This is Part Two of a three-part blogpost on political remuneration in Ireland. Part One was published last weekend, and is available here, it focuses on the detail of salary and benefits and has been updated with some new information since last weekend. It’s worth saying that the value of the Oireachtas pension which costs TDs and senators 6% of their salary each year, has yet to be calculated but with life expectancy for men at 77 years and women at 82 years, average returns on private pensions of 1.1% per annum between 2001-2011, a guaranteed 50% final salary scheme based on 20 years service, and a generous lump sum arrangement, I can’t see how it would cost less than 20% of annual salary in the private sector.
There is now going to be a Part Three following the acquisition on here of details of political expenses paid for by the grants provided by the State to political parties – politicians, it seems, aren’t limited to direct payments for their political income; the information is presently being analysed. Part Three will also examine the failure of the mainstream media in Ireland to report on the cost of the political system and the lack of transparency over how our money is spent, and with whom it is spent.
Part One allows us to, for example, challenge ministers when they claim their salary increments are justified because, upon being promoted to the office of minister, they lose the Travel and Accommodation allowance that applies to TDs, because in response, you can say “but then you get a new dual abode allowance which allows you to buy a Dublin home, an annual unvouched tax free allowance of up €6,500, plus two drivers plus a mileage allowance of up to €1.14 per mile plus hotel, service charge, overnight subsistence and even a gift allowance”; and judging by the Ruari Quinn mileage expense claim reported last Sunday in the Mail, the mileage allowance is not subjected to the tightest scrutiny. You can also ask someone like the affable Mick Wallace, what we get in return for a €92,692 salary, a gold-plated pension, a personal representative allowance of €15,000 (unvouched) to €27,000 (vouched), a travel allowance of €32,966 (Mick being 130 km from Leinster House), an independent’s allowance of €41,152, a secretarial allowance of €41,092 an €8,000 grant for a constituency office, termination payments, free facilities at Leinster House etc. And let’s not forget Mick’s well-publicised distractions in dealing with his own extracurricular businesses. And you might ask if the €250,000-plus potential annual cost of Mick, as unconventional and decent a man as he no doubt is, is good value for money.
There has already been a blogpost on here comparing the cost of our politicians with those in our nearest neighbour, the UK, which of course is not in an IMF programme, is a sub-Superpower with nuclear energy, which has control of/responsibility for its fiscal and monetary policy, whose economy is 10 times bigger than ours and whose political constituencies are three times bigger than ours (average Irish TD looks after 27,500 citizens, average UK MP looks after 95,000). That the emperor has no clothes is not just apposite for Treasury Holdings.
Personal Reward (Sinn Fein and United Left Alliance)
Whilst messages from this blog to the two parties that comprise the United Left Alliance (ULA), namely the Socialist Party and People before Profit parties, weren’t responded to, it is claimed in the media that the four TDs from these two parties adopt a remuneration policy similar to Sinn Fein’s. I don’t wish to offend anyone’s political loyalties, but a general statement on the matter, perhaps on the two parties’ websites might clarify the matter. With respect to Sinn Fein, each deputy and senator is paid the average industrial wage of €34,000 and then, personal tax and PRSI is paid on this €34,000 – typically the TD will end up with about €25,000 net. The rest is used at a local constituency level for party activities and that typically involves the employment of political activists. Sinn Fein has no special policy on pensions, but that party has the dubious privilege of not having to deal with it – in this Dail there are 14 Sinn Fein TDs, in the last Dail there were only four (five when Pearse Doherty was elected in November 2010), and in the previous Dail there were five, and before that just one. As far as I can see, Arthur Morgan (now aged 57) is the only past Sinn Fein TD and we don’t know what his pension arrangements are, but with only nine years service between 2002-2011, a salary of 9/40ths of €92,672 will not be significant even at age 65. Sinn Fein claims actual expenses only, as opposed to vouched expenses.
So given the straitened times we live in, it seems that Sinn Fein and the ULA are heroes in their personal sacrifice. Having said that however, the gross cost to the State of Sinn Fein and the ULA is exactly the same as any other party. And the second aim of this blogpost was to highlight the cost of our political system.
Part Two
Part Two is aimed at placing these political costs in context and examining the damage done to society and the economy by our gobsmackingly overpaid politicians. Again, the country needs presently borrow €300m a week to fund the difference between tax collected and state expenditure. Even in 2015, if all goes to plan, and we have a 3% deficit, that will still mean we need borrow 3% of €170bn, or €5bn a year or €100m per week. We are facing into a further four years of austerity/reform and by comparison with 2011, we will need adjust our budget annually by €12.4bn in 2015. With respect, if anyone thinks we will avoid a substantial household charge, university fees, cuts to public sector salaries, cuts to basic social welfare rates, cuts to frontline services, increases in mortality rates/class sizes/crime and reductions in education standards/crime detection rates/ available hospital beds, not to mention tax-rate increases and a wealth tax, and perhaps even an increase in corporate tax rates, then I think you’re deluded. €12.4bn is the annual adjustment needed, and that assumes economic growth which is far from certain, and assumes we will be able to borrow money to fill the €100m-a-week deficit in 2015. And it should be said that this is required regardless of bank bailout costs.
With a €12.4bn annual adjustment needed, the three main criteria for individual adjustments will be that they are undertaken quickly, efficiently and fairly. “Quickly” is easy to understand and measure, “efficiently” is less clear because there will be argument about cause and effect – do you raise VAT which drives down demand? do you cut public sector numbers or can you employ the same number with lower salary? how much can you tax wealth without it emigrating? – but it is the term “fairly” about which there will be most argument, and each of us has our tribes and vested interests and corner to fight. But “fairness” might objectively balance “ability to contribute” with “damage to the economy”. So a wealth tax akin to France’s or Italy’s may be needed, but any tax needs to take account of consequent behaviour and if you tax too much, the income or wealth may absent itself from the economy and since we don’t have capital controls or a Warsaw Pact approach to the free movement of people, any changes need to be sensitively considered.
Leadership
But in this war – and the fact that this country can’t pay its way is the greatest threat to our notion of sovereignty, so “war” is apt – to reduce the deficit, we need leaders. And our political leadership cannot continue to draw such plutocratic sums from the public purse whilst seeking to impose austerity on the rest of society. Or if it does, we end up with an unfair society, “the sow that eats her own farrow”, social unrest which at one end of the spectrum results in economic loss through days lost and low-level disorder and at the other extreme sees the collapse of law and order and loss of life and, mass emigration again and a place where the majority don’t want to live.
Turning to our leader, I should start off by saying I have no small amount of respect for An Taoiseach of the country, Enda Kenny. He leads a strong government not compromised by the whims of independents or dissidents at every turn. He has a rotten economic situation to deal with, and he hasn’t buckled under his responsibilities. He is the “father of the house” in the sense he is the longest-serving politician in the Dail, and that is no mean feat in this country. He seems to have a good sense of what is needed to keep his subordinates and his coalition partners in acquiescent equilibrium. And with respect to the theme of this blogpost, it should be remembered that one of the first actions undertaken by An Taoiseach in March 2011 was to reduce his own top-line salary and the salaries of An Tanaiste, ministers and junior ministers by 6.6%, which in An Taoiseach’s case meant a reduction from €214,187 to €200,000. And remember that only back in 2007, the top-line salary for then-Taoiseach Bertie Ahern was €310,000. And you might also have sympathy for the fact that An Taoiseach is meeting with people every day in this society and economy who earn a multiple of the taoiseach’s salary but with a fraction of the burden of responsibility.
But how can An Taoiseach ask for more from the nation, when his own rewards and those of his administration and his political system remain untouched? How will he answer critics in the US during his St Patrick’s Day visit when this year, he is likely to face questions on his salary from politicians in a country that is a big donor to the IMF, and doesn’t understand how a bankrupt country with limited options can afford to pay its political leadership sums which would appear excessive even in the world’s biggest economy and sole Superpower. In theUK, will opponents to the encroachment of Europe demand answers from their leaders as to why theUKis loaningIreland€4bn so as to pay such enormous sums. Perhaps this is the international agitation that is needed to focus politician’s minds here…
Part Three will be published next week.
(Graphic above produced by Japlandic.com, contact here)
Cash rich and morally bankrupt
While Cowen & Bertie topped lists all over the world spending less money then Fianna Fáil is no achievement. Who is to have sympathy for the Prime Ministers who regularly meet a Taoiseach earning a multiple of their salary but with a fraction of the burden of responsibility? Russia, Israel, UK
Great work, if only you guys where looking into Anglos \debt/ , sorry our debt.
Though i also think ArturCox and co would be worthy too
“And with respect to the theme of this blogpost, it should be remembered that one of the first actions undertaken by An Taoiseach in March 2011 was to reduce his own top-line salary and the salaries of An Tanaiste, ministers and junior ministers by 6.6%, which in An Taoiseach’s case meant a reduction from €214,187 to €200,000.”
I’m reluctant to post this because I can’t find the link to prove my point.
But I think this site mentioned that the political parties get c.€14M annually from the public purse to keep themselves afloat. From this, FG got c.€3M and FG gave Mr Kenny c.€50k.
So his official salary dropped by €14k (and he gave a press conference) but he got a top-up (was going to write dig-out) from HQ for €50k. There was no press conference about that…
Why compare with uk? why not compare with country of similar size and pop.?
Any wonder that Sinn Fein is doing well in the polls.
Thanks for these posts NWL. You’re practically the only public figure who is discussing serious issues in a rational and informed way.
Amen. The nonsense that comes out of the mouths of most politicians, economists, and media PR men evaporates in the face of the simple arithmetic of where the Irish State now finds its finances. €300m a week means we need to raise around €150 a week from every working age person in the land to pay run the country as it stands.
You’re worth three national newspaper editors NWL. The country needs leader now moreso than at any other time since the foundation of the State.
But worse I would argue than their fiscal irrectitude has been Enda Kenny’s cabinet’s repeated declarations that they are not the sovereign government of the land. Their abject capitulation to the great powers of Europe and beyond has been the most craven and irresponsible act of all. I’m not sure anymore if these people are capable of leading the Irish people, much less worthy.
And you’re worth more than the entirety of our indolent national commentariat besides.
In recent months, I have begun to question whether there is even a basis for civil society or indeed civilisation in Ireland anymore. We have become a brutal, dog-eat-dog society in which cronys, kelptocrats, and plutocrats reap the benefits of power at the expense of everyone else. But my fear is that this has become the accepted model of society among the Irish governing and intellectual classes. They have internalised injustice and inequality.
President Micheal D. Higgins’ recent speech at the LSE highlighted just how dangerous and destabilising our civic and intellectual crisis has been. We have replaced notions of citizenship and state with those of choice maximising consumers operating in an anarchical market system. More frightening than this state of affairs has been the acceptance of it by our governing classes. They have failed to contemplate, let alone articulate, an alternative vision of economy and society.
I fear that by their indolence and excess, the present Government are precipitating reactions which they may not be able to control.
@ NWL In relation to your comments about Sinn Féin and the ULA, if as they say they are giving the balance of their salaries to their parties, then a) their parties should return the balance over the donations limit to the State. They have not done so.
The only political organisation to make such a payment to the State was Comhar Chriostaí, a fringe group.
Based on the evidence, it is therefore clear that either a) the deputies/MEPs/Senators are lying or b) their parties have committed a fraud on the State by not returning the excess over the donations limit to the State.
Please see the 2009 SIPO return as evidence http://www.sipo.gov.ie/en/DonationsDisclosed/PoliticalParties/Donationsdisclosedbypoliticalpartiesfor2009/Name,13816,en.htm.
It should be note that the Trotskyite Mr. Higgins was drawing his Dáil pension at the same time as being an MEP, leaving a substantial balance over the limit to refund to the State.
In 2009, Pearse Doherty was a member of Seanad Éireann and did not disclose any donation to Sinn Féin.
@OMF.
The late English historian, Alexander Tytler, has some fascinating writings on this subject. it does have obvious and potent implications today:
“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government.
A democracy will continue to exist up until the time voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by dictatorship.
The average age of the world’s greatest civilizations from the beginning of history has been about 200 years. During those 200 years, these nations always progressed through the following sequence:
From bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back to bondage.”
We’re currently moving from dependence to bondage.
There are already subtle movements in closing the deficit gap, and this involves the removal of civil rights.
One example, the annual TV license fee which is now compulsory for each and every household.
This is a infringement of peoples civil rights. Regardless of whether a household has a TV (or receiving apparatus) they must pay. THIS HAS TO BE UNCONSTITUTIONAL.
The excuse that most households have broadband and therefore can watch TV content on the RTE website applies to all citizens on planet Earth. So why should people living in Ireland be obliged to pay when the rest of the Earths population pay nothing?
The fact that journalists refer to people who do not have a TV license as cheats is a disturbing development.
Another example, people who are unable to pay motor tax on their car, these are also described as tax cheats, despite the fact that the vehicle is off the road. Motor tax is over 2200 euro / year for some vehicles. Even a two liter car is up to 660 euro per year.
So perhaps those people who have no car, or those who own small cars, are they to be described as tax cheats? What about people who drive older cars? Could they be described as tax cheats, because if they bought a new car every year it would raise more revenue to the Govt.
We are have past the age of austerity, we are now into the age of injustice.
@ Sporthog
You should get your facts straight.
You don’t have to pay a TV licence if you don’t own a TV or if you look at telly over the internet. That’s the whole point of Pat Rabbitte talking about bringing in a type of household broadcasting charge to cater for those situations where viewers are not obliged to pay the licence.
Also, if your car is off the road for a considerable length of time there is a mechanism to legally avoid paying road tax during that time. I don’t have the specifics (I think you have to get a form stamped by the Garda) but I’ve no doubt a Google search would set you straight.
@ Bunbury,
Charming, absolutely charming old boy.
One of the mainstream news papers in Ireland frequently describes owners of untaxed cars as tax cheats. That’s not my opinion, that is what I have actually read in print.
Of course the current law is that your vehicle must be taxed provided it is in a public place. If your vehicle is untaxed but on private property the owner is of course within the law. But the media prefer to describe these people as motor tax cheats. The fact that the owner may be dead, or too poor to put fuel in the vehicle is of course irrelevant, they are tax cheats in the eyes of the media.
Currently there is a form (RF100 I think) in which you can make a declaration in a Garda Station in which you can declare that the vehicle is off the road for X number of months, therefore the owner does not have to pay motor tax arrears. But this is only used when taxing a vehicle which has been off the road for some time.
If what is printed in the newspapers is true, efforts are being made to change the current motor tax requirements, so that if you own a vehicle, motor tax must be paid whether the car is off the road or not. This I believe is fundamentally unfair to the owner.
In relation to the TV license, one must hold a TV license if one owns a receiving apparatus, (not a TV, a receiving apparatus, big difference).
Again if what our esteemed journalists write is true, efforts are in hand so that in the near future a household must hold a TV license whether they have a receiving apparatus or not.
So if what is written in various media reports is true, in the future one has the choice to drive a vehicle or not, but there will be no choice in motor tax payment, payment must be made. In the future household can choose to have or not to have a receiving apparatus, but they must still pay the TV license.
This I believe is fundamentally unfair and unconstitutional to the Irish citizen.
@ NWL
I just read Stephen Collins in yesterday’s Irish Times. Short version: how dare you or anyone else contribute to public cynicism by questioning what TD’s earn. Apparently, if we don’t continue to pay these high salaries and expenses we’ll only get the very rich or the very corrupt to go forward for election (last paragraph of the column).
You wouldn’t know where to begin to analyse Collins’ contribution. It was news to me that, to date, we’ve never got either the very rich or the very corrupt in the Oireachtas even with the high salaries and lucrative expenses. Also, there is no consideration by Collins of the effect of paying an entirely reasonable basic salary equivalent to, say, that of a school principal’s with vouched travel and office expenses. Would a school principal’s salary eliminate all but the very rich and the very corrupt from running for office?
@Bunbury, to claim that reducing senators/TDs salaries would exclude all but the rich or corrupt is lazy reporting and seems lifted from the expenses scandal across the water a couple of years ago. What salary and benefits are needed to attract competent men and women to fulfill the average Irish politician’s duties for a constituency of an average of 27,000 in a country with 14.2% unemployment? Are politicians chosen by our neighbours in the UK inferior to our own? less hard-working? less committed? less articulate? more corrupt?
Whilst not claiming that the average industrial wage is appropriate for the skills needed for TDs and senators, it’s worth noting that in the Irish context, we have 14 Sinn Fein who get €34,000 gross from which tax and PRSI is deducted, and political expenses are vouched. And it is understood from media reports that the 4 ULA TDs also survive with the average industrial wage.
Given SF’s 25% poll rating in the Sunday Times today, and part of the “other” rating of 17% will relate to the ULA, if replicated in a general election tomorrow, perhaps one third of all TDs would be prepared to accept the average industrial wage and vouched expenses. Now perhaps the average industrial wage doesn’t adequately compensate a politician for the range of skills required for the job, but when the country is bankrupt and facing into painful austerity these largely untouched salaries and rewards are gobsmackingly hypocritical.
Someone might challenge Stephen Collins to justify the present level of salaries and allowances in comparison with our neighbours.
NWL, thanks again for your work on this. In the end, however, I think you will want to be more specific about what allowances should be cut / what the correct salary should be / if you think the parliamentary assistant position should be removed etc. Also, what if any distinction you make between the various expenses – are they all “rewards” or do we in fact want to have TDs with parliamentary assistants, with some sort of payment for a constituency outside Dublin? If you dont think the average industrial wage is the correct amount, say what you think it is. If you think constituencies should be larger, you will find that many Irish people may disagree.
In other words, on with thinking about what payments are unnecessary / too much – that’s the hard part – rather than going on about hypocrisy. You were willing to say that the NAMA chief exec was worth his pay (I assume you would think so, even if a SF representative would offer to do the NAMA job for €25k??) – but in relation to the people who appoint the NAMA chief exec, it’s too much anger and too little analysis.
On last week’s post, I included a link to a UK Parliament research paper on allowances / expenses in various countries. You may be interested.
And – finally – although the populism is fun, it is worth recalling that the real fiscal problem in Ireland is the fact that the average wage earner on €25-35k pa is almost entirely exempt from taxes on income, even now. We have in fact had much more progress on reducing the incomes of our politicians than we have had on properly taxing the income of average earners. The latter is the more serious challenge.
@Otto, to take your last point first, the blogpost above
“With respect, if anyone thinks we will avoid a substantial household charge, university fees, cuts to public sector salaries, cuts to basic social welfare rates, cuts to frontline services, increases in mortality rates/class sizes/crime and reductions in education standards/crime detection rates/ available hospital beds, not to mention tax-rate increases and a wealth tax, and perhaps even an increase in corporate tax rates, then I think you’re deluded.”
You’re right, and if we are to adjust €12.4bn annually, the income tax on average earnings will, in all likelihood, need to increase. But you only do that when you have tackled higher earners where cuts/taxation are unlikely to damage the economy, or at least where the cuts/taxation are worth more than the damage to the economy. And as someone pointed out last week, in the context of a €12.4bn annual adjustment, even if we halved TDs salaries and allowances, the saving would be a drop in the ocean, but that’s where the concept of leadership comes in, and specifically leading by example so that you can look your constituents in the eye when you come to impose more cuts or increase taxes.
What should a TDs reward be? What package is required to attract men and women who can competently perform a TD’s role? In a country which is bankrupt? What expenses should be provided to a TD so as to perform his or her role? Seems like looking at our neighbour’s rewards might be a good place to start.
Increasing taxes on the average earner’s incomes is not just one of a few bits and pieces like university fees, class sizes or closing a barracks – it’s the essential and unavoidable fiscal challenge of the crisis. See this, for example: http://www.kearon.ie/?p=415 . Nor is the case of “only doing that” when you have tackled other things or when TDs salaries have been cut persuasive. TDs and ministers salaries have in fact been cut a lot, without making any real progress in terms of increasing tax on average incomes. The essential challenge has to faced head on, persistently, without cluttering it up with only-after-this, only-after-that.
“What should a TDs reward be? What package is required to attract men and women who can competently perform a TD’s role? In a country which is bankrupt?”
Again with the “reward”, as if all the costs involved can be described as rewards to the office holders. They can’t. And again with the “in a country which is bankrupt”, as if that had much to do with it. The NAMA chief executive is “in a country which is bankrupt too”, but you’re a-okay with his €300k+ salary. Try to demonstrate that you are thinking as critically and carefully about recruitment of the NAMA boss’s bosses as you are about the recruitment of the NAMA boss.
@Otto, the “only-after” standard reflects leadership, and lead-by-example. Cuts to social welfare rates and cuts to public sector salaries and numbers including frontline are just as important, in my view, as tax increases for average earners. But if you have leadership, you have a leader who demonstrates that these changes are imposed “only after” cuts and taxes are imposed on higher echelons when you have a quantum of adjustment as we have in Ireland.
“bankrupt” has everything to do with our situation. If you don’t have the money, you don’t spend it *unless* you can demonstrate the cost/benefit which tells you that the cost is worth it, and even then you must be ruthless. So with NAMA, if the €25k Sinn Fein volunteer mentioned above can do the job as well as the NAMA CEO, then that should be supported. But does anyone believe that to be the case? Now say you proposed a €100k cap on the NAMA CEO’s job, what would the consequence be? I’d guess Brendan McDonagh would say “sod this, there are easier ways to earn a crust” and he’d be gone. And if you offered €100k for a replacement what would you get? I’d guess no-one with experience and track-record. And where does that leave you?
Would our politicians be deterred by say a 25% cut in salary and allowances. Would existing TDs withdraw from politics to an occupation which would generate more income and personal satisfaction? Would their replacements on lower salaries and benefits be materially inferior? Would An Taoiseach say that his reward of €200,000 plus benefits plus party subvention say “sod this, there are easier ways to earn a crust”? Experience in our nearest neighbour suggests not.
“Reward” is a synonym for “remuneration” or “salary and benefits”. I use it all the time in the context of the private sector.
off topic sorry:
Everyone
What a mouthwatering topic we face….
China and NAMA.
Wow.
Our finest journalists left it to a poet to be first to raise the red flag.
Could it be?
Looking forward to Part Three. It’s probably fair to say, at this stage, that the consensus amongst your readers is that our politicians are overpaid (forgive me if part three reaches the shock conclusion that they deserve more). I was wondering: at what point would this become an issue worthy of debate in the mainstream media? Sadly, it appears as though the views of the lowly blogger are unworthy of mainstream media consideration (i.e. the self-ordained opinion formers).
One smallish clarification – post 1994 public servants (which would apply to most TDs) pay PRSI contributions and are entitled to social welfare including state pensions. Therefore to compare like-with-like the amount of state pension (contributory) should be minused off their entitlement to pension if you are to compare with workers in the private secotor. (As provate pensions are net of any state pension.)
@Juggernaut
You mean the TDS get a State contributory pension on top of the full TDs pension? Surely not.?
Is this the case with the PS (post 1994) or is the State contributory pension deducted in calculating the PS pension?
“bankrupt” has everything to do with our situation as a whole, but nothing specially to do with the remuneration of TDs in particular, any more than the NAMA chief. We might need to e.g. increase the wages of certain sorts of surgeons in Ireland, even under the current overall budgetary difficulties, if that’s what we need to do to get people to move here to fill certain positions. We need better TDs than the jokers we have enjoyed in the past – how do we get them?
“reward” or “remuneration”: do you refer to the secretary that works for a manager in an office as part of the manager’s reward or remuneration? Usually not, I think. But here you are listing secretarial allowances as “rewards”. You are even listing the use of free facilities in Leinster House, as if workers usually pay for their offices. Even travel payments for e.g. salesmen would not usually be considered either salary or benefits (mileages were more-than-cost, as they can be of course). So, using your own criteria, many of the costs you mention are not “rewards”.
Finally, the top of post image of TDs as Pigs etc is really quite misleading and casts a tabloid glow on the rest of the analysis. TDs and Ministers have taken large cuts. You correctly mention Enda is getting €200k instead of the €310k salary of five years ago. There are lots of people who are more untouched by the crisis than ministers and TDs – the employees of semi-states for example, and I am sure a rather lengthy list could be created – and the average earner – those still in employment, to be sure – still lives a near income-tax-free existence.
Politicians have taken cuts, but their remuneration was so inflated that even still they are getting paid over the odds. Or do you feel that, on balance, their pay rates are equitable (in a small, bankrupt country with a mismanaged economy)?
Let us separate a few different things:
1. The remuneration of politicians should be cut, especially as regards overgenerous allowances from which TDs can ‘profit’. I suppose I am tempted by the view is that we will get the same band of political families no matter what we pay them, which suggests a large salary reduction. On the other hand we do want people who can get high earnings outside politics to consider a political career – leading lawyers, doctors, even economists – and they will not do so if the salaries are too low. In fact, the Irish political system already has too few TDs of this sort. On the third hand, it is the electoral system perhaps, and not the remuneration arrangements, which really drives/distorts recruitment.
2. That the country is bankrupt relates to overall spending, and not TD spending in particular. See discussion of the NAMA boss’s salary above. We should spend what we need to (but not more) on TDs remuneration, remembering that we want in the future to have better TDs and a better managed economy.
3. Even if the pay of TDs should be further cut, that does not validate NWL’s presentation or the cartoon at the top, which suggests that TDs have taken no cuts while enforcing large cuts on every else. Rather, TDs and Ministers have taken large cuts, many in Ireland have taken none at all, and – despite cries that the ordinary people of Ireland are being shafted – the ordinary wage earner in Ireland pays almost nothing in terms of taxes on their income. NWL’s presentation is partly offering a serious analysis of an important topic, and partly pandering to populist claptrap. It would be better with less of the latter.
“unless mileages were more-than-cost”
If it helps sharpen your thinking, you might want to consider how to encourage competent technocrats like Brendan McDonagh to stand for election to the Dail …
@NWL you mention that the nation was simply starved for appearances,you may enjoy this!
http://forum.iop.harvard.edu/content/public-address-taoiseach-enda-kenny-prime-minister-ireland
@ Otto
I really do not know where to begin. I’ll throw out a couple to start. Your comment about the average tax payer not paying any taxes; and, thus not contributing a fair share, is one of oldest and most specious arguments around. First of all, the average tax payer does pay taxes and they are going to pay a lot more. Not paying a fair share is what is truly inequitable. And, if you think Ireland, or any other place on the planet, is solidly founded on a sense of meritocracy then I have a bridge in Brooklyn I want to sell you.
The crazy argument that cutting the politicos’ salary is not worth the trouble because it will only make a small dent in the overall deficit is fitting of the defense used by the bank clerk robbing only a few thousands that the bank can afford to loose.
As far as populism being fun, I can tell you what is not fun. An oligarchy based old boy’s club that produced the greatest economic collapse in modern history. If you think I am exaggerating, just wait. I have a funny feeling that you just might be John the Optimist with a new angle.
There’s nothing specious about the claim that the average earner pays almost no taxes on income in Ireland. See the link in my earlier posts using 2012 figures or, separately, two 2009 posts by Ronan Lyons, one of which includes family cash transfers.
http://www.ronanlyons.com/2009/04/27/are-irish-workers-undertaxed/
and
http://www.ronanlyons.com/2009/07/28/a-little-quiz-on-irelands-income-tax/
I didn’t make the argument that cutting TD/ministerial income is not worth the trouble, just that we should be aware that it is not fixing the main problem, and should not be a distraction from fixing the main problem esp the massive undertaxation of average earners’ incomes in Ireland.
And on the moral authority / leadership element, with TDs doing nothing and imposing massive costs on everyone else, as I say it’s much more complicated than many argue because 1. TDs and Ministers have taken big cuts already 2. there are lots of people in Ireland who have taken no cuts at all (the list is long, but semi-state workers would be the most obvious example) 3 many are under the illusion that they are making big contributions – like average earners – when the income taxes they pay suggest rather that they are far from doing so.
By specious, I was referring to your inference that by not paying income taxes on average income (34,000) that makes one some how automatically a privileged citizen and not paying their fair share. Of course there are lots of people in Ireland on average salary who do not pay income tax. Comparing that to what goes on in the Dail from a point of equity and morality is ludicrous.
@ Otto,
I would be interested to hear your opinion on the proposed changes to the motor tax and TV license fee issues I raised above. Do you think they are unfair and an infringement on the civil rights of each Irish citizen?
@ Otto
I certainly don’t begrudge politicians a decent wage and legitimate, vouched expenses should be paid. I doubt that anyone contributing to this blog believes politicians should work free of charge or, given that the national parliament is located in Dublin, that those living long distances from the Dail, should not be entitled to some type of travel or overnight allowance.
That said, the reality of modern life in Ireland at the moment is that tens of thousands of workers are commuting long distances to their jobs every day (some even to the UK and only see their families every second or third weekend) and they don’t get travel expenses. I guess most are just glad to have a job and hope that something better will turn up in time.
What I object to is the high salaries (by any international comparison), numerous additional allowances (who knew Michael Lowry got a leader’s allowance on top of his TD’s salary?), severance payments, and unfunded pensions paid out of current revenue. All this is paid while TD’s merely go to the Dail to rubber-stamp the cabinet’s decisions.
While these high salaries continue to be paid, TD’s have no moral authority to impose or defend cuts to vital services or the increased taxes and charges that are inevitably coming down the line.
One facet of funding which should not be overlooked is the level of resources provided for research and analysis. TDs who serve on Committees are faced with highly trained and experienced lobbyists, civil servants, union officials etc and it is clear that in many cases they are no match for the well-resourced parties they have to deal with.
You should attend (or watch a podcast) of say, the Public Accounts Committee, to see how poorly it works. They can be rambling, shambolic, and unfocused. TDs wander in and out seemingly at will and when present (and off camera) they spend their time idly texting or fiddling with something. It is excruciating to have to sit through a half hour of poor and unfocused questioning only for a TD to wander in from stage left and start all over on the same unproductive line of questioning. The Chair seems to assert no authority or control on what is simply downright rude and arrogant behaviour. All in all it is extremely frustrating to watch and very bad value for the taxpayer.
In fairness, the level of backup and resources given to Irish TDs is nowhere near what is available to counterparts in the US Congress or the Commons, thanks, of course to the disempowering agenda pursued by Government and the higher civil service. Nevertheless, a little more professionalism and efficiency in the running of Committees would be no harm and could enhance their credibility and claims for more resources.
@PTMIM,have to say the PAC has been excellent with trying to extract information from NAMA.As good as any US Congressional Committee,but they may be getting some pointers from NWL,which in no way is meant to diminish the great work they are doing.
One of the worst episodes at the public accounts committee in 2011 which has carried into 2012 was the investigation of the €3.6bn (later €3.719bn) error in the General Government Debt. It was very disappointing to see decent enough politicians fail to pin the Department of Finance down and get answers or at the very least a strict timetable to get answers. Four months later, Kevin Cardiff has had his leaving party/wake and there’s still no response.It was also disappointing to see the Committee identify the potential conflicts in having the Secretary General oversee an investigation into his own Department, and then allow it to progress anyway. No amount of special advice in the world would have assisted the Deputies and Senators, this was basic cop-on.
There appeared to be a general lack of enthusiasm evenly spread across the political spectrum,Noonan postured a bit,then dropped it too.Corrigan from NTMA had his Teflon suit on again.The answer/solution was to be get Kevin to Europe quickly……….
Er, Jake, you seem to be a shifting target, but, yes, if you are on an average income and paying near zero taxes on income, you are not paying your fair share and need to pay much more, if Ireland is to fix its fiscal crisis. From the Ronan Lyons post, the standard rate for European democracies seems to be about 18% net tax on income, after family cash transfers, and we need to move to something like that.
Otto,
Sorry about moving around, I’ll try to be a stationary target. In the USA, where I have quick numbers, the average salary in dollars is roughly that of Ireland, $40,000. Taxes paid for a family with two children would be approximately $1,700. This is with standard deductions, i.e. no mortgage deductions, medical etc. Off the top of my head, I have visited both countries in the last year, the cost of living in Ireland for the basics is easily 25% higher than the USA. As such, I do not see this as a massive under payment of taxes by the average Irish wage earner. I think you might want to take a gander at the Channel Islands if you wish to see a massive amount of tax underpayment or maybe at the Irish corporate rate or maybe even our good friends at Google who paid a rate of 2.4%. I believe you can find one of their offices in Dublin, no? I think you locals call it the “Double Irish”. http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html
Jake, thanks. The US case makes is clear where you are coming from. IIRC, the US tries to run a fiscal policy of about 18-20% of GDP being spent by the federal government. Whereas here in Ireland, we are more in the 40%ish range of a European welfare state. The former system may be possible to run with almost no taxes on income paid by the average earner (though I wonder if you are including social security taxes in your $1700 estimate), the latter, European norm certainly cannot be, as all our neighbours show. So yes, the Irish average earner needs to contribute a lot more, and they are currently getting a free ride on taxation of income. (Income tax for higher earners in Ireland is already much more than in the UK, and therefore much much more than in the US).
Here are some US numbers.
“Here’s how to read this: 40 percent of taxpayers with incomes between 30K and 40K pay more than 12.9 percent of their income in income and payroll taxes; meanwhile, 25 percent of people with incomes over $1M pay less than 12.6 percent of their income in these taxes. This suggests that there are a lot of very-high-income guys paying a lower tax rate than their secretaries.
And that doesn’t even take into account state and local taxes, which are quite regressive.
Taken as a whole, the US tax system is probably somewhat progressive — but not as much as you might think, especially at the upper end, and very erratically. There are a lot of rich people basically free-riding on the system.”
http://krugman.blogs.nytimes.com/2011/09/21/millionaires-the-middle-class-and-taxes-actual-numbers/
@JG
Krugman is being disingenuous, which is not uncommon for him. The 40% are people with only one standard deduction, single. The 25% are people with clever tax lawyers and lots of deductions. The average income tax paid by the 30k to 40k is not even close to 12.9%. Notice he includes payroll taxes, social security, with income taxes. This effectively doubles the tax rate for low income 40% and is capped at around $120,000 income, which greatly benefits the high earners.
I see An tUasal ÓSnodaigh has been moonlighting as a printer http://www.boards.ie/vbulletin/showthread.php?t=2056562050.
@Niall, yes it doesn’t look good and as I suspected the allowances shown are the tip of the iceberg. I have updated the first part of the blogpost with the toner allowance (€2,000 a year for TDs and €1,300 for senators)
What confuses me about the reporting is (1) standard toner cartridges at 5% print coverage of a page will print 3,000 pages, high yield will do 6-7,000 pages so 2-3 toner cartridges should get you 6-21,000 pages single sheet letters and (2) A ream of A4 paper is 500 pages so was Aengus taking 12-42 reams a day for his printing and at 80gm2 (standard office) each ream would weigh 2.5kg and at 134 g/m2 (letter quality) weighs about 4kg per ream so was he taking 30-168kg of paper each day as well?
It doesn’t look great, though I understand Aengus has defended himself on radio this morning saying the toners were used for constituency work and not for election material which is banned under the rules.
He could have been taking toner on behalf of other Sinn Fein offices around the country, or even other organisations affiliated with Sinn Fein(not just the usual) and gifting it to them.
I find this level of printing incredulous for one constituency office. The toner cartridges must have been ending up elsewhere.
Yea, I was interested in the paper and enevelope usage which you have now quantified. Presumably, the Dail can confirm this usage and/or he has receipts to back up the purchases.How can any politician expect to possibly write up, print and deliver the equivalent of 10k leaflets a day, day in day out for 49 weeks a year? Weird.
Maybe this is why there is a lack of understanding by those with their snouts in the trough!
When people talk about “printing money” these guys think… “But we get our allowance for print cartridges already, what’s the problem?”
We could talk a walk into the surreal and imagine a co-ordinated effort by TDs to stockpile print cartridges in the Irish Mint… Turning €2,000 into €2,000,000?
Maybe he was just doing his patriotic duty?
@ NWL,
A mileage allowance of 1.14 / mile would appear excessive. In fact a cut off point should be introduced, perhaps 120 Km. If your journey exceeds 120Km one should be using public transport.
For example a modern diesel car can do 50 miles or more to the gallon of fuel.
Some can even do more, getting closer to 60 mpg. If diesel is currently 1.6 / liter, that’s 50 miles X 1.14 = 57 euro, despite the car only burning 7.2 euro of fuel (4.5 X 1.6).
There are ancillary costs, ie servicing the vehicle, tyres etc.
However carrying out a long journey, charging 57 euro for every 50 miles when the cost of fuel burnt is 7.2 euro for the same 50 miles traveled would appear excessive.
Joseph Ryan
@I mean that the get state pension in lieu of part of theri pension. So if they are due 55 grand then the pension they would get would be (50-(230.30*52)). Therefore actual pension woudl be €38,000. This presumes they have a full contribution record. I’m a bit unclear what they get in cases where their prsi contributions fall short.
@namawinelake: one other correction. Politicians pensions are one of the fast accrual categories – so they don’t need to have worked for 40 years to get full pension.
They can also be contibuting and collecting two pensions if they were a public servant before being elected. I think this might only apply to teachers but also long as they keep payign the stamp they can build up the minimum years to get a full teachers pension without having worked those years. Trevor Sargent was the only teacher (to my knowledge) who surrendered the teachers pension before he was entitled to it.
@juggernaut, many thanks and I will try to give a better quantification of the pension benefit next weekend. By the way, I believe the maximum contribution period is 20 years and the maximum pension is accordingly 50%.
NWL:
You will be interested in this link:
http://www.slate.com/blogs/moneybox/2012/02/28/better_pay_doesn_t_buy_you_better_politicians.html
Raymond Fisman, Nikolaj Harmon, Emir Kamenica, and Inger Munk report on the impact of salary changes on the labor supply of Members of the European Parliament:
We examine the labor supply of politicians using data on Members of the European Parliament (MEPs). We exploit the introduction of a law that equalized MEPs’ salaries, which had previously differed by as much as a factor of ten. Doubling an MEP’s salary increases the probability of running for reelection by 23 percentage points and increases the logarithm of the number of parties that field a candidate by 29 percent of a standard deviation. A salary increase has no discernible impact on absenteeism or shirking from legislative sessions; in contrast, non-pecuniary motives, proxied by home-country corruption, substantially impact the intensive margin of labor supply. Finally, an increase in salary lowers the quality of elected MEPs, measured by the selectivity of their undergraduate institutions.
Have to congratulate Leo Varadaker on his revolutionary “no snouts in the trough” method of devising a new driving licence…JUST COPY ONE WHICH WORKS..ie the Finnish one..Party stalwarts won t be happy if this catches on..Less troughs for the snouts!..