Public spending, property tax and the debt crisis

golfwallah

People need to be made more aware of the links between public spending, taxation and the debt crisis. Losing sight of these links and the Irish / Eurozone debt crisis has an interesting historic parallel - the international debt crisis of 1841. And it wasn’t European states that were at the heart of the problem but 8 states and 1 territory in the USA.

The reasons - they had borrowed heavily on the back of a land boom to fund infrastructure (canals / railways) and banking projects, which were “sure things” to produce tons of money.

However, the predicted returns from these projects didn’t materialise. The legislators, given the choice between default and unpopular taxes (there was a moratorium on property tax), chose the “easier option” of default. After all, the bondholders were far away and foreigners.

The states looked to federal government for bailout. Fearing the states would continue to take undue risks that the federal government would be expected to bear (moral hazard), bailout was refused and they were left to sort out the mess they themselves had created. 7 negotiated arrangements with their bondholders and eventually repaid most of their debts. Property tax was a large part of the solution. The remaining 2 defaulted and never repaid on the grounds that the debts were not legitimate -they suffered tarnished financial reputations and economic consequences (such as higher borrowing costs).

The defaulting states were eventually able to borrow again from the markets – but only after they had changed their laws and constitutions to safeguard creditors.

The U.S. state defaults of the 1840s show that there is a link between public spending (on a lot more services today), taxation and debt.

Availability of EU grants, cheap credit and populist politics have conspired to create a real disconnect between these links in peoples’ minds, resulting in an unbalanced sense of entitlement to “free” state services in Ireland. This sense of entitlement is often “justified” by “revelations” about poor financial control and spending that is “buried” in the accounts.

It’s up to our Government to stop the rot, which appears to be happening in their determination on the property tax issue.

But democracy demands good accountability. So, longer term, Government needs to improve controls over spending and provide more transparent, disaggregated accounts for the services they are providing. This will ensure that voters are more aware of how taxes are spent and have clear choices on the services they want and are prepared to pay for.

ardmacha

But democracy demands good accountability. So, longer term, Government needs to improve controls over spending and provide more transparent, disaggregated accounts for the services they are providing. This will ensure that voters are more aware of how taxes are spent and have clear choices on the services they want and are prepared to pay for.

+1

Proper information provision would also allow identification of cost creep where costs rise without more service being provided and to distinguish this from areas where costs rise owing to more service being provided.

Jaysoose

One has to ask the question as to why there hasnt been an exercise to provide transparency for all goverment spending and what is actually being received for the spend after all we have been going through this crisis for 4 years at this stage.

For example its a disgrace that people are expected to stump up the household charge and be told its for "local services"..if a cost analysis was done showing a complete breakdown of whats being spent, whats being received and from whom was available it would be easier to argue in favour of it but to simply say its for "local services" isnt good enough anymore.

kippy

Jaysoose wrote: »

One has to ask the question as to why there hasnt been an exercise to provide transparency for all goverment spending and what is actually being received for the spend after all we have been going through this crisis for 4 years at this stage.

For example its a disgrace that people are expected to stump up the household charge and be told its for "local services"..if a cost analysis was done showing a complete breakdown of whats being spent, whats being received and from whom was available it would be easier to argue in favour of it but to simply say its for "local services" isnt good enough anymore.

I'd agree wholeheartedly with this.
There are massive areas of overspending and spending on unneeded services and provisions at all government levels. We generally only ever get broad figures and very little specifics.

Godge

Jaysoose wrote: »

One has to ask the question as to why there hasnt been an exercise to provide transparency for all goverment spending and what is actually being received for the spend after all we have been going through this crisis for 4 years at this stage.

For example its a disgrace that people are expected to stump up the household charge and be told its for "local services"..if a cost analysis was done showing a complete breakdown of whats being spent, whats being received and from whom was available it would be easier to argue in favour of it but to simply say its for "local services" isnt good enough anymore.

http://www.fingalcoco.ie/YourLocalCouncil/AboutFingal/OtherServices/Finance/AnnualBudget/Annual%20Budget%202012.pdf


See the link - A 76-page document setting out the budget for Fingal County Council for 2012 - the budget is 11% down on 2011.

What more information do you want on where they spend your money?

Manach

Godge wrote: »

What more information do you want on where they spend your money?

Direct oversight and a say on how that they spend it?

Jaysoose

Godge wrote: »

http://www.fingalcoco.ie/YourLocalCouncil/AboutFingal/OtherServices/Finance/AnnualBudget/Annual%20Budget%202012.pdf


See the link - A 76-page document setting out the budget for Fingal County Council for 2012 - the budget is 11% down on 2011.

What more information do you want on where they spend your money?

I would like to know how they have arrived at these estimated figures, i would like to know the criteria for selection of service providers and if these have been selected due to offering the most cost effective service in this area. I would like to know where exactly the household charge will be utilised within the council. I want to know because im expected to hand over the money if its to much of an effort to provide this information at a granular level then im afraid im not handing it over.

There is a worrying figure in all of this were commercial rates are expected to bring on 3.5 million more than on 2011, how is this realistic when businesses are going to the wall day after day!
Commercial Rates €120.01m €116.50m

kippy

Godge wrote: »

http://www.fingalcoco.ie/YourLocalCouncil/AboutFingal/OtherServices/Finance/AnnualBudget/Annual%20Budget%202012.pdf


See the link - A 76-page document setting out the budget for Fingal County Council for 2012 - the budget is 11% down on 2011.

What more information do you want on where they spend your money?

I, and many others like me, pay management fees - around €600 in my case, which isnt bad. For this I get, gardening, public liability insurance, ESB for the shared areas, parking maintenance, painting once every 5 years, general maintenance outside the house and someone to co-ordinate it all.
I pay seperate for bins etc.
The council have nothing to do with the estate.

The developer who developed the estate had to, no doubt pay a development fee, when we bought the house we paid tax/stamp duty etc. We have a manageable mortgage and plan on living in the house for a long time.
What exactly, that I don't currently get for my management fee, am I and others like me, going to get for our €100 and more worryingly, what happens in a few years time when this fee is increased drastically? How is this fee worked out? Square footage, area? What exactly and what extra will I get then? Will anything happen to my management charge?
I can see it from the PoV of those living in more rural areas and the PoV of many others.

Why do we need to have macro access to what is spent and where?
Just take a few examples of recent times, the infamous "inkgate" and the 9 million or so spent on Eyre square (amoung many other massive wastage of government money)
Having access isnt the key thing for me either, seeing some proper accountability and punishment is even more important? What happens when the next guy goes out and spends money that is not his to spend or puts towards expenses that are not his to claim, or gives a contract that is grossly over priced.
Do I want the household charge going to areas where it could be literally blown away?

Yes, I see a need for a sustainable tax stream from housing, how it is happening and the lack of clarity about what is going to happen in the future however are major issues that need to be addressed.

golfwallah

Godge wrote: »

http://www.fingalcoco.ie/YourLocalCouncil/AboutFingal/OtherServices/Finance/AnnualBudget/Annual%20Budget%202012.pdf


See the link - A 76-page document setting out the budget for Fingal County Council for 2012 - the budget is 11% down on 2011.

What more information do you want on where they spend your money?

With the onset of new local charges and taxes, I have taken an interest in the published accounts and budgets for my own local authority, Fingal Co. Co.

I wanted to see meaningful detail on the various activities our taxes were being spent on – i.e. precisely “what” the council was spending our taxes on – not just high level service areas. For example within the general area of “Recreation and Amenity” services, the lowest level of detail currently available is for “Op, Mtce and Imp of Parks, Pitches & Open Spaces”, “Service Support Costs”, etc.).

My main area of interest is the analysis under the heading “Recreation and Amenity”, so that one can compare spending and income on each major sporting activity area, such as GAA, Rugby, Soccer, Hockey, Swimming, Golf and Other Sports & Leisure Headings.

This will enable me and other taxpayers to assess if this is how we want the money spent – Public accountability implies the rendering of account for matters of public interest, i.e. an accounting to enable meaningful judgement to be made by the citizens.

Fingal Co. Co. has a revenue spend of €221.63m (Budget 2012), a 3 year capital spend of €446.4m (2008 – 10) and borrowings of €443.8m (as at 31/12/2012). These are not insignificant sums of money.

Under “Recreation and Amenity”, the spend on “Op, Mtce & Imp of Outdoor Leisure Areas” is €14.2m whereas income in buried under other vague headings such as “Recreation/Amenity/Culture” (€1.4m) or “Other” (€0.6m).

I have no problem with spending as long as I have some say in how it is spent (through my vote or ability to communicate meaningfully to my councillors about it). This requires the availability of more disaggregated and clearly understandable accounting information than is currently made available to the public.

Other taxpayers may be more interested a greater level of detail in different spending areas, such as Housing and Building, Road Transport & Safety, Water Services, etc. - the principle of transparency equally applies to ensure money is spent on what the taxpayer wants, rather than what is in the comfort zones of the county manager, officials or elected representatives.

Godge

Manach wrote: »

Direct oversight and a say on how that they spend it?

And what do you mean by this? Local plebiscites on whether it is Blanchardstown Park or Swords Park that get maintained?

You elected your councillors not so long ago to oversee how the money is spent, go talk to them.

Godge

golfwallah wrote: »

With the onset of new local charges and taxes, I have taken an interest in the published accounts and budgets for my own local authority, Fingal Co. Co.

I wanted to see meaningful detail on the various activities our taxes were being spent on – i.e. precisely “what” the council was spending our taxes on – not just high level service areas. For example within the general area of “Recreation and Amenity” services, the lowest level of detail currently available is for “Op, Mtce and Imp of Parks, Pitches & Open Spaces”, “Service Support Costs”, etc.).

My main area of interest is the analysis under the heading “Recreation and Amenity”, so that one can compare spending and income on each major sporting activity area, such as GAA, Rugby, Soccer, Hockey, Swimming, Golf and Other Sports & Leisure Headings.

This will enable me and other taxpayers to assess if this is how we want the money spent – Public accountability implies the rendering of account for matters of public interest, i.e. an accounting to enable meaningful judgement to be made by the citizens.

Fingal Co. Co. has a revenue spend of €221.63m (Budget 2012), a 3 year capital spend of €446.4m (2008 – 10) and borrowings of €443.8m (as at 31/12/2012). These are not insignificant sums of money.

Under “Recreation and Amenity”, the spend on “Op, Mtce & Imp of Outdoor Leisure Areas” is €14.2m whereas income in buried under other vague headings such as “Recreation/Amenity/Culture” (€1.4m) or “Other” (€0.6m).

I have no problem with spending as long as I have some say in how it is spent (through my vote or ability to communicate meaningfully to my councillors about it). This requires the availability of more disaggregated and clearly understandable accounting information than is currently made available to the public.

Other taxpayers may be more interested a greater level of detail in different spending areas, such as Housing and Building, Road Transport & Safety, Water Services, etc. - the principle of transparency equally applies to ensure money is spent on what the taxpayer wants, rather than what is in the comfort zones of the county manager, officials or elected representatives.

If you go through the Council debates and questions, also available online, you will get answers to most of your questions.

I am not a publicity officer for fingal county council, the point I am making is that the information is there, go and look for it.

And again, the elected representatives represent you, go and talk to them if you don't like the way your money is being spent. If they don't listen, at least you know who not to vote for next time.

Godge

Jaysoose wrote: »

I would like to know how they have arrived at these estimated figures, i would like to know the criteria for selection of service providers and if these have been selected due to offering the most cost effective service in this area. I would like to know where exactly the household charge will be utilised within the council. I want to know because im expected to hand over the money if its to much of an effort to provide this information at a granular level then im afraid im not handing it over.

Go through the budget debates and the council minutes, a mine of information there, I even think they have the meetings on video now. You want more information but which bits of the 76 pages do not give you enough. All of this wanting more information is just an excuse people are making up, the information is there, look for it.

Jaysoose wrote: »

There is a worrying figure in all of this were commercial rates are expected to bring on 3.5 million more than on 2011, how is this realistic when businesses are going to the wall day after day!
Commercial Rates €120.01m €116.50m

We could always tell our politicians to triple the household charge and reduce business rates:D

Jaysoose

Godge wrote: »

We could always tell our politicians to triple the household charge and reduce business rates:D

I personally think its a very worrying figure that the council sees businesses as something that can keep absorbing increasing costs for the same services.

Its simply not credible that enough businesses can keep paying increased rates to sustain the current projected income.

They are simply going to drive businesses under with this insane policy and in turn reduce the income they themselves receive, its basic maths.

kippy

This is the kind of crap that annoys me no end:

Transport Minister Leo Varadkar has said that those who break the law one day should not expect protection from it the next.

Minister Varadkar was commenting after calls from some unions for workers not to pay the €100 household charge.

There are just 11 days left to pay the charge, which comes with penalties if not paid before the registration deadline of March 31.

Minister Varadkar insisted there are no plans to extend the deadline despite calls from Fianna Fáil to do so, and he said householders have a responsibility to respect the law.

"People have the right to object to something if they don't agree with it," he said.

"But people also do have a responsibility to obey the law - and you can't break the law one day and then expect the law to be able to protect you the next day.

"You can't refuse to pay your taxes one day, and then expect to be able to draw on other people's taxes when you need to avail of services," he added.

Read more: http://www.breakingnews.ie/ireland/varadkar-people-have-responsibility-to-obey-the-law-544219.html#ixzz1pfpMkuHX

The majority of citizens in this entire country have taken tax rises, paycuts, job losses, taken increases in fuel, insurances, charges, medical charges etc and generally have gotten on with it. Indeed they will get on with it over a lot more than this household charge but the government need to take another look at why people have such issues with it and review accordingly.

golfwallah

Godge wrote: »

If you go through the Council debates and questions, also available online, you will get answers to most of your questions.

Ever tried to go through this material? I have ...... you quickly get bogged down as there is so much detail, it is almost impossible to sort out the wood from the trees.

Don't honestly know how councillors sift through all this (talk about ), as it looks to me that councillors are expected to know almost every small detail about everything on the agenda. The whole system of management and accountability would benefit from looking at how modern companies are managed in the private sector, where there are clearly defined lines of delegated authority to get things done and the board are responsible for overall policy and strategy. As things stand it appears that councillors are not only dealing with high level strategy but are also accounting for every small detail.

If every councillor is responsible for every issue, then nobody is in charge - thus pushing too much onto the executive.

Godge wrote: »

I am not a publicity officer for fingal county council, the point I am making is that the information is there, go and look for it.

What I want is ready availability of information on the key areas of accountability - with some input from the community on what those areas are.

Expecting democracy to work by asking people to go through reams and reams of information is not a workable answer.

Godge wrote: »

And again, the elected representatives represent you, go and talk to them if you don't like the way your money is being spent. If they don't listen, at least you know who not to vote for next time.

I have been doing just that but voting once every 4 years or so is not my idea of providing realistic feedback on performance - particularly when people don't have any idea of how well or otherwise councillors and officials are performing. That's why better transparency in the accounts is required plus more open accountability on performance every year end.

Godge

golfwallah wrote: »

Ever tried to go through this material? I have ...... you quickly get bogged down as there is so much detail, it is almost impossible to sort out the wood from the trees.

Don't honestly know how councillors sift through all this (talk about ), as it looks to me that councillors are expected to know almost every small detail about everything on the agenda. The whole system of management and accountability would benefit from looking at how modern companies are managed in the private sector, where there are clearly defined lines of delegated authority to get things done and the board are responsible for overall policy and strategy. As things stand it appears that councillors are not only dealing with high level strategy but are also accounting for every small detail.

If every councillor is responsible for every issue, then nobody is in charge - thus pushing too much onto the executive.



What I want is ready availability of information on the key areas of accountability - with some input from the community on what those areas are.

Expecting democracy to work by asking people to go through reams and reams of information is not a workable answer.



I have been doing just that but voting once every 4 years or so is not my idea of providing realistic feedback on performance - particularly when people don't have any idea of how well or otherwise councillors and officials are performing. That's why better transparency in the accounts is required plus more open accountability on performance every year end.

Look, on the one hand, you are saying that there is too much information, on the other, you are saying that you are not getting the information that you want.

Now there is a balance, the information you want may not be the same as the information I want and the guy down the road might want different information. So the councils are caught between competing demands.

The private sector company management comparison is not the same. Accountability, transparency and information are needed much more in the public sector. That does paralyse decision-making to an extent, how many companies engage in public inquiries before making a capital investment?

Jaysoose

Godge wrote: »

Look, on the one hand, you are saying that there is too much information, on the other, you are saying that you are not getting the information that you want.

Now there is a balance, the information you want may not be the same as the information I want and the guy down the road might want different information. So the councils are caught between competing demands.

Thats not what he is saying at all as you rightly know..

Essentially we have two options 1. A very high level report based on estimations from previous departmental budgets or 2.We have badly organised more detailed data which makes it nigh on impossible to drill down to the information wanted.

There needs to be a major reform in the way information is collected and produced so that the taxpayers can have a clear view on whats really being spent and how.

golfwallah

Godge wrote: »

Look, on the one hand, you are saying that there is too much information, on the other, you are saying that you are not getting the information that you want.

No, that is not what I am saying.

The point I am making is that it should be possible to provide slightly more disaggregated accounting information on areas of interest to voters, without swamping them in detail.

This isn't rocket science, just a way of providing more meaningful information to people. For example in the area of Recreation & Amenity, what's wrong with looking for a bit more analysis on spending on the different sports areas? This would certainly highlight obvious imbalances where a disproportionate amount is being spent on minority sports such as golf courses as opposed to GAA, soccer or swimming.

Godge wrote: »

Now there is a balance, the information you want may not be the same as the information I want and the guy down the road might want different information. So the councils are caught between competing demands.

It's not rocket science here either, to find out what areas people want reported on. There are such things as focus groups, surveys and other market research techniques that can be used.

With such a hue and cry over household charges and more to come about water charges, etc., I would have expected that local authorities would keep pace with events to satisfy increased demand for more meaningful information on what public money is being spent on.

Godge wrote: »

The private sector company management comparison is not the same. Accountability, transparency and information are needed much more in the public sector. That does paralyse decision-making to an extent, how many companies engage in public inquiries before making a capital investment?

So you agree that accountability, transparency and information are needed .... point made. I also agree with you that there is a need to avoid paralysing decision making. One way to speed thing up is to have clear lines of delegated authority such that only the major decisions come to the top layer to be made, rather than almost every decision as happens now.

Godge

golfwallah wrote: »

No, that is not what I am saying.

The point I am making is that it should be possible to provide slightly more disaggregated accounting information on areas of interest to voters, without swamping them in detail.

This isn't rocket science, just a way of providing more meaningful information to people. For example in the area of Recreation & Amenity, what's wrong with looking for a bit more analysis on spending on the different sports areas? This would certainly highlight obvious imbalances where a disproportionate amount is being spent on minority sports such as golf courses as opposed to GAA, soccer or swimming.

Isn't there an argument that government should encourage and support minority sports because they wouldn't happen without that support whereas the big sports can well afford their stadia? Then again, when you look at the amount of money gifted by Bertie to the GAA, IRFU and FAI for Aviva and Croke Park for them to make profits from, the amounts spent on providing amenities at local level such as golf courses looks quite miniscule. I for one, would support the idea that Fingal should contribute towards establishing Malahide as the international arena for the cricket team.

I also wonder how much detail you require. Here are a few selected quotes from the budget:

"A sum of €50,000 is being provided in respect of works required for Morton Stadium. This sum is to be transferred to Capital in the 2012 Budget."

"There are a number of sporting programmes planned for 2012 aimed at increasing participation in sports with specific target groups such as children, youth at risk, women in sport, older adults, people with disabilities, club development and coach education. A sum of €81,500 is provided for these initiatives for the year. A further €27,300 is available
through Healthy Cities for sports initiatives with a specific health content. In addition to the sporting programmes, a sum of €260,500 is being made
available for partnerships with national and local bodies for developing sport within the county. A subvention of €39,000 is also being provided for sports development directly through the Sports Section."


Do you want further disaggregation beyond this?

golfwallah

Godge wrote: »

Isn't there an argument that government should encourage and support minority sports because they wouldn't happen without that support whereas the big sports can well afford their stadia? Then again, when you look at the amount of money gifted by Bertie to the GAA, IRFU and FAI for Aviva and Croke Park for them to make profits from, the amounts spent on providing amenities at local level such as golf courses looks quite miniscule. I for one, would support the idea that Fingal should contribute towards establishing Malahide as the international arena for the cricket team.

Don’t agree for the following reasons:

Argument that government should encourage and support minority sports:
The country is awash with golf courses so there is no need for the level of subsidy the council courses are getting. I estimate the level of subsidy to Corballis and Elm Green, alone, is now running at about €600,000 per annum – that’s €6m over 10 years. This is at a time when member clubs, run by volunteers, are struggling for members / green fees and competing against subsidized council courses, managed by Carr Golf Services.
Such subsidies are a crutch for bad management and remove the incentive for efficiency / cost reduction – if there is a real demand for council courses, they should have to stand the test of the market, like the member owned clubs.
I’ve no problem with the council running golf courses, just as long as they can run them on a break-even basis or with a small subsidy.

Fingal should contribute towards establishing Malahide as the international arena for the cricket team:
Personally, I’ve no problem either – so long as the costs and revenues for Cricket and the other sports are clearly shown in the accounts for the voters to see.

According the EU/IMF Memorandum of Understanding (MOU):
“Government will ensure that effective measures are in place to cap the contribution of the local government sector to general government borrowing at an acceptable level. The mechanisms in place to underpin this position will be kept under close review, in consultation with the Commission services. The review will also consider how to provide data on the financial position including assets and liabilities of the sector on a timelier basis”.

Godge wrote: »

I also wonder how much detail you require. Here are a few selected quotes from the budget .......

Here is the only published information available from the budget as regards golf (losing an estimated €600,000 per annum before opening the new course in Lucan):

“The Parks Division continues to maintain public Golf courses at Elm Green, Castleknock, Dublin 15, Corballis, Donabate, and Malahide Demesne. In 2011 development of a par 3 course commenced in St. Catherine’s Park, Lucan and it is intended to open this course to the public in 2012. A provision of €100,000 has also been made for transfer to capital in Budget 2012 to fund various outstanding capital balances”.

Doesn’t really paint a realistic picture, now, does it?