Given that an agreement looks likely, it’s probably worth opening a thread on what commenters believe the new programme for government should contain, what it might contain, what that weird intersection of politics and economics means it will contain.
59 replies on “New Programme for Government: Open Thread”
2. Sitters for Oliver Callan
3. The rigorous application of Heisenburg’s Structural Reform Principle – you can either know what it is or when it will occur but not both simultaneously
4. Something reflecting continued, slow change of political momentum away from supporting those with interest in land ownership (including banks) towards those unable to pay-up to buy or rent housing
5. Some wording intended to facilitate opportunities to heap pressure on the Central Bank to “democratise credit” (as Alan Greenspan put it), in order to either punt point 4. into the long grass for an electoral cycle via increased borrowing, or at least make them look blame-worthy.
6. Nothing about acknowledging that there is already price pressure in the building industry at current build rates and that there is no coherent plan to increase capacity (tradesmen) to allow a non-inflationary build rate of 25,000 per year.
re: point 6
We’re already subsidising the vast majority of tradesmen by not requiring them to pay VAT or declare all of their income. What more do they need?
Its not about what the tradesmen need – they ‘need’ less tradesmen so they can charge more. That’s not what the country needs – and nobody is suggesting subsidising them.
During the recession Irl trained up literally a handful of them per year, while many left the country or effectively retired.
At the time, on this blog, the nuttiness of this was pointed out by several contributors.
The programme for government should commence with the text of Article 9 of the Water Framework Directive, with the Attorney-General’s advice on the likelihood of infringement proceedings at the ECJ.
The rest of the programme should be short.
On another thread BCT made what I think is a valid point re this:
to the effect that the EU’s institutions, in particular, the Commission, might be minded to move cautiously on this issue. For example, the Commission might have to take some time to clarify the nature of the suspension of charges that is being proposed and to establish whether or not there are grounds for initiating infringement proceedings.
Other than protecting the public by a massive crackdown on (mainly) Dublin drug-gangs, the government should do as little as possible. In the current climate of loony-liberalism being the dominant ideology in the Western world and having almost total control of the media, one can take it for granted that nearly all pressure applied to the government to ‘do something’ will come from that quarter and will be intended to advance the liberal agenda, most of which is detrimental to a healthy and prosperous society. Repeal the Eighth is the prime example. Expect a ferocious media campaign in coming months to advance that particular cause. Plus many others. In the past 2 months there has effectively been no government. Has anyone suffered because of it? During those 2 months the economic statistics have been spectacular. Growth has soared, tourists have flooded in, and the fall in unemployment has accelerated. The power of government to improve the lot of the masses is greatly exaggerated. The power of government to do harm is greatly underestimated. If no agreement was reached between the parties for 2 years, it would have little effect on economic growth or unemployment. But, if there has to be a government, its priorities should be to use the fruits of economic growth to cut taxes, relax planning laws, abolish the marxist-run RTE and license fee, encourage greater private-sector involvement in the provision of healthcare, and, given the growing housing shortage (itself largely the product of previous governments’ desire to ‘do something’), bring builders and developers back to center-stage regarding the formulation of policies to tackle it.
It seems to me that the concept of a programme for government is defunct under the agreement that is now emerging. The incoming government will not have a majority in the Dáil to implement one. This is uncharted territory for Ireland but well-trodden ground in other countries. How the new government will present to the Dáil what it intends to attempt to do is the crucial question; and when.
The framework must be that contained in the Expenditure Report 2016.
With a new Department of Rural Affairs! And added bells and whistles on the burning, that is to say immediate, issues of the day e.g. housing.
This link should work.
How to handle taxation issues months ahead of budget day may prove to be a bit of a headache.
The latest Stability Programme update (SPU) , published by Finance, does imply that any incoming government will have more resources to play with than previously thought, although of course events may render the forecasts redundant. As it stands, Ireland’s potential growth rate has been revised up, which alongside the change in the medium term fiscal target ( from a balanced budget to a 0.5% deficit) implies more Fiscal Space – I think the net figure (not published in the document) may now be around €11bn to 2021, from the €8.5bn published last October or around €0.5bn more per annum.
These figures do not take account of any broad based increases in public sector pay and although some allowance is made for demographic pressures I suspect this may be underestimated; the last census showed a population some 95k above that envisaged and the 2016 figure may also show an upside surprise. It is anyway pretty clear that capacity is already stretched in Health, Housing, Schools and Transport and the demands on expenditure, both capital and current could be much higher than contained in the SPU.
On the Irish Water issue, the company planned to raise around €270mn a year from domestic customers and €240mn from non-domestic. The total equates to 1% change in the standard tax rate or 2% on the higher rate.
It is not so much the SPU but the Expenditure Benchmark that is the constraining factor. IFAC have produced a suitably technocratic paper on the topic (and misses the political wood for the trees in the process).
The contradiction in the FF position is, nevertheless, glaring. To such an extent that it has become part of the political debate. If Irish Water loses one revenue stream, it has to be made up elsewhere.
I should explain that my criticism applies to IFAC’s near completely mechanistic approach – incomprehensible to the layman – fixated on the idea of fiscal space i.e. space to spend more, when the the concentration should be on (i) the quality of existing expenditure and (ii) the appropriateness in terms of the economic cycle of increasing expenditure and the manner in which this should be done. It may be that IFAC sees this as outside its mandate. Still, half a loaf is better than no bread!
Your estimates of household (HH) and non-household (NHH) water service revenue are broadly in line with the current consensus. However, there is no talk of suspending NHH (or commercial) charges. It’s just HH charges. Alan Kelly’s super clever Orwellian “water conservation grant” of €100/HH brings the net revenue that should be generated directly by HHs down to €140-€150 million. Applying the approx. 60% payment rate and you’re down to around €90 million.
Much more than this gets lost down the back of the sofa in the Dept. of Finance.
What is far more important is that IW, however it’s re-branded and rejigged, is able to borrow on its own account – even if the borrowing will be on the government’s books, as it were. This will mean a huge saving as the government will be simply contributing to service the debt and not paying directly for the capital expenditure it is financing.
Getting the gloriously excessive operating expenditure level down to something more sensible and justifiable will be a long haul – as will convincing people that they should pay directly for water and waste water service. But the political objective now is to kick this in to the long grass.
I doubt that the horse-trading between the two parties that facilitated and continue to sustain (with a little help from Labour, the PDs and the Green Party along the way) Ireland’s rentier economy will generate much that differs from what passes as ‘business-as-usual’ for the various special interest groups.
But there is one subtle shift already. What makes the Irish Water affair so interesting is that FF took note of and responded to the disgust and anger of many ordinary citizens when they observed the greed and sense of entitlement at their expense of the special interest groups involved. This allowed FF to recover votes that had migrated from it to Labour and to protect itself from assault by various left-wing and pseudo left-wing factions and individuals. But it was forced to choose between some of the special interest groups.
I’m pretty sure that the gas networks rump of Bord Gáis (the only semi-state with a HQ outside of Dublin), which following the ‘gift’ of Irish Water has become Ervia, thought it had FF (with Micheál Martin and Michael McGrath as the two FF Cork SC TDs) in its pocket. But FF has let Ervia go hang and appears to favour the water services divisions of the local authorities. It also looks like there will be much less largesse available for the private sectors consultants and service providers.
The message to the various special interest groups in all other sectors is clear. We don’t mind you ripping off the ordinary punters – and we’ll continue to facilitate it (we also benefit from the rent-seeking) – but don’t be blatant about it. If you are and it provokes serious public discontent that hurts us, we’ll cut you loose. FG still has some way to go getting up this particular learning curve.
But I’m sure they’ll get there. They should treat their recent engagement with FF on water charges as a lesson from the masters.
You know, your constant rants about ‘rent-seekers’ and ‘special interests’ might actually mean something to someone if you spelled out who it is you have in mind. I say this because there’s a left critique of ‘rent seekers’ and other parasites that targets financial services and the 1% generally. But you don’t seem to be involved in that, opposed as you seem to be to any increase in taxation on those groups. And there’s a right critique of ‘rent seekers’ that sees wage slaves in the public sector as unnecessary parasites (until such time as you need their services) whose jobs should all be privatised. The Grover Norquist school of thought. This seems to be closer to what you’re on about (relentlessly). But, in fact, nobody here knows. So maybe either forswear the use of the words ‘rent seekers’ and ‘special interests’ or tell us who it is you mean.
Very clever, Ernie. You know very well if I were to get specific in response to your disingenuous question I’d be banned from this site. And it might be with some justification because of the crazy libel laws.
You should enjoy the licence you get here to parade your delusions and to pursue ad hominem attacks.
I’m not asking you to name individuals. I’m asking you to name classes or categories of people. Unless you think ‘rent seeking’ is always an individual and idiosyncratic matter.
I think you provided much of the answer here:
I would simply add more at similar levels across all sectors, but the polity is so darned small and incestuous.
I think the Shane Ross crowd’s answers to political corruption together with coherent reform of the Public Service, perhaps some evidence based policy guidelines, someone to stand up to the legal profession, bans on vulture involvement in mortgages, a properly set up water system, social housing funded by pension funds who get 5% return and tax breaks
and a minister with the balls of Noel Browne to take on the gougers in the Health Service
Oh, please not more ‘reform’ of the public sector. Let me tell you what this means in practice: it means, in the name of ‘accountability’ hiring an army of managers on very high salaries that, in themselves, are more wasteful than any inefficiencies they might root out. It means: bringing in ambitious administrators who start inventing hoops for those delivering the actual service to jump through, all as a way of burnishing their CVs for the next career move. It means: ‘leadership’ that is always and everywhere top-down command and control where all of the most high-flying and enlightened private sector workplaces long ago abandoned such ideas.
If you want ‘reform of the public sector’ you’d frankly do better just taking several billion a year and just burning it. Oh, wait, we already do that…
The DoF is toxic, Ernie. So is the HSE. With OECD growth dead there is no margin left to indulge the way a lot of PS decision making works. Private sector management is not much better BTW.
We have seen the enemy . It is called the veneration of crap.
One point that simply has to be recorded at this stage is the sheer amateurishness displayed by all involved in the exercise of government formation. Two sides in a negotiation emerging to announce agreement and at the same time saying that what they have agreed has still to be written down beggars belief.
Well it seems that they have agreed to (a) increase rent supplements and (b) extend mortgage interest relief which was due to expire soon.
Both of these measures add to the demand for property (rented and owner-occupied respectively). Given the short-run inelasticity of supply this will push up rents and house prices. Those who have already bought will have lower net financing costs and probably higher housing wealth. The poor wannabe buyers may have more interest relief but will probably have higher house prices to contend with.
Great isn’t it when you let economically illiterate politicians loose in the playpen without any serious professional advice.
It’s almost as bad as the water disaster.
Short termism defines the Irish political system.
New mortgages don’t get mortgage relief. So I don’t see how the measure will add to demand for houses.
Public Sector – (non public sector items to follow)
1.Reform of the current arrangements, enshrined in an outdated law, where ‘the minister is responsible but not in charge of a department of govt and the deptl sec is in charge but not responsible’.Full accountability and responsibility for ministers and secs.
2.Full accountability and responsibility for performance or non-performance by senior public administrators – state, semi-state, local govt – to be made effective with genuine performance issues rewarded or sanctioned as appropriate. Dismissal included as a potential sanction.
3. Decreased investment in the bloated third level sector and funds switched to pre-school and early formative years education and development.
4.The ‘silo and inter deptl power play’ actions and mentality of the public sector to be dismantled by rewarding collaborative workings and initiatives which result in significantly improved public services.
I realise (again) it’s probably the wrong thread, but so few are open for comment. However, I believe this blog post:
should be of some interest to readers here.
It gets very close to pinning down what “neoliberalism” is really about and is excellent in demolishing some of the nonsense that many of those on the left spout when they rant and froth about what they think “neoliberalism” is.
Indeed, in one respect it might be very relevant on this thread. While caring little, if not affecting to be determinedly ignorant, about the ideological and intellectual underpinnings of neoliberalism, FF and FG are coming near to finalising a temporary compact on governance that will incorporate many of the hallmarks of neoliberalism as it is currently practised in most of the advanced economies. It authorises and facilitates crony capitalism, corporatism and rent-seeking and seeks to ameliorate their malign impacts via extensive fiscal redistribution.
And this broad, if fuzzy, consensus extends beyond the 93 FG and FF TDs to include Labour, the Green Party and 16 of the mainly rural independents – yielding a total of 118 TDs. On the other side are the 39 TDs who supported the motion to abolish water charges and whose principal bogeyman is “neoliberalism” as they, wilfully erroneously and disingenuously, conceive it.
Although different fault-lines exist on social, cultural and geographically-defined issues, this appears to be the principal fault-line in the economic sphere.
The irony, of course, in a quintessentially Irish manner, is that the vast majority of the 118 TDs would vehemently deny that they were supporting or implementing the current manifestation of neoliberalism, but privately they and the interests they represent revel in it. Conversely, many of the 39 TDs who excoriate “neoliberalism”, the special interests they favour and their academic and opinion-forming cheerleaders are perfectly happy to exploit the crony capitalism, corporatism and rent-seeking that it facilitates.
Despite the fact that most Irish people seem to be capable of suspending disbelief almost indefinitely, the dishonesty, disingenuousness and hypocrisy manifest on both sides of this fault-line will prevent the emergence of a stable system of governance or of an effective means of alternating those who govern. This is regrettable because the configuration of the current Dáil could lead to the emergence of a genuine legislature. But that seems to be well beyond the ken or grasp of the current denizens.
It appears that citizens will have more than one visit to the polling booths to sort out an effective replacement for the two-and-a-half party system that lasted for most of a century.
The submission of this document seems to have largely passed unnoticed. One wonders why!
Docm Neoliberalism is rent seeking crony capitalism in the service of shafting workers. PBP have it right.
The EZ is a failed Neoliberal project.
To quote Bismarck, “politics is not a precise science”. One thing that can be said with reasonable certainty is that the economy is managing pretty well on its own under auto-pilot.
Another, is that the political class in Ireland is confirming its reputation for mediocrity. Still another, is that FF has performed best in terms of political analysis, assessing correctly that it cannot outflank SF and regain a firmer footing in Dublin without (i) remaining in opposition and (ii) defusing the issue of water charges.
None of the parties deserve the slightest credit for the way the events are turning out. The important thing is that they are going in the right direction. Without the constraining framework of Europe we would, however, be in serious trouble.
It is of course easier to sit on the ditch and lob grenades into the political arena while voters who make bad decisions don’t have to accept any responsibility for them.
Irish members of parliament maybe as competent as Nordic counterparts or not, but what likely makes a difference is the process including transparency that has developed over two centuries.
Years ago I was chatting with a Swede at a dinner in Jeddah and he mentioned that he had been in the same class as Sven Ingvar Carlsson, the then prime minister. “He went into politics because he was stupid” was the Swede’s deadpan reaction in a typical Swedish style. Politics was just another job but it’s interesting that Swedish participation in general elections is usually about 20% higher than in Ireland — in 2011 after the loss of over 300,000 jobs, about 64% of the Irish adult population voted and less than 60% in 2016. It’s typically 80% or more in Sweden.
The 32nd Dáil Éireann is the third Dáil since the second huge economic crash in a generation and it’s striking how few members have made a mark in response to the bust and the misery brought by reckless misgovernance. There is no evidence thus far that the new intake of TDs, many of them non-party, have fresh ideas to challenge conventional wisdom and the status quo.
These should be the priorities for the incoming government:
I don\t agree that new TDs are out of ideas. Shane Ross’ crowd have lots of them. They know how corrupt the system is Fitzmaurice from Roscommon is very impressive. So is independent Catherine Connolly from Galway West. Most of the party ideologues in FF/FG are hopeless, par contre.
The FF FG deal.
There are many words to describe these documents but impressive is not one of them. Parochial and blinkered would fit.
The most important sentence is probably the following.
“Maintain our commitment to meeting in full the domestic and EU Fiscal rules as enshrined in law.”
Adherence to law is not a question of commitment, but obligation; without exception.
Were you expecting something similar to the American Declaration of Independence? This document is fit for the immediate political purpose. The key statement for me is: “This is a political agreement and is not justiciable.”
The key over-riding document, to which you have already linked, is the National Reform Programme (NRP). This political agreement simply provides some political spin on areas which are causing justifiable public concern – with a whole appendix for Irish Water. It also allows some wriggle room to do specific deals with enough independent TDs to secure their support when FF decides to abstain.
But the NRP is the real programme of government – which would be implemented irrespective of there being either an FG or an FF minority government. And this is just the usual combination of pandering to special interest groups and of “make-work initiatives” for public officials, consultants and advisers and massive fiscal redistribution to ameliorate the malign impacts of this pandering.
The officials and the Spads in the Department of the Taoiseach (and, I expect, their political masters) appear to be delighted (on p37 of the NRP) to boast about how much work the fiscal transfer system does to reduce poverty and inequality: “In 2014, social transfers … reduced the Gini coefficient from 45.6 to 30.7, an income inequality reduction effect of 32.7.”
There’s no interest in querying why the pre-transfer Gini coefficient is the highest among all advanced (OECD group), and not just EU, economies and in examining what combination of competition policy and economic regulation might be applied to reduce it. But why would there be? One should not expect those with their snouts in the trough to distort or disrupt the supply of public largesse.
I started noting down weaknesses in Irish Governance in 2010 after the Irish Times began featuring them in its op eds. Some of the stuff is beyond belief. The system is very like Heathrow airport. Incremental changes for maximum incoherence but enhanced trough for piggies. So many areas are sub par. Citizens are shafted 24/7. RTE and the media are complicit.
FF and FG are part of that system because they built it . Expecting change is ridiculous. It will only happen once the system is in danger of total collapse.
€10 will buy you the 2017 version of this document; the date of publication, however, remains open.
I stay with my opinion that (i) the conversion of the various national commitments with regard to expenditure ceilings from nominal to real, because the lee-way hitherto under the Expenditure Benchmark is exhausted, will (ii) end the pretence observation of them, as subjected to criticism by the Commission, and (iii) when coupled with the deal struck between FF and FG, may (iv) well have a long-term transformative budgetary impact, including (v) helping to correct the totally skewed nature of existing expenditure, to which you draw attention, and (vi) overcome the constant, politically opportunistic but puerile, focus on “fiscal space/new measures”.
On the issue of what is or is not legally binding in terms of the FF/FG agreement, the experience of other countries is that it is the political commitment that matters. Most arrived at it by intelligent political debate. We will have to make do with what we have. (Heath Robinson has nothing on what the EU has come up with. The distinction between the correct economic measures and staying within budgetary parameters is not always sufficiently clear; nor the optimum interplay between them).
The ability of the EU’s institutions to impose a better of quality of governance than that provided locally was probably over-estimated in the past – and is certainly much less now. Most governments, unless they are pursuing transformative projects – such as Thatcher in the UK in 1980s or the excessively whiggish, anally-retentive and Trevalyan-like George Osborne currently, simply hope to muddle through and avoid annoying too many voters.
What is interesting is that most voters seem to have made up their minds on their broad voting intentions at the local elections in 2014. Even though the turnout increased from around 53% to 65.2% in the general election the percentage shares of 1st preferences for the main factions and groups of individuals remained largely unchanged. Probably the most significant change is that FG and FF at 24% and 25.5% resp. in the locals switched positions at the general and better vote management allowed FG to secure a margin of 6 seats over FF.
Labour responded to the drubbing by changing leader and then easing out two of the “old men” ‘like the empty ass to shake [their] ears and graze in common’. But FG made no effective response to the drubbing they got. So it’s probably not surprising that people took to the streets. FF in the same position would not have made the same mistiake. Commissions would have been established, reviews and inquiries would have been conducted and water charges would have been kicked in to the long grass. Instead FG made things worse for themselves and Labour when AK was appointed to replace Phil Hogan and he started digging an even bigger hole.
Some politicians never seem to learn, but some do. And it’ll be steady as she goes from now on. Those with their snouts in the trough have little to fear.
And what did you expect to see in a FF/FG stitch up, DOCM ? Hordes of wildebeest?
RTE ran a very interesting set of video interviews with the candidates pre election. Most of the FG bucks parroted the same memes (vote for us or face doom) , as did the FF people (we are lovely, we are not like we were before) . It was only the independents who actually had anything with nutritional content. Expecting party ideologues to see big picture is deluded. That is not their job. They are pawns. Get enough elected and the executive gets in.
@ Paul Hunt
The antics in the Irish political kindergarten remind me of the opening scene in The Simpsons where Maggie, the baby, seems to be driving the car; until the camera zooms back and it emerges that what she is playing with is a toy wheel, and car horn which she is thumping enthusiastically, and the person doing the driving is in fact Marge. In this situation, Marge represents the collective authority of the institutions involved, both domestic and international, sanctioned by the vast majority of the electorate. (This does not include elected representatives who openly flout the law).
We owe what are euphemistically termed “official lenders” a large sum of money and if we continue to run deficits we will be unable to pay it back. It may be in the interest of Irish politicians to try and hide this fact from the electorate but the reasons why the academic economic community should seemingly fail to throw some light on the subject is a bit of a puzzle. It cannot be because there is any lack of information.
DOCM the way things are going an awful lot of debt will not be paid back.
the 1% own 42% of everything in the US and slightly less in the EZ. They don’t deserve to get their money back. Compare the cost of deflation now in terms of lost output with the cost of writing down debt in 2010.
Insofar as it might have any impact on the public understanding of these issues Dan O’Brien and Brendan Keenan are doing their bit in the Indo:
They both, to varying extents, highlight the inane complexity of DG EcFin’s fiscal calculations – and the ability of national politicians to duck and dive around any constraints they might impose. (Indeed, it’s only politicians in the smaller economies who have to duck and dive; the bigger economies’ politicians basically tell DG EcFin to get lost.) The NTMA is unlikely to encounter any difficulties rolling over bond issues of varying maturities at favourable coupons. While the disparity between GDP and GNP remains and nominal GDP growth remains much larger than the fiscal deficit as a percentage of GDP, the debt/GDP ratio will fall. We’ll be back below the 60% bar in no time.
Sure, isn’t everything grand? Just grand. And just in case, we’re going to have a Rainy Day fund as well. All this worrying and fretting is bad for one. It’s time to focus now on maximising the Great Re-distribution and divvying it up.
And, surely, you don’t expect anyone who is benefitting from this Great Re-distribution to question publicly why it has to be so big, now do you?
For a short period from the run-up to the 2014 Local and Euro Elections when FG foolhardily went public on the cunningly contrived average household water bill until the Government’s panicked response in mid-November to the public protests quite a few citizens got a glimpse of the rent-seeking they were funding (either directly via charges or indirectly via general taxation) – and they didn’t like it. But, since then, the rent-seekers and the politicians they have suborned have strived might and main to suppress the insight those voters gained.
In addition to (1) whoever will be appointed Minister for ECLG and the cohort of offcials advising him or her on policy, to (2) the totally useless government-appointed CER setting water charges in a manner that protects the interests of final consumers, don’t you know, to (3) the government-appointed main board of Ervia, to (4) the internally appointed management board of IW as an unconsolidated entity within Ervia and to (5) the totally laughable government-appointed Public Water Forum, we will now have (6) a government-appointed “commission of experts” to advise on water charging and conservation, (7) a government-appointed statutory advisory body to somehow oversee IW, but without apparently having any authority to do anything and (8) a dedicated Oireachtas Committee dealing with water service matters.
Paraphrasing Churchill: never before in the history of Irish politics were so many bodies established and populated by so many of the insiders and the well-connected to bamboozle a multitude of ordinary citizens – among whom probably only a few have either the time or interest to do the research so that they fully grasp precisely by whom and how they’re being ripped off.
It is called the “layer-cake” school of management, most recently enshrined in the DPER. As I have argued, what is needed is top-down budgeting and delegated – in a properly designed manner – of management authority, under ONE finance department. With the present arrangements, we have the worst of all worlds.
They are hovering over Athens at the moment but unlikely to go into action until after 23 June. I have a number of imagined candidates who might play Tsipras in the Irish version of the Greek Bog Road, as Brendan Keenan aptly describes it. Luckily, none will make it into government, at least on this occasion. In fact, I never had any concerns that we would go the same way as Greece simply because we have an -inherited – but functioning administration, something which the Greeks never had. Nothing could illustrate the point better than the Property Registration Authority, with a computerised and comprehensive system – even “world class” – compared to the hitherto failed attempts in Greece to bring one into existence. The really shining example of properly delegated authority is, of course, represented by the Revenue Commissioners. It is a pity the Treasury did not leave us a better budget system. Time to change it!
Calculating what cannot, it seems, be calculated; the structural balance.
The debate is rather beside the point as the issue that arises is political, not technical. Politicians at a national level simply do not like being bound by a fiscal rule set at an international level which limits their scope for budgetary action nationally.
The quality of the budgetary calculations at a national level is also clearly a vital element. As far as Ireland is concerned, there was a chapter in one of the recent tsunami of documents headed “Quality of the Public Finances”. Its content could have been summed up in one word; abysmal. As the debate is moving on, I repeat a link on how this situation can be rectified, using the Swedish example.
The beginning of wisdom as far as governments are concerned is that it is a national interest, and not an imposed external constraint, that justifies imposing binding expenditure ceilings, their method of calculation being a secondary issue.
Are we dere yet? Are we Dere yet? Are we DERE yet?
All this has SFA to do with Government … the FG/FF Special Purpose Vehicle has a Purpose!
Polling well under way in the Other 6. Expect Arlene and Martin to Tango shortly – Senior Hurlers. Luvly Hurlin!
New programme draft is here: https://www.scribd.com/doc/311631772/Programme-for-Partnership-document-agreed-between-Fine-Gael-and-Independents#fullscreen
Many thanks for this link.
We are so blest to have a society that is so totally free of economic, social, political, historical and cultural conflicts. The Great Re-distribution continues unabated (bribing people with their own money) and, in addition, there are innumerable “make-work” initiatives for public officials and lucrative opportunities for consultants and advisers: all shall have prizes. I think the key passage is on p33ff:
“The New Partnership Government is committed to a “Social Economy” model to deliver a strong economy and a decent society. This “Social Economy” will be built on four foundations:
(1) Sound Public Finances and a Stable and Broad Tax Base;
(2) A Supportive Environment for Enterprise and Employment;
(3) More Investmet in Economic, Regional and Social Infrastructure;
(4) A Just and Decent Society and a More “Inclusive Prosperity”.
As we work with the Oireachtas to avoid the mistakes that caused the economic crisis, this ambitious framework will be the basis for designing and assessing policies and measuring progress.
By combining our difference (sic!) experiences and different outlooks the members of the New Partnership Government will make Ireland a country in which every citizen shares in the benefits of economic growth and, in turn, lives in a decent society. As part of this, we will seek to alleviate pressures affecting household budgets across energy, childcare, medical and insurance costs.”
The last sentence suggests that the drafters of the document know that most household budgets are under severe pressure. It is very difficult to avoid this reality. The price level of private household consumption in Ireland is more than 20% above the Euro Area average. This amounts to an extra cost on average for each household of more than €9,000 a year. Much of this extra cost is totally unjustified as it results from inefficiencies and rent-seeking. Imagine the impact on ordinary households if this excessive and unnecessary burden were reduced.
But the drafters of the document either have no idea how to address this problem or have no desire to consider possible solutions. The solutions are simple and have been tried and tested in other jurisdictions – these are the “bread and butter” issues of economics in terms of markets, competition and economic regulation, but the opposition of the entrenched rent-seekers would be ferocious. It would be extremely prejudicial to the career of any public official or special adviser (it could even be career-ending) if he or she were to advance and advocate possible solutions. And I would bet that the distinguished group of academics poised to contribute here would claim not to have the necessary knowledge or competence in this area so they can safely keep their heads below the parapet. And I wouldn’t blame them. The problem and its solution begin and end in the Dáil.
Interesting that Shane Ross is backing FG. Are they really going to tackle corruption ?
Abstensionism suits Fianna Fail!
Be wonderful if it could last … The Coalition of the Unwilling.
Meanwhile … the Vultures continue to make hay on the imposed odious debt on the Citizenry.
Time to cut another bank of turf … I can’t see this lot taking on the ECB.
That said, I wish them all well … for a while!
p.s. Arlene and Martin will dance The Tango on the Stormont Lawn this Sunday Afternoon … Blind Biddy is in Belfast for the weekend to witness the events unfold.
Another v poor set of non farm numbers in the US to go with Trump wrapping up the GOP nomination on a platform of making America great again. His voters have been shafted for too long. US rates are going nowhere.
Tá an crash ag teacht.
The book to read is Wealth and Democracy by Phillips. Kevin Ó Rourke is name checked in it and everything.
I may be wrong about Maggie. She may actually be driving the car!
For evidence that the media observers are on the same level as those they are observing cf.
Did it not occur to the authors that the race would not have even taken place without the approval of FF?
Ireland is the most anti-tenant country in the world. Democracy is when the indigent, and not the men of property are the rulers.
Your new Minister for Health is 29 years old with a BA in journalism.
Your new Minister for Jobs, Innovation, Leadership, Excellence and Whatever You’re Having Yourself is Mary Mitchell O’Connor.
Best little country in the world.
The Greek Bog Road.
For ease of reference, I repeat the link to the “National Reform Programme” (NRP) submitted by DOF.
“Ireland held a General Election on 26 February 2016. The process of forming a new
Government is underway, with a new Programme for Government to be developed in due
course. Any update to this NRP, reflecting relevant elements of a new Programme for
Government, will be forwarded to the Commission as soon as possible.”
Blowing the available “fiscal space” on what Cliff Taylor aptly describes in today’s IT as a wish list rather than a programme for government, is mathematically impossible. The “country specific recommendations” (CSR) to be adopted by Ecofin in respect of Ireland will, no doubt, take this into account. It remains to be seen how.
What the “man with the plan” had to say in the Dáil, before the momentous announcement of the make-up of the new government (excluding the bit previously announced by the new minister for transport).
I can understand the basis of some of the concerns being expressed (by Cliff Taylor, Dan O’ Brien and other commentators) about this apparent fiscal incontinence confronting either Eurocratic constraints or averse reactions from some sovereign bond investors. But it baffles me that they do not recognise that this sort of fiscal risk-taking is a key component of the compact that permits governance in Ireland. It is a key element of how Ireland has been governed, most of the time!, in the past, of how it is being governed now – and, very likely, of how any sort of governance may be imposed.
The primary requirement is that the Great Re-distribution must be maintained at all costs. Every single TD in the Dáil is focused on maximising this and on maximising the share s/he can secure for their constituencies or the special interests to whom they are beholden (or both). Governments rely on public officials and the system of administration – in particular the NTMA – to make this work. And it does work, to some extent or other, most of the time. And, in this respect, governance in Ireland doesn’t differ hugely from that in other advanced economies. It’s just that the fiscal risk-taking appears to be more cavalier, the ability to project optical illusions and to suspend disbelief almost never-ending (until it does with a bang) and the rent-seeking, the baleful impacts of which the Great Re-distribution seeks to ameliorate, is more pervasive and rapacious.
Maybe it’s just part of what we are.
Maybe it is not that complicated? Ireland is a low tax, low expenditure, high social transfers economy. The data demonstrating this are not open to question. People like it that way. Those that do not leave the country.
Incidentally, Martin Sandbu had recently a very interesting comment on the general topic that is close to your heart.
What we are witnessing in Ireland is the opening skirmishes among the major players concerned, those most disadvantaged being those that are not organised, notably workers outside the public sector (which must now be taken, objectively, to included the banks).
The disgraceful collapse in investment spending is, of course, also a major feature.
The updated National Reform Programme (which is coordinated by the Taoiseach’s department, not the DOF, as I had thought) is to issue during the week. The remaining major document is that to be produced by the Oireachtas on parliamentary reform on the basis of the recommendations of the OECD (also mentioned in the FF/FG agreement).
DPER continues as a department but it cannot work now in any manner other than being joined at the hip with the DOF in the matter of the control of expenditure.
The central point, it seems to me, is that it is in the interests of BOTH major parties politically to be able to refer to the constraints of the Expenditure Benchmark when the debate starts in the new Budget Committee on the actual costings for various commitments.
An interesting question is which of the two parties has the most interest in being the chair of that committee; or maybe neither?
The biggest risks lie (i) in the quality of some of those appointed (buffoonery has its limits!) and (ii) the likely chagrin among those in FF who find it hard to follow their leader’s rather risky strategy, especially as they see their political opponents turn up in the Merc. The truth of the old saying that fine feathers make fine birds will undoubtedly be borne out.
Whoa! Too many assertions and observations that merit some discussion. But I don’t have time. And I don’t think it’s terribly complicated. Very briefly, Ireland has some distinctively different features and characteristics that require modification of the qualitative and quantitative analyses that are applied to EU Member States. It is true that the analyses of all other Member States require some modification, but I would contend that much more is required in the Irish context.
Some simple examples. The gap between GDP and GNP and the volatility of GDP and its components make macroeconomic and fiscal forecasting almost impossible – and render the targetting of fiscal targets, benchmarks and ratios totally spurious. The function of Irish macroeconomic forecasting is to provide compelling evidence in support of JK Galbraith’s aphorism about the function of economic forecasting. (Already the projections in the NRP – which is about to be revised – differ from significantly those used by IFAC at the end of last year.) These variations and the accompanying uncertainty allow politicians to top-up the pork-barrels with impunity.
Due to its lack of an establised industrial base Ireland has limited exposure to the rent-sharing that took place in other advanced economies. But the rent-seeking and rent-sharing that characterises other sectors is fully institutionalised and legally authorised.
However, you won’t find many Irish economists publicly discussing these issues with a view to presenting possible remedies.
I agree! That we may be correct in our view is confirmed by the fact that the IMF, and others, have been drawing attention to the points you make, if indirectly, for the past two years cf. (slide 4.3 in particular).
I also return to the central point of my argument i.e. that I do not expect any innovative contribution from the Irish establishment, broadly defined. Rather that we are observing a fortuitous coincidence of circumstances from which FF alone, or at least its leader, finance spokesman and some others, have drawn the necessary conclusions. The news this morning on the proposed reforms of the health sector clearly indicate that the penny has not – yet – dropped with FG. There cannot be a programme FOR government in any meaningful sense under the new dispensation. A National Reform Programme yes, but best submitted on a cross-party basis.
In sum, the coincidence of circumstances may be forcing what is, in practice, missing from the EU fiscal framework i.e. simple, binding – and observed – expenditure ceilings (top-down budget approach). The Scandinavian countries do not need the EU for this. They already have it. If actually introduced, each minister “has to be his own minister for finance” i.e. he or she is, with their departmental accounting officer, responsible for the money allocated and cannot go running to cabinet in the event of budgetary overruns. The legal framework currently in place requires only that the Dáil be “informed” in that event.The missing ingredients hitherto have been (i) the political will to implement the ceilings (however they are calculated) (ii) Dáil capacity to enforce them and (iii) the necessary modern government accounting arrangements. All must be put in place if any minority government arrangement is to survive.
Moving on from the Fiscal Fetish of some commenters …
Minister Noonan today announced that This Irish Admin will NOT seek odious debt relief from the EZ …..
Lots of Fiscal Space in €65 Billion …. us eejits paying for it as the vultures and the scalpers make hay … How much longer do we have to put up with this dreadful supine admin?
Hypo Alpe Adria was guaranteed by the Austrian state of Kärnten to the tune of 5.5 times its annual revenues and had to be resolved with debt haircuts . Gott in Himmel!
And nobody died. Other than Joerg Haider .