Government to reverse some Public Secor Pay cuts

fliball123

Godge wrote: »

We went into the bailout because of the combination of a number of factors:

(1) The domestic banking crisis;
(2) The world economic collapse;
(3) The reliance on property transaction taxes for our tax base;
(4) The sharp rise in unemployment putting pressure on the social welfare bill.


The level of public sector pay was not a factor of any significance. However, the cutting of public sector pay was the main expenditure saving.

Godge very blinkered we went into crisis primarily because we ramped up what we pay our public servants and the related increases also got passed onto pensions and what we upped our Welfare by. Bertie did this on the basis of a tax stamp duty that was not sustainable. The banking clusterphuck just chucked fuel onto it. We were put into check mate by the banking crisis as they would not give us the borrowing needed to pay the day to day if we did not prop up our banks.

Can you argue that if the banking crisis had not happened that everything would of been A.O.K..?? We would of went over that cliff sooner or later with the way Bertie set the house of cards that was the expenditure/Taxation regime which was built to buy votes off 2 sectors in particular..

As I say I dont blame the PS in general for this.

Godge

fliball123 wrote: »

Godge very blinkered we went into crisis primarily because we ramped up what we pay our public servants and the related increases also got passed onto pensions and what we upped our Welfare by. Bertie did this on the basis of a tax stamp duty that was not sustainable. The banking clusterphuck just chucked fuel onto it. We were put into check mate by the banking crisis as they would not give us the borrowing needed to pay the day to day if we did not prop up our banks.

Can you argue that if the banking crisis had not happened that everything would of been A.O.K..?? We would of went over that cliff sooner or later with the way Bertie set the house of cards that was the expenditure/Taxation regime which was built to buy votes off 2 sectors in particular..

I disagree.

We are now actually putting in place a sustainable taxation system - USC, property tax, water charges - that will bring us away from the over-reliance on property transaction related taxes.

fliball123

Godge wrote: »

I disagree.

We are now actually putting in place a sustainable taxation system - USC, property tax, water charges - that will bring us away from the over-reliance on property transaction related taxes.

Yeah 6 years too late and only done because the troika made us do it. So we would of went off that cliff regardless of banking crisis or no banking crisis

kippy

fliball123 wrote: »

The only PS I am bashing with this are the unions , Bertie and Biffo who made it so.

Did I say PS was entirely at fault? No

The part in bold is true...If we did not have to borrow the billions (which had nothing to do with the banks at the time previous to 2008) We could of turned to the IMF and said sorry that is not our debt thats the banks debts..But they stuck it to us as they had us over a barrel because we needed to borrow from them otherwise we would of had savage cuts to both ps pay and welfare and taxes ramped up even more to shore the decifit in one go.

But my premise remains the same the banks are not to blame for the crisis, they just tipped the whole thing over a cliff but we were heading there anyway.

The part in bold is not true.
You cannot view that in isolation.
The PS pay bill was completely sustainable at the time.

Rightwing

Godge wrote: »

We went into the bailout because of the combination of a number of factors:

(1) The domestic banking crisis;
(2) The world economic collapse;
(3) The reliance on property transaction taxes for our tax base;
(4) The sharp rise in unemployment putting pressure on the social welfare bill.


The level of public sector pay was not a factor of any significance. However, the cutting of public sector pay was the main expenditure saving.

That's priceless.
It's akin to saying I didn't go bust because I went to the bookie. However, when I gave up going to the bookie my finances improved significantly.

kippy

fliball123 wrote: »

The only PS I am bashing with this are the unions , Bertie and Biffo who made it so.

Did I say PS was entirely at fault? No

The part in bold is true...If we did not have to borrow the billions (which had nothing to do with the banks at the time previous to 2008) We could of turned to the IMF and said sorry that is not our debt thats the banks debts..But they stuck it to us as they had us over a barrel because we needed to borrow from them otherwise we would of had savage cuts to both ps pay and welfare and taxes ramped up even more to shore the decifit in one go.

But my premise remains the same the banks are not to blame for the crisis, they just tipped the whole thing over a cliff but we were heading there anyway.

You need to take a look at the big picture.
If all factors remained the same at the time and there wasn't a 64 billion call on funds from the banks the state would have been sound.
Why?
Because the state was taking in as much as it was spending.

What happened?
1. The housing market collapsed.
This lead to: about 300K people ending up on the dole on top of what was there. This lead to an expense on the state straight away. The taxes that those 300K people were paying (all taxes) was lost straight away on the "income" account for the state, leading to a major overall "loss" to the state. On top of this one off trasaction taxes related to housing were completely lost from the states books. Further more there were significant activity drop offs in related professions and their activity etc etc. From architects, solicitors, suppliers, and even deli counters!
All of that lead to a major hole in the states finances (before you ever go near the banking crisis)
That hole (the difference between income and expenditure) was a huge issue and still is.

(I wont expand on the what happened beyond that as that is the easiest piece to explain)

kippy

Rightwing wrote: »

That's priceless.
It's akin to saying I didn't go bust because I went to the bookie. However, when I gave up going to the bookie my finances improved significantly.

Our MAIN issue was as I described above.

Granted public sector pay, at the time, was very high, even when the states income was matching it's expenditure.

Rightwing

kippy wrote: »

Our MAIN issue was as I described above.

Granted public sector pay, at the time, was very high, even when the states income was matching it's expenditure.

It's debatable as to what the main issue was, suffice to say the PS pay bill was and remains too high. We are still borrowing upwards of €800m a month.

fliball123

kippy wrote: »

The part in bold is not true.
You cannot view that in isolation.
The PS pay bill was completely sustainable at the time.

Of course you can take it in Isolation.

The PS pay bill was sustainable really..Then why was it cut? It more than doubled in the decade before this and thats not taking into account the 2 bouts of benchmarking either.. and these increases also had a knock on for pensions that are paid to existing and future PS workers with the way they are structured as in we are on the lamb for billions more due to these increases.

The fact that we were borrowing billions before we even hit the crisis and that was while we had near full employment and had a tax windfall coming in with stamp duty would suggest that the spend side completely spiraled out of control. now the 2 biggest areas of spend welfare and ps pay and pensions both spiraled and that is the reason why we are where we are..Yet you and others in the ps will p1ss and moan about the big bad banks and deflect away from the real issue.

By the way I am not blaming anyone on welfare or in the ps for this. I have said who the culprits are but anyone on here in the ps trying to spin it that it was the banks who were to blame for the country needing a bailout I will put them back in their box where they belong.

fliball123

kippy wrote: »

You need to take a look at the big picture.
If all factors remained the same at the time and there wasn't a 64 billion call on funds from the banks the state would have been sound.
Why?
Because the state was taking in as much as it was spending.

What happened?
1. The housing market collapsed.
This lead to: about 300K people ending up on the dole on top of what was there. This lead to an expense on the state straight away. The taxes that those 300K people were paying (all taxes) was lost straight away on the "income" account for the state, leading to a major overall "loss" to the state. On top of this one off trasaction taxes related to housing were completely lost from the states books. Further more there were significant activity drop offs in related professions and their activity etc etc. From architects, solicitors, suppliers, and even deli counters!
All of that lead to a major hole in the states finances (before you ever go near the banking crisis)
That hole (the difference between income and expenditure) was a huge issue and still is.

(I wont expand on the what happened beyond that as that is the easiest piece to explain)

Sorry it would not of been sound..we were borrowing billions without the banking crisis , we only started binging in different taxation measures such as property tax, water charges due to the troika imposing it on us..No party in this country would of brought these measures in if it was not imposed on them.

The main reason why we are where we are was because the taxation side was built up on stamp duty , We were paying over the odd for ps pay , pensions and welfare and fact remains before we went over the cliff and before the banking crisis we were borrowing billions a year and that was with full employment and a tax windfall of stamp duty. How do you square that little circle in your bigger picture?

kippy

Rightwing wrote: »

It's debatable as to what the main issue was, suffice to say the PS pay bill was and remains too high. We are still borrowing upwards of €800m a month.

The main issue was straightforward (initially), in that we had a very fast reduction in what the state was taking in in income, this meant it was paying out more than it was taking in, which is always an issue.
There are two ways to resolve it. Change policies to take in more and pay out less.
Which is essentially what has been happening.

The cost to hire a PS worker WAS high, I don't disagree but numerous items have been put in place to reduce that cost as well as expanding the tax base.

That 800 million a month isn't necessarily all going towards the pay bill.


The major increase in unemployment alone is costing the state a hell of a lot of money and has done from day 1 of the "crisis"

I'll use conservative figures but assume that for every person unemployed the state spends 10K per annum in welfare payments.
That person who is now unemployed would have paid say 5K per annum "taxes".
Total loss to the state per annume of a single person who is unemployed:
15K

Total cost to state of having 200K people out of work? About 3 billion (on a conservative set of figures.)


Main aim of state NOW, get people back to work.

kippy

fliball123 wrote: »

Sorry it would not of been sound..we were borrowing billions without the banking crisis , we only started binging in different taxation measures such as property tax, water charges due to the troika imposing it on us..No party in this country would of brought these measures in if it was not imposed on them.

The main reason why we are where we are was because the taxation side was built up on stamp duty , We were paying over the odd for ps pay , pensions and welfare and fact remains before we went over the cliff and before the banking crisis we were borrowing billions a year and that was with full employment and a tax windfall of stamp duty. How do you square that little circle in your bigger picture?

In 2007, we were not borrowing billions.
The crisis essentially "started" in 07/08

Rightwing

kippy wrote: »

The main issue was straightforward (initially), in that we had a very fast reduction in what the state was taking in in income, this meant it was paying out more than it was taking in, which is always an issue.
There are two ways to resolve it. Change policies to take in more and pay out less.
Which is essentially what has been happening.

The cost to hire a PS worker WAS high, I don't disagree but numerous items have been put in place to reduce that cost as well as expanding the tax base.

That 800 million a month isn't necessarily all going towards the pay bill.


The major increase in unemployment alone is costing the state a hell of a lot of money and has done from day 1 of the "crisis"

I'll use conservative figures but assume that for every person unemployed the state spends 10K per annum in welfare payments.
That person who is now unemployed would have paid say 5K per annum "taxes".
Total loss to the state per annume of a single person who is unemployed:
15K

Total cost to state of having 200K people out of work? About 3 billion (on a conservative set of figures.)


Main aim of state NOW, get people back to work.

Benchmarking helped fuel the economy just at a time when it needed to be cooled down. Multplier effect. Most of economic matters are interlinked. Now, there are too many quangos etc. We don't need half that stuff.

kippy

Rightwing wrote: »

Benchmarking helped fuel the economy just at a time when it needed to be cooled down. Multplier effect. Most of economic matters are interlinked. Now, there are too many quangos etc. We don't need half that stuff.

Of course, most of economic matters are interlinked.
Benchmarking would probably never had happened had the states finances not been in a position to pay for it.
Essentially wages rose in ALL sectors during the same period.

I don't disagree with not needing stuff.

Don't you think, without any other factors. The increase in unemployment from 100k to 450K in the space of a few years placed a major strain on the countries finances?

Rightwing

kippy wrote: »

Of course, most of economic matters are interlinked.
Benchmarking would probably never had happened had the states finances not been in a position to pay for it.
Essentially wages rose in ALL sectors during the same period.

I don't disagree with not needing stuff.

Don't you think, without any other factors. The increase in unemployment from 100k to 450K in the space of a few years placed a major strain on the countries finances?

The jigsaw is falling into place now for you. They weren't. Ahern bought elections.

kippy

Rightwing wrote: »

The jigsaw is falling into place now for you. They weren't. Ahern bought elections.

Less of the condescending "winks" please, especially when you are failing to address any of my points.

The state was taking in as much income as it was spending for years.
I'd ad that as well as "buying" the public sector vote, a fair chunk of the private sector vote was "bought" as well.


Again,
I'd go back to the very simple question that I have posed to you twice but you have not addressed:

Do you think that the increase in unemployment from 100K to 450K over a few years didn't have an effect on the states finances?

Geuze

fliball123 wrote: »

So PS people if you are looking for people to blame..Look at Bertie, Biffo and the unions..

I support a well-paid and productive PS.

But I agree that, for example, when 8-11 health boards merged into the HSE, and Ahern promised the unions - no jobs lost - I agree that was madness.

Note though that people again and again voted for Bertie Ahern.

Godge

Rightwing wrote: »

That's priceless.
It's akin to saying I didn't go bust because I went to the bookie. However, when I gave up going to the bookie my finances improved significantly.

Once again you lack the capacity to understand the point without needing it to be explained again.


Tax revenue dropped because we relied on property-transaction related taxes which were too narrow a base. We responded by cutting public service wages to save money as a short-term solution. That does not mean that the public service wages were too high.

Now we are gradually replacing the taxes - USC, property taxes and water charges - and the tax revenue will rise, which is the long-term solution.

Rightwing

kippy wrote: »

Less of the condescending "winks" please, especially when you are failing to address any of my points.

The state was taking in as much income as it was spending for years.
I'd ad that as well as "buying" the public sector vote, a fair chunk of the private sector vote was "bought" as well.


Again,
I'd go back to the very simple question that I have posed to you twice but you have not addressed:

Do you think that the increase in unemployment from 100K to 450K over a few years didn't have an effect on the states finances?

Europe warned us for years that we were courting with disaster. Builders and the likes were on unsustainable wages, ridiculous levels etc. What do you do? Try and match it (thereby compounding the inevitable problem), or cool down the economy. Our government inexplicably tried to match it with benchmarking.

Now, if the PS wages rose on a sound economy your argument would hold about the unemployment levels rising.

Godge

Rightwing wrote: »

Europe warned us for years that we were courting with disaster. Builders and the likes were on unsustainable wages, ridiculous levels etc. What do you do? Try and match it (thereby compounding the inevitable problem), or cool down the economy. Our government inexplicably tried to match it with benchmarking.

Now, if the PS wages rose on a sound economy your argument would hold about the unemployment levels rising.

Once again, your understanding is way off.

Benchmarking was in 2002. The unsustainable wages in the building industry came later in the decade.

Rightwing

kippy wrote: »

The state was taking in as much income as it was spending for years.
I'd ad that as well as "buying" the public sector vote, a fair chunk of the private sector vote was "bought" as well.

Godge wrote: »

Once again, your understanding is way off.

Benchmarking was in 2002. The unsustainable wages in the building industry came later in the decade.

I think you ought to take a look at the budget deficits throughout the Ahern years, this would help your understanding.

kippy

Rightwing wrote: »

I think you ought to take a look at the budget deficits throughout the Ahern years, this would help your understanding.

Look,
I ain't saying any wage rises were built on sustainable economics (the opposite is the case) however whatever you want to say about what the budget deficit within normal economics. Up until the proverbial sh1t hit the fan.

The PS, the Private and citizens in general all had their own piece of the pie when the economy was "overheating" based on one off transactional taxes. You cannot just "blame" the PS.

My point is, had the economy continued as it was (ie, income more or less equal to expenditure) PS wages were sustainable. Now, I don't agree that PS wages were justified, just that they were sustainable in that context.
What stopped them being sustainable was the cliff face that the income side of things went off.

I don't personally think there is any point trying to continue to point this out to you and others at this point.

Don't you think the almost sudden 350K job losses put a significant strain on the economy?

creedp

Geuze wrote: »

I support a well-paid and productive PS.

But I agree that, for example, when 8-11 health boards merged into the HSE, and Ahern promised the unions - no jobs lost - I agree that was madness.

Note though that people again and again voted for Bertie Ahern.

Jees I was over on the Irish Water thread and if you swopped HSE for IW you'd get a whole lot of support for what Ahern did .. just shows you the importance of the 'Brand'. On top of that we'd have people seeking better working conditions, including the provision of free gym facilities for HSE, sorry IW workers.

Rightwing

kippy wrote: »

Look,
I ain't saying any wage rises were built on sustainable economics (the opposite is the case) however whatever you want to say about what the budget deficit within normal economics. Up until the proverbial sh1t hit the fan.

The PS, the Private and citizens in general all had their own piece of the pie when the economy was "overheating" based on one off transactional taxes. You cannot just "blame" the PS.

My point is, had the economy continued as it was (ie, income more or less equal to expenditure) PS wages were sustainable. Now, I don't agree that PS wages were justified, just that they were sustainable in that context.
What stopped them being sustainable was the cliff face that the income side of things went off.

I don't personally think there is any point trying to continue to point this out to you and others at this point.

Don't you think the almost sudden 350K job losses put a significant strain on the economy?[/QUOTE]

Of course, but the ridiculous PS rises led to more builders being employed in the first place. That's the essential criticism.

The economy could never have kept going the way it was, we had structural problems, just like Greece had.

kippy

Rightwing wrote: »

I think you ought to take a look at the budget deficits throughout the Ahern years, this would help your understanding.

What were the budget deficits over the Ahern years, as a matter of interest?
Have you something to back up your assertions?

kippy

Rightwing wrote: »

kippy wrote: »

Look,
I ain't saying any wage rises were built on sustainable economics (the opposite is the case) however whatever you want to say about what the budget deficit within normal economics. Up until the proverbial sh1t hit the fan.

The PS, the Private and citizens in general all had their own piece of the pie when the economy was "overheating" based on one off transactional taxes. You cannot just "blame" the PS.

My point is, had the economy continued as it was (ie, income more or less equal to expenditure) PS wages were sustainable. Now, I don't agree that PS wages were justified, just that they were sustainable in that context.
What stopped them being sustainable was the cliff face that the income side of things went off.

I don't personally think there is any point trying to continue to point this out to you and others at this point.

Don't you think the almost sudden 350K job losses put a significant strain on the economy?[/

Of course, but the ridiculous PS rises led to more builders being employed in the first place. That's the essential criticism.

The economy could never have kept going the way it was, we had structural problems, just like Greece had.

So you are basicilly saying that:
1. The increases in public sector wages, lead to the "crash"?

I cannot fathom how increases in public sector wages (or the wage bill in general) led to "more builders being employed in the first place".
Can you round that square for me?

Surely demand for housing based on major increases in population and people working here, cheap credit, a currency being controlled from elsewhere, light touch regulation etc etc are all ahead of increased public sector wages as a reason for the mess we are in now?

Rightwing

kippy wrote: »

What were the budget deficits over the Ahern years, as a matter of interest?
Have you something to back up your assertions?

Basically we were borrowing year on year even during the boom. Practically everyone knew the housing bubble couldn't last. So when that bubble crashed, our financial position just crumbled. There was no excuse for this from a political point of view. The only PS workers I've ever blamed were:

Regulator, Dept of finance officials, C Bank and politicians.

noodler

Godge wrote: »

We went into the bailout because of the combination of a number of factors:

(1) The domestic banking crisis;
(2) The world economic collapse;
(3) The reliance on property transaction taxes for our tax base;
(4) The sharp rise in unemployment putting pressure on the social welfare bill.


The level of public sector pay was not a factor of any significance. However, the cutting of public sector pay was the main expenditure saving.

An explosion in Voted Expenditure from 23bn in 1999 to 63 bn in 2009 was a major factor in the crisis.

It is incomphrehensble that anyone could look at the crisis and not give expenditure the recognition it deserves.

kippy

Rightwing wrote: »

Basically we were borrowing year on year even during the boom. Practically everyone knew the housing bubble couldn't last. So when that bubble crashed, our financial position just crumbled. There was no excuse for this from a political point of view. The only PS workers I've ever blamed were:

Regulator, Dept of finance officials, C Bank and politicians.

There are not many developed countries in the world that don't borrow a certain amount year on year. This is perfectly normal and indeed sustainable if kept in check.

"Everyone knew they housing bubble couldn't last" yet almost everyone got caught out by it.

Look, my point is not that we had a sustainable economy, my point is in response to a point that arose earlier in this thread where somebody said that had things remaimed the way they were (without 64 bil for the banks) the public sector wages would have caused us to go to the IMF ANYWAY.
This is patently not true, had income continued as it was...........
Of course none of this happened.

fliball123

noodler wrote: »

An explosion in Voted Expenditure from 23bn in 1999 to 63 bn in 2009 was a major factor in the crisis.

It is incomphrehensble that anyone could look at the crisis and not give expenditure the recognition it deserves.

This is what I was trying to point out to this poster. That even with supposed full employment and the cash lottery ticket that was stamp duty our borrowings grew and this was while the banking crisis was still a couple of years away.