February 2006 Archives

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.

Taxes are for Little People

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Following publication this week of reports on tax schemes for property development etc, it is clear that the stable door is being belatedly closed. These reports point to the existence of a "black hole" which must rank alongside benchmarking, decentralisation and infrastructural overruns as clear evidence of imprudent and incompetent management of the State's finances. The reports prompt two basic questions:

  1. Why should someone earning €50,000 pay tax on incremental income at 42% while an earner of €250,000 might pay only 20% on all income and personal capital gains? Surely, a top rate of tax should be exactly that. The current rate should be rebalanced and applied to everyone without exception. A new top rate of, say, 35% on income and personal capital gains could give same return to the Exchequer as the present inequitable regime.

  2. Why give investment tax breaks to individuals? Surely, breaks should be only available (where strictly necessary) to companies via accelerated depreciation, once-off grants and special allowances which, with the low corporate tax rate, would enable investment reserves to be built up virtually tax free. Done this way, all distributions and gains from companies could then be taxed in the normal way, without further relief, at a rebalanced and reduced top rate.

Letter published in the Sunday Business Post on 19th February 2006.

M50 Tolls

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By any standard, NTR has already been well-remunerated for its investments in the M50 West-Link toll bridges. Instead of paying hundreds of millions to compensate for prematurely ending its tolling role on the M50, the Government should announce plans to build another bridge as part of the M50 widening. A new bridge and associated road works would cost less than �100 million and this should be used to benchmark the maximum compensation payable to NTR.

In practice, a new bridge should not be needed to break NTL's monopoly as the threat should enable the Government negotiate a fair deal for the taxpayer. However, if needs be, a new bridge could be built within three years. Bear in mind that the southbound bridge which opened in 2003 cost, according to NTR's website, only �23 million and took just two years to build.

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