Last week, RTE published an interactive comparison of party manifestos. It was based on the ten most important election topics chosen by a sample of RTE’s audience. A simple yes/no score was developed by UCD’s David Farrell, UCC’s Jane Suiter and PhD students Stephen Quinlan and Mark Canavan, with quotations from each of the manifestos to back up the score given. I thought I’d go one better and score them out of five on each of the economic policy headings… This turned out to be across eight of the ten areas, which gives you an indication of how important people rate economic issues in this election.

I’ve grouped them into levels of urgency: immediate (sovereign debt), medium term (deficit) and long-standing (jobs and negative equity). In each, I outline what I would look for in an ideal manifesto and then try to summarise as briefly as possibly each party position, together with the score.

Immediate problems: Sovereign and Banking Debt

1. Renegotiate rate paid to ESF

What I am looking for here? I’m looking for a party to say that they will negotiate as hard-ball as is necessary until there is no premium on the ESF part of the IMF-EU loan, as it’s the EU not Ireland that wants to protect Ireland’s bank bondholders. This would effectively be a burning of the bondholders by 50% (i.e. Ireland is happy) without actually hitting the bondholders (i.e. EU is happy). The next item is:

2. Renegotiate with some bank bondholders

Which is a bit of a lame duck item, as there are a dwindling (and increasingly domestic) number of bondholders the banks have left. It’s the rate on the EU part of the loan where the action is at… Hence I’m merging the scores for items (1) and (2)

What I am looking for here? I’m looking for a party to say that they will negotiate as hard-ball as is necessary until there is no premium on the ESF part of the IMF-EU loan, as it’s the EU not Ireland that wants to protect Ireland’s bank bondholders. This would effectively be a burning of the bondholders by 50% (i.e. Ireland is happy) without actually hitting the bondholders (i.e. EU is happy). The next item is:

2. Renegotiate with some bank bondholders

Which is a bit of a lame duck item, as there are a dwindling (and increasingly domestic) number of bondholders the banks have left. It’s the rate on the EU part of the loan where the action is at… Hence I’m merging the scores for items (1) and (2).

FF (3/5): All three major parties want to renegotiate the rate of interest – but none seems to have grasped that 6% down to 5% won’t do it. To convince the markets a corner has been turned, it will have to be down to 3%, i.e. no premium at all on the rate the EU borrows at.

FG (3/5): See answer for FF.

Lab (3/5): See answer for FF.

SF (1/5): Completely off the wall stuff – not going to take the IMF-ESF money so would effectively opt to choose 9% over 6%. The wrong direction.

GP (2/5): Would take the EU money, so a step ahead of SF, but at a crippling rate, so worse than the big three.

Medium term problems: Spending and taxes

3. No further Social Welfare cuts

What I am looking for here? Unfortunately, while it would be great to say Ireland doesn’t have to cut total spending on social welfare, it does. The €20bn deficit hole between the Government’s €70bn in expenditure and €50bn in receipts cannot be closed without tackling the three biggest spending items: welfare (€20bn), healthcare (€15bn), and education (€9bn). If a party wants to preserve the particular rates of welfare paid, it will have to have a particularly good plan to reduce the number of people on welfare.

FF (5/5): The party has the right target for reduced spending and, by stressing the cuts are the last resort, the right flexibility in relation to what it would or wouldn’t do.

FG (4/5): It’s unclear what economic justifications there are for the safe list FG have, in particular the state pension, although it’s politically understandable.

Lab (3/5): It doesn’t seem to have a target for savings or indeed any policy on social welfare payments whatsoever. No-one will be put off by the focus on “efficiencies” but this doesn’t actually mean anything without more details.

SF (1/5): Reversing the cuts and increasing will deepen the government’s deficit, requiring more taxes and more debt borrowed at – if SF get their way – punitive interest rates.

GP (4/5): No specific plan but they are committed to the National Recovery Plan, which is broadly in the right place.

4. Greater emphasis on tax in Budget

What I am looking for here? I’m looking for awareness by parties that Ireland sticks out in two ways when it comes to tax: our tax credits are too generous (people don’t pay tax soon enough) and Ireland is probably the only developed country in the world not to have a property tax. In terms of balance, I think the €15bn non-growth adjustment should come €10bn from cuts, €5bn from new taxes. Increasing the burden of taxation by more than one sixth in four years would be excessive, in my opinion.

FF (4/5): The balance is probably right between cuts and taxes… but the details are sadly lacking in terms of finances. It seems they support an annual property tax, but I couldn’t find it. Assuming their plan is very similar to the National Recovery plan, I’ve given them 4.

FG (3/5): Increasing VAT is a bad idea, given the low-hanging fruit in relation to income tax and property tax, which they rule out. If anything, FG may be too focused on cuts.

Lab (2/5): Labour appear, according to FG, to support a property tax but don’t mention it in their manifesto. Given the size of the adjustment needed, a 50-50 split is also very unwise.

SF (1/5): It may seem that I’m picking on SF, but their fair taxation scheme, although detailed, doesn’t add up. Three quarters of all wealth in Ireland is in property but while SF won’t tax this, they will still somehow raise €1bn from a 1% wealth tax. Their proposals for restoring the crazy tax credits that lasted until 2010 and abolishing the Universal Social Charge may also be popular but they are economically illiterate.

GP (4/5): Not enough detail, but what is there is broadly on target, at least in my opinion.

5. Re-introduction of third-level fees

What I am looking for here? I’m sorry, much as this will lose me votes (oh wait, I’m not running for election), but this is entirely necessary. Our health system is chronically over-funded (relative to both our health status and what we get out of the health system). Our education system is generally well-funded but higher education is in an incredibly unsustainable position: the Government pays the fees and also sets the price. This gives the government a clear incentive to keep the price cheap… underfunding higher education. Deferred low-interest-rate loans might not be popular but they are necessary.

FF (3/5): Up-front contributions are probably the worst of all options that involve paying. You don’t let people see the benefits of college education before asking them to pay.

FG (5/5): A graduate tax sounds nasty but is actually quite close to deferred fees, particularly given that it only applies once you’re in a job above a certain level of income.

Lab (1/5): Head in the sand. We can’t continue not funding higher education and to not charge fees is essentially to ask the urban working classes to pay for the further widening of the skill gap between the rural and urban middle classes and them.

SF (1/5): As per Labour.

GP (2/5): Lack of a policy only barely better than a bad one.

Long-term problems: Mortgage arrears and unemployment

6. Reverse minimum wage cut

What I am looking for here? I’ll be honest and say I’m not sure. This is a double-edge sword. High minimum wages are bad for those sectors most likely to be dithering about taking on new workers… but are clearly good for those who might be employed. As part of a general lowering of the cost of living in Ireland by about 10% (compared to the rest of the eurozone), I think a lowering of the minimum wage here is justified, if painful – provided it goes hand in hand with a lower of the “reservation wage”, i.e unemployment benefits. I’m aware this make me sound heartless, but really the focus has to be on jobs as the only real solution.

FF (3/5): Presumably a silence on this issue, as they’ve already had to take the tough decision.

FG (4/5): An imaginative solution to this thorny issue.

Lab (2/5): I understand their policy, but don’t think a simple reversal is the best solution.

SF (2/5): As per Lab.

GP (3/5): As per FF.

7. Deal with negative equity

What I am looking for here? Ultimately, the real reasons for public anger are unemployment and negative equity, not bondholders or the IMF. It’s my opinion that nothing should be done about negative equity in and of itself – no-one worries about negative equity with their car, for example. Ireland only needs action for when a home is hit with both negative equity and mortgage arrears. The IMF has made €25bn available for further banking requirements. Alan Dukes and Morgan Kelly – a truly odd couple – both believe mortgage arrears to be the primary problem. Let’s use some of the €25bn to cushion the blow of arrears through part-ownership by the State of both the debt (the mortgage) and the asset (the house).

FF (2/5): Like almost all the parties, FF is not prepared to solve the problem, just postpone it.

FG (3/5): Fine Gael are slightly more detailed than the other parties but ultimately do nothing about the root problem of negative equity combined with mortgage arrears.

Lab (2/5): Slightly worse than Fianna Fail in that it reads as little more than kicking the can down the road. Their jobs plan would need to be pretty amazing for this plan to be sufficient.

SF (2/5): Debt-forgiveness without compensating equity forgiveness is not smart. Worse than that, though, changing systems of recourse (i.e. whether you can just send the keys back) mid-mortgage is asking to deal a hammer blow to what’s left of Ireland’s financial system.

GP (2/5): As per Fianna Fail and Labour, sounds relatively unoffensive… and thus so graded.

8. Jobs stimulus

What I am looking for here? The only real solution to Ireland’s long-term problems is to create jobs, not to develop fancy tricks to get around mortgage arrears. I am clearly not trying to be populist when I say that it will not be possible to get unemployment back down to 4% within the next decade. Getting unemployment down to 8% involves, unfortunately, losing 20,000 a year to emigration, but also creating in the region of 170,000 jobs. Employment multipliers mean that Ireland needs to target creating 100,000 new jobs directly (as every 10 jobs typically spin off a further 7 jobs indirectly). About 10,000 could come from developing education as an export, while a further 20,000 are possible from a national retrofit program and other infrastructure projects. Realistically – given job churn – no more than 30,000 net jobs can be expected to come from foreign direct investment. So the remaining 40,000 direct jobs must come from indigenous industry, including Enterprise Ireland. These are the sort of numbers I would hope to see.

FF (2/5): Quite vague and I’m not sure that capital-building programs should take centre-stage in a labour-employment strategy.

FG (4/5): More detailed, aware of the limited life-span of capital programs and the importance of red tape and PRSI – although I don’t agree with the VAT proposal. Welfare to work is tricky to get working right, but better than welfare-for-welfare. Also on top of education as an export.

Lab (3/5): Not a million miles from the FG plan, but not as well thought through, in my opinion.

SF (2/5): It’s unclear where the money would come from for this, particularly if the National Pension Reserve Fund is required to pay public servants’ salaries and unemployment benefit, as seems likely if SF had their way with the EU-IMF deal.

GP (4/5): Well, their headline figures are about right and they’ve the National Retrofit Programme in there. It’s a little Green-focused, although no-one would be complaining if the jobs were created.

The totals are given in the table below. The weakest manifesto is Sinn Fein’s, which scores just 10 out of 35. The next weakest is Labour’s, which scores 16. Fianna Fail and the Green Party are next, scoring 22 and 21 each. Fine Gael has the strongest manifesto, scoring 26 out of 35. While I doubt my views are particularly popular, I hope they’re of use when you come to vote on Friday.

Scoring the political parties' election manifestos

Disclosure: I voted FG in the last general election! I did this scoreboard, however, to understand how I should vote, not to validate any preconceptions I may or may not have.