Social Justice Ireland

Slí Eile: Some strong and clear messages emerge from Social Justice Ireland in its latest Socio-Economic Review. It makes the case that: 'It is profoundly wrong for example that poor people carry a major burden while senior bond-holders, who carry a large part of the responsibility for Ireland’s implosion, make no contribution to sharing the burden.' The full document may be downloaded here.

IBEC and Social Justice Ireland call for Higher Taxes (Revised)

Nat O'Connor: IBEC (in their pre-Budget submission) have proposed that Ireland's level of taxation should be 36 to 38 per cent of GNP. Social Justice Ireland (in their submission) call for tax to be 34.9 of GDP.

This is a revised version of yesterday's post. Thanks to Seamus Coffey for pointing out an error in the table re total tax revenue.

Professor John Fitz Gerald of the ESRI some time ago suggested 45 per cent of GDP as a long-term target, which would place Ireland in the middle of other European countries in terms of tax.

European economics commissioner Olli Rehn has already stated that Ireland must move from being a low tax economy to "a normal tax country in the European context"(Irish Times). The European average is 45 per cent of GDP.

If we go back to 2007 figures for GDP and GNP (which are the last stable pre-crisis figures), GDP was €189 billion and GNP was €163 billion (Source: CSO). This represents a 'boom' year. Figures for 2008 represent the beginning of the 'bust'. The following table illustrates what each of the suggested rates would have meant in those years, in terms of total tax revenue (taken from the Stability Update, and including social insurance as well as non-Exchequer tax, such as local authority commercial rates). Although it should be noted that GDP and GNP continued to fall in 2009 also.



Complete figures for 2009 are not yet available, but they are likely to show a continued deterioration of tax revenue (as stamps, VAT, etc. all continued to fall between 2008 and 2009; likewise higher unemployment means less PRSI paid and business closures reduce commercial rates). Hence, to meet the various tax take targets in 2009 would require even further increases in taxation.

IBEC's rates (36-38 per cent) would have represented less or the same level of tax in 2007, but up to €3.2 billion more tax in 2008. However, the significant collapse of GDP/GNP in 2009 makes it likely that IBEC's preferred tax take will be lower than actual tax take (as a percentage of GNP).

SJI's preferred rate would have called for over €4 billion in addition taxation in 2007 and over €7 billion in 2008. Despite the collapse of GDP/GNP in 2009 SJI's preferred rate will probably remain several billion higher than actual total tax revenue. In this context, it should be noted that SJI's stated aim is for Ireland to remain a 'low tax' economy.

A European average level of taxation (45 per cent of GDP) would have meant €23.7 billion more in tax in 2007 and €25.5 billion more in tax in 2008. That is nearly half again as much taxation. Of course, it would take years to carefully raise taxation towards this kind of target, and it would involve a transformation of Ireland's economy and industrial policy.

In reality, it is reasonable to suggest that increasing tax will cause some companies to leave Ireland, which will lower GDP. However, a more sustainable economic model might combine a more modest level of GDP with higher taxation; and more tax from a smaller number of companies and people might still mean more money for Government than lower tax from a larger number; including multi-nationals who are using tax breaks to avoid paying much tax here (or anywhere).

For example, the Social Justice Ireland document (page 2) shows a table of effective taxation in Ireland that suggests much higher taxation in the 1990s and early 2000s, which was also a time of stronger economic performance.

In this context, we could imagine that GDP falls to the same level of GNP, due to many multi-nationals leaving Ireland. In such a scenario, 45% of GNP would have taken an additional €11.8 billion in tax in 2007 and €14.8 billion in 2008. That's probably a more realistic estimate of what higher corporation tax, plus much higher social insurance, along with property tax could yield.

The bottom line is that the collapse of the tax take (by one third, €14 billion, between 2007 and 2009) is a major part of Ireland's financial problems. And this was on top of an already 'low tax' model, as the actual figures for both years show.

A broad coalition appears to agree that raising tax must be part of the solution for Ireland. And that means seeking higher taxes and new taxes.

That's where the debate really begins. IBEC want the Government to target people on the minimum wage for income tax, but they also call for property tax. Whereas Social Justice Ireland seek the reform of tax breaks (which generally benefit people on higher incomes).

Fine Gael's Economics

Nat O'Connor: Fine Gael leader Enda Kenny is quoted as saying that Richard Bruton will be Minister for Finance under any FG-led government and that this is "non-negotiable". While this may simply be political posturing, and the outcome of any possible future coalition negotiations will depend on the numbers of seats each party brings to the table, the message to any possible future coalition partners would appear to be that Fine Gael will control the economic paradigm that will guide them in government. So what's different from the present paradigm, if anything, about Fine Gael's economics?

Fine Gael has published a number of economic policy papers recently, including New ERA (its stimulus plan - revised November 2009), A Fresh Start for Jobs in Small Businesses and Hope for a Lost Generation (a plan to cut youth unemployment by a third). These documents are a fair place to start, to look at what Fine Gael proposes to do in office and to see to what extent this represents a break from the economic paradigm that got us to where we are today.

This is not intended to be a point-by-point critique, as I am only looking to identify Fine Gael's economics, not dispute the detailed costings, etc.

NewERA is essentially about managing the semi-state sector better, including using them to borrow money for investment in infrastructure (and creating 105,000 jobs), for which they will seek a commerical return through charges on customers. The major plank of this is renewable energy (Ireland to use 50 per cent renewable energy by 2020). A major broadband roll-out is envisaged, as is upgraded water infrastructure.

So far, this could be a policy objective from the left, right or centre. However, the proposed mechanism is a commercially driven semi-state company (NewERA Ltd) which will manage five merged/restructured semi-states. It will operate commercially, with the CEO and board appointed by the Taoiseach. A big, cross-utility merged regulator will ensure more powerful, "pro-consumer" regulation.

Fresh Start is sub-titled "18 ways to support small business and save jobs". In an introductory message from Enda Kenny, Fine Gael "commit to preserving our low tax model as the best means to promote growth, enterprise and employment." The 18 specific measures include: employers PRSI exemptions/subsidies; a national recovery bank; reducing VAT; abolishing the travel tax; reviewing Employment Regulation Orders (legally-binding pay agreements in hotels, retail, etc); prompt payment from State bodies; cutting red tape; business and employment units in local authorities; reducing energy costs; freezing local authority rates; and supporting start ups.

Hope for a New Generation includes: a national internship programme; a back to education schmeme; Community Employment schemes; workshare; and the above 'jobs tax cuts' (on employers PRSI).

From this snapshot, I can conclude that Fine Gael intend to refocus the State's involvement in the economy towards jobs. There is a recognition of the high multiplier effect of State investment in capital projects. Likewise, the policies also recognise the fact that SMEs provide many Irish jobs and that supporting them is important. There seems to be a reliance on tax cuts or tax expenditure (credits, allowances, etc.) to stimulate economic activity. There is also some long-term thinking about Ireland's energy security and the potential of a good return from investment in renewable energy generation.

The economics underlying the proposals seem orthodox and do not address the major problems shown by the global economic crisis. Although the decisions of recent government added miseries to the Irish case, the global crisis still requires all parties to re-think the received wisdom of economics in a much more fundamental way.

As an example of such a rethink, Social Justice Ireland have published "An Agenda for a New Ireland" (Full PDF here). They argue that "Ireland’s policy-making for more than a decade was guided by many false assumptions" including the assumptions such as: "Economic growth was good in itself"... "Infrastructure and social services at an EU-average level could be delivered with one of the lowest total tax-takes in the EU." ... "The growing inequality and the widening gaps between the better-off and the poor that followed from this approach to policy-development were not important as everyone was gaining something." ... "Low taxation was good." ... etc.

The failures which stem from these false assumptions include: "Failure to take action to broaden the tax base or to promote tax equity."... "Failure to overcome infrastructure deficiencies,"... "Failure to adequately address high energy costs or to promote competition in sheltered sectors of the economy," ... and "Failure to appropriately regulate the banking and financial services sector or to manage the growth of personnel numbers in the public service."

The SJI document alone poses questions for the Fine Gael policies. And the criticisms of recent Government economics cannot all be dismissed as part of 'crony capitalism'. There are genuine questions to be answered by advocates of the orthodoxy. For example, if Fine Gael are commited to Ireland's low tax model, how do they define that? Does it leave scope for a restructuring of the tax system to make it more egalitarian? Does it leave room for some increase in tax, as you simply can't have average European level of services without average European levels of tax?

Indeed, Social Justice Ireland proposes retaining relatively low tax (35 per cent of GDP, p. 26), versus recent suggestions by the ESRI's Prof. John Fitz Gerald, who would prefer Ireland to move to EU average levels (45 per cent of GDP). Where is Fine Gael on this issue?

On a more fundamental level, what about economic growth? Have Fine Gael seriously considered alternative ways of measuring economic progress, including quality of life, health, education, environment, distribution of wealth, etc? What about suggestions that the economic situation of most people could improve, despite a fall in GDP, if there was better organisation of the economy? In the long-term, a green economy cannot rely on continued growth models.

Fine Gael's policies seem to reflect a belief in the commercial sector and market forces that is not based on the evidence of the global crash. For example: banking regulation failed; corporate governance failed; long-term planning did not occur; and wealth was further concentrated in the hands of fewer people. So, why should we have faith in a "commercially driven" semi-state sector or in continued adherence to Ireland's disreputable low tax strategy?

Looking for more insight into the above, Richard Bruton's blog posts add some more detail. In March 2009 he posts the press release for the launch of the NewERA idea. The familiar buzz word "competitiveness" seems to be the driving force behind it. More recently, in January 2010 he discusses the Competitiveness Council’s Reports. These are referenced as reasons underpinnng the NewERA proposals. For example, "dissipation of responsibility across 34 separate public authorities has resulted in poor planning and appalling waste"... "it is no longer essential that the State owns all of the capacity for producing gas or electricity, though the grids must remain publicly owned." ... "All of the investments will be on strictly commercial terms. The companies involved will commit to servicing their loans without a State guarantee. This will bring a new element of commercial realism into the operation of companies and force new disciplines into their operation." This post has a press release feel to it too, nevertheless it further clarifies what Fine Gael envisage 'competitiveness' means.

A serious consequence of the above policies seems to be a shift from taxation to charges - charges for water, waste, energy at "commercially driven" rates. How will waiver schemes work in this context? Currently, private commercial waste collection firms don't always offer them. There is a real risk of a set of charges being levied on household incomes in lieu of a more broad-based and progressive tax system. This would be regressive in effect, as those on lower incomes would pay proportionately more of their incomes.

Another logical consequence of the above policies include weakening local authorities - by freezing rates for five years and limiting their role in water services to being "agents" of the proposed Irish Water national utility company. There is a pressing need to reform local authority funding, and a rates freeze sends the message of 'no change' for five years, while local services (like roads) continue to deteriorate. How can we have new local politics without funding reform? Also, it is glib to suggest that water leakage stemmed from "dissipation of responsibility" across the authorities. There has been a lack of capital investment in water (and other basic infrastructure provided by local authorities, like sewage and flood protection), which in turn was due to Ireland's low tax base and, in particular, the inadequate funding of local government.

Also, in terms of injecting "commercial realism" into the provision of utilities, what is to stop the State being stuck as the 'insurer of last resort' if commercial power plants threaten to turn off the lights? How will the commercial operation of firms be regulated to prevent short-term profiteering or asset stripping at the expense of long-term investment?

Whether a general election occurs in 2012 or sooner, Fine Gael is reasonably likely to lead the next government. If so, Fine Gael's focus on jobs and stimulus is welcome. But the above documents are more about suggestions for how FG would manage the State's role in the economy, broadly based within current constraints and without challenging the dominant economic orthodoxy.

Hence it is important to begin a more in-depth, open, public discussion about the assumptions Fine Gael (and other parties) make about economics. As a number of posters on this blog have commented, alternative or progressive economics is not the sole preserve of the 'left' (howsoever defined).

If Fine Gael are seeking to control Ireland's Ministry of Finance for the five or ten years after the next general election, then - especially in the context their proposals on New Politics, including open government - I hope that Fine Gael will publish more about their economic perspective and assumptions so that we can examine alternative options and discuss what economics represent the long-term public interest.

One thing Richard Bruton blogged in December 2009 about the budget was "To successfully implement change, you have to build a broad-based coalition to implement it." I hope this is Fine Gael's belief about economics, because any claim to offer "new politics" is an illusion if the economic paradigm to be adopted is "non-negotiable".

Guest post by Eoin O Broin: An agenda for a new Ireland

Eoin O Broin: Every year one of Ireland’s leading anti-poverty groups, Social Justice Ireland (formerly known as CORI Justice) produces a social and economic review.

This detailed report provides both a critique of government policy in the previous year and a set of alternatives aimed at producing a more equal society.

This year's report is entitled An Agenda for A New Ireland and was published on April 6.

Social Justice Ireland argue that a series of ‘false assumptions’ have underpinned government policy in recent years and are directly responsible for our social and economic crisis.

Politicians and senior policy makers believed that economic growth was a good in itself, and that the benefits of economic growth would automatically trickle down to all.

They also believed that a world class social and economic infrastructure could be built on a low tax base.

Alongside these ‘false assumptions’, argue Social Justice Ireland, was a belief that ‘the growing inequality and widening gaps between the better-off and the poor…were not important as everyone was gaining something.’

As a consequence of these assumptions, a series of policy mistakes was made across all government departments.

Government failed to broaden the tax base, leaving it vulnerable to the crash in the housing market, declining consumer demand and rising unemployment.

Government also failed to adequately invest in our social and economic infrastructure, in turn undermining our competitiveness and social-cohesion.

They also failed to adequately regulate key sectors of the economy such as rents, energy and banking, opening the way to spiraling costs and the collapse of the state's entire financial system.

The government's continuing adherence to these flawed policies, argue Social Justice Ireland, is making the current crisis worse.

In place of these flawed policies, Social Justice believe that ‘Ireland needs a new vision to guide policy development and decision making if it is to move beyond the current crises.’

The socio-economic review sets out four core values ‘that should underpin a guiding vision for Ireland in the years ahead’.

Firstly, it argues that every man, woman and child should have ‘what is required to live life with human dignity’, including adequate income, services and opportunities to participate in society.

Secondly, it argues that economic, social and environmental sustainability should be a ‘central motif in policy development.’

Thirdly, it argues that equality and a rights-based approach are placed at ‘the core of public policy.’

Finally, it argues for the idea of the ‘common good’ as opposed to individual advancement, should be a ‘constant goal of policy development.’

The report goes on to outline detailed policy proposals through which Social Justice Ireland believes these four core values can be achieved.

Among the proposals are:

• Raising the total tax take in a fair and equitable manner while keeping Ireland a low tax economy (i.e. below 35% of GDP)

• Investing in the states infrastructure and social services to being them up to EU-average levels

• Reforming public services to ensure it maximizes its capacity and delivers appropriate outcomes

• Addressing short-term and long-term unemployment.

• Reducing poverty with a particular focus on child poverty.

Social Justice Ireland’s 2010 socio-economic review provides a comprehensive assessment of the weaknesses in the government’s current policy agenda. It also provides a wide range of policy alternatives which it believes, if implemented, can make Ireland a more equal society.

A full copy of the report can be downloaded here.

'Unfair, unjust Budget fails the vulnerable, damages the economy'

Slí Eile: In an excellent and hard-hitting analysis and critique of Budget 2010 (the Irish one) by Social Justice Ireland (formerly CORI Justice) fresh off the presses last Thursday within 20 hours of the Budget speech there is a comprehensive and incisive account of the budget from an equality and anti-poverty perspective. It is well worth the time to study this 20 page document. It can be downloaded here.

In a telling comment it states that:

Government has placed its faith in the failed neoliberal economic model which caused many if not most of the current economic problems not just in Ireland but across the world.

Not only did the budget worsen the already precarious situation of the poor -working, unemployed or otherwise - it 'provides no pathway towards a credible, desirable future that Irish people can strive to attain'.
Nobody can accuse Social Justice Ireland of not outlining a detailed 'alternative budget' to the one brought forward. In November SJI published a detailed set of costed proposals and fiscal adjustments that would avoid any cut in social welfare. It can be downloaded here.
A criticism I have of the document and stance taken by SJI is that in common with that taken by many progressive commentators it seems to buy into the overall parameters set by the Government from April of this year (the €4bn adjustment split between expenditure cuts and tax hikes). This is not a good strategy and is one that risks turning a recession into a depression and a lost decade. We should make the case for higher spending, not lower spending, financed by taxes on the better off and employment generating enterprises. Another criticism I have is the commitment to a 'low tax' regime - albeit higher than our super low one currently - (the 'low' defined by SJI as a level of tax revenue just below the EU average). I would argue for going well above the EU average since the latter is only an average and reflects a wide range of tax takes including very low-tax countries in the East of the EU suffering from an excessive neo-liberal overdose following the collapse of communism in those countries.
However, all in all, the SJI paper is an excellent critique and stems from a positive and welcome values base. More power to their elbows. My hope for 2010 is that more and more commentators, researchers and activists can join forces to produce the data, analysis and policy thinking and actions to begin the transition to a new society based on values of fairness and respect for human rights over the dead hand of the markets. There is a lot to be done.

Social Justice Conference on Measuring Well-being

Slí Eile: Social Justice Ireland hosted a conference on measuring well-being (Beyond GDP: What is progress and how should it be measured?). All the papers are available from the website here.

Social Justice Ireland Alternative Budget

Slí Eile: Social Justice Ireland is to be commended for taking on the Dublin Consensus by working on an alternative budget. SJI has gone through the numbers to come up with a more just way of fiscal adjustment - taking the €4bn adjustment as a given it takes up the previous commitment to raise taxes by €1.9bn and cut spending by €2.25bn. In a paper summarised here, it takes some ideas from the McCarthy report on cutting some areas of public spending while defending - at all costs - those in poverty and low pay through no reduction in social welfare.

It places the challenge
'If we are going to have Romanian levels of taxation then we have to be prepared to accept Romanian levels of social services and infrastructure as well as Romanian levels of salaries.'

On the downside, I see major disadvantages in operating within the framework, assumptions and parameters set by Government. In other words, instead of falling into the 'cuts or taxes' and 'right limb or left leg' dilemmas we need to pursue a twin track approach of investing in infrastructure and helping to boost economic activity and, secondly, widening the tax base to bring in our wealthier brethren into the net.

How much does the State spend as a percentage of GDP?

Slí Eile: Earlier this month, at a conference of the National Economic and Social Council, Joseph Stiglitz warned against a single-minded focus on reducing public liabilities at the cost of public assets. There is an assumption abroad (in Ireland at least) that we are ‘living beyond our means’ and ‘unless we cut public spending the consequences will be terrible’. I would be surprised if a majority of persons who think much about these issues, and follow them in the media and in casual conversation, would disagree with the line that says ‘you can’t continue borrowing that amount – €400 m a week or €21bn a year (and rising)’ ‘We are borrowing to pay for 2008 public services with 2004 taxes – 5 into 3 won’t go’ ‘you can’t raise taxes much any more – businesses and hard-earning tax payers are being hammered’ ‘you will scare foreign investors and market sentiment’ ‘we have to take the pain and do our bit to get the country moving’.

None of these popular sayings have anything directly to do with recovery or job creation. Rather, they concern one issue only – ‘the country is bankrupt – we have to sort out our public finances’. By implication this equates to saying ‘we first have to sort out public finances (and banking) BEFORE we can deal with the job crisis. Indeed, many commentators will add ‘by cutting public spending and keeping a lid on taxes we can help the traded sectors of the economy to price themselves back into world markets – the main basis on which Ireland inc can grow again’.

But, will ‘adjusting’ for €4bn in the coming budget achieve its desired goal? Michael Taft has already demonstrated that public deflation will not achieve the single-minded aim of reducing public borrowing by anything other than a very modest amount. I will not repeat the analysis which can be found here.

In short, cutting public spending – especially when targeted on low to mid-income public servants (believe it or not, there are some) and social welfare recipients – will further reduce tax receipts (other things constant) and add to the volume of social welfare payments (other things constant). The fall in retail sales and tax receipts commented on this blog site is connected to the strongly deflationary impulse of the December 2008 and April 2009 budgets. The extent of the impact is unknown and would be interesting to model, empirically, if the latest data and will were there to do it.

One element missing from the debate is a consideration of the following question:
During these traumatic and uncertain times what level of public services is desirable and attainable on various assumptions and scenarios?

So, are we spending too much on public assets?

Using the latest National Accounts data for 2007 (yes) from the CSO National Income and Expenditure 2008, total spending (current and capital) by Government (central and local) was €73.8bn in 2007. This represented about 38.9% of GDP in that year – the height of the boom. Unfortunately, for some reason, it is very difficult to get a comparable estimate of total public spending in 2008 and projected for 2009. The April Supplementary Budget contained a Macroeconomic and Fiscal Framework. Table 7 in that document sets out total projected current and capital spending for 2009 (but not earlier years) and subsequent years. The total of gross current and gross capital spending (before deduction of receipts in each case) comes to €73.6bn in 2009. This latter figure is unlikely to be directly comparable with the National Accounts figure for 2007.

Taking total projected gross spending in 2009 and dividing by GDP in 2009 (using the latest ESRI forecast), you get an estimate of just 45% of GDP. Something akin to this figure has been used by economists such as Colm McCarthy. For example, An Bord Snip Nua reported (page 2) that:

In 2009, gross voted current spending (not including Central Fund expenditure such as debt service costs) will absorb 39.3% of likely GNP, the highest figure since 1983. Total Government spending (the current voted spending figure, plus debt servicing and other Central Fund expenditure, as well as Exchequer capital which includes the payment to the NPRF) will absorb 51.1% of GNP, the highest figure since 1987.

This claim has gone unchallenged and, in the absence of an explanation about how Bord Snip arrived at this estimate, we have to caution against any conclusion that public spending has jumped from about 39% of GDP in 2007 to 51% in 2009. Included in the 51% figure is the pre-payment of some €1.5bn to the National Pension Reserve Fund.

In the absence of reliable and up to date estimates of national and public accounts, the simplest approach is to add up receipts (which are easier to quantify) and then add an estimate for total borrowing in 2009. Social Justice Ireland have estimated that total income including taxes, social insurance, local government receipts will come to €47bn in 2009. If this comes to pass, it would represent 28.7% of GDP (SJI are using a higher GDP estimate to arrive at a slightly lower estimate of 27.4%)

If total borrowing comes to about €22bn in 2009 – as many commentators now expect - then total spending in 2009 is likely to be somewhere in the region of €69bn (current and capital, local and central). That would give a total public spend of very roughly 42% of GDP. I will settle for that estimate in the absence of any better data (readers may point to better estimates somewhere).

42% - sounds like a lot. It is certainly the case that some areas of public spending continue to grow – higher social welfare costs associated with growing unemployment, the cost of the pay increases across the public sector in September 2008, the impact of rising population on health and education services etc. Set against a collapse in GDP (and a spectacular one for any industrialised country since the 1930s), a significant rise in public spending as a percentage of GDP is not unexpected.

How do we close the gap between 42% and 29% (for total receipts of various kinds)? Bearing in mind that GDP will contract by a further 3% at least in 2010 (and arising from this more unemployed and more social welfare payments at current rates of payment), the challenge for any administration is to significantly raise receipts without further deflating the economy, and continue to borrow to cover those components of the deficit that correspond to (i) capital investment (for which money is usually borrowed anyway, even in good times – roughly €10bn per April figures), (ii) current spending and tax shortfalls associated with the downturn (welfare payments and reduced tax receipts) – estimates vary but could be €6bn. The remaining gap could be in the order of €6-7bn – the structural element. I think that there is a case for continuing to run a deficit of about €15bn per annum – or about 10% of GDP in 2010 - while re-targetting public spending on job-creating and job-retaining projects and maintaining the real values of social welfare payments (any short-term gains made as a result of modest HCIP falls in 2008-09 are more than cancelled out by reductions in wider social provision, plus likely impending price increases in 2011 as prices recover). The ‘structural gap’ of some €7bn needs to be tackled through a combination of measures:

Capital taxes
Income tax base widening
Tax-relief reductions (especially the most inequitable)
Local taxes
Income tax surcharges on very high incomes
Corporate tax increases to 15% and pegged for 5 years.

Yet again, we hear the often repeated claim that the yawning public sector deficit has nothing to do with the banks and NAMA. For one thing, we would not be as much in this mess were it not for the banks (thanks for the apologies emanating from Kenmare). In the second place, the recapitalisation cost of the banks is exacting its own ‘opportunity cost’ on public finances. Don’t take my word for it. The Department of Finance has revealed that:

At end-September 2009, the Exchequer deficit is €20,158 million, compared to €9,404 million at end-September last year. The year-on-year deterioration in the deficit of some €10.8 billion is primarily explained by a decline in tax receipts of €4.8 billion, the €4 billion payment to Anglo Irish Bank and €1.7 billion in respect of the frontloading of the annual contribution to the National Pensions Reserve Fund (NPRF).

A parting thought - now, suppose that the world is headed towards a double-dip recession with a downward shock to world trade and sovereign defaults spreading across Europe – what would that mean for Irish exports, for Irish tax receipts from VAT and income – and for public spending on education, health and social welfare? However unlikely such a doomsday scenario looks, it is worth bringing together a number of ‘what if’ scenarios ranging from rapid economic recovery from 2010 onwards to double-dip world slump in 2010 (and L-shaped recession for Ireland which I think is the more likely as our key trading partners pull out of recession next year and we are left to clean up on debt, NAMA and the prolonged deflationary impact of Budgets 2008-2010 and beyond).

It is not a pretty sight and nobody knows for sure what is going to happen next. Not good for confidence, trust, and job-creating investment and consumption.

We need a change of direction politically. All this deflation stuff is not good.

Social Justice Ireland launched

Slí Eile: Social Justice Ireland has been launched. See its new website.