Transfer Payments

A previous post looked at the overall government accounts using Table 21 from the CSO’s National Income and Expenditure Accounts.  Here we use the figures from Table 24: Transfer Payments to focus on the largest expenditure item.  As we saw in the previous post expenditure on current transfer payments rose from €21.3 billion in 2006 to €28.9 billion in 2010.

Table 24 provides a breakdown of current transfer payments in 43 different categories.  Here we combine many of them together to form ten main groups.  For example, Pensions includes contributory, non-contributory, retirement and invalidity pensions, Unemployment includes unemployment assistance, unemployment benefit and redundancy payments.  Other transfers such as Child Benefit and the Supplementary Welfare Allowance are used as standalone groups. 

The two largest named categories in the Other Transfer Payments group are the local authority housing rental deficit (€660 million in 2010) and the social employment scheme (€361 million).  Apart from miscellaneous categories all other elements of this group are smaller.

If required Table 24 provides the figures for all 43 categories but the ten categories used here provide sufficient detail for this glance into our transfer payments where the purpose is to inform rather than advocate.  Some details and 2010 figures of the classifications  used by the Department of Social Welfare are available here.

Anyway this is the table produced using the ten groups.

About 40% of the increase since 2006 is as a result of the increase in direct unemployment payments.  The increased level of unemployment will also have led to the increase in other payments.  Pensions form the largest category and account for about one-fifth of the increase.  Child Benefit payments were actually lower in 2010 than they were in 2006.

UPDATE: An extended table with details going back to 1997 can be seen by clicking here.

49 thoughts on “Transfer Payments”

  1. Thanks Seamus, really interesting table.

    What strikes me first is that unemployment benefits only represent 16% of the social welfare budget.

  2. Table 24 has figures from late boom onwards. This is a bust following a credit bubble. I think it would be appropriate to have figures from pre bubble though.

    House prices are back somewhere around 1999 – 2001 levels and this gives an indication of the sort of timescale that should be used for comparative purposes – eg if I were advising public sector unions or pensioners organisations etc I would first and foremost drum into them that they must keep emphasising how much this and that has been reduced over the last 3, 4 or 5 years – and to studiously refuse to engage with anything that happened before about 2005.

    Is this the work of the FODAR again, or happy coincidence?

  3. @Dreaded Estate
    I suspect many who are unemployed without debt and have savings are not claiming anything.
    Anyway the figures paint a picture of a much more efficient state now that the banks are temporarily out of the credit opium business.

    Just to highlight my hobby horse , the figures for operation of personnel transport equipment which includes fuel cost is pretty close to the 2006 figure – OK cars have aged , fuel costs have risen and tax has been raised but is this not still a low hanging fruit ?
    2006 – 4181 million
    2010 – 4161 million

    Can 1 billion of this be pushed into increased public transport use ? making bus & rail more efficient again as they are not much better then car pooling when half full.
    Fuel taxes raised to UK levels………. anyone anyone ?
    1000 euros extra car tax……… anyone anyone ?

  4. 2006 seems like a terrible analytical foundation as a base year since it is the height of the property bubble. Is it possible to push the data back to say 2000 before the bubble distorted the economy so badly? Otherwise it is difficult to interpret what the analysis is telling us.

  5. At least the payments are referred to as “transfers” and not the odious Tea party style “entitlements” which of course is joined to the hip with “slash” .

  6. Herhttp://www.imf.org/external/pubs/ft/scr/2011/cr11276.pdf 18$ worth of free publication..the IMF saying nice things about us.

  7. @ Dork of Cork

    “Fuel taxes raised to UK levels………. anyone anyone ?
    1000 euros extra car tax……… anyone anyone ?”

    I take it you don’t drive a private vehicle then?

  8. I’ll try and put together a table that goes back as far as is viewable on the average screen. The width of the text column limits what can be presented and the initial table was designed with that constraint, rather than any analytical reason, in mind.

  9. Seamus
    EXcellent work – Can I suggest that showing say 2-3 more years, not contigious, would be enough? perhaps 2000, 2003, 2005 ? Show with 2007, 2009-10 should be enough for a comparison

  10. Naughty, naughty! I think you left out the transfer of ~€30 billion to Anglo in 2010! (I know, I know, Technically a different category.)

  11. @Sportdog
    No I consider private cars a epic waste for the most part – depreciating in driveways like like rural Irish housing estates.
    They are Dollar bubble Industrial relics
    @John
    The whole of Europe has a dangerous love affair with cars – this belief that you can have both autobahns and ICE trains is ludicrous.
    Exporting our wealth so Arabians can blow it on whatever takes their fancy is the road to perdition.

  12. My first transport to a job in Ireland was via a company car pool – how many of those remain I wonder ?
    Until the average middleclass person walks / gets the bus for their weekly shopping and perhaps gets the Taxi home we will be in deep deep trouble here.

  13. Why is there not a “export austerity to Germany campaign” here ?
    Why do Irish Pubs have to die so that the Bavarians can drink more beer ?

  14. @ Seamus

    Great work, cheers.

    @ Dork

    So no cars at all, not even electric? Yesterday morning 36% of the electricity being consumed in Ireland was generated by wind. So if you happened to be charging your car, a third of the energy you purchased was generated/taxed in Ireland.

    With fewer moving parts and massive research on battery technology underway I don’t see why prices won’t decrease and capacity/efficiency increase over the next decade or so.

    While every charging e-car could be incorporated as part of the National Grid while charging, allowing for greater flexibility if/when energy maters are introduced in Ireland.

  15. @John
    Ireland cannot now function without extensive private car usage unfortunetly – but a 1000 euro extra car tax would certainly make car pooling more attractive somehow don’t you think ?
    And even in a Dorks perfect world taxis and business people using their vehicles more efficiently would carry on as normal.
    I am sorry I don’t buy this electric car / wind thingy – the batteries are just too capital intensive… Lithium will always be expensive.
    The primary goal of our trade policey should be about stopping the bleeding – we can get back to the 1983 oil consumption figures without a famine with a wise tax policey & investment in the obvious commuter rail projects.

  16. @ Dork

    You can be sure the ‘Carbon Levy’ will increase a bit but increasing car tax by 1000 euro would be an erratic move. that would push too many over the edge How about all the people stuck in negative equity in commuter counties around Dublin (lucky enough to have jobs).

    I’m pretty sure I read a paper once that said the actual raw cost of the lithium in vehicle batteries is currently less than 3% as a proportion of cost. I’d be more optimistic about their potential.

  17. Don’t like the internationalist Carbon levy thingy – my tax policey would be much more nationalistic in that sense.
    Things will have to localise anyhow – but we don’t have to pay London / Zurich compensation for a loss in oil revenue arbitrage which is what the Carbon tax is all about.
    The idea of tax is not to raise revenue which in reality it does not , it is to increase efficiency – ideally commuters will act rationally if they have no access to public transport and form car pools.
    You see you can avoid consumption taxes , not mortgages – at least in the long run.

  18. What does “Transfer Payments to the Rest of the world” consist of? Is this mostly foreign and development aid?

    I am presuming pesions paid to retired people living in a more sunnier climate and the 3 months dole people (“emigrating” immigrants) can claim when they leave Ireland, as well as childres allowance paid for kids who do not live in Ireland (but who have a parent who do) are already included in the appropriate categories.

  19. Why the concentration on the scale of the transfer payments ?
    Surely money has to be introduced into the system now that credit production has stopped.
    Otherwise you get no trade , no commerce if private debt expects to be repaid.
    The debate should center on how the money is best spent on end use consumption, productivity and efficiency gains.

    Fiscal defecits is a obsolete anachronism is a free floating currency system – they are just a measure of previous credit malinvestment socialised ( if we just guarrenteed deposits up to 20,000 we would not be having this debate)
    We are now a far more efficient country (input – output ) then during the 1999 – 2007 period.
    These transfer payments unlike credit creatures have no leverage.
    The question is can this expensive money replace the massive scale of the fraudulent leveraged credit or will it collapse.

  20. Dork,

    The extra 1000 a year on cars is a ‘policy’ not ‘policey’, and as far as I am concerned, it is equally well thought out as it is spelled. My dear car is now on the container following me happily to the Middle East so you can kiss goodbye to my 1200/year road tax and god knows how much in fuel tax / carbon levy and, while we are at it, income tax,. Nobody will coerce me into a depressing bus ride to work, as if slaving away for the first 6 months of each year for someone else isn’t enough.

    Furthermore, looking at the entitlement payments, I can see what else is wrong with Ireland of today. The education spending and child benefit spending remained flat while the pensions have ballooned out of proportion aptly illustrating the wealth transfer from the struggling young families to well-off retirees (who had already benefited from the massive rise in house pricing making their 30.000 punt wrecks into 300000 euro ‘properties’). So I am supposed to pay extra 1000 a year on top of all other direct and indirect transfers I am forced to pay so that the government can continue to pay inflated ‘Pat Neary’ pensions to useless retired bureaucrats who caused untold damage to the country through their incompetence. Not gonna happen, mate.

  21. And another thing, you are hardly exporting your wealth to Arabs. At $80 per barrel it works out to 30 Euro cents a liter (and roughly half of that goes for extraction, transport and intermediaries). Most of what you pay at the pump goes to the dear government. This is why they didn’t ban the cars although they will cause us all to fry from global warming, and other untold social ailments.

  22. @Dom K
    You want to cut the transfer payments “mate” go right ahead.
    I would like to cut the transfer payments.
    But you seem to forget you need money to pay down debt baby.
    This is money being introduced into the system – your arguments do not hold unless you want to default on credit deposits.
    I would also like to see a default on deposits.
    However in such a scenario the only mechanism to pay such a huge credit sum is to squeeze more efficiencies out of the system as I guess many workers spend more energy getting to work then what they give.
    You seem to forget most workers do not create wealth they just distribute it downwards whether efficiently or not.
    It looks like our betters decided defaulting on deposits was not going to happen mate.
    This is Keynesian spending and all such spending has only one true goal.
    Get on your bus.

  23. I can see how E130k p.a. pension paid to the retired public service gentry goes towards repaying the debt. Maybe it goes towards repaying their own debt but certainly it contributes to mine (it used to, anyway) and to that of the state. I can also see how borrowing to pay these pensions is good for the economy, or brings whatever other benefit as you seem to suggest. It ‘introduces money into the system’ as if that wasn’t what got Ireland (and the rest of the West as we can see these days) into the predicament the country is in.

  24. @Dom K
    Money exports / oil imports do not work like trade of goods which can be a neutral activity – when both countries trade goods they trade energy , it does not disappear until the goods depreciates into a rubbish heap.

    When you burn raw fuel it disappears instantaneously – the Arabs / Banks know this which is why they are thee key driver of the worlds monetory Gold market.
    They are making us poorer – they are not engaged in trade as you know it – they do nothing but watch their savings increase as it is not really a two way trade process – their savings make you poorer Dom K – especially when they no longer accept paper.
    The wholesale paper price is a illusion.

  25. I can also see ‘Care and Medicine’ costs have gone up 500%. Are we getting five times better service? The governments around the world putting vast amounts of money into healthcare systems, causing healthcare inflation. How surprising.

  26. When a pensioner gets his weekly payment he spends it locally for the most part – he goes down to the pub buys his pint of Beamish , gives it to the publican , he pays down his private debt , he buys other goods – those sellers pay down their debt and the so on.
    This Keynesian spending is needed to deleverage – who gets the money is more of a poltical question yes , but as long as they spend the money domestically the private debt will be paid down.
    The gap between the fiscal spending and credit malinvestment is known as hardship – thats where the efficiency is whether justified or not.

  27. Incidentally Arabs happen to import a lot. Saudi Arabia on its own imports $90b a year. And even when they save they do it for Europeans and Americans because someone somewhere has to. They sell you a product, they buy products off you and they save by buying your government’s debt which they must know the Europeans and Americans will never pay back. Can you imagine Barack Obama getting up on stage one day and explaining to fellow Americans how they’re going to pay more tax as of tomorrow and all those nice government programs will have to go on hold because the good people of China and Saudi Arabia want their money back? You think politicians in EU and US will tax voters to pay non-voters? Of course not. They will do as you suggest – they will print money and make you and the Saudis poorer.

  28. Dearest Dork of Cork,

    So fuel is burned and wealth is lost and what exactly happens to Beamish? It gets converted into machinery and other capital gods in the loo of your local pub? And good thing while your pensioner drinks Beamish, if he happens to go for a Guinness he is helping good people of Nigeria because this is where most of Guinness in Ireland comes from. I didn’t happen to notice all those Saudis working at petrol stations in Ireland getting salaries from the petrol revenue. How is the guy at the pump different from the guy behind the bar? We should in fact promote driving not only because a lot of revenue derived from motoring is spent on services (and transfers) but also because people want to drive. Just look at it for a moment. Drivers are taxed to the kilt when they buy a car. They are taxed annually to keep it on the road. They are taxed when they move, they are taxed when they park. And yet everyone wants to drive. If one drives to work for 50 years, his or hers mental health is much better. Driver are less prone to depression and I kid you not there was a study which resulted in such a finding. Your own car is a personal space which goes when you want and stops when you want. One of the few things in life that one still controls. It is a symbol of freedom and industrial success. No wonder the left hates it more than Thatcher and Reagan together.

  29. @ Dom K

    ‘Your own car is a personal space which goes when you want and stops when you want. One of the few things in life that one still controls. It is a symbol of freedom and industrial success. No wonder the left hates it more than Thatcher and Reagan together’

    You could be right about the car, but it is an ecologically daft sort of freedom when all is said and done. And by the way, the left drives around as much as anyone else.

  30. Paul,

    I don’t know about that. The cars today are very clean both in terms of particle emissions and CO2. The only beef the green lobby seems to have with the cars is in the CO2 emissions. I don’t subscribe to the whole politically motivated hocus pocus science around CO2 but let’s take it as valid for argument sake. Taking road transport as a whole, less than half CO2 emissions comes from private cars and yet the car attracts most of the wrath. Households emit as much CO2 as private cars so are we going to say that living in one-family unit households is an ecologically daft sort of freedom? Why not live in camps? Each family gets a room and other facilities like kitchen, bathrooms, etc. are shared? Is this in green party agenda? Why not, surely we must save the planet.

  31. @Dom K
    The Saudis are not buying as much paper as they once were – if you believe FOFOA they are buying much more Gold clandestinely as they are acting rationally now……depletion ?
    This shit is going down.
    Look at Edwardian Ireland – whatever the hardship it exported capital to the Empire – the rural hinterland does not do that now – its a consumer.
    How long will that relationship last ?
    fofoa.blogspot.com/…/us-mints-gold-disks-for-oil-payments-to.html

    The monetory system is going to change again – the dollar oil bubble is over in my opinion.
    This will change EVERYTHING.

  32. That I agree. But that has nothing to do with burning fuel and all to do with Bernanke 24/7 printing press.

  33. No Dom K – the Dollar is a symbol of oil or a synthetic oil if you will – dollar debt is a record of all the external American oil burned.

    Its writing cheques its economy can’t cash.

    The monetory system cannot take this abuse for much longer – it near the end game.
    Forget about printing presses for a second -this printing impacts the real physical world.
    http://www.youtube.com/watch?v=f3THVbr4hlY

  34. Seamus

    1. There is a very large increase in pension payemnts since 2006. I presume this includes both OAP and PS pensions, with the vast bulk of the increase due to PS increases. If so this will skyrocket in 2011 and 2012.

    2. Private rental supplement (€660m pa above) is much higher I thought. I wonder if retention tax is deducted at source from this.
    A huge increase in this overall catagory.

    3. The ‘Rest of the world’ transfers appears very high. Are these charity/relief or do they comprise payments to Irish people abroad, including childrens allowance?

    If you want a suggestion of real savings to be made, sell the contract for private rental accomodation to a private sector company that would squeeze the landlords. Possible saving €300m per year.

  35. @Joseph,

    I’m not sure about #s 2 and 3. I don’t know exactly what comprises the “local authority housing rental deficit”. I would guess that Rest of the World includes the Foreign Aid budget and other payments like that. I’m not sure that payments made to non-residents under the other categories would appear. They might but I couldn’t be sure.

  36. @Dreaded Est

    I have been doing a quick, 3 minute, Tolesque, barrel scraping exercise on your spreadsheet:

    % increase from 1999
    Cost of a house Approx 0%
    Eduction +88%
    Pensions +177%
    Child Benefit +294%
    Unemployment +391%
    Medicine & Care +288%
    Disability +259%
    Lone Parents +155%
    Supplementary Welfare +298%
    Other Transfers +165%
    Rest of World +172%
    Total +207%

  37. @Grumpy@Dreaded Est

    I wonder how that % increase compares with growth in GDP for the same period?

    I am guessing that there may not be a huge difference in both % increases (GDP growth and transfer payments ).

    However we need to remember that certain payments (eg Health and education) may be disproportionately absorbed in the form salaries rather than “delivery” as a result of benchmarking which will need to be “ironed out /moderated” over the next 2 or 3 years.

  38. @Livonian

    However we need to remember that certain payments (eg Health and education) may be disproportionately absorbed in the form salaries rather than “delivery” as a result of benchmarking which will need to be “ironed out /moderated” over the next 2 or 3 years.

    I don’t think any salaries are included in these numbers

  39. Looks like GNP for 2010 has been written down further since the June report !!
    Or am I missing something ?
    I remember a shocking decline in the first quarter of 2011 somewhere that was dismissed at the time as a blip.
    Whatever the statistical intricacies the GNP per head decline speaks volumes.
    A complete economic failure unless you are a holder of bank bonds.
    JCT : we will peserve price stability at any cost including if we have to the destruction of industrial society.

    Wage Deflation is Inflation by other means.

  40. Sorry my mistake (ameteur) – at current market prices identical at 128,207.
    Was the GNP for the first quarter 2011 revised yet ? .. is it worse or better then expected ?

  41. Worse then amateur , a ameteur – forgive my Dorkiness.
    But why are economists not screaming about the even more dramatic decline in GNP figures per head of population ?
    Strikes me as the most important metric somehow …….
    Can you give a convincing narrative as to why the patient is bleeding all over the operating table.

  42. As a percentage of total transfers, child benefit dropped back below 2001 levels in 2010. More families are benefiting, however, and to almost double the level of 2001. (In 2010 a total of 591,432 families received CB payments, while in 2001 the total was 514,919; from the SW statistics reports available from http://www.welfare.ie/EN/Policy/ResearchSurveysAndStatistics/Pages/StatInfoReportsIndex.aspx.) To what extent do families rely on this payment to cover basic needs or pay down debt? What effect would it have on child health and education outcomes to cut it further?

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