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Comment: The Celtic Tiger & Public Squalor in Modern Ireland

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June 14,2004--The many tributes on the occasion of the death of former US President Ronald Reagan emphasised his sunny optimism and success in restoring American confidence following the dismal 1970's. In this article it would be nice to emulate the Gipper but any slant of optimism is entirely accidental.

Charlie McCreevy, Ireland's Finance Minister must feel pretty smug following the recent report on the Government's finances. Spending is down while income tax receipts are 60% above budget. A reader may well feel that he is entitled to some smugness presiding over an economy with GDP per capita ahead of Switzerland, UK, Germany and France. The economy is forecast to grow at a 6% clip this year and inflation will not exceed 3 per cent. Mr. Creevy could well wonder by comparison, what is life like in the Baltic Republic of Latvia which has a GDP per capita at a third of Ireland's level? (See GDP per Capita in the EU25)

This is where the apparent sunny scenario comes to a screeching halt. More than twenty years ago, a motorway was opened in Mr. McCreevy's County Kildare, west of Dublin. It ended near the Curragh Racecourse and until late last year, traffic heading south to  two of the Republic's principal cities of Cork and Limerick, funnelled into the town of Kildare. Now the funnel has moved onto the town of Monasterevin. It is still in Mr. McCreevy's County Kildare. After ten years of the Celtic Tiger, there is still so much to do to upgrade national infrastructure and it may take another decade for the completion of motorways linking the main cities, never mind improving the conditions of secondary roads. Just take a drive beyond Macroom in County Cork on the road to Killarney and wonder if a GDP figure which is distorted by the earnings of foreign companies bears much resemblance to reality?

In Dublin, two tramlines linking the suburbs and the city centre are due to open this year and a port tunnel will divert trucks from the city centre but the public transport system will remain a pale imitation of those in leading European cities. In off peak times, there is a wait of up to 23 minutes on the existing rapid transit line (DART), by Dublin Bay. Apart from a tramline link-up with one DART station, there will be no integration between the tramlines and the DART line. An underground metro system for Dublin was rejected because of cost but keeping 18th century designed streets unclogged of traffic will remain a challenge and the failure to take bold measures when the Exchequer was awash with cash, will inevitably be seen as a mistake. 

Life isn't all about transport and the public health service is another example where much remains to be done. Money has been invested in new hospital facilities but Mr. McCreevy doesn't trust the Department of Health to spend it wisely. Last week the Irish Examiner newspaper estimated that  new facilities, which cost €460 million are lying idle because staff budgets remain unfunded. In South Dublin, a new hospital is nearing completion at Elm Park. The bulk of the staff will be hired on short term contracts, some less than 12 months. It would be bizarre if a foreign company which opens operations in Ireland operated in a similar manner. Community care budgets have been slashed, putting greater demands on hospital services and plans to concentrate specialist services in regional centres of excellence have not materialised because the public rightly wishes to see these centres in operation before allowing their local hospital facilities to be downgraded.

Before returning to Mr. McCreevy, let us digress to a successful Asian economy Malaysia. From the capital Kuala Lumpur you can drive on modern motorways north to Thailand or south-east to Johore and Singapore. All Government departments have been moved out of the capital city to one site near the new international airport. In Ireland we've had a programme of decentralisation of public services out of Dublin for more than three decades and last December during his Budget speech, Mr. McCreevy announced that half of the public services would be relocated to a large number of towns. A national spatial strategy had been announced months previously but it was ignored as Ministerial snouts dug deep into the pork barrel to find services which they could relocate to their own towns. The transfer of complete Departments from Dublin seemed easy for the back-of-the-envelope planners who salivated at the prospect of throwing political opponents on the defensive as grateful country folk welcomed the manna from heaven of jobs and surging property values.  Mr. McCreevy's junior minister Tom Parlon, who as a past head of the Irish Farmer's Association, had extensive experience of rattling the tin ponny in Brussels, was quick off the mark with public posters in his constituency declaring himself a messiah for jobs in 'Parlon Country.' Today the picture isn't as clear as relocating a family where a couple are both working isn't an attractive prospect for many people. Besides in today's society, it can take years if ever for people to establish a social network in a new location. Civil servants were told that relocation was voluntary and no compensation will be paid. So we may well end up in Dublin with a very large Department for the Unrelocated!  

The problem with the McCreevy decentralisation plan is that it was motivated primarily by politics. There was little to announce in a Budget where tax credits were to be frozen. An imaginative plan such as relocating all Government Departments to one site on the periphery of Dublin wouldn't have had the same short term impact. Imagination is a scare commodity in public planning and for a number of years the Government's plan to build a sports stadium at an estimated cost of €1 billion was a pet project of the Taoiseach (Prime Minister) Bertie Ahern. He eventually gave in to the argument that building such a facility at the location of choice, without a credible transport infrastructure, was ridiculous. Why not build an airport? Some years ago, the chairman of Aer Rianta the Irish Airports Authority, said in response to criticism from Michael O'Leary chief executive of Ryanair, who had been campaigning for a second terminal at Dublin Airport, that what O'Leary wanted was a 'cow shed.' Dublin Airport which is located north of the city, has experienced huge growth over the past two decades. It has no metro link and traffic gridlock in Dublin has made access a challenge for many. 

The Irish share of foreign investment in UK property is 20% and we are second only to the Germans. The Celtic Tiger has massively enriched a small segment of the population who are investing up to €2 billion in UK property annually. Tax incentives during the boom spurred the property market at home and enabled very wealthy people to shelter much of their income from tax. In addition, developers have been able to make a premium of up to 20% on the price of tax incentive property compared with similar non-tax incentive property in the same areas. In a country where so much investment is moving abroad, one may wonder why a cost efficient second airport could not be built near Dublin? People seek convenience and value and such a facility does not need to be gold plated. The system where land prices increase up to twenty-fold when zoned for development may be one factor. For decades politicians have used the private property protection in the Constitution as an excuse for inaction on reform of the existing corrupt system. Any fool can see where the priorities are. The Minister of Justice Michael McDowell fast tracks an amendment to the Constitution on citizenship but dare a politician like him take on the sacred cow of property and vested interest!

We as a nation have a striking tolerance for poor public service and public squalor. Measures are being introduced to tackle what's termed as the compensation culture but nobody among the well paid elected and public service staff have to take responsibility for cracked pavements which go unrepaired for years, levees on streets which fill with water that is the bane of pedestrians on our many wet days and the pervasive dirt in urban areas. James Joyce wrote a century ago of 'dear, dirty Dublin' and his words are as apt today. The smoking ban has been a welcome development but who gives a fig about all the fag ends which end up on the streets?

Ireland has thrown off the victim cross and it seems a long time since the 1980's when 48,000 took advantage of the special visas for the Irish, which were issued by the US Congress to alleviate the serious unemployment problem in Ireland. Irish politicians sing a different tune today. We don't hear of the obligation of the rich countries to help the poorer ones as we did when we were getting huge transfers from Germany in particular. Ireland today is a good location for people who have lots of money-direct taxes are low and public services would only be a priority for the less well-off; school fees are low compared with school fees in the UK and there are no university fees. The cost of living is the highest in Europe but for the 30,000 who have bought overseas homes in recent years there's always a chance to find value elsewhere. In addition, private healthcare is of a high standard. For the average Joe Public, he has a better chance of retaining a job but he may have to wait up to 45 minutes for a bus in Dublin; much longer in a hospital waiting room and the condition of the school attended by his children may be very poor. There simply are other European countries with lower GDP's per capita where the quality of life for the average citizen appears to be much better than Ireland's. 

The dormitory town of Ballincollig, seven miles west of Cork City, has a population of 20,000 and last week there was a charity walk to raise funds for a public playground for children. The Garda (police) Station closes at 7:00pm each evening because of limited resources. Meanwhile in West Kerry, a Government Minister can find funds for a rowing club with the help of changing the public funding criteria and Finance Minister Charlie McCreevy can fast track grant aid of €12 million for a racecourse conference centre, which is idle for much of the year. However, unless you are lucky to be a constituent of a Government Minister, your local school which is badly in need of repairs may remain on a funding waiting list for years. This is the other side of the Celtic Tiger. 

- Michael Hennigan

Click for Second Report of Decentralisation Implementation Group (in PDF Format)

Click for the Finfacts Irish Economy Main Page

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September 2004:

Ireland Tops Cash per Head Income Aid from European Union
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August 2004:

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June 2004:

Senator Joseph McCarthy: The Implosion of an Irish American Demagogue
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The Celtic Tiger and Public Squalor in Modern Ireland
The Many Facets of Racism Part 1
The Many Facets of Racism Part 2

May 2004:

Balancing Frugality and Miserliness
The Gekko Doctrine-Fair Pay in an Age of Greed 
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In an Age of Cynicism: Trust me, I'm a Politician!

April 2004:

Dealing with Al Qaeda Terrorism
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March 2004:

The Irish Abuse of Power Tribunals
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Irish Corruption and Morality: 'But sir, don't they all steal?'


US Corporate Scandals and the Laws of Unintended Consequences
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