Bundestag committee claims Ireland has no plan for growth

GCU Flexible Demeanour

This strikes me as largely valid criticism, albeit from a source that has its own agenda to follow.

http://www.irishtimes.com/business/economy/bundestag-committee-claims-ireland-has-no-plan-for-growth-1.1856046

Germany’s Bundestag finance committee has warned that, beyond tax breaks for multinational concerns, Ireland has no discernible business plan to return the economy to long-term growth.

Coupled with this story, it makes me mindful that there's still quite a gap in our economic policy debate.

http://www.irishtimes.com/business/economy/new-finance-chief-told-official-to-disregard-property-crash-fears-1.1854609

Derek Moran, the senior civil servant selected as the preferred candidate to be new secretary general of the Department of Finance, expressed confidence during the boom that the Irish housing market was in for a “soft landing.”


He told a more junior official in his Department to disregard her fears of a property crash in 2006 and to instead toe the consensus line that a crash could never happen.

Is it fair to say our public policy debates never get beyond formulating the right, optimistic, patter? So knowing the right optimistic patter for 2006 is a qualification for doing much the same job in 2014.

comongethappy

What with capital expenditures cut to almost nothing they are kind of right.

Having said that, with a deficit crisis like we had, that took priority.

With a balanced budget & cheaper borrowing costs perhaps the next term of office would be more about growth.

AlekSmart

For those of us in our mid to late 50's the current situation is beginning to take on a Lewis Carroll appearance....

I totally concur that the Bundestag's Committee has a somewhat more nationally focused agenda,and so it should have,BUT their assertions are somewhat more corect than we might wish to admit.

The sensation that this current administration is setting-off on an almost identical Individual Property Ownership crusade is worrying...BIG Time !

In the meantime,it decides to ignore or half-heartedly pursue the elements of an economy which are MANDATORY elsewhere....Public Transport....Broadband availability....Sustainablity of Infrastructure...Long-Term stuff...all pushed aside whilst a few "connections" strut around the Building Industry Parade Ring once more.

I wonder if the Busdestag undertake Outsourcing work.... ?

markpb

GCU Flexible Demeanour wrote: »

Coupled with this story, it makes me mindful that there's still quite a gap in our economic policy debate.

That's quite scary although the cynic inside me makes me wonder if the writer of that article is unbiased. Could Miss Mackle be pushing for a more public role? I wonder why they decided not to invite external applicants and why such a decision could be considered legal for a role in the public sector?

1st dalkey dalkey

Sadly, in Ireland, the actual economic performance of senior officials is less important then their political performance. Mr. Moran is reliable politically, will not cause embarrassment or upset the influential people. He knows who is important and will not step on those toes, no matter the cost in economic terms to the country.
He may be a complete disaster economically, but that matters little in our sad little corner. He is a product of the system and knows well how to survive and prosper within it. He has, after all, secured the top job despite (or maybe because of) his earlier performance.

The Bundestag committee has it's own agenda, of course. It is an agenda we should study and understand. In the evolving EU, it is likely to be the driving agenda. It will be even more influential if the UK chooses to leave.

goose2005

Reminded of this:

RichardAnd

AlekSmart wrote: »

For those of us in our mid to late 50's the current situation is beginning to take on a Lewis Carroll appearance....

I totally concur that the Bundestag's Committee has a somewhat more nationally focused agenda,and so it should have,BUT their assertions are somewhat more corect than we might wish to admit.

The sensation that this current administration is setting-off on an almost identical Individual Property Ownership crusade is worrying...BIG Time !

In the meantime,it decides to ignore or half-heartedly pursue the elements of an economy which are MANDATORY elsewhere....Public Transport....Broadband availability....Sustainablity of Infrastructure...Long-Term stuff...all pushed aside whilst a few "connections" strut around the Building Industry Parade Ring once more.

I wonder if the Busdestag undertake Outsourcing work.... ?

Well said. The only point I'd raise is that I'm in my mid to late 20s, and I can see that the mechanisms of the state are pouring petrol onto the property bonfire. You don't need to be old to see that, and you don't need to be young to miss it.

Farmer Pudsey

I would not be too worried about the property market to an extent, it is a Dublin based issue. It is a supply issue IMO, it need to be addressed by lower build costs. this can be achieved by reducing levy's from Co. Councils and state bodies. We laso need some sort of encourgement tax to force the release of zoned land. this could be in the form of an increasing tax or a property tax. There is no reason if land is zoned that you cannot tax it.


However the real economic issue is the cost of labour or the income trap that happens as one goses from unemployed to a worker. We need to discourage people from sitting on unemployment benifit longterm. Few Irish born people want to work in low paid employment. Go to a resturant, get your hair cut, shops, pubs, garages etc more and more of the lowewr end jobs are non nationals. paddy is too good to take this work.

hmmm

A quickfix of low taxes is a lot easier for politicians than putting in the hard work of building a real economy, and it leaves plenty of time left over to open supermarkets in Germany and new bypasses in their constituency.

Meanwhile we will continue to hammer anyone making more than 32 grand a year with taxes, levies and charges, and ensure that we end up with a workforce of low skilled people who have no interest in working longer or harder.

gaius c

comongethappy wrote: »

What with capital expenditures cut to almost nothing they are kind of right.

Having said that, with a deficit crisis like we had, that took priority.

With a balanced budget & cheaper borrowing costs perhaps the next term of office would be more about growth.

But current spending is as high as ever so even with "recovery", we're still lumped with the same handicap as before.

They do have an agenda but like McWilliam's increasingly erratic output, they do actually have a point.

SeanW

Farmer Pudsey wrote: »

paddy is too good to take this work.

Didn't seem to be a problem prior to 2004 ...

Farmer Pudsey

SeanW wrote: »

Didn't seem to be a problem prior to 2004 ...

Big difference between working in a low tax envoirment with a basic pay of 500/week and extra for saturday, and now where all this work is minimum wage and you are paying tax and USC as well. PRSI is on all income now there was a dispensation for low earners at time.

Any lad that picked up a shhovel from 2002-2007 was earning 650/week in general.

Cookie_Monster

Farmer Pudsey wrote: »

I would not be too worried about the property market to an extent, it is a Dublin based issue. It is a supply issue IMO, it need to be addressed by lower build costs. this can be achieved by reducing levy's from Co. Councils and state bodies. We laso need some sort of encourgement tax to force the release of zoned land. this could be in the form of an increasing tax or a property tax. There is no reason if land is zoned that you cannot tax it.

so we should just keep turning more and more land into housing, grow Dublin more and not worry about the underlying causes; just build?

Farmer Pudsey

Cookie_Monster wrote: »

so we should just keep turning more and more land into housing, grow Dublin more and not worry about the underlying causes; just build?

The main issue with accomdation at present ois lack of supply. It is not all about zoning new land but rather stopping of hoarding of sites and reducing build costs. Yes we can try to encourage people to live in high rises etc but if they are not inclined towards that what do you do

the untitled user

While I've many reservations about the economic policies of Noonan and co., this report is just a piece of populist propaganda by two members of the German opposition, pandering to the German electorate's notion that the rest of Europe is a burden to Germany in an effort to raise their profile.

But what's interesting to note, they criticize our growth policies yet for all the **** we've endured our policies seem to be doing better than the German equivlents, our growth projections for 2014 are at 2.3% given the latest figures, whereas Germany's is pegged at 1.9% I believe?

But whoever wrote that report should be castigated by their colleagues, the only intentions behind it were to damage our public image and all it serves is to undermine the little bit of progress that we are making. We're now in the paradoxical situation where wages are increasing and domestic demand is still contracting. Bull**** populist reports like these just scare people, causing them to save more, which is the last thing we need right now!

hmmm

the untitled user wrote: »

While I've many reservations about the economic policies of Noonan and co., this report is just a piece of populist propaganda by two members of the German opposition, pandering to the German electorate's notion that the rest of Europe is a burden to Germany in an effort to raise their profile.

The Germans warned us during the Celtic tiger that we were going crazy, and they were castigated by posters on here - and they were right. Now they've warned us that building an economy on the back of something that could disappear in the morning is also crazy, and they're right again.

Does anyone seriously think that the big US multinationals are located in the IFSC because of our miserable weather, our inadequate public transport, our complete lack of decently sized apartments, our miniscule supply of graduates who can speak a foreign language and our much higher wages than our competition? Are people that deluded?

Frank Lee Midere

RichardAnd wrote: »

Well said. The only point I'd raise is that I'm in my mid to late 20s, and I can see that the mechanisms of the state are pouring petrol onto the property bonfire. You don't need to be old to see that, and you don't need to be young to miss it.

It's nuts. This time we need to have criminal offences for incompetence. The CGT holiday this year for instance is clear manipulation.

Frank Lee Midere

Cookie_Monster wrote: »

so we should just keep turning more and more land into housing, grow Dublin more and not worry about the underlying causes; just build?

Sure.

Frank Lee Midere

hmmm wrote: »

The Germans warned us during the Celtic tiger that we were going crazy, and they were castigated by posters on here - and they were right. Now they've warned us that building an economy on the back of something that could disappear in the morning is also crazy, and they're right again.

Does anyone seriously think that the big US multinationals are located in the IFSC because of our miserable weather, our inadequate public transport, our complete lack of decently sized apartments, our miniscule supply of graduates who can speak a foreign language and our much higher wages than our competition? Are people that deluded?

Well they are here now. And probably will stay. ( I know that's heretical but if taxes are equalised across the EU then they will have no incentive to move). I think that the IDA strategy has been a brilliant one. We worked with what we had.

Jim2007

Frank Lee Midere wrote: »

I think that the IDA strategy has been a brilliant one. We worked with what we had.

No it is actually a very poor strategy, if you look at middle Europe most people are employed by small or medium sized companies with strong roots in the local community, such as family ownership and so on. When recession hits these type of company are will to accept years of zero profits rather that resort to the layoff and move tactics of the multinationals.

Furthermore, one of the reason that Irish industry has difficult in raising finance is that the banks have very little to give because they are all rushing around pumping it into property, but a house once build will not generate additional growth in the economy no matter who long it sits there!

So the Germans are making a very valid point, our strategy is a poor one - we deprive local industry of capital by encouraging property investment and we substitute local firms with multinational that have no real loyalty to economy, past all the benefits they get. We are just setting ourselves up to repeat the past.

comongethappy

Jim2007 wrote: »

No it is actually a very poor strategy, if you look at middle Europe most people are employed by small or medium sized companies with strong roots in the local community, such as family ownership and so on. When recession hits these type of company are will to accept years of zero profits rather that resort to the layoff and move tactics of the multinationals.

Furthermore, one of the reason that Irish industry has difficult in raising finance is that the banks have very little to give because they are all rushing around pumping it into property, but a house once build will not generate additional growth in the economy no matter who long it sits there!

So the Germans are making a very valid point, our strategy is a poor one - we deprive local industry of capital by encouraging property investment and we substitute local firms with multinational that have no real loyalty to economy, past all the benefits they get. We are just setting ourselves up to repeat the past.

Those working in small & medium businesses outnumber MNC employment by nearly 8 to 1.

Its hardly an 'eggs on 1 basket' situation.

Phill Ewinn

Another political fiasco about property in Dublin. Foreigners telling us 'we're better than you' and fat suits with handy jobs in government doing nothing worth talking about.

Anyone wanna go halves on a dog box in Booterstown?

the untitled user

hmmm wrote: »

The Germans warned us during the Celtic tiger that we were going crazy, and they were castigated by posters on here - and they were right. Now they've warned us that building an economy on the back of something that could disappear in the morning is also crazy, and they're right again.

It didn't stop them lending to us though? It was largely the level of inflation they were baulking at, as they do, most were as oblivious to the underlying risks that were stoking it. Secondly, monetary policy dictated by Germany that contributed greatly to the overhating of the periphery in the first place. And there were plenty of warnings from within Ireland that this was the case by the way, but despite the warning signs nobody in the Bundesbank made any attempt to fix the broken European monetary policy! But people like to overlook that aspect because the bankers contribution was much easier for general populace to comprehend...

hmmm wrote: »

Does anyone seriously think that the big US multinationals are located in the IFSC because of our miserable weather, our inadequate public transport, our complete lack of decently sized apartments, our miniscule supply of graduates who can speak a foreign language and our much higher wages than our competition? Are people that deluded?

Hey, I said I had reservations, I don't disagree with anything you've said there. But, to keep this conversation simply about German attitudes and contributions, simply nothing Germany has done has aided with the recovery of the periphery, and most of their actions have just gone to make it deeper.

What's I always found interesting is that most of the impact to the German domestic economy during this recession was in the SME sector, the sector most dependent on exports to the the peripherary. By letting the peripherary go to the wall, german policy makers knowingly undermined a sizeable proportion of what was a rapidly growing sector within their own economy, but their big business wasn't really affected due to growth in China so they largely didn't give a ****.

I'm being overly cynical here, but fundamentally, German conservatism and self preservation has made this recession much deeper for the peripherary than it should have been. We're now talking about a half hearted banking union so the politicians can save face, but the Europe has always been undermined by the one-size-fits-all monetary policy and general abhorrence towards fiscal transfers. And those policies were largely dictated by Germany...

Cookie_Monster

Frank Lee Midere wrote: »

Sure.

well great then, problem solved for a decade or so. **** the environment too, who needs that when we can just tarmac and concrete over everything in sight

gaius c

Cookie_Monster wrote: »

so we should just keep turning more and more land into housing, grow Dublin more and not worry about the underlying causes; just build?

Have a look at the Giro D'Italia Dublin footage. There's a good bit of it on youtube. What's striking is just how much unused land there is in built up areas of Dublin and there's so many derelicts, you'd have to wonder if we did have a property bubble at all.

Just stop people hoarding land in urban areas and we'll be able to make much better use of it.

comongethappy

gaius c wrote: »

Have a look at the Giro D'Italia Dublin footage. There's a good bit of it on youtube. What's striking is just how much unused land there is in built up areas of Dublin and there's so many derelicts, you'd have to wonder if we did have a property bubble at all.

Just stop people hoarding land in urban areas and we'll be able to make much better use of it.

There are thousands of unused acres of land in Dublin.
CPO-ing would be nice.

K-9

the untitled user wrote: »

It didn't stop them lending to us though? It was largely the level of inflation they were baulking at, as they do, most were as oblivious to the underlying risks that were stoking it. Secondly, monetary policy dictated by Germany that contributed greatly to the overhating of the periphery in the first place. And there were plenty of warnings from within Ireland that this was the case by the way, but despite the warning signs nobody in the Bundesbank made any attempt to fix the broken European monetary policy! But people like to overlook that aspect because the bankers contribution was much easier for general populace to comprehend...

True enough, plenty of warnings about low interest rates, but we'd plenty of warnings about how we were using said low interest rates, which we ignored!

The fact remains we chose to piss the cheap money away on a property bubble all while the Government largely ignored SME's and indigenous exporters, paying it lip service. Banks the same, focusing on quick and easy money from property speculation.

It's hard to know how much higher rates would have curtailed anything, Iceland had high interest rates and still managed to feck things up.

I suppose it seems a cultural thing, we don't like foreigners thinking they know better. The German ambassador, I think it was, got a very hostile reaction to his idea the public servants were on crazy money. The Germans couldn't understand how we were wasting this golden opportunity and just going mad, we resented outsiders knowing better and thought we'd this economics thing cracked!

Cookie_Monster

comongethappy wrote: »

There are thousands of unused acres of land in Dublin.
CPO-ing would be nice.

define unused though. Open grass space and forest / parkland is a preferable use of land IMO

Bob24

Frank Lee Midere wrote: »

Well they are here now. And probably will stay. ( I know that's heretical but if taxes are equalised across the EU then they will have no incentive to move). I think that the IDA strategy has been a brilliant one. We worked with what we had.

I think you are a bit overoptimistic. Tax policies (not the theoritical 15% corp tax rate, the effective 1% rate) are the only reason multinationals are here. If Ireland doesn't offer a clear advantage anymore, a large number of them will pull the plug within a few years (why stay in a country with poorer infrastructure, that is not in the core of Europe, where it is difficult to hire people with the qualifications their require, and where wages are higher than in most European countries).

comongethappy

Cookie_Monster wrote: »

define unused though. Open grass space and forest / parkland is a preferable use of land IMO

Excluding parkland I mean.

Huge areas of Dublin are un-used or severely underused.

For example, Dublin city council were looking at an excellent idea of a levy on the owners of undeveloped land in the city.

Staggeringly they have identified approx 155 acres of vacant sites, just laying bare within the canals zone alone!

Much of the suburbs are village levels of density.

Dublin has space for double its populace easily.
The potential for growth is there.

AlekSmart

comongethappy wrote: »

Excluding parkland I mean.

Huge areas of Dublin are un-used or severely underused.

For example, Dublin city council were looking at an excellent idea of a levy on the owners of undeveloped land in the city.

Staggeringly they have identified approx 155 acres of vacant sites, just laying bare within the canals zone alone!

Much of the suburbs are village levels of density.

Dublin has space for double its populace easily.
The potential for growth is there.

That growth potential,however,is severely reduced by our compulsory requirement for acceptable housing units to be at least 3 bed semi-detached with off-street car parking plus gardens front and rear....It appears impossible,in the Irish context to expect anybody,other than a student,spinster or nutty professor to live an acceptably meaningful life in an apartment.....particularly a RENTED one.

Legislate on Apartment specifications....make damn sure that Irish Developers and Architects are no longer allowed to inflict their own wildly uninhabitable ideas of what Apartment Living is :mad:....there is NO reason whatever (aside from greed and/or negligence) that Irish people cannot lead full,productive and happy lives whilst living in a centrally located Urban Apartment....and a RENTED one at that !!!

sock puppet

hmmm wrote: »

The Germans warned us during the Celtic tiger that we were going crazy, and they were castigated by posters on here - and they were right. Now they've warned us that building an economy on the back of something that could disappear in the morning is also crazy, and they're right again.

Does anyone seriously think that the big US multinationals are located in the IFSC because of our miserable weather, our inadequate public transport, our complete lack of decently sized apartments, our miniscule supply of graduates who can speak a foreign language and our much higher wages than our competition? Are people that deluded?

If two sinn fein TDs released a report critical of the German economy would you say that would constitute a warning from "The Irish"?

I also can't remember that many warnings during the celtic tiger? Surely germany was too busy trying to rebuild its own broken economy to be giving lectures? The germany of 10 years ago was in about as much position to be doling out advice as we are now.

Edit: also lol at the idea that wages in the ifsc are high. I can't wait for all those newly minted HEC MBAs to arrive on our shores after hearing this news

Frank Lee Midere

Jim2007 wrote: »

No it is actually a very poor strategy, if you look at middle Europe most people are employed by small or medium sized companies with strong roots in the local community, such as family ownership and so on. When recession hits these type of company are will to accept years of zero profits rather that resort to the layoff and move tactics of the multinationals.

Furthermore, one of the reason that Irish industry has difficult in raising finance is that the banks have very little to give because they are all rushing around pumping it into property, but a house once build will not generate additional growth in the economy no matter who long it sits there!

So the Germans are making a very valid point, our strategy is a poor one - we deprive local industry of capital by encouraging property investment and we substitute local firms with multinational that have no real loyalty to economy, past all the benefits they get. We are just setting ourselves up to repeat the past.

The countries you are talking about had an industrial revolution. We didn't. The IDA strategy worked and many of the MNCs here have been here since near their inception. Apple was here before the mac was built. The idea that we could have built as many well paying jobs in local industry is nonsense.

The banks lending to property is unrelated to my point or multinationals.

What "substitution" are you talking about? That's economic hogwash. Not only do we get more taxes - from wages etc. - from the multinationals which can be spent on loans or grants to local enterprise the multinationals themselves spend capital and look for partners, the wages are spent - it's the ultimate non-zero sum game. I don't think Irish industry had made enough of that but that's not the governments fault.

Your last error, in a paragraph full of them, is to assume the country would have "loyal" local companies. The company I with for has just been bought out by an American company - that's the aim of a lot of companies in fact - and some of us will move to the US. Other American companies move employment the other way.

Of course we would be poorer without the multinationals.

Frank Lee Midere

Bob24 wrote: »

I think you are a bit overoptimistic. Tax policies (not the theoritical 15% corp tax rate, the effective 1% rate) are the only reason multinationals are here. If Ireland doesn't offer a clear advantage anymore, a large number of them will pull the plug within a few years (why stay in a country with poorer infrastructure, that is not in the core of Europe, where it is difficult to hire people with the qualifications their require, and where wages are higher than in most European countries).

As I said. If the EU gets it's act together the taxes will be the same everywhere.

The other arguments are equally spurious. The corporations come largely from Silicon Valley where they put on their own buses so bad is public transport, the "centre of Europe" doesn't matter to digital goods and not much to physical ones, English speaking does matter, it's fairly easy to hire in Ireland because the pool is 400m people, and wages are lower than the US and margins are high.

Frankly high skilled work is not going to be cheap.

Frank Lee Midere

Cookie_Monster wrote: »

well great then, problem solved for a decade or so. **** the environment too, who needs that when we can just tarmac and concrete over everything in sight

As the rest of the thread shows there is plenty of development land in Dublin. Much within the cabals. The environment would benefit from people walking to work.

Bob24

Frank Lee Midere wrote: »

As I said. If the EU gets it's act together the taxes will be the same everywhere.

To put it simply: if what you said was correct and tax rates equivalent to the rest of Europe wouldn't cause many of these companies to leave, why in gods name is our government keeping many of them on a 1% effective tax rate (proven to be the case for Apple I believe) and not increasing corporate tax to pay our national debt and ease austerity measures that many people are complaining about?

I think we both know the answer to this ...

Frank Lee Midere wrote: »

The other arguments are equally spurious. The corporations come largely from Silicon Valley where they put on their own buses so bad is public transport,

To some extend I agree, but are they going to build their own power plants to balance for the high cost of energy?

Frank Lee Midere wrote: »

the "centre of Europe" doesn't matter to digital goods and not much to physical ones

I was more talking about being next to where economical and political power is in Europe. If Google's European headquarters where in Germany, it would possibly help their relationship with the EU.

Frank Lee Midere wrote: »

, English speaking does matter, it's fairly easy to hire in Ireland because the pool is 400m people, and wages are lower than the US and margins are high.

You might have a different experience, but having worked with one large multination for a while and knowing people in other ones, they are struggling to hire people with the qualifications they require and do hire a lot of non locals. On one hand it can be seen as a great sign that the economy is going well but on the other hand taking in account our high unemployment rate it might also be a hint that Ireland as attracted so many of these companies that the local workforce will never be able to full fill their needs - which is great for highly qualified professionals in Ireland but not so much for their employers.