|Pat Rabbitte (l), minister for communications and energy, and former Labour Party leader, smiling like a Cheshire cat, presumably because of the cornucopia of goodies he will have available, Michael Noonan, finance minister, Brendan Howlin, minister for public expenditure reform, and Fergus O’Dowd, minister of state with responsibility for NewEra - - the public spending programme that is more old era than new and has the potential of leading to the costliest pork barrel election, since Fianna Fáil , the builders party, won the 1977 general election. The party on its own in the period 1977-1981 trebled the national debt and in 1978 a budget deficit of almost 18% was recorded - - the largest according to the IMF in the period 1970-2008. Times have changed but not the style of governance. Launch in Dublin, June 13, 2013|
Irish Economy: With no credible jobs engine that could result in the creation
of 200,000 net sustainable jobs in coming years; no prospect that an international recovery
could trigger the "rocket" growth that Michael Noonan, finance minister, waxed
eloquent about in 2012; ministerial economy with the truth in respect of the
economy and challenges ahead; international tax rules likely to be changed for
the first time since Ireland began using tax policy to promote inward direct
investment in 1956; a weak indigenous sector illustrated this week by Elan, the
onetime biotech firm reduced to a shell and putting itself up for sale while
DCC, the trading conglomerate, bailing-out from the Dublin stock exchange; and a
Labour Party, the junior member of the governing coalition on the ropes mid-way
in the election cycle, provides the backdrop to this week's announcement
that the €6.4bn left in a public pension fund after bank recapitalisations, will
be transferred to an Ireland Strategic Investment Fund (ISIF) to create jobs.
Elan: Most valuable Irish firm becomes cash/ royalty
In contrast with the success of the
Little Dutch Boy in the 19th century American story, the planned
infrastructure spending is akin to plugging a hole in the dyke, while the
structure is crumbling.
Some spending programmes may well be merited but there is a
big political element to the programme. In a country of limited or
no accountability on public spending, the temptation to provide a costly window
dressing that would mask failed policies leading up to a general election, is too good to ignore. In the conventional system, much of the investment will flow down a sinkhole. Is there a senior civil servant or member of the overpaid staff of the National Asset Management Agency, the debt agency, who would rock the boat? Look at the record -- of course not.
Besides, the bitter truth is that we Irish have a very poor record in project management.
Crucially the political direction of the programme will work unimpeded given the very poor record and standard of representation of both Houses of
the Oireachtas, coupled with a weak media. Crucially as well, all the older men
involved are likely to be in superannuated bliss by the time the money runs out.
“In the past year since we launched the Action Plan for Jobs we have seen
more than 2,000 extra jobs created in the private sector every month, with
exporting sectors leading the way," Richard Bruton, enterprise and jobs
minister, said on Friday.
"Exports are leading the recovery and in recent years our exporting sector
has remained vibrant, competitive and robust. The services sector is playing an
increasingly significant role in export growth, having grown by 9.4% over the
first three quarters in 2012, and now exceed the level of goods exports by just
over a billion euro. This owes much to the significant price and cost
adjustments that have taken place in recent years," Michael Noonan
said last February.
I have asked the Department of Finance for the evidence that the surge in
services exports reflects competitiveness but there was no response. This week,
a House of Commons committee reported on Google UK and exposed the ministerial
Bruton knows that the claim that the private sector is adding 2,000 jobs a
month is highly misleading. A rise in part-time jobs and self-employment does not reflect
There was a total of 507,000 on the Live Register and in publicly-funded
activation programmes in May.
Kenny's bogus Irish effective tax rate claim - - including report on Google
UK. The Taoiseach also has been economical with the truth on corporate taxes.
Irish Economy 2013: Unofficial rate of unemployment remains over 20%
The target for the Action Plan for Jobs is to increase employment by 100,000
in the period 2012-2016 and with €6.4bn available for construction, energy
projects and other investments with no ultimate responsibility for
performance -- ministers and public sector staff and well-paid external advisers
-- there are going to be lots of big ministerial announcements.
The record is that the implementation/ performance seldom matches the initial PR and spin.
There is a classic case of an inflation-adjusted investment of €23bn spent
over a decade on the goal that Ireland would become a "world class knowledge
economy" by 2013.
The failure has been met with silence from ministers; both Houses of the
Oireachtas, the universities, other vested interests, the science editor of The
Irish Times and tech journalist cheerleaders.
Never fear: there is an audacious or delusional new target: "in which
Ireland in 2020 is the best country in the world for scientific research
excellence and impact."
It would be good if this was a joke but this is policy making in Ireland 2013, five years after time was called on
the fairytale that the free lunch had been invented.
All these policy makers and supporting eco- system are of course well-taken
I will chance my arm in trying to get Craig Beaumont, IMF Ireland Mission
chief, to argue for an independent oversight board, with some external members.
The Irish Fiscal Advisory Council should also
support such a proposal.
Silence in the past has destroyed the lives of
tens of thousands of fellow citizens.
Apple, taxes, Irish economy and creating 200,000 net
Irish Science Policy: 2020 replaces 2013 as target
to be 'best country in...world for scientific research'
Irish Economy: Innovation, a failed enterprise
policy and inconvenient facts for 2013
Irish Economy: Sustainable growth dependent on
foreign firms since 1990; Now FDI has peaked
The Irish Times: Timidity in turbulent economic times
Is it too much to hope that this time could be
different -- because of external pressure?
Government press release
Government presentation [pdf]
Sir Mervyn King, outgoing Bank of England governor, says in
a Lunch with the FT feature today with Martin Wolf: “I’m always struck when
I speak to not just ministers but people who work in the Treasury that it is
actually quite difficult to produce the investment projects. It’s very easy to
spend money but in a way that maybe doesn’t add to the real gross domestic
The New York Times
said in a February 2009 article that the main legacy of very high
infrastructure investment, is a good standard of infrastructure (excluding many white
elephants) and a massive increase in debt:
[It is not enough just to hire workers to dig holes and then fill them in again,” said Toshihiro Ihori, an economics professor at the University of Tokyo.
“One lesson from Japan is that public works get the best results when they
create something useful for the future.”
In total, Japan spent $6.3tn on construction-related public investment between
1991 and September of last year , according to the Cabinet Office. The
spending peaked in 1995 and remained high until the early 2000s, when it was cut
amid growing concerns about ballooning budget deficits. More recently, the
governing Liberal Democratic Party has increased spending again to revive the
economy and the party’s own flagging popularity.
In the end, say economists, it was not public works but an expensive cleanup of
the debt-ridden banking system, combined with growing exports to China and the
United States, that brought a close to Japan’s Lost Decade. This has led many to
conclude that spending did little more than sink Japan deeply into debt, leaving
an enormous tax burden for future generations.]
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