Wednesday Newspaper Review - Irish Business News and International Stories - - July 04, 2012
By Finfacts Team
Jul 4, 2012 - 8:01 AM

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The Irish Independent reports that three left-wing TDs should not have used their taxpayer-funded travel expenses to go around the country canvassing against the €100 household charge.

The Leinster House authorities finally confirmed they had never intended TDs to claim travel expenses for attending events outside their constituencies.

But it was unclear last night if they would have to repay the travel expenses because the authorities are waiting for legal advice before making a definitive ruling.

Socialist Party TD Joe Higgins, his colleague Clare Daly and United Left Alliance TD Joan Collins all had maintained they were entitled to use their travel expenses to attend anti-household charge rallies around the country.

Mr Higgins and Ms Daly had insisted they were the victims of a "smear campaign" and that their travel expense claims were entirely legitimate.

But they were forced to backtrack after the Oireachtas Commission -- which is in charge of Leinster House -- said that travel expenses were designed for journeys to the Dail, as well as travel around the TD's constituency.

They and Ms Collins are now offering to repay the money -- if the legal advice rules that they should.

Last night, Independent TD Mick Wallace was the only one of the nine backbenchers urging a boycott of the €100 household charge to maintain his silence on his use of travel expenses.

He attended an anti-household charge rally in Swords in Dublin alongside Ms Daly earlier this year, as well as another protest in Portlaoise.

Ms Daly broke her silence on the issue yesterday by insisting that the travel expenses controversy would not damage the household charge campaign -- with 700,000 out of 1.6 million households refusing to pay the €100 tax.

"We'll be involved in building that campaign regardless. It will go on," she said.

And she tried to divert attention by attacking local Fine Gael TD Alan Farrell for his use of travel expenses.

During an on-air row on local radio station LMFM yesterday, she questioned how it was possible for Mr Farrell to claim €10,000 last year if he only used it for travel in Dublin North.

But Mr Farrell told the Irish Independent last night he could stand over his travel expense claim.

"I've travelled up and around the constituency, which is the largest in Dublin," he said.

"I do monthly clinics, public appointments and I fill my tank in my car at least every eight or nine days at €100 a pop," he said.

Mr Farrell said it was "absolutely bizarre" for Ms Daly to have used taxpayer-funded travel expenses to tell people not to pay a tax.

He said it was "even more ironic" that one of the TDs supporting the boycott was a tax defaulter.

He was referring to the €2.1m settlement made by Mick Wallace's construction company with Revenue after the firm deliberately withheld VAT due on apartments.

The controversy over travel expenses has raised questions about the vague rules governing the travel and accommodation allowance.

The allowance ranges from €12,000 to €37,000 for TDs depending on how far they live from the Dail.

Independent Tipperary South TD Seamus Healy, who confirmed he had not used travel expenses for attending a anti-household charge meeting in Kildare, said that receipts should be required.

Yesterday, Sinn Fein was the only political party which gave an assurance that all its TDs are only using their travel expenses for constituency travel and journeys to the Dail.

But just last month, the Irish Independent revealed that the party's finance spokesman Pearse Doherty had used €8,000 of his travel expenses to hire two part-time party workers.

Fine Gael said yesterday its TDs were obliged to follow the travel expense guidelines, while Labour said it was a matter for its individual TDs.

Fianna Fail did not respond.

ULA TD Joan Collins said she had believed that it was possible -- under the "very confusing rules" -- to claim travel expenses for attending anti-household charge meetings outside her Dublin South Central constituency.

"If the legal advice comes out that TDs only have their allowance for travel in their constituency, we'd have to make a decision and pay that money back," she said.

The Irish Independent also reports that Taoiseach Enda Kenny and Tanaiste Eamon Gilmore once again told ministers to stop talking about the budget yesterday.

Although no individual minister was mentioned, Social Welfare Minister Joan Burton was regarded as the target of the reminder.

Ms Burton's suggestion that PRSI would have to be increased in December's budget has attracted controversy. Mr Kenny and Mr Gilmore told ministers it was "unhelpful" to be commenting on the budget this far out.

The comments came as officials from the troika, the EU/IMF/ECB bailout team, arrived in Dublin yesterday for their seventh review of Ireland's rescue programme.

Up for review are the on-going reforms of the banking sector -- namely, an in-depth look at the banks' mortgage books. Progress on the banks' deleveraging plans will also be assessed as will plans for the impending reorganisation of the country's credit unions.

The bailout team will also be looking for progress on the unemployment with particular emphasis on efforts being made to reduce the average duration that people stay on the live register and tackling the issue of jobseekers refusing to actively look for work and attend interviews. The review will also focus on the impending sale of state assets.

Despite the ban on talking about sensitive budget issues, Ms Burton also spoke at the weekend about the taxation system, raising the tax reliefs high earners use to reduce their tax bill.

Mr Kenny refused to comment on speculation arising from Ms Burton's speech that PRSI would increase.

Fianna Fail leader Micheal Martin asked the Taoiseach if he agreed a PRSI increase was the same as a hike in income tax. But Mr Kenny said he wasn't going to get into a debate about the Government's plans for the budget.

"I have absolutely no intention of getting dragged into your little game here. I have no intention of speculating on comment arising from the matters that you raise.

"These are matters for the government to decide as a government and as a cabinet, and I would remind everybody that that's in the people's interest, that when the decisions are made by government in respect of the Budget that there should be then open and public debate.

"Beyond that I don't want to go into it," Mr Kenny said.

Also yesterday, Mr Kenny updated the Cabinet and the Dail on the EU debt deal agreed in Brussels last weekend as questions remain over its scope.

But the Taoiseach reiterated the budget for next year would not be affected by the deal.

The Irish Times reports that the State is paying over €1 million annually in allowances to Department of Foreign Affairs staff posted abroad to offset the cost of school fees for their children.

The Department of Foreign Affairs is also paying more than €800,000 per year in allowances to cover the cost of top-up health insurance for its personnel overseas and their dependants as well as in excess of €280,000 in disturbance allowances for diplomats to assist with the cost of returning from posts in other countries.

New details have emerged about the scale and type of allowances given to public service staff both in Ireland and abroad.

A spokeswoman for the Minister for Public Service and Reform Brendan Howlin said last night he would be bringing proposals to Cabinet shortly in relation to allowances.

It also emerged last night that the Department of the Taoiseach is paying a clothing allowance of €444 per year each to a small number of staff in its protocol section and in the Government Press Office.

Press officers in the Department of the Taoiseach also receive an “on call” allowance of five hours’ overtime at double time every week. The Department of the Taoiseach said personal assistants to Government special advisers received a €7,125 annual allowance. The Taoiseach’s diary secretary also receives a €7,125 allowance.

Various Government departments said they were paying allowances of between €14.10 and €45.48 per fortnight on a personal basis to former Revenue Commissioners staff who were transferred some years ago under an integration agreement.

Government departments also said they were paying a special child allowance of just over €2 per week to staff who had been in the Civil Service from before 1978.

The Department of the Environment confirmed that 22 “field staff” had shared nearly €40,000 last year in untaxed allowances for making a room available in their homes for use as an office. It said two people had shared an untaxed payment of nearly €1,000 in respect of an “eating on site allowance”.

Details of the allowances were provided in answers to a series of parliamentary questions tabled by Fianna Fáil TD Seán Fleming.

The Government is currently conducting a review of 800 allowances paid to public service staff at a cost of €1.5 billion.

Last week Mr Howlin declined to give a list of the allowances to an Oireachtas committee. It prompted Mr Fleming to seek the information through parliamentary questions.

Mr Howlin told the committee he had asked departments to draw up business cases for each allowance which would be published when the review was completed. He suggested that some of the business cases were adequate and others “rather inadequate”.

Trade unions have argued that allowances are covered by the pay guarantees set out in the Croke Park agreement. Some teaching unions have warned they will ballot for industrial action if allowances are cut.

In its answer last night the Department of Foreign Affairs said it paid nearly €8 million in untaxed, cost of living allowances and local post allowances to about 325 staff posted abroad. It said the cost of living allowance was designed to defray the higher costs associated with living in some cities abroad.

It said the local post allowance provided assistance towards the additional indirect costs arising from the representational role of personnel overseas. Some staff were entitled to a “hardship” allowance in some locations, it added.

The department said it paid just over €700,000 in a children’s foreign allowance. It paid nearly €8 million on rent allowance for 265 staff abroad.

It also said 50 staff shared over €97,000 in furniture allowance while 46 officers shared €1.062 million in school fees assistance.

Mr Howlin said some senior staff in his department received between €48.60 and €121.46 per fortnight in a seniority allowance.

The Department of Social Protection said some former HSE staff currently employed by it had a Gaeltacht allowance equating to 7.5 per cent of salary. It said dual responsibility, cleaning, training and travel allowances were also paid to some former HSE personnel.

The Irish Times also reports that the Government will tomorrow attempt to borrow money from private investors. A target figure of €500 million is to be raised.

The return to financial markets will be conducted by the National Treasury Management Agency, the State body tasked with managing the national debt.

Yesterday the agency announced it would seek to tap financial markets by issuing IOUs known as treasury bills. The bills will have to be repaid in just three months.

Investor demand for the State’s first new issuance of IOUs in almost two years will be closely watched at home and abroad. So too will the interest rate the NTMA offers in order to entice investors.

If demand is high and the interest rate low, the Government’s planned full-scale re-entry to the market will receive a considerable boost, thereby enhancing the prospects of Ireland exiting its EU-International Monetary Fund bailout on schedule next year.

The NTMA plans to increase gradually the amounts it raises at each successive auction over the remainder of the year and into 2013. The repayment duration of the IOUs it issues will also be lengthened.

Typically bonds of five- and 10-year maturity account for most government debt in developed countries, with short-term treasury bills accounting for a much smaller share.

The success of the Government’s plan to wean itself off bailout funding will depend to a considerable degree on the performance of the public finances this year and next.

New figures from the Department of Finance, published yesterday afternoon, showed the fiscal position is on track to meet targets set out in last December’s budget and under the terms of Ireland’s EU-IMF bailout.

The exchequer returns showed the deficit between public spending and revenues narrowed in the first half of the year, falling from €10.8 billion in January-June 2011 to €9.4 billion in the same period this year.

Yesterday’s figures showed tax revenue increased by more than 5 per cent in June compared with the same month last year.

Total tax revenue for the first six months of the year was up by more than 11 per cent on the same period in 2011 and 3 per cent ahead of budget-day targets.

By contrast, public spending exceeded the targets set out late last year, with the two largest spending departments (health and social welfare) accounting for the overshoots.

In a statement, Minister for Public Expenditure and Reform Brendan Howlin said: “Given the importance of meeting our budgetary targets again this year, I will continue to stress to my Cabinet colleagues the need to adhere to the 2012 spending targets.”

The Irish Examiner reports that There is consensus among economic commentators that the European Central Bank is set to cut its rate by 0.25% tomorrow, in an effort to keep inflation in check.

European stock indices have been trading strongly on the expectation that the ECB will pump a monetary stimulus into the economy.

The Irish Stock Exchange recorded its strongest June since 2005. The ISEQ gained 2.3% following losses in April and May.

Davy economist Conall MacCoille said a number of issues came together to cut the ECB’s lending rate to a historic low of 0.75%.

"Mounting speculation about a 0.25% rate cut has followed the weak short- term indicators on the health of the euro area economy. And comments from ECB Governing Council members Ewald Nowotny and Benoit Coeure have hinted at a rate cut this month.

"Markets are also conscious that over the past year, the ECB has followed up political progress — like agreeing bailout terms for Greece and treaty commitments on fiscal discipline — with additional action to calm bond markets," said Mr MacCoille.

The ECB has never cut its main refinancing rate below 1% but policymakers say there is nothing to stop them doing so and they may want to bolster eurozone leaders.

At last week’s summit, ECB president Mario Draghi declared his satisfaction with the agreement to speed up cross-border banking supervision and allow the eurozone rescue fund to recapitalise banks directly thereafter.

"I think Draghi saying that he is happy with the summit results is a strong sign that the ECB is ready to do something," said Christian Schulz at Berenberg Bank, forecasting a quarter- point cut.

But Schulz, a former ECB economist, added: "We think if it’s just a rate cut, that would be a disappointment for markets because a rate cut would not do very much at all for the peripheral economies... that’s why something else is needed."

However, Mr MacCoille pointed out that the effective ECB lending rate to banks was already around the 0.3% level due to the overnight lending rate.

"However, the excess liquidity in the euro area banking system has pushed overnight borrowing rates to close to 0.2%, well below the ECB’s main refinancing rate of 1%.

"So a cut in the main refinancing rate may now be largely superficial, with little impact on the overnight cost of funding for European banks," he said.

The ECB’s rate cut would benefit Irish tracker mortgage holders. Ireland has almost 400,000 mortgage holders on contracts linked to the ECB’s lending rate. They will gain €300 a year from the ECB’s moves to battle inflation.

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