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News : Irish Economy Last Updated: Jun 19, 2013 - 9:04 AM


Ireland's slow-motion government slammed by European Commission
By Michael Hennigan, Finfacts founder and editor
Jun 18, 2013 - 10:43 AM

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Enda Kenny, taoiseach, David Cameron, British prime minister, Barack Obama, US president, José Manuel Barroso, EU Commission president and  Herman Van Rompuy, EU Council president, at the G-8 summit in Lough Erne, County Fermanagh, June 17, 2013. Ireland currently holds the six-month term of the EU presidency. This maybe more exciting for Kenny than boring process but while there is little interest in reform and change in Ireland, it has a very high cost.

Finfacts has highlighted several times during boom and bust the Irish slow-motion approach where problems have to become dire to have a chance of being tackled. The slow-motion government process of glacial reform continues despite a brutal recession. While in the real world, there is an economic emergency, well protected ministers and senior civil servants are aided by useless Oireachtas members who are not fit for purpose. So five years into the crisis, the European Commission asks why Ireland cannot update its archaic laws to allow the greater use of generic drugs or why the delay in reforming legal services?    

The spring 2013 review of the bailout programme by the European Commission has been leaked and the document shows the Commission complaining of “slower than expected” progress on reform and accumulating delays in various sectors across the economy.

It says the legal profession is a “drag on the economy’s competitiveness” because it remains “sheltered from competition”; it highlights the “worryingly large” levels of long-term unemployment could endanger the State’s fiscal adjustment prospects and the troubled loans in the SME sector; banks’ asset quality remained “a source of uncertainty,” the review added, while bank arrears were “large and still growing” albeit at a declining pace than previously.

“Unless these challenges are vigorously addressed, they could stifle the demand and supply of credit, put a brake on the incipient recovery of domestic demand, endanger the prospects for continued successful fiscal adjustment, and further weigh on the banks’ profitability,” the review says.

While it was essential that adequate protection was offered to cooperating distressed debtors so they could work out a solution with their creditors, ongoing reforms in the mortgage market might result in “diminished debt repayment discipline,” it adds.

The target for opening "one-stop-shop" facilities to help the unemployed is going to be missed; only 300 case workers are available for over 400,000 people on the live register, with the figure to increase to 600 this year and 800 next year.

"Rapid decisions" on outsourcing activation services are required as is the need for attention to re-skilling, up-skilling and training, in particular for the long-term unemployed and young people. "Fast action is also required to reform employment support schemes to increase their effectiveness," the European Commission says.

Alan Shatter, minister for justice, equality and defence, declared a new dawn on October 04 2011 with the prospect of an end to a cartel dating from the heyday of the British Empire, but the process of reform took a detour to Limbo and has remained there (it's still a popular place even though it was technically abolished in 2007):

"The Cabinet’s decision to publish the Legal Services Regulation Bill 2011 is a good day for the consumer and the legal profession. The Bill prescribes substantial reform which takes account of the recommendations of the Competition Authority and the Legal Costs Working Group reports."

"It provides for greater transparency for legal costs and greater assistance and protection for consumers of legal services. It also provides an entirely independent dispute system to determine allegations of professional misconduct and a new system for legal costs adjudication where legal costs are in dispute."

Shatter continued, "It is a good day for the legal profession as well because restrictive practices which inhibit the delivery of legal services are being removed through new business models, anachronistic and unnecessary restrictions derived from regulatory rules which permeate the legal profession are outlawed and a structure is to be put in place which provides for the possibility of greater competition in the provision of professional legal training and a reduction in the cost of such training."

The holidays beckons for the lawmakers and the mad rush to clear the decks of the easy debris will soon begin.

"What crisis"?

Check out our subscription service, Finfacts Premium , at a low annual charge of €25.

Reform Irish style --  respond to a crisis only when it becomes dire.

Ireland ranks with Greece for having the lowest level of generic drugs used.

The cost of Irish State financed drugs schemes doubled from 2002 to over €1.6bn in 2008. Fees and other income earned by pharmacists doubled accordingly. It cost the taxpayer an exorbitant €640m to get €1bn of drugs from factory gate to patients in the community in 2008.  

The drugs bill grew further to €2bn by 2012 and  generic drugs accounted for only 5% of the value according to the Department of Health. Why does it take so long to implement change that would bring big savings? - -  The pass the buck culture that is unlikely to change.

Even the cost of generic medicines are out of line: 123% more in Ireland than in the Netherlands, 63% more than in Germany, and 55% more than in Denmark. They cost 26% more than in the next most expensive country, Spain.

According to the IMF, the Government has given itself a deadline of June 30, 2013 to legislate for greater use of generic drugs.

"Crisis, what crisis?"

Bureaucrats love that word 'process' and here it is:

"We are in the process of  implementing the remaining key pieces of the budget package: legislating to effect higher charging for private patients in public hospitals and to mandate greater generic drug use (by end June); seeking an agreement with public sector unions on reductions in the pay and pension bill (by end-February, as discussed below); and preparing for the roll-out of the property tax on July 1."

At present, pharmacists are precluded from substituting prescribed branded drugs with a suitable generic. So, if your prescription says Lipitor for example, then this is the drug you must get, even if there is a cheaper alternative.

While this is an unwelcome expense for private patients, for the State, which is paying out on behalf of medical card patients, it means that its drugs bill is a symbol of gross incompetence at a time of austerity.

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