estimates that every 10,000 reduction in new housing units is equivalent
to 1.2% in growth. The Government collects at least 28% of the cost of a new house via
VAT@13.5% (it may be a surprise that such a tax is applied, given all
the blather about stamp duty), charges, levies, income tax/PRSI from the
Central Bank forecasts
GNP growth of 3.25% in 2008 (3.5% GDP), mainly reflecting slower domestic
demand growth. This is likely to be accompanied by an easing in inflationary
pressures and some limited rise in unemployment.
The Bank says that it would be desirable to
aim for a surplus in the General Government Balance once again next year. This
would ensure that, in the event that adverse developments result in lower than
expected growth, the fiscal position could accommodate this, without the need
for immediate corrective action.
Spending growth will have to be cut from a 14% rate to a mid single digit
rate in 2008.
The Health Service Executive has been unable to live within a budget that was
increased by 16% this year.
Reducing public expectations will be a big task for the
Tánaiste and Minister for Finance Brian Cowen TD.
However, politicians have been
the biggest gainers in the
public pay stakes since 1997, getting increases of 120% in basic pay
compared with a rise of 60% in the average industrial wage.
have 35 ministers in a country of 4 million, complete with retinues of
advisers/press release writers and constituency messenger gofors.
In addition a week hardly passes by without the launch of another public
quango to commission reports from the consulting industry, which
has made over €400 million in public sector revenues since 1997.
The litany could go on a lot longer than a litany and one of the latest in
actionless actions, is a planned climate change awareness publicity campaign that
has been ordered by Environment Minister John Gormley.
There has been minimal public service reform during a
decade when staff levels have increased by almost 100,000. After the
Budget, the Government will receive a review of the public service from the OECD
government think-tank. A fool could only expect a radical response.
wrote before the General Election last May:
Beyond the spin and tax cuts, there are real issues that matter in preparing
for the challenges that will follow from a temporary period of prosperity, built
on a housing boom.
In the absence of reform
and when clueless what to do when there will be a financial crunch resulting
from a downturn in the economy, there will be little surprise when the old blunt
measure, the public sector jobs embargo, will be wheeled out. The merry-go-round
will start again with essential posts left unfilled while useless paper-pushing
roles remain overstaffed.
We already have a
staff embargo in the health sector and expect more - but do not expect what
could be termed reform. For example,
the Faustian bargain of the Green Party includes more stellar objectives
than measurable reform at home, where real change moves at a slower pace than
the glacial speed in the Arctic.
Minister Cowen said on October 4th that
average increases of 8.9% agreed in the first miss-named Benchmarking
process cannot be repeated in the Benchmarking Body's recommendations
due towards the end of this year.
Cowen said that the
Benchmarking Body in making comparisons is
likely to give greater weight
to the value of the public service pension package "in view of
developments in relation to pensions across the economy in recent
The previous sham
benchmarking was shown to have been a fraud and at the outset, the
public service pension terms that gives any retiree alive the same
increase as those of the grade last worked, were not taken account of in
comparisons with the private sector.
Cowen says Benchmarking Body "likely" to give weight
to the value of public service pension package; Public sector reform not part of
ESRI: Irish economic growth forecast for 2008 cut again; Impact of 40% vacancy
rate of new houses built in 2002/06 could worsen outcome
Central Bank says Irish Gross National Product (GNP) will grow by 3.25% in 2008;
Recommends Budget 2008 surplus target to prepare for adverse developments
Irish Exchequer deficit in first nine months of 2007 at €3.1 billion; Shortfall
on tax for the year to be between €1 and €1.5 billion
Dept of Finance's Ready Reckoner Pre-Budget 2008
The Tánaiste and Minister for Finance announced in September
that “all new spending measures, as well as
tax changes, will be brought together and announced as one in a unified way on
Budget Day, instead of on a piecemeal basis, as at present”.
In outlining the new changes, the Tánaiste said that:
“These new arrangements
represent a major change and a major step forward in my ongoing reforms of the
budgetary process. Up to now it has been the practice to announce new public
expenditure initiatives on three separate occasions – the publication of the
Abridged Estimates Volume in November, Budget Day itself and the publication of
the Revised Estimates Volume in the following February. This will now be
streamlined into one single announcement of all expenditure policy measures
alongside tax changes on Budget Day”.
In order to make the system more transparent the Government
will publish detailed pre-budget estimates in October of the resources required
to maintain the existing level of public services in 2008. These pre-budget
estimates will form part of the new Pre-Budget Outlook (PBO) which sets out the
economic and fiscal outlook for the next three years.
Cowen said that this initiative will make it clear to Dáil Éireann and to
the public at large what is the pre-Budget position and what is the additional
spending being proposed. It will also help the Dáil focus more clearly on the
existing overall level of spending and what we are getting for this spending.
All policy initiatives involving an increase in public
expenditure, above and beyond the “existing level of service” figures, will now
be dealt with in Budget 2008, along with the Social Welfare increases and tax
measures. In this way, the Tánaiste said, he is responding to a call from the
Dáil’s Public Accounts Committee, which in its October 2005 Report on Estimates
Reform asked for a clear distinction between the pre-Budget and post-Budget