MORE to folly.
From top: Fine Gael’s government formation negotiating team, from left: Paschal Donohoe, Leo Vardakar, Frances Fitzgerald and Michael Noonan in Trinity College Dublin last week; Michael Taft
Do we really want to follow a Tory model of low-spend?
Don’t be surprised to see loss of competitiveness, poverty, inequality and poor public services dominate the headlines over the next few years.
Michael Taft writes:
We are potentially heading down a dangerous stretch of road ahead – leading us into the Ultra-Low spend zone.
In this zone, investment declines and, so competitiveness and productivity; health and education services suffer; income supports falter adding fuel to the inequality engine.
A low-service, low-waged, low-productivity future awaits.
Of course, spending a lot of money doesn’t guarantee you optimal results. But spending too little certainly won’t get you optimal results.
So how far behind are we falling? Let’s compare public spending (excluding interest – this is called ‘primary’ expenditure) in the EU-15 countries.
He did this because Ireland has an advantage here – we don’t have to spend as much on pensions and related expenditure because we have a smaller proportion of elderly.
In the EU-15, the over 65 cohort makes up 19 percent of the population; in Ireland, this cohort makes up 13 percent. 2014 is the latest year we have data for old-age expenditure.
In the following, old-age expenditure is subtracted from total primary spending. For instance, Ireland spent 37.2 percent of its adjusted GDP (adjusted per the Irish Fiscal Council’s hybrid-GDP estimate that factors in the accounting practices of multi-nationals).
It spent 4 percent on the elderly, leaving an expenditure level of 33.2 percent excluding elderly-related spending. Figures for European categories are mean averages.
Ireland ranks below all the European averages. What difference would it have made in 2014 in actual Euros and cents?
To reach the average of other EU-15 countries, we would have had to increase public spending by €6.5 billion.
The next comparison is with other Northern and Central European economies (other NCEE). This is the EU-15 excluding the poorer Mediterranean countries like Greece and Portugal. To reach this average, we would have had to spend an additional €9.6 billion.
The final comparison is with Other Small Open Economies, a category used by the IMF. These are economies with a small domestic market and a high reliance on exports. Austria, Belgium, Denmark, Finland and Sweden are in this category. This is arguably our peer group.
To reach this average we would have had to spend an additional €15.5 billion.
[Note: some will say that defence spending should also be factored in as other European countries spend more than us. This is true. In the EU-15, defence spending makes up approximately 1.3 percent of GDP; it’s 0.4 percent in Ireland. In any event, defence spending is a policy choice and, in my opinion, shouldn’t be excluded from comparisons. But if you insist, knock off about €1.5 billion off the numbers above.]
In 2014, it could be argued that we are already a low-spend economy but as I wrote here, the situation could actually be worse. I have reservations about Seamus’s method. Excluding old age expenditure not only removes the demographic driven part of overall spending, it removes policy choices.
Most other EU-15 countries spend more on elderly per capita than we do. Second, if we are to adjust for the elderly population, then we should also adjust for youth demographics. In Ireland, under-20s make up 28 percent of the population, compared to 21 percent in the EU-15.
And we are a low-spender when it comes to education. EU-15 countries spent 5.3 percent on education, Ireland spent 4.7 percent. We have a third more children than the EU-15 and spend more than 10 percent less.
Therefore, when these are factored in, I fear we will have fallen even further behind. But let’s stick with Seamus’s method. Besides, those calculations above were then and we are heading into an even worse situation. Let’s fast-track to 2021.
Here, I use the IMF estimates. There are certain assumptions we will have to make. First, that the interest expenditure throughout the EU-15 – 1.5 percent – applies to each country (it won’t but it will average out). Second, that expenditure on old age remains constant. This will almost certainly change but in all likelihood, spending will increase in Ireland faster than in the rest of the EU-15.
The 2015 Ageing Report estimates that the number of pensioners over 65 years will increase by 17.5 percent in Ireland between 2013 and 2020 compared to a growth rate of 10.9 percent.
We will still have a demographic dividend but the higher growth rate will result in higher spending. And we will have more students in 2020 while the number of students in Europe will fall. So, if anything our demographic driven spending will rise faster.
Third, we assume that 75 percent of the fiscal space will devoted to public spending, or €8 billion. So what is one possible future, based on the IMF estimates?
By 2021 spending in Ireland collapses, falling well behind other European averages.
To reach the average of other EU-15 countries in 2021 we will need to increase spending by €21.2 billion.
To reach the average of other Northern and Central European economies, we will need to spend €24.4 billion.
To reach the average of other small open economies, we will need to increase spending by an incredible €33 billion.
These should be treated as indicative as they are based on assumptions and estimates. Will other EU countries increase or cut spending? Will spending on old age rise faster or slower?
However, we do know from the Government’s own projections that primary spending will fall from 34.2 percent in 2014 to 24.7 percent of GDP between 2014 and 2021. Add in the spending from fiscal space (2.8 percent) and the fall is still substantial.
As I stated before – it’s not all about increasing spending. We need to spend more efficiently with greater accountability and transparency. But even if we were to be the most efficient spenders in the EU, we would still end up being one of the lowest.
So we have a choice.
The only other country that comes close to us is the Tory-led UK. Do we want to follow a Tory model of low-spend or a continental model?
If we want the former, don’t be surprised to see loss of competitiveness, poverty, inequality and poor public services dominate the headlines over the next few years.
But if we want the latter – a continental model – then we not only have to reject proposals for tax cuts, we need to begin a debate over which taxes we are going to raise.
And we better start that debate now, before we find ourselves stuck in the Ultra-Low Spend Zone.
Michael Taft is Research Officer with Unite the Union. His column appears here every Tuesday. He is author of the political economy blog, Unite’s Notes on the Front. Follow Michael on Twitter: @notesonthefront
From top” Ryan Tubridy; Dr Julien Mercille
Ryan Tubridy and other RTÉ stars are paid enormous salaries to defend the establishment and quell dissent.
Dr Julien Mercille writes:
Gemma O’Doherty, the investigative journalist fired by the Irish Independent for being too investigative, gave a recent speech about the state of journalism in Ireland.
She emphasised how the media has become numb and unwilling to challenge the establishment, declaring that “press freedom and the ability of the media to hold power to account is more compromised today than at any other time in the history of the state”.
We have just had yet another example of how the media represses voices of dissent and glorifies those who police the airwaves.
Indeed, comedian Oliver Callan was on RTÉ’s The Late Late Show with Ryan Tubridy when he shook the comfy Irish establishment by daring to mention the “elephant in the room”, Denis O’Brien. He was referring to the findings of the Moriarty Tribunal and Siteserv among other things.
It is not so important what Oliver Callan said exactly. The crucial point is that as soon as he challenged politicians and powerful figures (he also criticised the Healy-Raes and Michael Lowry), Ryan Tubridy started interrupting him.
Tubridy said that Denis O’Brien was not there to defend himself, so that no mention should be made of him. He underlined how all what those individuals did was apparently “legitimate”, “very legitimate”, “just legitimate”, etc.
This is very revealing of the mindset in the media: we cannot talk critically on any news programme about anybody who is not also physically present on the same programme. This is precisely the type of convention that results in a media that challenges virtually nothing.
The event shows why Ryan Tubridy is paid so handsomely, half a million euros in 2014 and three-quarters of a million euros in 2012, when austerity was biting the rest of us.
It is to defend the establishment and provide them with a sympathetic public tribune on the radio and television to voice their ideas and interests.
Here is the latest list of salaries of RTÉ’s “top talent”:
But the media machine doesn’t stop there. Not only does it exclude dissenting voices, it also presents endless rosy accounts of those who police what may and may not be said.
For example, a few days after Tubridy interrupted Oliver Callan on his show, the weekend edition of the Irish Times featured, front page, a long piece about Tubridy and the Late Late Show.
Patrick Freyne, who wrote the article, followed The Late Late Show team for a full week as they prepared the show on which Oliver Callan would appear.
What does the piece reveal? The subtitle states:
“We went behind the scenes at one of the world’s longest-running chatshows to see how they choose guests, plan interviews, and squeeze celebrity, tragedy and line-dancing into a single two-hour programme”.
Cutting-edge investigative stuff indeed.
The piece is very long, 5,200 words. In it, we learn a lot of small details, such as the fact that Tubridy likes to choose his ties, what he eats for dinner, how long he sleeps before a show, etc.
There’s only one small paragraph about Oliver Callan mentioning Denis O’Brien on the show. It states that as Callan started talking about O’Brien and media timidity,
“Tubridy trie[d] to intervene for the sake of balance”.
Conclusion: thank God we have people like Tubridy to rectify the balance on television, i.e., to make sure no one talks about Denis O’Brien.
But what should be done to counter this state of affairs in the media? It’s very simple: build an alternative media. By that I mean a quality media that tells the truth and provides good stories about what matters.
The problem in Ireland is that there is virtually no alternative media. Many people don’t even know what the concept refers to.
Instead, we’ve adopted the “headless chicken” strategy. This consists in a few scattered people blogging here and there, but with no coordination whatsoever. Some of those blogs are excellent, but they’re isolated and it often takes time to learn they even exist.
Many people are also busy writing furiously on Facebook and Twitter and actually believe that this is what an “alternative media” is.
But it’s not. It’s very easy to tweet a million things and argue on Facebook and feel good about ourselves, but we’re not going to get very far with that. In fact, it distracts from the real work that must be done, whether it is to establish a good progressive quality news outlet or doing some activist projects or actually investigating something.
I would therefore argue that the more pressing task ahead is not so much to criticise the mainstream media, but to build alternative outlets.
Julien Mercille is a lecturer at University College Dublin. Follow him on Twitter: @JulienMercille
Related: More Pricks Than Kicks
Sheila Larkin wins a €25 voucher to use at Golden Discs nationwide.
Sheila chose blissed out stoner classic Albatross by Peter Green’s Fleetwood Mac (above), a UK number 1 in 1968, “so we can all close our eyes and at least pretend summer is starting…”
Stephen: “Play Time Of The Preacherby Willie Nelson because today is his birthday.”
James Chimney: “Play ‘Sensitive Outsider‘ by Half Man Half Biscuit because it contains the words “Broadsheet” in the first verse, and reminds me of some of the more….er pretentious up their own hole types that are all too common these days….”
Rory: “Play Bulbs by Van Morrison at midday today because it’s a good old song.”
Clampers Outside: ‘Play April 29th by Sublime because… today is April 29th, silly ’
Earlier: You Hum It We’ll Play It
Every week we are giving away a €25 Golden Discs voucher to spend on vinyl (or any other format) at Golden Discs stores nationwide. 11 of the 13 Golden Discs stores now stock vinyl and with a Golden Discs Vinyl Club Loyalty Card every €10 spent earns a sticker, with 10 stickers earning a €20 discount on the next vinyl purchase.
To enter, just complete this sentence.
‘Please play_____________________at midday today because_______________________’
Lines MUST close at 11.30am