• -
  • irishtimes.com - Posted: December 10, 2009 @ 10:01 am

    The Game has Changed

    Deaglán de Bréadún

    First they imposed extra taxes; now it’s cutting welfare. But will it work? The international reaction has so far been favourable. That sector of opinion likes tough, right-of-centre economic measures.

    We are at the mercy of events on the international market. Another shock to the system could floor us – as well as everybody else. There is only so much a country can do by itself.

    The theory is that reducing public setor wages will eventually bring down labour costs in the private sector which in turn will help to attract investment. Time will tell.

    There has been a rather muted response generally. Will righteous anger take hold of public sector workers in the New Year or is there a general demoralisation process taking place?

    It would have been better in terms or national solidarity to have had a deal with the unions but the whole thing was handled rather badly and turned into a public relations disaster. The game has changed: there is a new reality and one wonders if there are people who still don’t realise that.

    • paul m says:

      The only people who don’t realise the game has changed are the union leaders.

      cop on. suck it up, and keep the head down. we’re all taking this one on the chin.

      there may be 30 shades of green but it’s still the same colour.

    • Liam says:

      You only have to look at Greece to see what happens if an economy lets their debt get out of control. It would be silly to bet the economy on a global recovery which in all probability will at least be double dip. Also I’ve been speaking to people that work in the public sector and they realise that the situation is unsustainable and the sensible ones have been unhappy with the behaviour of their unions but given the adversarial nature of the setup this will not be the view one hears in public.

    • Derek says:

      Well I voted against strike action the last time but I’ll be voting for it this time. The burden should have been shared out, I was prepared to take a pay cut but I didn’t expect the public sector to be the only ones hit!

    • Dan Sullivan says:

      I think the belief is that earnings in the private sector are already down and that the public sector earnings which are paid for from taxes levied on those private sector earnings had to follow them down.

      I have to wonder at the mentality behind the cuts to those under 25. Why does a single person of 30 need more than one of 20? If ever there was a sign that the state does not have any time or faith in younger people then that was it. The notion that some adults should be at home with their parents is not even Victorian. I’m well past being in that cohort but I would have thought the last thing someone in authority with any appreciation of history would do during the worst downturn since the 30s is target young people with time on their hands and muscle at their disposal. All that is necessary now is a harsh winter and some demagogue to appear with a winning and simplistic way out of this and we’re well on our way to civil unrest before the summer has started.

      Perhaps, that is all part of Lenihan’s plan – make some elements of the population so angry they abandon democracy rather than vote for any of the opposition.

      I personally think that the trade union movement as it is exists primarily as a public sector beast is facing a massive moment. I can’t see strikes this side of Christmas but a phased and escalated plan of action starting in mid-Jan has to be almost certain now. Truth is if the unions had the faith that their members were 100% behind them they would go out 1 day a week more each week until they were completely out on strike and they would sit outside the Dáil or some such public buildings a la Ukraine. The problem is that I suspect the union membership aren’t all that convinced of their own argument, sure the lower paid, those on 30K and under, are righteous but I can’t help think that some of those on 50K and more wouldn’t feel less than bullish about sitting out for a few nights to defend their salaries.

      The odd thing is that the government may welcome such a confrontation as some voters who have drifted away from them because of their dithering over the last 2 years might be attracted back because of a show of strength even if it is just a show.

    • robespierre says:

      Deaglán, I am a highly skilled worker and I cannot remember the last time I worked less than 60 hours in a week. Probably when I was on my summer holidays. I have taken at least a 20% cut this year and I am in middle management.

      I know a number of people paid almost the same amount as I am yet their contribution to national wealth is social in nature. This is about competitiveness. The unit cost we pay to teach a child, police the streets by all international comparisons is far too high.

      You through your writing create wealth. I do the same helping organisations reduce costs, innovate and change etc. It is only through incentivisation on this creative side that we will be in a position to benefit from any change in consumer confidence.

      What was unjust about the budget was the way child benefit is not asset tested or means tested and pensions were left untouched. Not good enough. I also think as somebody in my early 30′s that the dole is far too generous for people in their early 20′s. If living at home, there is insufficient incentive for people to start something themselves.

      Taking inspiration from creative initiatives like this would be a start. http://www.ted.com/talks/william_kamkwamba_how_i_harnessed_the_wind.html

    • Steve says:

      More public sector strikes – interesting that people claiming to be “struggling” can afford to lose yet more pay. Maybe in the 2011 budget, the government could just reduce the salaries by an amount equivalent to the number of days people are happy to lose salary for – 1 day a month would be roughly 5% of the working days in a year. This could be done in addition to the sorting out all of the inefficiences identified by the unions last week when they seemed to think that they were ones elected by us voters to make decisions as to how tax payers’ money should be spent. Curiously, how many union leaders or staff will lose even one day’s pay as a result of strikes and how many have taken any form of salary reduction?

    • Caitlin says:

      Dear Paul M, The thing is that we are not ALL ‘taking this on the chin’! Private practising Doctors, Dentists, Physiotheraphists etc. have not reduced their fees. TDs still have their pensions while ‘working’ and don’t forget that they jumped on the benchmarking wagon which was for public sector workers to bring their low payment in line with the Public Sector. I cannot put into words how totally unfair the Budget is.

    • Joanna Tuffy says:

      Robespierre,

      You have an interesting perspective on the creation of wealth.

      What about the wealth that is created through the education of our children who go on to achieve their best potential in our economy as well as our society? Or the wealth that is supposedly and is in reality in people’s good health? Not that I agree with the reduction to wealth or consumerism that you outline. But the education of our children and the keeping of our people in better health contributes in huge part to our economic growth.

      And as for means testing child benefit or taxing it children don’t have an income to means test or tax.

    • Malcolm says:

      You ask: Will righteous anger take hold of public sector workers in the New Year or is there a general demoralisation process taking place?

      Having worked in the public sector for five years during the annual Bertie benchmarking treats and the resultant PMDS in house there was a buzz. There was also lots of training to go on and CPD trips to UK and Europe to make the public service bright and righteous. That buzz has gone I see and hear. The public service will work on a go slow in the New Year. There will be lots of sick buildings and lots of sick staff taking their alloted sick leave. Sure can you blame them. The bonus monies from Bertie during 2003-2005 are being taken back by Brian, the new Taoiseach it seems.

    • barbera O'Shcokenzy says:

      I think Martyn Turner should give the FF bashing a rest now. FG’s Kieran O’Donnell’s scowling mug and Richard Bruton’s apoplexy as they listened to the budget speech — great material for a cartoon. C’mon Martyn we know you can draw the two Brians. Let’s see what else you can do. Let’s have some balanced cartooning.

    • Patrick says:

      I think the the Government lost an opportunity to increase the tax for those on public sector pensions as against state pensions. Most of those would have been prepared to make a reasonable contribution as an act of solidarity. Many of those retired have enjoyed the benefit of a stable economy for at least 12 years and have no mortgage and now would not feel the pain as much as the low paid employed or the persons with disability pensions/benefit.
      So come on Minister, fair play is required.

      Of course the recommendation of Civil Servants would not recommend this! It would be like shooting yourself in the foot.

    • Brendan says:

      The beards were very muted. The cuts will come and strikes will make no difference save cutting the PS wage bill further – a few days of action would be the icing on the cake for those of us living in the real world, the last day of action meant it was much easier for real workers to get to work that day

    • Ray D says:

      The problem would be if the public sector entered on targetted strikes, involving few employees. that cost them little but brought the country to its knees. Far from being a burden on the private sector, the public sector is such a large constituency that it contains many jobs that are as absolutely vital to society as say electricity is.

      It is manifestly unfair (indeed an outrage) to hit very hard meagre earnings under €30,000 and this has been done twice this year to public sector workers only.There could be some vicious days ahead.

    • robespierre says:

      Joanna

      My point is quite simple. My wife is a teacher and I admire the work that she does with children in a tier one disadvantaged school. I think that productive public servants should be adequately recompensed. A lot of people, including parliamentary members of the Labour party do not seem to have many deputies that have worked in the private sector (I acknowledge as a solicitor you quite likely did). This means that there is a consistent stream in public discourse that ignores the huge value of the guaranteed indexed pensions people like my father got for working in clerical positions in the public sector.

      I have done enough financial reviews of companies to know that a junior clerical position of an equivalent private sector worker could not hope to receive such a pension. Similarly, there is a rigid definition in the public sector of hours and roles but not of responsibility, benefits, productivity and holidays all of which get upward only reviews.

      Quite frankly, I have done enough consultancy work in the public sector to say that the inefficiency is a screaming disgrace. There are almost two hundred thousand less workers paying towards the cost of running the state. The unions want to magic up some way of increasing productivity but all their formulas involve uniting the front and this includes poor performers.

      I have said it before, I have no problem with a great midwife earning 150k as long as poor performers are proportionately penalised and eventually dismissed. My issue is with everyone getting the same rises. It leads to a complete lack of incentive to drive for excellence from within the public sector. I think the Revenue and the DSFA are pretty well run and they are carrying plenty of fat. That is it.

      The public sector has it easy. No threat of redundancy, no threat of incompetent workers being dismissed e.g. Fás. I take no satisfaction from the individual pain of a hefty pay cut. I have taken a large one myself this year but I live modestly and never overextended myself so it is not nice but the only way out is to work through it.

      As an elected leader of the country I would like to hear your specific ideas for how and where you will stimulate growth. Where will you provide jobs, using what incentives and more to the point how are you going to propose fostering entrepreneurship in a society suffering withdrawal symptoms from addiction to FDI?

      P.S. A propos child benefit you are being facetious, if you think someone north of 150k a year cannot do without child benefit that would make a much larger contribution at the bottom of the pyramid then that is a matter for considerable dismay. They could run one car, eat out less etc. So the question becomes whether or not I am more in favour of redistributing wealth than the main Irish socialist movement and if so what does that say about the Labour Party? I want kids that are genuinely challenged by their family income levels to get my contribution to social welfare in full.

      If I may be facetious for a second, I also acknowledge that if pensioners incomes were taxed the Labour Parliamentary party may be the most affected, so I can see why you chose to skip that point.

      Let’s remember a pension is deferred income. No tax has ever been paid on it. Stating that wealthy pensioners should not be taxed is as the French would put it a rebours. I thought Labour wanted a more equal society?

    • Desmond FitzGerald says:

      Isn’t it interesting that there is complete silence on the thought process that goes into starting from ‘we need €4 billion in cuts this year’ to ‘let’s raise taxes on those at the lower end of income with no regard to their actual living costs or why income levels need to be at the level they are at’.

      It seems Lenihan and Co don’t want to address why it takes two full time incomes to pay a mortgage and raise a family whereas a generation ago it took only one fulltime income.

      But given the pedigree of Cowen, Lenihan, Coughlan and Hanafin – all of whom come from crony political families and all of whose parents were staunch Haugheyites – it shouldn’t really be a surprise.

      Why didn’t Lenihan instead stop paying into the pensions of public sector workers for 2 years or close off on some of the tax relief the middle class claim.

      Because given his background, he is intellectually incapable of understanding right from wrong or fairness from unfairness.

      The other side of the coin is that I bet about 70% of those most affected haven’t even bothered to vote or get on the register to vote and have never joined a union. So in a way they have only themselves to blame.

      Out of all the various unions and community groups now moaning isn’t it remarkable that not one single person has emerged with say the charisma of someone like Ganley (like him or not) to be the public face of those less well off to fight their corner. Is it too much to think those groups would arrange a joint conference or something and develop a joint and consistent plan of action.

      Why not learn to beat the likes of the employers groups and the well off at their own game.

    • Peter says:

      The public sector enjoyed substantial increases over the past few years as did the private sector. Unfortunately for those in the private sector 250,000 have been made redundant or about 15% of the private sector workforce. They now get benefits and theres no 50% pension to look forward to.

      The huge benefit of working in the public sector is your job is safe, you’ll get your increments and you’ll get your good pension. If you’re sick, you’ll get full pay, if you are on maternity leave you’ll get full pay. the benefits of public sector working are huge and in order to keep these long-term benefits, the public sector need to accept the pay cuts – after all for them its 5 – 15% (before tax) (3 – 9% after tax) whilst for the 250,000 people who have beeen made redundant it up to 80% cut in salary!

    • dealga says:

      “And as for means testing child benefit or taxing it children don’t have an income to means test or tax.”

      Ms Tuffy if you’re going to go down the ‘won’t someone think of the children’ route then might I suggest that children don’t get to spend their benefit either.

      The obvious response to the question “What about the wealth that is created through the education of our children who go on to achieve their best potential in our economy as well as our society?” is “what will those children do with that education if they grow up into a society of crippling income taxes, high national debt, high unemployment and a closed shop public sector with a chip on its shoulder and an inflated sense of self-worth?”

      Maybe some of your veteran colleagues from the 1980s can tell you.

    • paul m says:

      Dear Caitlin @ 7,

      if you’re going to focus on fees that people charge let’s not restrict it to just healthcare professionals.

      Publicans’ prices are extortionately high and I seriously doubt we will see them pass on a price drop. The price of most electrical goods is way off the mark in the republic, as is clothing. I could go on but there are a lot of service providers out there who just don’t want to see the writing on the wall.

      But getting back on the point, regardless of what ‘fee’ people charge we’re all now getting taxed so we ARE all taking it on the chin. It’s just that the nature of each person’s uppercut is so specific to them that it makes people think the grass is greener on the other side.

      You obviously feel agrieved that you’ve been targetted unfairly in whatever taxable category you find yourself in. Well join the queue! You’ll find there’s not one person that won’t tell you they didn’t get the short straw. Finger-pointing isn’t going to help, neither is feeling sorry for ourselves and our situation.

      If you really want to evaluate how ‘unfair’ you’ve been treated then ask yourself;

      Did you vote in Fianna Fail?
      did you spend like there was no tomorrow during the good times?
      did you buy a new/bigger house or encourage family to get on the property ladder and take out an excessive mortgage?

      if you answer yes to any of the above then you’re an accomplice to this crime, as are most people in the country. so we share some of the blame for our current malaise.

      however all is not lost. we did manage to squeeze in a bit of education, technology and infrastructure while things went well. There are still a good few young smart minds that havent head for the planes and boats yet. So I and a lot of other people believe, we are in a far better position to recover from this than when the country was but an apple in Ronald Regans eye.

      Sure we’ll all be laughing at this situation over our stale bread and gruel in 6 months time… wont we?

    • fight back says:

      The budget was aimed purely at the public service and social welfare. The government is happy that off the back of the budget it can now borrow money at a lower rate to throw into Anglo-Irish Bank. There are a lot of people in Irish society who haven’t had pay cuts and who are using the plight of others in the private sector as a case why tax should not be increased. The media, banks, big business and the government are all in collusion to keep control of the masses and to push their failed free market agenda. The whole public private phoney war is a strategy that sadly a lot of people have fallen for. Even The Irish Times seems to be a mouthpiece for the government, what sad days indeed.

    • Deaglán says:

      Desmond FitzGerald: According to my recollection, you are not correct when you write that: Cowen, Lenihan, Coughlan and Hanafin – all of whom come from crony political families and all of whose parents were staunch Haugheyites. I don’t believe all their parents were staunch Haugheyites.

    • Joanna Tuffy says:

      Robespierre,

      Our alternative to the budget is on our website.

      As for your point about child benefit. Children’s allowance was brought in in 1943 as a non means tested and non taxed payment on the basis that parents get the same wage whether they have children or not. It is a payment to parents for children. We also provide universal education for the nation’s children. The fairest way to make the person on 150K pay their contribution to our universal provision for children, that is common with many countries, is through income tax. That is whether they work in the public or private sector.

      As regards the idea that public sector workers have it easy, thousands have been let go over the past year, in the HSE, colleges and local authorities and many now qualify for the social welfare payment Family Income Supplement. Some public sector workers pay a pension levy but get no pension.

    • Dan says:

      I have yet to see a debate on this issue where private sector workers haven’t trotted out the tired old line that all public servants have “jobs for life”.
      I don’t and many others don’t.

    • AP Clarke says:

      The public sector pay cuts should have been implemented as a benchmark against European averages and should have been implemented from the top down.

      How Cowen ended up on the same salary as Angela Merkel after his paycut is just another stroke from a party whose only known policy is Nixon’s ‘You can fool some of the people all of the time, and all of the people some of the time..’. And while I’m on the subject – did anyone pick up on ‘permanent pay cuts and decoupling pensions?’

      Its not about the public vs private sector. Its about a mathematically challenged electorate who are charmed by the rogues of a one party state who’ve sold them a dream of a low tax economy with services on a par with Denmark and Sweden.

    • robespierre says:

      I profoundly disagree Joanna. I do not think there should be any fecundity-related tax-breaks for the wealthy.

      I take your point about tax – obviously I agree with you on it but I also believe that those that can afford lesser or no children’s allowance – i.e. they do not need the allowance to get by (buying clothes, childcare etc) should do without it.

      Universal services I understand especially where they can be afforded. Universal discretionary expenditure of a tax break? I would rather my taxes were better-spent.

    • Joanna Tuffy says:

      Robespierre,

      You are such a romantic.

      The Government couldn’t work out a way or who to tax or means test because of it being a payment for the child, and that is the reason (in a roundabout way) the Minister gave in his budget speech for leaving it universal.

    • robespierre says:

      How about this.

      Revenue’s database contains the PPS number. So does Social Welfare. There is an address linked to both. Like any other benefit it should be based on the income level.

      What you need is to share the coded fields and create a hierarchy based on declared income.

      The payment is made to the child’s parents and is claimed by them. It does not go to the child directly.

    • Joanna Tuffy says:

      But what if the parents are not married? Whose income do you assess? It is a payment for the child claimed by one or other of the parents to spend on the child. Legally it is a quagmire.

    • Dan Sullivan says:

      Problem is Robespierre, that the government has a policy that different departments do not share data. They have their own silos and ne’er the twain shall meet. After all, we have massive problems with the accuracy of the electoral register which could be sorted quick as a flash if people were cross referenced with the data held by the revenue.

    • robespierre says:

      Dan

      I agree entirely with you and am fully aware of this. McCarthy’s recommendation for driving back office efficiency through ICT-enabled shared services can only be delivered if they move out of the middle ages.

      Joanna, I didn’t say it would be easy but as Dan will tell you with any Data project you match what you can first and then work your way through the exceptions. We would at the end of it have a rich source of statistical data being shared between revenue and welfare – something that can only be of benefit to the state.

    • Joanna Tuffy says:

      Robespierre, and Dan,

      The problem is not that it would not be easy but rather it would be almost impossible without abolishing child benefit and bringing in a payment that is for parents, in other words a parents’ benefit. Legally child benefit is the child’s and a child can only be assessed on the child’s income. That’s my interpretation at any rate and statements that have been made by the Government about difficulties in means testing or taxing would suggest I am correct in that regard.

      Universal payments for children are not unique to Ireland by the way, they are widespread in modern democracies. And many of those other countries that have a universal child welfare payment, have other universal provision for children that we do not have, namely universal free health care for children.

      And the other major argument against your proposal is that would not be worth the bother, while at the same time abandoning the idea that we cherish children equally. Far more money could be achieved from people with incomes “north of 150k” by simply making those people pay their fair share of tax, whether they have children or not.

    • robespierre says:

      The canons of taxation are equity, economy, convenience and certainty.

      If we look at the current structure of the tax system it is not at all equitable. More could be given at the top of the scale but equally a contribution from lower income groups would be an investment in greater social cohesion. Even if this is a lower band of 10%.

      The second rule is that it must be economic to collect or to reform the measure. Will the tax bring in more than it costs to collect. These days with EFT’s and tax deduction at source industry bears the burden of most tax collection.

      The third rule, convenience is interesting as the measure on bicycles showed last year or indeed home refitting, if it is not convenient to avail of a tax break or other for a tax incentivised behavioural program people will not use it. Another example is rebates on bin tags or tax relief on medicines.

      The fourth rule is certainty, certainty of income. We all know that the reliance on stamp duty, VAT and relevant contracts tax and narrowing of the income tax base has had a calamitous effect. The question therefore is how to shift toward stable sources of income.

      What frustrates me is that these principles are actually from The Wealth of Nations by Adam Smith. They are literally Economics 101 and I studied them in 4th in school. Some 16 years ago.

      It gives the lie to any argument from the government that they did not mismanage the economy.

      I equally think one can apply these measures on tax breaks or welfare payments. The children’s allowance, while taking on board the very practical comments you made Joanna, fails on grounds on equity and certainty. We are certain to pay and we are certain that payment is inequitable.

      Legally I am quite willing to go along with your opinion as I did not read law however that is not to say the situation cannot be changed.

      I am less than persuaded by the arguments that if everybody else is doing it, why shouldn’t we. The question we should ask ourselves is whether or not it is morally acceptable to make payments to people on good incomes when this allowance contributes such a significant amount to the less well off.

      Just because we can redress the paying out of one benefit through taxation does not make it the right thing to do. This left pocket / right pocket approach is inefficient and fails on the grounds on economy over the long term.


Search Politics