Prof Brian Nolan on Inequality - A complex issue explained.

At TASC, the main focus is on inequality and most readers of Progressive Economy probably have a good understanding of this complex issue. We publish an annual series on inequality which is part of a long-term project by TASC to monitor trends in economic inequality in Ireland. We present key economic inequality indicators in Ireland, which year-on-year will provide critical information for the public. In 2016, the book was Cherishing All Equally 2016.

Apollo House Homeless Occupation

Paul Sweeney: Last week the Irish state borrowed a load of money. The interest rate we will pay was minus 0.42% Yes, the lenders competed with each other to PAY the NTMA to take their money. The offer was 2.6 times oversubscribed. 

We Have the Money

Yet when the nationalised banks, AIB etc. are sold off by the state, the money is all to be used to help repay the national debt. Why repay some of it when interest rates are negative? 

Ireland has one of the Lowest Levels of 4G Availability in the World.

Paul Sweeney: Ireland has one of the worst levels of 4G availability in the world. This is largely because of the privatisation of Eircom. 

Ireland is 75^th of the long list of 79 countries (see graph below). We are below Thailand, Albania, Peru, Columbia, Panama, Morocco, Romania, Philippines and the UK, which is 54^th.  This list is in a report from the UK’s Infrastructure Commission on 4G and 5G.

Precarious work in Ireland: why is it an issue?

Alicja Bobek: Precarious work has become a very fashionable term in recent years. We hear about it in the media and public discourse; it is also a subject of much academic debate. The discussion revolves around the growth of atypical work and increased insecurity of employment, which is the main characteristic of precarious work. There are some who claim that nearly all work is now precarious, however most focus on the so-called ‘objective’ or ‘contractual’ precarity attached to flexible contracts, which are not typical, as in full-time and permanent.

Rental strategy insufficient for affordable homes

Rory Hearne: The government’s Strategy for the Rental Sector, while containing the welcome provision of rental restrictions is ultimately flawed because it does not link rent increases to inflation, excludes areas outside Dublin and Cork (particularly the commuter counties), does not provide security of tenure, proposes the sale of public land ‘below market value’ (i.e. give away/privatising a valuable public resource) to global real estate funds to increase ‘supply’, and is based on the failed (and contradictory) market assumptions that increasing rents will lead to further supply and increased supply will lead to affordable rents/house prices.

Leave no trace? How to combat off the record government

Nuala Haughey: When we think of government record keeping it often conjures up images of dusty archives stuffed with crumbling paper documents.

While historical archives are a rich part of our cultural heritage, there are many day-to-day reasons why we should care about how governments and public bodies currently make and keep records of their actions and decisions.

Is Inequality Entrenched Forever?

Paul Sweeney: Will the poor be always with us, as the Bible warned? Comparing the family wealth to those with the same surname today, a new study suggests that the richest families in Florence 600 years ago remain the same today.

This study, by two Italian economists, Guglielmo Barone and Sauro Mocetti, analysed Florentine taxpayers back in 1427 to those in 2011. In almost 600 years, they found “The top earners among the current taxpayers were found to have already been at the top of the socioeconomic ladder six centuries ago.” 

Brexit in Numbers for Ireland

Paul Sweeney: The CSO has published a useful paper on what the exit of the United Kingdom from the European Union will mean for Ireland. We have seen that there will be some advantages with the exit of the British in a recent blog by Prof James Wickham, though overall the impact will be negative on the economy. 

A Progressive Development (growth) Policy for Europe

Paul Sweeney: Did you know that last year 22.9 million people in the EU were unemployed, of which, a staggering 10.9 million people were long-term unemployed. At the current pace of reduction, the unemployment rate would take 7 years to return to its pre-crisis level in Europe. This is one of the many interesting points in a new economic study from European progressive economists.

The authors of the Independent Annual Growth Study “The Elusive Recovery”, expect that economic growth is going to slow down in the EU in 2017 to 1.6% after 1.9 % in 2016 and to 1.5% in 2018 because “tail-winds are turning into headwinds.” Brexit, higher oil prices and especially the slowdown in trade will impact negatively, along with uncertain politics.

Is an Irish Trump possible?

Rory Hearne: Trump’s election should make us reflect about our own national and regional economic and political situations and contexts. Trump’s success has resulted, in significant part, from a deep seated economic insecurity and exclusion amongst growing segments of the US population. So could we see an Irish Trump or new right-wing party elected into the Dail or even lead a new government?

Trumpolicy and the likely effect on real investment

Jim Stewart: The effects of "Trumpolicy" on real investment are difficult to understand. Corporate investment and flows of FDI to Ireland and other countries are extensively influenced by factors other than tax, as revealed by annual investment surveys.

An unholy trinity: what Trump policies, Brexit and political change in Europe could mean for economic stability

Jim Stewart: The policies of the Trump administration following Brexit and possible political change in Europe in the near future could lead to unprecedented change in Ireland. Despite the narrow immediate focus on the possible effect on U.S.foreign direct investment, longer run implications for world economic stability, for society, and political governance are likely to be far more important.

Book - Review: Branko Milanovic, “Global Inequality”.

Paul Sweeney: There are many books and reports on inequality now. It has been the big social issue for some time, but it is finally recognised as very important in economics. At last!

TASC’s excellent annual report “Cherishing All Equally 2016” is the best in measuring Irish inequality comprehensively and there are important and informative books like Inequality by Tony Atkinson who spoke at TASC last year; Joe Stiglitz (“The Price of Inequality” and “The Great Divide:); “Chronicles: in Our Troubled Times; by Thomas Piketty who addressed the largest meeting on economics in Ireland – on inequality - in Dublin also promoted by TASC a few years ago.

Enough of the post-Trump hand-wringing: it’s time to harness people power and push back

Maura Adshead: A colleague who studies Russian politics tells the anecdote about the Russian economics minister, holding a press conference after the 2008 financial crash. In answer to a question about what this meant for the Russian people, he replied; “the situation is hopeless - but not serious”. It took the stunned audience a few moments to realize the translator's error: the situation was of course serious, but not without hope.

Should judges be required to publicly declare their interests?

Nuala Haughey: Should judges should be obliged to make annual declarations of interests – such as property, gifts, land, and shares – in much the same way as TDs and Senators already do?

Minister Shane Ross thinks so. Explaining the rationale for this proposal, the Minister cited a recent case of a High Court judge who stepped aside from hearing a long-running dispute involving the cement company CRH, after concerns were raised about his ownership of CRH shares.

The Divide Documentary: Money, Stress and Inequality

Nat O'Connor: The Divide is a 2015 documentary, based on the The Spirit Level. I held a public screening and discussion of the film as part of the ESRC Festival of Social Science in Belfast.

The Divide tells the story of seven individuals striving for a better life in the modern day US and UK, where the top 0.1 per cent owns as much wealth as the bottom 90 per cent. By plotting these tales together, we uncover how virtually every aspect of our lives is controlled by one factor: the size of the gap between rich and poor. This film tells the human story of the link between income inequality, status anxiety and a wide range of social and health inequalities. The arguments presented in The Spirit Level underpin some of the ideas presented in the film, although it is also about the sheer injustice of the situation, never mind the theory.

For those who haven't seen The Divide, it is now available in the documentaries section on Netflix if you have an account, as is it otherwise hard to find a viewing.

A spiral out of control: global real estate funds, rental crisis & government policy

Rory Hearne: The Minister for Housing, Simon Coveney, indicated yesterday that he is not going to introduce rent regulation/certainty as it might deter the ‘supply’ of private rental accommodation. This shows that it is the new Irish landlords – the wealthy global real estate funds – that are influencing housing policy and not the needs of the hundreds of thousands of tenants facing spiraling rents and evictions.

Rising rents: a social and economic crisis

Rory Hearne: The Daft property website’s latest quarterly rental report shows rents rose nationwide by an average of 11.7 per cent in the last year. This is the highest recorded by the Daft.ie report since its series start in 2002. According to Daft.ie, Dublin rents are now 10% higher than their previous peak in 2008. The report is correct to state that “this is having a disastrous effect on social cohesion as well as on Irish competitiveness”.

Much Progress on Costly and Wasteful Tax Breaks but Radical Change is now Needed.

Paul Sweeney: There has been much progress in getting rid of the most wasteful and destructive tax breaks, but many remain. 

Indeed a radical approach to tax breaks must be taken by government because they are a fierce waste of money. The many references to “Value for Money” by the public service is empty and really should be used unless this issue is seriously addressed.

The issue is that many tax breaks suddenly arise, which were never planned, which cost a fortune and do nothing for the economy or society. 

The Interesting Story on Irish People’s Health and Habits.

Paul Sweeney: Did you know that 23% of Irish people still smoke, in spite of the ultra clear evidence that it is deadly? More men (26%) than women (20%) smoke. 

60% of us eat crap ie snack foods other than fruit, daily? And 75% of us drink alcohol? However this level of drinking is only in the past year while 41% drink at least once a week.  

But 37% of drinkers state that they drink six or more standard drinks (binge drinking) on a typical drinking occasion. Having been at Jimmy Murphy’s poignant play “The Kings of the Kilburn High Road” in the Gaiety last night, which centres around drink and achievement or lack of it, this latter statistic strikes a cord.

What cutting corporation tax to 10% would mean for the UK

Richard Murphy: Some of the smaller economic brains inside the Brexit camp are suggesting that the UK should cut its corporation tax rate to 10 per cent. Let me suggest some of the consequences.

The Impact of Driverless Cars: Blog 2

Paul Sweeney: In the last blog, it was forecast that driverless cars will be in mass production and in use in less than ten years. In this Blog, I will briefly examine the impact of driverless cars on different areas of the economy and society.

The Massive Impact of Driverless Cars, Blog 1.

Paul Sweeney: A few weeks ago, Uber introduced the first driverless cars on the road: a self-driving taxi fleet in Pittsburgh. Uber, partnered with Volvo, Google, Tesla, Volkswagen, Ford and GM are all investing heavily in driverless cars.

Insider lobbying and transparency - the hidden influence of expert and advisory groups

Nuala Haughey: After a full year in operation, the legislation behind Ireland’s lobbying transparency regime is being reviewed by the Department of Public Expenditure and Reform.

This is an important troubleshooting opportunity, as glitches in the law or its implementation can undermine its contribution to increased transparency in public decision-making.

The difference a welfare state makes

James Wickham:  Two charts that tell very different stories about inequality in Ireland today…

Opinion poll shows Budget 2017 should provide significant increase in investment in public services and infrastructure

Rory Hearne: Another opinion poll, this latest one from the Irish Times/Ipsos MRBI, shows that “a large majority of voters favour increasing spending on public services and welfare ahead of reducing taxes and charges”. This week’s Budget should reflect this public mood and provide a very significant increase in investment in key public services and infrastructure, particularly housing, a reversal of regressive austerity measures and outline a plan for the restructuring of the Irish economy away from failed neoliberalism towards a more social economy model of development.

The Private Rental Crisis: Towards a Solution

         

P.J.  Drudy: A recent survey of rising rents by Daft.ie is a further wake-up call for all of us and for the government.  During the last three months alone private sector rents nationwide rose by almost 4% and have risen 39% since 2011. 

Some People Pay Much More Tax Than Others (ITI Report)

Nat O'Connor: The Irish Tax Institute (ITI) has just published Perspectives on Ireland's personal tax system, which will be discussed on RTÉ Primetime tonight. Their main argument is that taxes are skewed, with those on high and "middle" incomes paying too much, and those on low incomes paying very little.

There are a number of problems with the ITI's analysis, including the prominence given to unorthodox measurements and a lack of context for their comparison with other countries.

Corporate Social Responsibility -the first casualty in Apple ‘truth fight’

Colm O'Doherty:  Viewed through a Corporate Social Responsibility lens the behaviour of the Irish State and Apple does not stand up to scrutiny.

The harsh impact of economic inequality on children in Ireland: Part 2

Rory Hearne: Children’s well-being is deeply affected by economic inequality. This is linked to, and results from, inadequate public expenditure on public services like health and education and wider economic inequalities in Irish society, such as income and wealth. In this blog, the second of two blogs dealing with Children and Economic Inequality in Ireland, I look at inequalities relating to health and housing and also some causes and potential solutions relating to reducing child inequality. 

On Apple tax, State must side with its citizens

Paul Sweeney: It is widely agreed that globalisation has bought immense benefits. But it is also recognised that these benefits are not equally distributed. Last week’s Apple decision demonstrates the complexity of the issue of distributing the benefits of globalisation. The Irish Government, faced with a windfall of some €13 billion, appears to have sided with the world’s largest and most profitable company against the welfare of its citizens.

The profound impact of inequality on children in Ireland

Rory Hearne: The impact of economic inequality on children’s levels of wellbeing has received increased attention internationally. This blog draws on the findings from TASC’s second annual report on economic inequality in Ireland, Cherishing All Equally 2016, to provide a brief analysis of the extent and impact of economic inequality on children in Ireland.

Appeal of Apple tax ruling is not in the public interest

James Stewart: The commission assessment of unpaid taxes at €13bn plus interest, to be recovered by Ireland is much higher than most expected, especially the Government.

Replacing USC with 600% Property Tax is Not Likely

Nat O'Connor: Talk of a 600% increase in property tax is a catchy headline, but not realistic fiscal policy. However, it is useful if it gets people thinking about how we pay for public services—and who pays.

There is a political promise in the Programme for Government to abolish USC (the Universal Social Charge). Yet USC brings in around €4 billion per year. So, officials in the Department of Finance (and presumably Revenue) have produced a document spelling out various ways to raise €4 billion elsewhere if the USC was abolished.

There are two key questions: Do we want to keep the same level of tax revenue in order to provide the same level of public services? Who should pay more or less tax?

Housing and homelessness crisis worsens

Rory Hearne: This week’s figures on homelessness and rent increases provide further evidence of the on-going housing crisis. Unfortunately the Government’s recent Action Policy for Housing and Homelessness provided no significant change in direction from the policies that caused the current crisis. Therefore, issues of homelessness and housing unaffordability are going to worsen in the coming months and years with harsh results for those most affected.

Despite recovery, Ireland remains a hugely unequal society

Rory Hearne: The fact that the number of homeless children in the capital exceeds 2,000 for the first time since current records began is further evidence Ireland is a deeply unequal country. Economic inequality is worsening despite the recovery and, for those experiencing inequality, particularly children, Ireland is a very harsh place.

London on the Liffey? Some impacts of the relocation of financial services jobs to Dublin

James Wickham:  Post-Brexit it is widely believed that Ireland will benefit from the relocation of some  financial services employment from London to Dublin.  There are some issues about the type of employment generated by mobile financial services...

The Not-Sharing Economy Part 2 – Uber and Airbnb

Paul Sweeney: In my last blog, I argued that the so-called “sharing economy” is based on an increasingly “fissured workplace.” Many technology firms can have a negative impact on jobs, workers’ conditions, on taxes and indeed on the sovereign state and democracy. This blog will examine two of these firms in the so-called sharing -  Uber, the world’s most valuable start-up and Airbnb, the  third most valuable one.

Uber

Uber has had endless global litigation, including a class-action lawsuit from drivers in California and Massachusetts which it recently settled for $100m. It avoids Irish VAT by shipping payments through Netherlands. 

Women’s unpaid care is pivotal factor in gendered economic inequalities

Dr Ursula Barry and Dr Maggie Feeley: Despite the issue of gender inequalities being well-aired in the past decades, current evidence shows that women in Ireland still experience immense economic disadvantage.

The “Sharing” Economy is based on a Fissured Workplace

Paul Sweeney: Uber and Airbnb are not the Sharing Economy. Instead, they represent a rapid increase in the “Fissured Workplace”. 

This “sharing” is large businesses shedding their employees and sourcing labour through "a complex network" of external entities, creating intermediaries between the workers and profiting from that work.

The fissured workplace is developing between a ruthless breed of capitalists, a shrinking elite of core workers, and the rest. 

Is Ireland's Income Tax High?

Paul Goldbrick-Kelly: A great deal of political debate in Ireland rests on the assumption that Ireland’s rates of taxation are prohibitive. This is generally taken to mean that Irish taxes on income, specifically, are particularly onerous. This perception is rarely, however, assessed with reference to available statistics.

Working conditions in the Irish back office: Are all jobs in Financial Services and ICT really that good?

Alicja Bobek: There are two sectors of the Irish labour market with average earnings significantly above the national average: Financial Services and ICT. In both sectors the annual earnings (including irregular earnings) were above €50,000 in 2015. Employment in these two sectors is also relatively secure for a large proportion of individuals as the majority of jobs are full-time and permanent (CSO, 2015); they can also be characterised as white collar and have relatively higher levels of job autonomy (O’Connell, 2010).

Is the G20 “Enhanced Structural Reform Agenda” serious about inclusiveness?

Pierre Habbard: Recently, the G20 Finance committed to a new — but yet to be made public — “Enhanced structural reform agenda”. Ministers also called for the “benefits of growth” to be “shared more broadly”. 

Will the two fit together? And, will they lead to policy change?

New Thinking on Taxation and Inequality from OECD

Paul Sweeney: The previous blog on the recent OECD paper on taxation pointed out its new recognition that taxation systems are not just about efficiency but must include other principles like equity. The paper sets out trends in inequality and the use of taxes and transfers to reduce it. 

The OECD paper takes a tax-by-tax discussion on tax design that supports inclusive growth. It discusses the efficiency and equity implications of each tax and offers options to reconcile both objectives. It argues that, “while a tax-by-tax assessment is critical, the possibility of reconciling efficiency and equity through tax policy will depend on the interaction of many elements within and beyond tax systems.”

Has the OECD abandoned its neo-liberal taxation policies?

Paul Sweeney: The OECD has relentlessly pursued a neo-liberal taxation policy. It seldom uses the word taxation without the appendage “burden” For its tax department, tax is not a “charge” or a “payment”, but nearly always a “burden”. On taxation, the OECD seemed like a Koch Brothers’ funded think-tank rather than one funded by governments. So when it revises its thinking in a new paper, it has to be welcome. 

The Effective Corporate Tax Rate, Again

Prof David Jacobson: I'm glad to see that even though Stephen Donnelly TD got most of the limelight, our Progressive Economy colleague, Jim Stewart, was at least referenced in the article by Jack Horgan-Jones on Section 110 companies in the Sunday Business Post (“REVEALED: the vulture funds that paid just €250 in tax”, SBP 24/07/2016).  

Jim Stewart is the leading researcher on how Multi-National Corporations in Ireland have minimized their corporate tax payments, on how their tax advisors – the big accounting firms – have helped in this, and on how the state, sometimes unwittingly, has allowed this to happen.  Among other important analyses, Dr. Stewart has shown that the effective corporate tax rate for US companies in Ireland is around 2 per cent, nowhere near the nominal rate of 12.5 per cent. 

Soaring Profits almost equals the Total Wages Bill in Ireland.

Paul Sweeney: The news that Ireland saw GDP growth of over 26.3% in one year in 2015 at first appears remarkable. However, it had little impact on jobs or citizens’ welfare. It was the work of “magicians” working for multinationals in the tax avoidance industry.

It really illustrates is how multinational corporations and their servicing agents in the big four accounting firms and legal firms are using Ireland to avoid tax internationally with major profit-shifting, base erosion and other financial shenanigans. 

Normally - in the past in developed countries - the wage share was around 75 per cent of national income. It has been in decline because of globalisation, the decline of union power, reduced taxes on companies, productivity gains going to capital etc.

A remarkable figure is the 44% growth in profits in 2015 over 2014. This is in stark contrast to some growth in aggregate wages of 5.6% (mostly because there were more workers employed) and indeed a small rise in the earnings of the self-employed.

From self-harm to social Europe?

James Wickham:  When in the 1960s the poor of the US ghettos rioted for the first time, they burnt down the areas in which they lived.  When the excluded of the French banlieus rioted in the 2000s, they burnt down the schools which served them.  Now the excluded white ethnics of the English working class have gone one better.  They have not only trashed their country’s economy (which arguably has given them very little for years) they have set in motion a process by which the institutions of the United Kingdom itself could be destroyed.

A New EFTA-EU Relationship Post-Brexit?

Nat O'Connor: Trying to imagine a “perfect” agreement for the UK to enjoy a stable, friendly and mutually beneficial trading relationship with the EU is problematic. A better solution would be to envisage this future relationship as an ongoing process rather than a final agreement or compact. The best candidate for this process would be a new relationship between the European Free Trade Association (EFTA) and the EU, based on respectful ongoing dialogue on the best way to organise trade with the EU’s neighbourhood. This would involve strengthening the EFTA into something more than it is today. If done right, such a process could provide the EU with a valuable mechanism for trading and co-operating with its close neighbours.

Brexit, Ireland and economic policy

James Stewart: Brexit marks a fundamental change in how we think about the EU and  our relations with our closest neighbour. Advice on what should be done has been both freely given and plentiful. 

Teething pains of lobbying transparency register

Nuala Haughey: The first official report on the workings of the Regulation of Lobbying Act 2015 offers important insights into how the new transparency regime is working after less than a year in operation.

Brexit threats to rights of migrant workers and students

Roland Erne: All European citizens have just been stripped of their European citizenship rights in Northern Ireland and Britain. Hence, no European right to vote in local elections, no European social rights (e.g. no European Health Insurance Card), and no European right to be treated equally anymore.

Brexit Scenarios

Nat O'Connor: The UK exit from the European Union is a sad event, not least because it is highly unlikely to deliver better living conditions to people in deprived communities who voted Leave. And by demographic change alone, in ten years today's Remain camp will be the majority (but Out nonetheless).

Next comes the long process of disentanglement. It is worth considering what the longer-term scenarios might arise from Brexit, in order to avoid some plausible nasty outcomes and to steer towards some kind of positive outcome that would benefit the UK and EU, and Ireland. Just two examples follow, but much more thinking is needed of all the many complex implications of this vote.

Better off without them?

James Wickham:  The founding fathers of the European Union believed that economics determined politics.  They have been proved wrong. What will happen now, after Brexit, involves politics – political choices, political values.  The European Union can only survive if its supporters recognise this.

The World economic outlook is not great

Paul Sweeney: The outlook for the world economy is not great, with low economic growth, rising inequality and slow demand, according to the OECD, the rich countries’ think tank. It published its Outlook earlier this month.

Neoliberalism exposed

Rory Hearne: Neoliberal policies have resulted in increased inequality and have failed to achieve economic growth. Furthermore, increased inequality in turn hurts the level and sustainability of growth. This statement is nothing new to progressives but it is very significant that the IMF has come out in recent weeks and identified these failings in neoliberalism.

Giving Ireland - and Europe - some backbone

James Wickham:  A progressive Europe requires putting the state back in.  And ‘the state’ means both the national member states and the European Union itself.  What follows is a written-out version of my invited intervention at a recent conference in Athens organised by Syriza and other progressive organisations.

Taoiseach appears to seek Increased Public Investment, as does OECD.

Paul Sweeney: The leak in the Irish Times (13^th June 2016) that the Taoiseach has written to Mr Juncker, President of the EU Commisson, on the need for greater investment in Ireland is welcome, but appears somewhat disingenuous. 

His letter appears to quote the report published by TASC last December which pointed out that Ireland’s level of investment was at its lowest level ever and was the lowest in the Union. Mr Kenny said investment in infrastructure in Ireland was at its “lowest level for many years, and also represents the lowest level of any member state at present” – the two points emphasised by TASC.

A Basic Income for All? Has its Time Come? Or is it a fad?

Robin Wilson: The recent Swiss referendum on a universal basic income for all has cast back into the spotlight a proposal which has periodically had its advocates, ranging from green progressives to right-wing libertarians. What it hasn’t had is popular support: 77 per cent of Swiss voters rejected it.

So why has universal basic income enjoyed a certain return to political fashion? It is a disarmingly simple idea based on a disarmingly simple premiss. The digital revolution threatens massive technological unemployment; ergo, every citizen should be paid a basic income regardless.

In this Programme – “There’s One for Everyone in the Audience.”

Paul Sweeney: This Programme for government is quite different from previous programmes. It is 160 pages where is the last programme was a mere 60. 

The many promises are a recognition of the vulnerability of this new minority government. It has to be more open to the views of others. In turn, this means that it will be much more difficult to be decisive in policy implementation. Yet, this handicap may lead to better policies. One of the downsides of social partnership was that issues took a long time to resolve, but the benefit was that better decisions were made in the long run, because many had contributed, foreseeing the downsides and strengthening policy. 

A New Era for Housing Policy?

Nat O'Connor: Now that there is to be a Minister of Housing, Planning and Local Government, as well as a Minister of State for Housing and Urban Renewal, one might hope for decisive shifts in housing policy.

The Fine Gael manifesto and the Programme for Government outline a range of commitments, including delivery of more social housing and affordable housing. Regardless of ideology, one might hope that the new ministers might wish to see a more coherent and honest housing strategy. At present, housing policy is neither.

How fares tourism? A review of the Programme for Partnership Government

Dr  Ziene Mottiar: It is surprising that a sector which employs 205,000 people, brings €6.6 billion of revenue into the country and contributes €1.6 billion in taxation is given so little attention in the Partnership for Government document, especially in light of the fact that there is considerable focus on rural development within the programme.

Where ambition meets reality: new Government spending plans do not add up

Marie Sherlock: As we have learned the hard way over the past decade, there is one hell of a gap between the lofty ambition of rescuing and building the economy and the hard task of making it happen and finding the resources to do so.

The Benefits of the Benefacts database

Nuala Haughey: A new database of information about some 18,000 non-profit organisations in Ireland will no doubt contribute to the drive for more accountability and transparency in the sector.

Billing itself “civil society online,” Benefacts is a free and searchable public directory that provides regulatory, financial and governance data about the non-profit sector which employs more than 100,000 people and has a combined annual turnover of more than €6bn. 

How the Government should tackle the housing crisis ­

Rory Hearne: The draft Programme for Partnership signals that the new Government will give urgently needed prioritisation to the housing and homelessness crisis. Positive measures include a commitment to “significantly” increase the delivery of social housing units, raising the level of rent supplement, developing “cost rental” housing, addressing mortgage arrears and progressing
the right to housing in the Constitution.

Reducing inheritance tax: populism and financialisation

James Wickham: Last week one of the first proposals of the new government was to raise the threshold for inheritance tax.  This is one of those measures that can have popular appeal and which are actually extremely regressive.

Polls indicate outcome of UK referendum on the EU too close to call - Brexit is a real possibility.

Blair Horan: Currently the polls for the UK referendum on EU membership, which takes place on 23 June, indicate that the result is on a knife edge and that Brexit is a very real possibility. While most polls conducted since the campaign began in late February show a small lead for the Remain side there is a clear  age divide with the prospect that an expected  higher turnout among older voters over 50, a majority of whom back Leave, could yet decide the outcome.

Today's UK conference on corruption is a step in the right direction, if a small one.

Paul Sweeney:   Mr David Cameron, the British Prime Minister, calling Afghanistan and Nigeria corrupt, as he hosts an anti-corruption conference, today Thursday 12^th May 2016, is a good case of “the pot calling the kettle black.” 

Yet that Britain is holding the conference is welcome.

However, it is worth focusing on some of the big powers and how they are a key part of the system which facilitates corrupt leaders in developing countries who steal billions of their citizens' taxes; major criminals; tax evaders and multinationals tax avoiders in hiding vast sums of cash. 

The extent of the corruption was highlighted by the Panama papers recently. And that was the papers of only one company, although it is a very important tax cheaters’ company.

The dependence of EU farm income on public support

Alan Matthews: In spite of the substantial reforms in the structure of the CAP over the past two decades, EU agriculture remains hugely dependent on public support. The importance of public transfers, including direct payments, to EU farmers can be shown in various ways.

Tax havens, secrecy and policy options

Jim Stewart: Panama is primarily a secrecy jurisdiction. The main function of the firm at the centre of the leaked documents, Mosack Fonseca, is to incorporate entities. This often involved a chain of ownership across several ‘tax haven’ type jurisdictions. A chain of ownership is used to make identification of true owners very difficult. This is one reason why this leak is of far greater significance than other leaks, for example the Luxleaks, because the web of interconnections and chain of ownership has been revealed.

Tax havens and the Panama Papers

Jim Stewart: This blog is about tax havens: their growth; functions, characteristics, and how they might be defined. A related blog tomorrow considers in greater detail the role of Mossack Fonseca (the Panama firm at the centre of the leak), whether Ireland is a tax haven, and some of the effects and policy issues arising from publication of the Panama Papers.

The Danger of Deflation

Paul Sweeney: The danger of deflation, i.e. falling prices, is that people wait to consume and so demand falls and that ultimately puts people out of work. Deflation has been hovering around for some years but so far, it has not bitten. However, it is not far off as European countries have been enduring low inflation for some time. There is also very weak demand and little growth.

Misplaced views on the keys to competitiveness

Proinnsias Breathnach: A key topic on Ireland’s radio airwaves this morning was the publication of the National Competitiveness Council’s annual “Cost of doing business in Ireland” report.  The report featured prominently on both Morning Ireland and the Seán O’Rourke programme on RTE.

Most Irish economists and business journalists have a fixation on production costs, and particularly labour costs, as the key to Ireland’s international competitiveness.  This has the nature of a religious mantra about it, based on blind faith rather than the available evidence.

Health Inequality Worsens for Irish Children

Rory Hearne: Health inequalities affect children in a number of ways. One measure of health inequality is waiting lists for various forms of treatment or assessment in our public hospital system. The recent HSE figures show that the trend in waiting lists is worsening for children in Ireland. The numbers of children waiting to be seen in hospital day cases, for example, has risen by a third (33.7%) in just over a year (from December 2014 to March 2016).

Rebuilding Ireland: It’s time to end bogus self-employment in the construction industry

James Wickham: As far as the tax system is concerned, many workers on Irish building sites are not workers at all.  Instead of getting wages for doing a job, they are receiving a fee for a contract.  Yet many of them are working in exactly the same way as if they were being paid wages.  Indeed, many building workers can only get jobs if they agree to work as self-employed sub-contractors rather than PAYE workers.  They are in other words, some of the new ‘bogus self-employed’.  In a recent report from the Working Conditions in Ireland project TASC documented the growth of this practice and highlighted its negative consequences for workers, for the state’s finances, and indeed for the industry itself.

How to Fund Housing and Infrastructure

Paul Sweeney: There is a simple solution to directly funding an immediate major social housing programme and other infrastructure. It is to use the billions already flowing into the Exchequer from the sale of the shares in the rescued banks for infrastructural investment, instead of paying down the national debt. Interest on the debt is only 0.7 percent and it can be paid down over a longer period from taxation.

Low pay in Ireland: causes, consequences, and solutions

Cian McMahon: This blog provides a brief overview of TASC’s recent submission to the Low Pay Commission on the level of the national minimum wage and the high proportion of women on the minimum wage. Our contribution highlights the economic and social consequences of low pay in Ireland, while also advocating for a progressive policy response.

At 23%, Ireland has among the highest incidence of low paid jobs in the OECD. The low paid are mainly women, who represent 60% of all low paid workers in Ireland. This high level of low pay amongst workers contributes to Ireland’s high level of gross (pre-tax-and-transfer) income inequality.

Five Proposals for A New Programme for Government

Rory Hearne: TASC has produced a new report (Towards Cherishing All Equally: Five Proposals for a New Programme for Government) outlining five policy proposals that could address some of the economic inequalities in Ireland. It is hoped that those involved in forming a new government, and those with a role as a responsible opposition, will find these useful. What is revealed by our analysis of the key indicators of economic inequality (see Chart 1) is that deep seated inequalities exist in Ireland. 

More Actions Needed to Curb Tax Cheating

Paul Sweeney: The recent stories in the news that there is widespread tax evasion and avoidance by the rich and powerful is hardly new. In my last blog, below, called Good News on Corporate Tax Avoidance, I was optimistic on the role of the OECD BEPs process. 

In spite of the news I still hold that there has been some progress. The  downward spiral of avoidance and evasion is being reversed. Evasion and avoidance is still continuing on an industrial scale in the globalised economy which assists such actions, but things are changing, at last. Tax paid by multinationals and the global rich – the 1%ers – is very low, but the public is less tolerant of it.

Inequality and the Millennial Generation

Rory Hearne: A global debate is taking place about the plight of the Millennial Generation and the ‘intergenerational inequalities’ they face. This also starting to receive some attention here in Ireland. The Millennials have suffered a significant level of ‘generational inequality’ in regard to a disproportionate impact from the recession and austerity. This includes higher unemployment rates, higher increases in rates of suicide and self-harm and higher emigration rates.

Good News on Corporate Tax Avoidance

Paul Sweeney: The public anger at the low levels of corporation tax paid by multinationals has forced action by states and may be beginning to bring in some extra taxation to hard pressed governments. Public anger also forced governments to curb their ambiguous relationships with the corporate multinational world. 

Previously, governments have increasingly vied with each other in the zero sum game of Tax Wars (“tax competition”) for foreign direct investment. The G20 asked the OECD to work on avoidance and they came up with BEPS or Base Erosion and Profit Shifting. It seems to be working. 

Apple and Ireland

A Challenge to Ireland’s Wealthy

Paul Sweeney: “We can well afford to pay our current taxes, and we can afford to pay even more. Our state needs to invest this revenue in our struggling schools, in antipoverty measures and in infrastructure improvements.” So say a group of 40 New York millionaires.

Retreat on Comprehensive Reform on Pension Taxation in Ireland and the U.K.

Prof Gerry Hughes: In the last fifteen years the cost of pension tax relief has doubled in Ireland and the U.K. and most of the tax relief accrues to higher taxpayers. In both countries there has been official concern about the sustainability of the cost of government subsidies for private pensions and some steps have been taken to make the system more equitable by, for example, introducing limits on the lifetime size of a pension fund and on an annual contribution to a pension.

Good News on Climate Change

Paul Sweeney: It is not often that we get good news on climate change, but a report from the International Energy Agency is positive and interesting. It found that Global energy-related carbon dioxide emissions (CO₂) – the largest source of man-made greenhouse gas emissions – has remained flat for the two years in a row.

Lifetime Community Rating and Inequality

Nat O'Connor: We are coming up to the first anniversary of Lifetime Community Rating (LCR) in private health insurance and it is timely to consider how this policy reinforces Ireland’s multi-tier health system and entrenches income inequality.

The previous government introduced LCR in May 2015, affecting everyone aged 34 or older. For every year a person does not hold health insurance, he or she must pay an additional 2 per cent per annum on the cost of an annual health insurance premium.

For example, someone who first takes out health insurance aged 39, five years beyond the age threshold, will pay a 10 per cent additional cost for life; so a €2,000/year premium* will cost that person €2,200/year instead. This adds up, and with the added unknown of health insurance price inflation, the crude percentage increase caused by LCR could have an even greater effect.

(* An average premium of €1,925 in 2015 was cited by a survey carried out for the Health Insurance Authority/HIA, although most people goaded into taking up insurance by LCR appear to be paying around €1,000 for the cheapest policies; schemes that come with so few benefits that serious questions could be asked about them).

But wait, wasn't LCR motivated by equality, or at least solidarity between the generations? LCR pushes younger people to sign up to insurance, which keeps the system funded (and the majority of insurance beneficiaries are older people or people with long-term illnesses). In theory yes, but if someone has a poor start in life or has many demands on their income (from children, disability, elderly relatives, siblings, or whatever) he or she may simply not be able to afford to buy health insurance until later in life – and he or she will be punished by the LCR system for this.

Wealth rising at the top

Rory Hearne: The increasing concentration of wealth at the top of society has become a major economic, social and political issue.  It is surprising, therefore that last week’s Knight Frank Wealth Report 2016, which suggests that the number of ultra-wealthy individuals in Ireland is set to increase by 28% over the coming decade, did not garner more attention.

The price of car dependency

James Wickham: Three almost random stories about Dublin’s transport disaster.  The first two show what happens if there is little investment in public transport; the third shows one consequence of stop-go investment, governed by short-term expediencies…

An EU Mirror Held Up To Ireland’s Economic Policies

Paul Sweeney: In this final blog on the recent EU report on Ireland, a few more issues will be examined. 

We Irish are fascinated with how other perceive us, particularly as our economy is recovering after the self-inflicted Crash of 2008. This report is like a mirror allowing us to see ourselves our policies and actions.

The EU on Ireland's Lack of Investment and the Improving Irish Labour Market

Paul Sweeney: I continue my examination of the recent EU report on Ireland EU Country Specific Recs. Ireland. It recommends three priorities for EU economic and social policy in 2016: re-launching investment; pursuing structural reforms to modernise Member Statesʼ economies; and what they call “responsible” fiscal policies. It is a staff working paper and while not necessarily reflecting the views of the Commission, it is close, in my view.

Why the EU Commission is right to call for increased public investment in infrastructure

Paul Sweeney: The new EU report on the Irish Economy EU Ireland report 2016 makes for interesting reading, if only to see how Brussels views our recovery. There is probably something in its 85 pages of analysis and data for everyone, depending on your perspective. 

Open government mid-term report shows need for sustained momentum behind reforms

Nuala Haughey: An independent report charting progress (and lack of progress) on Ireland’s open government reforms will be published in Dublin this week. The report is a mid-term assessment of the extent to which Ireland has fulfilled the goals set in its first Open Government Partnership National Action Plan 2014-2016.

Political accountability needs written record of government decisions

Nuala Haughey: The Oireachtas Inquiry into the Banking Crisis reviewed about 500,000 pages of documents from various bodies including banks, government departments and State agencies.

Yet not a single official document was provided to it relating to the marathon overnight meetings in Government Buildings that led to the blanket bank guarantee. Hamstrung, the inquiry had to rely on the recollections and scribbled notes of those who attended some or all of the meetings on 29th to 30th September 2008.

The Collapse of Ireland’s Finances (again): A Reinterpretation

Robert Sweeney: As the election season reaches full swing, the inevitable claims of who did what and when, and what this means in the future intensifies. One oft-repeated tale beginning to reemerge is that an expansion in public spending during the 2000s is a, or perhaps the, leading cause of the subsequent financial and debt crisis. After all, as seen below, the crisis manifested itself in an explosion of the public deficit and overall debt, which eventually culminated in an inability of the government to borrow from financial markets in 2010.

Children and Food Insecurity – a crisis for Ireland’s future

Dr Mary Flynn: The devastating economic crash in Ireland during 2008 threw the personal finances of large numbers of people into crisis.  Work opportunities all but vanished, businesses closed, people lost their jobs and many lost their homes; relationships suffered. Food poverty became a real issue for many families. Ireland is recovering from the economic crash but it will take time for this to reach all families.  Children don’t have time. From the moment of birth, they grow and develop relentlessly every day until they are roughly 18 years of age.

Debunking myths: why austerity and structural reforms have had little to do with Ireland's economic recovery

Aidan Regan: It has been a truly remarkable few years for Ireland and the European Union. In the space of five years Ireland has gone from being the basket case of the European Monetary Union to its number one success story. Economic growth is now the strongest in the Euro area, and according to the most recent data, this growth is having a real impact on employment. The dominant narrative among policymakers in the EU is that other peripheral states of the Eurozone should follow the Irish adjustment back to the market.

Housing Crisis & the Right to Housing should be a key issue in the election debate

So its election fever time! The current housing crisis should be a key topic for discussion in the election debate. Despite the economic recovery the housing crisis is in fact getting worse. Having a home (and particularly fair rent and home ownership) are issues that have defined this country from colonial times and the famine evictions to the Celtic Tiger property boom and crash that wreaked havoc to Ireland’s economy from 2008 and which continues today.

Guest Blog by Robert Watt: How Does Ireland's Public Service Compare?

Robert Watt: What evidence is there that the programme of Public Service Reform that has been pursued since 2011 is having an impact? The IPA’s annual Public Sector Trends Report provides many useful insights into this question, and the 2015 report, written by Dr Richard Boyle, is no exception.

The truth about taxes that you won’t hear during the election: Our taxes aren’t ‘stolen’ from us - they pay for nurses, guards and building schools

Rory Hearne: As part of a debate I took part in on Renua’s ‘Flat Tax’ on the Pat Kenny show on Newstalk, both Pat Kenny and Eddie Hobbs (who made the case for Renua) referred to the situation where “if you are paying over 50% of your income on tax then you are working 6 months for Michael Noonan and the next 6 months you are working for yourself”.  This once more highlights the need for a reshaping of the discussion around tax. Tax is not ‘taken away’ from you, ‘stolen’ or a ‘burden’ – we get our taxes back through the schools our children go to, the roads we drive on, the buses we use, the hospital we go to.

Will the radical cuts in public spending planned by 2021 be abandoned?

Paul Sweeney: Will the plan to greatly cut public spending by 2021 set out in Budget 2016 now be revised?

The question that all political parties should be asked on the doorstep in the election early this year is what kind of society they want to create.  We need to have a clearer vision of what kind of society we want and if it is cohesive, gives a level of security on health, education and minimum income with fair opportunities for all it will have to be paid for in taxes. 

Wrong recovery, wrong investment

James Wickham: According to the Taoiseach before COP21, Ireland needed special consideration because: "We have lost a decade of investment in our country because of what happened”.  Yet in terms of climate change, such talk of Ireland’s lost decade is nonsense.  Given that in Ireland the level of CO2 emissions has been closely tied to economic activity, the crisis reduced Ireland’s own contribution to global warming.  Going back to the earlier form of growth would therefore ensure that Ireland made its own significant contribution to global disaster.  It’s not just a question of more or less investment, it’s a question of what investment.

Moving towards a low carbon economy requires that carbon emissions stop increasing in line with economic growth – that they are decoupled.  During the boom there was absolutely no sign of this happening.  For all the current talk of emissions from agriculture, in the early stages of the boom between 1990 and 2003 these rose by 3.2 percent.  By contrast, as I showed ten years ago, during that period CO2 emissions from transport in Ireland rose by an astonishing 129.4 percent (Wickham 2006). As Figure 1 shows, up until the crisis the number of cars continued to rise faster than the growth in population.  

Figure 1 Cars and population, Ireland 1990-20012

 

The rise in transport emissions was largely because of the continued expansion of private car ownership and private car usage.  It’s highly unlikely that there was a concerted plan to increase car usage – and so greenhouse gases – in Ireland, but what actually happened with investment was as good as if there had been such a plan.

Firstly, public investment in transport infrastructure was disproportionately in roads.  In particular the motorway building programme ensured the final motorisation of Ireland. Building motorways doesn’t just mean that existing car-based journeys are quicker, safer and more convenient, it encourages more such journeys.  Although most research on such ‘infrastructure induced mobility’ (e.g. Cervero 2009) has focused on urban motorways (think the M50)), the motorway network has made it much easier to reach all parts of Ireland by car – so more people make such journeys.  Because car drivers can travel door to door a motorway network also facilitates suburbanisation – there is no need for those who wish to travel to live near a transport hub.

The motorway programme has made Irish inter-urban rail less competitive and many Irish trains still travel at speeds close to those of the 19^th century.  Compared to twenty years ago the public investment plans certainly show some increased investment in public transport, especially of course rail.  Yet the plans and the reality are somewhat different: planned new roads get built, planned new rail systems often don’t.   Political dithering and planning delays hold up rail far more than roads.  The classic example of this is the failure to build DART Underground – the investment that would potentially tie together Dublin’s fragmented public transport ‘system’.   Initial decisions are biased in favour of roads because there is virtually no consideration of the environmental externalities, while there also appears to be a great if usually unspoken reluctance to fund anything that would be operated by the public sector.  So Luas Cross-City gets built, Dart Underground (which would have to be operated by Iarnród Éireann) does not.

The other major investment contribution to Ireland’s greenhouse gases is the particular form of private housing.  The boom showed how ‘urban planning’ in Ireland is really an oxymoron.  Essentially houses were built where developers wanted to build them – this was ‘developer-led development’.  Most new building was on prime agricultural land adjacent to existing towns and cities – especially in the Greater Dublin Area suburban sprawl accelerated.  In particular the new housing areas out beyond the M50 have virtually no public transport and are utterly car dependent (Caulfield and Aherne 2014).  And across the country, as we are now realising, an as yet uncounted number of houses were built on flood plains.

Certainly there has been some investment in public transport.  The Dublin Bus fleet has been modernised and there has been some upgrading of Irish Rail.  Indeed, improvements in the DART and Dublin Suburban services have probably been especially significant, since national and international research shows that such ‘heavy rail’ services are most likely to persuade commuters to leave the car at home (e.g. Commins and Nolan 2010).  There have been infrastructure projects such as the Dublin Port Tunnel - an imaginative and massive investment which has enabled HGVs to be largely excluded from the city centre.  And despite the almost interminable delays, in Dublin the Luas did finally get built and is now being extended. 

All of this has made some difference.  In Dublin, unlike in other Irish cities, the apparently inexorable rise of the private motor car has slowed.  Whereas in cities such as Cork and Galway, travel to work by car increased between 2006 and 2011, in Dublin the modal share is not only lower but constant.

Within the Dublin area there has also been a significant increase in cycling, facilitated by the limited but real investment in cycle lanes and cycle tracks.   Young workers in the internet companies in ‘Silicon Docks’ (Google etc.) seem more likely to cycle to work than travel by car.  Here we can see Ireland’s (or at least Dublin’s) version of ‘peak car’ – the point at which car ownership and car usage starts to decline (Goodwin and Van Dender 2013).

Yet such change is very limited and very localised.  Cycling may even be increasingly concentrated in the central area of the city – in the outer suburbs cycling to work is almost non-existent.  Cycling is also still largely limited to a particular demographic – managers and professionals aged between 35-54; cyclists are also more likely to have switched from another sustainable mobility mode (walking, public transport) than from the private car (Caulfield 214).   Equally, the new growth of apartments could be seen as a counter-balance to suburban sprawl, except that many new apartments are so small that they are hardly an adequate basis for urban living.

Curbing the emissions of the Irish transport sector will require more and different public and private investment.  Within the Dublin area it will require investment in transport that ties the city together rather simply facilitates movement along existing corridors; it will require effective land-use planning to ensure good housing is built in areas that are not only reachable by private car.  In other words, it will involve the opposite of what would have happened if the lost decade hadn’t been lost.

Caulfield, Brian (2014) Recycling a city: examining the growth of cycling in Dublin. Transportation Research A: Policy and Practice 61: 216-226.

Caulfield, Brian and Aoife Aherne (2014) The green fields of Ireland: The legacy of Dublin's housing boom and the impact on commuting.  Case Studies on Transport Policy 2: 20-27

Cervero, Robert (2009) Transport infrastructure and global competitiveness: balancing mobility and livability Annals of the American Academy of Political and Social Science 626.1: 210-225.

Commins,  Nicola and Anne Nolan (2010) Car ownership and mode of transport to work in Ireland.  Economic and Social Review 41.1: 43-75.

Goodwin, Phil and Kurt Van Dender (2013) ‘Peak Car’ – Themes and issues. Transport Reviews 33.3: 243-254.

Wickham, James (2006) Gridlock: Dublin’s transport crisis and the future of the city. TASC at New Island.