The drums are beating. Throughout the nation we hear a growing chorus demanding tax cuts (including the leader of the Labour Party) to relieve ‘hard-pressed’ families. And this demand is being buttressed by some highly misleading claims that Ireland is a high public spending country.
According to Brendan Keenan, using recent OECD data, we are a high-spender. There’s even a cartoon in the article showing Ireland ‘fat’ with too much public spending, compared to ‘lean’ European countries. Is Ireland a high spender compared to European countries? Of course not. One has to know how to read these figures.
For instance, the OECD data for 2011 includes special bank payments arising out of the financial crisis. When this is removed (and it represents some 5 percent of GDP), Irish spending falls well down the table. It is highly misleading to claim that Ireland is a high-spending country while including payments to banks; unless one wants to make the argument that Ireland is a ‘high bank-subsidising’ country which is certainly true.
So, can we assess Ireland’s ranking in the EU-15 spending table? Yes, with the help of the EU’s AMECO database. We’ll look at 2014. Even though this money hasn’t been spent yet, AMECO is working off of country’s estimated expenditure under their individual Stability Programme updates. Any change would be marginal. We’ll also exclude interest payments since we want to focus on spending on public services, social protection, subsidies and investment. Further, we’ll exclude defence spending.
So what do we find when we examine government spending per capita (after all, Keenan says ‘spending per person tells its own tale’)?