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Irish Budget 2013: Budget Day at last and a
floundering government will be banking on hope that another payback, this year's
valued at €3.5bn in tax hikes and spending cuts, will engender optimism that the
sunny uplands of the Promised Land of a budget deficit below 3% of GDP (gross
domestic product) in 2015, can be glimpsed through the fog. Far away hills are
green and in 2015, GDP is forecast to grow by 2.9% and GNP (gross national
product -- mainly excluding the profits of the foreign-owned sector) is
projected to be 2.1%. The unemployment rate (thanks to emigration) will be
13% compared with a current rate of 14.8% and almost 200,000 people continuously
unemployed for 12 months or longer.
There may not be any real growth between now
What is most distressing about the current
situation is that policymakers and some economists appear to echo the Dickens
character Micawber in 'David Copperfield' that "something will turn up," which
is the benefit of a recovery in the economies of Ireland's trading partners.
However, given the severity of the recession, the end to easy credit and the
extent of the public debt in the developed countries, there will not be a return
to the mainly high growth two decades that preceded the economic crash.
I wrote the foregoing in June 2010.
So five years after the onset of the
international credit crunch, reform if at all, remains at the default glacial
speed and the Government presides over a balkanised society.
Google "Irish+reform" and the Irish Reform Act
1832 heads the results listing. It's indeed appropriate that a nineteenth
century British Act of Parliament should head the ranking and in 1986, the late
UCD constitutional law professor and Fine Gael TD, John M. Kelly, said:
"Ireland's political and official rulers have largely behaved like a crew of
maintenance engineers, just keeping a lot of old British structures and plant
ticking over... The challenge is to evolve structures - - within which the
people can be drawn to individual and community responsibility for their own
Michael Noonan, minister for finance, will
deliver his speech on Budget financial measures from 2:30 pm to the Dáil and he
will be followed at 3:15 pm by Brendan Howlin, minister for public expenditure
and reform, who will announce spending measures.
The two ministers together with the other
key economy minister, Richard Bruton, have squandered their credibility and
despite efforts today to promote commitments to fairness, it's too late. Their virtual epitaphs of political impotence and cowardice
have already been carved.
This is the first panic, bust, depression or
recession since the genesis of the trade union movement more than a century ago,
where the trade unions have abandoned the people at the bottom of the economic
pyramid and allied themselves with other powerful groups seeking to defend the
The long-term unemployed would fill more than 2
Croke Parks excluding dependents and the so-called Croke Park public reform
process will soon be in its third year.
A group meets every day in a room in South Dublin
trying to agree line-by-line on work practices. They will likely eventually
produce a modern day version of the Domesday Book. Wonder what will happen in
future when the cent drops that something was missed?
People who believe that this byzantine process
will produce significant change in a big organisation, likely are also suckers for
Last September, following a 'review' of the
estimated 1,100 allowances for public sector staff that costs about €1.5bn
annually, Howlin could only find one to cut for existing staff while in time
there could be annual savings "in the region of €475m" by cowardly targeting
One of the biggest Irish indigenous companies
today is the defunct former Anglo Irish Bank.
This shuttered rump of a bank is not open for
business but has 1,000 staff, 7 executives earning annual salary packages of
€500,000+ and 36 other employees being paid more than €200,000. The prime
minister of the Netherlands earns €144,000!
Earlier this year Minister Noonan asked Alan
Dukes, chairman of the renamed Irish Bank Resolution Corporation, to cut pay
by 15%. He was told where to get off.
To compound the unreality, Tánaiste Eamon Gilmore
described the pay levels at the bank as "unacceptable" and said the
Government has appointed consultants to advise on how wage levels at IBRC can be
Gilmore said consulting firm Mercer was probing what action could be taken. Inspiring,
Ballymagash may have faded from public memory but alas, it is an enduring brand.
In Sweden in the early 1990s, in response to a
financial crisis, state guarantees of employment were ended and all workers were
given equal rights and protections.
In the 1850's after administrative
incompetence during the Crimean War, British civil servants were given
guarantees of employment. It was a time when most of the private workforce were
Two examples of how this British Empire legacy
works in Ireland despite pay and pensions premia, were provided last month 1)
The Irish Times
reported that Eamon Foley left Aer Rianta International (ARI), a unit of the
Dublin Airport Authority, in November 2011 after serving 19 years with the
company, 12 of them as director general. His generous exit package comprised a
lump sum of €437,000 and a payment of €68,000 annually for 6.3 years to bridge
the gap to retirement. The DAA confirmed that Foley now worked as a paid external
consultant with ARI and served on the boards of certain subsidiaries. 2) When
Dún Laoghaire Vocational Education Committee, a State quango/agency will be
abolished next year, Carol Hanney, the chief executive, who is wife of Eamon
Gilmore, the deputy prime minister, will move to a newly created position
for her at the Department of Education on her current pay of €117,000 plus
The lot of the typical SME worker who loses
his or her job this week will be basic redundancy, no occupational pension to
provide some cushion against poverty in old age and if at an age from middle
age up, the prospect of never working again.
Why should citizens like Ms Hanney have such
special priviliges while new entrants to the public service and workers in the
private sector are treated as lesser citizens?
"Qu'ils mangent de la brioche"!
Domesday Book, that was commissioned by William the Conqueror in 1085,
could have been the first written tax document. Some centuries after the Duke of
Normandy had added England to his fiefdom, another Frenchman provided cunning
inspiration for modern finance ministers.
Jean Baptiste Colbert (1619–83), minister for finance to French King
Louis XIV reputedly said: "The art of taxation consists in so plucking the goose
as to obtain the largest possible amount of feathers with the smallest possible
amount of hissing."
Today is payback time and the working of Irish politics, which by default only
responds with other than glacial speed when a crisis becomes dire, brings to
mind quotes from Frenchman Alexandre Ledru-Rollin (1807-1874): “There go
the people. I must follow them, for I am their leader,” and American comedian
Groucho Marx (1890-1977): “Those are my principles, and if you don't like
them... well, I have others.”
I recall some years ago a Frenchman who was
trying to improve his English, pointing out some quote to me in an English
language book of quotations that he regularly checked.
I noticed another quotation on the page opposite, from Winston Churchill: "It
is a good thing for an uneducated man to read a book of quotations."
I was too discreet to point to the Churchill one as the Frenchman was my boss!
With history in mind, I present a quote from one of the failed Irish
politicians who had strong public support before the soufflé deflated.
Mary Harney said in the Dáil Budget debate in 1998: "Cutting taxes has
been the key to Ireland's tremendous economic performance.
We have cut taxes on labour, on capital, on companies. We have given huge tax
breaks for investment in films, in urban renewal, in the development of tourism.
Socialists don't believe in low taxes; they believe in high taxes. Right now the
biggest threat to our continued economic prosperity comes from Socialists,
European Socialists who are envious of our low-tax regime and who want to foist
on us the kind of punitive tax rates that have saddled them with massive
unemployment. Socialism has never been very popular in this country and the last
thing we want to do now is import it from Europe.
This Budget is another major step on the road to tax reduction and tax reform.
As long we in Ireland keep on that road we will continue to prosper."
Harney spent all her working life on
the public payroll.
We now know, as some of us did forecast then, that the biggest threat to
Ireland's prosperity, came not from Socialists but from Mary Harney and her
colleagues, who later brought the misery of "massive unemployment," to tens of
thousands of people. Her fairytale economy was built on a property boom and an
exporting sector where mainly American firms were responsible for 90% of the
total, while the derided Socialists, such as the Finns, Swedes and Danes, were
building their own world-class exporting companies.