Click for Finfacts Main Budget 2009 Page- - Oct 14, 2008
Irish Budget 2009 Comment: Tuesday's Budget is expected to be the toughest in twenty-five years and the real pain of political self-interest, incompetence, negligence and laziness, will be kept clear of those who have left the Irish economy so unprepared for the severe global slowdown that is forecast in 2009.
|Finance Minister Brian Lenihan will present his first Budget on Tuesday, Oct 14, 2008
The closest any member of the Government has come to acknowledging a monumental failure of historic proportions to put the Irish economy on a sustainable path, was on an RTÉ Radio programme on Saturday, Sept 06, 2008, when Minister Finance Brian Lenihan said: "You know, we’ve got to be honest about this as a people. We decided, as a people collectively, to have this housing boom. We decided not to have property taxes, to demand reductions in stamp duties, to demand interest for those who bought to-let properties, and there was no questioning in any part of the political system about that.”
“There go the people. I must follow them, for I am their leader,” Alexandre Ledru-Rollin (1807-1874).
“Those are my principles, and if you don't like them... well, I have others,” Groucho Marx (1890-1977).
In recent months, some people including wealthy commentators, have raised questions regarding what has been seen as the inflexible Euro system.
Given the incompetence of the toxic cocktail of former school teachers, small town solicitors, social workers and bookkeepers, without the external discipline of the Eurozone, we would be staring at a meltdown today, comparable with that of Iceland.
Like a cracked gramaphone record droning out John McCormack's Ireland, Mother Ireland, it would be easy to detail again the litany of failure, smugness, hubris and neglect. However, it is only necessary to consider that the most significant reform programme since 1997 was the back-of-the-envelope decentralisation stroke while six months after the publication of the Paris-based OECD report on the public service, there is little evidence of serious intent to reform the public service.
The results of political failure will be thousands of damaged and destroyed lives while in or out of office, the political masters will remain in clover.
Economist Jim O'Leary points out in the Irish Times today that even in the 1970s, when government budgets regularly went off the rails, the biggest one-year deterioration amounted to 5% of GNP and took place between 1973 and 1974 - the period of the quadrupling of oil prices and a supply embargo.
The Estimates for 2009 suggests that the Minister for Finance will face an opening deficit of €13.3 billion - which is 7% of GDP
O'Leary says current spending for 2009 has been reduced by something of the order of €500 million, not much more than 1% of the total. (this is before providing for increases in social welfare payments).
We pointed out on Saturday that the spending on politicians is due to increase by 12.3% in 2009 - up 61% in five years.
Today it's reported that top public servants shared a €3 million performance bonus last year, with average payments coming to more than €14,000 each.
The scheme applies to 221 senior public servants who received bonus payments ranging from a low of €3,200 to €26,000 for the top performer. Those who benefited from the bonus scheme are on salaries ranging from €138,683 to €186,891 a year.
By bringing forward the Budget date, before the big annual inflow of tax revenues at the end of October and November, the Government has been able to present a more optimistic picture than reality would suggest.
The Government's more lower deficit than a number of independent assessments, is based on the Department of Finance's tax revenue forecast for 2009 of €41.2 billion, which is up to €3 billion higher than other forecasts.
"The Government forecast for tax revenue is optimistic," said Rossa White, economist at Davy Research, who is forecasting 2009 tax revenue of €38 billion. White said the Department of Finance's estimates for the full-year 2008 tax shortfall could also be exceeded by the end of the year.
Taxes are to be increased in the Budget on Tuesday at a time when the economy will be in recession.
Taoiseach Brian Cowen has said the Government will not shirk tough and unpopular decisions.
"We will make the necessary tough choices so that we can chart a course for economic renewal," Cowen told the annual Fianna Fáil Wolfe Tone commemoration at Bodenstown yesterday.
There is a huge potential for savings from ending public spending waste and abuse but political will has been so self-evidently lacking in addressing the problem. There are too many sacred cows and vested interests to protect.
On the basis of the record, do not expect vision, radical reform or credible planning for the longer-term. Such a response would only follow a much darker scenario than even that which is currently hoped for by the politicians.
And as regards scenarios, when a two-bedroom poke of a house in Dundrum is selling for €425,000 - - a price that would get an impressive family home in most of the United Sates - - and an end of terrace 4-bedroom house in Terenure, Dublin, is also selling on Daft.ie for €825,000 - - a price that would rank as a very expensive house in most European cities, there remains a huge gulf between fantasyworld and reality in Ireland.
Finally, there was a touch of the Wall Street Master of the Universe - - a hired hand, not an entrepreneur -- in yesterday's Sunday Independent, in a report on plans by the Irish State broadcaster RTE to cut salaries in response to a plunge in advertising:
"They can look -- I make many millions more (for them) than what they pay me," said Gerry Ryan. "I'd be happy to negotiate once it drops below that."
Davy Stockbrokers this morning forecast the biggest contraction of the economy in 2009, since the 1950's.
Victims of the political self-interest, incompetence, negligence and laziness may find a crutch in Joe Duffy's Live Line -- he will be well able to afford to dole out some sympathy on an earner of over €400,000, including a news paper column!