General Irish Government discussion thread [See Post 1805]

PeadarCo

A Tyrant Named Miltiades! wrote: »

You can say this can be explained by the fact that Ireland is a small open economy, with a small fiscal multiplier (although the size of the multiplier is disputed in some ESRI research), but this is assertion not supported when we look at the recent examples of Portugal and Greece; of Denmark in the early 1980s, which initially seemed to recover, and then rapidly turned into a recession.

The Irish experience of 'expansionary fiscal contraction' is certainly an outlier, despite there being many examples of small open economies with which we might compare ourselves.

It is a uniquely Irish experience, and when something is described as 'uniquely Irish' in economics, I don't know about you, but for me, alarm bells start to go off.

Have you looked at how different Irelands economy is from Portugal and Greece. Ireland is an outlier when it comes to how open the economy is. Ireland is ranked 6 Portugal 72 and Greece 115.


https://www.heritage.org/index/ranking

Could Irelands economy take a knock in the short term yes with Brexit being the biggest danger and that would obviously impact the fiscal situation.

PeadarCo

PeadarCo wrote: »

Have you looked at how different Irelands economy is from Portugal and Greece. Ireland is an outlier when it comes to how open the economy is. Ireland is ranked 6 Portugal 72 and Greece 115.

And Denmark is ranked 12. Sweden, another example from the economic history on growth and fiscal consolidation, is 15.

The economic freedom index isn't a good predictor of recovery from fiscal contraction.

PeadarCo

A Tyrant Named Miltiades! wrote:

And Denmark is ranked 12. Sweden, another example from the economic history on growth and fiscal consolidation, is 15.

A Tyrant Named Miltiades! wrote:

The economic freedom index isn't a good predictor of recovery from fiscal contraction.

I'm not saying it is. I was just showing that Greece and Portugals are very different to Irelands. So it's hard to a comparison. I'm not fimiliar with Denmark or Sweden economies during the period you mention so I can't comment.

As I've said overall given the current underlying strategy for Irelands economy I don't consider the fiscal strategy to be the primary driver of Irelands economics performance. As a result its think its especially important to take account of what's going on in Irelands trading partners. We rely heavily on FDI and its one of the big reasons the most sensitive/protected part of our fiscal policy is the corporation tax regime. When comparing Ireland to other countries you have to factor that in. It also impacts statistics for example is GDP an appropriate measure of economic performance. When comparing Ireland to other countries any differences in FDI have to be factored in.

However the clear Irelands fiscal policy is very pro cyclical which makes recessions worse and booms better. The current demands for tax cuts and the opposition to property taxes and water charges are perfect examples.

PeadarCo

PeadarCo wrote: »

I'm not saying it is. I was just showing that Greece and Portugals are very different to Irelands. So it's hard to a comparison. I'm not fimiliar with Denmark or Sweden economies during the period you mention so I can't comment.

Well, I think it suffices to say that there are plenty of examples of attempts at 'expansionary contractions' in the European union, among small open economies, going back to the 1980s, and so far they've all failed. Ireland is the notable exception.

In case anyone thinks i'm some kind of conspiracy theorist, suggesting that the Irish macroeconomic indicators are invented, that's not what I'm saying either, although there still remain difficult problems with how our GNP is calculated.

Rather, it may be the case that Governments faced with a need for rapid fiscal consolidation prefer to 'bury' the ramifications of rapid corrections into parts of the economy that do not show up in the economic headlines, or that cannot easily be measured, and perhaps this feeds into Ricardian behaviour whereby citizens are tricked into believing the economy is doing better than it is, which becomes a self-fulfilling prophecy.

That's just one notion, I don't know if it has any merit. All I know is that if Ireland is the only country that we know of which seems to consistently make a success of fiscal contractions, there's probably more going on than meets the eye.

However the clear Irelands fiscal policy is very pro cyclical which makes recessions worse and booms better

Ireland executed a counter-cyclical economic policy pretty consistently during the Celtic Tiger, right up until the most recent recession, and we're on track to do so again. The countercyclical capital buffer in our financial system is among the best in the Euro Area, but these things are not miracle workers.

FreudianSlippers

Matt Barrett wrote: »

I asked directly which was the better deal;
Building and renting our own, even taking into account arrears.
Or Buying off the market and using as social housing anyway? On the fourth time I gave up asking.

This has been answered multiple times, you just don't like the answer because you're not dealing in reality.

Buying off the market is the immediate solution.

blanch152

A Tyrant Named Miltiades! wrote: »

That's far too vague an explanation to address what I'm talking about.

If we look back to the fiscal cuts of 1987-91, we see that the cuts were mainly on fiscal transfers (welfare) and on public investment. Similar cuts were undertaken from 2009, especially relating to public investment. On both occasions, there were large reductions in public-sector employment, largely due to early retirements and hiring freezes.

None of this (with the exception of a fall in unit labour costs), made the country more competitive to export markets; one would have expected the dramatic fall in public investment to have actually damaged competitiveness. but in fact private investment exploded on both occasions, and domestic demand rapidly recovered.

You can say this can be explained by the fact that Ireland is a small open economy, with a small fiscal multiplier (although the size of the multiplier is disputed in some ESRI research), but this is assertion not supported when we look at the recent examples of Portugal and Greece; of Denmark in the early 1980s, which initially seemed to recover, and then rapidly turned into a recession.

The Irish experience of 'expansionary fiscal contraction' is certainly an outlier, despite there being many examples of small open economies with which we might compare ourselves.

It is a uniquely Irish experience, and when something is described as 'uniquely Irish' in economics, I don't know about you, but for me, alarm bells start to go off.

You are looking too highly at the macro level.

Two countries imposing the same level of cuts, but who apply them in different ways can have different results, both because of the differing nature of the details of the cuts and the detailed differences in their economy.

Ireland has been lucky, but it has been lucky a few times. When that starts to happen, the question is how are they making their own luck.

When the recession hit, Ireland could have done what the likes of PBP and Sinn Fein wanted us to do and doubled corporation tax. If he had doubled corporation tax in 2010, instead of the cuts we did make, then we would be worse off than Greece.

James Brown

Wheeliebin30 wrote: »

I’m doing some general maths here.

Government builds house for 300,000.

Rents it for let’s say 400 a month.

Would take approx 60 years just to break even by the the house would be nearly done to be knocked.

This whole asset talk doesn’t make any sense.

Building 100,000 social houses would bankrupt the country.

Where are you getting these figures? They seem made up.

Government builds a house charges rent based on income, (what's the average wage?).
Or
Government buys house off the market and charges rent based on income.

So the government is paying back either the price of the build or the market value at the time.

Currently we are paying rent to private landlords, hotels and B&B's. This is more expensive than recouping the cost of the build, an asset the state would own.

James Brown

PeadarCo wrote: »

Why are you surprised the economy is going very well. The housing crisis while an issue will take a few years to solve regardless of who's in charge. It also only impacts those who are renting and or looking to buy. If you own a home it has a positive impact as it increases your wealth on paper.

And who else do you vote for at the moment all political parties are trying to imitate FF in 02/03 spend spend and to hell about the future. Its crazy that there's any talk of tax cuts on a broad scale. The time to cut taxes is in a recession not a boom. Now is the time to increase taxes if anything.

The housing crisis could be tackled if policy was changed. Reliance on the private market does not work. We've seen that. The high prices and profits to be made help the economy because people, many reliant on state assistance, have no option but to play ball.
There are more and more people coming up unable to buy and finding rents too tough. A smart political party would be looking ahead, but as in policy, it seems most parties are only interested in the now. I really wish FG did look after people who like to get up early of a morning, currently they are working against the tax payers interests IMO.
FF are merely hanging on the FG coat tails. FG used them and they used FG. FF not being in the spotlight is their trouble. If they were clever they'd be talking up the crises more. Not that I believe they actually give a toss for one minute.

Godot.

Surely Sinn Fein is the answer to the housing crisis famishing Ireland at the moment.

The left wing will always try to help renters/people on low incomes. Fine Gael will continue to help the landlords.

James Brown

Godot. wrote: »

Surely Sinn Fein is the answer to the housing crisis famishing Ireland at the moment.

The left wing will always try to help renters/people on low incomes. Fine Gael will continue to help the landlords.

Not a hope of them getting in IMO. Ironically the most conservative policy would be social housing builds and affordable housing. It would save the tax payer money which is what these FG types are generally pretending to be about.

blanch152

Matt Barrett wrote: »

Where are you getting these figures? They seem made up.

Government builds a house charges rent based on income, (what's the average wage?).
Or
Government buys house off the market and charges rent based on income.

So the government is paying back either the price of the build or the market value at the time.

Currently we are paying rent to private landlords, hotels and B&B's. This is more expensive than recouping the cost of the build, an asset the state would own.

Yes, they are wrong.


The average rent paid by local authority tenants is only €280 a month, which nearly doubles the time it would take to repay the capital investment, well over a hundred years.

Good loser

blanch152 wrote: »

Yes, they are wrong.


The average rent paid by local authority tenants is only €280 a month, which nearly doubles the time it would take to repay the capital investment, well over a hundred years.

Some while back I read on boards the average Council house in Dublin brings in a gross rent of €3,000 per annum and maintenance outgoings come to €2,000 per annum. Net income thus is €1,000 p. a.

So a capital cost of €300,000 would take 300 years to recoup (without counting interest). A 3% interest rate on that cost would come to €9,000 p. a.
Effectively such a house would be seriously loss making from day 1.

Sobering.

McMurphy

Good loser wrote: »

Some while back I read on boards the average Council house in Dublin brings in a gross rent of €3,000 per annum and maintenance outgoings come to €2,000 per annum. Net income thus is €1,000 p. a.

So a capital cost of €300,000 would take 300 years to recoup (without counting interest). A 3% interest rate on that cost would come to €9,000 p. a.
Effectively such a house would be seriously loss making from day 1.

Sobering.

Few questions..

How did you reach a figure of 300k for the initial cost of the house?

Is the initial tenant expected to remain in place for 300 years, or might themselves or a future tenant get finance and buy outright?

Presumably the houses can be sold by the state at as well as just available to let? (mortgaged by tenants/ie bought outright)?

Is throwing 1k or more at private landlords or hotel owners serious loss making or profitable?

Do you believe everything you read on boards?

Thanks.

Edward M

http://www.publicpolicy.ie/local-authority-rent-arrears-in-dublin/

From a few years ago, but arrears are high.
Seems it supports the around €280 per month average rents from DCC.
Counting build cost, and land cost, land cost has to be factored in as it is a cost, I would think the €300k cost per house would be justifiable.
However if you go with high rise then that wouldn't be the case.
Then again if you look at previous experience re high rise, I can't see how it could be better now than in past experience with it.

McMurphy

Aren't the govt committing state owned land to be developed?

300 would build you some lump of a house if the site cost was taken out either completely or at a sizeable discount.

On a bulk build basis (an estate) costs reduce further. No?

Red_Wake

Johnny Dogs wrote: »

Aren't the govt committing state owned land to be developed?

300 would build you some lump of a house if the site cost was taken out either completely or at a sizeable discount.

On a bulk build basis (an estate) costs reduce further. No?

You'd include the cost of the already owned land in the cost of the house for accounting purposes - you are still using the asset and it's value needs to be included to give a picture of the notional cost of the social housing.

Edward M

What do you do with Tennant's in arrears, evict them?
Be jaypers you'd be getting in to some social bother there too!

blanch152

Johnny Dogs wrote: »

Few questions..

How did you reach a figure of 300k for the initial cost of the house?

Is the initial tenant expected to remain in place for 300 years, or might themselves or a future tenant get finance and buy outright?

Presumably the houses can be sold by the state at as well as just available to let? (mortgaged by tenants/ie bought outright)?

Is throwing 1k or more at private landlords or hotel owners serious loss making or profitable?

Do you believe everything you read on boards?

Thanks.

Nobody believes everything they read on boards because it is full of people making points that they don't fully understand. In relation to the average €280 a month figure paid by local authority tenants, that came from this report put up by Geuze.

Geuze wrote: »

https://static.rasset.ie/documents/news/2018/07/19.-current-and-capital-expenditure-on-social-housing-delivery.pdf


.

€280 a month, translates into €3,360 a year. Given that the figure referred to by Good Loser - €3,000 - was from a few years ago, then this more recent figure, taking account of inflation, supports his position.

This audit report also backs this information up:

http://noac.ie/wp-content/uploads/2017/05/NOAC-Management-and-Maintenance.pdf

"Nationally, the average maintenance and improvement expenditure per unit in 2014 was €1,679 and the average rent received per unit was €2,665 or 159% of the amount spent maintaining and improving the dwellings"

"Dublin City and Leitrim most closely matched rental income to expenditure at 116% and 117% respectively. "

Taking those average figures, the net return per unit is €986 per annum.

If borrowing costs are 2%, the building cost would have to €50,000 in order to ensure that the local authority breaks even, but has no chance to repay the capital investment. At a building cost per unit of €200,000, (and there is no evidence to suggest this could be achieved), the local authority would be losing €200,000 up front, and an annual loss of €3,000 on top of that.

The only was these figures can be improved is by local authorities getting their act together and doing the following:

(1) Impose realistic rents
(2) Collect the rents
(3) Reduce maintenance costs either through better outsourcing, or addressing internal productivity issues.

Finally, I am fed up of seeing "rebuttals" by those defending local authorities or suggesting it is easy to build houses, but cannot produce a single piece of empirical evidence to back up what they are saying.

In this case, the facts are there in black and white. Local authorities collect very little rent and have high maintenance costs, making the cost of building social housing prohibitive.

James Brown

Good loser wrote: »

Some while back I read on boards the average Council house in Dublin brings in a gross rent of €3,000 per annum and maintenance outgoings come to €2,000 per annum. Net income thus is €1,000 p. a.

So a capital cost of €300,000 would take 300 years to recoup (without counting interest). A 3% interest rate on that cost would come to €9,000 p. a.
Effectively such a house would be seriously loss making from day 1.

Sobering.

Paying back for the price of a build is cheaper than paying rent to a private concern and you increase housing stock..
Arrears are a problem but so is putting families up in hotels.

The average council house would be over 30 years old, so to play your game should you not be calculating the build cost from over 30 years ago? That's an average, using your logic, of 90,000 recouped from a house that cost say 40,000?
So the average council house was paid for a long time ago and any rent is profit, with maintenance deducted. Even with those in arrears we are saving money by not using hotels or private rentals. By your own logic we are housing people, making a grand a year and not wasting money on private concerns. Sounds pretty good to this tax payer.

2,000 a year on maintenance? Link to that?

For any current builds rents are charged at rate of income. You give a social house to the average working tax payer and you'll get a decent reasonable rent.
Also, most importantly, Eoghan is buying housing off the market...and wait for it...using them as social housing anyway. How is that a better way to go?

To be honest this all smacks of cutting your nose to spite your face economics.

James Brown

Edward M wrote: »

What do you do with Tennant's in arrears, evict them?
Be jaypers you'd be getting in to some social bother there too!

They have a process for evictions. They need be stricter on arrears. Takes nothing away from the hotel option being a big waste.

blanch152

Matt Barrett wrote: »

Paying back for the price of a build is cheaper than paying rent to a private concern and you increase housing stock..
Arrears are a problem but so is putting families up in hotels.

The average council house would be over 30 years old, so to play your game should you not be calculating the build cost from over 30 years ago? That's an average, using your logic, of 90,000 recouped from a house that cost say 40,000?
So the average council house was paid for a long time ago and any rent is profit, with maintenance deducted. Even with those in arrears we are saving money by not using hotels or private rentals. By your own logic we are housing people, making a grand a year and not wasting money on private concerns. Sounds pretty good to this tax payer.

2,000 a year on maintenance? Link to that?

For any current builds rents are charged at rate of income. You give a social house to the average working tax payer and you'll get a decent reasonable rent.
Also, most importantly, Eoghan is buying housing off the market...and wait for it...using them as social housing anyway. How is that a better way to go?

To be honest this all smacks of cutting your nose to spite your face economics.

Already done, you must have missed my post.

blanch152 wrote: »

Nobody believes everything they read on boards because it is full of people making points that they don't fully understand. In relation to the average €280 a month figure paid by local authority tenants, that came from this report put up by Geuze.





€280 a month, translates into €3,360 a year. Given that the figure referred to by Good Loser - €3,000 - was from a few years ago, then this more recent figure, taking account of inflation, supports his position.

This audit report also backs this information up:

http://noac.ie/wp-content/uploads/2017/05/NOAC-Management-and-Maintenance.pdf

"Nationally, the average maintenance and improvement expenditure per unit in 2014 was €1,679 and the average rent received per unit was €2,665 or 159% of the amount spent maintaining and improving the dwellings"

"Dublin City and Leitrim most closely matched rental income to expenditure at 116% and 117% respectively. "

Taking those average figures, the net return per unit is €986 per annum.

If borrowing costs are 2%, the building cost would have to €50,000 in order to ensure that the local authority breaks even, but has no chance to repay the capital investment. At a building cost per unit of €200,000, (and there is no evidence to suggest this could be achieved), the local authority would be losing €200,000 up front, and an annual loss of €3,000 on top of that.

The only was these figures can be improved is by local authorities getting their act together and doing the following:

(1) Impose realistic rents
(2) Collect the rents
(3) Reduce maintenance costs either through better outsourcing, or addressing internal productivity issues.

Finally, I am fed up of seeing "rebuttals" by those defending local authorities or suggesting it is easy to build houses, but cannot produce a single piece of empirical evidence to back up what they are saying.

In this case, the facts are there in black and white. Local authorities collect very little rent and have high maintenance costs, making the cost of building social housing prohibitive.

The average net income from a unit of social housing is less than €1,000 per annum.

As I said, the facts are there in black and white for everyone to see.

If you disagree with me, please feel free to link to the relevant studies that back up your statements.

Havockk

blanch152 wrote: »

Already done, you must have missed my post.





The average net income from a unit of social housing is less than €1,000 per annum.

As I said, the facts are there in black and white for everyone to see.

If you disagree with me, please feel free to link to the relevant studies that back up your statements.

I call horse****. I own and rent out two properties, ok not in the city but those figures are up the left.

Red_Wake

Matt Barrett wrote: »

Edward M wrote: »

What do you do with Tennant's in arrears, evict them?
Be jaypers you'd be getting in to some social bother there too!

They have a process for evictions. They need be stricter on arrears. Takes nothing away from the hotel option being a big waste.

Where would you put those evicted from social housing?

blanch152

Havockk wrote: »

I call horse****. I own and rent out two properties, ok not in the city but those figures are up the left.

Are you a local authority?

The figures I presented, if you had bothered to actually read them, come from the Local Authority audit service, and relate to the actual rent received by local authorities from their own tenants and the cost to local authorities of maintaining said units.

Nothing to do with wealthy private landlords like yourself.

James Brown

Red_Wake wrote: »

Where would you put those evicted from social housing?

I don't know. What do you suggest? Where did they go previously?
Maybe Leo and Eoghan will put them up in the Gresham?

Personally I'd make moves to garnish any income from source, if welfare. If working I'd sue them or evict them.

So, do you think building social housing to rent is cheaper than buying social housing to rent?
Do you think renting out state owned social housing, even considering some arrears, is cheaper for the tax payer than spending on hotels to house the same people?

Havockk

blanch152 wrote: »

Are you a local authority?

The figures I presented, if you had bothered to actually read them, come from the Local Authority audit service, and relate to the actual rent received by local authorities from their own tenants and the cost to local authorities of maintaining said units.

Nothing to do with wealthy private landlords like yourself.

If the LA is claiming only 1000 pa profit p/unit. Someone is getting scammed.

blanch152

Havockk wrote: »

If the LA is claiming only 1000 pa profit p/unit. Someone is getting scammed.

It is there, audited in black and white.

There are several reasons:

- low rent charged by local authorities
- poor collection rate by local authorities
- long changeover periods between tenants
- high maintenance costs for local authorities

Local authorities in Ireland are highly inefficient at managing social housing (I would argue that they are highly inefficient full stop) and even in a booming market are making a mess of renting out local authority housing.

James Brown

Havockk wrote: »

If the LA is claiming only 1000 pa profit p/unit. Someone is getting scammed.

Even if accurate, that's 1,000 profit for the tax payer and no hotel bill. So the worst case is a win for the tax payer.

Havockk

blanch152 wrote: »

It is there, audited in black and white.

There are several reasons:

- low rent charged by local authorities
- poor collection rate by local authorities
- long changeover periods between tenants
- high maintenance costs for local authorities

Local authorities in Ireland are highly inefficient at managing social housing (I would argue that they are highly inefficient full stop) and even in a booming market are making a mess of renting out local authority housing.

Well see, I know how the scam works. It's why you're not questioning it is what has me pondering.

James Brown

Havockk wrote: »

Well see, I know how the scam works. It's why you're not questioning it is what has me pondering.

If only we had a minister in charge of all local authorities to whip them into shape.