Ireland’s Fiscal Tightrope

The Irish Exchequer Statement for the five months ending 31 May 2009 show that the Government has spent €25.6 billion and had an income, from tax and other sources of €15 billion.  This leaves an Exchequer deficit of €10.5 billion, financed by borrowings of €8.9 billion and other deposits of €1.6 billion.  Interest paid on Government debt amounts to €1.58 billion.

The table below summarises the profile of tax receipts and compares these to Profile of Exchequer Tax Revenue Receipts 2009.  The State is €37.2 million ahead of projections in the aftermath of the April 2009 Budget.

Tax Receipts for 5 months to 31 MAY 2009

€ Million	Projected	Actual	+ / -
Customs	92,000	88,280	-3,720
Excise	1,655,000	1,753,832	98,832
Capital Gains	202,000	189,226	-12,774
Capital Acquisitions Tax	116,000	105,890	-10,110
Stamps	315,000	294,370	-20,630
Income tax	4,589,000	4,634,263	45,263
Corporation Tax	1,012,000	1,138,985	126,985
VAT	5,511,000	5,305,559	-205,441
Training and Employment Levy		831
Unallocated	0	18,046	18,046
TOTAL	€13,492,000	€13,529,282	37,282

Spending at the Department of Agriculture & Food is €248 million more than this time last year and should be considered in the context of the output of agriculture and fisheries is a mere €3.88 billion, having dropped from €4 billion in 2005.

Health expenditure is €200 million ahead of last year and welfare spending is , predictably, €457 million ahead of this time last year, following steep increases in the Live Register.

One item of expenditure that is noteworthy is the €6.33 million paid to the Leaders of the political parties, pruned by 10% but this is partially offset by the overhead to run the Leinster House enterprise - €367,000 more expensive than last year.

The cost of the local and European elections amount to €8.5 million.

Cumulative Fiscal Progress – 2009

 

Month	Total Receipts €	Total Expenditure €	Exchequer Deficit €	Borrowing €
Dec 2008 (Year)	43,021,778	55,735,598	-12,713,820	30,310,525
Jan	4,281,998	5,029,215	-747,217	6,674,212
Feb	6,577,074	8,661,834	-2,084,760	6,398,172
Mar	9,433,404	13,154,149	-3,720,745	10,234,357
Apr	11,645,341	18,961,729	-7,316,388	6,579,469
May	15,090,952	25,678,595	-10,587,643	8,987,279

Excellent parliamentary service has a high price tag

The recent news that The Houses of the Oireachtas Commission is to recommend that the Minister for Finance reduce untaxed allowances payable to Members and this initiative could achieve potential annual savings of up to €4 million is interesting, especially in the context of the Minister being unable to achieve the savings in the cost of operating the Oireachtas that he announced in the preamble to his April Budget. However, the current proposal is merely a financial pedicure in the context of our prevailing and anticipated fiscal circumstances. The last time Ireland financed itself on total tax revenues of €34 billion was in 2003 and the annual cost of running the Oireachtas then was €81.79 million. The Houses of the Oireachtas Commission is estimated to cost €137.15 million, 67% more, in 2009. The typical annual output of our parliamentary enterprise is 42 Acts of the Oireachtas that require 96 sitting days each year. The output does not vary much from year to year, except when a general election takes place. This means that the average cost of creating a new piece of legislation is now €3.26 million and the average cost per sitting day has increased from €850,000 to €1.42 million since 2003. The largest component of this increase is Administration – which has increased by €34 million in this period.

If the Oireachtas is to confidently lead the nation in living within its means nothing less than root and branch reform of the Oireachtas is necessary and those who have to achieve this maybe inspired by examining some comparable, sustainable external examples. New Zealand, for example, has not had an upper House since 1950. There are 120 members of the New Zealand Parliament. They govern what is now a modern, prosperous society with a population of a size comparable to our own - 4.2 million and which has increased recently at the same pace as the Irish population.

The annual salary of a member of parliament is €57,000. A cabinet minister earns €120,000 and their prime minister earns €171,000. No member of parliament maybe paid more than one salary at any one time. If a member holds two, or more offices, the salary payable to that member is that payable for the office which the highest salary is payable.

The National Party is the largest political party in the New Zealand Parliament with 58 MP's and its leader is paid an allowance of €15,130 per year in respect of his party. The leaders of the political parties in the Oireachtas were paid a total of €7.5 million in 2007. The sum paid to the Leader of the National Party of New Zealand this year is 0.62% of the €2.45 million paid in 2007 to Enda Kenny, Leader of Fine Gael which currently has 51 TD’s.

The Corporate Plan 2008 – 2009 of The Houses of the Oireachtas Commission is based on the slogan ‘excellence in parliamentary service’ which is a laudable, if a costly objective but our economic reality today is that we can only afford ‘adequacy in parliamentary service’ unless major savings are achieved through the restructuring our parliamentary enterprise through the possible elimination of the Senate and a reduction in the number of Teachtaí Dalá (MP’s)

If the Oireachtas is to successfully lead the nation in matching expenditure with income the voters will, naturally, expect the leadership of the Oireachtas to be stellar in embracing whatever sacrifices are deemed necessary for society as a whole.