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Tuesday, July 28, 2009

Irish Royalty or Beggars on Horseback?

Ceann Comhairle (Speaker of Dáil Éireann - - the Irish Lower House) with his counterpart, Bernard Accoyer, President of the French National Assembly

It's no secret that the Irish Exchequer is for plundering by a legion of vested interests and the political class

There is no mileage in supporting parsimony in using public funds.

If we Irish want to blame the British, we might as well, as it's as good a self-serving excuse as any, but it puts our elite in the same class as the stereotypical African dictator.

We can look back to the early decades of the State for inspiration and there is much to admire but an RTÉ 1 documentary in 2004, showed that money also had its malign influence, when it detailed how Fianna Fáil party founder Eamon de Valera had funds that were raised in the US during the War of Independence (1919-1921), diverted for the establishment of the Irish Press newspaper, which ended up in the control of his own family.

The Sunday Tribune has reported that former Minister of Arts, Sport and Tourism, John O'Donoghue, his wife Kate Ann, and his private secretary Therese O'Connor, ran up a travel bill of over €126,000 and possible a multiple of that, in the space of just two years.

Among the expenditure were a series of €900-a-night hotels, €7,591 on "airport pick-ups" during a two-day trip to London, €120 for hat rental, €250 for water taxis and €80 to "Indians for moving the luggage".

On one luxurious trip to Venice, the former arts minister, his wife and the civil servant ran up hotel bills of €5,834 at the Albergo San Marco, the Hotel Cipriani and the San Clemente Palace. The ministerial entourage travelled to Italy by government jet, where they were collected by a private airport boat and taken to their luxury accommodation.

The water taxi to and from the airport cost €250, while the minister, his wife and O'Connor claimed a further €1,300 in subsistence and expenses.

On another trip to Paris, Kate Ann O'Donoghue's hotel bill included €56 for a haircut, but this was later paid back as "personal expenses".

The €56 saved will be scant consolation to the taxpayer when set against the €900 a night the former minister paid out for an "apartment" in the Hotel Le Bristol during two days at the hotel.

The Tribune said on another occasion, O'Donoghue, who is now Ceann Comhairle, stayed in even more expensive accommodation with the nightly room rate at the Hotel Montfleury in Cannes costing €990 a night, and a total bill of almost €5,000. Car hire for that trip, related to the famous film festival in the Mediterranean city came to €9,616, according to the figures released under the Freedom of Information Act.

Asked to comment by the Irish Times on Monday, the department said: “Ministers, given the nature of the brief, travel abroad to high-profile events, such as the Venice Biennale, the Olympics, the World Cup matches, all of which are regarded as contributing to the promotion of Ireland as a tourism destination and a venue for international sports events. The costs of flights and accommodation for such events invariably involve a high premium worldwide.

“In relation to the procuring of accommodation and car hire, every effort is made to secure the best possible rates for the Minister and the delegation. The cost of facilities at airports relates to fees charged at a standard rate.”

Tourism development and promotion was “one of the key objectives of the department.” The tourism sector was “underpinned by the arts and sports sectors, which also serve to enhance the tourism product.”

“Given the nature of the arts, sport and tourism brief, it is customary and necessary for the Minister to attend major events in Ireland and abroad. International marketing is regarded as an essential activity in the attraction of tourists to Ireland.”

Of course it is and what else can you say?

Is it any wonder that the average citizen gives the two fingers to pleas for sacrifice from these chancers?

Anyway, shur what's the big deal being made by small minded losers when it's a drop in the ocean in a €60 billion spending.

Add up all the feather bedding and reckless use of public funds and it would come to more than a molehill.

Ask UCD economist Colm McCarthy.

Is it any wonder that they want to keep public spending information in the Victorian age?

And for the information released via the Freedom of Information Act, the Irish Government asked for €523 for copies of the expense claims. What was released was incomplete, and did not include the cost of flights or the use of the government jet, which would easily double the travel bill.

The Bull came to public prominence in the 1990s by advocating a zero tolerance to crime and that was copied from the then New York Mayor Rudy Guiliani.

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

Lenihan publishes Bord Snip report; Proposes €5.3 billion in spending cuts and public sector staff reductions of 17,300; Says public pension cost at 30% of salary

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"

Thursday, July 09, 2009

Pharmaceutical output from US-owned firms the bright star of the Irish economy

US pharmaceutical firm Merck's principal Irish plant at Ballydine, County Tipperary

The latest Irish manufacturing data shows the contribution being made by the US-owned pharmaceutical sector.

IBEC Chief Economist David Croughan commented today on the May Irish production figures: "Although the total figures recorded only a modest decline and compared well with many other economies, which have suffered sharper falls in output, the strength came almost entirely from the 18.7% growth in pharmaceutical output.

"Output in other modern sectors such as computers, electronic and optical equipment was down by over 22%. Output in the traditional sectors fell by an annual 13.8% in the first five months of the year, with very large declines of between 30% and 46% recorded in metals and engineering, non-metallic mineral products and wood."

Service exports fell in Q1 and about 20 US firms are responsible for 70% of merchandise exports.

In the pharma/medical devices sector, about 10 US firms are responsible for 57% of exports in Q1 2009.

It’s good that we have the US firms but let’s not brag about “our great success” and dispense with questions on why we have been a failure in developing a significant indigenous sector after 50 years of FDI.

The reason why there has been a such a steep fall in the economy is that the property boom sustained so many jobs.

In the period 1998 to Dec 2007, excluding the internationally traded goods/services sector and direct construction, more than 400,000 new jobs were added.

After 2000, jobs in the internationally traded goods/services sector fell by 11,000.

The property bubble added 127,000 jobs in construction and 400,000 in the public services, indirect property supporting services, distribution and tourism.

In 2006, the peak year of the bubble, 83,000 new jobs were added. Only 6,000 were in the internationally traded goods/services sector.

Average pay in construction was €40K compared with the industrial wage of €31K and that’s not including additional allowances in construction.

During the boom, the windfalls plus lending from Irish banks, made the Irish the second biggest investors in commercial property in Europe.

Typically, €10-€15 billion went annually into commercially property while venture capital investment was generally les than €200 million annually.

As for competitiveness, the World Bank said in 2007 that Ireland was among the four most expensive countries in the world.

Anyone who travelled, would not have been surprised with that information but as regards the issue of competitiveness, the dominant US -owned sectors and the indigenous sectors should not be lumped together.

Last month's IMF report on Ireland, does refer to the fall in our share of FDI in recent years, in contrast with the superlatives from the IDA but there are many more issues at play than local costs.

During the boom, apart from Ryanair, there was no big local export success and the hopes in the late 90’s for the high-tech sector were not realised.

So indigenous exports are still mainly concentrated in traditional sectors and dependent on the traditional market, the UK.

The best potential market sector for Irish firms is the Eurozone and if food producers have trouble selling to Tesco at home, it would not be easy elsewhere.

According to the ECB, Irish unit labour costs rose by 33% in the period 1999-2007, compared with Germany’s 3% and Finland’s 11%. Of course new product development and so on are are also relevant but if prices are out of line, the task of breaking into a new market is not an easy one.

Irish Economy: Home Truths on Irish Exports as Ireland faces a changed global economy in the decade ahead