Public Servants & Mortgages

Dannyboy83

(Some) members of the public service have became used to high income, which seemed the norm during the Celtic Pyramid years and consequently took on large mortgages/obligations.

Unfortunately, times have changed, it looks like there will be large reductions in personal income and/or large tax increases, leaving a large gap in the personal balance sheet, with expenditure possibly exceeding income.

In the event that pay cuts will be introduced, many members of the public service will still have large mortgages/obligations to address. i.e. reduced income with no major change in expenses.

What plans do you have in place to deal with this?
Will you seek to balance the books via reducing expenses, or will you cover the gap through borrowing?

Wishbone Ash

Dannyboy83 wrote: »

Will you seek to balance the books via reducing expenses, or will you cover the gap through borrowing?

I definately won't be borrowing more but I will have to reduce spending on car, shopping, insurance, DIY, AVC's, pubs, restaurants, holidays, babysitters, cinema, theatre, clothes etc. Unfortunately, if other public sector workers are in similar circumstances, it will mean a great reduction in expenditure in the above and probably lead to more job losses.

nesf

Wishbone Ash wrote: »

I definately won't be borrowing more but I will have to reduce spending on car, shopping, insurance, DIY, AVC's, pubs, restaurants, holidays, babysitters, cinema, theatre, clothes etc. Unfortunately, if other public sector workers are in similar circumstances, it will mean a great reduction in expenditure in the above and probably lead to more job losses.

Are public servants spending much money outside of necessities and fewer luxuries though? I mean, the impression I get from the statistics anyway is that both public and private sector workers aren't spending their money, they're all worried about potential tax hikes/pay cuts/redundancies etc et al. I'm beginning to question how big a deflationary effect this pay cut will actually have, I mean if I was in PS I'd have cut my spending down already by a fair chunk.

Dannyboy83

nesf wrote: »

Are public servants spending much money outside of necessities and fewer luxuries though? I mean, the impression I get from the statistics anyway is that both public and private sector workers aren't spending their money, they're all worried about potential tax hikes/pay cuts/redundancies etc et al. I'm beginning to question how big a deflationary effect this pay cut will actually have, I mean if I was in PS I'd have cut my spending down already by a fair chunk.

Good point.
And assuming much of this available money (public or private) is already being spent outside of the Republic, this would contribute to the idea that the deflationary effect *might* be considerably less than one would expect, for such a dramatic cut.

How long will it take before we can realistically measure the effect NESF?

Also, assuming many retailers will have a bad Xmas, cease imports and close up shop, what kind of impact would this have, on deflation specifically?

View

Dannyboy83 wrote: »

Will you seek to balance the books via reducing expenses, or will you cover the gap through borrowing?

They'll surely cover the gap through borrowing. After all, they could hardly reduce expenses on a personal level while opposing reducing expenses on a public level (via street protests), could they?

Now, like the Government, all they need do is find a bank that is indefinitely willing to loan them the money to cover the gap between their personal expenditure and their actual income...

BostonB

Banks would never do that would they?

Hang on a minute...

nesf

Dannyboy83 wrote: »

Good point.
And assuming much of this available money (public or private) is already being spent outside of the Republic, this would contribute to the idea that the deflationary effect *might* be considerably less than one would expect, for such a dramatic cut.

How long will it take before we can realistically measure the effect NESF?

Also, assuming many retailers will have a bad Xmas, cease imports and close up shop, what kind of impact would this have, on deflation specifically?

Deflationary effects can only be guessed and estimated (imperfectly) many months after an event and even then it's impossible a lot of the time to isolate one event and examine its effect.

Basic idea is if people are already cutting back on discretionary spending then there will be a smaller decrease in their spending in absolute terms from a tax rise/whatever than if you implemented it when discretionary spending was high. There's a limit at which people can't not not spend money, they have to eat, drink, have heating etc. All within reason obviously.

Economies are highly complex entities. They behave in very complicated and interesting ways. Any concept of linear ideas of deflationary effects (i.e. a 1% increase in tax will decrease spending by X at all possible times) isn't going to capture the behaviour when you're looking at times of unusual highs or lows in public mood/tax levels and what have you.

BostonB

Dannyboy83 wrote: »

(Some) members of the public service have became used to high income, which seemed the norm during the Celtic Pyramid years and consequently took on large mortgages/obligations.

Unfortunately, times have changed, it looks like there will be large reductions in personal income and/or large tax increases, leaving a large gap in the personal balance sheet, with expenditure possibly exceeding income.

In the event that pay cuts will be introduced, many members of the public service will still have large mortgages/obligations to address. i.e. reduced income with no major change in expenses.

What plans do you have in place to deal with this?
Will you seek to balance the books via reducing expenses, or will you cover the gap through borrowing?

Look for a bail out?

Theres no reason to make such a long winded song ad dance about it. Even the unions have (finally) admitted wage bill has to come down, and the size of the PS shrink.

Dannyboy83

BostonB wrote: »

Theres no reason to make such a long winded song ad dance about it.

I was trying to avoid offending people, hence the clarity/long windedness depending on your perspective.

gurramok

Why should there be special treatment for public servants(17 odd % of the workforce) who overextended themselves?

Reduce your lifestyle and start living within your means.

Riskymove

gurramok wrote: »

Why should there be special treatment for public servants(17 odd % of the workforce) who overextended themselves?

Reduce your lifestyle and start living within your means.

indeed and anyway why focus on public servants?

surely "some members of the public Private service have became used to high income, which seemed the norm during the Celtic Pyramid years and consequently took on large mortgages/obligations."

there are people out there who are over extended and struggling to make ends meet in both public and private sector

and there are people in both sectors doing alright

TGPS

I'm a public servant on a decent wage who works bloody hard for it. My wages have been cut, my response has been to start a part-time buisiness.

During the boom years I bought a modest house outside of Dublin and I've never driven anything newer than about 3 years old.

I watched my colleagues buy first one house, then a second one and in some daft cases even a third one on similar salaries to myself. I could never understand it - I've always lived well within my means.

Now, I'm still living within my means - I save more than I actually did five years ago but the car is 10 years old and the lifestyle has changed (in some ways for the better).

I shop up North; I shop online - partly because out of necessity; partly in protest at the Government; and partly because Irish business representative bodies are forever having a go at myself and my colleagues, which they're entitled to do, but they can't complain if the people they are bitching about on Monday, don't morph into loyal customers on Saturday.

I didn't strike on Tuesday because I believed that industrial action in this case was morally and ethically unjustifiable.

bridgitt

TGPS wrote: »

I'm a public servant on a decent wage who works bloody hard for it.

Good for you.

TGPS wrote: »

I shop up North; I shop online

Nobody can stop you doing this, but did you ever stop and think where part of your wages come from ? Part come from borrowings, as the country is borrowing 25 billion a year just to keep going. The rest comes from people who pay vat and tax here. That is how the government can write you a cheque. It is where the money comes from. Granted it then stops part of that money paid to you, and calls it income tax, but that is where the 20 billion a year the goverment spends on pay and pensions comes from. Its almost equivalent to the government tax take. Enjoy it while it lasts, becasue the government will not be able to afford to pay you forever, while your spending goes to support the vat and taxes of her Majestys government, whose public servants are paid much less than ours.

The more people shop up North , and if everyone done their shopping and trade and holidays outside the country, the quicker the country will collapse and government cheques bounce, so you are doing the right thing.

TGPS

bridgitt wrote: »

Good for you.



Nobody can stop you doing this, but did you ever stop and think where part of your wages come from ? Part come from borrowings, as the country is borrowing 25 billion a year just to keep going. The rest comes from people who pay vat and tax here. That is how the government can write you a cheque. It is where the money comes from. Granted it then stops part of that money paid to you, and calls it income tax, but that is where the 20 billion a year the goverment spends on pay and pensions comes from. Its almost equivalent to the government tax take. Enjoy it while it lasts, becasue the government will not be able to afford to pay you forever, while your spending goes to support the vat and taxes of her Majestys government, whose public servants are paid much less than ours.

The more people shop up North , and if everyone done their shopping and trade and holidays outside the country, the quicker the country will collapse and government cheques bounce, so you are doing the right thing.

......eh I should've mentioned I'm an economist so I've a pretty good idea how money circulates in the economy and how it leaks out (and in).

Yes, I shop up North, but it's for essentials - groceries, baby stuff and the odd bottle of wine (ok the last one isn't essential!).

As for the whole taxes to Her Majesty / giving the Queen her shillings argument - what nonsense! No one was making or makes that argument when we pay UK contractors for work done here. Also is it a one way street - do we object to paying HM's taxes but not receiving them?

I'd happily shop and purchase locally, but Irish businesses have to give me a better reason than the flag.


TGPS

aphex™

TGPS wrote: »

I didn't strike on Tuesday because I believed that industrial action in this case was morally and ethically unjustifiable.

Fair play to you. Things have to be kept in perspective- they're looking for 4 odd billions cuts whereas the real deficit is 20+ billion. If they're already striking now what are they gonna do for the next 16 billion? Those figures need to be stated in every discussion on the issue on radio, tv and here IMO.

BostonB

Dannyboy83 wrote: »

I was trying to avoid offending people, hence the clarity/long windedness depending on your perspective.

People in any sector, unemployed, or not, with mortgages or not all have the same problems of balancing income with expenditure.

You're only reason to single out a narrow band of people is to persist the them and us attitude. If a PS claims they'll cut expenditure, its obvious you want to make a simplistic comparision with the PS wage bill. So in effect its the same topic as so many other threads all on the same subject.

Both public and private sectors have to take a large adjustment. However you can't expect the masses to accept with out resistence, it if the fat cats of both sectors are left largely untouched. The on going campaign to set one side off the other distracts from the failures of govt and their continuing protection of their vested interests.

bridgitt

TGPS wrote: »

I'd happily shop and purchase locally, but Irish businesses have to give me a better reason than the flag.

What about the reason that their taxes are paying you, and you are getting a better pay and pension than they are taking themselves ( and usually for working shorter hours ) ?
Would you be happy to accept the public service salary the vat and taxes paid up north support ?

Dannyboy83

its obvious you want to make a simplistic comparison with the PS wage bill.

And why do you object to this?
Is it an unreasonable comparison?

Both public and private sectors have to take a large adjustment. However you can't expect the masses to accept with out resistance, it if the fat cats of both sectors are left largely untouched.

I've never heard the "Fat Cat's being untouched" ever voiced as a reason for striking by any individual on strike. It has been a preemptive strike to prevent expense reduction in the public sector.
I think its easy to have a careful attitude toward your own finances and a more carefree attitude toward others.

The on going campaign to set one side off the other distracts from the failures of govt and their continuing protection of their vested interests.

I don't necessarily believe there is a campaign. I don't believe that the government are capable of orchestrating one.

TGPS

bridgitt wrote: »

What about the reason that their taxes are paying you, and you are getting a better pay and pension than they are taking themselves ( and usually for working shorter hours ) ?
Would you be happy to accept the public service salary the vat and taxes paid up north support ?

First, I made the conscious decision to come into the Public Service in Ireland 10 years ago having previously worked abroad for an NGO and before that for a "Big Four" accountancy firm back when there was a Big Five.

My pay reduced significantly and the perks completely. I have a very good pension because when I worked in the private and NGO sectors I made proper provisions; my public sector pension here is good, but in terms of benefits it will provide it is a small proportion of my total pension pot.

As for accepting "....the public service salary the vat and taxes paid up north support" - Yes I would gladly accept the salary - it's lower than what I'm on now, but so is VAT. Income taxes are higher, but they have a health service that works, decent community infra-structure and business culture that embraces customer service.

I'm in Ireland, because I'm from here, my extended family are here and because I didn't want my kids growing up with strange accents! If I didn't have kids I'd be off like a shot.

Instead, of bitching about my salary being cut I've been doing something constructive about it. I may pay VAT in the North, but I pay income tax here (and some VAT) and if all keeps going well I'll be giving someone a few hours work a week after Christmas, with more to follow.

P. Breathnach

bridgitt wrote: »

What about the reason that their taxes are paying you, and you are getting a better pay and pension than they are taking themselves ( and usually for working shorter hours ) ?
Would you be happy to accept the public service salary the vat and taxes paid up north support ?

So tell us, jimmmy: is it okay for private sector people to shop in NI?

MaceFace

TGPS wrote: »

First, I made the conscious decision to come into the Public Service in Ireland 10 years ago having previously worked abroad for an NGO and before that for a "Big Four" accountancy firm back when there was a Big Five.

My pay reduced significantly and the perks completely. I have a very good pension because when I worked in the private and NGO sectors I made proper provisions; my public sector pension here is good, but in terms of benefits it will provide it is a small proportion of my total pension pot.

As for accepting "....the public service salary the vat and taxes paid up north support" - Yes I would gladly accept the salary - it's lower than what I'm on now, but so is VAT. Income taxes are higher, but they have a health service that works, decent community infra-structure and business culture that embraces customer service.

I'm in Ireland, because I'm from here, my extended family are here and because I didn't want my kids growing up with strange accents! If I didn't have kids I'd be off like a shot.

Instead, of bitching about my salary being cut I've been doing something constructive about it. I may pay VAT in the North, but I pay income tax here (and some VAT) and if all keeps going well I'll be giving someone a few hours work a week after Christmas, with more to follow.

Seems like you are just guilty no matter what you say - your crime - working in the PS.

Is there anyone here who has not shopped Up North or Online?
Oh, and if anyone has a problem with shopping outside the jurisdiction, whatabout shopping in Tescos or Argos which are not Irish companies?

Times have changed and no one has a right to complain about anyone spending their money where they like (as long as it is legal of course).

bridgitt

Thank you, but when I asked "Would you be happy to accept the public service salary the vat and taxes paid up north support ? " I meant would you be happy to accept a UK level of salary in your current job, given your employer ( the government ) is broke ?

TGPS wrote: »

I may pay VAT in the North,

Plus the people who sell you the goods pay their income tax, vat etc to the UK exchequer. The money you get in your paypacket ( much of which is borrowed as you know, given the country borrowing 25 billion per year )
goes straight to another country, in to their tax system, to pay their public servants ( all of who earn considerably less than their counterparts south of the border ).

TGPS wrote: »

but I pay income tax here (and some VAT)

The income tax you pay is merely a witholding tax on the money the government pays you. If you earn 100k doing full time permanent government work and pay say 30 k income tax, its the same as if the government gave you 70 k in to your hand to start with.

You are right anyway, because the sooner the IMF move in the better - as said earlier the more people shop up North , and if everyone done their shopping and trade and holidays outside the country, the quicker the country will collapse and government cheques bounce, so you are doing the right thing. I say the " sooner the IMF move in the better ", because most people do not have a good secure income or very good pension.

gurramok

P. Breathnach wrote: »

So tell us, jimmmy: is it okay for private sector people to shop in NI?

Jimmy? Thats a serious allegation of account duplication to get around a ban. How low can one get :eek:

Anyway, yes its grand to go up north for anyone who is NOT on strike.

TGPS

bridgitt wrote: »

Thank you, but when I asked "Would you be happy to accept the public service salary the vat and taxes paid up north support ? " I meant would you be happy to accept a UK level of salary in your current job, given your employer ( the government ) is broke ?.

Yes, I would be happy to accept pay and conditions for the equivalent job in the UK but only if everything else is brought approximately into line with the UK too

bridgitt wrote: »

Plus the people who sell you the goods pay their income tax, vat etc to the UK exchequer. The money you get in your paypacket ( much of which is borrowed as you know, given the country borrowing 25 billion per year )
goes straight to another country, in to their tax system, to pay their public servants ( all of who earn considerably less than their counterparts south of the border )..

Money will always leak out of this economy. If I buy a car, large chunks of the purchase price go outside the country. If I shop in local shops employing foreign nationals a certain amount of what I spend will be remitted back to their families and their country.

That's before you even get to things like holidays, entertainment, a lot of groceries etc.

bridgitt wrote: »

The income tax you pay is merely a witholding tax on the money the government pays you. If you earn 100k doing full time permanent government work and pay say 30 k income tax, its the same as if the government gave you 70 k in to your hand to start with.

You are right anyway, because the sooner the IMF move in the better - as said earlier the more people shop up North , and if everyone done their shopping and trade and holidays outside the country, the quicker the country will collapse and government cheques bounce, so you are doing the right thing. I say the " sooner the IMF move in the better ", because most people do not have a good secure income or very good pension.

"Unfortunately" the IMF won't becoming anywhere near here and the sooner the likes of Kevin Myers etc realise that the sooner we can move on to a more constructive debate. The IMF won't be landing any time soon because the European Commission will intervene long before that becomes necessary.

If businesses want to attract to more business then they should give consumers a reason to shop here. They can only compete on price up to a point because of the cost base I agree, but they could compete on value - except it's the same old story - something goes wrong, they complain and look for a hand out rather than trying to innovate and create.

I started a business 8 months ago and manged to grow it modestly (very modestly!!) - it's hard, but not impossible......

halkar

$hit will really hit the fan once ECB start raising interest rates which has been predicted for next year.
The effect of the the levies, tax increases were minimal with the savings on mortgage interests this year on mortgage holders. I dare to think what will happen in Ireland when rates increase to 3-4% :mad:

Dannyboy83

TGPS wrote: »

I'd happily shop and purchase locally, but Irish businesses have to give me a better reason than the flag.

The flag is a pretty good reason for shopping up North.
If you wish to see reform, then go and get the best value.

Artificially supporting some system now will just lead to a bigger problem further down the line. Kicking the can down the alley for when people have no money.

A fundamental part of reform in this country will comprise of landlords lowering their rents, government reforming their taxes, vat and rates, and a variety of other changes which need to occur, having a cumulative effect.

So if a retailer offers bad value and we adhere to protectionism and "Buy Irish", then we are preventing reform from occurring. That's the last thing we want.
If a retailer here is offering good value and we buy in the North out of spite, then of course it is damaging.

TGPS

halkar wrote: »

$hit will really hit the fan once ECB start raising interest rates which has been predicted for next year.
The effect of the the levies, tax increases were minimal with the savings on mortgage interests this year on mortgage holders. I dare to think what will happen in Ireland when rates increase to 3-4% :mad:

We're on the cusp of a serious deflationary spiral - if rates go up we'll be kicked into it.

At best we can hope for an extended period of stagnation.

P. Breathnach

gurramok wrote: »

Jimmy? Thats a serious allegation of account duplication to get around a ban...

As jimmmy might say if he were here, and as bridgitt might say when he is not here, I made no allegation; I simply addressed another poster in a particular way. Perhaps it was because bridgitt causes me to think of jimmmy.

bbam

BostonB wrote: »

Even the unions have (finally) admitted wage bill has to come down, and the size of the PS shrink.

Thankfully I agree the unions are turning to realise this, I doubt if the next day strike will go ahead...

What I do hope is that PS wage bill is adressed through a graded system of reductions...

We should however worry about front line PS staff numbers being cut, these are rarely the folks draining the money and at least there is a return on their monies.. I hope to see the plethera of middle managers whom have made many sideways moves benig culled off..

This is where the problems are, we don't have too many teachers, guards, firemen, ambulance drivers or nurses...
We have too many pen pushers in shirts and ties walking round like the system would collapse without their presence

P. Breathnach

bbam wrote: »

... We have too many pen pushers in shirts and ties walking round like the system would collapse without their presence

A popular point of view. Maybe you could say how many non-frontline staff we need?

TGPS

Dannyboy83 wrote: »

The flag is a pretty good reason for shopping up North.
If you wish to see reform, then go and get the best value.

Artificially supporting some system now will just lead to a bigger problem further down the line. Kicking the can down the alley for when people have no money.

A fundamental part of reform in this country will comprise of landlords lowering their rents, government reforming their taxes, vat and rates, and a variety of other changes which need to occur, having a cumulative effect.

So if a retailer offers bad value and we adhere to protectionism and "Buy Irish", then we are preventing reform from occurring. That's the last thing we want.
If a retailer here is offering good value and we buy in the North out of spite, then of course it is damaging.

As I've said, if a retailer, business offers me value (as I define it) I'll shop there - wherever they are.

I offer two cases. I'm a keen cyclist and last summer bought a fairly high end road bike on the Cycle to Work Scheme (the C2W scheme didn't cover the whole price!!!).

I shopped in the local bike shops here for the bike I wanted and everything was extra - I made a few calls and found the same bike in a shop in Liverpool for about a third cheaper BUT, the Liverpool shop said if I wanted the bike it would take at least 3 hours for them to sell it to me as I'd have to be measured, fitted and observed, then the bike would be tweaked etc until it fit me and my cycling style perfectly. They also offered me free upgrades on a number of components.

If the bike was just a third cheaper I wouldn't take day to fly and get it from Liverpool, but as he was offering a professional bike fitting service and a custom build it was worth it - no bike shop in Ireland offers this totality of service.

Secondly, I bought an electrical appliance at the weekend - priced it up online and went to the local (and locally owned) shop to see if they could match the UK price - they couldn't even come close but I still bought from them because they came close enough (within 25%); they sponsor the local sports team on which one of my kids plays; and they threw in free delivery (even if it was only 5 miles down the road).

Customer service doesn't cost much - is it less expensive to provide it in the UK than here?