Why has the €20 Billion deficit not reduced ?.

tails_naf · 29-07-2011 12:13AM

Godge wrote: »

You are so naive, you know nothing about the education system.

In most primary schools, the principal teacher also teaches a class. While there is an arrangement for a small amount of paid substitution, most of the time they are in class. How will they do the sitting-in on other classes? In their sleep? As I have said, increased costs!

Good point - so many primary schools are very small that the principal (on about 70-80k mind you), teaches classes. And in the rural area I live in, there are 4-5 primary schools in a 5 mile radius, each with principals, and each with 4-5 teachers and 100 or so kids. Making one reasonably sized school with 20 teachers, 1 principal (who doesn't teach) and 500 kids is very possible - and would save a lot of money, while allowing these kinds of measures to be brought in.

However, most secondary schools don't have this situation, so what I suggested would apply to them, would it not?

Or are you only in favour of cost savings if they can be rolled out
a) Immediately
b) Completely

Ever heard of phased introduction? I know I'd accept phased cost savings over none!

Godge wrote: »

As for PPARS, most of the F-up was due to the fact that they hired consultants to do a job that the consultants were not able to do as they had such little knowledge of the public sector. Most of the cost of PPARS went to private consultants!!!!

And what's worse - the same private consultants were hired AGAIN, by the same public departments. Sure what do they care who's money was being spent - the culture of 'no responsibility' is so endemic in the PS that not only did no one in the PS suffer for PPARS, they didn't even think to hold the contractors responsible either!!

RobbieTheRobber · 29-07-2011 12:27AM

tails_naf wrote: »

Bonus culture did not cause the bad lending practices - poor regulation and direction from reckless upper management did.
The employees on the ground were told this is the way things are done - and they followed suit.

If an employee sells a LOT of what they were told to sell, then they make a bonus (or pay rise), which is fair - as they did and exceeded what was asked of them.

Here you seem to abdicating bank staff from any blame and below you talk of an endemic culture of irresponsibility.

Who are you blaming in the PS is it the average staff member who could be likened to the average bank worker in your first example?

Surely just like in the bank the responsibility should be laid at the irresponsible upper management, who in a nations case would be the successive FF governments.
(Did bertie not at some point liken himself to a CEO)
Or perhaps we should blame the people who elected them.

tails_naf wrote: »

Sure what do they care who's money was being spent - the culture of 'no responsibility' is so endemic in the PS that not only did no one in the PS suffer for PPARS, they didn't even think to hold the contractors responsible either!!

ZYX · 29-07-2011 07:36AM

Godge wrote: »

YAWN,

How many times do I have to do this. There has been a 12.2% net reduction in the public service pay and pensions bill between 2008 and 2010 (pay on its own has decreased by much more). That is a cut of 2.3 bn euro, more or less equal to the cut in the deficit. The increased taxes have paid for the increased social welfare bill and the increased interest payments on the debt. Move along, look elsewhere for the scapegoats, the figures show that the public service has delivered.

I also outline how the bill will go down further in 2011 notwithstanding all the guff here about increments.

YAWN. How many times are you going to count the pension levy?

Details of the gross total Exchequer Pay and Pension Bill were published, for the first
time, in the 2000 Revised Estimates Volume (Table 9). These figures are shown in
Table I of this booklet but all other figures in the booklet are net figures, i.e. after
deduction of appropriation-in-aid (mainly pension contributions, ESF funding and
pension related deduction).."

So in reality the cut is nowhere near 12.2%.
Public service pay 2005 €14.973 Billion
Public Service pay 2010 €17.327 Billion (after pension levy)
Total pay rise 15.7%. Total inflation in that time 12%. So in the last 5 years public sector pay & pensions have out performed inflation. How in gods name can you say the public sector have paid enough?

femur61 · 29-07-2011 07:49AM

When Joan Burton introduces social welfare changes and we still have a huge deficit, then will PS pay be addressed.

RichardAnd · 29-07-2011 08:37AM

ZYX wrote: »

YAWN. How many times are you going to count the pension levy?

Details of the gross total Exchequer Pay and Pension Bill were published, for the first
time, in the 2000 Revised Estimates Volume (Table 9). These figures are shown in
Table I of this booklet but all other figures in the booklet are net figures, i.e. after
deduction of appropriation-in-aid (mainly pension contributions, ESF funding and
pension related deduction).."

So in reality the cut is nowhere near 12.2%.
Public service pay 2005 €14.973 Billion
Public Service pay 2010 €17.327 Billion (after pension levy)
Total pay rise 15.7%. Total inflation in that time 12%. So in the last 5 years public sector pay & pensions have out performed inflation. How in gods name can you say the public sector have paid enough?

I think you're being overly harsh there. Public service pay has come down in the last 2-3 years and I think only the most sheltered and out of touch public servant believes it will not be cut again. The civil and public service have contributed to cuts and will continue to do so in the coming years so I don't see any need to reply to anyone defending this position in a derisive manner.

Rabidlamb · 29-07-2011 08:56AM

femur61 wrote: »

When Joan Burton introduces social welfare changes and we still have a huge deficit, then will PS pay be addressed.

Government will let the IMF do it, blame it on the deal FF struck, say they have no choice.
September is their next visit, interesting times ahead.
More likely to be the following year though.

ZYX · 29-07-2011 08:57AM

RichardAnd wrote: »

I think you're being overly harsh there. Public service pay has come down in the last 2-3 years and I think only the most sheltered and out of touch public servant believes it will not be cut again. The civil and public service have contributed to cuts and will continue to do so in the coming years so I don't see any need to reply to anyone defending this position in a derisive manner.

I started my comment in the same way he started his. My comment was not derisive. I used the figures he gave but explained them to him. PS workers have seen their pay rise over the last 5 years even allowing for inflation. Even over the last 3 years since the economy has hit the fan, PS pay & pensions have more or less kept up with inflation. Add to all this, the high earners have actually taken real cuts of up to 20% which means those earning less than 40K will in many cases have had pay risesin the last 3 years.

tails_naf · 29-07-2011 09:15AM

RobbieTheRobber wrote: »

Here you seem to abdicating bank staff from any blame and below you talk of an endemic culture of irresponsibility.

Who are you blaming in the PS is it the average staff member who could be likened to the average bank worker in your first example?

Surely just like in the bank the responsibility should be laid at the irresponsible upper management, who in a nations case would be the successive FF governments.
(Did bertie not at some point liken himself to a CEO)
Or perhaps we should blame the people who elected them.

I see your point - so let me clarify -

Everyone should be responsible for their jobs and their performance - in the case of the banks - the staff selling the products were responsible for selling - sure one or two sharp guys may have said to their boss 'this doesn't make sound financial sense', which was ignored, no matter where it came from - it was not the job of the lower guys, in this case, to simply stop selling in direct conflict of what their jobs were. In this case is was absolutely the upper management that were responsible for the banking mess.

In the PS - just line in the private sector, the management have responsibilities (like not re-hiring the same jokers who did PPARs - yet they did), and the average staff members have responsibility to do their specific jobs efficiently.

No one should be free from responsibilities, there should always be someone you can say in every job that 'the buck stops here', for the smaller things its the average employee, for the larger things it is the management.

tails_naf · 29-07-2011 09:18AM

RichardAnd wrote: »

I think you're being overly harsh there. Public service pay has come down in the last 2-3 years and I think only the most sheltered and out of touch public servant believes it will not be cut again. The civil and public service have contributed to cuts and will continue to do so in the coming years so I don't see any need to reply to anyone defending this position in a derisive manner.

Err.. how can numbers be harsh? They are what they are.

fliball123 · 29-07-2011 10:40AM

I think its fair to say that we all partied ...All private sector all dolees and PS partied..The bank fecked everyone over...There is still a massive deficit yet the Public sector pay seems to be off the table..and regardless of the 2 odd billion already saved there Godge there needs to be more taken...You cannot expect the 500k on the dole to take the hit or the tax payer ....

Godge · 29-07-2011 11:39AM

tails_naf wrote: »

Good point - so many primary schools are very small that the principal (on about 70-80k mind you), teaches classes. And in the rural area I live in, there are 4-5 primary schools in a 5 mile radius, each with principals, and each with 4-5 teachers and 100 or so kids. Making one reasonably sized school with 20 teachers, 1 principal (who doesn't teach) and 500 kids is very possible - and would save a lot of money, while allowing these kinds of measures to be brought in.

However, most secondary schools don't have this situation, so what I suggested would apply to them, would it not?

Or are you only in favour of cost savings if they can be rolled out
a) Immediately
b) Completely

Ever heard of phased introduction? I know I'd accept phased cost savings over none!

And what's worse - the same private consultants were hired AGAIN, by the same public departments. Sure what do they care who's money was being spent - the culture of 'no responsibility' is so endemic in the PS that not only did no one in the PS suffer for PPARS, they didn't even think to hold the contractors responsible either!!

Yes, merging schools will save money, however first we have to make the rural school transport system cost-neutral as the savings from merging schools would be swallowed up by the increased transport costs. Watch while the current minister addresses the school transport issue first. It has been the constant failure of private sector commentators to understimate the cost of change in the public sector and the risks of unintended consequences because of the complexities of public services.

As for the secondary schools and performance systems, what you say looks right at first glance, except that schools have a multitude of specialities and how would a principal teacher trained in history be able to judge the performance of a woodwork teacher?

Godge · 29-07-2011 11:45AM

fliball123 wrote: »

I think its fair to say that we all partied ...All private sector all dolees and PS partied..The bank fecked everyone over...There is still a massive deficit yet the Public sector pay seems to be off the table..and regardless of the 2 odd billion already saved there Godge there needs to be more taken...You cannot expect the 500k on the dole to take the hit or the tax payer ....

I never said that more was not needed. In fact, I have pointed to the measures already in place that will see a further reduction in the public service pay and pension bill. I expect that the pay and pensions bill will come down by another 1 bn between now and 2013. That will be a cut of about 20% in the public service pay and pensions bill since 2008.

If social welfare comes in 20% below 2008 and taxes 20% above 2008, we should be ok.

Welease · 29-07-2011 11:48AM

Godge wrote: »

As for the secondary schools and performance systems, what you say looks right at first glance, except that schools have a multitude of specialities and how would a principal teacher trained in history be able to judge the performance of a woodwork teacher?

Using the same performance management techniques that allow me and millions of other managers to performance manage our groups which are made up of vastly different skills sets (Project Managers, Developers, Engineers, HFE's etc. in my case)..

Nijmegen · 29-07-2011 11:50AM

I think we might be wise to have the (oft repeated) education argument elsewhere?

Re: the deficit not reducing, it's very simple: Social welfare rates need to fall. Public sector employment needs to fall.

These are the two biggest ticket items on our bill.

Quite how you can close that €18bn deficit without touching them is beyond me.

doc_17 · 29-07-2011 01:18PM

Nijmegen wrote: »

I think we might be wise to have the (oft repeated) education argument elsewhere?

Re: the deficit not reducing, it's very simple: Social welfare rates need to fall. Public sector employment needs to fall.

These are the two biggest ticket items on our bill.

Quite how you can close that €18bn deficit without touching them is beyond me.

It is beyond anyone....

I'd say before the end of the year there will be a PS pay freeze (no increments) and then next year another pay cut. Some of the recent adjustments are being cancelled out by increments. I know it will be tough and hard to bear but I don't see how we can meet the state's (and the bank's) commitments as we move toward 2013/4.

The deficit will not close if you leave out the big ticket items of pay, welfare and bank recapitalisation.

murphaph · 29-07-2011 01:19PM

Godge wrote: »

As for the secondary schools and performance systems, what you say looks right at first glance, except that schools have a multitude of specialities and how would a principal teacher trained in history be able to judge the performance of a woodwork teacher?

Do you not think that school principals know who their stronger/weaker teachers are?

If they don't, they should be the first to get the bullet.

sollar · 29-07-2011 02:29PM

doc_17 wrote: »

It is beyond anyone....

I'd say before the end of the year there will be a PS pay freeze (no increments) and then next year another pay cut. Some of the recent adjustments are being cancelled out by increments. I know it will be tough and hard to bear but I don't see how we can meet the state's (and the bank's) commitments as we move toward 2013/4.

The deficit will not close if you leave out the big ticket items of pay, welfare and bank recapitalisation.

Here is what Mr M Noonan said re increments:

'Increments within the Public Service vary in terms of timing, cost and application both within and across the various sectors of the Public Service and estimates of cost are of necessity, tentative.
It has been estimated that the annual cost in a full year of increments would be around €250 million. However, significantly reduced recruitment and higher numbers on the maxima of scales will mean that this cost will reduce in the coming years and will be affected by other factors. These include retirements, voluntary redundancies, number reductions, recruitment rates and the numbers of employees reaching the maximum of the scale, which cannot be quantified.
No specific provision is made in the financial allocations to public service bodies as they are required to meet the cost within their allocations.
Suspending increments would affect some public servants but would have no effect on others. Generally, incremental scales are longer for lower paid staff than for higher. Accordingly a higher proportion of lower paid including front line staff would be affected by a suspension of increments.
I have no proposals to change the current arrangements in relation to the payment of increments as they would disproportionately affect the lower paid staff in the public service.'

paul71 · 29-07-2011 02:42PM

Going back to the original question. Why is the deficit not reduced? I think it can be partially explained by the failure of the economy to be expend at the rate in the plan presented to ECB/IMF at the time of the bailout. Is it correct that the plan forecasted an expanion at 1.75% while in reality GDP growth is at .9% and GNP is falling and is running at -.3%.

Looks like tax increase have reached the point of negative return, or perhaps reached the point of negative return quite some time ago.

WalterMitty · 29-07-2011 03:24PM

It is difficult to cut pay again in nominal terms but will have to be done,along with welfare, pensions etc. UK public servants and pension and welfare recipients have actually had a real cut of around 30% relative to rest of Europe since start of crisis but their currency devaluation hid a lot of that from public sector workers and pensioners but they will suffer the equivvalent in lower standard of living and higher inflation in years to come with pay freezes and recruitment bans and higher retirement ages etc.

Our economy's structure doesnt allow as much corporate and asset taxes to be raised as in other economies. We cant raise corporation tax on irish businesses as it would hit multinationals who would then gradually withdraw from here or be less likely to come here in first place. So this means taxes on income , spending and transactions have to fill the states coffers.

There is good evidence that raising income tax levels too high can actually hit revenues and we seem to be at that point now . VAT andstamp duty dont seem to be capable of taxing much more of the burden and a wealth tax would send wrong signals to invvestors coming here or living here and drive more capital offshore. With a falling number of workers due to emmigration, there are also less workers to pay taxes and new employment positions are paying less and therefore less tax is paid by newly filled positions .

Really cant see total tax take rising to more than 35-40billion without being self defeating . That means spending has a lot to fall. Growth is gonna be low for a long time as we are no longer low cost for FDI and people are too indebted to binge on consumption.

murphaph · 29-07-2011 03:30PM

This is the nub of the issue. There isn't some great pot of untaxed gold out there. Spending is the problem now.

I favour a restructuring of how we tax ourselves (in principle I favour property taxation and so on as stable tax bases for the future), but the overall numbers don't have much scope for increase-lashing on a load of property taxes and leaving income tax and VAT untouched won't work and will lead to even less economic activity.

ILikeBananas · 29-07-2011 03:47PM

Colm McCarthy was on TV3 last night and he basically said that anyone who thinks that we can get out of this current slump without a massive deflation is talking through their hat. He went on to say that we can continue to make the cuts slowly and end up with a lost decade like the 1980's or we can try and really get it all done in a short period of time.

The point he was making is that when people know that we've reached the bottom, it's only then that confidence will creep back into the markets. At present everybody is holding tight because they know that there are more cuts on the way. In effect we are in a state of paralysis.

The main reason that the government are not touching the sacred cows of Welfare, Public Sector wages and Income tax is purely for political reasons. However they are 6 months into a 5 year term so surely it would be wise to tackle all three now, deal with the inevitable strikes and then move on and give themselves the chance to build up from that low point.

The way that they're going about it, means that things are going to continue to get worse in a drip drip fashion and in 5 years time Labour and FG are going to be decimated in the polls.

We're just delaying the inevitable

dynamick · 29-07-2011 04:23PM

Rabidlamb wrote: »

Were what, 2 or 3 years into austerity & according to comments on the radio yesterday we are still taking in €30 billion & spending €50 billion.
What happened to the €3 billion savings that were being made last budget & the ones before it.
Why do we seem to be getting nowhere ?.

Strange thread???

The deficit is reducing both in euro terms and as a proportion of GDP

2008 deficit €-13.2b (-7.3% GDP)
2009 deficit €-22.8b (-14.3% GDP)
2010 deficit €-49.9b (-32.4% GDP) excl. anglo once-off: -19bn (-12.4% GDP)
2011 deficit €-15.4b (-10% GDP)

So the underlying deficit has been reducing year on year since 2009. I see no reason this won't continue particularly with the recently announced reduction in interest payments and the doubling of the term available to repay debts.

The aim is to reach -3% GDP general govt deficit by 2015. This is achieved by increasing taxes and reducing spending.

ardmacha · 29-07-2011 07:41PM

Really cant see total tax take rising to more than 35-40billion without being self defeating . That means spending has a lot to fal

So you are proposing government share of the economy as 25% of GNP. This is entirely different than the rest of Western Europe and so the order of services provided would have to totally different than the rest of Western Europe, given that some things like law enforcement probably have to be the same.

What do you propose that the Irish government not provide that is normally provided by Western European governments?

dynamick · 29-07-2011 08:01PM

Tax revenue in 2010 was 34.5 billion
PRSI was 11.4 billion
Other income: 7.4 billion
Total: 53.3 billion
GDP was 153.9 billion

WalterMitty · 29-07-2011 11:42PM

ardmacha wrote: »

So you are proposing government share of the economy as 25% of GNP. This is entirely different than the rest of Western Europe and so the order of services provided would have to totally different than the rest of Western Europe, given that some things like law enforcement probably have to be the same.

What do you propose that the Irish government not provide that is normally provided by Western European governments?

GNP is more like 125billion so 40billion expenditure by gov is like 31%. tax take this year is forecast to be 35billion, if 200,000 people were magically taken off dole and paid 6,000euro each a year in tax that would only yield 1.2billion and also cut expenditure by about 4 billion on welfare .

The household tax and water taxes will be around 1500euro a house in a few years time which yields around 2.5billion a year. Dont know where the tax is gonna come from. We're in the sh1tter and our hands are tied.

WalterMitty · 29-07-2011 11:50PM

dynamick wrote: »

Strange thread???

The deficit is reducing both in euro terms and as a proportion of GDP

2008 deficit €-13.2b (-7.3% GDP)
2009 deficit €-22.8b (-14.3% GDP)
2010 deficit €-49.9b (-32.4% GDP) excl. anglo once-off: -19bn (-12.4% GDP)
2011 deficit €-15.4b (-10% GDP)

So the underlying deficit has been reducing year on year since 2009. I see no reason this won't continue particularly with the recently announced reduction in interest payments and the doubling of the term available to repay debts.

The aim is to reach -3% GDP general govt deficit by 2015. This is achieved by increasing taxes and reducing spending.

Should not use gdp,we dont actually own a huge chunk of that economic activity and have commited to not taxing it at any significant rate. Secondly all the easy measures have been taken, there is not a huge amount of uncillected tax out there that is readily collectable in a sustainable manner. Income tax rates are already at close to 60% marginal rates. People are heavily indebted which means less net income to pay taxes or spend in economy.

Godge · 30-07-2011 12:56AM

WalterMitty wrote: »

GNP is more like 125billion so 40billion expenditure by gov is like 31%. tax take this year is forecast to be 35billion, if 200,000 people were magically taken off dole and paid 6,000euro each a year in tax that would only yield 1.2billion and also cut expenditure by about 4 billion on welfare .

The household tax and water taxes will be around 1500euro a house in a few years time which yields around 2.5billion a year. Dont know where the tax is gonna come from. We're in the sh1tter and our hands are tied.

What is the optimum rate of taxation and expenditure in a balanced budget? If GNP is 125 billion, an average tax take (by European standards) of 40% would give 50 bn. As public service pay and pensions has now reduced to 16/17 bn, surely there is enough in the rest of that tax take to deal with everything else?????

WalterMitty · 30-07-2011 04:27AM

Godge wrote: »

What is the optimum rate of taxation and expenditure in a balanced budget? If GNP is 125 billion, an average tax take (by European standards) of 40% would give 50 bn. As public service pay and pensions has now reduced to 16/17 bn, surely there is enough in the rest of that tax take to deal with everything else?????

with public and private debt set to reach around 400billion , interest repayments at 5% would be 20bill a year from GNP. Im not sure if avverage rate on our borrowings as a nation and individuals averages 5% or more. We dont have the borrowings of a normal european country otherwise we wouldnt be borrowing from imf/eu.

Icepick · 30-07-2011 12:35PM

simple answer: mass delusion

irishh_bob · 30-07-2011 12:41PM

ILikeBananas wrote: »

Colm McCarthy was on TV3 last night and he basically said that anyone who thinks that we can get out of this current slump without a massive deflation is talking through their hat. He went on to say that we can continue to make the cuts slowly and end up with a lost decade like the 1980's or we can try and really get it all done in a short period of time.

The point he was making is that when people know that we've reached the bottom, it's only then that confidence will creep back into the markets. At present everybody is holding tight because they know that there are more cuts on the way. In effect we are in a state of paralysis.

The main reason that the government are not touching the sacred cows of Welfare, Public Sector wages and Income tax is purely for political reasons. However they are 6 months into a 5 year term so surely it would be wise to tackle all three now, deal with the inevitable strikes and then move on and give themselves the chance to build up from that low point.

The way that they're going about it, means that things are going to continue to get worse in a drip drip fashion and in 5 years time Labour and FG are going to be decimated in the polls.

We're just delaying the inevitable

history has taught us that the irish electorate when given a choice between politicans who espouse tighter fiscal policy as opposed to pork barrelled spending across the board , has always gone for the later , the irish electorate is in as much need of reform as the political system itself

Why has the €20 Billion deficit not reduced ?.

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