Inflation - What do you think the Government should do?

highgiant1985

Listening to the Leaders' Question and the focus of the discussion so far has been about inflation. Source: https://twitter.com/rtenews/status/1485976271632936960

I'm definitely noticing the pinch recently in terms of costs increases and I'm sure others are the same. The discussion is quite depressing to be honest though with a lot of posturing and hot air from both sides but very little in the way of ideas.

So I wanted to open it open here for discussion and see what others think, what practical measures do people think the Government could or should take to tackle the issue of inflation?

It's easy to say the Government should do more but what does that mean specifically. Being honest I've no idea myself so I'm just interested in hearing ideas from others on what might be practical solutions to the issue.

JimmyVik

Remove carbon taxes.

Brussels Sprout

Typically when excessive inflation happens then the most powerful thing to do is to increase interest rates. However, since we're in the eurozone, that is the ECB's call.

I'd be wary of the government trying to do anything to intervene - if their interventions in the housing market are anything to go by they are likely only going to exacerbate the problem.

Multipass

https://www.boards.ie/discussion/comment/118531107#Comment_118531107

This.

is_that_so

CB governor looking at it being above 2% for the year and likely to go below 2% in 2023 and 2024. Interest rates are traditionally an option but ECB have bigger fish to fry and post-COVID a rate hike would be slightly insane. So in answer to the OP, nothing but definitely look at easing off on that very high spending.

https://www.centralbank.ie/news/article/the-economic-outlook-for-the-year-ahead-remarks-by-governor-makhlouf-to-the-institute-of-directors-24-january-2022

enricoh

I saw Leo varadker today saying employers should give wage increases, pure populism. the boom is back baby - now watch as we get totally uncompetitive again!

Perseverance The Second

Invest in Nuclear power.

This will keep occurring again and again if you are reliant on external countries to provide energy. It also enables us to sell it to abroad.

TallGlass2

Abolishing USC be a start....

buried

Wealth Tax on the super rich including corporates.

usernamegoes

https://www.boards.ie/discussion/comment/118532339#Comment_118532339

A million per cent this.

Danzy

https://www.boards.ie/discussion/comment/118532293#Comment_118532293

The interest rates from the ECB are already insane, have been for years, a giant financial experiment and a story of significant global importance. Hikes being insane is only in response to the previous madness.

It's become a roundabout that the Eurozone will find hard to get off.

Danzy

https://www.boards.ie/discussion/comment/118532339#Comment_118532339

Nuclear has one big problem.

Its cost, every other source of energy is improving in cost and is already cheaper. Nuclear remains stupidly expensive and appears to be getting worse.

People who argue for nuclear as an energy security issue or because it is a source of vast and low carbon energy, have points, the cost is then secondary and in that regard a very strong argument can be made and is worth considering but the financial side would still be insanely expensive.

Germany closing it's Nuclear and coal plants so quickly was a significant mistake.

HBC08

Unfortunately this is not something the likes of Michael Martin of Mary lou (God help us) have the capability or capacity to solve.

The populist cries of scrap the USC or increase the minimum wage/introduce a living wage etc would only fuel inflation.

Perseverance The Second

https://www.boards.ie/discussion/comment/118532868#Comment_118532868

At the sametime it's also fairly consistent energy source especially from a price perspective. You are not at the whims of international markets for Gas price fluctuations. It helps a lot of businesses and people in general if they can have consistency.

We could have made the same argument about sustainable energy sources in terms of initial expense. Chances are that with more investment comes with greater efficiency down the line.

Nuclear can at least step in when renewables are impacted by fluctuations.

maestroamado

do nothing... the market will decide...

https://www.boards.ie/discussion/comment/118532325#Comment_118532325

Competitiveness due to wage increases was not a issue in the boom as much as the employers representatives wanted you to believe it was

Stop handing out unearned money. Promote a savings culture.

c.p.w.g.w

The last time we have inflation of this nation, didn't the government do saving schemes to remove money from the economy to brings inflation under control...

But is current inflation being driven by world wide supply chain and post/current pandemic issues

Viscount Aggro

Easiest way is for individual households to cut back, consume less of whats driving inflation.

Mad_maxx

https://www.boards.ie/discussion/comment/118532612#Comment_118532612

That would fuel inflation

The less government do the better. Unless they wanna reduce taxes.

Danzy

https://www.boards.ie/discussion/comment/118533009#Comment_118533009

Nuclear has a place in a continental market, it's consistently the dearer option bar none and it's not even close, with subsides removed it's still the worst cost wise.

Sustainable energy is fine but the speed of transition but no speed in the sustainability of the energy network, ie back up, Infrastructure, planned phasing out of old plants not gimmicks for headlines that's been a disaster.

Danno

What the government should do is jail the prícks who roared from the rooftops last year that Irish households had "saved" €12bln~€16bln over Covid as we couldn't spend owing to restrictions.

It gave every cnut in a position to set prices carte blanche to gouge the population in late 2021 and on into this year...

Government also needs to reverse all Carbon tax increases to 2008 levels, drop VAT back to 21% and abolish all toll charges for HGVs.

A serious root and branch review of funding given to the 19,000+ NGOs should also be undertaken to find required savings to off-set the above. We funded them to the tune of €5.5 billion in 2016, and you can be damn sure that annual bill has crept upwards since: https://www.businesspost.ie/analysis-opinion/more-than-half-of-ngos-eur105-billion-funding-comes-from-the-state-9b7115a5

Danzy

https://www.boards.ie/discussion/comment/118533129#Comment_118533129

NGOs are a major scandal waiting to be uncovered.

Citrus_8

https://www.boards.ie/discussion/comment/118532612#Comment_118532612

That would enable purchasing power which would fuel inflation more. We need the opposite now to stabilise the economy. There are a few approaches. Ireland is a small market, influenced by bigger markets - it's possible to leave things as they are and they will stabilise in time. It's a conservative way, usually, taking longer to see the result but also less risky.

A problem is that Irish culturally are very low in Long Term Orientation and also low in Uncertainty Avoidance, comparing to other European countries. So, a quick result but also uncertain future is ok for Irish. Which is not good for future planning. It doesn't encourage politicians to make some drastic decisions even if a result these days would be negative for a short period of time but in a long term it would bring a positive result.

We can increase VAT to reduce purchasing power (would help to reduce demand which would help for supply and deflate prices a bit) but that's currently too risky as it would also create problems for those businesses which have suffered during the lockdowns.

We have a problem that people have a lot of savings. Preferably, we want this money to circulate in the market to keep the economy going. However, when inflation is high, that's opposite - we want to slow down spendings to stabilise demands and help for supply.

It's a bit like a devils circuit at the moment, until supply will feed a demand and until covid will not make such a big impact for global economies. This may take 1-2 years, depending on the industry and subject to any further lockdowns, disturbances etc. I would predict that overall for economy to settle it could take 3-5 years from the end of the first lockdown.

Citrus_8

https://www.boards.ie/discussion/comment/118533129#Comment_118533129

How reducing VAT would help? If that would reduce prices, it would increase a demand and further increase the inflation. We need an opposite result now. Carbon tax increase was planned and known to everyone for a long time already. This to reduce demand for products, harmful to the planet. This is one of the long term decisions, which gives us a negative result in a short term. But in the long term it's a positive tax.

Lots of NGOs are doing a great job, many of them are vital to poor and more vulnerable members of society. Better to increase governments' spendings to the health and educations systems, also to the infrastructure, especially a public transport. But again, that's too hard to understand to some who are too much focused to the short term "solutions".

enricoh

https://www.boards.ie/discussion/comment/118533026#Comment_118533026

Leo today called on employers to increase wages. The minimum wage is gone up again this year, an extra bank holiday from now on too for employers also.

It all feeds into making us uncompetitive. Was reading today a coalman in Wexford saying with carbon tax increasing lads will head north and load up vans. If lads will go from Wexford there's no hope for lads near the border

joseywhales

https://www.boards.ie/discussion/comment/118533122#Comment_118533122

I think you need to account for timing. If we invest in nuclear now, it may be online in 20-30 years. By that time I think the economics of energy will look very different.

Danno

https://www.boards.ie/discussion/comment/118533257#Comment_118533257

The problem with you and the government is they way VAT at the upper end is viewed as "a tax on luxuries". It's fooking far from it.

Carbon taxes are increasing costs on everyone - everything here gets moved by road - both products and consumers. There are no alternatives for the vast majority who are on stagnated wages for much of the last decade only to see the menial increments of the past short while swallowed up in inflation and then some.

You haven't a clue what you're on about - the NGO sector is so huge it duplicates itself, and duplicates itself again and again and again, but that's okay as long as there are 15,000+ CEOs of NGOs commanding a generous salary, not to mention the managers and C-Suite below them.

Amirani

Worrying the amount of posters that seem to think reducing taxes is the answer to rising inflation. You're basically your man on the bus standing up to say he doesn't know what a tracker mortgage is.

The smallest bit of economics research will tell you that's a terrible idea.

Danzy

https://www.boards.ie/discussion/comment/118533396#Comment_118533396

It will but the long term picture is worse for nuclear. Solar energy costs are dropping exponentially and they are already cheap.

There are many experimental Nuclear reactors offering hope for the sector and sound promising but commercial application, if possible, is not going to happen in the next 20 years.

Wouldn't it be Great though, China have a new Thorium reactor, powers 2k houses but it is experimental, who knows.

afatbollix

Not an expert but if the gov are looking at boards for advice happy to help out.

In times of inflation, the rich get richer, especially the asset-rich folks.

I would put up stamp duty. If it's not your primary residence I would put it at a minimum of 5% maybe even 10%. A first-time buyer should pay 0%.

To help the middle I would encourage saving, Bring back the 4 euro saved 1 euro from the government. Hopefully, with the higher stamp duty, it won't encourage the housing boom like last time.

I'd then higher the amount of tax-free allowance so that the lowest-paid workers would get some more cash in their pockets.

No need for e100 off an energy bill. Why should a millionaire get e100 off their bill?

Citrus_8

https://www.boards.ie/discussion/comment/118533447#Comment_118533447

I agree, great thoughts 👍

Also, regarding 100 Euro, I have just had an argument with my friends recently saying it's one of the most expensive advertisement for the current political parties. Such a waste of money. Unfortunately, lots of with very little analytical or critical thinking thinks the government cares about them. If they reay care, they would provide a continuous financial support to the poor society members, not the whole population, as you said.

Terrible decisions, lots of missed opportunities. And people are ok with that as they don't understand and they don't think of future. Real populists are ruling the country at the moment.

joseywhales

The issue is we need a non carbon producing alternative to fossil fuels. That means we need a base load, something that is reliable without sun or wind. The idea of relying on battery storage , when the whole world will be scrambling for lithium and other rare metals doesn't fill me with confidence. Neither does an interconnection where we will put ourselves at the mercy of the producer, since we will have no alternative. That's not to mention the higher likelihood of global instability and possible wars given the deteriorating environment and mass migration. We need to have some independence and that starts with energy and food. Luckily we are a net exporter of food, nuclear solves the other part.

Get Real

https://www.boards.ie/discussion/comment/118533409#Comment_118533409

Agree with this. It's what contributed to the economic crisis last time round too.

There's posters here advocating reducing taxes, exactly what was done c1997 to 2007,and then there was no rainy day savings to pump into the economy post 08.

When an economy is growing, you actually want to take money out of it to prevent overheating and save money for a rainy day. Then in times of recession, you pump that money into the economy to stimulate spending and economic activity. Instead of cutting funding and raising taxes further to make up for all the tax cuts in the good times.

We've become used over the past decade to either deflation, or no change. 2-3 percent a year inflation is healthy as long as the economy is growing. Sure, at 5 or 6 it could be lower. But that's where you want to extract money from the economy and put it away, to reduce inflationary pressure due to all the money and demand going about.

It's not popular to say. But pumping even more money into the system leads to further upward pressure. Its a very fine balancing act.

I don't understand how anyone who was annoyed with govt in say.. 2011 (plus or minus 2 years, that whole water charges, emigration period) is calling for the same policies of the early noughties.

is_that_so

https://www.boards.ie/discussion/comment/118533447#Comment_118533447

No need for €100 off an energy bill. Why should a millionaire get €100 off their bill?

Because it is non-discriminatory, acknowledges a current problem for many, gets a buy-in from all parts of society and is very simple to implement. A process to determine who's worth it, is likely to cost a disproportionate amount relative to the payment itself and would take well into Spring to implement.

Nermal

Time for the SSIA to make a comeback?

SEPT 23 1989

we will be in a recession by this time next year

afatbollix

https://www.boards.ie/discussion/comment/118533793#Comment_118533793

That's the first time I have seen someone siding with a millionaire who a government is giving them money and calling out a person by calling them discriminatory. If a millionaire has a house and 2-holiday homes they get e300 from you and me.

Help the less well off all year round forget the people who can afford it. Personally, I'd give everyone tax credits instead of benefits to so many. Here's the thing they already have a system in place to work out tax credits so it wouldn't be too hard. You might reply saying the rich will also benefit but they are taxed more in the higher brackets so the less well off benefit more than the well off.

jahalpin

What would be your definition of super rich in money terms?

Bringing in a new additional corporate tax would be a disaster as the large corporates would just leave, if you take the example of Apple they are funnelling all sales outside of the US through their office in Cork so the state is getting tax on this, even if this is only 2% due to deals etc, 2% of billions is better than 15% of zero

is_that_so

https://www.boards.ie/discussion/comment/118534624#Comment_118534624

It's a one off feel good good move for everyone n the audience. It's simple, generally supported across the Dail and done. Not everyone works and tax credits cost money with our latest changes coming in at half a billion in a full year. You'd also be discriminating against welfare recipients of course our growing band of pensioners.

L1011

https://www.boards.ie/discussion/comment/118533171#Comment_118533171

The majority of NGOs are providing services the HSE is meant to provide; and giving an excuse / blame blanket for the HSE in the process. Absolutely no chance there'll be effort to get rid of that.

Triple rates on unoccupied commercial premises. Encourage the sale and rent of such buildings. Get more businesses on the supply side and hopefully have some competition. Inflation is less of an issue when there's some choice and you feel like you're getting something.

Brussels Sprout

https://www.boards.ie/discussion/comment/118533409#Comment_118533409

It's unbelievable. What we effectively have is a scenario where there is a shortage of goods and services combined with a larger amount of money in the system and people's first thought to that dilemma is "Let's inject even more money into the system!".

It's the financial equivalent of trying to extinguish a fire by throwing a bucket of petrol over it. It's also exactly what the government has been doing for years in an effort to trying to resolve the housing crisis. There's a shortage of houses and they keep coming up with solutions that involve putting more money into buyer's hands - very frustrating!

ittakestwo

https://www.boards.ie/discussion/comment/118534984#Comment_118534984

Exactly this.

Unfortunately too many people are not gifted with logic to understand your post.

HBC08

https://www.boards.ie/discussion/comment/118534984#Comment_118534984

100% very frustrating but a quick glance through this thread shows some people just don't understand even the basics.

What worries me more is I'm not convinced a lot of people in government or potential governments have a much better understanding.

Pussyhands

The central bank need to be banging the door of the ECB to raise interest rates.

Watch this 30 minute video if you want to know how interest rates affect economies

https://www.youtube.com/watch?v=PHe0bXAIuk0

Pussyhands

https://www.boards.ie/discussion/comment/118532325#Comment_118532325

It's really disheartening to see the majority want bigger wages instead of reduced costs.

I suppose that most people in the country just aren't able to grasp it. If someone says they earn 50k salary, the reaction of most is "that's great money". But earning 50k living in Belmullet and earning 50k living in D1 are two completely different things.

Pussyhands

https://www.boards.ie/discussion/comment/118533612#Comment_118533612

WTF use is a 100 euro anyways?

It's like FFG found the money tree they said never existed.

If you're really feeling the pinch, 100 euro...wow, pop open the champagne, you'll never have to worry about money again! 🙄

Pussyhands

https://www.boards.ie/discussion/comment/118534984#Comment_118534984

Eoin McGee must be reading this thread with a raging boner knowing he has enough people for another 15 series of his show.

Faugheen

Shouldn't be long before something about immigrants makes its way into this thread.