Should the full 9 billion adjustment be done in december ?

Blackbra32

I don't think there is any point in dragging it out for another 3 years. I think what the country really needs is one big adjustment that will put more taxes on the rich as well as cut oap and other welfare payments.

dlofnep

Blackbra32 wrote: »

I don't think there is any point in dragging it out for another 3 years. I think what the country really needs is one big adjustment that will put more taxes on the rich as well as cut oap and other welfare payments.

And destroy the economy along with it.

Jolly Red Giant

dlofnep wrote: »

And destroy the economy along with it.

Not alone would it destroy the economy - it would make Greece look like a posh dinner party.

Blackbra32

The adjustments will have to be done anyway. Im sick of hearing on the mainstream media every year since 2007 thats its going to be "toughest budget in years"

Godge

Blackbra32 wrote: »

The adjustments will have to be done anyway. Im sick of hearing on the mainstream media every year since 2007 thats its going to be "toughest budget in years"

If you make the adjustment in one go, you will destroy the economy. You will then need to do something similar the following year as tax revenue will collapse.

GCU Flexible Demeanour

It's a reasonable point to say that adjustments need to be made faster than Government/Troika intend. That's what the Fiscal Council are saying.

It just sounds like they won't be listened to.

http://www.irishtimes.com/newspaper/ireland/2012/0914/1224324009125.html

TAOISEACH ENDA Kenny has said the Government is not bound by the advice of the Fiscal Advisory Council to impose €1.9 billion in cuts between now and 2015, in addition to those already provided for in the troika bailout programme.


The council yesterday urged the Government to be more ambitious in tackling the budget deficit over the next three years. The new independent watchdog is tasked with overseeing the management of the public finances.


The Taoiseach gave a firm indication yesterday that the Government would not follow the key recommendation of the fiscal council report. “It is not binding on Government but the Government can reflect on any issues that are appropriate,” said Mr Kenny.

While I'm not suggesting Government should blindly follow the Fiscal Council, it is bothersome to see their advice roundly dismissed.



We're borrowing an awful lot of money, and not doing much with it that creates a financial return to pay those borrowings. I think more ambition is needed, but the political system seems incapable of digesting more.

Farmer Pudsey

There is one side of the argument which believes that if you impose cuts in one go you will collapse the Economy. If you decided to take that much out in one year you would certainly have to look at cuts in public service pay, welfare rates and both public service and state pensions. There is a theory that this would collapse demand and send the country into recession again.

However people who have money might be encouraged to spend it as there would no longer be a fear of more cuts effecting you. Also for a while there would be exceptional value which might also encourage spending. A lot of workers would have confidance in the stability of the system and might start to spend more of their wabes rather than save because of the fear of unemployment. As welfare would have to be reduced the unemployed might consider certain jobs that are targeted by non nationals at present.

Employers would also see that it might be profitable to employ and expand their buisness,

GCU Flexible Demeanour

Farmer Pudsey wrote: »

There is one side of the argument which believes that if you impose cuts in one go you will collapse the Economy. If you decided to take that much out in one year you would certainly have to look at cuts in public service pay, welfare rates and both public service and state pensions. There is a theory that this would collapse demand and send the country into recession again.

While I do try (and fail!) to keep an open mind, I've never managed to find that view convincing. And I do know that you are just setting it out as a commonly expressed view - and I'm just commenting on it on that basis.

So much of our consumer expenditure goes on imports, that the impact on the domestic economy would surely be compensated for by a fall in those imports. The main element of spending that stayed inside the economy was building, and that's already had its collapse.

Just for example, in 2007, Ireland spent nearly €4.4 billion importing cars. In 2009, Ireland spent less than a billion on imported cars. The reduction over €3 billion in the cost of car imports is hardly a loss to the Irish economy.

Reducing our expenditure at a faster rate will have an impact on living standards. But we're funding our present standard with borrowings, which is a mug's game IMHO.

twistedbrains

just cut all public sector wages in half job jone

im invisible

dole aswell

twistedbrains

CUT EVERYTHING IN HALF

Mr. teddywinkles

Hike the s**t out of the income tax too yeaaaaaaaaa!
Well this is productive :rolleyes:

number66

How about we go after some of the fat government spending first?


Head of Student Experience

And another thing to note is we are no longer spending more than we are raising in tax, all the cuts from now on are so we can pay the interest on the national debt.

BOHtox

Yes. We're running just to stay still. Debt repayments are increasing so cutting a bit just to see debt repayments rise creates a problem.

We need to cut it now. Everyone takes their fair share. Then we can start to rebuild from a balanced budget. I believe there's a few things that creates confidence in the economy, businesses and consumers alike, and that is a balanced budget and limited government!

Mr. teddywinkles

number66 wrote: »

How about we go after some of the fat government spending first?


Head of Student Experience

And another thing to note is we are no longer spending more than we are raising in tax, all the cuts from now on are so we can pay the interest on the national debt.

Holy s**t theres a salary :eek:

bbam

This is the financial policy of a six year old.
Cutting PS pay in half would cause widespread strike so no school, hospital, guards, council services.

Hike tax and people couldn't afford mortgages, fuel for heating or cars.

You would have mobs on the streets, crime would escalate.

Progressive thinking there OP.

kippy

I thought a few years ago that the cuts/tax rises should happen faster than they have happened and at a greater rate, not the extreme that is being outlined in this post however.

It would ensure confidence returned faster. Many people have money at the moment but wont spend it or spend very little of it, waiting for the next shock around the corner.

However, taking 9 billion out of the economy at once would have serious implications for life in this country, people who ONLY look at the figures never realise this.

Cookie_Monster

IT should have been done already for the most part. the last 2-3 budgets have all made trifling meaningless cuts around the edges of everything while effective dealing with hardly anything.

General Atomic

Welcoming cuts to public services... Is everyone so eager to send their money to our creditors? I have no idea what the economic argument is for this either, cutting the budget will not have a positive effect on the economy. Do I even need to point out the effects of austerity on countries like Greece, Spain and Britain, apart from its effect on this country?

The best course of action is to absolutely minimise the extent of the cuts until such a time as a decision is made regarding our bank debt. If Spain get a good deal, we'll get one too; we're better off keeping the pain just low enough to satisfy the Troika until that debt is partially cancelled, then subsequent need for cuts would be significantly reduced in any case. I'm still holding out hope that a Keynesian approach to stimulating the economy will be undertaken at some point in the future. In the meantime, we need to avoid damaging our economy through pointless cuts.

GCU Flexible Demeanour

bbam wrote: »

This is the financial policy of a six year old.
Cutting PS pay in half would cause widespread strike so no school, hospital, guards, council services.

Hike tax and people couldn't afford mortgages, fuel for heating or cars.

You would have mobs on the streets, crime would escalate.

Progressive thinking there OP.

This is a more relevant concern that the one about constraining demand reducing economic growth, as if a collapse in imports would do harm to the Irish economy.

However, while I agree with the Fiscal Council view that we have to accelerate our expenditure reductions, I don't think the results are as awful as you suggest. Yes, there would be unrest - but the money has to be saved somewhere, and most people don't have mortgages. The potentially problem mortgages only hit about 300,000 households - that's a lot, but they're not all public servants and not all in financial trouble.

So, yes, I'd expect things would be politically more contentious. But it's what needs to be done. I think the Government are a little like General Custer, surrounded by Indians and reluctant to accept that no matter what they do there's going to be a massacre.

Blowfish

General Atomic wrote: »

The best course of action is to absolutely minimise the extent of the cuts until such a time as a decision is made regarding our bank debt. If Spain get a good deal, we'll get one too; we're better off keeping the pain just low enough to satisfy the Troika until that debt is partially cancelled, then subsequent need for cuts would be significantly reduced in any case.

The bank debt makes up approximately 5% of the deficit. Any deal on bank debt wont make all that much difference.

General Atomic wrote: »

I'm still holding out hope that a Keynesian approach to stimulating the economy will be undertaken at some point in the future. In the meantime, we need to avoid damaging our economy through pointless cuts.

Given that the Keynesian approach is deficit spending, isn't that what we've been doing all along?

not yet

twistedbrains wrote: »

just cut all public sector wages in half job jone

What kind of person advocates cutting a persons wage from 28k to 14k. sweet jesus I amazes me how people come up with this tripe.

woodoo

twistedbrains wrote: »

just cut all public sector wages in half job jone

im invisible wrote: »

dole aswell

twistedbrains wrote: »

CUT EVERYTHING IN HALF

I had to check that i wasn't in After Hours there for a second.

woodoo

If you just take a look at this piece in the Indo today and you will see why it wouldn't be possible to implement a 9 billion adjustment in one year.

http://www.independent.ie/national-news/oaps-facing-5-travel-charge-and-electricity-cutbacks-3229651.html


It refers to the governments consideration of small cuts to OAP's. The OAP's haven't experienced any cuts at all yet. Nobody is suggesting hitting them hard but a small cut of 5% or so should be fair. The dole has been cut, as have PS incomes and all workers have had the USC and Income Levy.

kippy

Blowfish wrote: »

The bank debt makes up approximately 5% of the deficit. Any deal on bank debt wont make all that much difference.
Given that the Keynesian approach is deficit spending, isn't that what we've been doing all along?

The bank debt "repayments" may make up just 5% of the deficit but the banking debt is huge and a major factor in our borrowing costs.

That being said, I dont believe it's gonna have a major impact on the annual fiscal deficit.

kippy

GCU Flexible Demeanour wrote: »

This is a more relevant concern that the one about constraining demand reducing economic growth, as if a collapse in imports would do harm to the Irish economy.

However, while I agree with the Fiscal Council view that we have to accelerate our expenditure reductions, I don't think the results are as awful as you suggest. Yes, there would be unrest - but the money has to be saved somewhere, and most people don't have mortgages. The potentially problem mortgages only hit about 300,000 households - that's a lot, but they're not all public servants and not all in financial trouble.

So, yes, I'd expect things would be politically more contentious. But it's what needs to be done. I think the Government are a little like General Custer, surrounded by Indians and reluctant to accept that no matter what they do there's going to be a massacre.

You don't think that taking 9 billion out of the economy in a short space of time won't effect the majority of the population adversely?
Why are you suggesting this 9 billion in savings will only effect 300000 households?

Cuts need to be made but not at the expense of civil society. We are in a EU/IMF programme for a reason (ie to avoid chaos)

Duiske

GCU Flexible Demeanour wrote: »

Fiscal Council
.

There's another issue. Why did the Government feel the need create the the Fiscal Council if it was just going to ignore its advice ? I'm sure the council members are not working free of charge, so its just one more useless expense. Besides, we already have a rather large setup which "should" be well capable of taking on the tasks farmed out to this Fiscal Council. It's called the Department of Finance.

kippy

Duiske wrote: »

There's another issue. Why did the Government feel the need create the the Fiscal Council if it was just going to ignore its advice ? I'm sure the council members are not working free of charge, so its just one more useless expense. Besides, we already have a rather large setup which "should" be well capable of taking on the tasks farmed out to this Fiscal Council. It's called the Department of Finance.

I'd agree 100 percent with this.
Scrap it if they wont get listened to.

murphaph

number66 wrote: »

How about we go after some of the fat government spending first?


Head of Student Experience

And another thing to note is we are no longer spending more than we are raising in tax, all the cuts from now on are so we can pay the interest on the national debt.

That's really quite an obscene salary for what sounds like a seriously wishy washy job to be honest. As if they couldn't find suitably motivated and qualified canditates for half that!

It's hard to believe that a bankrupt state could have even one such job currently open.

As a non-resident I get no tax reliefs or credits in Ireland, so I pay at least 22% of my Irish taxable income straight to revenue (never mind charges like NPPR, Household charge, PRTB re-registration and the soon to be property tax....) and this is where it goes. This is why it's so hard to listen to the PS folks on here who tell us there's no more fat to cut in government expenditure.

ardmacha

That's really quite an obscene salary for what sounds like a seriously wishy washy job to be honest. As if they couldn't find suitably motivated and qualified canditates for half that!

It's hard to believe that a bankrupt state could have even one such job currently open.

This job is concerned with the 19000 customers of a large organisation and similar jobs exist all over the world. I'd share concerns over the grading and salary, but I am much more worried about people in jobs where they have no obligation to serve the customer. This university is seeking to alleviate its financial position by attracting more international students, it won't do that if it adopts a like it or lump it approach to its customers.

This is why it's so hard to listen to the PS folks on here who tell us there's no more fat to cut in government expenditure

.

I'm not sure that anyone has proposed such a thing. Some people have said that they should get cracking on actually cutting this fat instead of ranting about arbitrary cuts in salaries.

GCU Flexible Demeanour

kippy wrote: »

You don't think that taking 9 billion out of the economy in a short space of time won't effect the majority of the population adversely?

Why are you suggesting this 9 billion in savings will only effect 300000 households?

Cuts need to be made but not at the expense of civil society. We are in a EU/IMF programme for a reason (ie to avoid chaos)

No, I'm suggesting that borrowing €9 billion will effect the majority of the population for a lot longer. I'd expect most would find their living standards would be hit. They been hit already - but we're in this mug's game of borrowing to pretend that hasn't happened. Can we take it all at once? I don't know, but (as I've said) so much of our consumer expenditure goes on imports that I don't expect the damage to be as great as some would fear. In any event, I'm mostly agreeing with the Fiscal Council that the present rate of correction should be accelerated.

I'm not suggesting that these savings would only effect 300,000. I actually haven't said that at all. What I said was the mortgage issue - which is so frequently hauled out to attempt to frustrate necessary change - potentially only impacts a couple of hundred thousand households. Most households have no mortgage, and many more have modest mortgages, and there's no particular connection between preserving State payments and mortgages. So be very clear about what I'm saying - I'm simply eliminating one of the arguments employed to cloud the issue. We don't need to protect pensions to avoid mortgage defaults, for instance.

We've so little chaos at present, we could probably afford some. I'd suggest the lack of chaos is a warning - because it suggests that few have really experienced any difficult adjustments yet.