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How would you "balance" the books?

  • 06-05-2010 11:41AM
    #1
    Registered Users, Registered Users 2, Paid Member Posts: 24,612 ✭✭✭✭


    Over and over again we have the "PS Bashers" (a grouping I'd be labelled as being part of) claiming that reform, redundancies and paycuts are necessary to bring spending in line with revenues.

    The PS workers on this forum keep saying that they've already taken their cuts, didn't cause the recession etc. but I've yet to see a viable alternative suggestion as to how the defecit can be reigned in from them. So, this thread is a challenge to them, and anyone else who'd like to put forth an option for how we can get our year on year spending back in order.

    Budget 2010 puts our estimates at:

    Income 35,957m (Current 34,285m, Capital 1,671m)
    Expenditure57,895m (Current 50,200; Capital 7,694m)

    Leaving a projected overall defecit of -21,938m or a current expenditure deficit of -15,915m

    The Department of Finance inital budget figures always being very poor projections, lets take a look at Ronan Lyons' figures after the most recent exchequer figures: "This year, expenditure will be €69bn while receipts will be €50bn... The 2010 deficit, therefore, is estimated to be €19bn."

    Now, if myself and I'm presuming many of the others accused of PS "Bashing" on this forum were to make the call we wouldn't be borrowing any of this and would simply widen the tax net and cut expenditure (i.e. reform savings, lay-offs, salary cuts, social welfare cuts, reductions in services etc.) until the budget was balanced and there was no defecit whatsover. To allow some concession towards the argument that do so would further depress the economy which we need to grow in order to get tax receipts back up, I set the challenge to you to find 10 billion of savings i.e. a half-way point between taking a chainsaw to the public sector and hocking our children's futures to pay for it.

    As far as I can see, bank bailouts and NAMA can't be factored in here as, due to the prior actions of our government, any alternative course of action attempted at this stage will only result in even higher costs than the current course of action.

    Projected Income figures (taken from Budget 2010 - can't find revised figures)

    Projected Taxation Revenue||2010 (€m)
    Customs and Excise| |4725
    Capital Gains| |340
    Capital Acquisitions| |240
    Stamp Duties| |975
    Income Tax| |11,979
    Corporation Tax| |3210
    VAT| |10,460
    Levies| |1
    Non Tax Revenue| |2,355
    Total | | 34,285

    Revised Expenditure Figures: (taken from http://www.irishpressreleases.ie/2010/02/19/publication-of-2010-revised-estimates-for-public-services/) No breakdown available for Capital Expenditure on these lines so have deducted Budget 2010 figure for this at end.

    Projected Public Expenditure| |2010 (€m)
    Social and Family Affairs| |20,960
    Health and Children| |15,324
    Education and Science| |8,883
    Environment| |2,195
    Transport| |2,758
    Justice| |2,487
    Other| |8,572
    Less Capital Exp| |7694
    Total| |53,485

    So, where're the 10 billion to come from?


«13

Comments

  • Closed Accounts Posts: 56 ✭✭bondjames


    Have no public sector at all
    Don’t borrow any money to pay public sector and finally the private sector might see how many of there jobs depend on the public sector wage bill


  • Registered Users, Registered Users 2 Posts: 7,441 ✭✭✭bladespin


    Privatise the paperwork, simple really, subby out as much admin work as possible.
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    MasteryDarts Ireland - Master your game!



  • Registered Users, Registered Users 2 Posts: 10,903 ✭✭✭✭Riskymove


    While I appreciate the work put into this post, it is really the same question being asked again and is unlikely to end up any other way than all the rest. There is too much closed ears and spite at this stage for any rational discussion to proceed.

    Firstly, a small point, these are pre-budgetary decision figures so do not reflect changes (including the pay cut). On the matter of PS costs, gross figures do not reflect the pension levy either, which is a reduction on expenditure.

    so then to an attempt to answer. To be honest I dont think much has changed, I believe it remains:

    1. Reduce welfare spend through a proper review of schemes, criteria and rates

    2. Reduce cost of public sector through reduction of numbers, rationalisation of quangos/agencies/local government etc, thighter controls on costs such as overtime, allowances

    In particular the white elephant of the HSE remains, particularly administration

    proper management practices reform generally to allow for managers to actually manage and the issue of under-perfromance to be dealt with properly

    3. Restructuring of income tax system, refocus away from purchase taxes to other kinds, scrapping of tax breaks

    4. review of all other spending schemes

    this is obviously not a one-off exercise, it is not practical to suggest cutting €10 bn in one year

    its also not really feasible for us to get into the micro detail of costs without being experts in the areas really.


  • Registered Users, Registered Users 2 Posts: 3,834 ✭✭✭Welease


    The problem in trying to offer suggestions is the lack of real and trustworthy data on any particular area you wish to offer address...

    So in the absence of that, I would suggest the implementation of the McCarthy report for cost cutting, widening the tax net considerably, and the targetting of specific industries for growth over the next 10 years (partnerships with private sector organisations).


  • Registered Users, Registered Users 2 Posts: 12,089 ✭✭✭✭P. Breathnach


    Welease wrote: »
    The problem in trying to offer suggestions is the lack of real and trustworthy data on any particular area you wish to offer address...

    That has never been an obstacle to the armchair economists in this forum. The pattern is the less data one has, the more confident the prescription one gives.


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  • Closed Accounts Posts: 39,019 ✭✭✭✭Permabear


    This post has been deleted.


  • Registered Users, Registered Users 2, Paid Member Posts: 24,612 ✭✭✭✭Sleepy


    bondjames wrote: »
    Have no public sector at all
    Don’t borrow any money to pay public sector and finally the private sector might see how many of there jobs depend on the public sector wage bill
    This is exactly the sort of nonsense post I'm trying to address with this thread.

    Yes, some private sector work is dependent on the public sector. I never suggested it wasn't, my current employer is heavily dependent on UK defence and security contracts. That's not the point though.

    What do you propose we do about the fact that at our current levels of expenditure we'll have added another 100 billion to the debt mountain we're passing onto our children?

    We need to increase revenue, decrease expenditure or more realistically do both to prevent us as a nation from selling out ALL of our collective futures.

    I'll throw out one of my own suggestions here:

    Scrap Childrens Allowance:

    CSO Population Data for 1997:
    0 - 14 years 937.8
    15 - 19 years 278.6

    Assumptions:
    15-19 year olds are evenly demographically distributed.
    The over-estimation of numbers for those under 18 who have left full time education and whose parents are no longer claiming CB for them will cancel out the underestimation of rates received for some other children (where a family has more than 2 children or multiple births they receive a higher rate).

    This would save the state a little over 2 billion per year. (1160680 kids @ €150 p.m.)


  • Posts: 23,497 ✭✭✭✭ [Deleted User]


    Sleepy wrote: »

    Scrap Childrens Allowance:

    Speaking as a 29 year old single and sproggless male (so completely unbaised), that's looney. Quite a large proportion of houselholds rely on the childrens allowance. I would think though that rich folk shouldn't get it.


  • Registered Users, Registered Users 2 Posts: 14,583 ✭✭✭✭cson


    Good thread idea OP.

    In simple terms you need to reduce Governement expenditure and start creating new wealth [through exports for example]. Concentrating specifically on one area will not solve the problem thus in my opinion the solution lies somewhere between these two stools. Reducing Exchequer Expenditure married to a Wealth Generating Private Sector.

    I'll follow up on this later with some proposals. I hope this thread is constructive and doesn't descend into a Public v Private ****fest as is increasingly common in the forum.


  • Registered Users, Registered Users 2, Paid Member Posts: 24,612 ✭✭✭✭Sleepy


    RoverJames wrote: »
    Speaking as a 29 year old single and sproggless male (so completely unbaised), that's looney. Quite a large proportion of houselholds rely on the childrens allowance. I would think though that rich folk shouldn't get it.
    For my own background I'm 29, co-habiting and supporting two children. Any household that's relying on Child Benefit is a home that's on welfare or relying on it to support a lifestyle they can't afford.

    Even if the welfare allowance for dependent children was upped by an exactly corresponding amount to allow for the former case, we should see savings of over a billion by both removing the payment to those who don't need it and the elimination of the need to administrate the separate child benefit scheme.


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  • Registered Users, Registered Users 2 Posts: 4,121 ✭✭✭RichardAnd


    RoverJames wrote: »
    Speaking as a 29 year old single and sproggless male (so completely unbaised), that's looney. Quite a large proportion of houselholds rely on the childrens allowance. I would think though that rich folk shouldn't get it.


    I'm in the same position as you, no wife and no kids. However, I think childrens' allowance should be scrapped as it would make people take a more responcible attitude towards having children. Quite simply, if someone can't afford to have children, then they should not be having children, period. A child is the responsibility of its parents.

    I recall last year, there was a live line talk were a woman was offered a job with IKEA but she refused it because between the dole, childrens' allowance and single mothers' allowance, she was actually better off. Enough said there.


    As for balancing the books, I would take a different approach to simply cutting public service numbers and pay indiscriminately. What I would do, would be to privatise anything that could be privatised. That way, the old staff would have to re-apply thus, the wasters would not get back in.

    For state bodies that have to be run by the state (revenue for example), I would have the organisation examined by external, experienced parties from outside Ireland. Anyone found lacking would be sacked, not let go and not pensioned off; sacked.

    But of course, it won't happen. But a man can dream ;).


  • Closed Accounts Posts: 4,754 ✭✭✭oldyouth


    - Privatise the entire civil service
    - Privatise the administration of the HSE
    - Remove all unnecessary civil service perks
    - Take construction workers off the dole to complete the schools rebuilding programme
    - Reduce maternity benefit to 2 months
    - Means test childrens allowance
    - Reduce dole further to €50 for under 23s living in the family home
    - Abolish the Seanad
    - Close the Tribunals, everyone knows who did what but it will never be proven and no one will pay or serve time
    - Sell any semi state or state bodies not giving sufficient returns to the exchequer
    - No questions asked tax amnesty with expulsion from the state for those subsequently found not to have availed of it
    - Allocate more resources to detection of social welfare fraud

    I'm sure I'll think of more


  • Registered Users, Registered Users 2 Posts: 4,121 ✭✭✭RichardAnd


    oldyouth wrote: »
    - Privatise the entire civil service


    Not really possible. Certain aspects of a state will always be run by the state. For example, the police force of a country can not really be privately run. Similarly, Revenue would be difficult to work if under private control.

    Your other points have some ground though.


  • Registered Users, Registered Users 2 Posts: 14,583 ✭✭✭✭cson


    Quick one to those of you contributing; anyone got any wealth creation ideas? [ie Not cuts]

    I've a couple I'll post up later when I get the time but I think we should focus on bringing money into the country as well as cutting the fat in the State.


  • Registered Users, Registered Users 2 Posts: 14,583 ✭✭✭✭cson


    RichardAnd wrote: »
    Not really possible. Certain aspects of a state will always be run by the state. For example, the police force of a country can not really be privately run. Similarly, Revenue would be difficult to work if under private control.

    Your other points have some ground though.

    On a lighter note; were we to do this then I'd be proposing we get the massive bastards that patrol Heuston Station to do the job!


  • Registered Users, Registered Users 2 Posts: 19,044 ✭✭✭✭murphaph


    oldyouth wrote: »
    - Privatise the entire civil service
    - Privatise the administration of the HSE
    - Remove all unnecessary civil service perks
    - Take construction workers off the dole to complete the schools rebuilding programme
    - Reduce maternity benefit to 2 months
    - Means test childrens allowance
    - Reduce dole further to €50 for under 23s living in the family home
    - Abolish the Seanad
    - Close the Tribunals, everyone knows who did what but it will never be proven and no one will pay or serve time
    - Sell any semi state or state bodies not giving sufficient returns to the exchequer
    - No questions asked tax amnesty with expulsion from the state for those subsequently found not to have availed of it
    - Allocate more resources to detection of social welfare fraud

    I'm sure I'll think of more
    Agree with some but not all, you can't expel a citizen of Ireland for a start ;)

    There's definitely scope to cut welfare and children's allowance. People have to get used to a drop in living standards. we never deserved the living standards we got used to, as can be seen from the collapse in tax revenue with the end of the building boom.

    Are new entrants (hiring freeze aside) to the public service still entering defined benefit pension schemes or what? I believe this was one of the areas addressed by the govt in the budget but not sure of the details.


  • Closed Accounts Posts: 4,754 ✭✭✭oldyouth


    cson wrote: »
    Quick one to those of you contributing; anyone got any wealth creation ideas? [ie Not cuts]

    I've a couple I'll post up later when I get the time but I think we should focus on bringing money into the country as well as cutting the fat in the State.
    If we show that we can take proper control of our affairs, the inward investment will come. If we are seen to be run by the unions, forget it


  • Registered Users, Registered Users 2 Posts: 7,476 ✭✭✭ardmacha


    There are two basic approaches needed to identify a broadly appropriate level of public expenditure. International comparision is required and comaprision of tax systems as well as expenditure systems. But I have also argued here for a clear analysis of where the expenditure has increased in the last 8 years or so. Every public body should draw up and publish a clear statement of costs and outputs in 2002 and 2009. Clear includes breaking pay costs into numbers, grades, and pay scales. We can then look at where the increased expenditure went, if schools have more students or if more operations were performed etc then some of this expenditure might have been justified. But in other cases there will have been increases without any obvious output, these should be targetted.


  • Registered Users, Registered Users 2 Posts: 14,583 ✭✭✭✭cson


    oldyouth wrote: »
    If we show that we can take proper control of our affairs, the inward investment will come. If we are seen to be run by the unions, forget it

    The two go hand in hand imo. An analogy I'd put on it is that you can't clean up the house in your B&B and expect the guests just to land outside the front door, you have to actively seek these guests out at the same time as maintaining the house.


  • Registered Users, Registered Users 2 Posts: 174 ✭✭marlie2005


    Print more money..... Simples.....


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  • Registered Users, Registered Users 2 Posts: 1,603 ✭✭✭Funkfield


    Regarding building the coffers of the state as opposed to just cutting expenditure, I have never heard a decent explanation of why our tax net cant be expanded.

    Lenihan said in his budget address that taxation wasn't the answer. I know its not the answer, but can it not help?

    He claimed that if you think taxation is the answer then you don't understand how he he works the tax system or something along those lines.

    Our higher band of tax kicks in at 36,400 or so?
    The average Irish wage is in that area, and I mean roughly in that area.

    Why is there no scope for a third, fourth or fifth tax band?

    There must be someone on Boards who can give a valid reason as to why taxation cant help.


  • Registered Users, Registered Users 2 Posts: 14,583 ✭✭✭✭cson


    If you're looking at taxation its the lower end of the scale is where you should be fixing your view; extending the tax net to the minimum wage workers [and I say this as one of them] should be the next step taxation wise. High earners are pretty much taxed to saturation at this point; they'll likely pay a multiple of PRSI than they'd ever use for example. The analogy about the 10 lads going out for pints/dinner and how its paid for is a pretty good explanation.


  • Registered Users, Registered Users 2 Posts: 1,603 ✭✭✭Funkfield


    cson wrote: »
    The analogy about the 10 lads going out for pints/dinner and how its paid for is a pretty good explanation.

    Go ahead........


  • Registered Users, Registered Users 2 Posts: 14,583 ✭✭✭✭cson


    Suppose that every day, ten men go out for dinner.

    The bill for all ten comes to $100.

    If they paid their bill the way we pay our taxes, it would go something like this.

    The first four men -- the poorest -- would pay nothing;

    The fifth would pay $1:

    the sixth would pay $3;

    the seventh $7;

    the eighth $12;

    The ninth $18.

    The tenth man -- the richest -- would pay $59.

    That's what they decided to do.

    The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement -- until one day, the owner threw them a curve.

    "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20."

    So now dinner for the ten only cost $80.

    The group still wanted to pay their bill the way we pay our taxes.

    So the first four men were unaffected.

    They would still eat for free.

    But what about the other six -- the paying customers?

    How could they divvy up the $20 windfall so that everyone would get his "fair share?"

    The six men realized that $20 divided by six is $3.33.

    But if they subtracted that from everybody's share, then the fifth man and the sixth man would end up being *paid* to eat their meal.

    So the restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

    And so the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59.

    Each of the six was better off than before.

    And the first four continued to eat for free.

    But once outside the restaurant, the men began to compare their savings.

    "I only got a dollar out of the $20," declared the sixth man.

    He pointed to the tenth. "But he got $7!"

    "Yeah, that's right," exclaimed the fifth man.

    "I only saved a dollar, too.

    It's unfair that he got seven times more than me!"

    "That's true!" shouted the seventh man.

    "Why should he get $7 back when I got only $2?

    The wealthy get all the breaks!"

    "Wait a minute," yelled the first four men in unison.

    "We didn't get anything at all.

    The system exploits the poor!"

    The nine men surrounded the tenth and beat him up.

    The next night he didn't show up for dinner, so the nine sat down and ate without him.

    But when it came time to pay the bill, they discovered something important.

    They were $52 short!

    And that, boys and girls, journalists and college instructors, is how the tax system works.

    The people who pay the highest taxes get the most benefit from a tax reduction.

    Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.


  • Closed Accounts Posts: 1,647 ✭✭✭MaceFace


    Funkfield wrote: »
    Regarding building the coffers of the state as opposed to just cutting expenditure, I have never heard a decent explanation of why our tax net cant be expanded.

    Lenihan said in his budget address that taxation wasn't the answer. I know its not the answer, but can it not help?

    He claimed that if you think taxation is the answer then you don't understand how he he works the tax system or something along those lines.

    Our higher band of tax kicks in at 36,400 or so?
    The average Irish wage is in that area, and I mean roughly in that area.

    Why is there no scope for a third, fourth or fifth tax band?

    There must be someone on Boards who can give a valid reason as to why taxation cant help.

    There is plenty of scope of expanding the tax net, but unfortunately, it is not popular as it means targetting the lower paid who currently pay no tax.

    If we increase the tax rate for higher earners, the companies who rely on highly skilled foreigners will simply have to pay them more to attract them here. That decreases the competitiveness of the country.

    Also, if you impose higher taxes on the super wealthy, you risk losing their entire tax take through their emigration.


  • Registered Users, Registered Users 2, Paid Member Posts: 24,612 ✭✭✭✭Sleepy


    Agreed, expanding the tax net to include minimum wage and part-time workers on a pro-rata basis (i.e. if you only work 20 hours a week, you only get half your credits) is certainly one of the steps I'd take.


  • Registered Users, Registered Users 2 Posts: 3,834 ✭✭✭Welease


    Sleepy wrote: »
    Agreed, expanding the tax net to include minimum wage and part-time workers on a pro-rata basis (i.e. if you only work 20 hours a week, you only get half your credits) is certainly one of the steps I'd take.

    It would probably need to be done with consideration to the level of social welfare available.. we already have a culture of people who find it more cost effective to receive welfare than work.


  • Registered Users, Registered Users 2 Posts: 14,583 ✭✭✭✭cson


    Welease wrote: »
    It would probably need to be done with consideration to the level of social welfare available.. we already have a culture of people who find it more cost effective to receive welfare than work.

    The Portuguese method is highly desirable imo.


  • Registered Users, Registered Users 2 Posts: 1,603 ✭✭✭Funkfield


    Thanks MaceFace and Cson. To me though its still just theorising.

    I would recommend legallising, regulating and taxing the headshops to the hilt.

    Easy revenue.


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  • Registered Users, Registered Users 2, Paid Member Posts: 24,612 ✭✭✭✭Sleepy


    True, but most part-time workers wouldn't be entitled to welfare and when effectively reducing the take-home pay of minimum wage earners, I'd expect welfare to be reduced correspondingly.

    I'd actually advocate dropping welfare by more than the reduction in a minimum wage earner's take-home pay to encourage some of those on welfare who are still too proud to work for minimum wage to do so. I know that many on welfare would be prepared to do so but from participating in the Work & Jobs forum, I can see that there are many (particularly inexperienced graduates) who aren't prepared to get out of bed for less than 30k a year.


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