August 2005 Archives

US vs Irish House Prices

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Last week, the Federal Reserve Chairman Greenspan described the US housing boom as an economic imbalance that could end badly for its economy. He hoped this will be dealt with by "adjustments in prices, interest rates and exchange rates rather than more-wrenching changes in output, incomes and employment".

He could easily have been speaking about the Irish situation. Given that our State has no control over interest and exchange rates, does this mean that we must await downward shifts in prices, output, incomes and employment to restore balance?  The fact that prices have moderated doesn't lessen the problem.

As the Government patently failed to control prices (especially of land) on the way up, can we be any more confident that it will manage a downturn any better?

Co-located Hospitals

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May I add my voice to concerns about evolving health sector strategies.

Why is the State offering extraordinary returns to investors in the health sector when it can easily raise the finance at less than 3% per annum? How can the Government justify subsidies of up to 47% by way of tax breaks to investors in hospitals and, on top, having to make annual payments to these investors to cover rents, fees, dividends, interest and profits? It is nonsense for investors to suggest that the State would gain from the resultant PAYE and VAT as it would be getting these if it financed the hospitals in the first instance.

By any standards, Ireland already have an inequitable two-tier health system and the Minister of Health's current policies will result in a fragmented and highly discriminatory three-tier system. What is really needed is an uncomplicated single-tier system where care is based on need rather than capacity to pay. The Government has no mandate to develop a "for profit"  health service and opposition parties should, ahead of the next election, pledge to roll back all measures aimed at  privatising key health services. They could also usefully address the need to convert the VHI into the a form of compulsory health insurance for all and let a much diminished private insurance industry concentrate on the private healthcare sector.

The Minister's plan to transfer beds from public to private hospitals is akin to re-arranging deck chairs on the Titanic except that in this case they are being moved from steerage up to first-class. This measure is being presented as progress but it is, in reality, privatising and cherry-picking by the side door.

Instead of pursuing this zero-sum game, the Minister of Health, her department and HSE should review why  Ireland's health spend (as a % of Gross National Income) has risen above the EU average notwithstanding that the proportion of our population aged 65+ is only two-thirds the EU average. Is this because we are more prone to sickness and accidents than our EU counterparts (e.g. drink- and traffic-related), or because we get bad value from existing services (overpayment and underperformance), or because resources are mismanaged (too many administrators and offices and too few doctors and beds)? Findings and needs, not ideologies, should govern strategies aimed increasing rather than reducing equity.

This letter was published in the Irish Times on 24th August 2005.

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.

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