We need to manage our national finances more prudently.

Brendan Burgess said:
Are you saying that our finances are sensibly managed? That running up the borrowing over the last number of years is not a problem? That we have spent the Corporation Tax windfalls and low cost of servicing the debt well?
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I don't know! It's been a long time since I looked at the numbers thoroughly. My overall point is that a country is not a tennis club and books don't have to balance every year.

Too much government borrowing can lead to bad things (we all remember the troika years) but permanent deficits are fine for a country in a way that they are not for a corporation. France has not run a budget surplus in 40 years and it is not insolvent!



Brendan Burgess said:
And there is no risk of the state getting into difficulties when any or all of the following happens:
1) A fall off in Corporation Tax Revenue
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Yes. But what is the magnitude here? Losing €2bn of the current €14bn take over a few years is manageable. I haven't seen any indication that IP-intensive tech firms have any plans to reduce Irish activity, in fact the opposite.

Brendan Burgess said:
2) A rise in interest rates causing an increase in the cost of servicing debt
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But this process will be extremely slow to feed through the stock of outstanding debt. A sharp rise in rates would see borrowing go from 1.2% of GNI* to 2.5* of GNI* over five years? That's a lot of time to plan.

Brendan Burgess said:
3) A recession which will hit general tax revenues and increase our social welfare bill
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I think there is an exposure there for sure. Ireland's labour market is unusually flexible and in a recession a lot of workers get laid off. You could easily see unemployment double and benefits increase by €5bn in 18 months. I thought the idea floated a few years ago of a Rainy Day Fund was good, but it has never been implemented.

Brendan Burgess said:
4) The cost of Mica, refugees etc
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I agree. A lot of "one-off" things like Covid, Mica, refugees, etc have been covered by the expanding corporation tax take in recent years. That's not a good policy and the IFAC has pointed it out on a few occasions now.
 
Then why are the NTMA issuing Treasury Bonds , usually short term funding and other bonds that are longer term.

I'm the first to admit my knowledge of this area is rudimentary, but if we're not borrowing for current and capital expenditure where is the money coming from , existing debt?
 
Paul O Mahoney said:
Then why are the NTMA issuing Treasury Bonds , usually short term funding and other bonds that are longer term.
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Hi Paul

We have a lot of cash on deposit as well which is financed by bonds.

The NTMA borrows money long-term when it judges it's a good time to do it.

If the bond markets froze tomorrow, we probably have enough for the next year or so - to fund expenditure and to repay the maturing debt.

Brendan
 
I understand that but wouldn't that still be borrowed money? And interest is payable think its €2.1bn this year.

I know that Governments don't do accrual accounting but borrowing in year 1 to fund year 2 is still " borrowing ".

This is another example of the lack of transparency and by extension internal control, if any company were to say we won't be borrowing money this year to fund expansion of the business theyd be in serious trouble, both legally and financially.
 
Hi Paul

You asked why the NTMA was issuing bonds.

They don't need to do so at the moment as they have plenty of cash on hand.

That is the point I was making.

Brendan
 
Brendan Burgess said:
Hi Paul

You asked why the NTMA was issuing bonds.

They don't need to do so at the moment as they have plenty of cash on hand.

That is the point I was making.

Brendan
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But they have issued this year €1.5bn t Bill's and a bond for 1.25bn , might be that they are surrendering more expensive debts.

But my point is that how can we and there are some very clever people in this country understand the problems of transparency and devising methods to over come these problems and by extension hold the government accountable for the mismanagement of our economy.

And this is right across the entire governmental remit, housing, health, social services it disgraceful that the information is so difficult to get and then comprehend.

Rant over.
 
Brendan Burgess said:
Charlie McCreevy was berated for the opposition for not spending enough.

Just as Paschal Donohoe is now.

Both claimed to be managing the finances prudently. Charlie wasn't and Paschal isn't either.
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I disagree with your comment regarding Pascal Donohoe.
I think he is a very competent Finance Minister.
 
Sophrosyne said:
I disagree with your comment regarding Pascal Donohoe.
I think he is a very competent Finance Minister.
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In fairness I think most FG finance ministers had a tough time with the leftovers of previous FF governments but did their jobs pretty well.

Donohue would be the best . Hes articulate he knows his brief and explains situations very well.
 
Sophrosyne said:
I think he is a very competent Finance Minister.
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Hi Sop

Could you back up your opinion with some argument?

He is ruining the public finances with his overspending.

He keeps claiming the public finances are in a good position, when they manifestly are not.



Brendan
 
Paul O Mahoney said:
That opportunity sailed away 20 years ago and nothing they could do now will change voters minds.
Everyone wants everything now.

Mc Creevy, "I have it so I'm going to spend it" ruined the country as most now think they always have it.
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I'm inclined to agree here - not to mention the fact that many people regard FF and FG as the most extreme right wing, stingy parties that ever lived.

Slaintecare as proposed will cost nearly double of the perfectly viable compulsory health insurance plan FG originally had when elected in 2011 - thrown out because it would have costed nearly 2bn. But Slaintecare will cost nearly double that!

Part of the issue is that there is no real viable political entity to the right of FG - without that both centre parties are backed into spiralling wildly on spending, not least because much of it never gets seen.
 
Peanuts said:
The biggest problem I think is that politicians do not get rewarded for doing the right thing, i.e. Governments not getting re-elected. That leads to overspending/tax -cuts in order to 'buy' votes. I don't know how we get around that.
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Had FG actually persisted with cuts in spending from 2014 on they would absolutely not have been reelected in 2016, never mind 2020 (where they still won more seats than their 2002 outing).
 
We don't need right or left, we need fairness we need to show that lifes decisions are hard, but the message should be something like " if you fall society will catch you and break your fall, but it's you and only you who needs to get back up"

Of course some can't and they need tending to, but the majority can and once we eradicate " equality " as a concept people will find their level, and that level will be respected by all.

It's not complicated.
 
Paul, while I understand that you are philosophizing, no governmental system is perfect.

We have a constitution that contains our aspirations.

Management of the economy requires at least a basic grasp of governmental economics, which not everyone has.

Besides the interaction of inter alia, economic growth, taxation, expenditure, borrowings, interest rates & inflation, Finance Ministers have to be across a multitude of reports and data – national & international.

We might end up with the drunks on the bus telling us how to get rich, or endless discussion so that nothing gets decided.
 
Sophrosyne said:
We might end up with the drunks on the bus telling us how to get rich, or endless discussion so that nothing gets decided.
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Are we far off that now?
It is just about impossible to implement structural reforms within the State Sector so we end up with endless reports, populists nonsense getting platforms in the national media and endless amounts of money thrown at the shortcomings rather than fixing those shortcomings. That cycle doesn't lend itself to good government and it isn't indicative of an economically literate electorate.
 
What about Argentina, Venezuela and almost Italy Greece and ourselves during the financial crisis they defaulted on their debts , the debt was too high for their public finances to manage or for their tax payers to pay back.
They become pariah states closed off from the global financial markets with drastic cuts in public salaries and welfare payments, remember where we were in 2010 when the bond markets would not lend to us because we were too high risk, we had to be bailed out
 
Brendan's original article does not give enough room to this essential point.

Indeed if we fail to grow the economy we will leave lower living standards to our children.
 
Brendan Burgess said:
There is a huge difference between borrowing money to build the M50 and borrowing money to give teachers a salary increase.

Brendan
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Are you sure about this. Is there really such a difference.

Teachers with money to spend will buy cinema tickets, restaurant meals, haircuts, new kitchens etc. all leading to increased economic activity and investment by cinema chains, restauranteurs, hairdressers and kitchen installers.

We would not need the M50, if all those cinema ushers, waiters, hairdressers and carpenters didn't have any work to go to.
 
By that logic the more we borrow to spend the better off we become. Ask the 1970's how that works out.

It's a false dichotomy anyway. We can choose to spend the money on the M50, not give teachers pay rises and not borrow, or we can choose to spend the money on pay rises for the teachers and not build the M50 and not borrow, or we can choose to do both and borrow the money. Which item of expenditure the borrowing is allocated against doesn't change the choices we have.
We spend a decade and a half funding current expenditure using Capital transaction taxes. I don't think that's a good idea.
We could, if we chose to, spend current tax receipts on Capital items. I think that is a good idea.
 
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