Author Topic: Éirinn go Brách  (Read 1919 times)

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Éirinn go Brách
« on: November 23, 2010, 11:42:39 GMT »
The level of hype and at time hypocrisy from some UK politicians (usually Tory and anti-EC) on Ireland’s current situation is very interesting, particularly in terms of using it to attack EC membership and the euro in particular.  It is worth looking at the reason for the current state of affairs and it is certainly not to do with the EC nor euro but plain bad economic policy.  Ireland's tax base was (is) too narrow with developers getting huge tax breaks, among others   The banking system was allowed to respond by throwing money at property without any curbs whatsoever.  So there was a rational economic response to the “incentives” and everyone piled in until the bubble burst.  The Irish population had grown with immigration (the Diaspora and economic migrants), but nothing like the population before the famine, so there was a demand for housing which did not need an artificial stimulus.  Nothing much about the EC or the euro there!

But look at the Ireland now and compare it with the one that my father and mother (with myself and three siblings in tow) left Ireland as economic migrants in the 1950s?  Today the infrastructure is relatively good with motorways linking the North and midlands and further south and west to Dublin.  Tertiary education is unrecognisable. These all have benefited from EC membership and the resultant flow of funds that has allowed these investments.  Without EC funding these would not have materialised in the timescale they did – EC money was not wasted or so it would appear.  High-tech knowledge based industry now well outweighs agriculture which was the predominant generator of employment.  And yes, the low (relative to the rest of Europe, but not some other countries) corporation tax has helped, but is that significant?  The attractiveness of Ireland in this regard has to be the output of its education system rather than any backward linkages to resources and raw materials so there is no natural resource rent to be taxed.  The alternative is an uncompetitive higher tax rate where footloose investment goes elsewhere and the qualified Irish follow (sounds like a familiar historical theme).  Perhaps better to keep them at home with a logical tax rather than the illogical ones that caused the bubble in the first place. 

So here we are with the IMF and EC “faceless men” storming Dublin Castle, as we are led to believe.  Is there anything wrong with getting assistance from the International system designed to provide such help?  Many countries have used the IMF including the UK in the mid 1970s.  Ireland cannot devalue but it has introduced structural reforms that have the same impact by reducing wages relative to its competitors.  It is addressing its deficit and the banking crisis and the funding is to help with that.  Hopefully it will address the narrowness of the tax base and rid itself of distorting exemptions.
« Last Edit: November 23, 2010, 21:15:50 GMT by John Short »

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Re: Éirinn go Brách
« Reply #1 on: November 24, 2010, 15:44:56 GMT »
« Last Edit: November 24, 2010, 15:49:40 GMT by John Short »

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Re: Éirinn go Brách
« Reply #2 on: December 05, 2010, 18:44:51 GMT »
Very interesting exposition in Sunday Times Magazine of Dec 5th by Kevin Toolis on the tax policy lunacy, which led to the "property boom" and the "bankrupt" (not financially) politicians’ involvement.  My apologies to my Albanian language colleagues, but you can regain the page at your leisure.

petagny

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 348
Re: Éirinn go Brách
« Reply #3 on: December 05, 2010, 20:40:17 GMT »
Martin Wolf always has something useful to say. Here's an extract from an article that appeared in the FT on 23 November:


'Ireland is nothing like Greece. Back in 2007, Ireland’s net public debt was just 12 per cent of gross domestic product. This compares with 50 per cent in Germany and 80 per cent in Greece. Spain, too, had net public debt in 2007 at just 27 per cent of GDP. If the fiscal rules had been applied as ruthlessly as German policymakers say they now want (though their predecessors resisted their application to themselves in the early 2000s), they would have affected France and Germany more than twice as often as Ireland or Spain between inception of the eurozone and the current wave of crises.

It was not the public but the private sector that went haywire in Ireland and in Spain. In the low interest rate environment caused principally by chronically weak demand in core European countries – Germany’s real domestic demand was a mere 5 per cent higher in 2008 than in 1999 – asset prices and credit exploded in several peripheral countries, particularly Ireland. An expansionary monetary policy has to work in much this way, somewhere. Moreover, until November 2007, spreads of Irish and Spanish public debt over German levels were next to zero. Nor is it surprising that private suppliers of credit failed to discipline the boom: they caused it.'

In a sense, then we can see the Irish problem as being rooted in German economic policy and we should see the fiscal crisis as being a symptom rather than a cause.

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Re: Éirinn go Brách
« Reply #4 on: December 08, 2010, 17:40:51 GMT »
The Irish Budget and various supporting documents to be found at
http://www.budget.gov.ie/budgets/2011/2011.aspx

Quotes from Minister of Finance's speech
"Our income tax system, as it stands today, is no longer fit for purpose.......Our system is also unduly complex. With four separate charges on income, each rational in its own terms, it contains too many distortions, steps, and discontinuities. Our goal must be to create a system that is rational, sustainable and fair, and that delivers the resources needed for essential public services..........high earners availing of tax incentive schemes must contribute more in the current difficult circumstances............The National Recovery Plan contains a commitment to the abolition or the curtailment of tax expenditures and to the phased abolition of property-based legacy reliefs. The 16 measures identified in the Plan will be given full legislative effect. Today, I will abolish or restrict a further nine reliefs bringing the total to 25. "

There are other indirect tax measures for revenue generation and growth related tax measures, but the ending of these distortions begs the question - how did policy makers allow the tax system to reach this situation - or did the politicians get the advice and just ignore it? The horse is gone, the stable door is shut; can it be enticed back?   
« Last Edit: December 09, 2010, 10:17:52 GMT by Napodano »

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Re: Éirinn go Brách
« Reply #5 on: December 16, 2010, 13:55:59 GMT »
This sums it up beautifully and even poetically if not in a style and content that Joyce, Shaw, Wilde and Yeats as well as the thousands of Irish writers who have dominated English Literature over the centuries would have used. I am sure Fintan O'Toole will appreciate the subject matter and the sentiments.  Perhaps the move to a more oral tradition?   (It is not an English Lit forum so apologies to the denizens of the language who think Warwickshire and other places deserve this accolade.)
This video come with a health warning as it uses words that are in frequent use in Ireland but may not be so familiar to polite society such as in a rugby club.  Caveat Emptor.
My apologies to my Albanian language colleagues for hijacking the page again, but the contributors there will appreciate this, having worked with more gentle Irish people over the years.
http://www.youtube.com/watch?v=koY6kXhQDQo&feature=player_embedded

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
A postscript Re: Éirinn go Brách
« Reply #6 on: January 03, 2011, 10:01:44 GMT »
I managed to read Fintan O’Toole’s eye-opening and jaw-dropping Ship of Fools: How Stupidity and Corruption Sank the Celtic Tiger over the New Year.  Tax evasion schemes dressed up as tax avoidance and naming and linking of names along with pathetic banking supervision audits showed how the political process completely obliterated sound policy. 

What is absent from the book is any reference to analytical papers and policy advice from the Department of Finance or analysis by the Industrial Development Agency on the consequence of the tax exemption policy and weak banking supervision.  It is difficult to comprehend that such policy papers and analyses were not produced. What did they contain and happened to them would surely provide further fascinating reading?

I have now started on the sequel Enough is Enough How to Build a New Republic.  I will be interested to read if the strongest case for the political unification of the Island adapted from Max Weber’s famous treatise is considered.  This would leaven the political mix, the absence of which is a clear cause of the current state of affairs.
« Last Edit: January 03, 2011, 11:34:01 GMT by Napodano »

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Re Postcript No 2: Éirinn go Brách
« Reply #7 on: January 03, 2011, 21:00:35 GMT »
I started this thread to argue that the Irish crises was neither a product of membership of the European Union nor the Euro, but was the product of poor tax policy that favoured property development, a banking system that fuelled it because of lax or zero regulation and cronyism in politics that allowed it all to happen.  I then stumbled on an interview with Fintan O’Toole on the BBC and found his recent two books.  Both Ship of Fools: How Stupidity and Corruption Sank the Celtic Tiger and Enough is Enough How to Build a New Republic are, in his own words, polemic works.  The information contained in them are “of the must be true as no one could actually make it up category!”  However, National Integrity Systems Transparency International Country Study Ireland 2009 (primary research led by Dr. Elaine Byrne between June 2006 and November 2006, and led by John Devitt between January 2007 and December 2008) does not contradict the main theme of the O’Toole books.
Much of the material in Enough is Enough can be looked at from a PFM (and even PEFA perspective).  He illustrates the policy vacuum in pensions, housing, health and education and puts forward alternative policies in these areas and links them to planning and resource allocation.  He also addresses reforms in tax administration and policy but in the context of equality rather than plain good policy (which should include equality).  He puts all of these suggestions into a reformed cultural and political system that incorporates parliamentary scrutiny and strengthened internal and external auditing and makes the State responsible for policy and its implementation, all of which he contends are weak presently in Ireland.
Although decrying “right wing economists” (not defined), most of the 50 reforms that are suggested make economic sense and would certainly improve PFM and likely PEFA scores.  Both books are good reads on political economy and how distortions can be manipulated by those who have the wherewithal to do so.
« Last Edit: January 03, 2011, 21:03:49 GMT by John Short »

Napodano

  • Administrator
  • PFM Member
  • *****
  • Posts: 681
Re: Éirinn go Brách
« Reply #8 on: January 03, 2011, 22:26:32 GMT »
Hey, John;

how about lending me that book (Enough is enough) ?
It sounds a very interesting reading.

atseacliff

  • PFM Member
  • *
  • Posts: 99
Re: Éirinn go Brách
« Reply #9 on: March 22, 2011, 18:42:55 GMT »
John

Highly entertaining presentation on the Irish financial crisis from Professor John Fitzgerald at the CIPFA Conference on St Patrick's Day.

http://embed.policyreview.tv/video/564/3360

harnett

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 204
    • REPIM
Re: Éirinn go Brách
« Reply #10 on: May 30, 2011, 14:36:16 GMT »
Also interesting to see Paul Krugman weighing in with views on the Irish (and other EC nations) crisis.  Certainly against the "more pain more gain" attitude that seems to be the EU heavyweights' attitude towards Ireland, Greece, Portugal etc.  Of course we'll never know if less pain would result in more or less gain but......  Check out  http://www.nytimes.com/2011/05/23/opinion/23krugman.html

N.B. Moderator - you may want to move this article as it really questions the response to the crisis in Europe in general and what policy should be adopted in the US.
« Last Edit: May 30, 2011, 14:40:48 GMT by harnett »

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Re: Éirinn go Brách
« Reply #11 on: July 07, 2011, 20:04:50 GMT »
Establishment of Irish Fiscal Advisory Council
 
Following the agreement of the Government in June, the Minister for Finance, Michael Noonan T.D., announced today the establishment of the Irish Fiscal Advisory Council.  The Council is being put in place as part of a wider agenda of reform of Ireland’s budgetary architecture which is envisaged in the Programme for Government.
   
The Council will be an independent body and its existence and independence will be underpinned by legislation to be brought forward by Government later in the year in the proposed Fiscal Responsibility Bill.    Its role will be to provide an assessment of, and comment publicly on, whether the Government is meeting its own stated budgetary targets and objectives. It will also be charged with assessing the appropriateness and soundness of the Government’s fiscal stance and macroeconomic projections as well as an assessment of the extent of compliance with the Government’s fiscal rules. The latter are also to be brought forward in the proposed Fiscal Responsibility Bill.
 
 
The members of the five-person Council are:
 
 •Mr. Sebastian Barnes, OECD,
•Professor Alan Barrett, TCD (on secondment from the ESRI),
•Dr. Donal Donovan, University of Limerick (formerly IMF staff),
•Professor John McHale, Head of Economics, NUI Galway and Chair of the Council, and
•Dr. Róisín O’Sullivan, Associate Professor, Smith College, Massachusetts.
 
Commenting on the establishment of the Council, the Minister said:
   
“The establishment of the Irish Fiscal Advisory Council is another important step in the process of reforming Ireland’s budgetary framework. The Council will provide an independent assessment of the Government’s budgetary plans and projections and, in doing so, will help to inform the public discussion surrounding economic and fiscal matters.
 
A number of other countries have taken the step of establishing such a council and have found it to be beneficial not only in helping to ensure that an appropriate budgetary policy is pursued, but also in sending a positive signal to markets regarding the conduct of future fiscal discipline.”  (Such as Office for Budget Responsibility (OBR) http://budgetresponsibility.independent.gov.uk/ also in UK: http://www.hm-treasury.gov.uk/data_obr_index.htm) (added to Press release by Poster)
   
The Minister wished the members well in their work and expressed the view that the Council will make a significant contribution to the task of ensuring that Ireland avoids the type of imbalances in the public finances that have been a feature in recent years.   The Minister said that he was confident that the move would be viewed positively by the markets as further clear evidence that Ireland remained on track in meeting its obligations under the EU/IMF Programme and that it was committed to overcoming its financial difficulties.
 
The Minister thanked the new members of the Council for lending their time and expertise to help establish this important addition to Ireland’s budgetary framework.
 
 “I am delighted that we have been able to assemble such a high-quality team to form Ireland’s first Fiscal Advisory Council. I have no doubt that, over the coming period, the Council’s standing will only increase through its work. I am particularly pleased that Professor John McHale has agreed to act as Chair.   He will have a key role in setting up the Council and in helping to define its remit and its independent character.  I would like to thank all of the members for making available their time and expertise to help reform our budgetary architecture.”
 
 7 July 2011

http://finance.gov.ie/viewdoc.asp?DocID=6927
« Last Edit: July 12, 2011, 07:04:59 GMT by John Short »

harnett

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 204
    • REPIM
Bad Planning!!!
« Reply #12 on: December 05, 2011, 13:01:28 GMT »
According to the Guardian: http://www.guardian.co.uk/world/2011/dec/04/enda-kenny-optimistic-ireland-budget-recovery
 
Ireland's prime minister, Enda Kenny, has warned of a tough budget ahead for the Irish this week, but said the country is on track to restore international confidence in its economy.

In a 10-minute address on Irish television on Sunday night, Kenny said the government's priority was to create jobs.

But a large proportion of the Irish television audience did not tune into his attempt to soften up the public before the budget.

Ireland's TV3 channel refused to reschedule the X-Factor vote that took place at the same time as the taoiseach's address. The station said the government information service in Dublin failed to give it enough time to change scheduling.

petagny

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 348
Re: Éirinn go Brách
« Reply #13 on: December 05, 2011, 17:05:49 GMT »
So there might after all be some advantages in having a prime minister who controls most of the media!

harnett

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 204
    • REPIM
Re: Éirinn go Brách
« Reply #14 on: December 05, 2011, 17:20:25 GMT »
The Irish one does!!! - Well it's in public hands as in UK.  But not TV3.  Are you suggesting that such bad planning would never happen with Berlusconi?

Napodano

  • Administrator
  • PFM Member
  • *****
  • Posts: 681
Re: Éirinn go Brách
« Reply #15 on: December 06, 2011, 08:27:53 GMT »
The Irish one does!!! - Well it's in public hands as in UK.  But not TV3.  Are you suggesting that such bad planning would never happen with Berlusconi?

harnett,

you meant Monti, didn't you?

harnett

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 204
    • REPIM
Re: Éirinn go Brách
« Reply #16 on: December 06, 2011, 10:04:47 GMT »
No - I meant Berlusconi - "a prime minister who controls most of the media" - he's the closest that we've had internationally I'd say (in peacetime).

petagny

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 348
Re: Éirinn go Brách
« Reply #17 on: December 07, 2011, 10:07:25 GMT »
Then of course there's Putin, who doesn't own the media, but certainly controls it!

STONE

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 161
Re: Éirinn go Brách
« Reply #18 on: February 08, 2012, 08:57:39 GMT »
I see Ireland is embracing fiscal responsibility and plans an Act of that name.

http://blog-pfm.imf.org/pfmblog/2012/01/how-ireland-is-strengthening-its-fiscal-management-as-part-of-its-ongoing-recovery-program.html

cites an article by Tom Ferris

http://www.publicaffairsireland.com/system/assets/253/original/highlighting-the-need-for-greater-fiscal-responsibility-tom-ferris.pdf?1326882346

It has five strands reportedly: 3 deal with budget preparation of which 2 are about a medium term perspective (looking around the corner) the other is about performance information. The last is about accountability to Parliament.  Nothing about execution.  My ears detect the sound of a harp and my great-granny's eyes would be smiling.

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Re: Éirinn go Brách
« Reply #19 on: February 08, 2012, 10:20:55 GMT »
Or could it be the Harp on the Guinness label?

Another doc
"This Plan provides a blueprint for a return to sustainable growth in our economy. It sets out in detail the measures that will be taken to put our public finances in order."
http://www.budget.gov.ie/The%20National%20Recovery%20Plan%202011-2014.pdf

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Re: Éirinn go Brách 2 -10 years on
« Reply #20 on: August 23, 2023, 13:22:30 GMT »
"Ireland's economy has recovered strongly from the Covid-19 pandemic so more taxes like VAT are being collected.

But something else is going on. That something is the corporation tax coming from multinational companies.

Last year Ireland raised €22.6bn (£20bn) in corporation tax, 182% more than the €8bn (£7.08bn) it took in just five years ago.

Of that €22.6bn Mr McGrath has designated about €12bn (£10.62bn) as a "windfall" from multinationals, meaning it has been derived from a particular set of circumstances that won't last forever.

Ireland has long featured in the tax planning of multinational companies, often as a conduit for shifting money around.

But in the middle of the last decade some of the world's biggest companies began to reorganise their affairs in a way which meant they would pay a lot more tax in Ireland.

Ironically this was partially a response to the pressure on big companies to clean up their act on tax."

https://www.bbc.co.uk/news/world-europe-65343497

See also:

https://www.ntma.ie/uploads/general/NTMA-Investor-Presentation-website-final.pdf

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Re: Éirinn go Brách
« Reply #21 on: August 25, 2023, 09:50:12 GMT »
Of course it is not just tax rates - something has to be taxed.

The position that has been reported has been generated by two major investments - in education and in roads.

As Ireland has not any significant non human resources, investment in its people has been important to attract inward investment.  OECD figures show this:

https://gpseducation.oecd.org/CountryProfile?plotter=h5&primaryCountry=IRL&treshold=5&topic=EO

The other area of significant investment has been in motorways which has transformed the country. It is easy now to travel from North to South (through the unique County of Laois) and from East to West in a fraction of time compared to 10 to 15 years ago using good public transport: Dublin to Galway is a good example.

« Last Edit: August 26, 2023, 08:11:56 GMT by John Short »

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Re: Éirinn go Brách
« Reply #22 on: September 07, 2023, 13:02:32 GMT »
Interesting commentary from the Fiscal Council which is an independent statutory body with a mandate to:
•   Assess the Government’s fiscal stance
•   Assess and endorse its official economic forecasts
•   Assess its budgetary forecasts
•   Monitor fiscal rules

https://www.fiscalcouncil.ie/pre-budget-2024-statement/
Key Messages
“The Government now plans to repeatedly breach the National Spending Rule every year out to 2026. The Government’s intention is to go beyond plans set out in April, repeatedly breach the National Spending Rule every year out to 2026. The Rule sets a 5% limit for core spending increases net of new tax measures — a speed broadly matching trend growth that would help stabilise the economy and avoid fuelling price and wage pressures. Core net spending is now expected to be €4 billion higher by 2026 compared to previous plans.
These breaches are a serious cause for concern.
1) They risk repeating Ireland’s past mistakes, with employment already high and windfalls boosting the Exchequer. This would represent a continuation of procyclical fiscal policy.
2) The stance adopted undermines the National Spending Rule at a time when EU fiscal rules are not binding and likely to be distorted by GDP if and when new proposals are enacted.
3) The manner in which plans were revised weakens the credibility of Government projections, lacking transparency and not factoring in overruns and costs related to population ageing and the climate transition.
The Council recognises pressures for additional spending, but these pressures should be funded sustainably. Pressures in health, housing, infrastructure and climate-related areas are likely to need ongoing multi-year funding. If the Government wishes to ramp up spending across all these areas, it should ensure that the outlays can be maintained on an ongoing basis and not just based on receipts expected to prove temporary.
Looking to Budget 2024, the Council assesses that:
• The Government should adjust its plans to stick to its National Spending Rule. This would ensure more credible and sustainable fiscal plans. It could be achieved by introducing offsetting tax increases or spending adjustments elsewhere. To this end, there is a role for developing more comprehensive reviews of existing programmes.
• There is little to no justification for further temporary non-core measures in Budget 2024. Energy prices are falling and temporary measures risk adding to price pressures. Additional unfunded measures, given the existing pressures and low unemployment, would represent a further shift toward a more procyclical fiscal policy.
• The Government needs to improve its long-term planning. The Government’s fiscal plans only go to 2026, right before new estimates from the Council suggest climate costs will mount (Casey and Carroll, 2023). Ageing pressures will also begin to deepen towards the end of this decade.
• The Council welcomes proposals for a new Savings Vehicle — temptations to spend more resources immediately should be resisted, without offsetting measures elsewhere. There are substantial pressures for additional spending and there is a good case to be made for additional public investment. However, the State already has ways to achieve that. The National Spending Rule allows additional spending provided this is offset elsewhere, while the National Development Plan provides a framework to plan longer term capital needs. The rationale for an investment fund is weak. It risks simply being used as a means of ramping up capital spending in the short term even more than currently planned, and at a time when getting value for money is challenging.
• The Government should reinforce its National Spending Rule as a “first line of defence”. The Government’s National Spending Rule could continue to prove a useful tool to ensure the public finances are managed sustainably. But it needs to be reinforced and adhered to.”

See also
https://www.bbc.co.uk/news/articles/c3gw0888ew5o
which contains:
"Irish Finance Minister Michael McGrath rejected the IFAC criticism, saying inflation meant the government had to adapt its policy, which included breaching the spending rule.
He added that "on balance" it was the right thing to do."

John Short

  • Global Moderator
  • PFM Member
  • *****
  • Posts: 558
Re: Éirinn go Brách
« Reply #23 on: December 31, 2023, 15:32:18 GMT »
I must admit I was surprised at the latest year position in the series if not the progression up the table.

https://gfmag.com/data/richest-countries-in-the-world/


 

RSS | Mobile

© 2002-2024 Taperssection.com
Powered by SMF