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Issues of Tax and Spend
Read more about: Economy, Government, Irish Politics, Taxation 
Not all of them, but a microcosm of the bigger picture. Yesterday the NCC announced its annual competitiveness survey. There was also a presentation at the ESRI on child poverty figures and accompanying welfare policy.
After browsing the competitiveness survey for a while, its conclusions struck me as “since 2002, we’ve been lax, relying on consumer spending and construction to gloss over a drop in productivity.” That isn’t really what the government want to hear before next May, nor is it what any of us resident in the country wish to hear. The Celtic Tiger is credited with turning us from a backwater outpost on the edge of Europe to hub linking the US and EU.
There is a growing consensus, though, that we are getting lazy, resting on our laurels and relying on cheap money to finance an asset bubble that could burst with some pressure from the ECB. Today’s Independent has the alarming story that banks are now competing in the loan market. You may call me cynical but I think it’s time to worry about our appetite for debt and houses when we have banks beginning to compete on interest rates.
This spells possible bad news for the economy as a whole. The gravy train may just about be getting ready to stall out, with business complaining about costs and employees complaining about costs of living. A lack of competitiveness is worrisome for a number of reasons; for this post, the most worrisome is its knock on effect on the Exchequer.
One of the major themes of Barnardos‘ current billboard campaign is that in Ireland many children are poor. The current rate is somewhere around 9%, with a serious commitment from government that this will be 2% by next year. The issues raised in a paper at the ESRI is that this costs money. 2% is Sweden territory and in Ireland we do not have the political will to argue for such expediture on welfare provision. Child poverty is indellibly linked with adult unemployment, an issue which is connected to overall competitiveness in the economy and rising interest rates.
Adult unemployment is a welfare issue, reliant on public coffers being capable of facilitating spending. It’s unlikely any of us are going to argue child poverty is fine, but the circle needs to be closed by a government with a strong commitment to equality as to growth.
The current economic climate may begin an upward trend in unemployment and a downward trend in government monies. The current election falls at a time when the issues above are only a microcosm of the seriousness with which we treat tax and spend into the next 5 years. I am one who would err on the side of welfare provision, yet from our parties there is a deafening silence on what sort of thinking they are doing on the nature of welfare and spending should the current signals prove to be signposts to a downturn.
Are there policies that can be put in place now or in the next 18 months which can secure development of Irish society alongside its economy into the future? I suspect there are. I don’t know as I have only begun to ask. Our parties need to know by May.
strong commitment to equality as to growth
Equality and poverty or 2 very different things. People can be equally poor as well as equally rich. People think we can give money way and solve the problem and we can’t. Also raising Welfare rates and thus raising tax just put more people out of jobs and in a lot of cases increase poverty traps.
From the Combat poverty website they mention these things as being big contributors.
* Up to 5,000 young people leave school early each year
* One in ten leave primary school with serious literacy problems
* Traveller infants die significantly earlier than infants of the settled community
Now the last is ini part due to living conditions. Living in a caravan on the side of a road is by its very nature not that healthy. We have a very damp climate. That kind of living is just going to be dangerous. For instance forcing them to live in houses would tackle that. But as we are not going to do that. We have to accept that it is probably a fact of nomadic life.
As for the other 2 it is education. And down to things schooling and parenting. We can’t continually dodge the question of bad parenting. Simply put to many parents don’t make their kids do their homework and let them out on the streets at all hours of the night.
other factors is education spending. But many of the things needed to combat this are probably cheap. To deal with the parenting homework thing above. After school study from a young age would do alot to solve it and probably be quiet cheap.
Your argument above is ridiculously simplistic. Welfare doesnt a priori put people out of work. There are a large number of other factors around to do that. Seeing welfare as oppositional to jobs is a sure route to having a bad relationship with both. people have jobs or are pretty poor and in some cases both.
At present i disagree that a rise in tax is required to finance better welfare. Im convinced that the lack of serious commitment to thinking on welfare has let hte system of administration become sclerotic in delivery. Raising the effectiveness of tax euros to outcomes would have an impact straight away.
Is educational spending not welfare category? I think it is and in order to create a policy on education you cant just draw it up and plant it into a system you need to examine factors adjacent to it, like getting to school, getting value from education, the provision of breakfast where it is now required for rich and poor kids whose parents commute or work long hours. Access to materials and supplies, uniforms and other kit and also the generation of schools in the first place.
I dont disagree that the policy framework may not be as expensive to demand raising taxes, my point is that we may not have that comfort zone as the economy begins to dip FDI moves on to its next plaything and we are left with a gap where sustainable irish business cannot fill and a ten year period of excess where planning on the future wasnt done.
Is educational spending not welfare category
I wouldn’t say so it is not under the department for social welfare.
My point about welfare was not that alot people seem to think that there is no correlation between raising tax and jobs. They are linked. If we raise tax to pay more benifits we may well be putting more people out of work thus negating the welfare benefit as more people need welfare.
Im convinced that the lack of serious commitment to thinking on welfare has let hte system of administration become sclerotic in delivery. Raising the effectiveness of tax euros to outcomes would have an impact straight away.
I am all for that but I don’t see it happening. The civil service culuture of a job for life would be needed to be tackle for that. Also people would have stop trying to deal with relative poverty and deal with absoulte poverty. Because relative poverty in my opinion causes resources to be spread to thinly
Those are some mighty mental hoops you’re jumping through. You’d agree that the Children’s Allowance is a form of social welfare, right? But what if control over it was shifted to, say, the Department of Health? Would it stop being a form of social welfare?
What, and education isn’t funded from taxes?
Or you could raise some and drop others, searching for a sweet spot where exchequer revenue is maximised, but not at the cost of the economy. It’s not a matter of raising taxes, that’d just be stupid.
When I here people going on about relative and absolute poverty, I cringe. Both forms of poverty are horribly misused by all in argument. Example in point: you often hear people going on about how somebody earns only, say, EUR20 a month in some developing country, and people will go on about how terrible that is. The problem here is that they’re measuring poverty in absolute terms, which is nonsensical: somebody in a poor developing country can get by on that because essential goods and services are cheaper there than in a weathy developed one. Considerable elements of poverty are, without a doubt, relative.
There’s more I want to write about this, but I’m tired. I’ll try and pick up on this later.