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Hindsight - Sept 09

As at end September 2009 there were 132 entries in this blog. This sounds a lot but bear in mind that they really started accumulating back in 2002. However, this interval is long enough to do a look back with the benefit of hindsight. Here are some of the more interesting (to me) assessments:

  • The high cost of houses was first raised back in 2003 when my concern was that rising interest rates "could move many recent and future buyers with large mortgages into negative equity and expose their lenders to defaulting loans". This was followed in 2004 by a concern that "if the Government fails to unwind the house price problem in an orderly way, then its much-beloved "market forces" will do the job with consequences that will be many orders of magnitude greater than the current financial scandals".

    In 2007, I estimated that house builders and land owners made exceptional profits amounting to about €37 billion over the ten years to end 2006. This is additional to windfall profits made by financial institutions, who lent far more than strictly necessary, and by a raft of service providers including brokers, insurance companies, solicitors and auctioneers who participated in the bubble. Shouldn't these parties pay for the Nama bale out instead of the taxpayer? 

    Lots more about house prices, property etc. here. It cannot be said that there weren't lots of danger signs.

  • The Dail and politicans have attracted the greatest number of entries - this should not be not surprising given the way that they have been running the country over the last decade. Individually, politicians are possibly hard working and effective but put them into a party or govenment and they seem to lose the run of themselves.

    My first entry (of dozens) about politicians was in 2001 and related to Stadium Ireland aka The Bertie Bowl. Matters have gone downhill ever since. As a bomber pilot might say, the Irish political scene is target rich and has been crying out for "root and branch" reform. My key targets have been the Dail's effectiveness, politicians' expenses, international salary and productivity comparisons, decentalisation, TD's pay and pensions, and competence and trust.

    Two key entries offered 13 suggestions for improving Dail/TD performances and 9 suggestions to restore the electorate's confidence in the Dail and politicians. You can read all the entries relating to the Dail and politicians here (if you have an hour to spare and have taken a tranquiliser, especially if you are a politician).

  • The first entry about Dublin's Traffic was written in 1998. At that time it was planned to send Luas underground. However, we still don't have "Freeflow" traffic and are still only talking about an elected Lord Mayor. Taxi services have been liberated but buses are, by and large, still in the hands of a monopoly. Over the years, I have had major reservations about Luas on cost grounds as far back as 2001 as well as on the Port Tunnel, Metro, Dublin Transport Authority, Red Cow Roundabout and the general state of Dublin's traffic. See here for a full list of traffic-related entries. Road tolling has also been a favourite topic.

  • Benchmarking first attracted attention back in 2003 when I estimated that it would cost about €25 billion over the next two decades (this amount has proven to be rediculously low).

    The need for international pay comparisons was raised in many entries and culminated in a personal submission in 2006 to the Review Body on Higher Remuneration about the need to internationalise the benchmarking process. Of course, it was ignored. However, the wheel has now turned a full circle and at time of writing (September 2009) the Review Body has been instructed to undertake a new review centred on international comparisons.

    See all entries about benchmarking and public sector pay issues which also cover politicians pay.

  • National wage agreements have become progressively unbalanced and inequitable. Much of this is due the application of percentage increases to all workers regardless of their salary levels. The cumulative effect of these increases over many years has been to widen the gap between the lowest and highest paid and to create a situation where many senior officials, politicians and professionals in the Irish public sector earn far more than counterparts in other comparable countries.

    There is a myth perpetuated by some employers that the solution to national competiveness is to reduce the minimum wage. Well, have a look at this analysis based on unpublished CSO data which shows that, for maximum impact, the place to start reducing earnings is at the top. A similar case can be made for increasing taxes on the higher paid rather than the lowest paid.

  • Let's talk about the banks. Back in August 2004, I suggested that house prices were the real financial scandal as hundreds of thousands of house buyers will be making excessive loan repayments amounting to billions of euro for decades to come. In June 2006, I asked whether banks and estate agents sellling their own properties knew something about property prices that their customers didn't!

    From the day (30th September 2008) that the Government gave unconditional guarantees to the banks, I have had major reservations about its approach to the banking crisis - too soft and too slow - as this allowed the banks to run rings around it until it became blindly obvious that the bankers were either hopelessly incompetent or telling barefaced lies about the scale of their bad debts. When the Government finally got a grip, its solution in the form of Nama was, in my opinion, the worst of all worlds and confirmed that it was more concerned about bankers, bank shareholders and bondholders and property developers than about taxpayers. Time will tell, assuming that Nama gets off the ground. Here are lots of bank- and Nama-related entries.

  • My hostility to co-located hospitals commenced in 2004 and has continued ever since. This policy has been pursued by a right-wing Minister for Health without any mandate or background assessment of the options. What makes this extraordinary is the fact the Government has allowed this solo run to happen - surely a case of the PD tail wagging the FF dog. At time of writing, no co-located hospitals have been built and the entire hospital system is facing cronic problems relating to costs and capacity. The solution was and still is to use the valuable sites earmarked for co-location to build substantial step-down units to relieve pressure on hospial beds, avoid duplicating facilities and reduce the public-private patient divide.

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