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Budget 2014 - Sharing the Pain?

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The budget indicated that national debt/GDP will remain north of an unsustainable hundred per cent for the foreseeable future. As a consequence, about half of all income tax will be used, possibly for rest of this decade, to meet interest charges on this debt notwithstanding an imminent exit from the bailout.

Against this background, there was no indication in the budget that any new sacrifices are being made by one of the best paid and pensioned cabinets in the world or by their overpaid advisers, senior public servants and wealthy supporters. Where are the moderate salaries, reasonable pensions and equitable taxation that might be reasonably expected as part of an austerity programme which, after several years, continues to be inflicted by the few on the majority?

Letter published in the Irish Times on 21st October 2013.

Saving the Seanad

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So, we have learnt that the actual saving to be made by abolishing the Seanad might be only half the €20 million claimed by the government. In the light of this, the total vote in favour of abolishing the Seanad could also be halved given the huge importance attributed by government to their estimate of potential savings.

The realisable annual saving amounts to less than ten percent of the cost of running Leinster House and to an almost invisible 0.02% of total annual State expenditure. Holding a referendum to secure these minor savings is hardly significant in the current scheme of things, so I assume that there are other more pressing reasons which may not have been fully disclosed to the electorate.

Letter published in the Irish Times on 28th September 2013.

See & Hear No Evil

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The search for the Anglo tapes whistleblower reminds us that the only person convicted in connection with the Beef Tribunal was a whistleblowing journalist.

The Minister of Finance has reportedly complained, in relation to the tapes, that the media should stop "mucking around in garda business".  Surely, politicians are the parties most guilty of "mucking around" for having failed to set up a robust and comprehensive public inquiry into the most damaging event in the State's history.

They also appear to have failed to provide adequate resources to the Fraud Squad, Director of Public Prosecutions and Office of Corporate Enforcement to complete rapid and extensive investigations into events that have left citizens footing a bill for at least €64 billion.

Lead letter in the Sunday Business Post on 14th July 2013.

Inquire and Take Action

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Through greed, incompetence and negligence a few hundred people have set this country back decades in economic and social terms, and have sullied its international reputation. In the few cases where "sanctions" have been applied, they have amounted to big pensions and fat payoffs instead of sanctions and reparation.

Notwithstanding the magnitude and duration of the crisis, we still have no clear plans for a proper public banking inquiry. As in other countries, a comprehensive, lawyer-free and apolitical inquiry could expose systemic failures and serve as a pathfinder for possible prosecutions. To progress this, last years's referendum on Oireachtas inquiries should be rerun in lieu of the planned Seanad referendum.

Because white collar crime can be extremely difficult to prove due to its complexity, wriggle room and "memory lapses", civil actions, as an alternative to criminal prosecutions, could be initiated against the key individuals against whom adverse inquiry findings are made. This route could reduce the burden of proof, speed up collection and presentation of evidence and reduce the duration and complexity of legal actions.

Letter published in the Irish Times on 27th June 2013.

SOS - Save Our Seanad

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The Taoiseach woke up one morning and proclaimed that he would abolish the Seanad to the complete surprise of everyone, including his party colleagues. He and Eamon Gilmore have no mandate whatsoever to proceed with this as they will find out in the referendum.

The Dail is in far more urgent need of reform than the Seanad. So too is our entire system of local government. Abolition of the Seanad will not save a claimed €20 million a year as a cost of €10 million was indicated by Oireachtas officials last year. Even €20 million is a trivial amount if it helps prevent the erosion of democracy.

The Taoiseach has stated that 'Ireland had too many politicians for its size', so let him cut the number of costly and numerous TDs and speed up rationalisation of local government.

Instead of abolition, give the Seanad a real role in the political process as has been proposed by some Seanad members; introduce a list-based electoral system based on vocational, regional, emigrant and Northern Ireland constituencies to elect all members; and ban the use of the whip so that the senators can operate with complete independence.

Letter published in Irish Times on 7th June 2013.

Future of the Seanad

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The Taoiseach's decision to proceed with a referendum on abolishing the Seanad in four months time leaves little time for discussion on this hugely significant proposal either inside or outside Leinster House.

With the political holidays looming and many other more pressing economic and social matters to be addressed, it is hard to believe that his timetable can be adhered to. However, if he does proceed then the likelihood of rejection must be very high given that voters  have clearly demonstrated in past referendums that they want to be fully informed on all issues and options and don't like being taken for granted or fools.

Letter published in the Irish Times on Friday, 17th May 2013.

Quick Banking Inquiry

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Will we ever see a report on the Irish banks like the UK's recent parliamentary report on HBOS?  Its  chapter headings read like a thriller - "The best board I ever sat on", "The price of failure", "Conclusion - a manual for bad banking".
 
I don't think the establishment has the stomach for a "full blooded" inquiry which would make the DIRT inquiry look like a picnic. As an alternative, our politicians could get a copy of the HBOS report and simply do a quick search/replace of names, places and dates as I suspect that the findings and conclusions could be left unchanged.

Letter published in the Irish Times on 15th April 2013.

Pension Fund Theft?

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There is nothing extraordinary about the proposed Cypriot levy on apparently untouchable deposits. The Irish Government led the way by imposing a 0.6 percent annual levy on similarly untouchable private pension funds. It expects to gather €1.8 billion from this underhand action which provoked minimal opposition or protests unlike developments in Cyprus.

Of course, no similar penalty applied to public sector pensions amidst recent ministerial claims that constitutional property rights preclude the slashing of outrageous pensions being paid to former politicians, mandarins and bankers.

Lead letter published in the Irish Times on 21st March 2013. This follow up letter was published on 27th March 2013.

William J XXX (26th March) stated that I was factually incorrect when quoting me as saying  (21st March) that "no penalty applied to public sector pensions". I actually wrote "no similar penalty" in the context of the Government's raid on private sector pension funds. This is factually correct. 

He goes on to write about public sector pensions being  dependent on employee contributions but ignores the fact that these pensions, particularly at higher levels, are largely financed by private sector taxpayers who could never aspire to secure such attractive pension benefits for themselves.

Exiting the Bailout?

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Notwithstanding years of austerity, Ireland still has some of the most over-borrowed public and private sectors in the developed world and, according to Christine Legarde (IMF managing director), has only completed two-thirds of the current bailout programme. Against this backdrop. there is no way that Ireland will be able to break free from the troika for years to come.

Over the next year or so, we might have to contend with Croke Park chaos, dissent over the property tax, another savage budget just as people are seeing how sneaky the last one was, slow economic growth, large street protests, further Dail defections, local election upsets, foreclosures/evictions, further bank restructuring, surging emigration and other unexpected nasties.

They will all feed into the next Dail elections which could well result in a trouncing of the governing parties and the formation of a very weak, rainbow government. In the absence of strong and decisive national leadership, the troika is likely to demand a continuing supervisory role notwithstanding that its motives and agenda would not be in our national interest.

Letter published in the Sunday Business Post on 17th March 2013.

Promissory notes: Call a Referendum

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I sent the following email about the promissory notes to all TDs and Senators this afternoon:

Hello

I have reproduced below a letter from me published in today's Sunday Business Post advocating non-payment of the promissory notes.

In it, I emphasised that payment would create a cash loss of €30 billion for the State and that non-payment would create NO cash loss for the ECB/ICB. This is a key point which distinguishes the Irish situation from sovereign defaults which have had serious ramifications for the defaulting states.

If the PNs are not paid, do you really believe that the ECB would apply sanctions to the "best boy in the class"? I think not as these would also provoke a huge euro crisis.

A write off of the €30 billion. as distinct from any other deal, would be transformational for the Irish economy whose the debt/GDP ratio is almost120%, or 150% based on GNP when fickle profits of multinationals are excluded. Let us face facts, this level of debt is completely unsustainable and tinkering at the edges will be fruitless.

Personally, I would like to see politicians work together (for once) in order to provoke a referendum on the question of payment of the PNs so as to settle the matter for once and for all for the electorate, EU, ECB and other international interests. This could be achieved by asking the Dail and Seanad to consider a Bill relating to payment and then, in accordance with Article 27 of the Constitution, getting a majority of the Seanad and one-third of the Dail to petition the President for a referendum on the grounds that the Bill "contains a proposal of such national importance that the will of the people thereon ought to be ascertained".

Such an initiative would have the overwhelming support of the electorate, even without anticipating the result of the referendum. It would also evoke a positive response from the financial markets, and even the ECB might get around to understanding that the circumstances surrounding the PNs were absolutely unique and required a euro-wide response.

Brian

[ To see the SBP letter, just scroll down to next entry or click ]

Don't Pay the Promissory Notes

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Professor Morgan Kelly, writing about the Anglo bailout in 2008, suggested that "the money might as well be piled up in St Stephen's Green and incinerated". Well, unless a write-off deal on the promissory notes is struck, that is exactly what will start happening in March, albeit at a different location, when €3.1 billion of "real cash" is passed to the Central Bank where it will disappear in a puff of electronic smoke.

Any deal that replaces notes with bonds is unacceptable as it simply pushes this senseless burning of Irish taxpayers onto another generation. Instead, a full write off must be sought and secured on the grounds that the cost of the bailout of Anglo should not be foisted on blameless Iriish taxpayers,

A write off is entirely within the gift of EU central bankers and, while it might result in a temporary loss of face, no loss of cash would be incurred. In fact, the full €30 billion will be effectively written off irrespective as to whether notes are paid or not.

The Government should stop spinning and whining about unfairness. Instead, it should start playing hardball and show more backbone even at this late stage.

Burning €30,000,000,000 of taxpayers money for no return whatsoever makes no sense and is extortion given that the State is bankrupt.

What exactly would the ECB do if the notes are not paid? Pull the rug from under the Irish economy or just make the "best boy in the class" sit on the bold step for a while?

Lead letter in the Sunday Business Post on 3rd February 2013.

Budget for 2013

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Tables compiled by the Dept of Finance showing the impact of the budget on various incomes say it all. Here is an extract for a married couple with a house, without children and paying full PRSI:

  • On a gross income of €45,000, the reduction in income will be €422 a year (1.2% of gross).

  • On a gross income of €175,000, the reduction in income will be €872 a year (0.9% of gross)

So, for someone earning four times more, the impact of the budget is only doubled. Inequity is even greater for people further down the income scale. How can this budget be viewed as fair?

Letter published in the Irish Times on 7th December 2012.

Why Pay Taxes and Debts?

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Would some kind reader explain why I shouldn't follow the example of the so called 'good and great' and avoid paying my debts and taxes by hiding my wealth, falsifying documentation or emigrating to a tax or bankruptcy haven?

Letter published in the Sunday Business Post on 17th June 2012.

I wrote the following unpublished letter to the Irish Times on 27th May (two days before the referendum).

To assist decision-making in an uncertain situation, such as a referendum, there is a technique called mini-max which entails selecting the option that minimises the maximum post-event regret, i.e. to minimise the force with which you'll kick yourself for having made in retrospect the wrong decision.

If 'yes' voters win, I believe that many of them will kick themselves as they will realise they have locked themselves into a bad deal from which they cannot escape as further austerity bites and stability proves elusive.

They will regret their 'yes' votes and realise that 'no' would have kept options open, created space during a time of great uncertainty, and bolstered Ireland's negotiating position on bank debt write offs, growth and austerity strategies, and future funding.

But, by then it will be too late as whatever chance they might have had of a second referendum if 'no' wins, they'll regret having no such opportunity if 'yes' wins.

 See also:

Dept of Finance and Nama

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The Department of Finance's recent strategy statement indicates that it aims to increase employment, ensure sound finances, raise living standards, address the international debt and restructure the banks. In reality, it will do nothing of the sort as the document also indicates that the Department's role is simply to provide "independent, impartial and well informed advice" (and about time too). This mixing of altruistic goals and practical actions permeates the document.

For example, on Nama it states that the Department will "insist on the highest standards of transparency in the operation of NAMA, on reduction in the costs associated with the operation of NAMA, and that decision-making in NAMA does not delay the restoration of the Irish property market".  Sounds impressive but why didn't it simply state that it will extend Freedom of Information to Nama, cut outrageous fees paid by Nama and stop it trying to rig the market.

Letter published in the Irish Times on 12th May 2012.

Constitution and Fiscal Compact

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The constitutional amendment for the Lisbon Treaty made numerous references to our membership of the EU. It also referred to the EU's authority to pass laws alongside other competent bodies under the Lisbon and related treaties.

The proposed amendment for the Fiscal Compact makes no mention of EU or prior treaties and indicates that  unspecified "bodies competent" can pass laws or measures for Ireland. This begs questions as to whether the Fiscal Compact should be viewed as an EU or international  treaty and whether these bodies competent might be same ones that are driving the EU into a depression by insisting that austerity is the only way forward.

It is extraordinary that Ireland eventually agreed to the Lisbon Treaty in a second referendum partly because we were promised a permanent Irish Commissioner. Yet today, the entire Commission seems to have been pushed aside by banking and political forces and we are being urged in the current referendum to deliver key aspects of our Constitution and lawmaking not to the EU but into the hands of an international treaty led by so called bodies competent where our influence is likely to be minimal by comparison with the Commission.

Letter published in the Irish Times on 10th May 2012.

See also:

I sent the following message about the ESM to all TDs on 4th May 2012:

In case you missed it, I had a letter about possible outcomes to the referendum published in the Irish Times on 2nd May [see a copy in entry immediately below].

I call on all TDs, irrespective of their party, to respect the wishes of the electorate in the event of a NO vote in the referendum by refusing to ratify the closely related ESM treaty.

To do otherwise would be a flagrant breech of democratic principles and an insult to voters.

If the referendum is rejected and Ireland has difficulty securing a second bailout, it will be forced to batten down all hatches to preserve cash and reduce outflows. Once in this type of of sovereign examinership, it would be legitimate to suspend all unnecessary payments to creditors including those related to the promissory notes and to defer bond repayments even if these actions might trigger a default. As this would have major adverse consequences for the euro, the EU/ECB/IMF would be forced to provide a second bailout, even if the ESM is closed off to Ireland, to prevent contagion, if for no other reason. This bailout will have to include a stimulation package as well as massive relief on debt linked to the bank bailouts as without these the EU/ECB/IMF might as well pour their support down the drain.

If, on the other hand, Ireland ratifies the ESM, it will have to make a contribution of €11 billion. As this money will have to be borrowed, the ESM will effectively return the €11 billion as part of a second bailout. This will push Ireland's debt/GNP ratio to well in excess of 150 per cent - a level which is absolutely unsustainable and unmanageable in the absence of massive debt write offs and stimulation measures.

Thanks for reading this. Hopefully it will generate the response being requested.

In the event of a Yes vote [in the forthcoming referendum on the Fiscal Compact], the Government would be entitled to proceed with ratification of the ESM treaty as this would reflect the democratic will of the majority of voters.

However, in the event of a No result, Ireland would be cut off from ESM funding because of a condition within the Fiscal Compact. Whilst Ireland doesn't have a veto on the Fiscal Compact, the Government could easily defer ratification of the critical ESM treaty over which Ireland would have a blocking vote if supported by other States who together contribute at least 8.5% of the ESM's capital. This would force the EU and ECB to offer meaningful proposals to ease Ireland's unfair and unsustainable bank debt burden which, to date, has been effectively ignored by them.

Arguably, this could lead to a second referendum on the Fiscal Compact which might also lead to ratification of the ESM treaty.

Letter published in the Irish Times on 2nd May 2012.

Paying Bondholders and Bankruptcy

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Congratulations are due to the National Treasury Management Agency for creating a diversionary bond swap on the very day that it extracts €1.25 billion from our pockets to repay bonds in a defunct bank.

Any chance that Ireland could avail of the new bankruptcy proposals given that it has an unsustainable level of debt and clearly falls into the "can't pay" category?

Letter published in the Irish Times on 27th January 2012.

Taoiseach at Davos

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Given that we haven't yet had a proper enquiry into the banking crisis, I am not surprised that the Taoiseach resorted to blaming "people" at Davos, reinforcing the image of the Irish as feckless and greedy.

Instead, he should have  been upfront and honest by singling out sections of the establishment and business "elite" including ministers, public administrators, bankers, developers and foreign lenders as the greedy incompetents who "went mad"  and failed the "people". However, this would have probably gone down like a lead balloon with the Davos "elite".

Letter published in the Sunday Business Post on 5th February 2012.

As readers of this blog will know, I have been concerned about the accounting method used by Nama and have campaigned for more transparent accounts based on the par value of loans acquired (in excess of €71 billion) and full disclosure of written down/off loans and interest.

My campaign included writing to Nama's board, Minister for Finance, EU Commission (twice) and, more recently, the Comptroller and Auditor General (C&AG) and Public Accounts Committee (PAC). See Nama's Accounts and the Comptroller & Auditor General and linked items.

At its meeting on 1st December 2011, the PAC considered my correspondance and invited Nama and the Department of Finance to respond. In reply the CEO of Nama has advised the PAC that, having considered my suggestion that Nama publish "shadow" proforma accounts including a P&L and Balance Sheet based on the par value of loans, Nama, in consultation with the C&AG, "will provide such additional disclosure in respect of the movement in the par value of Nama's acquired loans in our 2011 Annual Report and Accounts". See Nama's letter dated 4th January 2012 to the PAC.

Hopefully, these disclosures will include "shadow" proforma accounts which will highlight the full extent of writedowns on the loans acquired at a huge discount by Nama. Ultimately, the losses could amount to €50 billion inclusive of this discount and related interest write offs.

The reporting of these losses by Nama would be a reminder (if one is needed) of the greed, recklessnes and incompetence of many of our leading developers, bankers, politicans and public officials and of the virtual total absence of "moral hazard", public enquiry and pursuit of possible wrongdoing.

More positively, the reporting will help increase accountability, transparency and openness and facilitate better oversight by the Dail and PAC of Nama's activities. It will also bring into focus the desirability, for the avoidance of doubt and to make matters crystal clear, of changing Nama's legislation to explicity state that maximising the recovery of original debts, over and above the actual cost of acquiring loans and recovering expenses, is an objective under Section 10 Subsection (2) (c) of the Nama Act.

Updates:

There has been some media coverage following publication of this entry:

Some additional comments:

1. What would be the impact on Nama's accounts?

Suppose Nama acquires a €100m loan for €30m and is repaid €30m after 3 years. Arguably, it has discretion, based on its current accounting method, as to how it allocates the sum received between principal and interest. For example, it could say that it has broken even on the loan, ignore the loss of interest and report breakeven before deducting its overheads.

If shadow accounts are created Nama would have to explicitly account for BOTH the capital loss (€70m) and contracted interest written off of, say, €12m (€100m at 4% for 3 years) making a total loss of €84m in contrast to breakeven. Henceforth, we could see headlines indicating that, while Nama might report breakeven using its accounting method, it will have incurred a massive loss in the shadow accounts. This loss would be a huge wakeup call to all concerned.

2. Will additional disclosure make a real difference?

Hard to say because Nama is really captive to future market and economic conditions. However, the reporting of the huge losses based on shadow accounts will highlight the need for Nama to recover the absolute maximum amounts from borrowers, minimise expenses, manage its assets effectively and "play the market" successfully when disposing of assets over the coming years. This will put pressure on Nama and its clients to perform to the maximum (rather than targeting breakeven) and might, just might, result in a lower eventual loss.

Don't Pay Anglo Bondholders

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I wish to protest at the planned redemption at par value of a €1.25 billion bond on 25th January by Irish Bank Resolution Corporation, formerly Anglo, Given that this unsecured, unguaranteed bond traded at less 60 percent of par within the past year, why is the Government redeeming this bond at par notwithstanding that the issuing bank is insolvent and being liquidated?

The proposed payment is equivalent to the salaries of 5,000 extra nurses for five years; or one-third of the cuts and tax increases in the 2012 budget: or the full cost of TWO new national children's hospital. Instead, the money will be used to reimburse anonymous bondholders who provided funds at the peak of the boom to a bank which operated as a virtual casino.

Irish taxpayers are entitled to expect the Government to stand up for their rights and to either refuse to redeem the bond or to pay on the back of an explicit quid pro quo from the ECB if the latter wishes to avoid contagion. To this end, I call for an unwhipped Dail debate where isms, ologies, outdated manifestos and failed policies are, for once, put aside in the national interest and where the bond redemption and related economic and social policies are reviewed in an open, honest way.

It will be patently obvious to any TDs who held clinics during the Dail recess that current policies are failing and that redemption of the bond will simply add costly fuel to a fire which is currently smoldering but could easily get out of control.

Letter published in the Irish Times on 10th January 2012.

See also Another Letter to TDs about Anglo Bonds.

Another Message to TDs about Anglo Bonds

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I sent the following email to all TDs today regarding the next redemption of Anglo bonds:

Dear Deputy

I wish to protest at the planned redemption at par value of a €1.25 billion bond (ISIN ref. XS0283695228) on 25th January by Irish Bank Resolution Corporation, formerly Anglo,

Given that this unsecured and unguaranteed bond traded at less 60 percent of par within the past year, why is the Government redeeming this bond at par given that the issuing bank is insolvent and being liquidated?

The proposed payment is equivalent to the salaries of 5,000 extra nurses for five years; or one-third of the cuts and tax increases in the 2012 budget: or the full cost of TWO new national children's hospital.

Instead, the money will be used to give windfall profits to so-called sophisticated but anonymous bondholders who provided funds at the peak of the boom to a bank which operated as a casino and which, thankfully, no longer trades.

Irish taxpayers are entitled to expect public representatives and Government to stand up for their rights and to either refuse to pay or negotiate a quid pro quo with the ECB if it wishes to avoid contagion.

What's needed from TDs is an unwhipped parliamentary debate where isms, ologies, outdated manifestos and failed policies are, for once, put aside in the national interest and where fundamental issues underlying the bond redemptions are considered in an open and honest way.

For example, a free vote in the Dail when it resumes next week in favour of a 50% discount on redemption might "frighten the horses" enough to allow the NTMA repurchase the Anglo bonds at, say, 60/100 and save the taxpayer about €500 million without any default arising. Not a bad morning's work in the Dail.

Brian

Here is the text of a previous message sent on 30th October 2011 to TDs about the redemption of Anglo bonds worth approximately €750 million. So, if the January bonds are redeemed at par, the Irish taxpayer will have redeemed unsecured, unguaranteed bonds amounting to about €2 billion since November 2011. To put this in context, the Government announced in December 2011 a savage budget which will raise taxes and make savings for the Exchequer amounting to €3.6 billion during 2012.

See also Don't Pay Anglo Bondholders.

Here is an uptodate and corrected list of TDs as at 22nd January 2012. To help ensure delivery, it has been divided into four parts.

Budget for 2012

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Given that the Minister for Finance has claimed on numerous occasions that all the low hanging fruit has been picked, why doesn't he start plucking some of the ripe, plump fruit off the highest branches? He could also give the tree a good shake and make substantial saving by cutting off dead branches and pruning back at all levels.

For example, he could introduce a third tax band for salaries above €100,000, apply a salary limit of €150,000 across the entire public sector and limit pensions in the sector to half that. Such measures would be much fairer than increasing VAT, introducing new stealth taxes and cutting key services and capital expenditure. Given that the country is effectively bankrupt, force majeure should take precedence over legitimate expectations or entitlements and it makes no sense to increase borrowings and pay additional interest simply to allow those at the top of the tree to over-ripen.

Letter published in the Irish Times on 22nd November 2011. A somewhat similar letter was published in the Sunday Business Post on 13th November 2011.

Over the past year, I have expressed deep concern about Nama's accounting methods to Nama's chairman and board, EU Commissioners and the Minister for Finance in a series of letters - see Nama and Creative Accounting for details.

My complaint is that Nama is using an accounting method which effectively "buries" the losses incurred (aka the "discount") on loans acquired from the covered banks.

The furore over the recent "discovery" of €3.6 billion in the national accounts is nothing compared with the "disappearance", I reckon, of about €50 billion (i.e. €50,000,000,000) within Nama's accounts. I understand that the Comptroller and Auditor General is considering the inclusion of this "loss" in Nama's accounts in some shape or fashion.

Against this background, I wrote to the C&AG on 1st November and suggested that, in the interest of openness and transparency, his office should consider producing "shadow" pro-forma annual accounts for Nama showing its acquired loans at par value and indicating the full extent of loan and interest write downs/offs. Here is a copy of my letter to the Comptroller and Auditor General

This proposal would help identify the full extent of the developers' bailout and losses incurred by the covered banks during the bubble years.

Nama's "forgive and forget" approach can be contrasted to the Government's treatment of mortgage holders who through unemployment etc. cannot meet repayments - see Debt Forgiveness Discrimination.

Update:

Having reviewed the full transcript of a meeting of the Dail's Public Accounts Committee with Nama and the C&AG on 26th October 2011, I have written directly to the PAC drawing attention to my letter to the C&AG and related correspondence. This was published at the PAC's meeting on 1st December and forwarded to the Department of Finance and Nama for comment.

Ministerial Pensions are a Gravy Train

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Former ministers will receive annual pensions averaging €81,000 and costing €8.8 million a year. This could amount to €80 million over the next decade and must be funded by new borrowings and additional taxation to cover interest charges and eventual repayments.

In accepting these pensions, do these former ministers not realise that the State is effectively bankrupt thanks, in some cases, to their mismanagement and incompetence?

Letter published in the Irish Times on 11th November 2011.

Bank Inquiry Snookered?

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May I congratulate the "establishment" on its scare-mongering, self-serving campaign to ensure that the banking crisis which brought the country to its knees is unlikely to ever be the subject of an in depth public inquiry by our elected representatives.

Letter published in the Irish Times on 2nd November 2011.

Message to TDs - Don't Pay Anglo Bondholders

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I sent the following message to all TDs this morning:

Dear Deputy

I wish to protest in the strongest possible terms about the proposed redemption at par value of a US$1 billion bond (ISIN ref. XS0273602622) on Wednesday 2nd November by Irish Bank Resolution Corporation, formerly Anglo,

Given that this unsecured and unguaranteed bond recently traded at just 53 percent of par value, why is the Government paying full value when the bond is rated Caa2 by Moody's and viewed as being of "poor standing ... subject to very high credit risk ... extremely poor credit quality"?

To put this in context, the proposed payment is equivalent to the salaries of about 2,500 extra nurses for five years; or one-fifth of the cuts and tax increases planned for the 2012 budget: or the full cost of the new national children's hospital.

Instead, the money will be used to give windfall profits to so-called sophisticated but anonymous bondholders who provided funds at the peak of the boom to a bank which was operating as a casino and which, thankfully, no longer trades.

I don't buy the argument that refusal to pay will cause contagion. It is very evident that contagion is (like taxes) for the "little people". Irish taxpayers don't like being treated like Darby O'Gills and are entitled to expect their public representatives and Government to stand up for their rights.

I have two questions:

1. According to brokers in New York, the bond is expected to be paid in full. Given that the redemption date was settled years ago, why were no steps taken to secure a substantial discount?

2. If the Government is being forced to pay at par to prevent  EU-wide contagion etc., will the IMF. EU and ECB compensate the State for this specific action?

Sick, Tired and Annoyed

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I am sick, tired and annoyed about:

  • Getting patronising pats on the back from international spokesmen while they stick their hands in my pockets to help international banks.

  • Seeing the State give a bailout worth €50 billion to developers while completely rejecting modest bailouts for deeply-troubled mortgage holders.

  • Watching the EU move towards massive write downs on Greek sovereign debt while preventing Ireland from defaulting on private debt owing by a non-bank, namely, Anglo.

  • Being lectured at by grossly over-paid politicians, experts and administrators on austerity while their retiring colleagues get huge pensions and pay offs

A letter based on this entry was published in the Sunday Business Post on 30th October 2011.

White Collar Crime and Inquiries

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Following on from John McManus's piece (12th September) would someone explain why civil actions cannot  be initiated against the key individuals that grossly mismanaged the economy, the banks and their borrowings over the past decade? This legal route would speed up the collection and presentation of evidence and reduce the duration and complexity of any possible trials.

It is worth noting that the Quinn family has gone to court claiming grounds for suing Anglo for alleged negligence, breach of duty and intentional and/or negligent infliction of economic damage and, separately, that the High Court has ruled that the chief executive and director of a leading bank (NIB) was grossly negligent and that his conduct had fallen below the required standard and constituted a fundamental failure of governance.

Surely, grounds for pursuing politicians, regulators, senior civil servants, bank directors and major property developers might include possible breach of trust, dereliction of duty, failure to manage, incompetence, negligence, fraudulent or reckless trading, dodgy tax activities, misrepresentation, failure to disclose, lying, falsifying documentation, breach of fiduciary duty, abdication of duty of care and so on.

Maybe, passing the referendum on Dail committees will (at last) facilitate the establishment of a proper investigation, with the assistance of whistleblowers, into what went wrong and who were primarily responsible and thus opening up the scope for civil actions.

Letter published in the Irish Times on 16th September 2011.

Debt Forgiveness Descrimination

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The Minister for State for Finance Brian Hayes has said that writing off €6 billion of debt for tens of thousands mortgagees is unrealistic.  If so, how can his Government justify Nama writing off tens of billions of debt incurred by a thousand or so speculators?

Letter published in Irish Times on 23rd August 2011.

Nominating a President

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I am minded to spoil my vote in the presidential election by writing "David Norris" on the ballot paper as a protest against the domination of the nomination process by politicians. If enough voters do the same, the pressure will be on for a referendum to alter article 12.4.2 of the Constitution to allow the electorate to directly nominate candidates by collecting, say, fifty thousand signatures of support. The same referendum should also propose a five-year term.

Letter published in the Irish Times on 5th August 2011.

Household and Property Tax

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It is not too late to convert the household charge into a window tax. Using a three-bed semi with eight windows as the benchmark, the rate would be €12.50 per window. This would be more equitable than the proposed flat charge, easy to assess and check and very transparent.

Letter published in the Irish Times on 2nd August 2011.

Judges' Pay and the Constitution

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The memorandum from the judiciary on judges' pay states on its first page that  "Article 68 of the 1922 Constitution provided that the remuneration of judges may not be diminished during their continuance in office". On the second page, it quotes Article 35.5 of the current Constitution as stating that "the remuneration of a judge shall not be reduced during his continuance in office."

To my non-legal mind, the atorney general's advice to the Government about reducing the remuneration of judges as a class was wrong. Maybe, he was mistakenly reading the 1922 Constitution which talked about "judges" and "their" when he offered that advice rather than the current  Constitution which referred to "a judge" and "his".

Letter published in the Irish Times on 13th July 2011.

Default is Inevitable unless ..

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The EU has forecast that Ireland's Debt/GDP percent will reach 118% next year. This is viewed in most official circles as just about 'manageable' presuming favourable growth rates and adherence to current bailout terms.

However, it ignores the fact that, unlike most other EU states, there is a large divergence between Ireland's GDP and GNP as the former includes the enormous profits of multinationals which are taken overseas and don't really touch the local economy.

If GNP is used instead of GDP, Ireland's forecast Debt/GNP percent for 2012 shoots up to about 144%. Even if account is taken of Irish corporation profits tax paid by multinationals, the ratio hits 139%. This is off the scale and puts Ireland on a par with beleaguered Greece.

An Irish default is almost inevitable unless the EU, IMF and ECB apply much more flexible and realistic bailout terms.

Letter published in the Sunday Business Post on 29th May 2011.

I have become so concerned about Ireland's looming economic and social crisis and the absence of any robust response by the Government that I wrote the message below to all TDs on 11th May.

I have highlighted my comments about GDP and GNP because:

  1. Almost uniquely within the EU, GNP is a much better measure of Ireland's economic activity and strength as it excludes profits of multi-nationals which are taken overseas.
  2. According to the ERSI's latest Quarterly Economic Commentary, the gap between GDP and GNP could widen from 22% to 27% by 2012. This makes the situation much worse than that portrayed in my message to TDs.
  3. The EU has today (13th May) indicated that Ireland's debt to GDP could reach 118% by 2012 - a year earlier than estimated the Government in its Jobs Initiative - May 2011.

This reinforces my belief that, unless rescued (rather than punished) by its EU partners, Ireland has no hope of avoiding involuntary default within the next few years with most serious consequences for the State and entire EU.

Here is the message sent to TDs:

Pension Levy Hits a Soft Target

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Now that Irish private sector pension funds can be raided, why do bondholders of busted banks and gold plated public sector pensions remain out of reach? Is it simply because we are softer targets than German, French and Irish public sector pensioners?

Letter published in the Irish Times on 13th May 2011.

Nyberg Report

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The Nyberg Report contained sections entitled The Herd, The Silent Observers and The Enablers. I look forward to a sequel dealing with The Developers, The Politicians, The Professionals, The Spinners, The Cronies, The Eurocrats, The Chancers and The Suckers. Should be a best seller.

Letter published in the Sunday Business Post on 1st May 2011.

One Letter & One Month

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Based on the new Government's approach to the bank bondholders, the only difference between FF and FG appears to be one letter and one month.

Letter published in the Irish Times on 13th April 2011.

Banking Crisis: Help Us or We Default

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It is almost two months since my last entry. In the interval:

  • We've had a general election in which the Fianna Fail and Green parties were comprehensively rejected by the electorate in favour of a Fine Gael and Labour Coalition.
  • The Moriary Tribunal has reported and concluded that a former Goverment minister had accepted payments from a Irish businessman in return for helping to influence the outcome of a competition to award his company an extremely lucrative mobile phone licence. 
  • After over two years of drip feeding bad news and "kicking the can down the road", we are now approaching the endgame in relation to the banking crisis with the production of further stress test results.

This extended entry reviews the banking crisis and EU/IMF/ECB rescue package under the following headings:

        1. Depth of the Black Hole
        2. Putting the Cost in Context
        3. No Moral Hazard for Golden Circles
        4. Central Bankers were Asleep
        5. Default is Inevitable
        6. Irish Taxpayers Rescuing Foreign Banks
        7. Ourselves Alone or Kind Strangers
        8. Package Deal including CPT.

This entry conclude that in the absence of basic changes to the terms of the rescue package Ireland will be obliged to default. To prevent this outcome, it proposes changes to the package's interest rate, selective restructuring of outstanding bank bonds and temporary concessions on the politically sensitive, Irish corporation profits tax rate.

Fairness in Health

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As one of the best-paid Ministers of Health in the world, Mary Harney's take-it-or-leave-it offer to funding for Thalidomide sufferers as reported by Susan Mitchell (19th December) is extraordinary. Her offer of €62,500 lump sum plus an annual €,680 per survivor contrasts with her own prospective retirement package(based on those quoted for Ahern and Dempsey) of over €300,000 paid in first year in addition to an annual pension in excess of €120,000.

Letter published in the Sunday Business Post on 2nd January 2011. This letter was not tended to be a "dig" at Mary Harney but rather to illustrate (a) the extreme inequity in Irish society and (b) the extent to which our politicians are divorced from their constituents and have feathered their own nests.

Vote Against IMF/EU/ECB Bailout

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Here is the text of a message sent to all TDs ahead of the Dail debate on the IMF/EU/ECB rescue package on 15th December. This debate lasted two hours and the package was approved by 81 votes to 75.

I would ask you to reject the IMF/EU bale out in the vote on Wednesday on the following grounds:

- Our debt crisis cannot be solved by increasing our national debt.

- Our deep recession cannot be reversed by reducing economic activity.

Please note that the €85 billion rescue package includes €17.5 billion of our own money and up to €35 billion could end up being used to "rescue" major continental banks and the ECB.

It appears to me (and many experts) that Ireland will default sooner or later as the bale out terms are too onerous and growth projections are unrealistic. So, lets nip the problem in the bud as delay will only make matters much worse.

If the bale out is rejected by the Dail, the worst that can happen is that the terms will have to be renegotiated to slash the composite interest rate and restructure senior bank debt. To facilitate the latter, a clear distinction must be made between sovereign and bank debt.

Finally, this is one of the most important votes ever taken in the Dail and I would urge you to vote in the national interest rather than on party lines.

Click the Continue Reading link below to see replies received (as at 21st December):

Reject IMF Baleout of Banks

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The EU is foisting a massive loan (€50+ bn) on Ireland in order to rescue the ECB and major banks which irresponsibly lent to Irish bubble banks. This will only worsen Ireland's position as the principal could amount to about one-third of our GDP and the interest burden could equate to about one-quarter of all income tax receipts. This, on top of everything else, is unsustainable.

The bale out should be rejected. Instead, Ireland must introduce a bank resolution scheme by copying the UK version and secure ECB support to negotiate a deal with bondholders. Meantime, Ireland will pursue a four-year plan to reduce the deficit.  In this way, pain would be shared by all participants and because the Irish banking crisis is exceptional, contagion should be contained.

Letter published in the Sunday Business Post on 21st November 2010.

How to Resolve the Crisis

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The Government should invoke force majeure and immediately introduce legislation to halve the salaries and pensions of all highly-paid people in the public sector and dispense with all special entitlements.

It should signal that it will aggressively contest any attempts to frustrate these actions. They must be fully implemented before the budget to ensure that, unlike previous budget announcements on pay and pension cuts for ministers and senior civil servants, they will not be watered down or reneged on. Such a move, backed by the Opposition, would demonstrate leadership to citizens and financial markets.

From this high moral ground, the government should then negotiate pain-sharing with bondholders alongside the introduction of a bank resolution scheme; nationalise both main banks; pull back on Croke Park Agreement; finalise the four-year plan; secure support for the 2011 budget; and hold a general election. All these things could be done by next spring when Ireland could re-enter the bond market with a much stronger investment case and brighter future.

Lead letter published in the Sunday Business Post on 14th November 2010.

Say Cheese

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The big cheeses say 'hard cheese'. They must be crackers if they think people will swallow this.

Letter published in the Irish Times on 6th November 2010.

Moral Hazard with Justice

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Many international commentators including the Wall Street Journal, New York Times, Financial Times and Economist have queried the pain being inflicted on Irish taxpayers arising from the banking crisis. They had anticipated that taxpayers would be at the end of the pain queue after shareholders, management, borrowers and lenders.

Instead, they have been pushed to the front of the queue immediately after bank shareholders. At the same time, managements continue to enjoy huge salaries and pensions, borrowers get massive bale-outs thanks to taxpayer-supported Nama, and lenders are secured by guarantees underwritten by taxpayers.

Where is the "moral hazard" and justice in this?

Where are the public enquiries into the destruction of over €50 billion of wealth?

Where are the apologies and offers of restitution from the still wealthy borrowers hiding behind limited liability and sloppy documentation?

Where is the political leadership that puts citizens ahead of cronies and sound strategies ahead of self-serving spin?

Where are the prosecutions for blatantly fraudulent, reckless business activities?

Letter published in the Sunday Business Post on 10th October 2010. 

Economic Recklessness

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Through greed, incompetence and negligence a few hundred people have set this country back a decade, or more, in economic and social terms. In the few cases where "sanctions" have been applied, they have amounted to big pensions and fat payoffs instead of sanctions and punishments.

Notwithstanding the magnitude of the crisis, we still see no plans for a comprehensive public enquiry and we know that proving white collar crime can be extremely difficult due to complexity, wriggle room and "lapses of memory".

Given the scale of the economic and social devastation, it is inconceivable that any further painful remedial measures will be accepted by the nation unless firm lessons on "moral hazard" are seen to have been applied.

This could be done by designating economic recklessness (alongside the existing crime of reckless trading) as a crime and setting up a judicial or Dail-based investigation to identify the most culpable organisations within the public and private sectors based on public testimony of experts. The Honohan and Regling scoping enquiries would be relevant inputs regarding developments prior to September 2008.

Having decided which boards and groups of administrators should be examined in detail, the investigation should proceed with public questioning of relevant individuals leading, where appropriate, to files being passed to the ODCE or DPP. The level of proof for economic recklessness convictions should be the civil rather than criminal level to take account of the difficulties associated with prosecuting "white collar" crime.

Penalties for economic recklessness should include lengthy prison sentences, massive fines (linked to the wealth of the convicted) with significant scaling back for those who admit complicity or become whistleblowers.

Name for Dublin's Wheel

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How about "The Spinning Wheel" to reflect the fact that our politicians are always spinning and going around in circles?

Letter published in the Irish Times on 25th August 2010. Other suggestions included:

  • Ireland's Eye
  • Whirly Gig
  • Dublin Money-Spinner
  • Wheel of Fortune
  • The Wheeler Dealer
  • Roulette
  • Dublin Eye Soar
  • The Turning Point
  • Wheel-a-Wheel-Abhaile
  • Eye of the Tiger (RIP)
  • Dub Hub
  • Eye'll Go On
  • Pointless

Fine Gael Leadership

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So, a second rate-leader with a first-rate front bench is going to end up with a new second-rate bench. Hardly, a recipe for electoral success.

Letter published in the Irish Times on 19th June 2010.

Nama and Freedom of Information

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The call by Alan Dukes, director of Anglo Irish Bank, for Nama to be covered by the Freedom of Information Act should also embrace Anglo given that it could account for about half of all loans going into Nama. This should enable taxpayers to find out about Anglo's bondholders, the cost of winding up and its extraordinary lending decisions.

By my reckoning Nama will, unless it is very lucky or tough-minded, have to write off about €11 billion of unpaid interest on top of loan defaults of least €20 billion over the next ten years. Given the scale of these losses, it is essential that Nama's and Anglo's plans and operations be open to maximum public scrutiny.

Letter published in the Sunday Business Post on 16th May 2010.

Changing the Irish Constitution

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As indicated in my posting Your Country Your Call, I submitted an idea entitled New Republic - New Constitution proposing that a Citizens' Assembly be established to help prepare a new Constitution to mark the centenary of the 1916 Rising. You can vote for my entry here.

In this posting, I elaborate on the proposal by suggesting some possible changes to the 1937 Constitution, I cannot be too specific as I don't have all the answers and don't even know all the right questions!  Purposefully, I have steered clear of some potentially controversial issues like the status of Irish, religion and the family. Constitutional law can be very technical and it would be important to consult widely via the proposed Citizens' Assembly and to secure the help of experts and other interested parties.

You can view the Constitution or buy a copy in bookshops for under €3. Relevant material on the Internet includes the following:

Of course, the political parties have their own views on possible constitutional changes as do many representative and special interest groups.

Here are my thoughts to get the ball rolling:

Your Country Your Call

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I have submitted a proposal entitled New Republic - New Constitution to the Your Country Your Call competition which was launched by the President of Ireland. You can see my entry and, hopefully vote for it, at http://tinyurl.com/y7en6rh.

It proposes that the Citizens' Assembly mechanism be used to undertake a comprehensive review of the 1937 Constitution with a view to a new Constitution being put to a referendum ahead of the centenary of the 1916 Rising. A New Republic with a New Constitution would be a much more appropriate way to celebrate this than the predictable parades, flags and monuments.

I had been kicking the idea around for some time but was unable to see how it be progressed without being high-jacked by politicians for their own ends. Several references to Citizens' Assemblies in the inspiring Renewing the Republic series (published by the Irish Times during March/April) were the keys to the door!

Here is my full proposal:

The Way Ahead ...

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Here are my proposals to help address some key issues confronting the Nation. They were originally published on 3rd April as a comment in the Irish Times at the conclusion of its wonderful Renewing the Republic series.


1. Introduce a new income levy for high earners on the grounds that they have been the main beneficiaries of the boom. I can think of several memorable names for such a tax.


2. Beef up the prosecution arms of the State to ensure that all possible resources are thrown at the the few hundered or so people who through greed and incompetence created the mess.


3. Have a general election and ensure that those elected agree to root and branch reform of the Dail. Here are some suggestions dating back to 2003 to get the debate started. Only one (related to expenses) has been partly implemented to date (after seven years !!!).


4. Establish a Citizens' Assemby or similar to commence drafting a new constitution with a view to launching a Second Republic to mark the centenary of the 1916 Rising.**

** This suggestion has been submitted as a proposal to Your Country Your Call.

Irish Banking Enquiry - 2

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The Government's convoluted, evasive plans for a banking inquiry are a bucket of whitewash and waste of time. They insult the electorate who will bear the cost of the crisis without ever seeing and hearing exactly why and how it happened.

We need is a new type of inquiry which is a mix of tribunal and commission and provides for membership by politicians and others. It should have subpoena/discovery powers, take evidence under oath, make findings, exclude lawyers, be open to public and televised, have an independent chairperson, engage expert support staff, hold private hearings by exception, have power to refer to ODCE/DPP/Gardai and so on.

Letter published in Sunday Business Post on 31st January 2010. For a more detailed discussion on these proposals, see Irish Banking Enquiry.

George Lee's Resignation

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George Less is a person of enormous integrity who I admired greatly during his time with RTE. In truth, I was very disappointed when he joined Fine Gael as I felt that his RTE role was much more significant than any opportunity that might arise within the party and that he would be compromised by it and the Dail. However, his resignation fully restores my faith in him as a person of great integrity and ability and I hope that he will revert to a key reporting position at RTE.

Letter published in the Irish Times on 9th February 2010.

Irish Banking Inquiry

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The Irish Government's convoluted, evasive plans for a banking inquiry are a bucket of whitewash and waste of time. They insult the electorate who will bear the cost (€40+ billion) of the crisis without ever seeing and hearing exactly why and how it happened.

We need is a new type of inquiry which is a mix of tribunal and commission and provides for membership by politicians and others. It should have subpoena and discovery powers, take evidence under oath, make findings, exclude lawyers, be open to public and televised, have an independent chairperson, engage expert support staff, hold private hearings by exception, have power to refer to ODCE/DPP/Gardai and so on. There are plenty of examples of this type of inquiry including the US's Financial Crisis Inquiry Commission which is examining a much more complex crisis than Ireland's and required to report by the year end.

A quick referendum would also facilitate other major inquiries in the future. It would make sense to delay the banking inquiry until the necessary changes could be introduced.

The Government needn't spend three months scoping its flawed approach to a banking inquiry. Instead, it should look at the terms of reference for the Financial Crisis Inquiry Commission. Most of them are relevant including role of regulator; monetary policy and availability of credit; accounting practices; tax incentives; capital requirements; credit rating; lending practices; concept of "too-big-to-fail"; corporate governance; compensation structures and levels; legal and regulatory structures; quality of due diligence; and fraud and abuse. To these, I'd add role of media and commentators; role of ministers and government departments; and relationships between politicians, developers and bankers.

Needed to say, a proper inquiry would not stop at September 2008 and should investigate the basis for the bank guarantees (relating to liabilities exceeding €400 billion), Nama (cost to taxpayer unknown but could exceed €10 billion), nationalisation of Anglo Irish Bank (€4 billion injected and another €6+ billion to follow) and provision of €7 billion in preference shares to Bank of Ireland and AIB (at a time when their combined market capitalisation was a fraction of this) with billions more to follow.

It is quite clear that the Government is doing its very best to frustrate the electorate's demand for an inquiry by doing as little as possible and working as slowly as possible. At the very least, the Opposition should withdraw all support for the proposed inquiry and undertake to set up a public inquiry when they win the next election.  

Ministerial Pay

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Having sat on it for three months, the Government slipped out the latest report by the Review Body on Higher Remuneration in the Public Sector in the wake of the budget. Its approach was to compare Irish salaries with those in Germany, UK, Austria, Netherlands, Belgium and Finland.

It found that the Taoiseach's and ministers' salaries were the second highest and that salaries of Secretary Generals were the highest. Even after adjusting for pensions, tax and purchasing power, Irish salaries were still well ahead for most countries. In comparison with Finland (population 5.4 million), the Taoiseach's salary was 33% higher than his opposite number, ministers were 20% ahead and secretary generals were 52% higher. On this basis, Ireland's administration has a long way to go to become competitive and the cuts announced in the budget were merely a first step.

With the Dail in hibernation, ou highly-paid Government should note that the Finnish Parliament sits in non-election years for about 150 days a year as compared with just 90+ for the Dail.

Letter published in the Irish Times on 29th December 2009.

Mental Reservations and Mature Reflection

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Is it too much to expect people in public positions to answer questions truthfully without recourse to mental reservations, mature reflection or overnight consideration?

Letter to editor published in the Sunday Business Post on 6th December 2009.

Politicians' Expense Scandal is Small Fry

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The current outrage about politicians' expenses is well justified and must lead to a complete reform incorporating a vouched system and lower expense rates (e.g. for attending the Dail). The message to politicians is that they should stop arguing, fix it and then move on as there are much bigger fish to fry.

Preoccupation with politicians' expenses and the million euro payment to a former FAS executive should be contrasted with the proposed payment by Nama to the banks. This is 54,000 times greater.

To put this in context, a million euro of €10 notes laid end-to-end would stretch from O'Connell Street to Howth whereas the Nama payment could be wrapped 17 times around the earth at its widest point. Given the magnitude of Nama and the limited information available (we know much more about the Ceann Comhairle's expenses), surely the Dail should spend more time discussing the principles of Nama rather than the minutiae of the bill. An expert-supported, forensic examination of Nama and its proposed pricing methods might help close the stable door before, rather than after, Nama bolts.

Also, compare the FAS furore with the deafening silence and absence of sanctions surrounding current and former ministers, bank directors and senior banking, public sector and regulatory executives for leading the entire economy to the edge of a precipice and then demanding that everyone else pays for their incompetence.

Nama - Three Suggestions

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The following message about Nama was sent on 4th October to all TDs and Senators as a follow up to that sent on 28th August. Several recipients pledged to raise the suggestions in the Dail or at the Committee stage of the Nama Bill. Whether any of them make it into law remains to be seen.

On 28th August, I wrote to you signifying my deep concerns about Nama. In the event that Nama proceeds in its present form, I wish to offer the following suggestions to help enhance public trust and improve its effectiveness:

1. Whistleblowers' Charter

The Nama Bill covers corruption, acting in bad faith, conflicts of interest, lobbying as well as failures to comply with obligations. It also provides for extensive reports, audits and accountability. Provision should also be made for a whistleblowers' charter to cover staff within Nama, covered institutions, debtors, advisers and service providers so as to help ensure that these parties all operate to the highest professional and ethical standards.

2. Reporting on Policy Matters

As the incumbent Minister for Finance will effectively control a €90 billion property empire and as several individuals of different political hues could fill this role over the life of Nama, robust checks and balances are essential to ensure that these ministers cannot use Nama in any manner at variance with its original purpose. To see how easily this can happen, consider Nama's sister body, the National Pension Reserve Fund which was set up to develop an international investment portfolio over a twenty-year horizon. Eureka, at the Minister's direction it now holds €7 billion of Irish bank shares amounting to a third of its total assets. Sections in the Nama Bill preclude its Chairman and CE from discussing policy matters with Oireachtas Committees. As things stand, these committees could be prevented from raising major issues, such as pricing of asset sales, on the grounds that these are policy matters. These sections should be removed and senior management should have unrestricted access to Oireachtas Committees.

3. Management Resources

After market risk, the key variable determining the success of a venture is usually managerial risk. In Nama's case, the former will be addressed largely by the size of the so-called haircut. To address the latter, Nama's senior management team must have extensive direct experience of world-scale asset recovery and portfolio management. Reliance on local secondments, expensive advisers and delegation of anything but basic administrative activities back to covered institutions should be minimised. The proposed staffing of Nama is only a fraction of that used by the Swedish "bad" bank operation which dealt exclusively with nationalised banks and had a loan portfolio far smaller than Nama's. It appears that Nama's inhouse staff of under a hundred people people will be managing a highly fragmented, complex portfolio worth €77 billion and covering 20,500 loans linked to almost 2,000 developers' business plans. Such an approach is penny wise and pounds foolish and is equivalent to sending a boy on a man's errant. Accordingly, the management resources and expertise within Nama must be appropriate to managing one of the largest property portfolios in the world even if this entails much higher operating costs than envisaged to date.

Thank you for reading this. I would welcome feedback or comments but please don't simply reply with a canned response or by enclosing any more general policy documents about Nama.

Say Sorry & Resign

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A shorter letter from the Ceann Comhairle to the electorate incorporating the words "sorry" and "resign" would have been more appropriate.

Letter published in the Irish Times on 16th September 2009.

Nama's Role in Price Rigging

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The property market is in the doghouse simply because, as dogs on the street know, prices have to fall considerably further to make long-term economic sense based on yields and prospective interest rate increases.

Clearly the Government is not listening as it strives to ensure that Nama will be able to exploit its dominant market position to keep prices artificially high for the benefit of bank shareholders, bondholders and developers. Surely this amounts to price rigging and State subsidisation and is contrary the public interest.

Nama - TDs and Senators

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The following message was sent to all TDs and Senators on 28th August 2009. It was acknowledged by about forty recipents who mainly supplied canned responses with attachments about party policies.

I'm very concerned about the Government's approach to resolving the banking crisis and wish to make the following points to you as a public representative in the hope that you can influence or lobby the Government:

  1. As the economy moves through an unprecedented recession, all possible measure should taken to ensure that credit is readily available for viable projects and credit-worthy borrowers. It is impossible to see how this can be done by a lame-duck banking system which is being pulled in several directions - to lend more, protect shareholder value, ration credit to improve ratios, hoard resources to cover bad debts, and make guarantee and recapitalisation payments to the state. 

  2. While the Minister for Finance views bank nationalisation as the "last resort", he must also appreciate that the main banks continue to operate thanks to the State's guarantees for €400 billion, its €7 billion preference share investment, its plan to purchase €90 billion of their loans and, if needs be, to take equity stakes.

  3. Nama is a huge gamble which exposes taxpayers to a multi-billion euro hit if prices paid for the loans prove to be too high. In these circumstances, the banks would emerge unscathed and their shareholders would make massive gains as the economy recovers. If you think that this couldn't happen, recall that an insurance levy paid for many years to bail out AIB after its ill-fated takeover of ICI. Note: This was incorrect - the levy related to the failure of PMPA.

  4. As the Government has a responsibility to protect the banking system and taxpayers ahead of banking institutions or bankers, it is very hard to understand why it doesn't simply "bite the bullet" and temporarily nationalise the main banks as a central element of Nama's rescue mission. Given that it holds the whip hand, the Government could cut deals with bank stakeholders to ensure that gains and pains are shared more fairly.

Thank you for reading this.

Who will Control Nama

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Based on the draft Nama legislation, the Minister for Finance will effectively control a €90 billion property empire and, given Nama's expected life span, several individuals of different political hues could fill this position over the next decade.

This raises concerns about the robustness of checks and balances to ensure that these ministers don't use Nama for pet projects at variance with its original purpose. Couldn't happen?

Just look at Nama's sister body, the National Pension Reserve Fund which was set up to develop a high-grade, international investment portfolio over a twenty-year horizon. Suddenly, at the direction of the Minister for Finance, it has been stuffed with €7 billion of Irish bank shares amounting to a third of its total assets.

Any requirement that finance ministers account for Nama to the Oireachtas offers absolutely no solace based on that body's track record. Instead, the legislation must include overarching controls to ensure that Nama cannot become a ministerial sweet shop offering goodies like bail-outs, tax-breaks, benchmarking and decentalisation.

Role of Nama

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Why is the Government proposing to use Nama to prevent a decline in property prices at a time when Ireland has the second highest cost of living in the EU?

Surely, it should be encouraging lower prices as these would result in cheaper houses, lower shop prices and more competitive commercial and industrial rents. Instead, taxpayers are expected to underwrite a multi-billion punt on Nama to ensure that property prices don't fall and that the country remains uncompetitive.

Lead letter published in the Irish Times on 26th August 2009.

Unemployment Crisis

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The Minister for Finance told the Dail on Wednesday last that the unemployment rate will hit 15.5 percent next year. This compares with 11.4 per cent last month and just 5.4 percent for April 2008. Unemployment is expected to reach 366,000 during 2010. This is almost 60% higher than the highest level encountered during the dark eighties - it can be no consolation to the unemployed that the labour force has increased substantially in the interval.

If public sector employment remains steady at 360,000 then private sector will continue to bear the brunt of unemployment. This will bring the sector's unemployment rate to almost 19% notwithstanding across-the-board wage freezes and reductions, impaired pensions and substantial rationalisation.

It begs the question as to why, in this unprecedented crisis, the public sector continues to enjoy a substantial like-for-like wage premium, excellent pension arrangements (notwithstanding the recent levy) and near absolute job security. Surely, it is time for the entire public sector to engage, without preconditions, in a major programme of reform and productivity improvement to align itself more closely with the private sector.

For its part, the Government and opposition should set aside their petty party differences and lead an immediate action plan to contain unemployment, reduce public expenditure, unblock the banking system, protect the least well-off and restore medium-term confidence and competitiveness.

In parallel, the social partners parties must get off their ideological high horses; accept that a substantial across-the-board decline in living standards is inevitable; and start working with the Government to ensure that the major surgery needed to restore the economy's health is executed as fairly as possible. The quicker this is done the sooner the recovery can start.

Get the Government We Deserve

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This Government is quite clever in the way that it periodically creates smoke screens to distract from underlying issues. The latest example is reshuffling junior ministers to hide gross excesses in the remuneration and expenses of politicians. Clearly, the Government has used a feather duster instead of a chain saw notwithstanding that it promised in the last budget to "lead by example".

Of course, this is not surprising given that, apart from a few sacrificial lambs, none of the hundred or so individuals in the public and private sectors who led the economy over a cliff have suffered meaningful sanctions or even offered unqualified apologies.

All the signs are that the economy will decline by about 14% between mid-2008 and 2010 and that only about one-third of this decline may have already occurred. This is confirmed by the expectation that the tax increases announced in April will have to be repeated, in one form or another, in budgets for 2010 and 2011.

On this basis the worst has yet to come. The Government's most recent initiative has been to scuffle a few meaningless jobs instead of showing real leadership to drive through root-and-branch changes to reduce public expenditure, sort out the banking system and restore medium-term confidence and competitiveness. When those fortunates with jobs see the impact of higher levies on their pay slips at end May, they will be in no mood to tolerate a Government that pussy foots around the excesses of the Celtic tiger and fails to "lead by example".

A rout of the governing parties in the local and European elections could easily provoke a crisis of confidence within the Dail and lead, for better or worse, to an early general election. This time around, the electorate should ensure that it votes for a government that leads from the front and is both firm and fair.

Sharing Economic Pain

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Your editorial (16th March) about Oireachtas reform stated that the question is not whether there should be cuts, but how deep cuts should go.

For starters, the Minister of Finance should announce an immediate reduction of about one-third in the salaries, pensions and other perks enjoyed by politicians and across the upper reaches of the public service. This might seem Draconian, but it would only deflate a big bubble and bring things into line with other comparable countries with which Ireland is expected to compete.

If the Government makes such an announcement on or before budget day, it will send the clearest possible signal to the electorate and international observers that it understands the seriousness of the situation and is leading by example.

If it fails to do so, there is every chance that it will not secure the electorate's support for the budget measures. In these circumstances, it is possible that even more painful medicine will be imposed unilaterally by the ECB or IMF as a precondition of a financial bailout.

Letter published in Irish Times on 23rd March 2009.

Proposals on Crisis

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The following proposals are aimed at those in leadership positions and the higher paid. While small in number, they are hugely important for setting example, restoring fairness to the tax system and contributing to the national finances and competitiveness.

  1. Salaries, pensions and expenses of ministers, TDs and senators should be reduced by, at least, one-third and instead of being pegged to overblown civil service scales, their salaries should be linked to those of politicians in other states of comparable size and status, and having similar parliamentary sitting days.

  2. Salary scales of senior administers and professionals across the public sector should also be benchmarked against opposite numbers in other comparable countries and linked to the average industrial wage. In the interests of fairness, the proposed pension levy should be restructured as was done for the income levy.

  3. As applies in the US, exceptional salaries in the private sector should be funded by shareholders rather than subsidised by taxpayers. Accordingly, any elements of total salary, bonus and pension contribution exceeding €200,000 should cease to be deductable for corporation tax purposes.

  4. The conditions applicable to non-residency for tax purposes should be reviewed so that non-residency means exactly what it says or tax exiles pay up like every other citizen. For starters, tax should be changed on worldwide incomes of tax exiles pro-rate to days (or part of) spent in the state.

  5. Having been introduced to encourage greater participation in the work force, tax individualisation should be phased out to help distribute scarce jobs across more households. Dual-income households with high mortgages that voluntarily become single-income should get special tax credits or be able to extend the term of their mortgages.

  6. A new tax rate of 48% should be applied to the 60,000 tax payers with incomes above €100,000 a year. The annual yield would be about €800 million, and could be higher if allowances for "top-hat" pensions, investments etc. are reduced. If applied immediately for the next five years, these changes could cover about a quarter of the projected €16 billion shortfall.

Letter published in the Irish Times on 10th February 2009.

Facing Reality

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Nothing illustrates the Government's weak-kneed approach to the crisis more clearly than the fact that on the same day that President Obama demanded that US companies receiving bailouts should limit executive salaries to US$500,000, our Taoiseach who earns more than President Obama merely urged top executives in banks covered by tax payers' guarantees to take 25 per cent salary cuts. Arguably, a maximum salary of about €200,000 would be appropriate for Irish bank executives when account is taken of their size relative to their US counterparts

Supplementary Budget

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Here are some suggestions for the Minister for Finance to consider when he is obliged by circumstances to present a supplementary budget early in the new year in response to the disastrous economic downturn which is still gathering momentum.

They should be implemented in the context of a realistic, attainable five-year plan for which the support of the social partners and opposition should be sought. Given that these are unlikely to acquiesce even though they offer no alternatives other than to strut, whine and oppose, the government should, for once, show real leadership and forge ahead on the grounds that there is no alternative and early action is crucial. Most people will accept pain provided it is seen to be fairly distributed and there is hope at the end of the tunnel. The alternative is much higher unemployment, cutbacks, emigration and extreme hardship which will take a decade to unwind.

As those who gained most from the Celtic Tiger should pay the most, the income levy percentages should be extended on a sliding scale from 0% for the lowest paid up to, say, 10% for those on the highest incomes. Alternatively, a new higher tax rate should be introduced for those earning more than, say, double the average industrial wage.

Given that payroll costs account for half of all public sector expenditure where salary rates are well ahead of equivalents in the private sector and internationally, the Government should roll back the first benchmarking exercise and plead "inability to pay" other than to the lowest earners under the new national wage agreement. It should only recommence payment of increases once major reforms have been confirmed by An Bord Slash.

Taxpayers can no longer be asked to subside "gold plated" pensions for politicians and public servants when the value of their own pensions (if they have one) is dropping through the floor. The Government should establish a realistically funded contributory pension scheme in lieu of the present prohibitively expensive and inequitable "pay-as-you-go" arrangement. As a stop gap, full PRSI should be applied across the public sector and, in recognition that PRSI is income tax in all but name, earnings limits should be removed for all workers in the private sector.

The foregoing measures will arrest the catastrophic deterioration in public finances and enable the new standard VAT rate of 21.5% to be reduced substantially. This will help the lower paid as well as assisting tourism and curtailing cross-border shopping.

Finally, the Dail should immediately start sitting for four full days every week for at least forty weeks a year. To ensure genuine debate and better decision making, backbenchers should be pressurised by constituents to exercise greater freedom of expression in Dail debates, and voting linked to constituents' needs rather than party loyalties should become the norm rather than the exception.

Lead letter published by Irish Times on 8th December 2008.

Waste in FAS & Dail

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Our public representatives in Leinster House should get their own house in order before throwing stones about expenses and wasting money.

TDs enjoy some of the highest salaries in the world for sitting in the Dail for less time than opposite numbers in most other countries. These assemblies which operate for under two days a weeks are grossly over manned and hopelessly inefficient and ineffective due to archaic procedures and conventions.

TDs enjoy excellent allowances and related perks which are not necessarily taxed or even vouched for. On top of that, they have extraordinary pension deals and are free to employ relatives at the taxpayers' expense. They throw patronage around like confetti by creating non-jobs for many Minsters of State and Committee chairpersons and appointing friends and camp followers to the boards of hundreds of quanoes which are often used to shield them from accountability.

If our representatives were paid on the basis of results, they would now be hugely indebted to the taxpayer.

Maybe, they would reflect on their own value-for-money during the forthcoming six-week Dail recess.

This letter was published in the Irish Times on 28th November 2008. 

Citizens' Initiative

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Given that the main political parties all supported the Lisbon Treaty, would they consider adopting a measure for Ireland similar to the Treaty's Citizens' Initiative whereby at least a million EU citizens from a significant number of member States could request the EU Commission to bring forward proposals on a particular issue?

Based on the Lisbon model, we could be talking about a minimum of eight thousand citizens from, say, six counties being able to oblige the Cabinet or Dail to consider an issue or for the Government to hold a referendum. Apparently, such a proposal was included in a draft of the 1922 Constitution of the Free State. Citizens' initiatives operate in Switzerland, New Zealand, Estonia and about half the States in the US. A measure along these lines might help bridge the yawning gap exposed by Lisbon between our politicians and the electorate. What issues would readers propose as citizens' initiatives?

Restoring Confidence in Politics

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One of the most troubling things about the Taoiseach's resignation has been the headlines in the international media which used words like resignation, scandal, payments, allegations in various combinations. This damage to our reputation must be urgently addressed by the incoming Taoiseach along the following lines:

  1. Take the long overdue Ethics Bill in the current Dail session.
  2. Introduce legislation to protect all whistle blowers in lieu of the current patchwork sectoral approach.
  3. Roll back changes and charges relating to Freedom of Information and broaden its coverage.
  4. Give more powers to Dail committees to conduct investigations along the lines of the Public Accounts Committee.
  5. Establish a Dail Committee to confirm all significant Government appointments to State boards etc.
  6. Preclude Ministers from signing non-essential orders or making appointments once an election has been called.
  7. Clear up all the obvious flaws governing donations to politicians before and during elections.
  8. Follow up on the Standards in Public Office Commission's recommendations.
  9. Require that the accounts of political parties be audited and placed in the public domain.

These measures would kick start the process of restoring the electorate's confidence in the political system and politicians.

Letter published in the Irish Times on 5th April 2008. 

The Taoiseach & The Tribunal

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The most unsettling thing about the Taoiseach and his finances is the failure of judgement being displayed by the governing parties. The Taoiseach should have been "urged" to step aside long ago to facilitate due process and to avoid distracting from effective government of the country. Instead, ministers sat on their hands while burying heads in the sand.

In fairness, the Taoiseach has been a victim of the "no resign under any circumstances" syndrome which permeates Irish politics. A higher standard would have allowed him to step aside with no imputation of wrongdoing and to fight his corner with greater freedom. As a consequence, the country is now being run, if that word can be used loosely, by a distracted government which places parties first, shirks collective cabinet responsibility and betrays the electorate's trust. How can ordinary citizens register their disgust other than by voting No in June?

Letter published in the Irish Times on 2nd April 2008.

Productivity of TDs

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Having recently secured very large salary increases, the Taoiseach and Ministers have been exhorting everyone else to accept realistic pay increases to help maintain our international competitiveness. Well, here is how our TDs compare with their opposite numbers in the UK, our main trading partner:

  • The basic salary for a TD is €97,747 compared with €78,588 (£60,277) for a MP.

  • The Dail sits for about 95 days a year in contrast to 150+ for Westminster.

Based on the foregoing, and ignoring the fact that MPs serve much bigger constituencies, the basic salary cost per sitting day for a TD is about €1,028, double that for a MP €524). Maybe the Ceann Comhairle and some TDs could take a day trip to Westminster during the Easter recess to see how to instigate a four day, forty week year.

Trust the Government?

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On Friday's Morning Ireland Senator Mansergh compared the Taoiseach's appearance at Mahon to an aircraft in turbulence coming in to safely land. Others would view it as a catastrophic crash landing happening in (very) slow motion.

In the light of their sustained attacks on Mahon, it is clear that Fianna Fail and its ministers are making a major error of political judgement and, as always, have placed their party ahead of the country. It is also evident that the Greens and PDs have no courage or convictions and lack any moral standard.

In the light of this, how can the electorate trust the Government's judgement on other matters such as the Lisbon Treaty or their competence to manage our slowing economy?

Letter published in the Irish Times on 23rd Febraury 2008.

Competence of Government

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In the context of providing Irish aid to Africa, your correspondent Mr X (Friday 14th) queried whether Ireland would have make better use of the billions received from the EU if this had been administered by EU-appointed managers rather than by our own Government.

For many people, the answer would have been a definite yes. The time delays might have been shorter, the cost overruns lower and the herd of white elephants smaller.

Letter published in the Irish Times on 19th December 2007.

No L-Plates for the Cabinet

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I disagree that cabinet members should wear L-plates as they seem very competent at parking issues, doing U-turns, overtaking everybody, reversing positions, using airbags, driving in bus lanes, straddling dual carriageways, using fog lights, blowing the horn and driving on both left/right sides.

Admittedly, they are not so good at route planning, driving straight, obeying red lights, negotiating roundabouts, handling slippery conditions, making clear signals and emergency stops.

Letter published in the Irish Times on 22nd November 2007.

Review Body and Public Pay

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It is clear from the reaction to the recent Report by the Review Body on Higher Remuneration that its approach of comparing public sector salaries with the private sector is inadequate. Why should Irish Secretaries General be paid more than their equivalents in almost every other country? If TD salaries are very high by international standards and linked to those of Principal Officers, what does this say about salaries at middle levels in the Irish public sector?  Buried in the Review Body's report is mention of a recent survey, covering 13 countries, that indicated that the remuneration of office holders in all the countries is WELL BELOW (my emphasis) below that of jobs of comparable weight in the private sector. Why should Ireland be so different?

It will be interesting to see if the current review by the OECD of the Irish public sector will include salary comparisons when it benchmarks the Irish public sector against other comparable countries. If it doesn't do this, how can it hope to assess effectiveness and performance given that pay and pensions account for the bulk of public expenditure.

Aside from Review Body awards and benchmarking, the main driver of politician and public sector pay has been the various national agreements which appear to mainly benefit the public sector. Because these agreements provide percentage increases across the board, workers at the lower end of the scale only receive small monetary increases and the gap between top and bottom salaries gets wider on an exponential basis. Is it any wonder that, notwithstanding the smallness of the State, our political and administrative leaders are, thanks to these percentage increases, amongst the best paid in the world?

For the future, the Review Body must be instructed by the Government to take account of comparable public sector salaries in other EU countries and national agreements should make provision for percentage increases to be applied on a sliding scale so that the lowest paid get the largest percentage increases.

Lead letter published in the Irish Times on 7th November 2008.

Taoiseach's Salary

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How can a prospective salary of €310,000 for the Taoiseach be justified when the UK's Prime Minister only earns €270,000 (€187,611) and the US President gets €281,700 ($400,000) ? Is it any wonder that Ireland is losing its competitiveness and public sector costs are surging when people at the top so blatantly ignore the need for pay restraint.

Letter published in the Irish Times on 30th October 2007.

Celtic Nightmare

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Does projected economic growth of 5% a year mean, for example, that we'll have:

  • 5% more cars on the road each year for the foreseeable future?
  • 5% more children trying to get into schools every year?
  • 5% more people crowding each year into our hospitals?

Will this growth continue to undermine our national competitiveness as has happened during the recent years? If so, the net result will be that cars will be barely usable due to congestion, more children won't get places in schools, the health service will implode and no one will want our overpriced exports. Surely this is a Celtic nightmare and absolutely unsustainable or undesirable.

Will some politician please stand up and articulate a vision of Ireland which allows the country to consolidate and draw economic breath.

Decentralisation - Two Rules

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Why should Aer Lingus be expected to adhere to the Government's National Spatial Policy when the Government's own decentralisation plans have ignored it?

Letter published in the Sunday Business POst on 26th August 2007.

Taoiseach and the Economy

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Only weeks after stuffing the electorate with promises of lower taxes and better services, the Taoiseach tells us (7th June) that we are entering a period of challenging economic conditions and that it is important to focus on restoring and renewing competitiveness across all dimensions. Isn't it really strange that this is the second occasion that conditions have deteriorated immediately following an election?

In fact, absolutely nothing has altered during the past month to justify this about face. However, if the Taoiseach believes what he says then he could lead by example and slash the inflated salaries of ministers/TDs who are amongst the best paid in the World. He should then shake up the public sector to bring it into line with performance and pay norms in the private sector and ensure that lump sum wage increases rather than socially-device percentage increases are applied in future national wage agreements.

Unless measures along these lines are taken to restore our increasingly unbalanced, uncompetitiveness, overpriced and overborrowed economy, we will see a continuing deterioration. Action now would be less painful than the appalling prospect of having to abandon the euro for a floating Irish pound in order to recover the levers of economic management. This would improve competitiveness but at the expense of even higher prices and interest rates.

Letter published in the Irish Times on 13th June 2007. 

Fewer TDs - Better Dail

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Given that electoral boundaries may need to be revised in the light of the preliminary Census results, we should go the whole hog and have a referendum to reduce the total number of TDs.

The Dail sits for less than a hundred days a year and TDs are paid around €100,000 plus expenses of about the same amount. On this basis, a TD directly costs about €2,000 per sitting day presuming 100% attendance. If actual attendance time in the chamber is about 20%, then the cost shoots up to €10,000 per attendance day. It would be far better for democracy if the Dail were to sit for, say, 160 days a year with fewer TDs and with revamped procedures so that all TDs could have meaningful legislative roles as mandated by the electorate. By way of comparison, UK MPs are paid about the same as TDs notwithstanding that MPs have much larger effective constituencies and their Parliament meets for many more days a year and for proportionately more hours than the Dail.

All candidates in the forthcoming general election should be asked by voters to undertake, if elected, to ensure that the new Dail sits for four full days a week and forty weeks a year. If this commitment cannot be given, they do not deserve to be elected as part-time legislators.

Letter to the Sunday Business Post published on 13th August 2006.

Aer Lingus Privatisation Submission

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Here is a detailed 6-page Submission made to the Oireachtas Joint Committee on Transport on 11th April 2006 in connection with the proposed privatisation of Aer Lingus which I opposed. Here is a copy of the Joint Committee's Report (Word document).

On 7th March 2006, I made a submission to the Review Body on Higher Remuneration with a copy to Brian Cowan TD, Minister for Finance.

It urged that the Review Body should take account of and publish international comparisons when it devises new salary levels. Here is the submission . And, here is the Review Body Report which made virtually no effort to make any international comparisons.  

TDs are Winning Race to the Top

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The Government is continually emphasising the importance of competitiveness to the social partners as they start negotiations on a new national wage agreement. Are similar exhortations being made to the Review Body on Higher Remuneration in the Public Service which has just commenced a major review?

In the past, this Review Body made comparisons with the domestic private sector jobs but this time around it should also consider similar public sector jobs in other comparable economies.

Much of the data required for this work is published on the Internet. But there are gaps. For example, to compare current salaries of British MPs and TDs, copious material can be found on the Westminster website but the Oireachtas website contains no relevant information. For the record and to illustrate the problem, TDs now earn between 2% and 9% more than their UK counterparts notwithstanding that the Dail meets for only about 60% of the sitting time of Westminster and TDs effectively serve only a quarter the number of constituents covered by MPs. Likewise, Irish Cabinet Ministers and Ministers of State earn between 1% and 5% more than their UK counterparts notwithstanding that they preside over a country that is no larger than some counties in the UK. Is it any wonder that the Irish information is hard to find.

If broader study confirms that other top-level salaries are also completely uncompetitive, the Review Body must confront the "appalling vista" of salary reductions to maintain competitiveness. Of course, they must take account of our recent economic progress. In doing so, it should also take cognisance of the fact that many key public services - health, law and order, transport and infrastructure - has been so ineptly lead and inefficiently managed that major achievements in other areas have been negated.

When establishment figures speak of international competitiveness, they should practice it. For starters, the Review Body on Higher Remuneration should be instructed to take account of and publish international comparisons when it devises new salary levels. This approach should also apply to the forthcoming benchmarking review. Additionally, the negotiators of the next national wage agreement should review the practice of setting percentage rather than absolute wage increases. This only widens the gap between the top and bottom grades and can result in senior officeholders receiving wage increases as large as average wages earned at the bottom.

A race to the top can be just as destructive for the national interest as the race to the bottom.

Note to Editor: The Irish salary levels were secured from the Oireachtas PR Office. A TD earns between €88,556 and €94,205. Ministers earn €199,044 and Junior Ministers get  €136,771. MPs earn the equivalent of €86,636. UK Cabinet Ministers and Minsters of State get €196,447 and €129,872 respectively (Source: House of Commons Fact Sheets M5 and M6).

Lead letter published in the Irish Times on the 13th February 2006.

Dail Productivity

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When the Dail resumes today, it will have sat for just 58 days this year -equivalent to about 1.5 days per week. As a benchmark, UK MPs are paid about the same as TDs notwithstanding much larger effective constituencies (66,000 versus 18,000) and Parliament sitting for 150+ days a year versus 90+ for the Dail. Based on the latter, UK MPs offer seventy percent better value than TDs.

In any other context, this divergence would be viewed as a rip off. To resolve these matters, the Dail should be obliged to sit for four full days a week and forty weeks a year following the next election. If this doesn't suit prospective TDs, then they shouldn't stand for election.

This letter was published in the Irish Times on the 1st October 2005.

Providing for Pensions

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The Minister's concern about the poor uptake of pensions should be seen in the context that all workers are already contributing over 20% of their income tax to pensions. Unfortunately, it is not always for their own pensions. About half their contributions pay the "gold-plated" pensions of public servants and politicians, and the balance is hoovered up by the National Pension Reserve Fund. This assessment takes no account of tax relief granted to the wealthy self employed to create massive pension funds used for estate planning.

The following suggestions would put fairness into national pension arrangements and help resolve the looming pensions crisis:

  1. The next round of benchmarking should take full account of the cost and value of public sector pensions. This means that staff should be given the option of maintaining current pension rights with salary reductions to cover the full cost of entitlements, or of holding current salary levels and funding their own pensions on a discretionary basis. In addition, the State should progressively introduce self-funded schemes for all its employees.
  2. There should be a cap of, say, a million euro on the value of tax-deductable contributions to a pension fund for any individual.
  3. State organisations with pension deficits, amounting to a billion euro, should be required to sort these out internally and not be baled out by the taxpayer and by raising prices to consumers.
  4. The role of the National Pension Reserve Fund should be clarified as regards the expected distributions between public sector and social welfare pensions. Indeed, a fundamental reassessment of this organisation should be conducted in the context of our surging population and given that invests over a billion euro a year aboard while the State has a deficit in infrastructural funding.
  5. As TDs and Ministers are amongst the best paid and, probably best pensioned, in the world, they should fund their own pensions over and above a basic scheme. The sums involved are not large but there is a principle involved and a lead to be given.

This prescription is likely to be painful but, as everyone knows, it is better to start pension planning earlier rather than later. So, before introducing mandatory pensions, the Government should create an equitable starting point.

Effectiveness of Dail

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The Government Chief Whip (4th August) undermines his defence of the Dail's recesses by acknowledging that  it is hoped to increase Dail sitting times. Why has this not been done before now and why did the Dail sit for 12 fewer days this year than last year?

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 services, infrastructure, environment, responsibility and accountability. It is noteworthy that UK MPs are paid about the same as TDs. However, MPs have much larger effective constituencies (66,000 versus 18,000), and their Parliament meets for many more days a year (150+ versus 90+) and proportionately more hours than the Dail. Is it any wonder that the electorate thinks that TDs are overpaid and that the Dail is in urgent need of root and branch reform.

Letter published in the Irish Times on 9th August 2005.

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.

Decentralisation

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The Government's plan for decentralisation is clearly unplanned, unwanted and unneeded and should be exposed for what it really is, namely, a short-sighted, self-serving, vote-getting stroke. It is comparable with the discredited Punchestown 'investment' except that it is on an infinitely larger scale involving hundreds of millions instead of just €15m and is backed by the entire Cabinet rather than just two ministers.

While a small number of people may benefit - most obviously the TD's in the targeted locations - the resultant fragmentation, dislocation and disruption of (so-called) central government runs contrary to the national interest. Notwithstanding this, premises are being sourced and commitments made using tax-payers money. I assume that the intention is to spend as much as possible in order to create a fait accompli notwithstanding that this tactic failed spectacularly in the case of the e-voting debacle.

Letter published in the Sunday Business Post on 25th July 2004.

Face Reality

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Things have reached a stage that we as a nation need to take stock and start facing some home truths about our State, its management and direction:

  • We have a booming economy for which everyone takes credit for but which is based largely on inappropriate cheap credit rates ordained from outside the State.
  • We have completely inadequate services in health, law and order and for the disadvantaged and deprived but unending promises of improvement that are rarely delivered.
  • We have a strong foreign industry base thanks to transfer pricing, generous tax rates and light regulation but stagnating indigenous industry due to escalating costs and lack of development.
  • We have a service sector that is manifestly over-pricing in many areas which blames everyone but its own greed for causing the high prices.
  • We have a Government  that is unwilling to raise taxes to improve services but very willing to give tax breaks to wealthy tax payers and impose stealth taxes.
  • We have a public sector that accepts politically-inspired benchmarking awards but offers little in return other than interest in further similar awards.
  • We have an administration that expends enormous sums on capital projects but is incapable of managing them on budget and time without selling major rights to private interests.
  • We have a national pension fund which sucks up 1% of national wealth every year to invest throughout the world but is unwilling to make any significant investments in Ireland.
  • We have a political philosophy which seeks to impose greater use of our historic language in Ireland and the EU but fails to adequately protect our heritage, constitution and nationhood.
  • We have a Cabinet that is unable to make timely decisions on key issues - airport terminal, health service reform, housing, traffic and social equality - but very fast to decide on unimportant matters like post codes, decentralisation and e-voting.
  • We have politicians who transfer hundreds of millions of tax receipts to lawyers to probe corruption and wrongdoing but who are unable to accept their responsibilities and often pay scant regard to the truth and ethics.
  • We have a legislature which generates noise and spin but operates for less than half the year and, even then, is very poorly attended and regularly ignored by its proponents.
  • We have an "establishment" which pursues a liberal economic agenda but fails to appreciate that the economy is only one element of a strong, satisfied State.

TDs Salaries & Expenses

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A TD can easily secure an income of €140,000 a year before deduction of their expenses. Assuming that the Dail sits for a hundred days a year, then the theorietical cost per TD per sitting day works out at about €1,400.  However, the real cost is a huge multiple of this as few TDs seem to spend much or any time in the Chamber. Thus, the actual cost of a TD's Dail appearance or speech could work out at several thousand euro per minute or per word.

A better way of looking at the cost of TDs is through the Oireachtas Commission's expenditure estimates. This indicates that salary, expenses and allowances will average €199,000 per TD for 2004. This is before adding in the €44,000 to be paid to TDs for their proposed personal research assistants. On this basis, the direct cost of a TD will reach a quarter of a million for the year. This takes no account of other perks - gold plated pensions, private dining, free parking etc.

How can this be justified when there is no prohibition on TDs doing nixers and consultancy work; the Dail only sits for 100 or so days a year; and TDs are diminishing the Dail's status by limiting genuine debate, restricting time for questioning and bypassing it for major announcements?

Nice Referendum & e-Voting

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The forthcoming referendum should be rejected, irrespective of any possible merits, by the electorate for two principled reasons.

Firstly, as a protest against the use of an e-voting system that fails to contain paper-based voter verification, published source code and fully tested systems.

Secondly, to object to proposals for constitutional change being pushed past the Dail and electorate over a holiday period with minimal time for reflection and debate. Instead of Green Papers on both matters we have been offered whitewash and flannel.

Letter published in the Sunday Tribune and Sunday Business Post on 25th April 2004.

Punchestown

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Is the Public Accounts Committee a mouse or a lion? Certainly, it seems to have been very mouse-like when allocating "blame" for the Punchestown Equestrian Centre. Surely, Ministers McGreevy and Walsh should have been assigned responsibility instead of passing the buck to their departments.

The ease with which €15 million of taxpayers' money was secured without due diligence, value for money assessment or matching funding can be contrasted with the Department of Enterprise, Trade & Empoyment's programme for Community Enterprise Centres launched in 1999 with funding of €17 million. To date, €13 million has been allocated on a matched funds basis to over forty new enterprise centres which will assist the creation of hundreds of new businesses and thousands of jobs. These centres were selected on a competitive basis from about 140 applications representing, I assume, all constituencies.

Letter published in the Irish Time on 1st April 2004.

e-Voting

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We have been assured that e-voting is simple, fast, accurate and inexpensive. On this basis, I request that the option "None of the above" be appended to all lists of candidates. Also, an election should be rerun in any constituency where the actual poll, excluding votes for "None of the above", is less than 50% of the total eligible to vote there.

On a related point, the only people who seem to be pushing e-Voting are Minister Cullen and TDs. Given that we have a perfectly good paper-based system at present, will the Minister undertake to resign without argument or delay if any significant disruption or failures arise during the operation of e-Voting in the forthcoming elections.  After all, he wants the system and he is try to fix something that is not broken.

Broadcast on RTE's Today with Pat Kenny on 6th February 2004.

TDs and the Dail

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Clearly my letter (2nd October) suggesting thirteen ways in which TDs could improve their performance to justify benchmarking fell on deaf ears. Since then, we have learnt that:

  1. About nine TDs were on holidays or junkets when the Dail resumed on 30th September notwithstanding that the summer recess had lasted four months.

  2. One TD had a phoney foreign bank account and made a €130,000 settlement to the Revenue but still managed to provide a tax clearance certificate.

  3. Junior ministers have been claiming travel expenses of up to €160,000 since the Government was formed last year.

  4. Up to €500,000 has been paid to sitting TDs as partial teacher salaries in addition to their full TD salaries.

To cap it all and to rub salt into the raw wounds of a very disenchanted electorate, the Dail has decided to take a "mid-term break" after sitting for just four weeks. 

Surely, the time has arrived for the electorate to call a halt to this self-serving behavior and, in the interests of democracy, to demand "root and branch" change to the Dail and its TDs.

TDs and Benchmarking

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Now that the Dail has resumed sittings, let us have some real performance improvements from the Dail and politicians to justify benchmarking. Some suggestions in no particular order of importance:

1. No double jobbing as TDs are paid to do full-time jobs. Earnings from nixers and consultancy work should be used to reduce Dail salaries.
2. The Dail's annual holidays should be only 4-6 weeks. Normal office hours should apply from Monday to Thursday with Fridays reserved for constituency work and clinics.
3. The number of TDs should be rationalised - one TD per constituency is adequate.
4. All expenses and allowances paid to TDs should be accounted for in the same way as applies to the self-employed.
5. TDs should have the same tax allowances as all other workers or self-employed persons. Tax certificates should be supplied before taking a seat in Dail and every year thereafter. No cert, no seat.
6. Official transport should only be used for official business. Unofficial or party use should be reimbursed to the State.
7. TDs should have the same pension entitlements as most working people and should be eligible for redundancy payments when they lose their seats.
8. The productivity of TDs should be tracked by the quarterly publication of their attendances and speaking records in the Dail and at committees.
9. The Dail's effectiveness should be monitored in terms of sitting days, bills proposed & passed and output of committees.
10. Backbenchers should have greater flexibility in respect of Dail contributions and votes. Free votes should become the norm rather than the exception.
11. If backbenchers cannot become more active and productive in the Dail, their hours of work and pay should be scaled back.
12. There should be greater public accountability of TDs' performances via annual public meetings with constituents.
13. To ensure that TDs have real mandates, elections should be rerun if fewer than 50% of the electorate in their constituencies cast votes.

In return for these implementing changes, the salaries of the remaining TDs should be substantially increased to reflect their enhanced roles. As is often said, change and good example must start at the top!

Lead letter published in the Irish Times on 2nd October 2003. It was also read out on RTE's Morning Ireland and discussed with Joe Duffy on RTE's Liveline.

Croke Park & Stadium Ireland

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Let's see if I understand the €60++ million offer of our money to the GAA. It appears to have been offered to ensure that "foreign games" would not be played at Croke Park (thereby strengthening case for Stadium Ireland) and on the understanding that some key GAA matches would be played at the folly. In effect, does this mean that the payment is designed to ensure that Croke Park will be underutilised?

Just how far are our politicians willing to go to support an ego trip which could cost a billion or so by the time it is build. How will its annual financial costs of, say, €60 million be met? That amount equates to a "Croke Park" donation for every year to infinity! Surely, this money could be better used - to reduce the national debt, improve the infrastructure, assist the underprivileged and so on.

Letter published in Irish Times 24th April 2001. This was my very first letter to be published. 

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