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July 2005 Archives

The Cost of Infrastructure

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Why is the State offering extraordinary returns to investors in infrastructure when it can raise finance at about 3% per annum? How can the Government justify subsidies of up to 47% by way of tax breaks to investors without securing some immediate ownership rights and, in some cases, being obliged to also pay ongoing surcharges to cover rents, fees, dividends and profits for the very same investors? It is nonsense to suggest that the State would gain from the resultant PAYE and VAT paid as it would be getting these if it financed the investment. 

At a time of steady economic growth and unprecedented low interest rates, most property-related tax incentives are completely unnecessary other than for the purpose of competing with other such schemes. Virtually no schemes were adequately costed at the outset and, even after years of operation, their costs and benefits are only now coming under investigation. A classic example of handing out large amounts of tax payers money and failing to apply any management and control.

These tax schemes are a throw back to the days of double-digit inflation, interest and unemployment rates and have no role today given the buoyancy of Exchequer returns and low public sector borrowing.  Surely, the simplest solution is to abandon all schemes so as to level the playing pitch for all investment types and stop further hemorrhaging of tax payers money. Only in truly exceptional cases should schemes be revived after full investigation. If needs be, funds could be secured by diverting some of the billion euro a year paid to the National Pensions Reserve Fund for investment in overseas infrastructure and industries. However, cynics may say that this is untouchable as it  is primarily designed to help finance the unsustainable pensions of public servants and politicians.

Ministerial Gravy Train

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The latest report of the Review Body on public sector pay found that salaries of higher public service groups have fallen out of line with the private sector and  recommended an interim increase of 7.5% pending a full review. As a result, Irish Ministers will earn more than their UK counterparts when parliamentary salaries are included (€195,800 versus �194,900).

How can this be justified when the huge differences between the respective budgets and responsibilities are taken into account and when the ineffectiveness and avoidance of accountability by many of our ministers are considered?

Letter published in the Irish Times on 19th July 2005.

Benchmarking TDs

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Unless something unexpected happens, the Dail will have sat for just 58 days during the first nine months of  this year notwithstanding perpetual crises in law and order, health service, infrastructure, environment, responsibility and accountability. Based on the minimum annual salary of €87,000, the salary cost per TD per sitting day will exceed €1,120. If we double this to cover expenses, then the cost  reaches €2,200 per sitting day. Finally, if we  assume (generously) that actual attendance in the Dail chamber may average 20%, then the direct cost of maintaining a TD's presence in the Dail chamber rises to about €11,000 a day.

It is noteworthy that UK MPs are paid about the same as TDs notwithstanding that MPs have much larger effective constituencies (66,000 versus 18,000) and that their Parliament meets for many more days a year (150+ versus 90+) and sits for proportionately more hours than the Dail.

Is it any wonder that the electorate think TDs are overpaid and that the Dail is in urgent need of root and branch overhaul.

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This page is an archive of entries from July 2005 listed from newest to oldest.

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