Northern Ireland Executive posturing with respect to water disruption is pathetic

It is a bit rich for the Northern Ireland Executive to posture like Pontius Pilate adorned in Teflon with respect to the shambolic performance of Northern Ireland Water.

This public utility monopoly is controlled by them. The sacking of four non-executive directors last July following the disclosure of 73 irregular contracts with a value of £28.4 million over a 3-year period must have been the consequence of a legacy of shoddy oversight by the Department of Regional Development.

The interim board was directly selected and appointed by Conor Murphy, Minister for Regional Development last August - outside the Code of Practice of the Commissioner for Public Appointments. Personal choice cannot therefore be divorced from direct responsibility.

The Chairman is paid £45,000 per year on the basis of no more than typically three or four days attendance per month, a considerable outlay for dry taps, parched livestock and toilets that don’t flush in tens of thousands of Ulster homes in mid winter.

Surely the buck now stops with Conor Murphy and, if heads are to roll, should his not be first in line to underline his accountability in this primitive, disruptive debacle before the entire board of directors suffer the inevitable consequences of systemic, failure that is not merely attributable to circumstances of force majeure ? That gesture would be the essence of accountability and good governance at the highest level and it would emphasise the importance of effective risk evaluation and customer service in a monopoly utility.

Incestuous Social Partners are as stale as the current Irish Government

Danny McCoy, boss of IBEC (Irish Business and Employers Confederation),  and Paul Sweeney, the economic adviser to the ICTU (Irish Congress of Trade Unions), set out their respective panacea for the future of Ireland in The Irish Times today.  Both speak as high-priests and advocates of the social partnership process.  Each is seeking wriggle-room to establish a bedrock of influence in 2011. 

This time in the context is that of ‘a collective’ that is ‘robust and rational’, whose deliberations are based on ‘evidence-based policy’ making.   They opine that ‘social partnership’ is ‘dysfunctional and politically expedient’ .  ‘We’ in Ireland need to reflect on the type of economy and society ‘we’ would like to emerge and ‘we’ need to craft laws and policies that reflect that vision!  The ‘perverse economic experiment must be dismantled’ and the next government will have to be ‘courageous and radical’; the private sector will have to be ‘reformed’ so as to move from ‘shareholder value’ to ‘stakeholder value’ and ‘cronyism is to be stamped out’. 

Who, under God, will deliver this utopia?  Lobbyists?? The backing of at least a dozen Nobel Laureates will be necessary to attribute credibility to all of this and to ensure the Jewish and Arab bankers who buy Irish bonds adapt to the collective’s notion of ‘stakeholder value’ and fall into line like obedient foot-soldiers.

Social partnership started modestly in the late 1980’s as an attempt to successfully tame a flaming industrial relations jungle. But, by the turn of this century, it had become a disingenuous platform that provided lobbyists with an unwarranted span of influence, instant access to government and direct funding amounting to millions of wasted euro that has been shown to have been inadequately accounted for. This led to a ‘dig-out’ culture of entitlement, free of any risk to the negotiating parties, which ignored the obligation that bread must be earned in the universe - not doled out at the parish pump.

This is the culture that gave legitimacy to gigantic ‘pre-contracted’ bonuses, outrageous professional fees, described as ‘fair and reasonable’ and annual cumulative directors’ emoluments in domestic financial institutions routinely exceeding €30 million because the government and its agencies failed to govern and the absence of moral responsibility is shrouded in legal legitimacy.

Mr McCoy is concerned about the trauma of the past few months; what about the trauma of the past decade? Does the memory of the lines of people queuing to buy a lousy-designed, poor quality residence on highway-robbery terms not make him squirm in outrage? Does the experience of the thousands of FÁS trainees who never obtained certification from an agency controlled and directed by these very same, ever-solicitous, ‘social partners’ not tell its own story about their capacity to be accountable and practice a decent standard of corporate governance?

He is concerned about the Climate Change Bill and the impact of ‘rushed legislation’. But is he not also concerned that the Government has failed to open the marketplace for professional services by, for example, not implementing the Competition Authority’s 2006 recommendations to open the legal services marketplace, a development which would surely benefit IBEC members.

Mr Sweeney, I also abhor the use of the NPRF resources to bail out the vandalism and delinquency of mercenary galoots, but how could this have been avoided? Japan’s debt/GDP ratio is twice that of Ireland but 95% of its debt is due to Japanese people, a higher proportion of whom are in the older age bracket. If bond holders renegotiate and play their ace card – not to put a further cent into Ireland – what happens next when all new Irish debt is owing to foreigners? It is not unnatural to expect borrowers to spend their own money as well?

It is a pity that Mr Sweeney did not define our ‘real economy’ and elaborate on how it is in ‘good shape’ and what the basis of its sustainable strength is.

This country does not have mineral or energy resources. Recovery from the more restricted Swedish bank bailout of the 1990’s was facilitated by a viable engineering and timber sector as well as hydro capacity. Ireland’s younger demographic profile is an important asset but where is the wealth creation potential for this resource to exploit?

HAPPY NEW YEAR!

Are Irish political opinion polls really accurate?

Have Irish political parties become intoxicated by opinion polls as they reflect on their ambition to abseil the pantheon of political stardom?

While the polls are giving Fianna Fail a severe hangover, they also indicate that support is not committed firmly and that opinion polls really do not capture voting intentions in a representative way. How could they when those seeking to enter government appear to be paralysed by inertia and in sleep-walking mode within an anticipated 100 days of a widely expected general election?  Perhaps they ought to examine the message from the electorate in opinion polls more closely and not merely rely on the froth of the headline trend.

Fine Gael have yet to choose candidates in 7 Dáil constituencies and given the considerable number of Fine Gael candidates chosen who are strangers to the electorate there is little flair or imagination evident on their web site to educate the electorate about their candidate offering and policies.  

The Labour Party web site does not identify one single general election candidate. Their web site offers the usual blancmange of a ‘better’, ‘fairer’ nation but they still blather about ‘Stop NAMA’ and the ‘threatened’ move to transfer €90 million of property loans from banks. Despite the opinion polls there is no evidence that Labour has a well-drilled, sophisticated, army in place to fight the battle ahead. Will positive opinion poll trends be soured by poor candidate selection?  

The web site of Sinn Féin does have a tab called ‘candidate’ – but that relates to their candidates for the May 2010 British general election in their traditional heartlands in Northern Ireland. Apart from media reports that Mr Adams is to migrate to somewhere in Co Louth there is no evidence that Sinn Féin is serious about general election in the Republic of Ireland other than a generic warble about ‘better’, ‘fairer’ ‘change’ and continue pursuing the goal of Liam Mellows and Bobby Sands ‘to bring us closer to our goals of Irish unity and independence’. Independence of what – the IMF and the ECB? They advocate ‘building an Ireland of equals’ – would that be equality of debt, bound in the chains of eternal welfare, poverty, aimlessness and hopelessness? Given the experience of the 2007 general election a voter would have expected to observe the shoots of economic genius and economic leadership but perhaps what is not there simply cannot be observed and what is offered by Sinn Féin is merely rousing neighbourhood activism. 

The Green Party, at whose instigation, the timing of this general election is to be determined, have shrouded the identity of potential candidates, the constituencies they intend to contest and policies for the future in opacity as dark as mushroom compost covered in black polythene. Is their stamina exhausted or a symptom of jaded leadership? 

The electorate deserve to be informed of the identity of general election candidates; to understand their values and competency. The electorate should not be expected to make choices wearing a blindfold. The electorate also need to form an opinion on the capacity of parties to govern with integrity, wisdom and decisiveness. Ireland will not waffle its way, using clichés, to achieve a semblance of recovery. 

Coping with bad weather

Ireland has experienced unprecedented disruption as a consequence of snow and freezing weather during  two consecutive winters and repeated episodes of large scale flooding at other times. Government agencies, local authorities and transport providers attempt to provide a coordinated response to weather-related emergencies but are doing so in the absence of any predetermined published priorities, benchmark levels of resources and equipment, lines of accountability, legal or regulatory framework.

A nationwide Adverse Weather Operations Plan needs to be devised and published to overcome these shortcomings.   An operations plan should identify who in a particular region is responsible for declaring a weather-related emergency and leading the response to it. This ought to facilitate  the response of the authorities and integrate those with communities and farmers with suitable equipment against a framework of known priorities and expectations.  Regulations should cover snow and slush clearance and the identification of which roads and routes across the country have priority in terms of attention and resources.  Categories of priority attaching to particular roads would be determined by the importance of the access they provide.  An effective response to the threat of widespread flooding also needs to be taken into consideration in devising such a plan.

Regulations ought to, for example, ban the dumping of snow from a private property onto a footpath or road and establish guidance on the adequate clearance of snow to allow safe passage on footpaths and from fire hydrants and storm drains.

Regulations could also establish emergency parking bans along critically important routes to keep traffic moving safely in snow or in freezing conditions.  Discounted off-street parking might be made available for as long as a weather emergency exists - as a condition of planning approval. 

Bright coloured highly visible sand and grit boxes might be located at strategically important junctions and close to train stations to allow communities clear footpaths, drains and fire hydrants and to encourage use of public transport.

A central low-cost telephone service and and flooding web site might be established to provide a 1-stop source of information dealing with emergency consequences such as driving conditions, school closures, the cancellation of examinations, or changes to the routines of hospitals.   It ought to to be possible to identify vital arteries on such a web site as a component of the long-term planning process and this would enable motorists to become aware of them and respond appropriately when an emergency arises.

The impact of these suggestions ought to enhance the safe passage of vehicles and pedestrians - residents, workers and visitors, but especially the elderly and the handicapped.  It would also provide a context for the avoidance of the threat of flooding on the devastating scale witnessed too frequently in recent times, as well as dealing with its immediate consequences.

What promise does 2011 hold for Ireland?

We ought to remind ourselves that the average age of our abundantly educated, talented, well-travelled, multi-lingual, sophisticated population is under 35 years and that in itself is a magnificent asset. But the chamber of celestial irrelevancies is entirely populated by jaded, faded mainly late middle-aged members, not one of whom is under 30 years of age. How could they possibly have a relevant engaging relationship, vibrant empathy and a convincing understanding of the needs and aspirations of that younger cohort of the population whose prospects they have seriously blighted?

A new lexicon, based on dubious sense of entitlement, has emerged in Ireland that has allowed its advocates to become more and more detached from the necessity of earning prosperity and wellbeing. Politicians using the expression ‘fair and just’ as code for unsustainable levels of welfare, of a scale that ought not to be necessary in a viable, stable, pay-your-way economy but the scale of which creates a long-term poverty trap for those in receipt of it and those who are obliged to pay for it.

‘Fair and reasonable’ is becoming synonymous with exorbitant professional fees and charges, bonus payments, retirement entitlements of ministers’ etc. – which are also on a scale that is detached from our economic reality. How can a bust nation, whose sovereignty has been surrendered and whose GDP accounts for such a tiny portion of that of the EU, for example, support so many professional firms whose annual revenues place them firmly in the top quartile of their European counterparts? If ‘fair and reasonable’ payments are significantly higher than international norms and greatly exceed what can be afforded – what particular criteria define ‘fair and reasonable’ and what outcomes are delivered by those in receipt of such largesse other than a well-nurtured sense of infinite entitlement?

Ireland’s GDP in 2009 is apparently being 27% higher than the EU average as a consequence of asset price inflation but this so-called wealth is not capable of fully employing the nation’s population or funding its spiralling debt. Where is it, who controls it and how productive is it and what benefit is the nation achieving from it?

Ireland needs an establishment that recognises the importance of and is capable of delivery the nation from one generation to the next in a more enhanced condition than prevailed when they obtained the power to influence it. That requires more than a Dáil comprised of neighbourhood populists, passing opportunists, the unimaginative self-righteous and sundry ‘blow-in’s’ from distant parts.

But neither Fine Gael, the Greens, nor The Labour Party has presented a complete panel of prospective candidates to the electorate to contest the general election that is to take place only weeks away. How can the electorate form an opinion of what these parties are capable of achieving, or is the electorate to merely rely on the trends in opinion polls to identify virtue and potential?

Bank directors remuneration immune moderation

The boards of the banks and building societies which are transferring heavily discounted loans to NAMA are populated by approximately 60 individuals, a significant number of whom have been in situ for many years prior to September 2008.  Their fees and remuneration from 2005 amounted to €148.4 million.

While 11,000 loans to 850 borrowers with a nominal value of €71.2 billion have been transferred to NAMA at a discount of 59%, the bona fides of each loan have to be painstakingly tested and evaluated because the representations of the banks and building societies cannot be trusted at face value.

But the 60 directors who lent this money and endorsed these transactions were paid remuneration and fees of €16.5 million in 2009. That may represent a haircut of 47% on the €31.2 million they were paid in 2008. But the losses incurred on the NAMA loans are equivalent to 180% of the remuneration they were paid last year.

It is from this rudderless, self-serving, opportunistic, morally bankrupt culture that bonus payments of tens of millions of euro are concocted and justified.  Will the Government intercept and definitively halt this wanton plundering of taxpayers money and the willy-nilly invention of yet more customer fees and charges in 2011 spearheaded by Bank of Ireland?

NTMA defy Public Accounts Committee

I have been observing the relationship between the National Treasury Management Agency and the National Assets Management Agency with the Public Accounts Committee with increasing concern.

NTMA and NAMA Remuneration

The activities of the NTMA and NAMA have been examined on several occasions by the Public Accounts Committee in 2010, most recently on 18 November when the Committee sought a breakdown of the remuneration paid to NAMA employees – all seconded to NAMA from NTMA. The Chief Executive of NAMA, Mr Brendan McDonagh in a letter to the PAC dated 7 December 2010 defied the Committee and advised:

That he discussed the Committee request with Mr John Corrigan, Chief Executive of NTMA – but not, curiously, with the Secretary General of the Department of Finance,  an ex officio member of the statutory  NTMA Advisory Committee and principal advisor to the Minister for Finance to whom both agencies are accountable.

• That the pay structures in NTMA are outside of public service pay structures (as authorised by the National Treasury Management Act 1990).
  
• That the NTMA recruit mid-career specialists in banking, property, corporate finance and law for NAMA on what he termed a ‘fixed purpose’ contracts.
  
• The contract and remuneration arrangements of each employee are unique  to a particular individual and are treated as confidential.
  
• The NTMA/NAMA staffing ‘operating model’ is shrouded in so much secrecy and opacity that colleagues do not know how much each other is paid and that NAMA would apparently be seriously compromised in the conduct of its mandate were it to be exposed – (presumably, to the rigours of public and media scrutiny and that of the marketplace  from which NAMA seeks to determine  ’ market competitive’ salaries). 
  
• ‘Operational freedom to negotiate’, authorised by legislation, in NTMA has apparently become seamlessly synonymous with clandestine secrecy by the Chief Executive of a State agency which does not have a conventional board of directors and where the same chief executive, rather than an independent chairman, corresponds with the Minister for Finance on the performance of the entity that he manages on a day-to-day basis.

McDonagh’s letter and Corrigan’s patrician perspective on the Committee’s request is such an appalling indictment of these State agencies that a citizen would wonder about its capacity to fulfil its core objectives in a culture clearly devoid candour, accountability and transparency.  NTMA and NAMA need to be advised in blunt and uncompromising terms  by the PAC  that the principles of transparency and accountability expected of the Irish public sector are not those of the nod, wink and handshake that prevail, for example,  in the dictatorships of North Korea and Burma. The standards espoused by NTMA also directly contravene the policy of the Department of Finance with respect to the governance of commercial State entities.

Furthermore, this is precisely the self-righteous, conniving, corporate attitude which champions generic, non-itemised accounting that prevailed in FÁS, the HSE SKILL Programme, the Health Services National Partnership Forum and other grossly dysfunctional State entities which have shattered public confidence after the wanton squandering of hundreds of millions of euro with abandon.

Transparency has not compromised the ‘operating model ‘or the efficiency and effectiveness of any the debt management agencies in any other OECD country.  The transparency of these agencies would also suggest that the NTMA is an excessively costly agency compared to its counterparts.

NTMA Costs and Operating Efficiency

The activities of NTMA remained substantially the same in scope between 2000 and 2008 with the exception of the establishment of the National Development Finance Agency in 2003.  Between 2000 and 2007 Ireland’s national debt ranged from €36.5 billion to €37.5 billion.  It increased to €50.3 billion in 2008, an overall increase of 38% since 2000.

But the operating costs of NTMA in that period increased by 314% and remuneration, including superannuation, by 365%.

NTMA held nine bond auctions in 2009 and raised €35.4 billion which brought the National Debt to €75.1 billion.  Salary and pension costs were €22.86 million, or an average of €135,384 per person.  Total expenses in 2009 at €39.4 million were significantly ahead of other OECD government debt management offices.  Debt servicing costs as a percentage of year-end national debt, excluding sinking fund payments, in this period were:

 

2000	5.74%
2001	5.25%
2002	4.66%
2003	4.78%
2004	4.53%
2005	4.61%
2006	5.31%
2007	4.29%
2008	5.24%

Australian Office of Financial Management

The Australian counterpart of NTMA is the Australian Office of Financial Management (AOFM). It raised €38.9 billion by approximately 100 competitive tender in the year to 30 June 2010. Apart from managing the Australian national debt AOFM invested €12 billion in residential mortgage-backed securities to provide funding for small mortgage lenders.  Total expenses for the year amounted to €11.5 million – less than ⅓ of what it costs to run NTMA.  The salary, pension and fringe benefits of Neil Hyden, the recently retired chief executive of AOFM, cost €250,000.  The remuneration, superannuation and fringe benefits of the 36 staff of AOFM amounted to €3.94 million in the year to 30 June 2010, or an average of €109,502 per person.   Approximately 60% of Australia’s government bonds are held by non-Australian residents - compared to 84% foreign ownership in the case of Ireland’s Government bonds.

HM Debt Management Office

The British counterpart of NTMA is the Debt Management Office.  Employing a staff of 112 persons, it raised €267 billion on the bond market in the year ended 31 December 2009 in 58 major and 13 minor auctions – a scale of borrowing 7.6 times greater than that of NTMA.  The activities of the DMO also include the administration of the UK Credit Guarantee Scheme in respect of debt issued by banks and building societies and the Emissions Trading System in the UK.  The salary, pension and fringe benefits of Robert Stheeman, Chief Executive of the DMO was €188,000 – some €12,000 less than the 2009 bonus of Dr Somers.  The net operating cost of DMO operating in the City of London in 2009 was €18.5 million – less than 50% of the overhead to run the NTMA in Grand Canal Street Dublin.

Chief Executive’s Bonus

It was officially disclosed last week that Dr Michael Somers, the founding chief executive of NTMA received a bonus of €200,000 in respect of 2009.  It was reported in the media last September that Dr Somers received a bonus of €400,000 apparently bringing his total remuneration to €1 million.

Ireland enjoyed the considerable advantage of lower level government debt relative to GDP for much of the decade to 2008.  Investor perception of Ireland was positive and reflected in excellent credit ratings; an economy that was perceived to be robust; a positive fiscal outlook and attractive yields on Irish debt.  Irish debt was adopted enthusiastically by investors.  There is no withholding tax on Irish bonds thus removing a barrier to investment for foreign investors unwilling, or unable to invest in assets subject to withholding tax.  Was this bonus merely based on surfing these positive circumstances or what precisely was Dr Somer’s contribution to making a distinctive difference which benefited taxpayers?  The citizen is left scavenging the internet for clues because the agency conveys no information whatsoever  on this issue.  The public are treated with the same bland contempt that occurred days before the recent arrival of the IMF and ECB to take economic control by the scruff of Ireland’s emaciated neck.

It would be helpful  if this key agency of the Department of Finance were to publish the fullest details of all executive remuneration for each of the last 10 years.  This, in the case of bonus payments should identify achievements against particular objectives and confirmation of who approved objectives, achievement and bonus payments. 

Department of Finance Code, 2 October 2001

State bodies, including the subsidiaries of such bodies, are required in the conduct of their operations to adopt this Code of Practice promulgated by the Department of Finance and advocated by the Director of Corporate Enforcement.

The Code of Conduct for the Governance of State Bodies states that the remuneration of a chief executive of a State agency and the remuneration of the chief executive of any subsidiary should be subject to audit and set out in the entities annual report which should state:

• The basic salary
• Payments made under a performance-related pay scheme
• The total value of the chief executives superannuation benefits, with a breakdown between standard entity superannuation benefits and any additional benefits  being provided for the chief executive

NTMA has consistently disregarded this guidance.  S6.(3) of the National treasury Management Act 1990 provides that the terms and conditions relating to the remuneration of the Chief Executive of NTMA are determined by the Minister for Finance after consultation with the Advisory Committee – on which the Secretary General of the Department of Finance is an ex officio member.  State agencies are required to implement Government pay policy, as expressed from time to time, in relation to other staff, including the chief executive and other staff of any subsidiary.

The Department of Finance, in the case of NTMA, is expected to be consulted, according to this guidance,  in good time on any pay proposal, or likely development, that could have significant implications for (i) general Government pay policy (ii) NTMA finances (iii) charges for goods and services provided and / or (iv) other areas of the public sector.  Compliance with Government pay policy, or with any particular Government decision, should not be effected in ways which cut across public service standards of integrity or conduct or involve unacceptable practices which result in a loss of tax revenue to the Exchequer.

The annual report of a State entity should include a schedule of the fees and aggregate expenses paid to each of the directors – or, presumably, in the case of NTMA, to each member of the Advisory Committee

There is, therefore, an obligation on the Secretary General of the Department of Finance to explain the remuneration trends at NTMA and very particularly, the remuneration arrangements between the chief executive and the Minister for Finance to the Public Accounts Committee.  How can he sit on the Advisory Committee and observe long-standing policies of his own department ignored?  That slipshod attitude to supervision allowed FÁS function as a ceded territory dominated and unilaterally controlled and dominated by the chief executive who, in practice was accountable to nobody.

Consultancy & Legal Expenses

NTMA has become a large-scale purchaser of legal and consultancy services.  Details should be provided of the number and value of contracts in each financial year, differentiating between new and existing contracts. 

The annual report should, in the case of consultancy contracts with a value of €10,000, or more, identify the consultant concerned; describe the service provides; confirm the price of that service; details of the selections process and the justification for using the services – to demonstrate transparency and compliance with relevant regulations and directives.  Taxpayers should not have to scavenge internet search sites or surveys of the highest revenue earning professional firms in Europe to distil how much revenue Irish professional firms are obtaining from public sources.

Zuma’s spending spree on State cars

The Irish Government is not the only government under the spotlight for spending on State cars.

A widespread public backlash broke out in South Africa late last year when the government of President Jacob Zuma, elected in April 2009 with an overwhelming majority, spent over €3 million on luxury cars for the use of ministers and senior officials.

Zuma (68), incidentally, was a member of the South African Communist Party from 1963 until 1990, is the father of 20 children and has been married five times.  He was charged an acquitted of rape in 2005 and fought a long battle over allegations of racketeering and corruption.  An 18-seat Boeing 737-7ED VIP business jet is one of four jets at his disposal.

No rules were broken by this outrageous spending spree. The South African ministerial handbook provides for the purchase of up to 220 luxury State cars at a total cost of over €24 million, each car equivalent in value to 70% of the user’s annual salary. A locally commissioned study indicated that this level of expenditure would be sufficient to provide 5,500 houses, 25 schools or pay the annual salaries of 1,500 nurses.

While the global economic recession prompted a reappraisal of State spending before the spending spree, the South African government has failed to curtail extravagant public spending on personal luxuries. The elite of Africa are imbued with a culture of unremitting self-entitlement while the masses are deprived of basic services such as access to water, sewage, electricity and refuse removal. South African ministers argue that top-end luxury vehicles are necessary to meet public expectations and to conduct their mandate.

The Irish Government has spent over €42 million on bilateral aid to South Africa since 2005. Why does the Irish Government not use its diplomatic might, agility and vitality to exert its influence on the governments of aid-recipient countries to curtail self-enrichment and corruption and to foster more sympathy and support to alleviate the financial hardship of the masses they govern?

Irish diplomatic success could, in the case of South Africa, be reflected in the context of the political will of the authorities delivering the values and aspiration of Nelson Mandela with respect to greed, corruption and selfishness.

Real change would be recognised in amendments to their ministerial handbook that outlaws public spending on personal luxuries, improved efficiency in the provision of basic services and the consequential avoidance of a climate of instability and unrest. That would be an authentic demonstration that the poor, hungry and marginalised of Africa are not forgotten and it would imbue the quality and effectiveness of the Irish Aid programme with outcomes that are unambiguous, defensible and sustainable.

Failure to make progress would mean that the Irish Aid programme is really propping up government self-indulgent extravagance in Africa at enormous cost to a dwindling cohort of very hard-pressed Irish taxpayers - with no long-term benefits ever achieved.

Irish Central Bank Review - a toothless wonder

The widespread explicit criticism of incentive structures contained in the recently published Review of Remuneration Policies and Practices by the Central Bank would bear more moral authority if the Government had not made the recently inaugurated Central Bank Commission another haven for political appointees and former overpaid bankers.

It is all very well for this Central Bank review to advocate the necessity for non-executive directors of banks to step up their scrutiny of remuneration arrangements but virtue is never spawned in a vacuum and it never flourishes in circumstances where leadership is not underpinned by compelling and principled good example.  If Irish domestic banks had not demonstrated contempt for the concept of the common good for a very long time there would be no crisis - but they continue to do so. Their practices of paying obscene levels of remuneration are fully insulated by a culture of indifference to the common good that is secured by a phalanx of cronies and yes-men that serve on their boards of directors. These boards are preoccupied and obsessed by their own self-interest.  They have demonstrated that they are incapable of embracing any fundamental change and, according to NAMA, they tend to be economical with the truth when it suits them. They bear no responsibility for the consequences of their decisions because the government insists that moral hazard passes seamlessly, totally and relentlessly to the taxpayers of Ireland for whom there is no apparent ceiling to the burden that is thrust upon them.

The next phase of Ireland’s lost sovereignty will become manifest when the ownership of the domestic banks inevitably falls into foreign hands because they are incapable of resourcing themselves adequately and winning the trust of stakeholders whose support, investment and benevolence is vital. Irish banks will then be accountable to foreign regulators whose exhortations will likely carry more weight and the domestic financial sector will be reduced to credit unions.  The Central Bank will have no control over the banks but remuneration paid by them may only moderate at that stage.

Mortgage securitisation fuelled the housing boom and bust in Ireland

The Irish financial institutions took to residential mortgage securitisation like a duck to water. The total value of securitised mortgages in January 2003 (prior to the aggressive inflation of the property bubble) amounted to €3.75 billion. This figure increased to €37.6 billion in January 2010, an increase of 902%! The overall residential mortgage volume increased by 172% in the same period

The securitisation of residential mortgages have been described as the ‘mother of all securitisations’. They generally pass through securities or bonds based on cash flows derivable from residential home loans.

The long maturities of residential mortgages and the lending collateral being real estate providing strong asset backing enabled investors to take an independent exposure on the receivables. The concept originated in the United States and was considered a catalyst in the provision of house purchase finance.

The two main Niche lenders in Ireland relied on securitisation as a funding mechanism and international capital markets took an increasing interest in Irish residential mortgage assets.

The structured funding techniques for residential mortgage lenders are securitisation and covered bond issuance.

The impact of these trends on average house prices has been:

 

	New Houses	Used Houses
Q1 2003	€213,904	€243,604
Max average price H1 2007	€320,969	€386,989
Q1 2010	€226,245	€247,534
Climb 2003-07	+50%	+59%
Fall 2007-09	-30%	-36%

Making Sense of The National Recovery Plan 2010-2014

The Irish Government estimated that total tax revenue for 2010 would be €31.05 billion. Government expenditure (capital and current) for 2010 was forecast to be €61.17 billion, a 3% reduction over 2009.

Tax revenue for 2003 was €32.1 billion and total voted Government expenditure that year was €30.74 billion. The exchequer deficit that year was €978,020 million. The National Debt in 2003 was €37.61 billion.

Government expenditure in 2003 and 2010 compares as follows:

	2003	2010	Spending Change
Agriculture, Fisheries & Food	829,787	1,758,806	+929,019
Communications, Energy & Natural Resources	299,015	517,922	+218,907
Community, Equality & Gaeltacht Affairs	257,810	419,195	+161,385
Defence	839,043	964,377	+125,334
Education & Skills	5,680,888	8,883,040	+3,202,152
Enterprise, Trade & Innovation	1,025,054	2,011,370	+986,316
Environment, Heritage & Local Government	2,307,765	2,195,483	-112,282
Finance	1,122,398	1,453,795	+331,397
Foreign Affairs	543,947	754,217	+210,270
Health & Children	7,954,540	15,324,452	+7,369,912
Justice & Law Reform	1,718,131	2,487,484	+769,353
Social Protection	5,611,921	20,959,799	+15,347,878
Taoiseach	127,792	185,819	+58,027
Tourism, Culture & Sport	393,306	504,980	111,674
Transport	2,030,225	2,758,046	+727,821
(MILLIONS of  EURO)	€30,741,622	€61,178,785	€30,437,163

The National Debt is currently €89.5 billion. The 2010 exchequer deficit to October 2010 is €14.37 billion.

The National Recovery Plan 2011 – 2014 provides for overall savings of 11.43% over 2010 expenditure with the greater burden, in percentage terms, falling on Foreign Affairs, Taoiseach, Justice, & Law Reform, Environment, Heritage & Local Government, Full details of the proposed cuts are as follows :

€ Million % Change from 2010 Agriculture, Fisheries & Food 221,000 -12.57% Comms, Energy & Natural Resources 20,000 -3.86% Community, Equality & Gaeltacht Affairs 35,000 -8.35% Defence 106,000 -10.99% Education & Skills 690,000 -7.77% Enterprise, Trade & Innovation 47,000 -2.34% Environment, Heritage & Local Gov 311,000 -14.17% Finance 85,000 -5.85% Foreign Affairs 187,000 -24.79% Health & Children 1,445,000 -9.43% Justice & Law Reform 370,000 -14.87% Social Protection 2,825,000 -13.48% Taoiseach 35,000 -18.84% Tourism, Culture, Sport 76,000 -15.05% Transport 139,000 -5.04% Other Measure 400,000   €6,992,000

Replacing Cowen now is fraught with misjudgement

The Irish media are full of speculation this weekend about the political future of Brian Cowen.  He has never fought a general election as Taoiseach and consequently has never had the endorsement of the people since he succeeded Bertie Ahern as Taoiseach on 7 May 2008.

Some argue that he will stand down before the next imminent general election.  There is no Constitutional impediment and some argue that a new leader is necessary if Fianna Fáil is to survive.

Those who advocate replacing Brian Cowen before the next general election ought to realise that it is only in failed states that the of head of government position is decided upon exclusively by an elite opportunistic clique. The notion that Brian Cowen should be replaced imminently is tantamount to suggesting that a stranger would take the place of a candidate at an important public examination. Cowen’s legacy and political future must be decided by the people at the next general election. The right of the people in our democracy to return their verdict on the leadership and record of any Taoiseach and his, or her, cabinet is inalienable and should be protected by the Constitution. 

The flesh of this nation has been under attack from smart-alec politicians for 40 years and its skeleton is now imploding as a consequence.  Political degradation and dysfunctional leadership caused the surrender of sovereignty and also dramatically changes the dynamics leading to the next presidential election. It will take more than a four-year National Recovery Plan and spun messages rooted in bland anecdotes of prior accomplishments to restore the prestige and eminence of Ireland across the world. Each of the political parties must recognise this and put forward a first-class presidential candidate who clearly demonstrate integrity, values, wisdom and the capacity to inspire the restoration of the nation’s withered morale.

FÁS fed made at least one property developer very rich

FÁS agreed to spend €275,000 per acre for a 5.6 acre site in Birr in November 2004 that the agency’s own professional advisors valued at €140,000 three months earlier to facilitate the transfer of its head office from Dublin 4 under the Irish Government’s public sector decentralisation programme.  The value of commercial sites in locations such as Portlaoise, Tullamore and Athlone is currently between €70,000 - €110,000 – although there are very few transactions.

The Irish Government’s staff decentralisation programme played a significant cameo role in the property bubble.

The decentralisation plan was to relocate 11,000 civil and public servants to 95 locations outside Dublin. By April 2010, 3,148 persons has relocated. 2,430 of these were in permanent office accommodation and 718 were in new offices but the full decentralisation programme had been deferred to properties in 34 locations. The decentralisation of 6,583 posts at 61 proposed locations have now been deferred.

The Government seriously weakened its own negotiating position with property vendors for three principal reasons

• The entire decentralisation programme was to have been accomplished within 3 years - by 2006
• The destination locations were announced in advance by Finance Minister Charlie McCreevy which immediately triggered price inflation.
• The State had no authority to make compulsory acquisitions for the decentralisation programme.

Rody Molloy, then Director General until he was fired in November 2008 is a native of Birr. The board of FÁS approved the purchase of a 5.6 acre site in December 2004 at a cost of €1.5 million, or €275,000 per acre. The site had originally been part of a 25-acre site owned by a voluntary housing charity who sold it to a developer.

Respond Housing Association made a planning application to Birr Town Council on 19 March 2004 for a major housing development of 224 dwelling, eight apartments, a community building, and two group homes in three and two storey blocks, on Banagher Road, Town Park on the north side of Birr. The proposed housing development caused uproar in Birr among local councillors and the Northside Residents Committee.  The planning permission was appealed to An Bord Pleanála who approved the scheme on 28 September 2005. The housing development did not proceed.

Property consultants were retained by FÁS in August 2004 to assess the value of the site proposed and they concluded that given its particular characteristics the site was worth approximately €700,000, or €140,000 per acre. The site was landlocked although the vendor agreed to provide road access after the contract was signed. FÁS put forward a revised offer of €150,000 per acre which the vendor rejected. The property consultants then apparently raised the valuation of the site to €300,000 per acre following further work and analysis and a deal was done in October 2006 to buy the site for €275,000 per acre.  The vendor was Finbarr McLoughlin (66), a property developer from Kilshane House Tipperary,  who wanted the FÁS deal secured before he purchased the 25-acre site from the housing charity.

This transaction was undertaken independently of the Office of Public Works.  The former Minister with responsibility for the Office of Public Works, Tom Parlon, a native of Birr and former TD for Laois-Offaly, was involved in direct discussions about this transaction at the offices of the solicitor acting for the original vendor, Respond Housing Association on 10 November 2006 concerning road access to the landlocked site.  Parlon contacted the Manager of Offaly County Council in the course of this meeting to clarify the Council’s attitude to providing planning permission for an access road – which was subsequently approved in Parlon is currently the Director General of the Construction Industry Federation.

While this spending splurge was taking place the 400 FÁS employees destined to move form Dublin to Birr refused to budge while only 6 agreed.

Industrial sites with a 999 year lease located in Tullamore, Portlaoise and Athlone are currently on offer for between €78,000 and €117,000 per acre.

FÁS also took a 10-year lease from Birr Technology Investment Consortium on a 708 metre² building at Mill Island, Birr in 2007 at an annual cost of €99,000 that was to accommodate up to 40 staff but just 20 moved so far.  This is a development that qualifies for urban renewal scheme tax breaks.

The agency entered into a contract in December 2006 valued at just over €1 million for the fit-out of this leased building. The landlord’s company was the only vendor invited to provide a quotation – on the basis that this proposal ‘compared favourably with a cost plan developed by the quantity surveyor employed by FÁS’. The total cost of this fit-out cost over a 10-year time frame was 77% higher than the upper benchmark established by the Office of Public Works, according to the Comptroller & Auditor General.

No work has been undertaken on this site pending the review of the national decentralisation programme in 2011 – that will now happen in the context of the IMF having sovereign control of the country.

FÁS has several other offices in Co. Offaly at Edenderry, Portloaise and Mount Lucas, a former briquette factory.  The latter was bought for €281,000 in 2006 and a further  €1.474 million was spent on adaptation and the construction of classrooms which was to function as a ‘centre of excellence’ for the construction sector.

The national decentralisation programme is on ice until 2011 but €43.8 million has been spent on 12 sites in locations where the decentralisation programme is not being advanced. Those sites acquired at a relatively low cost were already in the ownership of a local authority but private vendors with properties in town centres were able to demand premium payments for properties during the era of peak activity.

Ireland ranked 2nd wealthiest–according to Bank of Ireland’s ‘Wealth of the Nation’ report

Ireland boasted 30,000 millionaires in 2006 and the number of millionaires was predicted to exceed 100,000!  The average wealth per person in Ireland, €148,130 per person that year was greater than the average wealth per person in the United Kingdom, United States, Italy, France, Germany and Canada. 

That is how Bank of Ireland viewed Ireland on 10 July 2006, a year in which the members of the Court were paid remuneration of over €5 million but increased to €10.23 million the following year because we were all so invincibly wealthy.  The report was published 10 days prior to the shareholders annual general meeting

'A key defining characteristic of Ireland’s wealth is that it is first generational by nature (peasants were, in other word, wearing shoes for the first time and could afford a toothbrush). with the vast bulk of our wealth having been created in the past ten years. The report highlights that much of this wealth has been created through gains in property investment and through a willingness to borrow to invest further. It has been entrepreneurial and more risk orientated than many other developed countries where inheritance features more prominently

The current allocation of Irish wealth to equities and cash, by contrast, is less than any of the other countries in the report. 'However, we (Bank of Ireland 10 days before the 2006 AGM) predict that this will change as property price increases move back to more realistic levels and an ageing population may act as catalysts to create growing interest in diversification into other assets, primarily investment and pension funds. As wealth grows and matures, the benefits of diversification become compelling and an increasing amount of this wealth will be allocated to other assets’.  This is a natural evolution as Ireland's wealth matures and individuals seek to protect their gains and transfer wealth to the next generation'

'The growth in wealth in the Irish economy has been astounding, (oh shucks!) with net wealth growing by 350% in 10 years. This is after taking into account the level of household debt in the economy and this highlights the rude health of Irish household's finances. We expect that net assets will grow to over €1.2 trillion by 2015, an increase of 80% in the coming decade.'

'Much has been made of the level of indebtedness in the Irish economy, with the pace of growth in debt much higher than in many other countries. However, liabilities as a percentage of total assets have only now reached international averages. While debt as a % of disposable income has increased from 89% to 140% in the last five years, the level of wealth provides an enormous cushion to borrowers (and our borrowers continue to be breast fed until their mothers reach 75 years of ages). Neither the absolute level of borrowing nor the level of borrowing relative to overall wealth are ahead of international norms indeed, we have come from significantly behind other developed countries. What is really interesting is that Irish investors have used much of this borrowing to leverage their positions in property, which, in turn, has been the engine for growth.'

Fears about rising debt levels are overstated as Irish investors leverage assets to secure further growth

This report was based on a survey of the top 8 leading OECD nations, Ireland is ranked the second wealthiest, behind Japan and ahead of the UK, US, Italy, France, Germany and Canada, showing an average wealth per head of nearly €150,000.

The report spells out precisely how rich Ireland has become over the past decade and the direction that this wealth is likely to take in the next decade. The report, covering household savings and investment patterns in an international context, paints an upbeat picture about the sustainability of recently created wealth and suggests that fears about the rising levels of debt are overstated.

According to Mark Cunningham, Managing Director, Bank of Ireland Private Banking:'A key defining characteristic of our wealth is that it is first generational by nature, with the vast bulk of our wealth having been created in the past ten years. The report highlights that much of this wealth has been created through gains in property investment and through a willingness to borrow to invest further. It has been entrepreneurial and more risk orientated than many other developed countries where inheritance features more prominently. The current allocation of Irish wealth to equities and cash, by contrast, is less than any of the other countries in the report.

'However, we predict that this will change as property price increases move back to more realistic levels and an ageing population may act as catalysts to create growing interest in diversification into other assets, primarily investment and pension funds. As wealth grows and matures, the benefits of diversification become compelling and an increasing amount of this wealth will be allocated to other assets. This is a natural evolution as Ireland's wealth matures and individuals seek to protect their gains and transfer wealth to the next generation,'added Mark Cunningham.

The Report states that while property will continue to be dominant, it will no longer be the pre-eminent asset of choice other assets, more particularly equity markets, bonds and cash will come to the fore. In 2005, Irish asset allocation stood at cash 10%, bonds 3%, equities 16% and property at 71%. By 2015, Bank of Ireland predicts that asset allocation will change to cash 12%, bonds 5%, equities at 22% and property at 61%.

Commenting at the launch of the report, the first of its kind in the Irish market, Pat O'Sullivan, Senior Economist and author of the report said:'The growth in wealth in the Irish economy has been astounding, with net wealth growing by 350% in 10 years. This is after taking into account the level of household debt in the economy and this highlights the rude health of Irish household's finances. We expect that net assets will grow to over €1.2 trillion by 2015, an increase of 80% in the coming decade.'

The report outlines that personal disposal income in Ireland has doubled over the past ten years, and it is forecast to double again over the next ten years.

The annual level of personal savings stood at €10 billion at the end of 2005 and this is forecast to increase to €13.5 billion by 2010 and to €24 billion by 2015. The latter figure equates to 14% of disposable income, which contrasts sharply with the recent averages of 1% in the US and 5% in the UK. We have to look to Germany to find a similar attitude to savings, where it approaches 10%.

Average Irish Household Assets and Net Worth 2005 – 2015

€000 per household	2005	2010	2015
Residential Property	542	684	891
Deposits	80	112	177
Pension Funds	64	90	160
Business equity	43	64	96
Investment funds	28	57	106
Direct equity	19	30	56
Commercial property	20	27	36
Gross Assets	796	1,064	1,522
Household Debt	115	200	300
NET ASSETS	681	864	1,222
Financial Assets	191	289	499

The Uduras party continues to swing as public expenditure cuts bite everywhere else

There is clearly no shortage of resources at Údurás na Gaeltachta judging by the 2009 Annual Report which was published on their web site just as our new sovereign leadership (IMF and ECB) arrived in Dublin. Perhaps their reticence is understandable because this report certainly prompts some critical and penetrating questions.

• 10% of the total income (€6,532,902 out of €63,615,000) was paid to board members in fees, grants and other transactions in 2009 – a year when full-time grant supported employment dropped by 720 jobs to 7,473. Taxpayers deserve a detailed explanation of these transactions and an insight into how much of their own cash recipients contributed to grant-supported projects and what sustainable value the State obtained for the taxpayers money.
  Reference http://www.udaras.ie/index.php/corporate_menu/publications/annual_reports_and_statements/1124 Notes 9 and 21 – 2009 Annual Report
  
• Board members obtained €12,813,823 in members fees, expenses, grants and in respect of anonymous transactions since 2005.


• Between 2005 and 2009 a total of €94.28 million was paid in grants while the total underlying employment dropped by 185 jobs from 7,473 to 7,658. These grants included €34.3 million on fixed assets to presumably increase production capacity to create new employment; €3.4 million on property rental subsidies; €11.8 million on employment grants; €29.3 million on training; €13 million on research and development and €2.2 million on grants for no attributable objectives. The scale of this is mind boggling.  What enduring benefit has been achieved for this expenditure?
  
• Travel and Motor Expenses for the staff whose total number declined from 113 to 100 from 2005 to 2009 amounted to €4.26 million. How come it was necessary to spend the equivalent cost of ten business class round-the-world airline tickets for each staff member when nothing demonstrable was accomplished?
  
• Cumulative expenditure in 2007, 2008 and 2009 on building projects that did not go ahead in the last five years €1.86 million. What were the circumstances of this spending? Who obtained this money and why?
  
• Expenditure on buildings since 2005 was €51.5 million, including €16 million since the property market crashed in 2008. How much was spent on the provision of high-speed internet connectivity?
  
• In the light of the foregoing, is there any reason to believe that this agency is actually a State resourced property development company whose capacity to foster enterprise is as dynamic as the capacity of the soil of Bellyferriter to grow grapes to make vintage champagne?
  

Tax yield from Irish agriculture collapses, as EU keep the sector on life support

EU subsidies are the life support mechanism of Irish agriculture.

The tax yield from Irish agriculture collapsed by 90% between 2007 and 2009 – from €817 million to €78 million. This compares to an overall contraction in tax revenue of 26%.

Last year Ireland contributed €1.5 billion to the EU Budget and received €1.8 million from the EU. The Irish contribution is determined by a formula and rules based on certain customs duties, a proportion of VAT and a proportion of Gross National Income.

Ireland’s receipts from and payments to the EU Budget from 2005 to 2009 are as follows:

Year	Annual Receipts - €BN	Annual Payments - €BN	Surplus to IE - €BN
2005	2.4	1.5	0.9
2006	2.2	1.5	0.7
2007	2.1	1.6	0.5
2008	2.1	1.6	0.5
2009	1.8	1.5	0.3

The lion’s share (€1.64 billion) of the money received goes to agriculture and rural development, the largest component being the €1.3 billion for the Single Farm Payment while the balance (€161.8 million) is paid from Structural Funds.

Total public expenditure on Irish agriculture in 2009 was €3.38 billion – for an economic sector whose output is €4.76 billion. The gross added value of Irish agriculture at basic prices was €983 million.

Employment in agriculture has dropped from 114,800 in June 2008 to 84,900 last September. The number of farms in the country has dropped from 128,200 in 2007 to under 115,000 units. The demographic profile of agriculture is similar to the demographic profile of Irish politics – 51% of the farmers are over 55 years of age and only 7% are under 35 years of age.

The land area of Ireland is 6.9 million hectares of which 4.2 million hectares is used for agriculture and a further 737,000 hectares is used for forestry. Over 80% of farm land is deployed for pasture, hay and silage production; 11% is dedicated to rough grazing and the balance, 10% to crop production.

The 2010 budget of the Department of Agriculture, Fisheries and Food to keep this show on the farm amounts to €1.37 billion and it takes 5,232 employees to sustain it a 4% drop in employee numbers since 2009. Their travel and subsistence allowances alone are €9.7 million. The associated postal and telephone charges exceed €9.7 million but they spend €126,000 on value-for-money reviews. That, by the way, is a 59% reduction on the €310,000 spent on value-for-money reviews in 2009. Research and training for the 84,900 remaining employees is €35.7 million.

How will the social partners (i.e. the IMF and ECB) react to this?

EU, ECB and IMF set to put the jackboot into maudlin Cowen

Ireland endured the consequences of an impaired reputation in the global financial markets since September 2008 but this has now morphed into serious doubts about its credibility and the credibility of its Central Bank Commission.  The market will not trust its numbers.

Financial markets are spooked by the losses in Irish banks.  These had been estimated at €11.2 billion but have risen to €45.55 billion, mainly as a consequence of the toxic cess pit – Anglo Irish Bank.

Will the Central Bank Commission survive the scrutiny of the IMF and the EU? Its principal role is to oversee standards of corporate governance in Irish banks and to vet incumbents appointed to senior roles in the banks.  Will an umbilical link between the disgraced board of FÁS, the State training agency, which has been stood down for grievous failure of corporate governance enhance the credibility of this Commission as an umpire of corporate governance standards? 

National Irish Bank, a wholly-owned subsidiary of National Australia Bank engaged in a decade long episode of untrustworthy behaviour which not just undermined the Central Bank from 1988 to 1998 but also undermined the integrity of the national tax system which led to 9 senior managers of National Irish Bank being disqualified to act as an officer of any company.  How can this Commission demonstrate credibility in overseeing the calibre of senior appointments in Irish banks against this background?

Foreign borrowing as a percentage of the Irish net national debt has increased from 28.5% in 2001 to 80.6%. The underlying foreign debt has increased from €10.3 billion to €72 billion. The Irish State deficit from January 2001 to October 2010 has risen to €51.92 billion. This reflects Government expenditure in the decade of €376.85 billion while corresponding tax revenue was €324.9 billion. Retail savings in State institutions account for 13% of the national debt.

The sooner this jaded, depraved, incompetent, lame-duck government of no standards and no class and their administrative peasants and toadies are out of existence the better.

Údarás na Gaeltachta at the Public Accounts Committee

When the Secretary-General of the Department of Community, Equality and Gaeltacht Affairs was recently examined at the Public Accounts Committee he responded to charges that the travel expenses regime at Údarás na Gaeltachta  read like ‘a mini FÁS’ by indicating  that the agency has provided him with assurances that ‘all spending was within rules’.

It is noteworthy that the board of the Údarás did not facilitate public understanding of this important examination by publishing their 2009 annual report on the web months beforehand.  However, a review of the annual reports from 2002 to 2008 suggests that there is ample scope for the Public Accounts Committee to ask some penetrating and insightful questions.

The Údarás has a staff of 107 persons, whose travel expenses between 2002 and 2008 were €7.17 million, an average of over €67,000 per employee – sufficient to cover the cost of 19 round-the-world business class airline tickets for each and every employee.

The Gaeltacht has a population of approximately 90,000 persons – about the same as the population of Co. Wexford.  This represents 5.4% of the 1.66 million people in the country, aged 3 and over, who can speak Irish.  There are 775,000 persons in the national workforce who can speak Irish.

The primary function of Údarás na Gaeltachta is enterprise development.  Total employment in grant-supported firms increased by 622 to 8,193 between 2002 and 2008.  But the total amount of grants approved during this period was €201.47 million and the total amount of grants paid was €122.8 million.  If tax credits rather than grants had been approved the recipient businesses would have been required to generate a profit in the region of €1.6 billion and sales perhaps ten times greater than this sum to qualify for this scale of incentive.

Total expenditure by Údarás na Gaeltachta in this 8-year period was €429.3 million, €19.1 million more than its income.  Expenditure between 2002 and 2006 exceeded income by €30.2 million, attributable mainly to a more aggressive depreciation policy of buildings from 2002.  Why does the Gaeltacht not enjoy the economic vitality of Qatar with such a massive investment inflow to a relatively small population? 

Údarás na Gaeltachta spent over €80.6 million on buildings in that 8-year period.  That expenditure presumably made some vendors very rich.  A total of 1.5 million was spent on ‘building projects that did not go ahead’. But if there was no growth in overall employment why was it necessary for the State to spend so much on construction, especially a time when the construction industry was expanding at breakneck speed and on auto-pilot, heading eventually to its own self-destruction and obliteration?  What proportion of this construction expenditure has yielded an economic return?  Who now bears the risk in respect of that part of the buildings portfolio which is fallow or redundant? 

If the provision of infrastructure was the primary argument for the provision of these buildings, how much was spent on broadband infrastructure given that enterprise is much more dependent on adequate broadband connectivity.  Fast broadband, Facebook, Twitter and Skype removes the disadvantage between the Gaeltacht and the rest of the universe, not empty buildings.

The Údarás is governed by a 20-member board of directors elected by plebiscite.  The cost of members’ fees and expenses of that board during these 7 years was €2.13 million but the PAC might like to examine the context and circumstances of how €8.2 million was paid in grants, or other transactions, to enterprises which employed board members or in which they were otherwise personally interested.  Annual Reports indicate that board members complied with Department of Finance guidelines covering situations of personal interest and did not receive documentation or participate in the board discussion relating to such matters.  But the nature of the these payments remains as watertight as the Third Secret of Fatima while there is some detail provided of grant payments to the general public.  The PAC might enquire with respect to grants, the extent to which recipients invested their personal resources, particularly their own cash, in grant supported projects and what sustainable value the State obtained for the peoples’ money and the peoples debt.   

The Committee might also consider how a 20-person board can possibly govern a 107 person organisation and function as coherent, focused and inspiring thought leaders to an 11-member management.  Should politicians be directly involved in disbursing public money?

85% of Ireland’s sovereign debt is held by foreigners.  The ‘men-in-red-braces’ reflect their verdict on Ireland’s economic leadership at all levels – including the A-team at the Department of Finance and its agencies, through level of credit available and the interest charged on sovereign debt.  Has the time arrived for a review of the State’s efforts to develop the Gaeltacht and is there an opportunity to try a fresh approach that is much less complex in organisational structure, fosters a more enlightened culture of accountability, is considerably less expensive; operates with simpler, but realistic, goals and where those who incur risk also bear the burden of delivery?

How does one discern political reform in Ireland?

The self-serving, ‘cute-hoor’ response of the Government to the High Court decision in relation to the Donegal by-election is the latest twist in the epic tale of Ireland’s spiralling democratic deficit and outrageous contempt for the electorate by a rudderless government that is incapable of reform.

Ireland has now reached the stage where two Independent T.D.’s define our short-term political destiny. Michael Lowry is de facto Taoiseach and Jackie Healy-Rae is de facto Tánaiste. The credibility of social partnership has also imploded because this undemocratic process has been dysfunctional for at least a decade, despite the hundreds of millions of euro spent directly, and without due accountability, propping it up.

It has been seamlessly replaced by a plethora of consultants who believe the can charge the State what they want for services rendered because they control the market for these services. But these people, like the social partners, carry no risk and bear no burden. Why has the Government never reformed these markets? Is it a case that there are simply too many vested interests to appease?

Most believe the cost of the bank bailout at €45 billion to be utterly obscene but when citizens realise that is cost no less than €6.43 billion to actually acquire the next-to-worthless shares in these wretched banks they will be aghast – and not a single person is held accountable for this appalling debacle. This is what happens in a State with no bargaining power and no backbone.

This state of affairs is further compounded by an implosion of leadership, sound judgement and moral authority on the part of a number of key top-level civil servants and supine advisors whose own decisions, or tolerance of the decisions of others, are having a devastating impact on the wellbeing and reputation of our country – not just in relation to public spending but also in relation to the low calibre and doubtful qualifications of certain public sector appointments

It is impossible for the electorate to discern what game the Government are playing with respect to the decision to appeal the High Court decision concerning the Donegal South West by-election. But is certainly is not motivated by their consideration of the people and they are about to face very scorned voters.

Those who intend to be in government speak loquaciously about reform. They would need to extend their horizons in this regard beyond the trivia of 27 ministerial cars to removing the deadbeats whose incumbency of top-level positions in the civil service and connected advisors has this country in a state of paralyzing ambivalence and economic decay.

If a general election is to take place sooner, rather than later, those aspiring to power will need to have explicit, credible and compelling explanation of what exactly reform means in their universe - if they too are not to be greeted with scorn and derision. No more generic waffling please!

Constructing a residence fit for the President of the University of Limerick

Last February a statement on behalf of the President of the University of Limerick to the Public Accounts Committee indicated that €2,317,000 was provided by The Atlantic Philanthropies towards the complete cost of constructing an official home for the President on the campus, of which €347,000 was for associated infrastructure.

The Atlantic Philanthropies have been extraordinarily generous to the University of Limerick and provided grants of €29.65 million towards 15 different projects in the past decade. These included the funding of €3.61 million for a faculty and staff common room in 2001 and €1,075 million for core support for the University of Limerick Foundation in 2007. But the latest list of grant-aided projects does not mention the Presidents House, despite other grants being paid to the University in 2009.

Perhaps, Chuck Feeney, the founder of The Atlantic Philanthropies made the funds available through some other means. However, the statement to the Public Accounts Committee emphasised that the Higher Education Authority had been very supportive of campus development and had been regularly briefed 'in the context of seeking State funds for campus development through various submissions and reports'. But it did not explicitly state the Higher Education Authority or the Department of Education & Skills were aware of the initiative to build the President's House before this matter was discussed at the Public Accounts Committee. Would it not have been astute of the University to keep these bodies abreast of both thinking and developments as these are planned and take place rather than run to very real risk of being subsequently left out in the bitter cold by them at another time?

The generosity of Mr Feeney was a critical catalyst in launching the Programme for Research in Third Level Institutions throughout Ireland. He approached then Taoiseach Bertie Ahern and then Minister for Education Micheál Martin in 1998 offering to put up £75 million for research if the Government would match it. Third level research has subsequently benefited from funding of €1.22 billion provided by exchequer and matching private funds, of which €749.9 million was spent on research buildings and €429.4 million was spent on research programmes.

This raises the question that if Mr Feeney provided the funds to build a house for the President of University of Limerick why a matching contribution was not solicited from the State or some other partner. The value and yield from the investments that provide the funds donated by The Atlantic Philanthropies have been hit by the recession and administrative expenses as a percentage of donor expense has increased from 10% to 13% between 2008 and 2009. How could it have made sense for The Atlantic Philanthropies to bear the bear the total burden and the total risk of this project against this background, especially when their main mission is to redress social injustice and disadvantage? Why would no credit be claimed by the donor in its publicity?

The cost of constructing this residence at €4,378 per metre ²
in 2009-2010 was very high given
the depressed state of the construction sector and the economy – did moral hazard creep in and inflate the cost when the funding was provided without quibble by a third party? Is this residence owned by the source of the funds, by the University or by the State? While no State funding was apparently sought for its construction who picks up the tab for upkeep and maintenance, given that it is intended to accommodate distinguished visitors to the University of Limerick?