Croke Park II preliminary Talks started today

ardmacha · 09-05-2013 11:32AM

Bear in mind that CP2 didn't advocate a direct cut on lower paid wages, only those above 65k

Why should a person on €70k get a cut and a person on €65k not? Presumably because of some ability to pay argument, if this has any validity than a person on €70k can also pay more tax.

any raise at a lower wages level also impacts adversely to those on a higher wage bracket, which you have shown to be unsustainable as upper taxation rates are already towards the higher end of EU averages

This is also confused. Marginal tax rates may be comparable with EU averages, total amount of tax paid is not necessarily so. While reducing tax credits etc may lead to everyone paying more it does not affect marginal rates.

vinylbomb · 09-05-2013 11:58AM

ardmacha wrote: »

This is also confused. Marginal tax rates may be comparable with EU averages, total amount of tax paid is not necessarily so. While reducing tax credits etc may lead to everyone paying more it does not affect marginal rates.

If you raise the rate on the lower tax bracket it follows on that those on on the upper rate swallow the increase too.

Nothing confused about it.

vinylbomb · 09-05-2013 12:03PM

ardmacha wrote: »

Why should a person on €70k get a cut and a person on €65k not? Presumably because of some ability to pay argument, if this has any validity than a person on €70k can also pay more tax.

I'm gonna guess and say 65k is the demarcation line in PS between what is considered upper grades and lower grades. But I don't know, as I said, that's a guess.

Dannyboy83 · 09-05-2013 12:48PM

Geuze wrote: »

I disagree.

PS workers took two cuts:

(1) a straight cut to gross pay (% cut increases as gross increases)
(2) PRD levy, this is a substantial cut

In normal times, PS pensions increased in line with PS pay.

But, when PS gross wages fell, PS pensions were not cut. Where is the solidarity?

Yes, I acknowledge the point you're making and agree that it is a fair criticism.

My answer is within your statement:
"In normal times, PS pensions increased in line with PS pay.
But, when PS gross wages fell, PS pensions were not cut."

In "normal times", pay and pensions were increased via benchmarking to levels which were known and understood at the time to be unsustainable, in any event other than the one where the property bubble remained unburst.

The Fianna Fail government who did this, did it to buy an election and were secure in the knowledge that the contract could be retrospectively amended.

We should learn from that mistake, not attempt to rewrite it, by honouring those contracts.

If we simply rewrite the mistake, we give future governments carte blanche to
retrospectively amend ANY contract where it fits their interests.

The bottom line is that the way we deal with this issue today, will determine the precedent we set for future governments.

If the United Left Alliance government of 2023 decide to implement another round of unsustainable benchmarking to buy an election :

- will they do it comfortably assured in the knowledge that it doesn't require financial planning, it can all be amended later when the **** hits the fan?

- or will they do it cautiously and prudently, uncomfortably aware that the memory of the pork barrell benchmarking taxes are seared in the public consciousness?

The way we deal with this issue today, will determine that.

ardmacha · 09-05-2013 01:43PM

The bottom line is that the way we deal with this issue today, will determine the precedent we set for future governments.

If the United Left Alliance government of 2023 decide to implement another round of unsustainable benchmarking to buy an election :

- will they do it comfortably assured in the knowledge that it doesn't require financial planning, it can all be amended later when the **** hits the fan?

The previous post was very much to the point.
This process must set some sort of principled basis for the remuneration of the public sector. But the proposals so far have been less principled than benchmarking, as they don't even pretend to have a basis in most cases.

There must be some sense of what is a proper long term basis for both public funding and expenditure and steps should be taken to move towards that, while avoiding political stunts that establish a principle that you just fiddle around the numbers for political advantage. But this is anathema to politicians, who want to be able to do what seems expedient, without reference to any sort of long term planning or principle.

Godge · 09-05-2013 01:46PM

vinylbomb wrote: »

There was quite a lot of good information in your post, but one thing re: tax raises was missed - any raise at a lower wages level also impacts adversely to those on a higher wage bracket, which you have shown to be unsustainable as upper taxation rates are already towards the higher end of EU averages - without providing the social benefits of other countries.

Welfare does need to go down, it is unsustainable, but in my opinion so are PS wages. Bear in mind that CP2 didn't advocate a direct cut on lower paid wages, only those above 65k - so in a way you're cutting off your nose to spite your face in this argument.
You wish to protect lower paid from wages cuts but in effect you are protecting higher paid from them.

Not necessarily true. Say for example you cut the personal tax credit in half. Every taxpayer loses out by the exact same amount but as a proportion of income it hits the higher lower paid hardest.

Also I have never said that I wished to protect lower paid from wages cut. I believe that with the cuts, depending on the benchmark used (private sector or EU - some posters prefer one or the other) there are PS employees overpaid, correctly paid and underpaid. Some have given more productivity under the CPA than others as well which means that a straight-forward outcome is not justified.

creedp · 09-05-2013 01:52PM

Dannyboy83 wrote: »

The bottom line is that the way we deal with this issue today, will determine the precedent we set for future governments.

But the precedent of reducing public sector pensions already exists .. albeit in a reduced PRD payment which is a pay cut by another name. So why should pensioners be treated any different to employees when it come to additional pay cuts when the principle already applies in both sectors?

As for the fairness issue ... I wonder how much support the LRC would get for for a graduated pay cut with even a minimum 1% pay cut for those earning between €35k & €65k? However, many such people are happy to vote for a 5.5% plus an increment freeze for their colleagues. What is even more incredulous to me is that some people are criticising workers for not voting for such an unfair approach to pay cuts. This is my issue with CP2 and why if the Govt want to introduce a pay cut rather than engage in real reform they should simply introduce a graduated pay cut across the entire PS.

Godge · 09-05-2013 02:22PM

vinylbomb wrote: »

I'm gonna guess and say 65k is the demarcation line in PS between what is considered upper grades and lower grades. But I don't know, as I said, that's a guess.

But why should upper grades get a cut and lower grades not?

Even within those categories, are there some deserving of a cut and some deserving of an increase?

There is this belief out there on internet boards that public servants are one group of people who don't have votes, friends or family and just be treated to a pay cut because they deserve it because they are overpaid when there is no recent evidence (post the last round of pay cuts) to say that this is true.

As is shown by the vote on CP2 public servants are not a homogenous group and advocating pay cuts using an imaginary dividing line based on a figure pulled out of the sky is nuts.

Dannyboy83 · 09-05-2013 03:13PM

creedp wrote: »

But the precedent of reducing public sector pensions already exists .. albeit in a reduced PRD payment which is a pay cut by another name.

So why should pensioners be treated any different to employees when it come to additional pay cuts when the principle already applies in both sectors?

In general, contracts cannot be retroactively changed – unless the contract stipulates it can.

So realistically speaking, no public servant who has a contract with the state should have that contract retrospectively altered.
I believe these were the grounds cited in the case of Roddy Molloy et al. ?
(Open to correction here)

But realpolitik deems that someone must take a cut.

When I was in my early 20s, I took a car loan for a large sum of money, for a car which turned out to be a dud.
I didn't try to renegotiate my mistake after the fact.
I manned up and paid it off.
I learned financial prudence. I learned it the hard way.

The mistake and the learning as a result of it was much more valuable than the lost thousands, because ultimately it stopped me walking into much bigger mistakes down the line, such as the housing bubble.

We can solve this issue now by being ruthless, just cut everyone.
Solve the problem but learn nothing.

Or we can mature as a nation and develop "some sense of what is a proper long term basis for both public funding and expenditure".
Suffer the consequences, learn from the mistake by ensuring we never repeat it.

There is no easy answer, but to me it's an easy decision.
I will bear the burden of mistakes and learn from the costly consequences before I will ever give an Irish government unconditional power and unrestricted authority.

ardmacha · 09-05-2013 03:38PM

There is this belief out there on internet boards that public servants are one group of people who don't have votes, friends or family and just be treated to a pay cut because they deserve it because they are overpaid when there is no recent evidence (post the last round of pay cuts) to say that this is true.

In the period 2013-2016 inflation will increase and so the PS are in line for a real cut in wages of 5% odd anyhow. This alone will sort out most residual overpay.

Count Dooku · 09-05-2013 03:59PM

ardmacha wrote: »

In the period 2013-2016 inflation will increase and so the PS are in line for a real cut in wages of 5% odd anyhow. This alone will sort out most residual overpay.

Do you mean that inflation affect only PS workers?

ardmacha · 09-05-2013 04:05PM

Do you mean that inflation affect only PS workers?

Of course, I do not mean this.

creedp · 09-05-2013 04:59PM

Dannyboy83 wrote: »

We can solve this issue now by being ruthless, just cut everyone.
Solve the problem but learn nothing.

Or we can mature as a nation and develop "some sense of what is a proper long term basis for both public funding and expenditure".
Suffer the consequences, learn from the mistake by ensuring we never repeat it.

There is no easy answer, but to me it's an easy decision.
I will bear the burden of mistakes and learn from the costly consequences before I will ever give an Irish government unconditional power and unrestricted authority.

Two ways of looking at this .. if we have a hole to get out of then the pain of that should be distributed across the population in an equitable manner with everyone asked to contribute their fair share. Whether this be a(temporary) increase in tax for all or if deemed appropriate, a cut to public sector pay. If the latter I would consider it appropriate that all PS contribute to this shoulder to the wheel, including retired PS.

In relation to breaking of contractual terms my understanding is that the legislated pay cuts using the FEMPI legislation are temporary and must be justified annually. They must also be imposed across the board but can be graduated based on some consideration of ability to pay. This is probably why the Govt are very reluctant to go down the legislative route here (as they have done on 2 occassions already) and instead want a small proportion of the PS to agree to carry the can for all. Seems logical when you set it out like that doesn't it? And yet people wonder in amazement why it wasn't wholeheartly supported.

Cody Pomeray · 09-05-2013 05:39PM

amen wrote: »

I thought that if you were a retired PS/CS in certain grades that retired before the bench marking rounds and if the during bench marking your grade got an increase then you as a retired person also got an increase?

Yes, but just like any household income, there is no valid reason to protest if your budgeting is made easier.

The issue arises when someone has made budgeting plans in accordance with their stated pension, and retires only to find that the defined benefit available to them has now been altered in a way which undermines their financial planning.

There are all sorts of reasons why that alteration can be a necessary measure.

My point here can be summed up by saying it is reasonable to only protest changes to pensions if that change constitutes a reduction in payment.

Godge · 09-05-2013 05:47PM

creedp wrote: »

Two ways of looking at this .. if we have a hole to get out of then the pain of that should be distributed across the population in an equitable manner with everyone asked to contribute their fair share. Whether this be a(temporary) increase in tax for all or if deemed appropriate, a cut to public sector pay. If the latter I would consider it appropriate that all PS contribute to this shoulder to the wheel, including retired PS.

In relation to breaking of contractual terms my understanding is that the legislated pay cuts using the FEMPI legislation are temporary and must be justified annually. They must also be imposed across the board but can be graduated based on some consideration of ability to pay. This is probably why the Govt are very reluctant to go down the legislative route here (as they have done on 2 occassions already) and instead want a small proportion of the PS to agree to carry the can for all. Seems logical when you set it out like that doesn't it? And yet people wonder in amazement why it wasn't wholeheartly supported.

Yes, this is interesting especially when I read the news reports that the Department of Public Expenditure and Reform are consulting the Attorney General about the legality of pay-cuts. Surely they would have done this before they told the Minister to issue threats during the talks and voting? It would be really embarrassing if they announced that for legal reasons they could not make the cuts.

Godge · 09-05-2013 05:50PM

Cody Pomeray wrote: »

Yes, but just like any household income, there is no valid reason to protest if your budgeting is made easier.

The issue arises when someone has made budgeting plans in accordance with their stated pension, and retires only to find that the defined benefit available to them has now been altered in a way which undermines their financial planning.

There are all sorts of reasons why that alteration can be a necessary measure.

My point here can be summed up by saying it is reasonable to only protest changes to pensions if that change constitutes a reduction in payment.

I think the point you are making is that if you have made a financial decision that requires you to plan for say 20 years, that shouldn't be altered by the stroke of a pen?

How do you reconcile that to somebody who has gone down a career path of a teacher, nurse or guard who does not have an equivalent in the private sector and no private sector career path and who has done 15 years in the job and is facing 25 more and they can be cut? What about their right to household budgeting? Just like the person who retired their financial planning is undermined by a cut - why should they suffer and not the retired person?

K-9 · 09-05-2013 06:36PM

sean200 wrote: »

zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz same old story by same old people

Mod: This is the second similar type post, nobody is forcing you to post or read the thread. Don't post on this thread again please.

Farmer Pudsey · 09-05-2013 08:27PM

Kristopherus wrote: »

So you think a PS pensioner on €20-25,000 should be cut? And a married couple who sat on their arses all their life would then get a non-con pensions greater than your PS who has had their pension cut. That just makes no sense.:mad:

Dannyboy83 wrote: »

I am against the retrospective changes of public service pensioners who are currently drawing their pension.

I agree it can be changed for those still in employment, but not for those who have already retired.

Yes, it's a difficult financial burden to bear.
But it's the only way our government will ever learn accountability; Allowing retrospective changes to those contracts now completely eliminates the necessity for financial competence for future governments.

We should bear this burden and we should learn from it.
It should be seared in the public consciousness, so future governments cannot attempt to buy an election with the next round of benchmarking, safe in the knowledge that they can retrospectively change it.

Pensioners are well treated in tis country they receive extra tax allowances etc. The impact that this recession is having on young couples on low to medium with mortgages etc is excessive. Also most PS pensioners have pensions that are maybe 70%+ of net pay of corresponding staff now. They also have less cost than young family's.

How can it be fair that young familys may have received 30% pay cuts and taxes but a pensioner because of the tax regime is maybe 10% worst off and there day to day cost have gone down as there has been deflation in luxury goods and services.

donalg1 wrote: »

I'm a bit confused by this, you say that 33k or 66k isnt a big wage however you then go on to say that PS pay should be cut, there are many in the PS that earn far less than 33k and who are part of a couple earning less than 66k.

Do you want to cut their pay or leave it alone and cut those that earn more than this?

You seem to differentiate between the wages and services the PS employee receives and the wages and services the Private Sector employee receives even if their wages are the same.

You cannot allow for every situation however in general most people will marry/co-habit/live with people in there own socio-economic group note I highlighted most. The government has little to do with pay in the private sector we are dealing with a situation where we need to balance the book and look at cuts that will have least effect on the economy and at the same time improves public services to ordinary people. All the money that the government receives in tax cannot be use to protect PS wages at the expense of services which is what is happening.

creedp wrote: »

What would be your definition of low pay in the public sector given that it is different from SIPTU? For example would you think someone on €60k is highly paid while someone on €59,999 is a low paid worker.

My own opinion is that the Government should start cutting pay above 40K

Godge wrote: »

Farmer, do you have anything to back this up?

http://economic-incentives.blogspot.ie/2013/03/effective-tax-rates.html

Here is some data on effective tax rates - admittedly it leaves out the USC. The second link is more informative

http://economic-incentives.blogspot.ie/2013/01/is-ireland-low-tax-again.html

Here is the most important quote from this independent analysis:

"For average earners Ireland is a low-taxed, low-social-insured economy. A chart ranked by total deductions is here. Ireland is at the bottom."

Even if you disagree with some notion of the figures (taken from 2010, other assumptions) getting from bottom of the EU15 to near the top in terms of taxation of average income would be difficult no matter how you twist the statistics. Therefore, there is absolutely no evidence to back up an assertion that the average income person pays too much income tax. The opposite is indeed the case.

Your other point is more pertinent about the fact that if you tax them higher they will drop out of the workforce (that applies to public servants too if you cut their wages).

So we have clear evidence on two points:

(1) We are at the bottom of the league for income tax/social contributions on average income
(2) Social welfare levels are so high that there is a disincentive to work.

The solution you propose to these two problems is not raising income tax and cutting social welfare, it is cutting public service pay. Brilliant. Cutting off your hands to cure the gangrene in your legs. Absolutely brilliant.

Godge in any thread I have advocated cutting cutting Social welfare. I have also stated that tinkering with the minimum wage is a waste of time. And I have stated that PS pay needs to be cut.

Also I did not post about effective tax rates I stated clearly about the Marginal rate. Yes this includes PRSI and USC which are tax by another name.

Yes we may have a different tax % to the EU average. However as the Dingle man out in Krugher Kavanagh pub said to The Yank looking for the way to Donegal, "if I was going there I wouldn't like to be starting here''.

The reality is that the country is broke. People are saddled with debt, the private sector is barely breathing and unless they can generate profit and expand there business's that may allow them to employ more workers. We have a PS that is over staffed and it pay is out of kilter with what we can afford.

Yes workers on low pay less tax in Ireland however unless we cut welfare to English or German rates ( which I have not an issue with) then we cannot extract extra taxes from this group.

Do you think that the Government can cut unemployed benifit by 40%. Do you think they will.

ardmacha · 09-05-2013 08:38PM

We have a PS that is over staffed

Which bits are overstaffed?

Cody Pomeray · 09-05-2013 08:40PM

Godge wrote: »

I think the point you are making is that if you have made a financial decision that requires you to plan for say 20 years, that shouldn't be altered by the stroke of a pen?

No.

I'm saying that it's perfectly reasonable to complain only when your income is reduced, and not when it is increased.

I didn't say that pensioners do or do not have a right to maintained rates. That decision may be influenced by whatever objections which they put forward, it is simply reasonable that they object, and also reasonable that they did not object in better times.

tayto lover · 09-05-2013 08:41PM

Cody Pomeray wrote: »

No.

I'm saying that it's perfectly reasonable to complain only when your income is reduced, and not when it is increased.

I didn't say that pensioners do or do not have a right to maintained rates. That decision may be influenced by whatever objections which they put forward, it is simply reasonable that they object, and also reasonable that they did not object in better times.

Public Sector pensions were already cut a few years ago by 4% apparently.

fall · 09-05-2013 08:54PM

Between pension levy and contribution I pay about 700 euro a month. I think that is a huge amount of money. I would hope to have an ok pension based on that.

barneystinson · 09-05-2013 09:43PM

Farmer Pudsey wrote: »

My own opinion is that the Government should start cutting pay above 40K

Why 40k?

skafish · 09-05-2013 09:57PM

Farmer Pudsey wrote: »

All the money that the government receives in tax cannot be use to protect PS wages at the expense of services which is what is happening.

Do you think that the Government can cut unemployed benifit by 40%. Do you think they will.

All the money the government receive in tax is not used to protect PS wages. What do you think pays social welfare, builds roads (granted, there is not much of that happening at the moment), gives , if I'm not mistaken, €700 M to overseas aid every year?

Who mentioned cutting SW by 40%? to achieve the savings the government need, the would need to cut the SW budget by 5%.

Or alternatively, they could sort out welfare fraud and the black economy

barneystinson · 09-05-2013 10:01PM

skafish wrote: »

Or alternatively, they could sort out welfare fraud and the black economy

I'm all ears on how you propose "they" do that? (And who "they" are)

Farmer Pudsey · 09-05-2013 10:10PM

skafish wrote: »

All the money the government receive in tax is not used to protect PS wages. What do you think pays social welfare, builds roads (granted, there is not much of that happening at the moment), gives , if I'm not mistaken, €700 M to overseas aid every year?

Who mentioned cutting SW by 40%? to achieve the savings the government need, the would need to cut the SW budget by 5%.

Or alternatively, they could sort out welfare fraud and the black economy

Some are advocating higher taxes on lower paid to do this so as to encourage people to stay in employment or take up employment you would need to cut unemployment benefit. At present a lot of workers would be better financially of unemployed than working.

If we went to British or some European rates out welfare would have to be cut substancially. I cannot se the government do this.

How do you propose to sort out Welfare fraud and the Black economy. All developed countries Finance Ministers would be all ears on these one not just Micheal Noonan.

skafish · 09-05-2013 11:02PM

Farmer Pudsey wrote: »

Some are advocating higher taxes on lower paid to do this so as to encourage people to stay in employment or take up employment you would need to cut unemployment benefit. At present a lot of workers would be better financially of unemployed than working.

If we went to British or some European rates out welfare would have to be cut substancially. I cannot se the government do this.

How do you propose to sort out Welfare fraud and the Black economy. All developed countries Finance Ministers would be all ears on these one not just Micheal Noonan.

I don't claim to have all the answers, but the revenue commissioners seem to have made a good start in finding a number of tax defaulters.

Personally, I would advocate increasing the number of revenue inspectors, either through redeployment, or direct recruitment, and starting by conducting tax audits on all registered businesses in the country (including farmers). The additional revenue raised should more than pay the wages concerned.

At the same time, the number of SW inspectors should be increased, and where employers are found to be employing people in the black economy, they should be heavily fined. This would act as a disincentive to those tempted to employ others for cash.

Simultaneously, new businesses should be helped by reducing red tape etc, and encouraged to take on employees through schemes whereby people can continue to claim part of their SW for a limited period, thus reducing the wage costs for the business until the employee becomes self funding (ie generates enough of a return to the business to enable them to be paid a decent wage directly). This option should be made available to all business.

If SW was reduced to a more realistic level while all this was going on, it would encourage those people who are currently better off on SW back into the workforce.

I'm not suggesting that any of the above would be easy; and like lots of other ideas, its not perfect, but you asked what I would do.

Mind you, I can't see the current government doing any of the above, as it would adversely affect their popularity.

As an additional measure, it would be good to see the government keep just a few of their pre election promises with regard to reducing the number of TDs, getting rid of quangos, reforming the dail expense culture etc.

But I don't expect to see any of these for a long time either.

barneystinson · 09-05-2013 11:31PM

skafish wrote: »

I don't claim to have all the answers, but the revenue commissioners seem to have made a good start in finding a number of tax defaulters.

This is nothing new, Revenue have published a quarterly list of tax defaulters for donkey's years now, and that is only a fraction of the total (the worst categories of default).

skafish wrote: »

Personally, I would advocate increasing the number of revenue inspectors, either through redeployment, or direct recruitment, and starting by conducting tax audits on all registered businesses in the country (including farmers). The additional revenue raised should more than pay the wages concerned.

That's just plain unrealistic for any number of reasons, which assuming you're a grown up shouldn't really need to be spelled out, but nonetheless -

What timeframe are you hoping to carry out all these audits within - you realise you're talking about somewhere between half a million and a million audits? Do you have any idea of the manpower you would need to do that? In 2012 Revenue completed 9,066 audits yielding €359m - their entire staff is less than 6,000 and the bulk of those are not in audit - far less than 1,000 auditors. So now scale up 9,000 audits to 500,000 and work out how many extra audit staff you'd need... They'd need to hire most of the accountants in the country (but they couldn't afford them anyway as most auditors are EO's/AO's/HEO's earning 30k-55k), or redeploy as many unqualified people as you want from other Depts, to make a proper mess of it.
Why stop at registered businesses, if it's black economy you're after then what about all the PAYE workers / unemployed people doing nixers or running a whole business in the black market?
Auditing everyone (including every fully compliant business in the country) just for the sake of it, would be a monumental waste of resources - currently Revenue use risk profiling to identify the riskiest taxpayers and focus their limited audit resources on them - this includes farmers (not sure why they got a special mention?). And also, remember the cost in time and hassle to the taxpayer of dealing with an audit - you want every fully compliant taxpayer to suffer this cost, for no particular reason.
"The additional Revenue raised should more than pay the wages concerned" - how can you possibly know this?! Lets say average cost per auditor (including non-audit support staff, and additional managers etc) would be €60k a head. Revenue delivered 9,000 audits last year. To audit the whole country (say 500k businesses & sole traders) every 3 years you would need 18 times as many auditors - if there's 700 at present, you're talking about hiring / redeploying 12,600 new auditors and more than trebling the size of Revenue. That's at least €750m of cost - you're going to need them to find an awful lot of missing tax every year to cover that cost.

ardmacha · 09-05-2013 11:49PM

What timeframe are you hoping to carry out all these audits within - you realise you're talking about somewhere between half a million and a million audits? Do you have any idea of the manpower you would need to do that?

The modern approach is data mining and the like to identify suspect cases so that regular people are not targetted. No doubt data mining experts will be queuing up to join the Revenue and get their pay cut, it is not as if they could get a job somewhere else.

sock puppet · 10-05-2013 12:41AM

ardmacha wrote: »

The modern approach is data mining and the like to identify suspect cases so that regular people are not targetted. No doubt data mining experts will be queuing up to join the Revenue and get their pay cut, it is not as if they could get a job somewhere else.

I'd imagine their stats department does this already no?

Croke Park II preliminary Talks started today

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