So who is to blame?
There is a perception that the 205 billion euro debt pile that sits atop the Irish economy was put there by rogue bankers; in other words, it was the cost of bailouting the banks that left us with this legacy of debt.
In reality, just over 100 billion euros correspond to a sequence of budget deficits accumulated following the crash and directly linked to the mismanagement of public funds by the government of the time. The administration then headed by Fianna Fáil had spent lavishly and used the exceptional tax revenues of the real estate sector to plug the hole in its accounts.
When those taxes dried up, the budget deficit exploded. At the height of the crisis in 2009, the deficit was 23 billion euros. This means that the state spent 23 billion euros more each year than it collected on taxes and other income.
This required large-scale borrowing, which lasted, to varying degrees, for most of the next decade until we finally ran a small surplus last year.
The bank rescue plan represented 60 billion euros. That’s a large number, no doubt, but significantly less than the amount attributable to budget overruns. And we are likely to get half the money from the bank bailout – aside from the 30 billion euros swallowed up in Anglo and Irish Nationwide which will never be recovered.
With that in mind, the Irish Tax Advisory Board’s criticism of the government for repeatedly failing to prevent unbudgeted spending and for its use of potentially volatile corporate tax revenues to close the gap is more than a simple nit-picker.
Council Chairman Seamus Coffey rightly asserts that there are “disturbing echoes” of the 2000s when a cyclical expansion in tax revenues funded a significant increase in government spending.
The head of the National Treasury Management Agency, Conor O’Kelly, noted this week that the state debt – at 205 billion euros – was four times higher than before the crash, and that 60 billion euros have been paid in interest over the past decade.
We might have recovered from the employment crash; the national debt, however, is a more lasting scar.