Friday, June 29, 2012

Irish politicians’ gravy train intact despite escalating debt burden

The proposed €120 billion plan proposed at the two-day summit in Brussels last night is relatively modest when compared to the National Debt of Ireland, which nos stands at  €129 billion

While the Government wrestles with its conscience about the phenomenal debt burden on Irish taxpayers’ and the implications of the personal insolvency of many of them, one facet of that burden which seems utterly immune from the conscientious distress of the Government is the quantum of taxpayers’ money paid to political parties and Independent members of the Oireachtas under the Electoral Acts.

The sums involved are additional to the very substantial tax-free payments in respect of the Parliamentary Standard Allowance, the Travel and Accommodation Allowance and the other direct supports provided through the Oireachtas Commission at a cost of €130 million in 2011. They are simply outrageous, unconscionable and, in a society bearing a cumulative exchequer deficit well over €82 billion and a titanic National Debt, unaffordable.

The standard of accounting is risible in the case of political parties and non-existent in the case of Independent politicians. The quality of oversight reporting by the politically-compromised Standards in Public Office Commission is opaque, shoddy, wretched, inconsistent and disregarding of basic accounting conventions.

Thanks to the bountiful munificence of Charlie McCreevy in 2001 political parties have been granted over €78 million of taxpayers’ money since 1 January 2007 under the authority of the Electoral Acts to meet reported expenditure of under €64 million with €14 million left in their balance sheets. Last year 29% of the €13.3 million paid to political parties was carried over to 2012, probably as a consequence of the vast sums spent paying a myriad of ministerial political advisers.

The scale of these payments escalated since 2002 by 47% in line with increases in public sector pay but it is most noteworthy that payments to political parties did not reduce when public sector pay reduced from 2009 onwards.

Do taxpayers really need to: pay Fianna Fáil €28,542 in respect of depreciation, (a non-cash charge); pay Fine Gael €18,657 to spend on ‘donations’; pay the Labour Party €44,000 to spend on ‘international affairs’; provide €28,700 to the Sinn Féin ‘national finance department’ and leave €90,000 in the balance sheet of The Green Party, which has no Oireachtas membership? [/over]

Fine Gael and Labour voted against the appointment of a politician (former Fianna Fáil minister, Michael Smith) in a Dáil vote on 19 December 2007 to membership of the Standards Commission, a curtain-raiser initiative of the Ahern Government that preceded the publication of tribunal reports. It is interesting that only 15 of the 73 TDs who supported that motion are in the current Dáil and they include the Chairman of the Public Accounts Committee, John McGuinness, Independent Deputies Noel Grealish, Finian McGrath, Mattie McGrath and Michael Lowry.

Both the Taoiseach, Enda Kenny and the Tánaiste, Eamon Gilmore,  participated in the Níl vote against that motion. If the Governing parties position in 2007 opposed the principle of a politician, or former politician, becoming a member of a commission whose mandate is to oversee the ethical standards of politicians and public officials’, why has this Government not already removed political influence from the Standards Commission, especially in the light of the tribunal reports’ findings and instructed it to improve the quality of its published reports rather than tolerating its interminable excuses for inertia and weakening moral authority?

Will the Government’s ambition to reduce the debt burden on taxpayers’ include a dramatic reduction in the amounts of State money paid to political parties to a level that is affordable and demand a more transparent and credible regime of accounting for this money, or does the Government merely intend to haunt society with threats, innuendo and rumours of more taxation, new charges and cuts in public services?

Friday, June 8, 2012

Political party State funding, a rich, rewarding gravy train

The scale of funding provided by taxpayers to political parties under the Electoral Acts and the Party Leader’s Allowance legislation, by any benchmark, is so outrageous, absurd, unaffordable and inadequately accounted for that political parties have become equivalent to bloated, featherbedded and State-dependent QUANGOs.

Figures recently published show that taxpayers provided €12.66 million last year to which a further €3.1 million was carried forward from 2010 bringing their spending capacity in 2011, courtesy of taxpayers’, to €15.77 million. They reported spending €11.88 million which means they brought forward €3.8 million to 2012; a 26% increase on the sum carried forward, unspent, from 2010, in an era of severe austerity, great personal sacrifice and massive cutbacks.
To put the scale in context, the British Government provided €8 million in 2011 to Opposition parties who successfully contested the 2010 general election for research support for front-bench spokesmen. The 2010 British general election consisted of a valid poll of 27.1 million votes. Our 2011 general election consisted of 2.2 million 1st preference votes.

Despite the attachment of an auditor’s certificate the accounting for this money is pathetically obscure; devoid of candour and adequate transparency, notwithstanding the proximity of the Standards in Public Office Commission as overseer.

The Standards Commission advise that Fianna Fáil, for example, claimed to spend €28,542 on ‘depreciation’, a non-cash expense. Fine Gael spent €18,657 on ‘donations’. Labour spent €44,666 on ‘international affairs’. Sinn Féin spent €28,700 on its ‘national finance department’. The Green Party, with only 41,000 general election votes and without a single Oireachtas member, managed to spend €341,466 but have still brought forward over €90,000 to 2012. The pair of two-TD parties received so much funding that they are bringing forward almost €93,000 of unspent taxpayers’ money to 2012 leaving the four of them to eke out an existence on the €167,462 in tax-free travel, subsistence and Parliamentary Standard Allowances.

The People Before Profit Alliance spent just €1,000 on ‘pre-Budget research’ but over €7,500 on ‘travel and subsistence’, over and above the €20,000 their TDs collected in travel and subsistence to commute from the adjacent Dublin suburbs last year. The Socialist Party has obliged all taxpayers to pay €4,689 in respect of the production of Socialist Party publications. Independent members [/over] of the Oireachtas pocketed €713,885, free of income tax, without even an auditor’s certificate, or any obligation whatsoever to account for this money. Some of them tell us they donate their allowances to charity.

The Parliamentary Leader’s Allowance, which last year amounted to €7.2 million, is linked to pay increases in the civil service but the legislation does not compel a reduction in line with civil service pay cuts and the radical pruning of the public sector since 2009.

It is noteworthy, in the context of the statutory mandate that 30% of selected candidates in the next general election are to be female, that 1.4% of the €5.4 million provided to seven parties under the Electoral Acts was applied to the promotion of participation of women in political activity.

The foregoing expenditure is separate and distinct from the €6 million received, tax-free, directly by TDs in respect of the Parliamentary Standard Allowance and generous tax-free travel and subsistence allowances, which they receive when they turn up for the 100 days sitting of the Dáil each annum.

Spending last year on political parties is equivalent to an average of €1,311 for each 200 votes received by qualifying parties in the February 2011 general election. Political parties in Great Britain and the North are obliged to provide detailed annual audited accounts since 2003. The average overall subvention for each set of 200 votes won by qualifying parties in the last British general election in 2011 was €37.16, less than 3% of what Irish taxpayers are saddled with.

The ridiculous scale of political party spending in Ireland is also illustrated when the campaign cost of each vote cast, €4.17 in the 2011 general election is compared to the campaign cost of each vote cast in the 2010 British general election, €1.07.

Is there any other facet of the €52 billion in current expenditure that is spent by the Government so out of kilter with economic reality, where loose and ambiguous rules are tolerated and the standard of elementary accountability to stakeholders is so opaque?

How can the Irish Government, reform-minded and responsible for public expenditure, public sector reform and the adequacy of corporate governance standards look voters in the eye while this self-indulgent squandering orgy that is unnecessary and which is taking place directly under their collective nose?

The British political party subvention, incidentally, is restricted to Opposition parties with at least 2 MPs and more than 150,000 votes (0.55% of the national poll). It is based on three elements:

1. General funding of €18,600 per seat + €30,04 for every 200 votes

2. Apportioned travel expenses for Opposition parties subject to an overall limit of €204,000

3. A sum for the running of the Leader of the Opposition’s office

4. Salaries for three post holders: Leader of the Opposition’ Opposition Chief Whip and Assistant Opposition Whip

Wednesday, June 6, 2012

How the State got screwed on Dublin Docks

It beggars belief that the State owned the entire controversial Irish Glass Bottle site at Poolbeg, through Dublin Port Company, in 2005. But the following year, after the freehold title was acquired by a subsidiary of the tenant under a loophole in the provisions of the Landlord and Tenant (Ground Rents) No 2 Act 1978, the site was offered for sale by public tender with the State having a 33.3% share of the sale proceeds, not the more typical 50:50 share that had been the custom in instances where long-term commercial leases were being disposed of in a similar context.

The site was sold to a consortium that included Dublin Docklands Development Authority (DDDA) as a 26% shareholder, developers Bernard McNamara and Derek Quinlan in late 2006 for a consideration of €411 million. The State stood to recoup one-third of this (€140 million) but ought to have recouped a further €65.5 million had the customary landlord/tenant 50:50 split applied.

DDDA sought the permission of its supervising minister, Dick Roche to enter the joint venture and to increase its borrowing capacity to €127 million, the maximum allowable under governing legislation; permission to enter a joint venture and indicated on 12 October 2006 that the cost of the proposed transaction in respect of which the loan powers were sought would be €220 million.

Mary Moylan, an Assistant Secretary from the Environment Department, with line responsibility for DDDA, was an Executive Board member who participated in 12 of the 15 board meetings that took place in 2006. Ministerial approval was received on 24 October 2006. Ten days later, on 3 November, the Executive Board of DDDA agreed a tender bid of €411 million but Moylan’s Minister and Secretary-General was not informed of the massive and fundamental change in the terms of engagement.

The assessment of the site value was left to Bernard McNamara, in recognition ‘of his expertise and experience and if he had some additional information which convinced him that the bid should be increased then the Executive Board of DDDA agreed that McNamara could be allowed to increase the bid as he saw fit to a maximum of €437 million’.

A professional valuation of the site was not obtained in advance of determining this bid although one was obtained the day after the decision to submit with an application for loan finance to Anglo Irish Bank, two of whose directors, Lar Bradshaw and Seán FitzPatrick, were members of the 8-person Executive Board of DDDA, Bradshaw was chair of the Executive Board and FitzPatrick was his predecessor in that role.

The stated objectives for the involvement of DDDA in this joint venture was to (1) ensure that the site would be developed imminently (2) expedite the planning process (3) advance its social amenity and less commercially desirable agenda and (4) input to the architectural design and tone of the development.

DDDA operated on the basis of creating a Master Plan for parcels of the 500+ hectares within its jurisdiction. The 2003 iteration of this for the Poolbeg Peninsula had not been completed when this deal was executed in 2006 but they had broad stroke ambitions to have facilities in place for research and development and industrial and commercial usage. The promoters of the joint venture envisaged a return of 15% on their investment. A substantial portion of this would have comprised 1-bedroom apartments overlooking an incinerator and selling for prices up to €1 million each. But no detailed analysis was carried out by the Executive Board or management of DDDA for a proposition that was supposed to have a ceiling of €35 million for DDDA.

The negotiation of funding for this splurge took place with Anglo Irish Bank and Bank of Ireland. Bradshaw and FitzPatrick were both directors of each organisation while another member of the esteemed executive Board, Declan McCourt was a director of Bank of Ireland, as well as being a director of the vehicle importer and distributor, OHM Group. While these three absented themselves from the actual discussion of the funding issue at the board meetings it was Bradshaw who signed the loan guarantees with Anglo Irish Bank.

By 2010 DDDA had a potential exposure of €81.9 million but after a settlement was reached with NAMA, which acquired the lending banks’ loan assets, its actual exposure was €52.1 million.

Some €36.3 million was allocated to site remediation. The value of this 10 hectare site, on which €431 million was spent before taking account of remediation costs, was put at €45 million at the end of 2010.

There has been never been evidence that the scale of this splurge was ever made known to the Minister for the Environment, Community and Local Government and in May 2012 the current Minister, Phil Hogan, announced the shuttering of DDDA. Moylan remains an Assistant Secretary in charge of finance and central services. The five other member of the Executive Board in 2006 were Angela Cavendish from Raglan Road Ballsbridge, a director of Alexsam Limited, Donall Curtin a director of Byrne, Curtin Kelly an accountancy practice, Niamh O’Sullivan from Ranelagh, a director of Arup Consulting Engineers and Joan O’Connor formerly a director of Interactive Project Managers Limited.