insofar as it identifies a near doubling of govt spending in the space of 8 years or so.

On that bare fact alone govt spending is unsustainable and I am not disputing that.

However, what needs to be taken into account is whether €60bn in 2018, the starting point for this topic, was excessive spending in the first instance ? or was it an austere budget? or just right?

Assuming it was just right!

In 2008, govt spending was budgeted for €60bn also. Obviously with the onset of the crash, bailouts, austere measures etc, is it any surprise that 10yrs later the budget was still at €60bn? Then that reflects a period of profound stagnation while Ireland was in bailout programs up to 2014/15?.

Even allowing for an annual average inflation rate of 0.5%, the budget by 2018 should have been around €63bn.

Other factors to consider then from 2018 onwards was the unwinding of Financial Emergency measures of the previous decade that assisted with the recovery and the restoration of public sector pay. I estimate that to be €4bn. Covid measures also cost a pretty a penny and inflationary impact of the Ukraine/Russian war and supply chain disruptions also cost some. Add to that pay increases to keep pace with the rate of inflation (a well-established norm in industrial relations here) then I estimate that the €60bn 'just right!' budget should now be running at around €90bn a year.

Or would you consider €60bn in 2018 to be too high, too low? And at what rate should this govt spending have been increased or decreased between 2018 and today?

The €117bn amounts to an excess of €27bn, or 30% above where a fiscally stable budget should be, in my opinion, based on the €60bn being 'just right' in 2018 and not a near 100% as the OP infers.

That is, in my opinion, Pascal presided over an excess of 30% of state expenditures in the 8/9 period we are talking about. Or 4% additional spending on average per year.

That 30% has largely been fed by corporate tax receipts.

Where student courses and tuitions fees come into all that is like picking pepper grains out of a salt bag.

 

[Purple]

I broadly agree with that @Sister Sara. If we accept your figures that's an additional €27 billion a year in expenditure. While our national debt is decreasing in real terms and relative to GDP but it's still very high and when the MNC tax bonanza ends it'll look a whole lot bigger.

Much of our spending is pro-cyclical and inflationary (and chasing inflation with pay increases is a fools game). I just don't see value for money for that €27 billion.

When crashes happen, and they always happen, it is generally the young and the poor that are hardest hit. I have nothing but contempt for the self described left wing Parties who cry for more spending and more pro-cyclical policies knowing that in the medium term they will damage the people they claim to represent but also knowing that they get elected by being populist.

The 30% is entirely fed by Corporation Tax receipts, as is a good chunk of the rest of it.

 

[Duke of Marmalade]

Slightly off topic but all this talk of infrastructure deficit highlights what a strategic shoot in the foot is auto-enrolment.
It is projected that when at full steam it will be diverting €4bn (in today's money) per annum to mostly buying foreign company shares on the second hand market.
It should have been a State pension supplementary to the Old Age Pension. Defined Benefit and Pay As You Go with benefits linked to the economic performance of the economy, like the Swedish model. The funds would be invested in infrastructure and everybody's interests would be aligned.

 

[joe sod]

Looks like Simon Harris is changing tact, he has said that tax breaks for workers are
back on the agenda after pascal donohue effectively raised income taxes in last budget by not increasing tax thresholds with inflation . He said workers need to be rewarded by keeping more of their money for their families rather than giving it to the taxman. This is a welcome move.

 

[Purple]

He said workers need to be rewarded by keeping more of their money for their families rather than giving it to the taxman. This is a welcome move.

Any move which reduces the proportion of the tax burden which falls on work (wealth creation) and broadens the tax base is a good thing.

 

[joe sod]

Anecdotally you hear of skilled professionals like doctors and engineers choosing to work less, take years off to look after children etc because the tax system penalises them too much , the high rate tax band comes in too early along with other stealth taxes. So there is a large skilled productive base of the economy that is unavailable due to our taxation system which is not being reported. That is a huge loss to the domestic economy but this is getting camouflaged by the overall productivity statistics which are grossly exaggerated by US multinational revenue flows.