Tag: Leinster House

Taxes won’t make us quit fags. We’ll just smuggle them

by dsmooney, posted in Policy, Politics

A copy of my Evening Herald column from December 28th 2011 

I suspect most of us will be glad to see the back of 2011. As we prepare for its successor we will do so in the hope it will be better and with the traditional list of good intentions for 2012.

There are many things I hope to have the discipline and self will to both do and not to do in the year ahead. Fortunately, one of those things is not giving up cigarettes as I have never had that particular nasty habit.

I don’t smoke. I have tried it a few times, but I have never taken to it. Maybe this helps explain why I have never understood its allure. Sadly, I have seen the damage they can cause close up.

Just under ten months ago my Dad, Fergus, died following a four year battle with lung cancer. He had fought it bravely, but eventually his heart gave out. Not helped by the fact he spent decades smoking 40 a day, un-tipped ones at that.

I have an uncle who still smokes despite the damage it has already done to his health. I have a favourite aunt and various other relatives and friends who I would dearly love to see quit cigarettes.

Clearly, I am not unique in any of this, but I make the point as a background to why I think the recent increase in tobacco duty was a bad idea.

I was chatting with my Mum just before Michael Noonan rose to give his Budget speech. The wanted to see an increase in tobacco duty as she felt it might deter others from going through what my Dad had endured and also help stop her brother from continuing to smoke.

While she was happy with the Budget increase, I fear her hope that increasing the price of a packet of cigarettes by 5c, 10c or 50c will reduce the amount my uncle (or anyone else) smokes will not be realised.

I wish it would, but logic and factual analysis makes it increasingly clear that it won’t.

This is not just me picking conclusions out of thin air. It is the conclusion reached by the Revenue Commissioners’ Economics of Tobacco .report published last February.

It estimated that about 20% of cigarettes consumed inIrelandare not taxed here, ie, they come into the market illegally via smuggling. It also says this figure is rising. Some suggest their estimate is conservative and is probably somewhere nearer a third.

Whatever the precise figure, there are two things we know. We have the highest excise on tobacco products inEuropeand we have increasing levels of black market sales of smuggled tobacco.

The relationship between these two facts is so blindingly obvious that even the Department of Finance has been moved to admit it

Replying to a Dáil question last October, the Junior Minister for Public Expenditure & Reform stated that “The average price of a packet of cigarettes here is €8.65, whereas inHungary it is €2.06… raising tax on tobacco products further would simply encourage the illicit trade..”

So why go and do precisely that? Why indulge in a gesture that not only flies in the face of the facts, but also only serves to benefit the lowest in our society.
Some 218 million smuggled cigarettes were seized in 2009. This includes the 120m intercepted at Greenore Port, Co Louth: the largest ever seizure in the EU. But  we still only seize a fraction of the illicit trade. Countless millions of cigarettes, including fake illegally produced ones with prohibitively high tar contents, are making it on to the streets.

This smuggling is funding the activities of criminal and dissident terrorist gangs to the tune of probably €3million plus per week.

Meanwhile the Government loses about half a billion Euros a year in lost taxes that could be used to fund treatments that might actually combat nicotine addiction.

The sad truth is that there is no one simple action government can take to stop people from smoking: this includes plain packaging (a topic I will return to).

The sooner we grow up and acknowledge this fact the sooner we will start to really address the problem.

Twitter: @dsmooney

Enda’s State of the Nation fails to Inspire

by dsmooney, posted in Brian Cowen, EU, Fine Gael, Politics

An Taoiseach’s national address was well intentioned but badly executed. 

To his credit; from the moment he became Taoiseach, Enda Kenny has shown that he realises the importance of talking to people. He has demonstrated regularly that he knows the job of Taoiseach is not just the traditional one of government Chairman or Chief.

He understands that it is also that of the “confidence giver in chief”, particularly at times of crisis like this. The person who tells the rest of us what is happening and how he and his team have a plan to get us through the difficulties.

Television has not been his friend. Neither have the formal set pieces: Ard Fheis speeches etc. He has been more comfortable in informal situations, particularly those where his words and message are delivered unmediated: live to a flesh and blood audience.

For all these reasons, last night’s TV “Address to the Nation” was going to be a big ask. The fact that it was billed as the most important address he would ever give, the “speech of his life”, did not help.

In the event, the speech did not succeed in achieving its desired result.

A speech is not about offering a litany of facts and figures, it is about putting across a clear message. The Taoiseach acknowledged this truth in his address saying that he was “outlining the Government’s strategy.”

The pity is that while this may have been the aim, the content and delivery failed to convey any sense of strategy or coherent plan.

The address should not just have been another element of the package of budget speeches: but an opportunity to set out a vision of where we are going and how we can get there together.

It could have been a vision of the kind of Ireland the Taoiseach wants to see in place by 2016, the centenary of the Easter Rising and an exposition of how he sees us achieving that.

Instead of the expected “state of the nation” we got a curiously cold and passionless presentation that omitted both vision and purpose. A bland party political broadcast that seemed, in part, to be an attempt to explain both why The government was now implementing policies it had opposed and why it had abandoned promises made only nine months ago.

It was less an “address to the nation” and more an apology from the leader of Fine Gael.
As the Taoiseach and his advisers are now starting to realise there are some very obvious risks with such addresses.

The expectations were high.

People expect to be better informed and maybe even more confident after the broadcast than they were before. Looking at the online commentary as I write this, I do not see this being the emerging consensus. Most politically unaligned posters appear to be seeing the address as a “wasted opportunity”.

But there are other risks too. The leader comes on TV to say that things will get better… but, they don’t. As a consequence we lose faith in them.

The other worry is that the Leader comes on TV to say that things are even worse that he had suggested they were… the opposition have a field day using his own words to attack him and his popularity plummets

Though I have no firm evidence for thinking this, I believe that these were the two of the key factors behind Brian Cowen’s reluctance to make a similar address in 2008/2009. The one issue Cowen would not have had to address if he had chosen to make such a speech then is the crisis facing the EU and the Euro.

In my view the Taoiseach made a mistake in not devoting more of his script to this crucial issue. Not only did the EU section amount to less than 10% of the total text, the section was bland and failed to seriously address any of the issues facing us.

In other EU countries they are talking of having “less than a week” to save the Euro. Within the coming days we will learn more of the Merkel/Sarkozy plan to fundamentally change how the EU and the Euro function, but here our Taoiseach reduces the matter to almost an afterthought in his keynote address to the nation.

It kind of sums up the whole exercise, well intentioned, but poorly done.

Twitter:  @dsmooney

Barrack Closures a Mistake on All Fronts

by dsmooney, posted in Defence, Fianna Fáil, Fine Gael, Government, Irish Labour Party, Politics

This article appeared in the Irish Examiner on Thursday November 17th 2011

Resigning as a Minister is not something to be done lightly. You must weigh up the influence and input you are surrendering from having a seat at the table against the public acclamation you will receive. The applause and cheers will soon die down and you will be left standing on the outside while decisions get made without you.

Though he is not a household name, Willie Penrose is a smart man. While he may have the bearing and manner of a classic rural parish pump TD, he is a smart guy. An experienced and successful Barrister, Penrose knows what he is doing.

Gilmore knew that that the future of Columb Barracks in Mullingar was a red line issue for Penrose when he nominated him as a Super Junior – so why did he proceed with the appointment?

This government was only a few days in office when speculation started that they may close some more barracks. Further barrack closures have been a fixation with some senior civil servants and military figures in Defence.

Shortly after I entered the Department of Defence in October 2004 a senior official popped into my office to discuss the issue of “barrack consolidation”. This I came to learn was the euphemism for barrack closures.

There is a school of thought, among some in the Defence organisation, that we should have a much smaller number of super barracks – say three or four – located in the major cities, rather than the existing network of smaller posts across the State.

While this would potentially be a little more economic and efficient, this has to be weighed with the popular support and positive PR generated from having more locally organised and based units. It is a demonstrable fact that recruitment is strongest in those areas where there is a military post.

Even at the height of the Celtic Tiger for every general service recruit post advertised there were at least 5 applicants, while the Cadet competitions often saw 25 or 30 well qualified applicants for each vacancy.

Local barracks and locally based army units form strong bonds with local communities. Use of barracks facilities, especially sports grounds, is usually offered to local community groups, particularly youth groups. The local army unit is always on hand to help out in the classic “aid to the civil power” type exercises – flooding, ice clearance, bad weather etc.

While they are hard to measure on a civil servants excel spreadsheet, these strong local bonds are vitally important and should not be thrown away lightly.

The previous Minister, Michael Smith has closed six barracks back in 1998, though some of these properties had still not been disposed of almost six years later. Indeed it would take a further five or so years to deal with these.

The estimated year on year savings from these 1998 closures was estimated to be in the region of €3.5 – 4.5m. These were “economies of scale” saving from reduced security, heating, lighting and other savings.

If the current row over closing three or four barracks was just about that, I might be tempted to agree with it. But this is a mistake on all fronts.

Alan Shatter says that given the choice between saving buildings and retaining personnel, he opts for the latter. A noble intention: if only that was the choice before him.

It is not.

If the planned closures go ahead the Defence Forces can kiss good bye to seeing their numbers ever rise back above 10,500 again.

There are a number of reasons not to close these barracks.

Their closure will hurt the local economies in Mullingar, Clonmel and Cavan just as much as any factory closure. There is no point the Taoiseach giving out to Talk-Talk management for the inconsiderate handling of that closure while his own Minister is planning to do the same thing.

Where does the Minister propose to transfer the troops stationed in Mullingar, Clonmel and Cavan? Where is the spare capacity in the remaining barracks?

We are already aware from the last round of barrack closures that the remaining barracks were full and operating close to capacity.

To close these other barracks and to permanently move around 500 – 600 troops would require a considerable capital investment in additional facilities in Athlone, Finner andLimerick. This is not something that will appear overnight. Where does the Minister propose to get the cash to provide this additional capacity?

Colm McCarthy’s famous Bord Snip Nua report found that the Defence Forces were the only sector of the Public Service to reduce numbers during the height of the Celtic Tiger. His report suggested a number of further small reforms, including a reduction in the size of the force by a further 500 to 10,000. He recommended this be implemented over a two year period. It was achieved within a year, well ahead of the target date.

So what kind of signal do these further cuts – cuts that go beyond An Bord Snip Nua – send to others in the Public Service? This was a point that Brian Lenihan and Brian Cowen instinctively understood.

Here is a part of the public service that has downsized, modernised and reformed itself beyond expectations and yet it gets singled out again for cuts that neither make sense nor add up. These barrack closures appear, on the face of it, to be gratuitous.

The Defence Forces now do more with less. When it comes to real public sector reform the Defence Forces are a model of how it can be done right. These closures put that model at risk.

The investment in the Defence Forces made between 1997 and 2007 was a text book example of how to invest wisely and productively. Surplus property was sold and the proceeds invested in better training and equipment.

While the numbers working in the Public Service increased by 17% over the decade of the Celtic Tiger, the numbers working in the defence organisation actually fell by 8%.

This applied across all levels. The number of troops fell and so did the number of civil servants. Indeed Defence has a remarkably small civil service

The fact that the Minister does not get this point is compounded by the fact that he did not address the annual PDFORRA conference. That was a bad decision. It was his first opportunity to address the soldier’s representative organisation and he opted to send his Junior Minister while he and his Secretary General heading off to an international conference instead.

Willie Penrose’s resignation is about a lot more than just Mullingar Barracks; it is about a part time Defence Minister who fails to appreciate what he is doing, or is simply not bothered.

Kenny’s U-turn on Special Advisers

by dsmooney, posted in Defence, Fine Gael, Government, Politics

Taoiseach Enda Kenny’s defence of his U-turn on capping the pay of Special Advisers set me to thinking.

Merrion Street
Dept of An Taoiseach

When they came into office just eight months ago the Taoiseach started out well. He announced the withdrawal of ministerial cars and garda drivers from most Cabinet Ministers and was seen striding to work onfoot with no merc or beemer in sight.

He also said that he intended to take a similar approach to Special Advisers pay. The results there have been less impressive. Contrary to the declared intention to reduce the pay rates, it now emerges that almost 50% of them have been given exemptions and are now paid above the Principal Officer grade.

The Taoiseach defends this saying that Advisers are still paid less than previously.

Is that really so, Enda?

Back in October 2004 I was asked to become the Special Adviser to the newly appointed Defence Minister. It took me about five or six weeks to wind up my existing business and take on my duties as Special Adviser.

Within a few days of taking on the position I sat down with the Department’s HR manager. He talked me through the Departments requirements and regulations.

There were a number of forms to sign, covering a range of matters including security and related matters. I was required to produce the usual tax forms required of any new employee plus a Tax Clearance Certificate.

He then produced my contract of employment. We discussed some of the provisions while I leafed through the document. Then we both went quiet at the same time.

When it came to my pay rate the contract stated that I would be paid at the first point on the Assistant Principal (AP) grade. My understanding when I had accepted the post was that I would be paid at Principal Officer (PO) grade.

The difference between the first points on the AP and PO scales was in the region of €25k. The first point on the AP scale was in or around €57K as best as I can recall now.

I was a bit taken back by this and said as much to the HR manager. He explained that the default rate for my post in the department was AP grade unless I could show that my previous salary had been higher than that.

I relaxed as I knew I should clearly show that my annual income over the previous few years was in excess of the AP scale. It did take a few weeks to sort out but the paperwork was finalised as my first year’s pay was set at the first point on the PO scale.

I am not revealing anything new here. I am open about my salary as the then opposition used to ask parliamentary questions about my pay and expenses, and that of my colleagues across other Departments, at least twice a year. The replies were published regularly.

Indeed I recall opening an issue of the Sunday Independent as I was queuing to board a Ryanair flight to visit my parents in Spain and seeing one of those replies featuring my name, photo and pay rate there.  Worse still, I saw some people on the plane later holding copies of the Sindo and glaring at me.

Those replies usually pointed to the fact that there were fewer advisers in the post 1997 FF/PD Governments than there had been in the 94-97 FG/Lab/DL one. About 30% fewer: as far as I remember.

I make this point as the Taoiseach has sought to assert that paying 50% of their advisers at the first point on the PO scale is some big advance on the situation while I was there.

It is not.

The point on the scale is the same, though the scale has reduced. It was reduced by the last Government, not this one. As advisers we agreed to a 9% voluntary reduction in our pay in line with the voluntary cut in Ministerial pay, as well as the increased pension contributions and reductions in civil service pay rates across the board.

Like many things this Government is doing they may want people to think it is different – the reality is that it is the same.

Why Fianna Fáil is right not to contest Aras11

by dsmooney, posted in Politics

The reality that Fianna Fail is no longer the huge force in Irish politics that it once was is gradually dawning on some.

Former big beasts in the forest are finding that they now do not strike the same sense of awe and fear they once did when the party commanded support levels of around 40%.

While watching the process of them coming to terms with this loss of influence and authority in public is neither edifying nor appealing – it is better it happens quickly.

The reality of the last election is that Fianna Fail no longer has a God given right to presume it can be in power. It has received what a colleague of mine in the North described as “the mother and father of a political punishment beating”.

It is a beating from which the party can recover, but that process will be long and arduous. The process of renewal the party must undergo must itself commence with the facing of some facts.

The first among these is that the traditional way of doing political business will no longer work. That means, in this instance, that the old assumption that almost any candidate Fianna Fail selects from its own ranks will automatically be a front runner no longer applies. Things have changed utterly for everyone in the party, not just those at the top.

It applies even to huge voter getters like Brian Crowley. For him to think that he could personally withstand this swing against the party is to miss what happened last February.

There is no great evidence to show that the public anger has diminished significantly. Any candidate facing the electorate in the foreseeable future, and that includes this October, with Fianna Fail on their posters will incur the wrath of a still smarting public – no matter how small they make the logo.

Contrary to the views of others, the party leadership was right, and is right, to wait until now to decide its strategy. The suggestion that this decision should – or could – have been made last June or July is nonsense. This is a decision that required some time and space for calm consideration. It is a decision that needed to be made when the full impact and scale of what happened last February had been digested.

Having the Gay Byrne flirtation in public before taking this decision was an error, though it hard to see how anyone could have thought the Byrne option could ever have been considered just in private.

It sent the wrong message to the party membership. Martin’s countrywide tour of the constituencies was reconnecting the leadership with the members – the Byrne episode has dented that reconnection: though not damaged it irreparably, despite the rantings of a few impetuous people on Facebook.

But consider what a hero Micheal Martin would have appeared if he had convinced Byrne to run. Consider too that some of those who were most critical of Martin for courting the popular light entertainer had – a few weeks earlier – been urging him to allow four or five of his Oireachtas colleagues to sign the nomination papers of another, equally well regarded entertainment figure; David Norris.

There is a world of difference between accepting your current situation and allowing it to curb your ambitions. The fact that Fianna Fail may not directly contest this October’s Presidential election does not undermine the party’s hopes to recover the public trust it has lost.

If anything, not running a traditional style candidate is part of the process of letting former supporters know that it is taking the hard message they sent last February to heart.

This is not merely a question of the party saving a few hundred thousand Euros by not running a candidate – it is about Fianna Fail doing what it traditionally did best: facing up to harsh realities and addressing them. It is this which offers Fianna Fáil a way to renewal and recovery, not the fielding of an Áras 2011 candidate.

Why current crisis is more political than economic

by dsmooney, posted in EU, Policy

My latest Evening Herald column from August 8th 2011 – you can also see it online: here

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Euro Parliament Committee Room - Bxl

Success has many fathers, but failure is an orphan. Clearly, no one has told the economists this.

In any other walk of life — architecture, dentistry, cake decorating — people run away when they see failure or disaster looming.

Not the economists. They embrace disaster. They revel in it.

As soon as a crisis looms they rush to the TV camera and the microphone to say how they predicted it.

They take a pride and pleasure in being associated with doom and failure that would do your heart good, if the consequences were not so dire for the rest of us.

In the wake of last week’s market turmoil, the weekend papers and discussion shows were full of economists doing what they do best.

Switching between the radio stations on Saturday and Sunday mornings was like playing some demented radio five-card stud — I see your dollar bond collapse and raise you an Italian bailout.

The Sunday newspapers were as bad with even more dire predictions of either the collapse of the euro or the dollar, or both.

We are living in uncertain economic times … and will be for some years to come. No one needs to tune into the radio to learn that.

This is a major culture shock for many, though not for those of us who lived through the Eighties … and no one wants to see another decade lost to despair and inactivity.

But I digress. So why have we seen renewed predictions of crisis this week? They do not seem to have been prompted by the publication of any eurozone statistics or hard figures.

Neither could they be reasonably explained away as just the result of a global slow news day.

While they may, in part, be due to the outworkings of the American debt ceiling compromise, the giveaway is in the word most often employed by economists in describing the crisis: confidence.

We have seen share values drop and bond costs increase over the past week because market analysts and investors do not have confidence in the capacity of eurozone countries to deal with all the debt in the system.

Could these possibly be the same investors who were protected from massive losses in banks and bad investments by those same governments?

Ironic, isn’t it? Eaten bread may be soon forgotten, but never with anything like the speed and hypocrisy with which socialised private losses are forgotten by the markets.

It is tough to make someone have confidence in you, particularly when you have not got much confidence or trust in them. But wringing our hands in anger on this won’t make the problem go away.

As I said earlier, the past week’s scare does not have its origin in a spreadsheet. It is fundamentally a political issue; not an economic one.

The real danger for us is that the dramatic actions and reforms the market is demanding in return for their “confidence” would be deeply unacceptable to people here and across the Eurozone.

This is the almost impossible balance that the eurozone leaders are trying to strike. To make the changes just about needed to gain market approval without totally alienating public opinion at home. The political spectre of Brian Cowen must stalk their deliberations.

Not that the eurozone leaders merit much sympathy. Merkel and Sarkozy’s slowness to act decisively in the early stages of this crisis has cost us all. Their dithering and loose talk threw Ireland to the market wolves in a futile attempt to stem the tide at no cost to themselves.

Their recent reforms to the European Financial Stability Fund have been more carefully judged, though these will take a while to work their way through.

Meanwhile, the next time you hear an economist demanding firmer and more determined actions, just remember that translates in higher taxes and higher charges for you and yours.

– Derek Mooney

Germany lectures us on debt — forgetting the lessons of its own history

by dsmooney, posted in EU, Government, Policy, Politics

Here is my column on Germany forgetting the lessons of its own history from the Herald (Tuesday June 28 2011)

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Signing the London Agreement on 27 Feb 1953 (Pic via: http://www.tlaxcala-int.org/article.asp?reference=8440)
Signing the London Agreement on 27 Feb 1953
(Pic via: http://www.tlaxcala-int.org/article.asp?reference=8440)

The media has been full of hourly reports of how the Greek debt crisis has the capacity to send the global economy back into the doldrums.

The Greeks, and by extension, the Portuguese, Irish and Spanish have had to endure tough lectures from France and Germany about the need for austerity.

The German government has been particularly forceful in delivering these lectures. Its leaders tell us their taxpayers do not want to subsidise bloated public sectors or unproductive workers across Europe.

And who could blame them? It is understandable that German workers do not want to pay extra taxes to send money across Europe, even if it is in the form of a loan with generous interest payments attached.

Understandable … but only if you have a short memory and disregard the history of the past century.

An economic historian at the LSE, Prof Albrecht Ritschl, has pointed out that the worst debtor nation of the past century is not Greece, it is Germany — and by a wide margin too. Worse still, Germany is denying to Greece, Portugal and Ireland the precise remedies it needed to rebuild itself. Twice in the last century, after WWI and WWII, Germany has ran up levels of debt that would make the Greek crisis look like a bad night at a mythical Tipperary Casino.

The cost of Germany’s 1930s debt default was as significant as the 2008 financial crisis. A default they were forced into as they could not repay the debts and war reparations set out in the Versailles Treaty following WWI.

This was the result of the rest of the world doing to Germany what Germany and others in the EU are now doing to us. Tons of new debt (in Germany’s case it was war reparations) were heaped on top of existing debt thereby draining the German economy of the ability to rebuild itself.

By the end of WWII, the rest of the world had learned a lesson. It recognised that lumbering a devastated and demoralised Germany with more debt was not a workable solution.

In the 1953 London Agreement on German External Debts, the Allied powers did the exact opposite of what the German and French governments are doing today. They wrote off half of Germany’s total mountain of debt and gave it additional time to repay the monies it owed.

It was thanks to the foresight and generosity of former enemies that West Germany was able to deliver the Wirtschaftswunder (economic miracle) of the 1950s.

This was a deal negotiated between leaders who had learned from the mistakes of the past and could see beyond the political demands of the next election, particularly Germany’s own Konrad Adenauer.

Remember, also, that one of the occupied countries owed money by Germany was Greece. Those protesting in Athens remember that their parents and grandparents had to forego the compensation owed to them.

How galling must it be for them to take lectures from the current German Chancellor on the virtues of paying your debts?

And, in case anyone thinks this is all reaching too far into the past, think again. According to Prof Ritschl, Germany defaulted on one of the conditions of the 1953 London Agreement as recently as 1990.

TOOLS

It is a sad indictment of the current German leadership that it cannot see that denying others the tools that it required to rebuild itself is only storing up trouble for the future.

It does not take a Konrad Adenauer or a Willy Brandt, however, to recognise that Germany’s economic fortunes are so closely intertwined with the other eurozone countries that if part of the eurozone falls, Germany could flounder.

So, even if heeding the lessons of history cannot bring Germany to realise the current policy is not working, self interest just might.

– Derek Mooney