Whither Apathy or Raising Awareness

What would happen if the US dollar fell, as is expected, by 30% or more?
What will happen when it does fall?
Assuming it does happen, what preparations are being made by the Irish Government to minimise the economic outfall from such an event?
What if the fall is 50% - as might happen if the US debt keeps increasing?

Mr. Bertie Ahern is a simple man, with simple needs – football; imported English beer; a helicopter to avoid the gridlock at sea level & the Gulf Stream jet from Baldonnel to avoid the queues at Dublin Airport.

He is aware that there are problems; he reads it in the papers every day. But they are not really his problem. They are the problem of other people; ordinary people who have to use public transport; people who have no helicopters to take them to the Galway Races or on holidays.

He is no fool, yet acts in a way that makes one doubt. I’m sure that if I met him, I would like him.

However, it is not the duty of a Prime Minister to be populist. His job is to lead. Ahern’s lust for power is legendary and that makes him dangerously unstable. To understand the gravity of his capitulation in order to remain in power, one has only to read about his Pauline conversion to the Healy Doctrine of Comparative Poverty - and his flirtation with IRA/Sinn Fein, a party much in tune with Father Healy’s Marxist views.

And it is the responsibility of opposition to oppose — if there are justifiable reasons to question the actions (or lack of action) by Government.

Yet, there is no real Government action on a range of potentially negative possibilities that might threaten the, mainly artificial, fabric of the Celtic Tiger economy, such as the devaluation of the US dollar.

Does the opposition focus on such possibilities? If they have, it has not been recorded. Instead, they persist in personal attacks on individual ministers and the, largely parochial, issues that will continue as long as Cabinet Members retain their constituency associations.

So what are these potentially negative issues?

Mention has already been made to the very real dangers arising for the Irish economy in the event of a fall in the value of the US dollar.

In his illuminating paper on this subject, Alan Ahearne, a one time senior economist at the Federal Reserve Board in Washington DC from 1998 to 2005, sets out very clearly the possible outfall for Ireland and cautions against the Budgetary deficits proposed by Minister Cowen. Instead, he advises that “Ireland might be well advised to aim for sizeable budget surpluses…”.

Later in his paper he suggests that “Irish policy makers should also be more proactive in managing the risks associated with the property market.”

In the recent European Budget Talks, Ireland’s representative was the Minister of Agriculture – currently 3% of GDP. Not an encouraging sign when our economy is so dependent on the service & the construction industries.

It has to be asked if we need a Cabinet Minister to represent 3% of GDP. It also has to be asked if we need a Minister for Transport as well as one for Communication. And why have Natural Resources & the Marine been lumped into Communications?

Effectively, Ireland only requires five Cabinet Ministers:-
Justice (including national security & defence);
Finance;
Natural resources;
Human Resources and
Communications.
Foreign Affairs can be undertaken by a Minister without portfolio.

In Ireland, the Taoiseach could continue to carry this function. However, in order to make such a Cabinet effective, each Minister would have to vacate all constituency work & delegate this to a locally elected representative.

It has been established, by the various Tribunals, that “donations” to politicians, and their respective parties, have been misappropriated.

There can be little doubt, although never proven, that donations from businesses & individuals are motivated by more than mere altruism & affection for politicians. Fund raising will always be a contentious issue and no political party is likely to vote on a motion to discontinue the practice, notwithstanding the corruptive aspects.

However, if there is to be an end to corruption, such practices must end and be replaced by an equitable allocation of opportunities to canvas.

The State owns 3 radio stations and an equal number of TV channels. They control the granting of Licences to broadcast. It should be a simple matter to require that a certain amount of Air Time be allocated to every political party, free of charge, in advance of all national elections.

Posters and similar should be discouraged, if not banned, as such practices have caused vandalism & they also constitute a serious element of waste & disfiguration of the environment. Cold canvas calling will remain the front line option and a limited amount of funding could be allocated to each party to cover essential overheads, on the basis of their representation in Dáil Éireann.

For the sake of clarity “Donations” should be allocated the widest interpretation. Gifts; holidays & outings; fact-finding junkets; bartered services; soft loans; loan write-offs; benefits in kind; employment advantages/promotions/benefits to connected persons etc; forbearance of liabilities and the myriad ways in which politicians solicit favours & cash.

If action can be taken to minimise the risks consequent upon a fall in the exchange rate of the US dollar, certain matters of domestic housekeeping need urgent attention.

The infrastructure is a shambles. There are too many public servants and they must now contribute to their Pensions. And I include the Cabinet in this equation.

It would certainly encourage those, who would wish to make a career change, to move.

There are also too many Trade unions. Two would suffice: one for the Service Industries and one for all other employments. All employers with more than, say, 100 staff should be obliged to employ a Personnel Liaison Officer, with suitable qualifications in Labour Law & Personnel Management.

As a preliminary to action, the Funds of the Trades Unions should be sequestrated & transferred to the Central Bank. These would be Designated Funds, for the benefit of the members of the two Unions. The funds would be interest bearing and the interest might be used in instances of hardship; for pensions; administration etc.

All domestic disputes should be referred, in the first instance, in house. The individual complainant should refer the matter to the Personnel Manager. If the matter cannot be resolved, the matter might be referred to a properly constituted Board of Arbitration, who would hear the arguments and give a ruling.

If this fails to resolve the problem, the matter might be further referred to a Labour Court, whose judgement would be appellate. The Labour Court would have no other function & would take the form of a Judicial Tribunal, manned by suitably qualified judges, versed in Labour Law and Personnel Management.

Utilities are presently competing with the private sector for trade. Examples are the ESB shops; DAA hotels etc. As many utilities have been receiving natural gas at a substantial discount, they should be compelled to confine their activities to providing an economic service to the taxpayer. Profits & dividends to the Government are totally inappropriate.

The yield from road users is more than sufficient to fund a world class infrastructure (this is exclusive of the subventions from the EU) and the Planning process should be revised to accommodate a system similar to that obtaining in, for instance, Spain. If additional funds are needed, it should be possible for Government to float a long dated Bond Issue, at a premium rate, to complete a public transport system appropriate to the 21st century. Banks should be compelled to underwrite the issue.

It goes without saying that the Communications Minister should have expertise in this area.

Holland has a land mass the size of Munster and supports a population of 16 million. Much of it is below sea level, yet they export flowers; fruit; vegetables; cheeses and alcoholic drink worldwide.

We have fertile land; rivers; forestry and minerals in abundance. Yet we have allowed our agriculture to shrink to 3% of GDP.

A competent Minister of Natural Resources should be able to improve on this. An increase to 4% adds one third to output and 10% should not be impossible if land hoarding was discouraged, preferably by progressive taxation.

Mr. Ahern saw fit to dismiss the best Finance Minister this country has ever had. In bowing to CORI’s crozier he plunged the country into confusion. There is no need for additional taxation nor for the doubling of CGT.

There is a need to simplify the taxation system & to eliminate those areas, such as Grants; allowances; deferrals; special reliefs; etc… that are regularly being exploited to avoid taxes.

In the matter of Corporation Taxation, a Distributed Profits Tax for all trading companies would overcome the inefficient current method.

A distribution would be defined as any cash payment to any person; corporate body or similar, by way of dividend; bonus payment; repayment of capital; share options; benefits in kind; swaps or barter. The details would need some research to achieve a balanced definition.

Any surplus arising on any liquidation; winding up or similar would be regarded as a distribution. The rate of tax deducted from distributions should represent an incentive to companies to plough back profits into expansion and employment growth.

It would also deal with the problems of repatriation of “Invoice Transfer Profits” that is engaging the minds of economists in Europe & the USA. A gradual movement towards a Consumption Tax should be considered as a fairer method of personal taxation. It has the merit of allowing the individual retain the fruits of his/her labour and the discretion to spend or save.

This would be a graded tax and there would be large differentials between the tax on a €100,000 motor car, or yacht, and a pedal bicycle. The present system is complex; grossly unfair & open to massive abuse.

Whatever may be decided, this is not a political issue. It is a matter of economic pragmatism and sectoral interests should not be allowed influence or distort the path to action and reform. Simplicity; clarity and fairness should be the objectives.

A highly qualified professional economist/accountant/ lawyer should assume this critical Ministry. This is not a job for “Buggins”.

Much has been made about Law & Order & the apparent breakdown of society. So-called Political Murder must be stricken from the Statute Books as a defence in any prosecution. The taking of human life cannot be excused on the basis of some political aspiration. It is murder & should be prosecuted on this basis.

It would also put an end to all the tiresome horse-trading that is currently wasting the energies of both States in the matter of the so-called OTR’s. These people are criminals and should be dealt with as such.

The descent of the police force into recriminations and their resistance to reform and supervision needs serious attention.

The Northern Ireland model, chaired by the excellent Nuala O’Loan, should be the template for future control & supervision of the force.

The use of police to drive Ministers of State should be discontinued. The practice is at odds with their primary responsibility; the prevention of crime. Instead, the defence forces might undertake this duty.

They might also be used to provide security in the transportation of money etc, — at a fee to be paid by the banks & similar Institutions.

Some time ago there was heated debate about the so-called Dual Mandate. The point at issue seemed to be the loss of income resulting from the discontinuance of this practice, not the benefits arising from the expertise of local politicians.

However there is merit in combining the management of local issues.
Local Government; TD’s & the judiciary might be usefully located in dedicated buildings, designed for that purpose, throughout the country.

This would facilitate the local public in their quest to have a voice in national politics; law & order and community affairs. Elected representatives (both TD’s & Councillors) could liaise on matters of concern in their constituencies. Councillors should be obliged to serve a term of not more than five years. After a break of, say, three years, they might offer themselves for re-election.

The practice of overseas, fact-finding excursions, more generally known as “Junkets” should be limited to one or two experts, with specific targets & objectives, and an audited report on the residual value of the exercise.

All relevant matters arising within the boundaries of each constituency might be collated & computerised, creating, in the process, an information bank that would provide Government with relevant information & feedback on matters of national concern, obtained on a regional basis. TD’s could maintain their Clinics in these buildings and connect, via a video conferencing link, with Central Government. A problem frequency would emerge which, in turn, could be costed & prioritised for action.

De-centralisation is another hotly debated issue, which has been distorted by biased media and others.

The concept of reducing Dublin’s bloated Civil Service population was a sensible one. Where it faltered was in giving the employees a choice. This was further exacerbated by TD’s using undue influence to move the various departments into their own sphere of influence.

Thus the project descended into farce. But first one must examine the origins of the concentration of the Civil Service in Dublin.

The pre-requisite of a thorough knowledge of the Irish language seems to be at the core of this. Inasmuch as the best & most fluent Irish speakers came from the provinces, it was natural that the bulk of Civil Servants, even today, come from a rural background. The consequences of hiring on the basis of this flawed criteria was an exodus from the provinces to Dublin. The promise of a “job for life; generous sick leave; paid holidays; non-contributory, index linked, copper fastened pensions etc…” were irresistible.

I can remember a presentation, by a representative of the Civil Service Commission, which was made in my children’s school. She started with the Leaving Certificate requirements for entry at the lowest Grade (including mandatory Irish). She went on to describe internal tests that could be taken to obtain promotion to the next Grade etc. & the wage scales; paid sick leave; holidays; pensions; maternity leave; etc… Never once did she mention Work; Job Satisfaction; Value Added. Just the perks.

CONCLUSIONS.
Of necessity, this overview can only touch on Issues that constitute a marker for those who might be concerned at the Apathy so prevalent in current political attitudes. There are some politicians with the necessary ability to take decisions.

Regrettably the system prevents this.

Several members of the present Government are grossly incompetent, pursuing a policy of short-termism, U-turns to quasi socialism and sound bites, in advance of the next General Election.

This will prove very costly, particularly if the US dollar behaves as expected. A healthy Budget Surplus will be required; tight control of public expenditure & the elimination of waste – particularly overlap in strategic areas of the administration, which is capable of correction if the Cabinet is restricted to five Ministries.

One thing is certain:-
Bertie will have to go.
He is The Obstacle, as has been continuously shown —- by his ineptitude; procrastination; dedication to consensus; evasions of confrontation; U-turns & dishonesty.

His desire to be populist is a major weakness. His love affair with the trade union movement, from which background he evolved, makes him a soft target for manipulation.

His conversion to Socialism & his cosy relationship with CORI is a clear indicator of the likely direction he will take if there is any sign of a recession, following a devaluation of the US dollar.

His recent buddy-buddy sessions with Charlie Haughey will probably mean a State Funeral when the old Pickpocket-in-Chief snuffs it.

Another wasted million of dubious PR – like the Patrick’s Day bash.

But it is his flirtation with Sinn Fein/IRA & their Marxist policies that should leave one in no doubt that he is totally unsuited to running this country.

E& OE. © 2006.