The Irish Independent reports that householders face a double whammy of a property tax and water charges next year after both were yesterday put firmly back on the table by a senior government minister.

Justice Minister Dermot Ahern made it clear that both measures were still under serious consideration as part of the plan to raise €3bn in increased taxation and cutbacks in the Budget. The Cabinet is due to meet today for the last time before its summer break to sign off on the final details of the revised €39bn capital spending plan and the preparations for the December Budget. "That may include a property tax and charging for water -- which are in every other European country," Mr Ahern said.

He also signalled that the Government was still examining plans to force more low-paid workers to pay tax. "There's a relatively small percentage of people who are paying tax. But 50pc of people are not paying a bob of tax. That is not sustainable," he told Newstalk 106.

The original 2007-2013 National Development Plan (NDP) provided for €184bn in current and capital spending, but it has become unaffordable due to the crisis in the public finances.

In the revised plan that is set to be launched today by Taoiseach Brian Cowen, the Navan rail link and the final phase of the Western Rail Corridor will be cancelled and funding for new roads will also be cut.

However, two of the biggest construction projects in the history of the State -- the Metro North line to Dublin Airport and the DART Underground -- are likely to get the go-ahead.

Mr Cowen said the plan was exactly the type of stimulus that the economy needed in order to help rebuild confidence and accelerate economic recovery.

"It will not only greatly improve the lives of our citizens, it will help to create jobs now and to sustain jobs for the future," he said.

The Taoiseach said the plan would include a doubling of investment through the enterprise agencies -- such as IDA Ireland and Enterprise Ireland -- to build the 'smart economy' and create sustainable jobs.

Mr Cowen also said that upgrades of public transport and water services would get a greater share of capital investment.

A Green Party source said the party had worked hard to protect investment in this area and in the area of improving energy efficiency.

But the sectors most at risk of cutbacks include tourism (which had been promised €800m under the current NDP) and social housing (which was due to have 60,000 new units).

The construction industry has been pushing for the maximum spend possible on capital projects, pointing out that €100m invested in infrastructure per annum creates 1,000 jobs.

However, the Government is hoping to get better value for money because the cost of construction projects has fallen by 30pc. Sources say it expects to get more for less.

Economist Colm McCarthy, who chaired the 'Bord Snip Nua' group last year, backed the Government's decisions to cut back on capital spending.

"That makes sense, the economy is much smaller than we thought it was going to be and the pressure on infrastructure of various kinds is less than it's going to be and it's not going to recover in a hurry," he told RTE's 'This Week' programme.

When the National Development Plan 2007-2013 was announced three years ago by Mr Cowen as Finance Minister, he declared that it was based on an expectation of annual average economic growth of between 4pc and 4.5pc.

The Government was so confident of growth that it included €2bn per year of extra capital spending more than had been recommended by the Economic and Social Research Institute.

Deficit

But due to the 15pc decline in output over the past two years, Mr Cowen is now presiding over the slashing of the plan in response to the huge deficit in the public finances.

However, he pointed out yesterday that several key NDP projects had already been almost completed, such as the inter-urban motorways.

Mr Cowen is due to cut the ribbon for the new €660m Limerick Tunnel tomorrow, which stretches 670 metres under the River Shannon.

Although the Cabinet will not make any Budget-related decisions until later in the year, one cutback which is expected is a reduction in the number of diplomatic staff in smaller embassies abroad.

Foreign Affairs Minister Micheal Martin plans to have more 'model embassies', with just an ambassador or diplomat -- instead of having two or three other diplomats as support staff.

The Irish Independent also reports that an investigation has been launched into how the Government breached its own guidelines on giving lucrative 'sweetheart' deals to four sacked semi-state chiefs.

The newspaper has learned the Cabinet gave the go-ahead for special termination packages for the four CEOs, despite them not meeting criteria laid down.

They were among 86 pension top-up and severance deals approved under the past three Finance Ministers, including Brian Cowen.

Among those who benefited from the other 'golden handshakes' were advisers to former Taoiseach Bertie Ahern, as well as disgraced former FAS chief Rody Molloy.

However, the packages to the four CEOs are specifically being probed because the Government sought to give them the go-ahead even when they knew the guidelines had not been met.

The Public Accounts Committee is to probe these four deals. PAC Chairman and Fine Gael TD Bernard Allen said: "This is very disturbing and it shows that different rules were set aside for the top brass."

The revelations come as it emerged the former head of the Department of Finance, David Doyle, received a pension top-up to increase his annual pension to an estimated €115,000.

The unidentified chief executives given the special deals had their contracts terminated, or not renewed, to allow for a "fresh" approach in their respective companies. This made them eligible for a special CEO severance and pension arrangement.

Qualify

But the four executives didn't qualify for these conditions.

In one case, a CEO is believed to have been the wrong age and others were seeking additional pension years that exceeded a five-year cap.

Documents obtained under the Freedom of Information Act show the Government decided to approve the four special packages between 2000 and 2007.

The cases were among a raft of pension top-ups and special deals approved since 2000:

• Thirty-three pension deals worth €589,840 under Brian Cowen.
• Thirty-three deals worth €589,754 under Charlie McCreevy.
• Twenty-two deals worth €1,090,759 under current Finance Minister Brian Lenihan.

The four controversial approvals now being probed by the PAC came during the period when Mr Cowen and Mr McCreevy were the Finance Ministers.

Guidelines for the special scheme for semi-state CEOs were circulated by the Department of Finance in 1998.

They allowed for one year of pensionable service to be added onto their pension package for each year they worked in the public service after the first 15 years.

However, the guidelines cautioned that this pension top-up had to be capped at five years.

The severance arrangement also entitled CEOs to a severance payment of four weeks of pay for up to a maximum of 26 weeks.

To qualify for its terms, chief executives must have headed the semi-state body for six years, and have worked for 15 years overall in the public service.

If the conditions were not met, the board of the semi-state body had to get the package cleared by government.

It is understood the exemptions would have been run past the Finance Minister, before going to Cabinet for approval.

The most recent decision came on January 31, 2007 during Mr Cowen's tenure as Finance Minister, when a CEO fell short of the age criteria.

The three other cases occurred during Mr McCreevy's tenure as Finance Minister.

In June 2003, the government allowed a CEO to get 6.66 additional years of service to his pension package, while another CEO got six months' pay in November 2001.

On March 2000, the government gave the go-ahead for 5.5 additional years of service to be added on to the third CEO's pension package.

The Department of Finance said the deals were approved by government. But last night Mr Allen, demanded clarification on why the exemptions were granted.

"We will be seeking an explanation from the Department of Finance," he said.

"On first sight it seems that ministers were playing hard and fast with taxpayer's money and providing extraordinary golden handshakes to semi-state CEOs."

The Irish Times reports that the Government is expected to announce a major rescheduling of decentralisation as part of its six-year €39.43 billion revised capital investment programme to be published today.

State spending on healthcare infrastructure is likely to be cut, but the relocation of the Dublin Institute of Technology (DIT) to a new campus at Grangegorman on the city’s northside will go ahead.

With an initial investment between €30 million and €40 million, the Grangegorman project will involve all elements of the DIT moving to the site, and the sale of their existing premises at 10 different locations in Dublin.

The decision was approved by Cabinet at its Farmleigh meeting last Wednesday. Formerly a psychiatric hospital, the campus will also house a number of healthcare projects.

Plans to decentralise elements of the Department of Education to Mullingar and of Enterprise, Trade and Innovation to Carlow will be postponed for further re-assessment next year, as well as a similar move of Government personnel to Longford, sources said.

Metro North and the €2.5 billion Dart underground project are to proceed, but rail links from Dublin to Navan and from Tuam to Claremorris will be put on hold.

Potential for job creation was the deciding factor in choosing between different projects, according to Government sources.

Establishing the DIT campus at Grangegorman would be “a huge milestone” in terms of educational infrastructure for Dublin, Government sources said. The Bolton Street architecture and engineering faculty is expected to be the first to move.

Although €1 billion is being cut from capital expenditure, Government sources said recent reductions in costs would mean “added value” of about 30 per cent.

The programme, Infrastructure Investment Priorities 2010-2016, will be launched by the Taoiseach at the national convention centre in Dublin’s Spencer Dock at midday today. He will be accompanied by Minister for Finance Brian Lenihan and the Green Party leader and Minister for the Environment, John Gormley.

Informed sources said that 30 per cent, or around €100 million per year, could be sliced from the Health Service Executive’s budget for developing hospital and other facilities.

However, despite the new spending curbs, it is expected that the controversial new national paediatric hospital will be approved for development on a site at the Mater Hospital in Dublin.

The first major State expenditure on this project is expected to take place next year. The HSE currently has a capital budget of over €350 million.

Some of the main areas for investment will be public transport, roads, schools, health facilities, the environment, energy efficiency, broadband, Research and Development (RD) and support for jobs and enterprise.

A Government statement last night said the programme “includes in-depth analysis and reprioritisation of the capital expenditure programme”.

Speaking in advance of the launch, the Taoiseach said: “This is exactly the type of stimulus that the economy needs to help rebuild confidence and accelerate economic recovery.

“It will not only greatly improve the lives of our citizens, it will help to create jobs now and to sustain jobs for the future.

“We have seen the benefits of the investment of recent years and we believe it is essential to maintain that momentum for the coming years.

“We also recognise that we are in a new situation, so have refocused our priorities. That is why, for example, there will be a doubling of investment through the enterprise agencies to help build the smart economy and to create sustainable jobs. There will also be a greater share of investment for public transport and environmental issues such as upgrading our water services.”

Mr Cowen said the programme was “ambitious, appropriate and affordable”.

The Irish Times also reports that former ANGLO Irish Bank chief David Drumm had offered to sell homes in Malahide, north Co Dublin, and Cape Cod in Massachusetts, US, and pay some of the sale proceeds to the bank as part of a settlement of its action against him.

The bank has rejected Mr Drumm’s proposal to settle its action to recover €8.3 million in loans from him, and has offered him a counter-proposal. Discussions are believed to be ongoing.

It’s understood Mr Drumm had, as part of his proposal, offered to withdraw his counterclaim for €2.6 million in salary, pension and deferred bonus payment which he said are due to him.

He also offered the bank his full pension, understood to be worth €5.4 million, under which he is entitled to receive €271,000 a year from the age of 55. In addition, he proposed selling his home on the Abington estate in Malahide, on sale last year for €2.3 million, and home at Stage Neck Road in Chatham, Massachusetts, and pay some of the proceeds to the bank.

It is not clear how much Mr Drumm had offered to pay from the proceeds of these sales, and these transactions have been described as not straightforward.

Mr Drumm’s legal team is thought to have claimed the total value of his offer was in excess of the loans due. However, the bank is believed to have raised queries about the value of his pension if drawn upon before his retirement.

The bank is also disputing whether Mr Drumm is owed the €2.6 million he is counter-claiming as he resigned as chief executive in December 2008 over Seán FitzPatrick’s hidden loans.

Mr Drumm is arguing his employment was not validly terminated in early 2009. He contends that although he stepped down as chief executive, he remained an employee of the bank. He has claimed he is entitled to notice payment equal to his annual salary of €1.2 million; 12 months’ pension payments of €715,000 and €44,000 in benefits, and a deferred 2006 bonus of €661,000.

Anglo’s counterproposal involves Mr Drumm making a commitment to repay his loans at the bank in full from any future earnings as part of a settlement offer.

The bank is thought to be intent on securing the full amount due.

The Commercial Court was told last week Anglo had rejected a series of proposals from Mr Drumm aimed at settling the action against him but had offered a counter-proposal on July 14th.

Mr Drumm provided a statement of net worth before the bank taking its action last year. However, the bank is seeking an independently verified statement of Mr Drumm’s financial affairs showing his assets and liabilities.

Anglo has also issued proceedings against Mr Drumm and his wife, Lorraine, over the transfer of their house at Abington into her sole name. The court is due to hear that case after Anglo’s loans action concludes. The action is scheduled for hearing on October 26th .

The Irish Examiner reports that about 60% of parents said they faced higher costs this year than they did ahead of the 2009/10 school year.

The children’s charity Barnardos has warned that children’s futures should not be sacrificed to the recession. Today it is launching a survey which reveals the average basic cost for a child going into first year is €815, while the Back to School Clothing and Footwear Allowance for eligible families is only €305.

Barnardos said the average cost did not include items such as school bags, sports equipment or extra-curricular activity costs.

Chief executive Fergus Finlay said the findings, from a survey of more than 250 parents, indicated a worrying trend. He suggested the Government would have to take action to ease families’ financial burden.

Central to the increased back-to-school costs was a yearly increase of 9.1% in the cost of education, according to the Consumer Price Index published in June. That compares with an overall price decrease of 1.1%.

Mr Finlay said: "Despite the extreme financial pressures facing families with children, the costs associated with sending children to school have actually risen.

"It is imperative that Government takes this into account when considering the upcoming budget; families who are dependent on social welfare or on low incomes absolutely cannot afford any cuts to their income or to supports.

"Children’s futures cannot be sacrificed to the recession," he added.

The survey revealed a number of higher costs and the reasons behind them.

• School books, with 58% of parents stating they paid more this year than last.
• Specific uniforms with school crests, which are worn by 90% of pupils and add to the cost.
• Pressure on parents to provide top branded footwear and sportswear.

The survey revealed that school books cost more for children entering first year and fifth year at secondary level, in line with the onset of the Junior and Leaving Certificate cycles.

Current Government supports include addressing advantage in schools categorised as disadvantaged under the DEIS (Delivering Equality of Opportunity in Schools), but Barnardos said 56% of pupils from unemployed backgrounds do not attend one of the country’s 667 primary and 203 secondary DEIS schools.

Barnardos also said the Back to School Clothing and Footwear Allowance had remained unchanged since 2007 at €200 for those aged up to 11 years and €305 for those aged 12 to 22, despite the fact the numbers receiving it had increased from 180,252 in 2007 to 277,713 last year.

Barnardos has recommended that the Government needs to enforce the establishment of book rental schemes in all schools, reduce the use of workbooks that cannot be passed on and prevent increases in school transport charges and any more cuts to services and funding.

* barnardos.ie

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