November 2008 Archives

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. 

Future of the Banks

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Has the Government learnt nothing from Eircom's experience in the hands of private equity investors and venture capitalists? It now seems to be wrapping up some of the Irish banks to facilitate a new game of pass the parcel using another key national resource.

Why doesn't the Government simply create a special investment vehicle to borrow the funds needs to recapitalise the banks via high-coupon preference shares and then do a public floatation of this vehicle to repay these borrowings?

This would allow the banks stay in, largely, Irish hands, give the Government a say over credit policies and ensure that banking strategies are aligned with the national interest rather than dictated by the short termism of unregulated Wall Street funds which played a lead role in creating the current international crisis.

This letter was published in the Irish Times on 22nd November 2008.

Budget Reactions

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It is clear that (a) the Mininster has underestimated the looming problems (b) taxpayers were braced to accept some pain provided it was seen as equitably distributed (c) reform of the public sector has become a priority and (d) failure to recapitalise the banking systems will lead to a credit famine.

Here are some suggestions to address these matters:

  1. It is clear that the majority will pay for the excesses of the past few years even though only a small minority were the principal beneficiaries. On the basis that those who gained most should pay 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 very highest incomes and expanded, as a condition of retaining Irish citizenship, to the worldwide incomes of our tax exiles. These changes should raise sufficient revenue to roll back the budget cuts and tax increases impacting on young, old and weak.

  2. Extremely high salaries should be subsidised by shareholders rather than by taxpayers, To this end,  the Finance Bill should disallow any elements of total salary, bonus and pension contribution exceeding, say, 15 times the average industrial wage (c. €600,000) from being tax deductable.

  3. Payroll costs account for about half of all public sector expenditure and salary rates are well ahead of their equivalents in the private sector and abroad. To help reduce costs, restore parity and reduce future borrowings, the Government should plead "inability to pay" other than to the lowest earners under the proposed new national wage agreement.

    It should only agree to recommence payment of increases post-rationalisation and -restructuring as guided by the forthcoming report on the Task Force on Public Service.

  4. The scale of the looming pensions problem is evidenced by the sharp declines in the National Pension Reserve Fund and private sector funds, the poor uptake of pensions by the unpensioned and the surging cost of public sector pensions.

    Taxpayers with low/no pensions should not be required to subside "gold plated" pensions for politicians and public servants. The Government should immediately initiate a realistically funded contributory pension scheme in lieu of the present prohibitively expensive and inequitable "pay-as-you-go" arrangement.

  5. The National Treasury Management Agency should immediately acquire substantial stakes in the quoted Irish banks to recapitalise them as insurances against defaults linked to the State guarantees and in anticipation of their profit declines over the next few years.

    Alternatively, the NPRF should liquidate some of its overseas holdings to acquire these stakes on the grounds that if our banking system fails the funding of pensions for two decades hence becomes academic. Of course, the annual payments of 1% of GNP, financed by borrowings, to the NPRF should be suspended immediately.

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