Public sector pay increases v infrastructure spending?

[patslatt]

Taoiseach Cowen is toning down his commitment to the infrastructural spending programmes for transport and other infrastructure,the excuses being falling tax revenues in a weak economy and the Brussels rules on deficits limits of 3% of GNP.

Given Ireland's record low national debt level as a percent of GNP,Brussels isn't going to object strenuously if Ireland should borrow heavily to fund infrastructure, spending that would be well timed as a countercyclical economic stimulus. Brussels would be terrified to object if the government announced its firm commitment to specific spending numbers just before the Lisbon Treaty referendum.

So is the real reason for Cowen's weakened commitment a perceived need to modify infrastructure spending? Or is that the government as in the era before the Celtic Tiger has decided to gut infrastructure spending in order to award good public sector pay increases? The future of the economy in the next ten years could be at stake in the answer.

The government should be able to contain public sector pay in the next two election free years, given that its pay is already about 40% more than in the private sector when jobs for life and pensions ridiculously indexed to wages are taken into account.

[returning officer]

It is a bit more complictated than that.

In my review each time a budget is put together for a year, the budgeter should have to start as if they have a blank page to justify the expenditure, rather than the last year plus nine percent method that seems to be employed.

Below is the detailed revised estimates for spending in 2008.
€52Bn is being spent on current spending and €9Bn on capital.
http://www.finance.gov.ie/documents/REV ... nglish.pdf

The figures are scary.
29% of current spending goes on social welfare while, 3% on enterprise sets the tone for all other spending.
The army pension bill is €176m p.a. - do we really need an army with that level of drain?
We spend 18% of the capital budget on housing - ie taxpayers pay to build a house, it is then rented at very low cost and at some stage will be sold at a cost which bears no reality to the market. I have no problem with the low rent part for those who cannot afford a roof over their heads, but why should the State subsidize the aqusition of property for private citizens at all?
And finally what is admittedly a very petty point: the government decision in April, 2006 to extend the Centenarian’s Bounty to Irish Citizens born in the Island of Ireland who live outside the State which costs €1.2m p.a. (€2,500 per head - I thought it was a token €100!).

[returning officer]

It is a bit more complictated than that.

In my review each time a budget is put together for a year, the budgeter should have to start as if they have a blank page to justify the expenditure, rather than the last year plus nine percent method that seems to be employed.

Below is the detailed revised estimates for spending in 2008.
€52Bn is being spent on current spending and €9Bn on capital.
http://www.finance.gov.ie/documents/REV ... nglish.pdf

The figures are scary.
29% of current spending goes on social welfare while, 3% on enterprise sets the tone for all other spending.
The army pension bill is €176m p.a. - do we really need an army with that level of drain?
We spend 18% of the capital budget on housing - ie taxpayers pay to build a house, it is then rented at very low cost and at some stage will be sold at a cost which bears no reality to the market. I have no problem with the low rent part for those who cannot afford a roof over their heads, but why should the State subsidize the aqusition of property for private citizens at all?
And finally what is admittedly a very petty point: the government decision in April, 2006 to extend the Centenarian’s Bounty to Irish Citizens born in the Island of Ireland who live outside the State which costs €1.2m p.a. (€2,500 per head - I thought it was a token €100!).

[patslatt]

It is a bit more complictated than that.

In my review each time a budget is put together for a year, the budgeter should have to start as if they have a blank page to justify the expenditure, rather than the last year plus nine percent method that seems to be employed...
We spend 18% of the capital budget on housing - ie taxpayers pay to build a house, it is then rented at very low cost and at some stage will be sold at a cost which bears no reality to the market...

The extreme PR system of government in Ireland doesn't have enough power to do zero based bugeting starting from a blank page,thanks to local and vested interests.

I was impressed years ago by the budgetary figures of the Canadian federal government in which some departments saw their spending slashed and other departments received major increases,obviously in an attempt to reallocate spending efficiently.

How much social housing do we produce,and at what unit cost per house? 20,000 units a year maybe? On top of that,there is the developers' contribution of "up to 20%" of development land for social housing, and in inner Dublin that's usually 20%. That's usually money well spent,provided the housing is scattered around in order to prevent social housing ghettoes of uneducated,alienated youth,

In addition to social housing,there is massive spending on rent subsidies,with the government accounting for maybe 40% of the rental market. This is one way of avoiding ghettoes but it is probably an expensive solution.