This to me is the key point. Our electoral system rewards short termism, populism and sectoral interests. In order for improved behaviours and outcomes to be achieved, the reward system would need to be changed. Problem being finding, agreeing and implementing a better system.
This is a very dangerous pro-cyclical budget - the opposite of what we need
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This to me is the key point. Our electoral system rewards short termism, populism and sectoral interests. In order for improved behaviours and outcomes to be achieved, the reward system would need to be changed. Problem being finding, agreeing and implementing a better system.
well there actually is one Renua, yes it is socially conservative but it cant reverse referendums recently voted on. I think any party right of centre is demonised by the media and therefore never gets off the ground in Ireland. I think fine gael the traditional fiscal responsible party in ireland has been under intense media pressure to increase spending on health and welfare and housing benefits. Its also the case that they have alot of new young tds (leo varadker included to some degree) much more concerned with their media image and dont want to incur the wrath of the media. Whereas the old guard like michael noonan et al were hardened operators and could fight their own corners with the media, they were less concerned with how they appeared on tv.
Sophrosyne
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The problem identified in the IFAC report is Health overspends.
"To show the effect of spending over-runs, the IFAC said that without health overspends (or by using additional revenue measures to pay for them), the public finances would have moved into surplus two years ago."
The report states: "Failures to prevent unplanned spending increases have meant long-lasting increases in spending that are difficult to reverse. These increases represent a repeat of the policy mistakes of the past.
"Instead, pressures in the health sector and elsewhere should be funded through sustainable tax revenues or decreases in spending categories elsewhere."
We still don't know the reason for the overspends.
"To show the effect of spending over-runs, the IFAC said that without health overspends (or by using additional revenue measures to pay for them), the public finances would have moved into surplus two years ago."
The report states: "Failures to prevent unplanned spending increases have meant long-lasting increases in spending that are difficult to reverse. These increases represent a repeat of the policy mistakes of the past.
"Instead, pressures in the health sector and elsewhere should be funded through sustainable tax revenues or decreases in spending categories elsewhere."
We still don't know the reason for the overspends.
I remember I used to vote for Fine Gael as the only identifiable party espousing (at least rhetorically) policies of fiscal rectitude. I'd take the early incarnation of the PDs back now. You'd wonder what the point of the IFAC is? Opposition politicians hold their views up as the leading critique of government policy. until, of course, they're in government.
Great point. IMO, what's much more needed is a IEAC, where the "E" stands for Effectiveness. What's really needed is a body to ensure that the money being spent on public services is well deployed. In other words, extending the great work done by the Comptroller and Auditor General.
Brendan Burgess
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The point of IFAC is to comment independently on the Budget and fiscal policies of the government.
It has a problem in the current Irish environment where no party has criticised the recklessness of the Budget. Not even one TD or Senator did.
But that is all IFAC can do. It has done this very well. It did not shirk its responsibility.
I would support a constitutional change that appointed the Minister for Finance from outside the political system. That he would be independent from government in the same way as the Governor of the Central Bank is.
The government could decide how much tax to raise. The Minister for Finance would set the Budget for each Department based on the tax revenue available.
Brendan
Brendan Burgess
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Séamus Coffey of the IFAC will be speaking to the Budget Oversight Committee today at 2 pm
Here are the members
Deputies
Maria Bailey
Fine Gael
Declan Breathnach
Fianna Fáil
Colm Brophy - Chair
Fine Gael
Thomas P. Broughan
Independent
Joan Burton
Labour Party
Lisa Chambers
Fianna Fáil
Barry Cowen
Fianna Fáil
Pearse Doherty
Sinn Féin
Martin Heydon
Fine Gael
John Lahart
Fianna Fáil
Michael McGrath
Fianna Fáil
Jonathan O'Brien
Sinn Féin
Eamon Ryan
Green Party
Here are the members
Deputies
Maria Bailey
Fine Gael
Declan Breathnach
Fianna Fáil
Colm Brophy - Chair
Fine Gael
Thomas P. Broughan
Independent
Joan Burton
Labour Party
Lisa Chambers
Fianna Fáil
Barry Cowen
Fianna Fáil
Pearse Doherty
Sinn Féin
Martin Heydon
Fine Gael
John Lahart
Fianna Fáil
Michael McGrath
Fianna Fáil
Jonathan O'Brien
Sinn Féin
Eamon Ryan
Green Party
Brendan Burgess
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Michael McGrath welcomes the report and says it's backed up by the data.
Do you still believe, as you did in 2016, that the CT receipts are sustainable?
Or are we in danger of making the same mistake, basing permanent spending increases on temporary income increases.
Séamus: CT is a volatile tax and it's likely to go down at some stage. But the step change was in 2015. So they are sustainable until 2020, but the high levels increase the risk. We don't know why the CT rise happened.
McGrath: You are very critical of the health service expenditure. But if the government asked you what could they do?
Michael Tutty (Council Member) : If there are overruns on health every year, then something is wrong. The forecasts are not based on reality. We need reasonable forecasts rather than unrealistic ones. The Dept of Finance might be at fault as well as the HSE.
Séamus: We had the same overruns on health last year, but we had underspends elsewhere. This year, the overruns are across the board.
Do you still believe, as you did in 2016, that the CT receipts are sustainable?
Or are we in danger of making the same mistake, basing permanent spending increases on temporary income increases.
Séamus: CT is a volatile tax and it's likely to go down at some stage. But the step change was in 2015. So they are sustainable until 2020, but the high levels increase the risk. We don't know why the CT rise happened.
McGrath: You are very critical of the health service expenditure. But if the government asked you what could they do?
Michael Tutty (Council Member) : If there are overruns on health every year, then something is wrong. The forecasts are not based on reality. We need reasonable forecasts rather than unrealistic ones. The Dept of Finance might be at fault as well as the HSE.
Séamus: We had the same overruns on health last year, but we had underspends elsewhere. This year, the overruns are across the board.
Brendan Burgess
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Maria Bailey
We need capital expenditure to improve out productive capacity.
Would cutting that improve our deficit position?
Where will the biggest increases in the health budget come from? Are health spending overruns not normal in developed countries?
What sort of tax increases are you talking about?
You mention that if we build a lot of houses, then there will be a lot of over-heaing in the economy.
Séamus
We do need an increase in housing.
But is there space in the economy to do it?
We are going to build about 18,000 but need over 30,000.
Housing is tax risk and could lead to an increase in demand in the economy
We need to take heat out of the economy to make space for house building.
We need capital expenditure to improve out productive capacity.
Would cutting that improve our deficit position?
Where will the biggest increases in the health budget come from? Are health spending overruns not normal in developed countries?
What sort of tax increases are you talking about?
You mention that if we build a lot of houses, then there will be a lot of over-heaing in the economy.
Séamus
We do need an increase in housing.
But is there space in the economy to do it?
We are going to build about 18,000 but need over 30,000.
Housing is tax risk and could lead to an increase in demand in the economy
We need to take heat out of the economy to make space for house building.
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Lahart
I am not an economist
I am not an accountant
I am not very good with figures
We seem to be back to "When we have money we spend it."
But how does the government underestimate the CT so much?
Why did the government leave the Xmas bonus out of the estimates.
We invited DEPR in to talk to us about the health budget, but they declined saying it was the responsibility of the Dept of Health.
Why has the Social Protection budget been constants, with falling unemployment?
Tutty:
One of the reasons we were set up was to try to stop this cycle of spending money in good times. We have to try to persuade parliament and the people that this cycle should break.
Despite the advice of public servants, it has been the practice to leave the Xmas bonus out of the budget.
Coffey
Unemployment accounts for only 25% of the budget and this element has fallen, but demographic pressures has increased the expenditure elsewhere.
I am not an economist
I am not an accountant
I am not very good with figures
We seem to be back to "When we have money we spend it."
But how does the government underestimate the CT so much?
Why did the government leave the Xmas bonus out of the estimates.
We invited DEPR in to talk to us about the health budget, but they declined saying it was the responsibility of the Dept of Health.
Why has the Social Protection budget been constants, with falling unemployment?
Tutty:
One of the reasons we were set up was to try to stop this cycle of spending money in good times. We have to try to persuade parliament and the people that this cycle should break.
Despite the advice of public servants, it has been the practice to leave the Xmas bonus out of the budget.
Coffey
Unemployment accounts for only 25% of the budget and this element has fallen, but demographic pressures has increased the expenditure elsewhere.
Brendan Burgess
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Sebastian Barnes
On page 144, you will find some stress testing scenarios which show the high risks.
Tommy Broughan: This report is an indictment of the FG/FF government
Parties should have their own budgets. "I am an independent myself at the moment" - [ "at the moment"? Big laughs from everyone else there.]
Coffey: The political cycle increases the risk
A tax cut is the same as spending - we use the word "spending" as shorthand for either.
Budgets 2016 and 2017 have been revenue reducing. Budgets 2018 and 2019 have been revenue increasing.
On page 144, you will find some stress testing scenarios which show the high risks.
Tommy Broughan: This report is an indictment of the FG/FF government
Parties should have their own budgets. "I am an independent myself at the moment" - [ "at the moment"? Big laughs from everyone else there.]
Coffey: The political cycle increases the risk
A tax cut is the same as spending - we use the word "spending" as shorthand for either.
Budgets 2016 and 2017 have been revenue reducing. Budgets 2018 and 2019 have been revenue increasing.
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