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  • irishtimes.com - Posted: July 17, 2009 @ 9:36 pm

    A Snip in Time?

    Deaglán de Bréadún

    The Dáil may be gone for the Summer but politics refuses to lie down. First we had the Greens with their late-night abstention on the final vote for the Criminal Justice (Amendment) Bill and then we had Colm McCarthy’s Bord Snip Report.

     colmmccarthybetson.jpg

    That Report  (Photograph by Alan Betson)       

     The Greens protested that they were acting out of sincere conviction and genuine concern and blamed Dermot Ahern for failing to respond with sufficient sensitivity to their concerns.

    The few remaining denizens of Leinster House seemed to be positively overcome with cynicism about the Green abstention, pointing to the fact that Fine Gael were supporting the Government so there was no danger the Bill would be defeated. The cynics charged that the Greens were just throwing shapes ahead of today’s party conference on Lisbon and the Programme for Government. But perhaps they should take it more seriously than that.

    Certainly Brian Cowen was taking it seriously and when I asked him about it this morning he said: “Well I think it’s important obviously to ensure that legislation adopted by government under the doctrine of collective responsibility is maintained and enacted, and that happened in this case. I’d like to think that it would be a very isolated incident.”

    I have to report that he looked much more concerned in response to this question than to previous ones about Bord Snip. Mind you, Eamon Gilmore says the Report is a bit of a ready-up anyway, with the Government as the Bord’s ventriloquist.

    Bord Snip was expected to come up with €3.5bn in public service cuts but actually came up with €5.3bn. This will suit the Government as it is more a menu than an agenda. The Coalition can pick out the least politically-toxic bits for implementation.

    But even at that, the cuts are very severe and one wonders again if the FF-Green alliance can survive into the next Budget in December. The cause of the Lisbon Treaty will not be helped by Snip either. One can foresee the farmers and elements of the trade union movement taking a position that, “If you want this  Treaty, you will have to pledge not to implement such-and-such proposals from Bord Snip.”

    The Report, whether or not one approves of it, is a forensic document. I have never read in such detail about the working terms and conditions of teachers and college lecturers, for example. Colm McCarthy could be getting frosty looks in the UCD staff-room!

    The Government’s position, which Cowen repeats and repeats and repeats, is that the money must be found to meet our obligations, otherwise the State will go bankrupt. Ireland will become Iceland (well, there’s only one letter in the difference.)

    The most controversial Snip proposal is probably the one to cut Social Welfare by 5%. It is hard to see any Government, especially a Fianna Fáil-led one, cutting the basic rates. The shadow of Ernest Blythe will see to that. But there won’t be any significant increases this time round, I’d wager.

    There are also signs of trouble over the plan to cut back the number of local councils. This hits politicians where it hurts and FF Senator Ned O’Sullivan from Kerry issued a strong statement of opposition tonight. I believe today’s Joe Duffy Show was a whingefest par excellence.

    It was a little disappointing that the Bord Snip report shied away from proposing a reduction in the number of TDs and Cabinet Ministers. If a constitutional amendment is required for significant chagne, so what? Colm McCarthy pointed out that the British have 31 cabinet members – but it’s a much bigger country in geographical and population terms. The Report does suggest a unicameral legislature, i.e., abolishing the Seanad, but there’s very little chance of that. Another one I didn’t see in the Report was a suggestion to reduce the salaries of Department of Finance personnel, who reportedly get ten per cent more than officials in other departments.

    Summer or not, we’re in for a lively six or seven months.

    • Ray D says:

      It is indeed a rat to be smelled. It came up with more than the Government wanted to ensure that the Government could get off the hook somewhat and spin like mad. It is a political document created by an elite of economists – right wingers I would suggest though McC says he likes hurling – ground hurling? McCarthyism is back and it is worse than the first time round.

      It makes far too many recommendations and covers far too much ground. The deatil of what is written in some cases is based on a substantial lack of knowledge of the particular matters written about.

      The Group shold have been given a week to do the job and the result would have been better.

      What the economy needs is a few sharp measures to deal quickly with now. Tax rates should be increased significantly – everyone in the net – to 10, 25, 45 and 65% rates depending on income. Significant cuts should be made immediately in child benefit, unemployment assistance, early child welfare and development aid. These few measures would save 4 to 5 billion immediately. Also the partnership payments should be resumed immediately to boost tax take, to restore confidence and to encourage more spending by the populace in general.

    • Joanna Tuffy says:

      Deaglán,

      So when our economy picked up again would we reinstate the town councils, and the Seanad, and bring T.D. numbers back up to the numbers that have existed from the time when our population was almost a million less than what it is now? Is this the reductionist path we are to be led down by the same economists and political practitioners that got us into this economic mess in the first place? Democracy is just expendable, we only need it if we can afford it. I doubt there is another democratic country in the world where it would be seriously suggested and entertained that you abolish whole elected forums (some in existence over a hundred years) because there is a recession.

      In fact with the changes in the representation on local councils following the local elections, and the many leftwing controlled Councils that are now in place, it’s at local government level that we might see some real vision and action aimed at rebuilding local economies in a fair and sustainable way.

      Where the report is not so forensic is in relation to the economic impact of its proposals, in particular how will this level of public expenditure cuts impact on the economy as a whole? It’s generally thought that job losses are bad for our economy, because of the various knock-on effects of a job lost, but not when it comes to public sector jobs it seems.

      Joanna

    • Liam says:

      Honestly, people need to get real, what some are calling a recession is more like a depression and our present course is insolvency.
      I can see from J. Tuffy’s response that she has a very 2 dimensional view of how an economy works. Losing public sector jobs= a negative impact for the rest of the economy. But she will happily ignore the fact that keeping the jobs that are not affordable now means higher taxes and additional borrowing which will lead to a greater destruction of jobs in the private sector. There is no way around it, to protect a public sector job now you have to take purchasing power away from people who will then have less to spend in their local communities. From a moral standpoint it is not fair that part of the economy can be ring-fenced because it is outside the market while countless businesses will be wondering why the phones have stopped ringing.
      Our reputation as a country is now a joke and it is time for some very inventive decision-making that doesn’t involve kiling the economy with higher taxes or mortgaging my kids’ future here with higher borrowing so some politicians can avoid making honest decisions.

    • Dan Sullivan says:

      My problem with the suggestion about councils is the large degree of inconsistency and the failure to make the argument on logical grounds that the current system of administration (and it’s local admin, not government) is delivering poor quality and is lacking in the scale necessary to ensure good quality. If we were to have local government at the level of the 300,000/400,000 mark and then area committees drawn from those councils for the counties as they stand, then it would make more sense. But having one council for Cork city and county with around half a million people and a substantially large area to cover, but 4 councils for Dublin County with 3 of them being considerably smaller than the Cork one is right quare odd.

      Better to have taken the CSO figures and drawn up entirely new local government boundaries and get rid of the county councils. We should also look for new questions for the census around workplaces and commuting times so as to have an accurate picture as to which are currently the big draw towns that future development should be centred on.

      For example Munster and south Leinster combined could be served by 4/5 councils centred on Cork, Limerick, Waterford, Kilkenny.

    • Joanna Tuffy says:

      Liam,

      You might be interested in a simulation carried out by the ESRI this April whereby they simulated a reduction of employees in health and education by 17,000, thereby reducing the public sector wage bill by 1 billion in 2009. The simulation assumed the reduction by 17,000 public sector job numbers would be maintained until 2015. The results? GNP and GDP would fall by 0.8 and 0.6 per cent respectively by 2015;the volume of consumption would fall by 1.1 per cent by 2015;the unemployment rate would initially rise by 0.9 percentage points. However, with extensive emigration it would eventually fall back to 0.3 percentage points by 2015.

      This article by Michael Taft (from which I sourced the link to the ESRI article) sets out the greatly reduced net savings of the 17,000 job cuts taking into account the reduced consumption and higher numbers of people on the dole as being less than half than the reduced public sector pay bill of 1 billion: http://notesonthefront.typepad.com/politicaleconomy/2009/07/fear-and-loathing-reading-the-report-or-it-really-is-the-economy-stupid.html

      (The article outlining the ESRI simulation is here:
      http://www.esri.ie/UserFiles/publications/20090403095300/WP287.pdf)

      Not to mention the impacts on public services of that level of public sector job cuts, with the McCarthy Report proposing 6,000 job cuts in the HSE and 6000 in education, including 2,000 special needs assistants.,

      It.s not public sector jobs in particular I think should be saved – just jobs. Jobs are precious now and as Mr. Padraig Neary from Tubbercurry wrote in a letter published in The Irish Times yesterday, it makes no sense, when the private sector is haemorrhaging jobs, to deliberately axe public sector jobs resulting in more people on the dole.

      And the main reason both of our children’s future is mortgaged to the hilt is set out very succintly by Gene Kerrigan in the Sunday Independent today when he writes “By the way, what percentage of GDP have various euro area governments committed to bank guarantees? It ranges from zero in Malta to 21 per cent in Belgium. The average is 7.5 per cent. And Ireland? No less than 214 per cent”.
      (http://www.independent.ie/opinion/analysis/no-alternative-youve-got-to-be-joking-1829608.html)

      Don’t forget it’s the same people who got us into this mess that have created An Bord Snip Nua. Don’t you think that those politicians (and their advisors) could still be getting it wrong?

      Joanna

    • Liam says:

      Joanna, obviously I think the bank guarantees is the biggest con, my kids’ future is being put at risk to keep a bunch of bond traders sweet. They should have queued up in the bankruptcy court with everyone else. Why such a big decision can be made without some kind of public vote is beyond me. It will come back to kill the economy in the years ahead. (and I will vote for a party that promises to undo it, for once in my life I would demonstrate against it)

      But, for the issue at hand I still think your analysis is based on single entry accounting. There are clearly areas of the public service which are structurally inefficient so should be cut/reformed to make the economy more efficient. Even if that was not the case, if the money isn’t there under the present tax take, then you are advising higher taxes and more borrowing. As taxes go up, then, I for one will cut back on spending and other people will be forced to as well. All you are advising is substituing a job in the local community for one in the civil service.
      My advise for the opposition would be build up a head of steam on the bank bailout instead of the Pavlovian outcry against other cuts.
      We need to start getting inventive on how we use our smaller pot of money. For instance how many billions are spent enforcing drugs laws and granting a monopoly to drugs gangs to supply the market?

    • dealga says:

      Hi Ms Tuffy,

      May I say I find the implications of your final statement quite distasteful and an example of the linear, cynical thinking that dominates politics.

      Suggestions that Colm McCarthy’s report is somehow compromised simply because it was the current government that tasked his team are of no value to the debate.

      Play the ball, not the man, please.

      Perhaps the opposition parties would be so good as to whip out the old pink highlighter and mark up the parts of the report they agree with, so the government could claim a consensus and get cracking? Then we could debate the more contentious issues.

      Or would you disagree with all of it (which would kind of imply that government spending over the last few years has, in fact, all been appropriate and sensible and that there is no fat worth trimming)?

    • Ray D says:

      On further reflection it is amazing the amount of public comment that report got. The Bord Snip attempt to castrate the economy should have been binned before it got out of rthe starting blocks. It is a mish-mash of rubbish created by a bunch of economists that have been found over the past few years to have no good solutions to anything economic. If one were to think for one second that economists know what they’re doing then interest rates would be increased enormously and, since savings equals investment, the Irish economy would be flying. And pigs will fly.

    • Ray D says:

      As regards jobs, we had 400,000 employed in the building and construction industry. That industry could sustain about 120,000 jobs. So we must lose about 300,000 jobs there and that is no loss.

      As regards the public sector, taking an average 40-year workspan and applying the ban on recruitment across the board to the over 300,000 employees there, at least 8000 jobs per annum will be lost. Allied to the ISER scheme more than 17,900 jobs will be gone by the end of 2010. Get ready for a host of administarative errors, long queues and a serious diminution of service. By the way there are a lot of people in the public sector that do little or no work but, in my experience, many of those in the productive sector do little too and employ similar dodges and fiddles as they do in the public sector.

    • Joanna Tuffy says:

      Dealga,

      I didn’t mean to play the man. I actually quite like his straight-talking style, there’s just not a lot of the substance in this particular report. I don’t agree with the political philosophy that lies behind Colm McCarthy’s economics. That’s not to say that I disagree with everything in the report. He quite rightly highlights that it is a luxury the public sector can’t afford, paying for expensive consultants in the private sector, in the manner it has been doing, under government direction, over the past decade.

      Liam,

      The problem with a guarantee is that once it’s made how do you undo it? I would say the blanket guaranttee and potential bankruptcy it has brought us to, has a lot more to do with the interest repayments Colm McCarthy highlighted than any waste in the public sector. In rebuilding our economy we need to move away from the assumptions that underpinned the politics of those that voted blindly for the guarantee, which is everyone except the Labour Party.

      Joanna

    • Deaglan – I have to disagree with your claim that the report “is a forensic document”. I didn’t focus on the education sector, but in the two areas that I know about myself (local government and equality), the recommendations in the report are far from forensic. There is little or no evidence base for these decisions. Indeed, they reminded me greatly of McCreevy-ish back-of-the-envelope type calculations (which have cost us dearly in the past – remember decentralisation anyone?) For example, the proposal to cut 20% of special needs assistants in schools is based on unattributed anecdotal evidence that ‘some schools’ get to keep SNAs after the pupil has moved on. The reduction in SNA’s will be achieved through efficiencies and time management, we are told. I would like to see Mr McCarthy trying to ‘time manage’ the toileting needs or the learning needs of a 5-6 year old with disabilities. The recommendation to merge Cork County and City councils while retaining the 4 Dublin councils makes no sense if you look at the population numbers.

      This is far from forensic analysis. This is off-the-cuff chopping of the usual suspects, with no analysis of need. And indeed, McCarthy missed a few significant opportunities for efficiency through centralisation, particularly in the local govt sector.

      I’d give it a 3 out of 10 maybe, and I’m feeling generous today.

    • Deaglán says:

      When I said it was “forensic”, I didn’t mean the recommendations, I meant the level of information the Report contains. Ruairi Quinn said on radio last Sunday that even a TD would never get access to that kind of detail.

    • Liam says:

      Joanna, Well the gov. could pledge to keep borrowing to a max. % of GDP. Anything above 100%/150% spells certain doom for the economy.
      By that time interest rates will be exploding in any case and an increasing % of the tax take will be leaving in interest payments. In simple terms if the gov. doesn’t set a borrowing limit the bond market will.
      I am not sure that I have much faith in any party but in Labour’s case I am just suspicious that your “clients” in the civil service will be calling the shots and the average worker will be heading back to 50%-60% taxes.
      If Labour can set out a platform of of fiscal responsibility I’ll listen but I am afraid the play book will be a repeat of the 1970’s Keynesian nonsense. The average punter out there needs low taxes and low interest rates so that they have a fighting chance of paying their mortgages, the reverse will be a disaster

    • Peter B says:

      A very sharp and precise article by Fintan O’Toole in today’s Times. Enough said really!

    • Dan Sullivan says:

      Deaglán, but isn’t that part of the problem? As Elaine Byrne talks about today, our TDs from government or opposition can’t get accurate, precise, up to date and detailed information out of the system we pay for in order to say something sensible about it.

      Joanna, I think the cover all bases guarantee for the banks was in retrospect a bad idea. But I’ve yet to hear what Labour would have done right there and then, once the lads from the Bank had turned up at the department of Finance, except some version of wait and see.

      I personally would have been inclined to guarantee the deposits and such like but not the bond holders or shareholders. And I’d have asked for the immediate resignations of all the bank chiefs with recommendations from them of people who could take over there and then for 3/4 months but with no view that those people would be kept in place at these new positions while we went through their books over the next 12/24 months. And if they said that, Oh we could all go under tonight you have to act now, I’d have told them it was a bit late for them to be coming to me now and that they should eff off for a couple of hours while I get some kip.
      I would have asked for them to surrender their passports and that should it be in prospect that they had lead to the collapse of the Irish financial system that they would be looking at charges under the Offences [Against the State?] Act, or even with Treason. And that should it be the case that they had obtained their salaries and bonus under the false pretences that they knew what they were doing that all their assets would be liable to confiscation. In other words, make them really sweat.

      But that’s just the inner, act now, plea for clemency, person in me.

    • dealga says:

      Peter B –

      O’Toole’s piece is full of ad hominem and contains logical fallacies.

      O’Toole drags out the utterly pathetic ‘public services didn’t cause the mess, the banks did’ line despite the fact that it was the private sector boom that was used as the justification for the benchmarking process and despite the fact that it was the taxes on the construction boom, inflated by the banks, that paid for it.

    • Ray D says:

      just once more, there was one only benchmarking exercise that counted. that was based on relativities with the private sector back at the beginning of the decade (2001) before the transaction taxes debacle.


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