Grim grim news....

[BodyofEvidence]

Addendum to the Stability Programme Update - Department of Finance - Government of Ireland

Budgetary Outlook
The deterioration in international economic conditions has had a significant impact on
the Irish economy. In addition, domestic pressures, in particular the contracting
construction sector and its spillover into the wider economy are compounding these
international difficulties. The substantial loss in economic output has resulted in a very
steep fall in tax revenue. The tax shortfall in 2008 was €8.1 billion resulting in a total
tax revenue figure of €40.8 billion - representing a contraction of 13.7 per cent in
revenue over 2007. In addition, substantial expenditure pressures, for example social
welfare related expenditure, meant that in overall terms a larger than planned Exchequer
deficit of €12.7 billion materialised. It is estimated that the General Government Deficit
in 2008 was 6¼ per cent of GDP.
The poor tax revenue performance, combined with the worsening economic outlook,
means that the fiscal outlook for 2009 and subsequent years has weakened considerably.
On the basis of existing policy, which assumes payment of the latest public sector pay
deal under Towards 2016 and no other policy measures over and above those
announced in Budget 2009, a General Government Deficit in the range of 11 per cent –
12 per cent of GDP is in prospect for each of the years to 2013. The Government
regards this as untenable and has decided that urgent action over and above that already
agreed will be taken. The Government has set as a priority the elimination of the
current budget deficit by 2013, that is to stop borrowing for day-to-day spending, and to
bring the General Government deficit to below 3 per cent of GDP in that period.
Budget 2009 had set out a plan to do this by 2011. Given the worsening position it is no
longer practicable or sensible to do this in three years, as it would layer too great a
shock on the economy and would be counter-productive. Instead the Government has
agreed to put in place a five year plan to restore balance to the public finances by 2013.
Action Planned for the Public Finances
In putting in place a five year plan to restore balance to the public finances by, amongst
other things, reducing and prioritising current expenditure and adjusting taxation levels
to reflect the changed realities, the Government has agreed that in 2009 significant
public expenditure savings will have to be made. This will be in addition to the strict
containment of expenditure and tax raising measures contained in Budget 2009.
Investment in capital projects to enhance Ireland’s productive capacity has been
retained at a very high level, of the order of 5 per cent of GNP, as this will help boost
the productive capacity of the economy and thus ensure future improvements in living
standards. In addition, given the extraordinary economic and financial circumstances
7
impacting on all countries, including Ireland, this level of investment, which is now
being totally funded from borrowings, will provide a significant fiscal stimulus in these
difficult times.
The Government took firm and immediate action on expenditure in mid-2008 to address
the emerging spending pressures, securing some €440 million in savings in 2008. The budgetary process was accelerated and presented to the Dáil in October, rather than, as usual, in December. Government expenditure is to be further contained and almost €2
billion (1 per cent of GDP) is being raised in additional taxation in 2009 on foot of the
October Budget. In addition: -
• A special group has been established under an independent Chairman to further curtail public expenditure and public service numbers. This Group will reportto the Minister during the first half of 2009 to secure additional savings which will feed into the Budgetary and Estimates process, work on which is already underway.
• A Commission on Taxation established in February 2008 is currentlyexamining the structure and nature of the Irish tax system and will report to the Minister for Finance well in advance of Budget 2010.
• The Government will decide during January 2009 amongst options to deliver additional savings of up to €2 billion in Government expenditure during 2009 over and above that agreed in Budget 2009.
• Additional adjustments will be made on a phased basis each year out to 2013 and these will cumulatively amount to over €16 billion (8 per cent of GDP) by
2013.

[Factorem]

Is Brian Cowen mentally ill or something?

Why haven't we heard anything?

[Libernia]

Bruton for Finance - at this stage by military coup if necessary

[Schuhart]

Is Brian Cowen mentally ill or something?

Why haven't we heard anything?

Because these matters are far too important to discuss with crass people like the public or their elected parliament. These matters need to be dealt with sensitively, in behind-the-scenes discussions between the Department of the Taoiseach, IBEC and ICTU. Following those discussions (which clearly you are not allowed to know any details of), we'll produce a document that your elected representatives will rubber stamp as a fait accompli.

The fact you even ask this questions shows your unfitness to be a witness to these deliberations. Sure, once IBEC and ICTU agree, and there's ritual sign-off from IFA and CORI and the like, why would we need you to be informed? You're not a social partner, are you?

[Factorem]

When did I elect IBEC/ICTU/IFA/CIF/ISFA and CORI?

Seems to me like Biffo is spending far too much time talking to lobby groups.

He should be getting on with his own agenda. Oh wait, does he even have an agenda?

[Libernia]

This is the whole point. Social partnership is sindicated oligarchy. Unions who represent 30% of workers dictate the economic discourse and make our parliament play second fiddle. IBEC aren't much better, the Banks, CRH, Semi State companies and Treasury Holdings and their Construction buddies.

[jpc]

When did I elect IBEC/ICTU/IFA/CIF/ISFA and CORI?

Seems to me like Biffo is spending far too much time talking to lobby groups.

He should be getting on with his own agenda. Oh wait, does he even have an agenda?

Thats FF for you.
Never make a decision that cannot be blamed on others if things go wrong.
Motus operandi to date.

[jcdf]

He should be getting on with his own agenda. Oh wait, does he even have an agenda?

Beyond doing whatever it takes to stay in power, No of course not!

[Libernia]

They have to be taken out as a matter of extreme urgency. The opposition should leave the house and demand an election. It really is that serious. Our very independence is at stake.

[Factorem]

They have to be taken out as a matter of extreme urgency. The opposition should leave the house and demand an election. It really is that serious. Our very independence is at stake.

I agree. That notion did enter my head recently.

The Green Party and the FF back-benchers are the key.

If it goes on any longer, there'll be riots on the streets.

On independence: I agree too. If Ireland becomes yet another colony of the IMF, the "republic" is effectively finished. We might as well re-join the Commonwealth.