What did the bailout Troika ever do for Ireland? They’ve already given us the Fiscal Advisory Council which independently pronounces on whether or not the Government’s plans will help meet our budget targets. You can wave goodbye to the days of Charlie McCreevy and the “if we have it, we’ll spend it” approach. You can largely wave goodbye to cynical giveaway budgets on the eve of elections. The Fiscal Council might have gotten off to a rocky start in 2011 when the Government ignored the recommendation for a bigger budget adjustment, but with the legislative backing of the Fiscal Responsibility Act, you can expect the Council to come into its own in the run-up to Budget 2013.
Next month, we’ll have the House Price Database of all residential property prices from the start of 2010 – that’s the Database that has been called for, ever since the Kenny Report in 1973. The idea of a Database proposed by Judge Kenny in 1973 was universally supported by Fianna Fail, Fine Gael and Labour but somehow, in forty years whenever they were in office, they failed to introduce it until Ajay and the boys and girls from the Troika came onto the scene.
By the end of this year, we should have a reformed personal insolvency regime which tries to bring Ireland into the 20th century, and who knows, if we have honest and effective debates in the Oireachtas, we might even get a regime fit for purpose for the 21st century. Thanks to Klaus and Craig and the other good people in the Troika, we’ll no longer have draconian 12 year bankruptcy periods but something which tries to balance the needs of borrower and lender.
And in 2013, Ireland will have a central credit registry which will keep track of all your loans, and how well you’re repaying them. It might sound Big Brotherish but it is part and parcel of modern developed economies. It should make getting credit easier for deserving borrowers with a good credit history, and it should stop (mostly our) banks making bad loan decisions. You can wave goodbye to loans being given the nod, just because of cosy rounds of golf with the bank official, it will come down to the brass tacks of what you owe and how well you deal with your debt. And you can thank Istvan and his associates for pushing us to it.
The Bill to create the credit registry will be published in September 2012, but yesterday the Government gave us basic details. The registry will be operated by the Central Bank of Ireland, and will try to capture all commercial and personal credit transactions, so that prospective new lenders can check to see if you – whether “you” are a business or a consumer – can afford a new loan. There is no facility for Joe Public to check other people’s credit standing, but there will presumably be a facility for Joe Public to verify the accuracy of their own standing.
NAMA will be one of the lenders whose information on borrowers will be collated by the CBI, and indeed lending by local authorities will also be captured. The bulk of the information is likely to come from the banks and credit unions.
Another Troika innovation.
And lastly, in defence of the Troika which is likely to receive a lot of political flak in the next four months in the run-up to Budget 2013. Remember we have a colossal gap between what we generate in tax and what we spend on welfare and public services. That gap is not the fault or creation of the Troika, but closing the gap is what the country needs and what the Troika is overseeing. As the Memorandum of Understanding makes clear, the Irish government still has sovereignty and can change proposals in the Memorandum as long as the budget gap is closed. So whether it’s property tax, water charges, PRSI, medical cards or whatever else comes on the agenda in the next four months, our government can make adjustments and substitute different measures as long as they generate the same financial result.