In yesterday’s Irish Times, Stephen Collins wrote:
The current appalling plight of the public finances is a direct result of the profligacy of Bertie Ahern’s governments since 1997 when public spending was ratcheted up far ahead of economic growth, year after year.
If public spending grew at rates far ahead of economic growth, then government spending must have increased as a share of GDP. However, when I check one of my favourite sources of information, the Statistical Annex of the European Commission’s European Economy publication, page 174 tells me that government spending as a share of GDP fell from 39.1% in 1996 to 36.9% in 1997 and fell further to 31.5% in 2000. The ratio moved up to 33.4% in 2001 and then stayed at essentially this level until the final two years of the second Ahern government at which point there was a gradual rise in this ratio to 35.7% in 2007, still below the level inherited by Ahern.
So the figures show that on average, rather than increasing public spending at rates far ahead of economic growth year after year after 1997, Bertie Ahern’s governments on average increased spending at a lower rate than economic growth.
Many fiscal policy mistakes were made during the Ahern era but it would be better if public discussion of these mistakes started from facts rather than imagined truths.