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Labour Target the Poor’s Savings
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Isn’t great that a party in this country wants to jeopardise the future financial security of the Irish people so that they can open up their own little ideological Disneyland. And no I am not on about Sinn Fein’s tax policies I am talking about Labour and Aer Lingus.
The National Pensions Reserve fund in Ireland was a good example of future planning. Basically it committed all future governments until 2055 to set aside at least one per cent of GNP each year. This was so that when the demographics changed to Ireland having an older population that instead of the government requiring to raise taxes to fund pensions it would have this fund which is being invest carefully to cover some of the costs. Considering that most people in the middle class will have private pensions this fund is primarily going to be for the poor who can’t afford to pay into private pensions.
Aer Lingus is in need of investment. With the open skies deal with Europe and America. This opens up more opportunities for expansion for Aer Lingus and for Irish people to get more options in their airline destinations. Bertie said that it needs 2 billion to buy new planes to capitalise on this.
The object of the fund is “securing the optimal return over the long-term subject to prudent risk management”. Prudent as in cautious, sensible, careful. Ask any economist what is the most volatile industry in the world and I would guess that that many of them would say Airlines. Look at all the airlines that have gone bust in recent years. A website here lists 57 from November 2003 to December 2004. Major National carriers like Swissair, Sabena have gone to the wall. Many others have just managed to scrape through with massive losses. Aer Lingus it’s self just managed to survive thanks to major restructuring. And this is the industry that Labour want to invest what is basically the countries life savings which is supposed to be prudently, cautiously, sensibly, carefully invested. It really is complete and utter irresponsible lunacy.
When asked why Ireland needs a state owned airline Rurari Quinn answered. Eircom. That privatisation didn’t work with Eircom hence it wouldn’t work with Aer Lingus. This is complete and utter codswallop. Eircom was a monopoly and the infrastructure was privatised. As Mary Harney once said if there is anything worse then a state monopoly it is a private monopoly. This will not happen with Aer Lingus. Multiple airlines fly all over the world from Ireland. Ryanair even flies from some of the smaller airports like Kerry and Knock which Aer Lingus do not. The idea that if the government do not fund an airline that access to the country will be lost really is a bit naive.
As for these mythical Heathrow slots. What business would sell slots into the busiest International Airport in the world on the second busiest in the world air-corridor in the world. Which has one of the highest load factors. Even if an airline company did sell off the slots. The company that bought them would probably still fly into Dublin as it is probably one of the most profitable routes. And even if it was likely that a company would not want to fly the world’s second busiest air route. The government could when it is privatising Aer Lingus. place control of the landing slots in a semi-state company’s hands and rent them to airlines flying London-Ireland. The way to give the Irish people more choice, more value and more destinations to to privatise Aer Lingus.
AL made a profit of about €100 million last year and made a profit in 13 of the last fourteeen years. It has cash reserves of €650million odd. It is in a very healthy financial situation.
The question is not ‘why the state should own an airline’ but why the state should flog off a profitable company it owns?
Precisly because it is a profitable company. The state should not be in business that it is not need to be in.
It is not the job of the government to be in Business. Neither is it the place of government to invest tax payers money in a business, money which could be better spent in the health service.
Also remember when it flogs it off the state gets a big payment. That can be invested for the greater public good.
That the state should not be involved in business is neo-liberal claptrap. The Irish state invested when there was a shortage of capital or of private initiative. There’s no reason to sell a successful state company.
While I’m at it, I might add that giving or selling shares to employees is privatisation and shouldn’t happen.
I have a question. and it might be a silly one but here goes.
What happens to the profits which my tax euros generated if the neo-liberals get their way and Aer Lingus is privatised.
I think that the poor are worse off with the current government than they would be with Labour, A PD/FF designed yellow pack medical card is no good to someone who is on long term medication and only needs repeat prescriptions and not doctor visits.
Squid,
It’s not a silly question. It’s right on the mark. Neo-liberalism functions to transfer wealth to the well off. Have a look at David Harvey’s “A Brief History of Neoliberalism”.
So do any of you have any problem with labour wanting to invest the money that is going to pay the future pensions of the less well off in one of if not the most volitile industry in the world.
Airlines are indeed the most volitile industry in the world but i can think of something worse that inveting in it publicly. Waiting until it has a bad time and comes cap in hand to government for a bailout that only secures the profit of a small few shareholders. Ultimately airlines of hte stature of aer lingus dont go bust, they get government help (just look at AA, Delta, USAIR etc etc)
If they are going to come to us when its bad, why not we be there to profit when they are good? Its not like private sharholders are going to be more demanding than public pension funds, they both demand management deliver on the share price.
Actually the government is not allowed to bail out major companies in trouble under EU law.
Wont stop them trying, the EU is as reliant on airtravel as other major blocks where there is a will there is a way.
Ya but Ireland is not reliant on Aer Lingus. With Ryanair, easayjet,central wings, Gitmo Express, delta airways, American airlines, British Airways Air France etc etc.
Simon, the NPRF already invest in airlines as part of its portfolio, incluing Ryanair (some €3million)
Aer Lingus sale will raise a miserly €400 million or so, yet it returns a profit of €100 odd per annum. The state, under EU directive form 1984 is allowed to invest in a commerical viable semi state and so should invest.
It makes money, its owned by the state (ie the people) it should be kept.
Aside from repeating the naive assertion that ‘Governments should not be in Business’ you have yet to give a single good reason for the state to flog off an asset that makes money.
One of the most worrying aspect of the effect of twenty years of the promotion of neo liberalism have been the blinding of, in particular, young peoples in relation to state ownership. It has become convential wisdom that privatisation is inherently good and state ownership bad.
Firstly there is a big difference between 3 million in Ryanair and the 2 billion that will be need to invested in Aer Lingus. The 3 million in Ryanair is a stock market investment that can be withdrawn if the stock starts to fall. If Aer Lingus suffers then so does the pensions of the future poorer people. 3 million is a miniscule amount in relation to the entire portfolio of the fund. A massive investment in Aer Lingus would be a significant long term investment in a company that if it goes south can not be recovered.
Also if a company is to be successful it has to be able to exploit commercial opportunities when it sees them. However a semi-state body does not have the ability to do this. It has to go through government channels and the whole situation becomes a political football. If it became commercial unviable for Aer Lingus to fly out of Shannon for instance. Would the government allow it to do this considering that it would lose the government all the votes in the mid-west. No it would force the airline to stay and operate at a loss. Effecting the return to the people.
Also back in 2003-2004 when the airline was looking for finance to expand the fleet. But due to government and Union feet dragging it could not purchases the extra planes. That was just after 9/11 and the aircraft market was very cheep. Indeed it was about 25% cheaper then it is today. If the company had been private then it could have bought more aircraft at a reduced rate. Indeed the 2 billion need to expand the fleet today would be 1.5billion back then. Or equal to 5 years profits.
Also presuming that Aer Lingus will stay profitable at it’s current levels. Which is debatable as it is one of the most volatile industries in the world. The pensions fund will not break even for 20 years. Also at its current profit level. If the company was to be sold for 400 million. That would mean that the people of Ireland would not see a monetary benefit for 24 years. Imagine where the financial situation of the world’s aviation industry will be in 24 years. Peak oil, middle east war, another 9/11 etc etc. The amount of things that could turn Aer Lingus into a loss for the pension reserve fund is many. If the pensions fund wants to make a profit for the Irish people there is a lot more prudent and more profitable ways for it to make its and our profit.
One of the most worrying aspect of the effect of twenty years of the promotion of neo liberalism have been the blinding of, in particular, young peoples in relation to state ownership.
Blinding to state ownership my god I would say the totally opposite is true. I doubt more young people in this country have ever been as socialist. Look at the largest youth parties in University in my experience the PD’s and Fine Gael are the smallest if they exist. And the Greens, Sinn Fein, Labour and the socialist party are big. Or maybe that is just me
I have never seen a time when fewer young people are socialist.
The Greens would not pretend to be socialist.
SF would pretend to be anything.
Most members of the Labour Party are socialist.
The Socialist Party is quaint rather than socialist in today’s terms.
The only vaguely reliable measure of Irish leftism is the Labour percentage and it is showing no sign of a surge.
Either is the PD’s. Fine Gael are more conservative the economical right. I have to wonder is their any idological economic politics in Ireland. Labour remember are advocating economic policies that most of europe considers right wing. 12.5% corporation tax for example. Most people in Green,Sinn Fein socialists Labour would consider themselves left. And by that measure the precentage is rising. But that debate deserves another dedicated post. Hint Hint other contributors
Simon,
Yes, that middle ground is very crowded. However, most of those occupying it accept neo-liberal orthodoxy. There is little reason therefore to support the PDs other than that they are honest, outspoken believers in inequality - assuming one can stomach that kind of thing.
“Left” has become meaningless. After the fall of the USSR neo-liberal nutters were deemed “left” because they weren’t traditional, conservative communists.
There is too a huge amount of thinking going on among socialists. Frankly we are unsure and a little confused. The present situation is complex, difficult to analyse, and difficult to address. Class structure has become complex but exploitation remains - indeed, it’s becoming worse. Marxism remains as a useful tool for analysis. It was never a doctrine. No matter what has changed, there are some of us who still want a democratic, relatively egalitarian society in which everyone can flourish.
I must take issue with your casual listing of SF. They are not just a political party like others. Given, say, 30 years, they might become that. Indeed they will likely merge with FF. However, for now they are a conspiracy against democracy. We all saw the IRA marching at the head of their parade in Dublin a few months ago. We all know about the intimidation and IRA “police” in deprived housing estates. Few will speak out for fear of their safety or for fear of upsetting “the peace process”.
To close, you are right: this debate doesn’t belong under this heading but you speak when you can.
I agree with you on Sinn Fein but some people do see them as left so I listed them.anyway back to aer lingus
There is too a huge amount of thinking going on among socialists. Frankly we are unsure and a little confused.
No comment.
“We all saw the IRA marching at the head of their parade in Dublin a few months ago.” - We….cant say I noticed myself. Care to provide clarification.
The pension fund is administered by pension fund managers, market leaders of the modern day. In the complexion of modern stock markets it is they more than management that make the key calls, make or break a company. I think that if we are to benefit from a strong Aer Lingus in both real and public senses the best way to do this is to have a pension manager squeezing the return that is required from Aer lingus, its what the market would do anyway but we get the benefit of acutally holding onto the wealth.
acutally holding onto the wealth
That is the nub of the arguement I think people want to hold on to the wealth but I think if you look at it by doing what is needed to be done to hold on to the wealth the state is going to make less wealth then it would if it did not.
As with Shannon what the managers might want them to do to squeeze out of the company might be against the political wind of the day. Does anyone think if it is economically desirable for Aer Lingus to pull out of Shannon for instance that the government will allow them?. If they need another major cash investment how long would it take the government to invest in it?
Also there would be alot more prudent and probably more profitable ways for the pensions fund then to invest in the company.
Also here is an interesting thing. Aer Lingus do not fly anything out of Kerry Airport. Doing nothing to benefit the economy of Kerry. Not even a flight to London. Ryanair and Aer Arann cover many European destinations for people in that area. And according to last Sundays business post Delta Airways are in talks to fly Kerry to New York. (God bless the yanks
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FB,
Sure, though I don’t want to stray off the subject here.
There was a parade and I think they called it something like, “Make Partittion History”. At the head of the parade was a “colour party” and “escort” dressed in military uniforms.
Frank,
I appreciate your decision not to comment.
Is this the Labour party test-launching a secret new weapon — a sense of humour?