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Dublin: 16 °C Tuesday 21 May, 2013

€4 billion ‘should be cut in Budget 2012′

The Irish Fiscal Advisory Council says the government needs to cut €4 billion from its spending if the state is expected to meet its 2015 deficit target.

Image: Images_of_Money via Creative Commons

THE IRISH FISCAL Advisory Council says the government needs to cut €4 billion from its public spending in the next Budget if the country is to make its 2015 deficit target of below 3 per cent of GDP.

The council, comprised of five economists, was established in July of this year to assess and publicly comment on the government’s progress on its budgetary targets and objectives, and to assess “the appropriateness and soundness” of the government’s fiscal position and projections.

In a report today, the council recommended making a “relatively modest reduction” in the targeted deficit from 8.6 per cent to 8.4 per cent of GDP for 2012, which would require a fiscal adjustment of €4.4 billion.

It said that it was not making the suggestion lightly, “given the painful adjustment measures taken since 2008″ but that it believes “a more rapid restoration of sound public finances, as well as being highly desirable in its own right, will have important favourable effects on the country’s creditworthiness”.

The government had indicated earlier this year that the next budget would see cuts of €3.6 billion on top of the cuts already in place. The ESRI said last month that Ireland could meet its deficit target in three years time due to the interest rate cut on the bailout and suggested Ireland could return to the markets by 2014.

Representatives of the European Commission, ECB and IMF are currently in Ireland to review the state’s deficit reduction progress according to the terms of the bailout, and the troika is expected to focus on Budget 2012.

Read the Irish Fiscal Council report in full >

Read: Social welfare could be cut by up to €1bn >

Column: Social welfare should not spark social warfare >

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Comments (34 Comments)

  • Laying the groundwork for a tough budget, better bend over and get ready to be rode :(

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  • Well if we didn’t have these 5 gimps on a board telling us the obvious we would have saved probably 500k euro a head already.
    Great telling us, but how can you get blood from a stone?

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  • I have a question for anyone who may know the answer as it is something I’ve been thinking about, when the Government accepted the IMF bail-out should the people of Ireland be asked first in for an example a referendum? That may seem like a silly question but it’s a question non the less!

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    • No they Irish people need not be asked. We elect these politicians to represent the people and to make the decisions on our behalf and seeing as it requires no change to our constitution a referendum is not needed. A shame really, I know what the result would be!

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    • ‘Direct Democracy’ website has some interesting articles on how the Government has played loose and fast with the constitution.

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    • Yup, ever read article 45? Maybe constitutional law uses a different version of English then the one I learned in school but when I read article 45 I can’t help feel that our glorious leaders have become adept at finding loopholes rather then following the spirit (and to my limited ability in the English language) the letter of our constitution.

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    • Neil 12/10/11 #

      You wouldn’t just be saying No to the IMF, you’d be saying Yes to default.

      And any referendum campaign would have to very clear on the 30% reduction in PS pay and SW that would mean overnight.

      If the Irish people are OK with that then let’s go for it.

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    • I think you’ll find that some of the irish people want no Troika help or otherwise and they don’t want default. They just want pure magic!

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  • Another tighten your belt budget sooner or later the blood flow is going to be cut to our legs. What then a tighten the noose budget.

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  • Isn’t it well for all these RICH and well paid advisory people telling the government to make even more cuts and increase taxes even more. They won’t have to worry about not been able to pay their mortgage and paying the increase in heating and electric.
    THE IRISH FISCAL Advisory Council can go and F**K as far as I’m concerned.

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    • Thumbs down must be from the RICH and well paid people!!!!!

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    • We cannot borrow money on the open market (we borrow to spend more than we earn).

      The people who will lend us money (i.e. the Troika) are doing so only on the condition that we reduce or deficit to manageable levels.

      The only way to get out of the clutches of the Troika is to get our deficit down to levels that the market will begin to lend to us again.

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    • The article seems to suggest reducing spending rather than tax increases, which has to be the most sensible statement to ever come out of a quango.
      Nonetheless, the government will no doubt start with emergency rooms and schools before tackling it’s vast wasteful bureaucracy.

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    • Correct, Donal McC. However – they have to & must start cutting from the very top & slim down Govt day to day spending before they plunder the guy/gal in the middle – AGAIN. It’s disgraceful that we are holding a referendum to reduce the pay of the arrogant & conceited Judges. Who do they think they are ? All this bullsh*t about independence from Govt etc. They are accountable to Irish society & bugger off with your arrogance. Start from the very top before they come down to u & me. Stop all these “secretarial” payments to ex Taoisigh, too. Bertie claimed over E300k since he did a runner – er – resigned ??!!! GGGGRRRRRR !!! That’s where the IMF/ECB must start. Lead by example. Then we will listen.

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    • Declan, I agree that the pay and expenses of some people that is funded by the Government would make a saint spit. However, the problem is that cutting at the top will produce very little savings relative to the amount that needs to be cut now. The vast majority of Government spending goes on Health, Education and Social Welfare.

      BTW – we have to have the referendum on judges’ pay because the Government was advised that to reduce their pay without such a referendum was probably unconstitutional.

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    • Hey Donal,

      We never had to hold a referendum to raise the feckers pay, but to reduce them we have to vote… seems like one way traffic?

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    • Daniel, unfortunately, the Constitution only mentions not reducing the pay of a judge!

      35.5. The remuneration of a judge shall not be reduced during his continuance in office

      http://www.taoiseach.gov.ie/upload/static/256.htm

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    • hi Declan to quote you “However, the problem is that cutting at the top will produce very little savings relative to the amount that needs to be cut now. ”

      Whilst the basis of your point is valid and true, the extremely high packages given to those at the top of NAMA, NTMA, TDs, etc causes the Europeans (the Germans especially) to say “Why do they pay themselves so much?” as our NAMA head is paid twice the German equivalent or almost 3 times more if you count bonuses etc…. They probably assume that we’re all overpaid on a sliding scale working down from those at the top…..

      There’s more than savings made at stake here.

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    • Thank god the social welfare is getting cut. I am sick of the peasants getting a free pass on everything while the middle class and educated have to pay for everything and work their asses off.

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    • Cork_Granny

      Unfortunately I don’t think that is the case at all. They are simply looking at how much money we are taking in, where it is coming from, how much we are spending and where we are spending it on.

      I know that people have issues with the salaries paid in the NTMA; however, we are hiring most of these people in the market. We don’t have anything near the required expertise in our public service.

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  • Article 5 of The State in The Irish Constitution: “Ireland is a sovereign, independent, democratic state”. Surely that is now questionable due to the IMF bailout. We are dependent on a foreign loan and the people who afforded us the loan have taken away a certain amount of our independence by dictating how we must repay that loan (e.g. cutting public sector wages/staff)? And if that brings our independence and sovereignty into question, should we not have had a referendum to decide whether or not the people of this country wanted to accept this loan? Or is this all too much of a grey area?

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    • I imagine the key thing with respect to the constitution is that we asked for the bailout. It was not forced upon us, so it could be argued that we asked for assistance and it would be pretty standard that conditions would apply to receiving large trances of money. Others may differ, but its just a point of thought!

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    • That’s an interesting point but to be fair there was a lot of pressure to take the bailout in order to prevent a possible Euro meltdown. Surely the conditions of the loan would have been outlined prior to accepting it (who takes out a loan with any financial institution without first reading the T&C’S?) with the conditions stating that the IMF & ECB would have a say (either partially or otherwise) in how the loan was repaid and the consequences these decisions would have on the general public? Did Fianna Fail then basically just take it upon themselves to sign off on this, thereby possibly disregarding Article 5?

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    • Did not people who worked and knew the late Brian L claim that the ECB threatened to cut off the Irish banks short term loans if the then government did not sign up to the ‘bail out’? Did we not end up ‘asking for assistance’ because of outside pressures applied to this state by the ECB?

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    • They pressure they applied would have been legitimate even if not very European and neighbourly. The reality is Ireland did have a choice, we could still have said no. However that didn’t happen. One could argue we are still a sovereign sate and many would argue that we gave up soverignty many years ago, well before the crash. The only way to find out for sure would be to test it in court, but I imagine success would be limited…..who knows though!

      Maybe the lesson for the future is to design our future prosperity around ensuring there can never be an institution to big to fail and utilising the common currency to our benefit, while ensuring we never again leave ourselves at the mercy of foreign powers and this includes fundamentally looking at what our country needs to survive and ensuring that we are able to produce it ourselves e.g our own energy, food, water supplies etc……and at the same time doing what most sensible people do, build up savings. I know thats looking well ahead, but the future is as important as the here and now.

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  • Im a public sector worker and hav had five pay cuts.. Please educate urself before making such a moronic comment !

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  • Always find it amusing and disgusting at the same time how economists speak of cuts as if they are simply crunching numbers. I reckon the trade unions are already getting their " public service bashing" banners out of the closet so they can remind everybody that public spending cuts on their members is simply an attack on them , not an adjustment on what we can afford.

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    • Neil 12/10/11 #

      Eh? Public Sector pay and pensions is part of government expenditure. If it needs to be cut then its because governent expenditure cannot be paid for. Are you honestly saying that it would be cut just to ‘attack’ PS workers? Just for the sheer devilment of it?

      If PS pay came from a magic money tree, and was independent of the state of the Irish economy perhaps. But it’s not. It will always depend on whether the government can rustle up the money to pay for it.

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  • I bet the people on the dole will take the hit.
    They have no trade unions.

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    • Neil 12/10/11 #

      Sad but true Pete. I think eventually there’ll be free one-way plane tickets for the unemployed, and a gentle prod that they should use them and not come back.

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  • We could probably save 4 Billion & more by the Government tackling the overpaid & inefficient public sector !

    Labour are in power so looks like the private sector is getting Fu**ed once again
    I often think what working in the public sector is like, what it feels to watch others suffer and still complain of "unacceptable conditions" & my personal favorite " I’m entitled"
    Time the public sector grew shoulder and put it to the wheel !

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    • Good to hear us in the public sector haven’t been hit. I wonder where the 20% or so of my wages that I haven’t been getting for the past few years had gone.

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    • John, it must be nice to in such a black and white world. There are plenty of public sector workers who work their asses off everyday, and have to put with this type of infantile analysis. And there are plenty of people in private sector who were overcharging and creaming it in the tiger days, and plenty who still do. It’s very easy to pick on an vague target like ‘the public sector’ – maybe you should raise it with the next garda, teacher, nurse, social worker, fireman, soldier you meet…

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    • Are you for real?! The public sector know all about pain-it began in 2008 with the introduction of the pension levy which, before any of you ill-informed public sector haters bring up, IS NOT a contribution to our own pensions. It is taken from us each month to ensure that there is money to pay the pensions if public sector workers who have retired. Also, we do contribute to our own pensions. Mine is currently costing me â

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