The Irish Economy
Commentary, information, and intelligent discourse about the Irish economy
Why is this anti-business organisation being given a platform here?
Why not let IBEC or the CIF reply?
Unlike TASC, organisations like IBEC and CIF create hundreds of thousands of jobs and actually know something about how an economy works.
TASC are basically arguing for the high-tax high-spend social Europe model.
So, why is most of Europe in such bad shape, while Ireland is bounding ahead?
Today ESRI forecast 5pc growth in 2014 and 5pc growth in 2015.
IBEC yesterday forecast 6.1pc growth in 2014.
High-tax high-spend social Europe will be lucky if it manages 0.5pc growth.
The favourite country of TASC appears to be France. It comes near the top of every carefully-selected TASC chart, while Ireland comes near the bottom.
So, why is France mired in total economic stagnation?
Basically, the Celtic Tiger economic boom 1987-2002, which brought economic and social progress on a scale few countries have ever seen, was achieved by governments (both FF and FG) totally ignoring the advice of organisations like TASC. Then, in 2002 Bertie Ahern foolishly declared himself to be a socialist (he wasn’t, of course, but given the media climate with buffoons like Vincent Browne and Fintan O’Toole ruling the roost, he had at least to pretend to be). The great Charlie McCreevy was sacked, and spending was increased far too much. Predictably this contributed a few years later to an economic crisis. In the past few years, not totally willingly but partly by force of circumstance, Ireland has begun to return to the tax/spend model that prevailed from 1987 to 2002. Tax cuts in the coming budget are the next stage in that process. And, contrary to everything that organisations like TASC predict, high-growth has also returned. Organisations like TASC never learn anything. If you want to see what a ‘TASC’ economy is like, go to France.
The idea that F O’Toole and V. Browne “rule the roost” is so preposterous that it almost invalidates everything you say here.
Meanwhile, I’d love to go to France. By almost any measure it’s a much nicer place to live than Ireland. Unless, of course, you’re a growth fetishist rather than a bon viveur. But I remind you: you can’t feed your family growth.
Also preposterous: the economic crisis was caused by Charlie McCreevey’s successors (not the great man himself, of course) increasing spending too much. Honestly, what planet were you on during those years? And did you miss the thing about the banks running wild?
Anyway, beyond the ad hominem whining, do you have any actual refutations of anything TASC claim in that report? The whole thing seems eminently sensible and, indeed, obvious, to me.
“By almost any measure it’s a much nicer place to live than Ireland.”
Lots of good features about France:
the skiing is better
the weather is nicer
wine is better (although as I rarely drink, I don’t care)
the women are extremely attractive (although at my age, I don’t care)
So, if your ideal lifestyle is to go skiing in the morning, then come down from the mountain and idle the afternoon sitting in the sun, while sharing a bottle of wine with an attractive woman, then France beats Ireland everytime.
However, none of these delights are due to its high-tax economy.
What high-taxation is responsible for is France’s cr*p economy, which has grown at snailpace for 40 years.
Ask John Lewis boss:
Selective use of data in that presentaion to say the least. Ridiculously biased think-tank
Then it should be easy for you to refute. Please go ahead now.
Again, you seem to operate under the assumption that the point of a society is to serve the economy rather than the other way around. If life is nicer in France, why in heaven’s name should anyone care about growth (let alone the sort of phoney growth pumped up by the activity of foreign companies with brass plates in Dublin). You’re really dreaming if you think Ireland had anything on a place like France other than that growth number you feel an irrational pride in brandishing.
Can we have a thread on the Shinners and the Joe Higgins budget proposals please?
Clearly the neoliberal stranglehold on the entirety of the national media is not enough for some people. Even so much as the notion that anyone who hasn’t taken the blue pill might get 15 seconds of coverage is enough to give them a case of the vapours.
I don’t have any point of disagreement with their figures, although I haven’t checked them all. I have no reason to believe they are anything but accurate.
Its their conclusions I disagree with. Plus what they omit.
They say the share of Ireland’s national income accruing to the bottom 90 per cent of population fell from 71 per cent in 1975 to 64 per cent in 2009.
I just checked their database and that is correct. Fair enough.
The same database shows the share of France’s national income accruing to the bottom 90 per cent of population stayed stable at 67 per cent in both 1975 and 2009.
So, bully for France and shame on Ireland.
Until you consider that Ireland’s GNI per capita rose from approximately 50 per cent of French level in 1975 to approximately 105 per cent in 2014. And, if ESRI’s growth forecasts today prove even half-true, it will reach 120-125 per cent by 2020.
So, combining these sets of figures, the incomes accruing to the bottom 90 per cent in Ireland have risen far more in real terms since 1975 than the incomes accruing to the bottom 90 per cent in France, and, if ESRI’s growth forecasts today prove even half-true, this is set to continue for years ahead.
So, no dispute with TASC about the figures.
But, its their conclusions I disagree with totally.
Ireland is full of well-heeled socialists from the top 10 per cent who genuinely think that the Irish combination of a relatively small decrease in the share of national income accruing to the bottom 90 per cent, but more than compensated for by far faster-growing national income, is morally worse than the French combination of zero change in the share of national income accruing to the bottom 90 per cent, but more than compensated for by far slower-growing national income. And, they constantly rail against it. However, few among the bottom 90 per cent agree with them, which is why the Left in Ireland never win elections.
“neoliberal stranglehold on the entirety of the national media”
ad nauseum (literally) . Yes, neoliberals every one of them.
You can’t really be serious. Do you want me to come up with my own list? It will be very long unlike your list of the 6 token lefties (not all of them really lefties) that most media outlets feel compelled to publish (because it brings “balance” to the 50 right-wingers they have on staff).
And the left in Ireland never win elections because of the right-wing stranglehold on all public discourse is so total that, even when they do win, it would be political suicide to go against it.
If the country has ‘bounced back’ so well that we now have over 5% growth, what does IBEC et al want tax cuts for?
Shure aren’t we doing just fine with current tax rates! Maybe it was the tax increases of the last few years that forced the growth!
The Irish Times now looks like it is written by a cadre from the SWP or PBP or some bunch of looney lefties. Yet every accountancy office, bank, solicitors office takes a few copies every day. It does not even have a decent racing page any more.
The TASC submission could be better presented while pre-transfer and tax as a ratio of GDP charts are misleading on the subject of inequality.
With the inevitability of changes in the corporate tax regime in the short-term, wealth and income tax rate hikes do not seem prudent in this early recovery phase.
In France, the top tax rate of 75% will lapse next year.
Given the low Irish employer social security tax, a mandatory pension contribution should be introduced in coming years.
Last year official data showed that half the population or 2.3m were in receipt of some form of social welfare and that of course excluded recipients of corporate and farm welfare.
The tax burden compares with the UK at about 36% of GNP but seeing that a two-tier health service is officially recognised, possibly health insurance should be regarded as a tax.
Ibec’s campaign for tax cuts to avoid pay rises, will ensure that there will be a Dutch auction on taxes at the next general election.
With only two budgets to go, the governing parties will be forced to promise more jam tomorrow. However, at election time Labour Party TDs will have a hard job arguing for water tax.
The business lobbies are also looking for a cut in capital gains tax from the current rate of 33% – to encourage entrepreneurs.
I would encourage anyone in a 9-5 job worried about this rate to stay put because they are unlikely to succeed.
The property interests are seeking a cut in the 80% tax on the profits of rezoning land – the mother of all stealth taxes – that is rezoning not the windfall tax to the CGT level of 33%.
While the rules on existing rezoned land may require tweaking, if Joan Burton gives in on this issue, she deserves losing her seat because it’s the only lever available against the vested interests to reform a corrupt system that makes development land scarce in a country that has the lowest population density in Western Europe.
Finally, Leo Varadkar is seeking an honest health budget while his colleagues want to massage the Budget figures and leave spending ‘overrun’ to be funded by future tax buoyancy.
You make some very interesting and valid points.
“Given the low Irish employer social security tax, a mandatory pension contribution should be introduced in coming years.”
It should happen, should already have happened, but will it happen. The pension apartheid system benefits the politicians and PS and their primary, and possibly only interest, is in looking after themselves. They do give a fiddlers about the 50% of the population that will have nothing except the State pension to rely on in old age.
“While the rules on existing rezoned land may require tweaking, if Joan Burton gives in on this issue, she deserves losing her seat because it’s the only lever available against the vested interests to reform a corrupt system that makes development land scarce in a country that has the lowest population density in Western Europe.”
Will she stand her ground against what are a very small but entrenched group of vested interests, including State vested interest, that will and are using their power to create a shortage of housing supply in Dublin. A group that will try to manoeuvre public opinion to believe that they must be given tax breaks, yet again, just to build houses?
I have my doubts that she will fight to win that one.
re: Health Budget:
Varadkar, as you say, wants honest budget figures on the table. But the FG / Lab government would prefer to lie, not only to the Dail, but to the whole population and pretend that current Health expenditure does not exist or can be magicked away on a spreadsheet. [We are both old enough to remember the Gene Fitzgerald budget back in 1980 (?). Last years Health budget by Messrs Noonan and Howlin should rank in the same category]
PS Latest opinion polls very interesting:
It looks like the Troika and its mandatory water charges could have the effect of putting Sinn Fein into government.
Water charges are needed, but politically they a tax too far for the poorer members of society.
there’s a lot of nonsense discussed on this forum, particularly in a tyrone accent, and it’s hard to get a grip on stuff that is genuinely insightful but every so often there is a nugget such as
” It does not even have a decent racing page any more”
If people want right wing populist economics they can buy the Indo. It also has racing and funerals.
Indo is but an Irish version of the Mail. But you are correct. I find myself reading the Torygraph these days. Excellent coverage of Europe & a good racing page.
I see the Krauts have voted to allow us to repay our IMF loan but loads of pointy headed backbenchers demanded we increase our CT.
They have not lost the world domination gene.
It’s not easy. The papers have all cut back. The IT is not what it used to be and the Torygraph has sacked an awful lot of journos. It’s not a bad read but it has seen better days.
The Sunday Business Post only has 35k sales. I think it’s not bad for an Irish Sunday paper. Maybe if they had a sports section from some tabloid tacked on they could get it up to 50K.
By selective use I mean the fact that the slide deck shows the chart on inequality before transfers, but not after. If it showed after taxes and transfers, it would illustrate that Ireland performs better than EU average on income inequality, but that doesn’t fit the TASC story. Also says
“After both tax and transfers, Ireland moves from having the highest income inequality in the OECD to around the EU average for income inequality”
Can’t bring them to say it’s actually below the average. Again it doesn’t fit the narrative. Instead use fuzzy language like “around”.
Bias from but left and right ideologies is no basis for a sound analysis of any economy. Clouds the sensible suggestions they make on the need for investment later the in piece
In the catalogue of misdirection, deception and outright propaganda perpetrated by various organisations in Ireland over the past decade or so, referring to income inequality (after taxes and transfers) that is around the EU average, albeit below, as being “around the EU average” strikes me as so minor as not even to figure. In short: is that all you’ve got?
Contrast that with constant reference in gov’t and in the media to “the 52% tax rate” when, in fact, the top tax rate in Ireland remains 41%, just as it was during the boom. But now, for some reason, we’re conflating the USC and income tax when, in the past, we never included all of the taxes and levies that the USC replaced when citing tax rate figures. Indeed, when the top rate was 48%, if you included the levies, etc. the overall combined rate was higher than 52%. All that’s down the memory hole of course. But it’s crucial to make people believe that income tax takes more than half (not to mention letting them believe that marginal rates are the same thing as effective rates), whereas, who is going to be scandalised by the same 41% that has been the top rate for a decade?
Now watch them use this bit of deception as an excuse to lower not the regressive USC (which really might benefit the middle class) but the top income tax rate to 40% or so. That move, as you know, will increase inequality after tax and transfers. Maybe then it’ll be your side saying that we’re “around the EU average” because we’ll be above it.
This is the terrible price to be paid for ignoring organisations like TASC and instead sucking up to evil business interests. If only the government would take TASC’s advice and shove up tax and spending to French levels, none of these dreadful things would be happening.
All from today’s IT:
 Professional networking giant LinkedIn is to construct a new international headquarters in Dublin, after acquiring a 17,507sq m site at Wilton Place. LinkedIn said the site had the capacity to see the company’s Irish workforce double from 600 to 1,200.
 According to the survey, European countries are split over economic prospects. Businesses in Ireland and Spain are most confident scoring 56.40 and 54.14 respectively, while the UK, Germany and Poland are all more optimistic than pessimistic. However, in Austria, Switzerland and Portugal the reverse is true, with all countries scoring below 50. France is the most pessimistic about the economy of all nations surveyed, scoring just 44.08.
 Dublin Port is predicting a record year for trade on the back of a sharp rise in throughput levels and ferry passenger numbers. New figures show that total throughput (consisting of imports and exports) at the country’s largest and busiest port rose 5.7 per cent to 7.8 million tonnes in the third quarter. Total throughput for the year-to-date was 23.1 million tonnes, up 7.3 per cent on the same nine month period a year earlier.
 The National Treasury Management Agency (NTMA) has sold €1 billion of 10-year bonds at a record low yield of 1.63 per cent. This was somewhat below the yield of 2.3 per cent it paid at a similar auction in July. The auction received 2.5 times more bids than the value of the paper on offer, the agency said.
 Ireland can look forward to almost a decade of strong economic growth, Enda Kenny has predicted. Hope, credibility, confidence and integrity had been restored, and Ireland was now the fastest growing economy in Europe.
“This is the terrible price to be paid for ignoring organisations like TASC and instead sucking up to evil business interests.”
You have a short memory -or are being well paid to lose it-as far as listening to ‘business interests’ were concerned.
Hopefully we will have some growth, but not if your buddies/employers get their way by inflating house prices (“assets”) and making the Dublin area completely uncompetitive.
Good for the NTMA and the country today. What a pity they left over €200 million on the table by not buying the IBRC junior bonds from the IBRC liquidator, instead of seeing them flogged off at a probable 25% discount.
Somebody at senior levels clearly does not share your uber confidence.
As for surveys today, the most relevant one was today’s poll in the Ir Times. The societal gap is opening up in the ROI. Ireland is creating a new breed of modern 21st century Teiges.
It’s like talking to someone in a cargo cult. “Growth” is the fickle yet benevolent deity before which all other human values (e.g., “justice,” “goodness,” “happiness,” etc.) must bow. If there’s growth, there is no room for any complaint, even if 90% of it is going to the very wealthy. “Have you not heard the news?! There’s GROWTH!!!!” And that’s supposed to end debate.
Once again: growth for what? The economy for what?
Anyone with half a brain and given a choice would rather live in France than Ireland. This is especially true the poorer you are. But the focus on “growth” and the criticism of TASC for “failing” to recognise that a “rising tide lifts all boats” (while ignoring the linked points about the poor having to pay for services that would be free in many and perhaps most European countries) blinds you to any recognition of this.
‘The Government meanwhile has been urged to lower VAT rather than income tax in the budget next week if it wants to give something back to the public in an equitable and sustainable fashion.
Nat O’Connor, research director with the Think-tank for Action on Social Change (Tasc) said cutting VAT by 1 per cent – at a cost to the exchequer of €350 million – would help to kick-start the economy by boosting domestic consumption and the spending power of lower income households in particular.
Lowering income tax would only be beneficial to those earning enough money – particularly if the 41 per cent rate was targeted – to fall into the relevant net, he said. A cut of 1 per cent to the 41 per cent rate would cost €235 million.
Tasc says changes to tax rates and bands “disproportionately” benefit higher earners but an increase in tax credits of €200 – at a cost of €260 million – would have the same benefit for someone earning €25,000 as €125,000.
Irish are a pretty happy bunch. Happier than the French
The chart on page 7 shows the income of the top 1% rising rapidly for 20 years from the mid-80s and then dropping precipitously in the late tiger period. The chart seems to end around 2009. Anyone know what has happened over the past five years? Has that trend of declining inequality continued?
@JtO [no Examiner in Tyrone?
Have a blast of Mick Clifford ….
The most arresting feature of the by-election is the odds offered on the candidates. As of yesterday, Sinn Féin’s King is 1/8, while Murphy is 9/2. These are followed by Tony Rochford and Ronan McMahon (both independent and on 16/1).
After those come the three candidates from the established parties of Fianna Fáil, Fine Gael, and Labour, John Lahert, Cáit Keane, and Pamela Kearns respectively, all on 20/1.
Since the foundation of the State, have the elements of the two-and-a-half party system ever been so far adrift in the pre-poll betting?
Prior to the last general election, all disillusion was focused on Fianna Fáil, but, in places like west Dublin, the virus has spread to both the parties in government.
‘The Government meanwhile has been urged to lower VAT rather than income tax in the budget next week if it wants to give something back to the public in an equitable and sustainable fashion.”
You are very trusting of our business gombeen class to pass on the full value of such a VAT increase. It may well be passed off close to the border but as one approaches the south this won’t happen.
I remember Charlie McCreevey having the same problem when he reduced VAT a while back.
This gov’t won’t make the same mistake that they made in 1997 when they wer prudent and left an economy in first class condition for FF and the PDs to ruin.
By setting out their income tax cuts for the next 3 budgets and beyond the 2016 General Election they hope to put the opposition in the position of actually taking money off the electorate (if they aren’t going to give the same tax cuts) without actually being in government.
Also re:Mick Clifford and the by elections even the Bert couldn’t win a by election when in govt. This current one has done it a number of times.
I heard the SF candidate for DSW saying that if Pearse Doherty is the Min for Finance in the next govt that they (SF) will abolish the property tax and water charges. Was he asked what would happen if SF are in govt and Pearse isn’t MoF.
Dublin South West is hardly typical of Ireland. If it was, Ireland would have been North Korea long ago. Come to think of it, if the rumours that Kim Mentally-Ill Sung has been deposed prove true, he should consider reviving his political career by standing in Dublin South West, where he would undoubtedly top the poll.
Kim Il Sung has been approached to run for the Socialist PArty in Dun Laoghaire. I look forward to the contest between him and Rich Boy Barrett for the votes of millionaires row in Killiney.
I hear that Kim was elected for Saxony recently …
The Bundestag are presently finalising the Budget before passing it to Ministers Noonan & Howlin …
btw who’s in power in Tyrone these days?
Do I see a comment of substance on the substance of the TASC proposals? Methought I did – musta bin mistaken!
Wonder where is all the fruit of this ‘growth’ going?
“btw who’s in power in Tyrone these days?”
Actually, wouldn’t surprise me if he ran for President next time, either as independent or for FF.
With fears of defaltion, normally good news may not be as welcome in Europe as in the past: world food prices at 4-year low thanks to bumper harvests but dairy prices are also on the slide with a movement away from the production of cheese by the EU to Russia resulting in increased output of butter and skimmed milk powder.
Brent crude dipped to a 27-month low on Wed.
You seem to go missing sometimes when data does not fit your sunny narrative.
Remember in early Sept when there were very positive PMI survey reports that are usually misreported in the newspapers (the main index is based on a single question asking respondents to report on the actual change in business activity at their companies compared to one month ago ?)
It appeared that manufacturing activity was back to 1999 levels and services to early 2007.
The CSO reported Tuesday that monthly industrial production fell in August – that is no big deal as it’s usually volatile – but the CSO also reported that its services index that tracks a panel of about 2,200 non-financial firms also fell.
The plan to promise income cuts over 3 years is hardly going to get people excited or snooker the opposition.
Noonan pulled a neat trick last year by announcing a new pensions levy to enable him meet his 4 year promise on the old one. 😥
So he may raise the rate on the new one from 0.15% to get some poor people as well as others fund social housing investment – it would look better than paying for tax cuts.
@ Joseh Ryan
Two years ago this month Joan Burton received a report on pension charges that she commissioned PwC to produce.
It appears to be gathering dust.
The report says that while every pension fund scheme member is by law entitled to receive an annual pension statement outlining the charges levied on their savings, almost two-thirds of trustees said they had difficulty getting some of the information on charges required for the report.
The research found that there was no evidence of a culture in the pensions industry of providing clear information in a simple manner. 😯
The report provides the following example.
If an individual age 35 saves €250 per month for a pension for 30 years, a fund of approximately €200,000 is created which results in a pension of about €10,000 per annum. Apply the average charge of 2.18% per annum to this fund and the final fund is reduced by 31% i.e. the fund is reduced by €62,000, resulting in a lower pension of €6,900 per annum. This impact would be significantly higher where the maximum charges apply.
There’s a guy on Matt Cooper now who wants VAT increased because Hotels and Restaurants didn’t pass on the VAT reduction to the punters. He has a distinctly salt of the earth dub accent. (Totally different from most of the union heads in this country who seem to be imports.)
QED, kind of makes my point for me.
But then TASC and the pseudo-lefties would prefer to take money from the punters so that it could be spent where they (TASC et al.) want it to be spent and not where the punters would spend it on themselves.
I’m inclined to believe that some of the furore about the Donegal chap being put on the board of the IMMA is as much about the fact that he wasn’t the right type of Luvvy, than he was a friend of Kenny.
The plan to promise income cuts over 3 years is hardly going to get people excited or snooker the opposition.
That is exactly what it is intended to do and will!!! Very hard for SF and FF to argue for a cut in water charges and property tax when they have to explain where the money will come from and who they will take promised tax cuts from. It’s kind of a political poison pill. Eaten bread may be soon forgotten but try and remove promised jam in the future and watch the fan come in contact with product.
Did Vincent Browne ask the SF guy what would happen vis-a-vis water charges and property tax if Pearse Doherty wouldn’t be in Minister for finance but SF would be in govt., and what was the result?
There were two reasons why the McNulty stroke blew up in Enda’s face. Number one and least important he was an unqualified crony of Enda. Number 2 and more importantly he was not part of the incestuous arty lobby that has been suckling at the taxpayers teet for years. Most of these have never produced any work of artistic merit.
You guys are a riot. Yeah, sure, Enda was brought to book by the Arty Farty crowd and sent back to the camp for re-grooving.
Do you feel your grip on reality slipping away? That’s because we in the Arty Farty Party spiked your pint with acid. Enda’s too.
Why not fish for answers here:
[don’t forget the ‘acc€nt’!
. = Your Aesthetic Turn
Right on cue: http://www.irishtimes.com/news/politics/highest-rate-of-income-tax-to-be-cut-in-budget-kenny-1.1958208
They never disappoint me.
You could pass for one of the art lobby yourself. In your case it is performance art of no real merit.
Apropos your comments on the Irish approach to the annual budget, Noel Whelan makes a very valuable contribution in today’s IT with regard to alerting the general public to (i) its failings and (ii) its near unique character.
The really interesting question is whether the reluctant steps that have been taken, that would never have been taken had not the Irish political class not been forced by the country’s creditors to take them, will bring about the necessary structural change. (The short list i.e. that most politically sensitive consists of (i) water charges (ii ) LPT and (iii) septic tank registration).
The hope must be that they will, especially when coupled with the moves, if timid, towards multi-annual budgeting, including in relation to taxation (even if the last-mentioned is driven by electoral rather than any other considerations).
The key is compliance. The record on the LPT (95/96% compliance) suggests that this will not be a problem.
P.S. Noel Whelan does not waste his time on the game of largely pointless ping-pong played by various interests in terms of last-minute budget submissions. That this exercise, regrettably, includes those in the Dáil on the opposition benches is a matter of fact, the blame for which can only be laid at the government’s door. If it pays no attention to its own TDs, why should it bother with those of the opposition!
@ MH et al
Cliff Taylor, a welcome addition to the columnists of the IT, on the same topic.
His description of the exchanges between outfits such as TASC and others as a “Punch and Judy” show is apt.
The best revolutions are invariably the quiet ones. The challenge for the economists active in the area of the conduct of economic policy is to at least agree on the data parameters of the debate and, where such are lacking, to point this out.
Budget preparation, Irish style!
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