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!

Rescue remedy needed for training and education system

The viability, reputation and stature of our national training and education enterprise is sailing like the Titanic en-route to the iceberg and there are no life jackets on board.

Despite recurring and widespread allegations of systemic malpractice and accounting failures at FÁS, SIPTU announce glibly that the ‘problems’ at FÁS can be overcome, a perspective not apparently echoed by IBEC. Is this a case of mutual recognition by birds of a feather, or does it merely imply that SIPTU has a higher than desirable tolerance of mediocrity and slovenliness and an aversion to change and radical reform?  FÁS is a creature of a social partnership process that has self-destructed as a result of insular thinking, incompetent, delinquent and politically compromised leadership. The best days of FÁS are behind it and only those with deep vested interests, most precious to themselves, refuse to recognise this while those most effected deserve a much more enlightened and inspiring response.

Secondly, a stronger level of Government supervision is urgently needed over the plethora of private third-level colleges emerging in this country. This could take the form of an operating licence reflecting the conformity of its teachers and courses to designated national standards.  Some of these so-called colleges are purely money-making rackets promoted by individuals with no background in education and no substantial personal academic credentials. They should be immediately banned from advertising courses that have no Irish State accreditation rather than playing on the desperation and gullibility of an unsuspecting public, presumed to believe that any entity with the initials C D in its identity automatically has the prestige and resourcefulness of a distinguished university. When there is incisive and scathing official criticism of a private college it is no defence whatsoever to state that such criticism is "not as positive as we might have hoped".

Thirdly, the realisation that 40% of our adult population struggle with primary school maths and that 10% of the candidates for ordinary maths in the 2010 Leaving Certificate failed is a symptom of a fundamental failure in leadership at an institutional and also at a political level. If that trend is not successfully arrested the prospects of our society being able to sustain the standard of living it aspires to will be sorely compromised and those adversely affected will find it increasingly difficult to obtain meaningful work at home and abroad because such a wide range of skills are based on some understanding of maths and mathematical relationships.

Another 'High-Noon' at FAS

THE appearance of a FÁS delegation, for the 4th time in twelve months, at the Public Accounts Committee yesterday signalled another ‘high-noon’. This appearance followed the shocking revelations in the second Special Report issued by the Comptroller and Auditor General into a scandalous level of extravagant and feckless waste of public money spent on advertising and promotion at FÁS, “an agency with a culture of non-compliance, part compliance and circumvention” according to Peter McLoone the Chairman who, along with IBEC presided over this.

This country has been served from time to time by some really outstanding and inspiring public servants for whom trustworthiness, transparency and integrity were bywords. But it has also had to endure more than its fair share of clown princes, princesses and gombeen-men with delusions of adequacy.

Do those individuals responsible for the selection of Rody Molloy as Director General of FÁS have any regrets about this decision?

The two Special Reports from Comptroller & Auditor General published to date are a comprehensive indictment of guile and sheer incompetence that has suffocated this agency for the last 9 years and mutilated its reputation. The idea that the State would provide Molloy with premium levels of compensation to oust him, in the light of settled evidence, is not just manifestly outrageous; it is precisely the type of decision which debases the reputation of the country and would lead any outside observer to believe that the Irish are nothing but a posse of pathetic goboloons.

Molloy and his side-kicks displayed the paranoia of J Edgar Hoover, Head of the FBI from 1924 until his death, at the age of 77, on 2nd May 1972. Their incompetence, arrogance, guile, self-serving nature and peasant cunning and the pathetic naivety of Del-Boy. Pervasive lack of accountability, weak standards of corporate governance, abuse and waste of public money were the hallmarks of Molloy’s tenure and define his legacy. It will clearly not surprise the master of non-compliance that the State has finally awakened to the logic of not rewarding this fool for his idiocy and the material loss that this incurred.

But Molloy continues to impart his prestige as Chairman of the Institute of Public Administration. The Institute of Public Administration is supposedly the Irish national centre for development of best practice in public administration and public management. Its training and education programmes are tailored to the needs of public servants. Its research and publishing services offer an informed voice and forum for discussion and debate on public service issues. Its board includes Peter Nolan, National Secretary of IMPACT, the trade union of which Peter McLoone is General Secretary Chairman of the board of FÁS. Perhaps Al Capone’s grandson ought to be allowed extend his prestige and be appointed as Chairman of the Revenue Commissioners. Does this nation not deserve better?

The bile continues to seep and trickle from FÁS. The odour is overpowering and, at last, it dawns of the political establishment that it is not necessary to reward Molloy with 4½ years added pension worth €1 million and a taxable payment with no admission of legal liability, of €111,000 to compensate for loss of office. This murky, squalid package was slung together without even the observations of a novice law clerk. Of course, Ireland is bursting with resources and the role of Government is to squander these bolstering the vanity of eunuchs, who, in another jurisdiction would be televised ‘prep-walking’ to court.

When Molloy before the Public Accounts Committee on 2 October 2008 he stated in his introductory remarks that “FÁS is not a perfect organisation” and that internal audit reports are written in a style and in robust language not designed for general public consumption and that “unfortunately, the internal reports released by us under the Freedom of Information Act have been sensationalised by the media and used by some with a destructive agenda towards FÁS”. His hope that day was that meeting of The Public Accounts Committee and the Comptroller & Auditor General’s involvement “will end the constant negative commentary”. What bishop wrote that script for him?

The media report today, 25 September 2009, almost a year after this Examination began, that Molloy filed 22 complaints in relation to the conduct of the internal audit team which wrote the report which was the subject of the C&AG examination. All of Molloy’s complaints were rejected by the Audit Committee of the FÁS board.

The Public Accounts Committee stated on 18 December 2008 that they “found it difficult to obtain comprehensive and full information from FÁS. Much of the information we received was incomplete and presented in a format which made it difficult to analyse. In addition, some of our requests for information have been refused. The lack of complete data has slowed down our investigation and made it more difficult to make a final judgement on this hugely important matter”

This is a principal oversight committee of sovereign nation acting on behalf of citizens who are providing over €1 billion every year to an agency where there is clearly no adult supervision.

Molloy is not the first honcho to leave that agency with his palms abundantly greased. The former chief executive of An Bórd Gáis, John Lynch was appointed Chairman of AnCO while Ruari Quinn was Minister for Labour. FÁS was subsequently created incorporating AnCO, the National Manpower Service and the Youth Employment Agency and Lynch became its first Chairman. Today he describes the latest episode of traffic mishaps involving CIE buses.
The position of Director General became vacant in 1990 following the hasty departure of the former incumbent whose position was no longer tenable. It was advertised but the Chairman was to discover there was nobody sufficiently brilliant to take on this role until he looked in the mirror one day. The board of the agency invited him to consider himself as candidate. He was interviewed and the outcome was successful from Mr Lynch’s perspective. The Minister for Labour at this stage was Bertie Ahern.

Lynch continued as Director General for a decade. Those who reported directly to him included Gregory Craig, Head of Corporate Affairs, the function that is subject of the C&AG special reports. Craig was suspended on full pay. The Chairman of the FÁS Audit Committee, told the PAC that this suspension was serious enough to be ranked as ‘short of dismissal’.
It was reported in the media that Craig enjoyed 20 days paid accumulated leave and the letter confirming suspension seems to have only been issued on 1 December 2008 at which time Craig’s solicitor advised him not to discuss the nature of his suspension with any other party.
It does seem strange that with Garda enquiries ongoing and the protracted controversy surrounding the department over which Craig had unfettered oversight that he should be short-listed for the vacant position of Assistant Director General of FÁS. The interviewing panel that made this possible included Christy Cooney, now President of the GAA.

The taxpayers observed the Cooney leadership skills at the conclusion of the All Ireland Hurling Final on 6 September this year. Cooney, with the moral rectitude and imperiousness of General Norman Schwarzkopf Jnr, directed that fans should not enter the pitch, for health and safety reasons, after the game and the cup would be presented to the winners on the pitch.

The fans, en masse, defied the General and invaded the pitch. The General retreated to the stand and an LCD sign flashed ‘Plan B’. The General was lanced; his presidency of the GAA defined.

The pity is that FÁS was also a Plan B organisation led by a caste of B country and western bit-players, stunt men and small-town marshals, none of whom had the impact of Gary Cooper or the elegance of Grace Kelly in the 1952 film 'High Noon'. Molloy and his fellow travellers should not be treated as injured innocents when they forfeit their badges.

IBEC and the unions - the watchdogs that never barked

DESPITE the Taoiseach clinging tenaciously to the concept, the principal stakeholders of social partnership have been reduced to empty rhetoric and the threat of disruption that, in due course, will be seen to have achieved nothing. The paltry attendance at street protests outside Leinster House this week is evidence of a weary and disillusioned public.

Social partnership has demonstrated some focus, coherence and purpose when the objective was merely the division of perceived incremental wealth. But there appears to be no scope for partnership when there is no wealth to divide, hence the grandstanding.

The publication, on 10th September, of the Comptroller & Auditor General’s Special Report on FÁS undermines the authenticity of IBEC and the trade unions as social partnership process to the point where this concept has probably run its course.

The C&AG’s examination was part of a follow up to a Special Report issued in April 2008 and the subsequent consideration of the Report and other issues by the Oireachtas Public Accounts Committee.

The examination covered the period 2002 to 2008. In that time FÁS spent €48 million on advertising, promotion and related activities. FÁS had the largest advertising expenditure in the entire non-commercial State sector.

The examination found that advertising and promotional activities lacked strategic direction and that much of the advertising was ineffective in increasing awareness of services provided by FÁS. Budgetary control was poor and expenditure in that area exceeded budgets by 38% in the periods under review. There was some wasted expenditure, including €600,000 spent on television advertisements that were never broadcast and a further €600,000 for which no services were delivered to FÁS.

The examination also found that FÁS did not always comply with public sector procurement procedures and there were shortcomings in its internal financial controls which resulted in breaches of expenditure authorisation limits and a failure to track all expenditure commitments.

The last Director General of FÁS, Rody Molloy, resigned abruptly last November but was rewarded with very significantly enhanced pension arrangements, despite this performance and the country being almost bust. There is no jail-time for white collar crime or incompetence in Ireland. This matter falls within the context of national heritage preservation, although Molloy’s successor admitted the staff of FÁS feel betrayed by the wasters-in-charge.

The Report identifies a number of areas where improvements could be made to systems, practices and procedures at the State agency. The C&AG is to issue another special report about governance at FÁS in a few months.

The recently appointed Director General of the employers body IBEC, Danny McCoy, calls for moderation in government expenditure and a reduction in wages and welfare. He represented IBEC on the board of FÁS from 2005 until he took on this role a few months ago. He had ample opportunity to practice what he so stridently preaches but he failed to do so.

An increase in State funding of 45% to over €1 billion per year was provided between 2002 and 2007. The number on the Live Register increased by 20.3% to 170,376 and the number unemployed increased by 14.6% to 93,400 during this period. A substantial component of the FÁS spend is connected to welfare. They say that a nod is as good as a wink to a blind man so the excess of expenditure over income in 2005 and 2006 did not arouse the sleeping directors of FÁS.

What moral authority does IBEC now have with respect to these issues when
it did not even bark when it could have achieved an outcome that it says it
desires?

Potential savings of €400 million could have been achieved during these years, an era of effective full employment, without unduly compromising the overall intended impact of FÁS.
The trade union movement is heavily embedded in FÁS and the evidence of its very limited competence, most recently under the chairmanship of Peter McLoone, to oversee the agency is now tragically apparent.

The trade union movement has lost tens of thousands of subscribing members since the recession bit the leg off the economy.

A consequence of social partnership is that Ireland ranked second last this year in terms of labour cost competitiveness throughout the EU-27.

Our labour cost competitiveness has eroded by 23%-points since 1998 according to competitiveness indicators published by the European Central Bank. This is a consequence of social partnership. The average deterioration in labour cost competitiveness throughout the EU-27 was 4.4%. Slovakia is the only Member State with a poorer showing. Germany and Austria both achieved a significant improvement in labour cost competitiveness in the decade.
The moral of this is that any prospective social partnership process must be first about the creation of wealth, the enhancement of productivity and increased output. If there is a shared perspective about this the issue of wealth distribution can then be considered from a sold foundation. Sowing precedes reaping.

Ireland must never trust the myopia of a Ponzi-like construction bubble ever again propagated by self-serving bankers, no waste time on a social partnership process that is bereft of effectiveness.

A new approach is necessary.

The Debacle that is FÁS

WHEN public trusts is so utterly compromised, as in the case of FÁS, one is inclined to question upon what basis trust was reposed in the first instance. The executive leadership of FÁS never seemed to earn the highest public acclaim. Taxpayers’ and citizens’ would have thought that the board of an enterprise that was spending over €1 billion per annum and contained within its ranks trusted individuals who would be competent, visionary, inquisitorial and vigilant. But, tragically, the board of FÁS operated to the standard of geriatrics’ book club and the reputational fallout is far reaching at a personal and institutional level as the stench of geriatrics’ stale urine.

The architect of the culture of any organisation is its chief executive and the calibre of a chief executive defines an organization.

The public are now aware of what the management of FÁS were fully acquainted with last year when they appeared before The Public Accounts Committee. I read the transcript of the FÁS dialogue with The Public Accounts Committee again over this weekend. The explanations tendered to that Committee, in respect of certain decisions, are so utterly self-serving in the light of evidence now to hand. There was a great deals of wriggling and waddling behind the fig-leaf of legal nicety but to what ultimate avail?

The most recent report of the Comptroller & Auditor General is a sequel to a previous report with adverse findings on procurement and related matters at the agency.  It deals with the management of advertising, promotion and related activities, including jobs and activities to promote science.

The C&AG found that advertising and promotional activities lacked strategic direction because there was no marketing and communications strategy.  There was a substantial and prolonged breakdown in budgetary control.  Promotional expenditure in the period reviewed exceeded budgets by 38% and the general advertising expenditure exceeded budget by 66%.  But much of the advertising was ineffective in achieving the objective of increasing the awareness of the services provided.

There was nugatory expenditure of €622,000 as a result of a series of transactions for which there was no evidence of goods and services having been provided.

There was also considerable non-effective expenditure including over €600,000 spent on advertisements that were not broadcast and payment of €9,200 for a car that was not delivered.

The board of FÁS, under the chairmanship of Peter McLoone,  is to resign following the publication of this second report.  The chairmanship of this agency alternated between trade union representatives and the employer lobby group, IBEC.

 

The Belly Dance is about to begin …

As you listen to the siren calls for the curtailment of government expenditure reflect on the energy and vitality applied to curbing excessive spending at this agency.  The period between 2002 and 2007 was an era as close to full employment as Ireland is likely to see for a long time.  Did any of the distinguished board raise there hand to successfully counter this trend?  This board did not even react when the expenditure for the agency, as a whole, exceeded income in 2005 and 2006.  Perhaps they were in Florida having a pedicure.

Year	Income € Million	Surplus / (Deficit) of year-end income over expenditure €000	Live Register	Unemployment
2002	859.3	812.00	166,142	80,000
2003	823.1	664.00	170,604	85,200
2004	833.3	481.00	158,816	83,600
2005	912.0	-4,597.00	155,833	82,100
2006	974.6	-572.00	155,389	88,200
2007	1,071.5	5,762.00	170,376	93,400
	€5,473.8
CHANGE	24.7%		2.5%	16.8%

 

When IBEC Boys Choir hums sweetly about a reduction in wages and a reduction in welfare, should these remarks, in the interests of clarity and the elimination of ambiguity, be prefaced by:

 – “wages are what they are because of the social partnership agreements that IBEC negotiated with other stakeholders”

When you speak about welfare cuts, you could mention “

“when I was sitting on my precious idle arse in the boardroom of FÁS, dreaming about Ireland’s first astronaut, I did absolutely nothing to prevent the FÁS State subsidy increasing by 24.7% between 2002 and 2007 while the Live Register recorded a mere 2.5% increase and the number unemployed increased by 16.8% to 93,400 persons. My board knew nothing about the derring-do, even though expenditure exceeded income by €4.59 million in 2005 and by €572,000 in 2006.”

I look forward to the third report of the C&AG and the unfolding dynamic of the social partnership process with intriguing interest, especially as the Voice of the da Vulnerable has once again raised his hidden jowl above the parapet of public opinion, this time from a newly created vantage point but representing the sentiments of the same constituency. The stature and credibility of social partnership has, unfortunately, also been thrashed leaving its stakeholders naked and impotent.

Jack O’Connor wants a social banquet

Our Taoiseach, Brian Cowen, clings tenaciously to the concept of social partnership to create a roadmap to economic recovery.  But the consequences of the economic collapse has made the same social partners as effective as neutered rabbits on a sunny Spring morning.

They have traditionally positioned themselves as the providers of incremental benefits.  But with no resources to allocate the new game plan is subsidy bounty-hunting. 

IBEC want millions to subsidise exporters. 

The IFA want millions to subsidise hobby farmers.  They will hold public tantrums to avenge their rage and throw eggs at whatever lactating political breast they believe they can beat into submission.

The religious congregations remind us of our ‘solemn obligations’ to provide hundreds of million of euro for their Third World clients and that the return on this expenditure will be ‘kudos’ and a reputation for the country ‘punching above its weight’.  They are not too concerned if the resources provided are derived from income or debt.

Jack O’Connor, General President of SIPTU and currently President of Irish Congress of Trade Unions is the latest actor to step forward.  O’Connor wants the primary legislation to establish the National Assets Management Agency (NAMA) to incorporate a “social dividend”.  Is that not a lovely, cuddly inoffensive euphemistic thought, just like Wexford strawberries cream on the beach in June?  The little teddy bear should even have its very own beating heart.  Can you believe it – a 21st century Butlin’s with redcoats entertaining the new arrivals at Nirvana and ‘adult party’ weekends!

Jack advocates that what is to become the largest property institution in the world, whose primary function is to realise collateral for bank loans, should have a social dimension. in the form of providing houses, schools, health centres and, even, sports and community facilities.  Santa Claus has rode into town in August and Jack is making a list and checking it twice.  Local authority waiting lists will disappear and there will be no private facet to the dinosaur that is our health service.  Nirvana is at hand!

I don’t think that economic literacy is Jack’s strongest card.  Everything has a price but Jack omits to mention who is to pay for his dream of a social dividend.

It would have been interesting if Jack had aspired to an economic dividend – a gesture that might create the wealth from which the social dividends could be provided.  But that would be so boring from Jack’s perspective. 

It was only 3 months ago that Jack was promising mayhem on the streets of Ireland as union members would protest about their grievances.  But there hasn’t been a whisper about that since. I suspect that unions members are taking their own counsel as to how far-reaching their protests will be and how they will spend their political capital.

The chilling reality is that unemployment in Ireland is now 228,000 – almost three times as high as 2006.  There are 418,000 on the Live Register.  Short-time working and pay cut backs are the order of the day.  Day to day economic activities such as shopping, eating out, purchasing a car, taking a holiday are no longer possible on the level of a short few years ago.  This has also impacted the membership levels of SIPTU and their counterpart unions. 

Jack’s real priority nowadays is two-fold: protect the SIPTU membership base and the income derived from it and to choose topics for public discourse that could validate the union’s existence and make Jack appear to be a compassionate soul, a Robin Hood of modern times.  The latter has to be in a form of a good, appetising banquet, the cost of which is always somebody else’s problem!  Belch!

Each of the social partners need a good banquet from time to time.  Otherwise they will starve to death.  Their irrelevance will become too glaringly obvious and if the membership walk their public spokesmen will be out of job and off the invitation lists.  The absurdity of the menu for these banquets can be directly correlated to the desperation of the group placing the order!

Jack has stated the Ireland’s social partnership process offers no potential on a deal to enhance the prospects of economic recovery.  This is not surprising and reinforces the notion that this process is simply about more, more, more.  The latest hot potato concerns a possible reduction in the minimum wage.  Ireland’s minimum wage is apparently second highest to the minimum wage in Luxembourg but when adjusted for purchasing power its also ranks mid way after the minimum wage in Holland, Belgium, France and the UK.

Of course, the minimum wage level and the disparity in wages between Ireland since 2001 is a consequence of the very same partnership process – so perhaps it is time for a new and more creative approach.

Social Partnership needs an urgent reality check if its legacy is not to be ‘a one-trick pony’

Peter McLoone, General Secretary of IMPACT and chairman of FÁS (2006-2010), warns of an ‘abyss’ as the social partners are “staring failure in the face”. Would this not suggest that it is time to restate the fundamental objective of partnership in the context of prevailing circumstances and a Live Register that has increased by well over 100% in twelve months?

We cannot spend our way out of recession - even if this is a classical economic response to reigniting an economy. We cannot subsidise our way out of difficulty either. The Government faces the prospect of only being able to fund 53% of what in intends to spend in 2009 out of what it is likely to earn in 2009. Personal debt, at €172 billion, is well in excess of what is prudent and a by-product of housing bubble where buyers bought houses at the equivalent of up to 15 times their household income. We cannot tax our way out of difficulty because that aggravates the basic problem rather than ameliorates it.

We are told that when an international recovery becomes evident that we can aspire to an ‘export-led recovery’. But what will the components of this be?

There have been many own-goals that contribute to current difficulties and one of these is the erosion of competitiveness. Many cliché-laden tomes have been published commenting on this but little action has been taken to improve matters.

If social partnership has any real purpose surely that should relate to enhancing national competitiveness.

If the process is to degenerate into a bidding process where each of the social partners are essentially seeking parity of subsidy (€1 billion ++) for their particular constituency, it is hardly worth the cost of the Pledge furniture polish the maintain the talks table.

Can partnership offer anything that will stimulate economic recovery and growth or is it merely a subsidy -dispersing talk-shop with each stakeholder reduced to seeking parity of resources? Is the suggestion that the national Partnership process in its current form maybe faltering really such a bad thing?

Social Partnership has been in existence since 1987 and has accomplished a great deal. It brought the industrial relations process to a more sophisticated and far reaching level and its impact extended beyond bilateral industrial relations matters to encompass the perspective of farmers, construction and the voluntary sector. It reduced the incidence of days lost through strikes (4,179 in 2008, 6,038 in 2007) to provide me and thousands of beneficiaries with a sense of enhanced prosperity that are now illusory as a consequence of the financial crisis and especially that element of it that is attributable to an absence of economic leadership and direction in Ireland. We now realise that a society cannot be economically sustainable on the basis of its citizens buying poorly constructed houses in out-of-the-way locations for 15 times their annual income when they ought to be able to do so for three times their annual income. The fault lines of voodoo economics and its first cousin, leveraged investment, have been brutally exposed.

However, the process has been defined by the stakeholders in the one-dimensional direction of being able to deliver incremental financial benefits to their constituencies. We are in an environment where the Government is intending to spend €63 billion out of a potential income of €34 billion in 2009.

The last time that Ireland operated with the level of tax revenue anticipated this year was in 2003. The following gives a high-level glimpse of how fiscal circumstances 2009 compares with those of 2003:

	2003 € 000	2009 € 000
GDP at current market prices	139,097	Est 168,000
Expenditure Department of Social & Family Affairs Department of Community, Rural and Gaelteacht Affairs Department of Enterprise, Trade and Employment Expenditure % GDP FÁS	5,611 257 1,025 6,893 4.9% 823	21,271 476 1,449 23,196 13.8% 1,080
National Debt Cost to service National Debt	37,610 2,276	Mar 54.245 2,108
Surplus (Deficit) on current account Surplus (Deficit) on capital account Exchequer Balance	3,685 -5,554 -1,869	-6,093 -8,698 -14,791
Live Register Unemployment	166,142 4.6%	384,448 Apr 11.4%

The foregoing does not take into account the implications of redeeming our zombie bank sector. The recent US announcement that tests to of the capacity of leading American banks to survive an economic downturn will require to raise the level of core capital by collectively raising $75 billion in new equity and to maintain a higher ratio of core capital. Irish banks do not have a high level of core capital by international standards. If they are to compete for new equity with American banks they will be judged adversely for the inadequacy of their core capital in the context of these higher norms.

ICTU and IBEC have each advocate spending initiatives costing €1 billion plus to respond to their individual constituencies. Who is going to pay for this against this fiscal background?

A consequence of partnership since 1996 is the erosion of Ireland’s competitiveness and this has resulted in the benefits that recipients thought were assured were in fact unsustainable.

The most recent quarterly report from the Central Bank demonstrates how this has come about:

	1990	1996	2009
Ireland: average hourly earnings	82	100	196
Major trading partners: average hourly earnings	80	100	156

Our labour force in December 2008, 2.28 million was 17,200 lower than a year earlier. Unemployment increased from 101,500 to 170,700 in this period. The participation rate in the workforce dropped from 65.1% in December 2007 to 54.1% in December 2008. The index for modern industrial production at December 2008 was 152.5 compared to 173.8 in December 2007, a downturn of 12.3%.

Many of the multinational businesses operating in Ireland have established positions in developed countries. Some are seeking growth in emerging countries which account for 85% of the world’s population and more than 50% of potential worldwide GDP growth. Can Ireland offer products and services to these markets and be competitive in doing so? When this recession eases and new businesses begin to emerge across the world they will seek lower barriers to entry and affordable technology. Will Ireland have anything to offer them and will the advantages be sustainable?

If economic recovery in Ireland is predicated on exports can partnership contribute to Ireland becoming sufficiently competitive to achieve the earnings and the tax revenue to pay its way, or is it incapable of doing so?

A second issue concerns leadership. McLoone, in his remarks to the IMPACT biennial conference on May 8^th also stated with his chairmanship of FÁS, “when the heat came on”, in relation to the spending controversies, his initial reaction was to walk away. He also stated that trade unions had no influence in the State’s key economic agencies. Power comes to those who seize it and use it. To suggest that the chairman of a State agency with a budget north of €1 billion is disingenuous.

A crisis need stellar leaders, not fair weather friends. Can the social partners provide this or are they merely capable of cheer-leading to the most short-term postures of perceived influence?

To summarize: we cannot subsidize our way to recovery; we cannot tax our way to recovery and we cannot spend our way to recovery. But we can compete our way to recovery and we can only prosper to the extent that we can pay our way. The alternative is that the economic management of the nation is outsourced and the vested interests are rendered truly impotent.

If the axe really fell on Irish Government spending, where would it be felt?

I was listening to Batt O’Keefe TD, the Minister for Education on RTE radio news this afternoon blathering about the government having a "€54 billion spending commitment to be funded by €34 billion in tax revenue" (if they are lucky!) He had been to the INTO conference in Letterkenny where, it is said, he received a ‘cool reception’ - no applause from the delegates.

What would happen if the Government really did swing the axe and align spending with revenue, as they will inevitably have to? Current outgoings cannot be funded by spiralling borrowings, on top of which provision must be made for extraordinary State borrowing to rescue the dumb, profligate overpaid bankers, after their delusionary programme to convert every dungaree-wearing driver of a Toyota HiAce van to become an Aston Martin owner wearing a navy blue crombie with a suede collar, imploded with an unspeakable deluge of bad debts and hand-washing.

The population of Ireland increased by 11% between 2003 and 2008. Our tax revenue increased by 27%. A growth in public spending of this scale may have been sustainable but our public expenditure actually increased by 60% between 2003 and 2008 - only to be surpassed by the emoluments paid to top bankers.

The Department of Communications, Marine and Natural Resources was the only government department which reduced spending in this 5-year period and this was accomplished by spending €50 million less!

Welfare increases, which outstripped those prevailing the neighbouring jurisdiction, were an important component of the overall increase. Welfare spending increased by €3.7 billion in what was a relatively benign environment from a welfare perspective. Unemployment in 2003 was 88,000 and the Live Register recorded 172,414. The labour force expanded from 1.89 million in 2003 to 2.2 million in 2008. We certainly needed to augment and enhance infrastructure to cater for this unprecedented growth.

IBEC advocated a radical cut-back in welfare spending before the budget. Its director general, Turlough O'Sullivan, is to retire shortly. He will be relieved to be beyond the ambit of socially dysfunctional politicians. But when the time comes for him to reside in a room full of geriatrics, who are sitting in a collective puddle of piss, he might reflect on what it is like to be thought of as nothing more than an inconsequential, voiceless 'demographic entity' in the calculus of Ireland's pertnership movers and shakers. There is nothing like the rasping, self-righteous cadence of a Northern Ireland accent on the media airwaves to emphasise this perspective, whatever one might say about the prudence of our generous welfare system. It is the perfect foil to the 'inheritance brats' as defined by Paul Sweeney, economic advisor at the ICTU.

The April budget was designed to raise €1.8 billion to cope with a collapse in tax income but there was very modest cuts in public expenditure.

If the Government was prune up to €20 billion off its spending to match its income and 2003 spending patterns were adopted as a guide the following cuts are indicative of what would be necessary to balance the budget at a departmental level:

• Agriculture & Food -€866 million
• Arts, Sports & Tourism -€313 million
• Communications, Marine and Natural Resources –no change
• Community, Rural & Gaelteacht Affairs -€235 million
• Defence -€220 million
• Education and Science - €3.35 billion
• Enterprise, Trade & Employment -€409 million
• Environment, Heritage and Local Government - €847 million
• Finance / Revenue Commissioners - €284 million
• Foreign Affairs - €440 million
• Health and Children - €5.8 billion
• Justice -€873 million
• Social and Family Affairs - €3.70 billion
• Taoiseach - €58 million
• Transport -€1.07 billion
  TOTAL €18.46 billion!

But as the Live Register now lists over 370,000 people and and additional €4 billion in welfare expenditure has been provided for in the April budget, the foregoing cuts are nonsensical because, in practice, there would be no €3.7 billion cut in welfare spending and the net additional €7.7 billion to fund welfare would have to be obtained through additional cuts, over and above those indicated here, to reach the €18 - 20 billion spending cut target!