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Monday, July 20, 2009

Bord Snip 2009 - - a response to Ireland borrowing nearly €400 million per week


UCD Economist Colm McCarthy.

The report of the group, known as An Bord Snip Nua, which was published on Thursday, contains proposals for saving €5.3 billion annually on Irish public spending - - less than 10% of the annual total.

Its recommendations include, merging of local authorities, cuts in hundreds of millions of euro worth of allowances for State employees and a reduction of €1.5 billion from the social welfare budget.

The report also calls for 17,000 State job losses, including a €300 million reduction in the Health Service Executive’s paybill.

Speaking on RTÉ Radio's This Week programme yesterday, UCD economist Colm McCarthy said the current situation, where the Government was borrowing nearly €400 million per week, could not be allowed to continue.

I made the following comment in the Irish Economy Blog - - on its Bord Snip threads:

Main thread

To me, the key issue is not ideology or the level of waste in different sectors but the dysfunctional nature of the Irish State.

Whether it’s public or private, the gravy train has had a kaleidoscope of characters; €1.6 billion annually for State drug purchases, which have an ex-factory price of €1 billion (even the factory price itself has a subsidy); multi-millionaire farmers on public welfare, then hitting property purchasers with a hidden tax through the corrupt rezoning system; huge outlays on IT projects via the opaque procurement process, for private consultants and then the cornucopia of allowances and other perks available in the public sector, led by the political class, while the majority of private sector workers do not even have a basic occupational pension scheme.

The biggest unreformed vested interest is at the top and I cannot recall any proposals of radical reform from the 216 members of the Oireachtas, most of whom are nonentities, in response to the current crisis.

In recent months, Senator David Norris made a plea in the Irish Times for the retention of the Seanad. It is however instructive, that his own significant contribution to Irish society, would always leave his membership of that defunct institution, as a footnote.

The cost of running the Oireachtas has increased at an annual rate of 12% in the past 5 years.
There has been resistance on both sides of the aisle to sacrificing priviliges and embracing radical change in the archaic system.

The 1828 US term, “‘to the victor belong the spoils,” likely sums up the outlook of the Opposition.

All roads lead back to the political system and Ireland needs to badly look in the mirror.
In contrast to the propaganda, the country remains deeply conservative.

Since a government collapsed in 1951, through pressure from the Catholic Church and the medical profession, the significant change in the system has been the neutering of the influence of the Catholic Church, related to its history of child abuse, and trade union power becoming focused on the public sector, because of its exclusion from much of the private sector.

The system of political clientism remains essentially the same and the vested interests retain their power, with the top earners in the medical profession post-1951, no longer against “socialised” medicine but having a well-healed foot in both camps.

An example of the insider system of little accountability is provided by the first “benchmarking” award, where a system of checks and balances could not work.

They all got the increase and the same Secretary General of the Taoiseach’s Department, five years later was given another 25% pay increase - - as were his 3 retired predecessors.

Inside the loop was RTÉ, the State broadcaster with a virtual monopoly in domestic TV broadcasting and while ministers never took issue publicly with evidence that the benchmarking system was a sham, they were never held to account elsewhere either.

The same people who resist necessary radical reform of the system and a surrender of their own over-the-top perks, are now responsible for selling the béal bocht to a public they had convinced a short time ago, that the free lunch had been invented.

Exports

Caution is required when bragging about export success when the better performance than elsewhere recently, is based on the operations of less than 20 American-owned firms.

Knowing the facts about Irish exports is not an easy process.

This week a public statement read: “Enterprise Ireland today reported that its client companies achieved new export sales of €1.3bn in 2008, bringing the total value of exports from Enterprise Ireland-supported companies to €14.3bn. This represents a net increase of 3% on 2007, which was itself a record year for export growth.”

So what does “new” mean?

EI confirmed to Finfacts on Friday that no additional exports came from new client companies of the agency.

Exports sales grew by €400m but but the €1.3bn makes a better headline.

Even the total figure is a guess.

More in:

Health thread

Energy, Environment and Transport thread

Finfacts article:

The Waste Land - - Bord Snip, Irish Public Spending Transparency and the motto "Never do anything for the first time"

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