Exchequer Finances 2008

[pete]

Deficit up to 6.7billion (http://www.irishtimes.com/newspaper/breaking/2008/0805/breaking65.htm)



It said there was a shortfall of €6.7 billion so far this year, compared with a deficit of €1.3 billion over the same period last year.

Tax receipts for the year up to July 31st were €22.67 billion, down from €25 billion last year. Expenditure for the first seven months of this year is €31.1 billion, up from €27.57 billion in 2007.

Capital gains tax was down from €1.09 billion to €655 million this year, while VAT dropped by 5.5 per cent to €8.9 billion from €9.4 billion in 2007.

Stamp duty income fell by €883, or 44 per cent, to €1.14 billion.


Hard to argue with opposition claims of government mismanagement. To some extent they have limited control on reduced tax revenue government spending has increase 12% this year which the government have direct control over.

IMO clear sign they cannot control spending & were able to get away with it when cash rich in the good days. I wonder will there be another mini budget soon?

[OneRedArmy]

Government mismanagement is a given (unfortunately). As is a large deficit.

I'm more worried about where the Government is cutting costs. I like the fact they say they are prioritising capital spend, but as tax revenues fall further beneath estimates (as they surely will) then I wouldn't be surprised if major projects get postponed.

I'd much prefer them to tackle public sector pay and in particular those in senior grades who seem to get the best of both worlds, private sector increases and bonuses in the good times and then cost of living-benchmark type increases in the bad times with a job for life to boot.

[pete]

I'd much prefer them to tackle public sector pay and in particular those in senior grades who seem to get the best of both worlds, private sector increases and bonuses in the good times and then cost of living-benchmark type increases in the bad times with a job for life to boot.

The government are so used to spending 10%+ every year that they haven't a clue how to reign it in now. Reform of the public sector isn't something you start after 10 years of government.

Evidence would seem to suggest those senior grades get automatic bonuses every year irrespective of performance. There was a recent story about senior FAS official who while under investigation for financial irregularities was short listed for a significant promotion.

Click (http://www.timesonline.co.uk/tol/news/world/ireland/article4407904.ece)



The Sunday Times revealed recently that the internal audit found that Craig, who is now on sick leave, was involved in irregular practices when overseeing millions of euro in spending in the corporate affairs department from 2000 to 2004.

Craig also received a €10,000 special merit bonus in November 2005 despite the fact that the audit of his department was launched in November 2004 after allegations about his conduct were made in an anonymous letter.

[superfrank]

Couldn't be happier for the Gov. It puts a cloud over Brian Cowen and it's going to take some doing for Brian Lenihan to be a popular man come the Budget. I just don't think he's up to the task.

[Macy]

Reform of the public sector isn't something you start after 10 years of government.
If they'd tackled it during the boom then at least there would've been a take up of voluntary redundancies if such a package had been available. Who's going to take a package when there's little prospect of another job? At this stage it's like turning a super tanker, but I would still reckon it's management of resources that's the issue rather than overall spend or overall numbers. So many agencies have been set up so they can fill the boards with political appointees rather than have them come under existing agencies that would mean they could share support staff it's ridiculous. And some basket case decisions like the HSE that there appears to be no political responsibility for.


Evidence would seem to suggest those senior grades get automatic bonuses every year irrespective of performance.
Only management grades get the bonus, and it does appear to be without any targets at all. Some wishy washy general things like modernisation that are all covered by the national wage agreements anyway. Senior Civil Servants (along with the senior politicians) got - National Wage Agreements, Their own version of benchmarking (which is more regular than the normal), normal benchmarking and yearly bonus. Yet when IBEC and others start attacking the civil servants they focus on the Clerical Officers and other lowly grades. Are IBEC salaries tied to the same mechanisms as the senior civil servants?

[Macy]

Couldn't be happier for the Gov. It puts a cloud over Brian Cowen and it's going to take some doing for Brian Lenihan to be a popular man come the Budget. I just don't think he's up to the task.
Cowen mismanaged the boom, and now is passing the buck on the recession. But come next election the same idiots will still vote FF.

[pete]

Irish Times (http://www.irishtimes.com/newspaper/frontpage/2008/0806/1217923985237.html)



Official figures published yesterday show that the amount of money the Government collected in tax in July was €776 million below its expectations for the month.

However, sources within Government said that no decisions on revising projections or otherwise would be taken until September.

The sources said that at that stage it would be possible to make an assessment about whether the poor July figures were a once-off or part of a more serious trend.


Given all the financial data they have available to them I find the Dept of Finance projections hopeless. Have things changed so much in July? Surely they can work out if it is a trend? This is not a once off as in the times of budget surpluses they also the projections incorrect.

[Reality Bites]

Couldn't be happier for the Gov. It puts a cloud over Brian Cowen and it's going to take some doing for Brian Lenihan to be a popular man come the Budget. I just don't think he's up to the task.

Politicians in this country are in the position they are in due to Nepotism and not Meritocracy. Example - Brian Cowen - see Ber Cowen, Brian Lehnihan - Brian Lehnihan Snr, Mary Coughlan, both her Father and Uncle were prominent Donegal TD's, Enda Kenny son of a prominent Mayo TD..these people have got to where they are due to Family members only I am convinced of this, not in my opinion valid reason to be at such an elevated Office -for reference see George W Bush!

[jebus]

Meritocracy? :)

[Reality Bites]

Meritocracy? :)

leadership by able and talented persons.

[jinxy lilywhite]

Cowen mismanaged the boom, and now is passing the buck on the recession. But come next election the same idiots will still vote FF.

I don't think Cowen is completely to blame although Bertie did pick his moment to jump ship perfectly well.

One problem I have with this recession is that the government seem to be burying their heads in the sand trying to let it just pass over. They are doing the same with the partnership talks.
what we need is leadership and a leader who will make tough decisions not care about public opinion, invest as was said in capital projects (NDP) where the option of borrowing the money becomes attractive as the project should still be there long after the loan is repaid. I don't think Cowen is the man for the job. personally I think he will borrow to cover current spending and he will meddle in the pension fund too. There is roughly 6bn there. He is no leader and he offers no insperation to the country as a whole. Who would respect a man called "Biffo". Then when you look at the opposition I wouldn't even want them minding my house and they offer no alternative.
We just need our politicians selling the country to the world again like they did in the early nineties.

[pete]

I don't think Cowen is completely to blame although Bertie did pick his moment to jump ship perfectly well.


Hard for him to pass the buck given he was Minister for Finance in recent years.

Borrowing for suitable capital projects makes sense given our low National debt but failing to control current spending will fuel inflation & continue waste of money of recent years.

[Macy]

I don't think Cowen is completely to blame although Bertie did pick his moment to jump ship perfectly well.
He was Minister for Finance ffs. He fooked up by continually feuling construction with tax breaks when he should've been trying the reign it back in to a sustainable level. Then we might have had the so called soft landing, instead of the virtually complete stop we had.

[NeilMcD]

http://www.davidmcwilliams.ie/2008/08/13/why-bailing-out-housing-market-is-a-very-bad-idea

[pete]

http://www.davidmcwilliams.ie/2008/08/13/why-bailing-out-housing-market-is-a-very-bad-idea

He is correct. No use artificially creating new demand for housing.

[OneRedArmy]

He would give an aspirin a headache, but he's right.

I get alternately amused and p'ed off every time I hear Tom Parlon on the radio/TV (in his role as head of the Construction Industry Federation).

Americans have a phrase called "drinking the Kool Aid", used when people get caught up in hype (origination in the cynanide laced drink that the followers of cult leader Jim Jones drank).

The construction industry are certainly drinking the Kool Aid by the bucketload. The tone of Parlon's repeated and increasingly desperate pleas for help indicate that he and his members believe they should be immune from economic cycles and their earnings of the last decade should be the norm.

Housing shouldn't get a cent of support, except perhaps a reduction in stamp-duty which is still too high and limits the effectiveness of the second hand market.

Sooner or later the housing market will find its level (another 15-25% to fall?) and volumes will pick up. There will be losers, but there always are. It took a lot of people in the UK who bought just before the early 90's crash 10 years to get out of negative equity.

Infrastructure expenditure should be prioritised and this should also have the effect of soaking up some of the construction related unemployment.