Thursday, December 31, 2009

The Lenihan story

Being out of the loop over the Christmas break I only heard the details of the Brian Lehihan story on the radio in the car yesterday. Over the course of a couple of interviews and reports I pieced together the story that TV3 broke a gentleman's agreement to not break the story of Lenihan's illness over the Christmas period. To be honest the only thing I find strange about this is the fact that FF and Lenihan hoped that commercial interests would take a back seat and that the media would sit on this story until they had the spin machine sorted.

While on a personal level, one can only feel bad for Brian Lehihan and wish him well, politics keeps on rolling and the pressure of being the most powerful person in the country will not help him on the road to recovery once treatment begins. There needs to be an orderly transition to a new regime in the Dept of Finance but unfortunately the range of options is extremely limited.

Tuesday, December 22, 2009

City Council plays Scrooge

Twas the week before Christmas and all throughout the city, those on lower incomes were exempt from paying for waste collection. But the nasty grinches up in the Council Chamber were about to put an end to that. Ok I think that's about all I can do in that style so plain English from here.

Last night, Dublin City Council voted to remove the waiver for waste collection or at least that's how certain parts of the media (right) and protest voters (left) would like it to be reported. The elites in their ivory tower stealing yet more from the poorest in society is a good headline and a good rallying call for political support. However, it appears that the truth is somewhat less exciting as what was actually passed is as follows
  • Retention of the waiver for the standing charge
  • A number of free bin collections for households with a waiver
  • Payment for collections in excess of this free number
Doesn't seem so draconian now does it? According to research, households with the waiver were generating almost twice as much waste as compared to those that had to pay. Under the new regime there will be an incentive for those on the waiver to reduce their waste levels to save money.

In my house, we put out the brown bin once per month and the black bin maybe every 2 months. The frequency goes up in the summer to avoid smells but that comes to about €50 per annum, ignoring the standing charge. Now to my mind that seems like a fairly reasonable sum to pay to get rid of your rubbish even if you are pensioned, unemployed or on a low income.

Thursday, December 17, 2009

Recession is over

According to the CSO, GDP grew by 0.3% in Q3 this year so technically Brian Lenihan was correct when he said we had turned the corner and were on the road to recovery again. Of course, if we're on a double dip, then come April we could be back in recession if Q4 09 and Q1 2010 report further contraction of GDP.

As someone who knows next to nothing about economics, I've often wondered if GDP is a useful figure to determine recessions, depressions and booms. It seems like a very unwieldy stick in a field where a certain amount of finesse is required. Also in a small, open economy *DRINK* like ours, GNP might actually be a better measure of the state of play as it would ignore the impact of companies like Microsoft or Intel who could decide to book a lot of business in a quarter which would have a large impact on Irish GDP.

Either which way, this news won't be much comfort to those who are out of work and facing benefit cuts in January. They're still going to find it tough going even if the economic indicators are showing a recovery.

Monday, December 14, 2009

New representative in the Rotten Borough

This morning they counted the votes in the Seanad byelection caused by the election of Labour's Alan Kelly to the European Parliament in June. Under the rules, even though Councillors, TDs and outgoing Senators can vote for the various panels immediately after a general election, only sitting members of the houses of the Oireachtas can vote for casual vacancies. Talk about making a closed shop even more closed. Of course this happens to work in favour of the government at the moment as had all Councillors had been allowed to vote, the seat would have been retained by the opposition - probably swinging from Lab to FG unless a deal was struck.

In the end the Green's Niall Ó'Brolcháin, former Galway City Councillor and Mayor, was elected by taking 119 of the 205 valid votes cast. This is the same person who after losing his seat in Galway City Council in the local elections in June announced his retirement from public life and who also suggested that the Greens should leave their current coalition if FG and Lab made them an offer. It will be interesting to see if he continues in his maverick (but not Gogarty-esque) ways or will he have to toe the line now that he is part of the establishment.

Saturday, December 12, 2009

True Irish Wit

Ah Deputy Paul Gogarty, you've really raised the level of esteem in which politics is held in this country. With a simple 6 word refrain, you've joined the ranks of great Irish orators such as Emmet, Davitt, Parnell, Larkin. Now if only you could direct your anger at the right section of the Dáil, your bedfellows from FF.

With all due respect, you're a muppet.

Thursday, December 10, 2009

Budget 2010

I'm going to tackle the budget under a few different headings as there is lots to get through. I'm not going to hit everything, just the bits that jumped out at me while watching the speech yesterday afternoon. Also this is mainly based on the text of the Minister's speech and not on any in depth analysis of the details which I'll leave to cleverer people like Constantin Gurdgiev and Karl Whelan.


The first thing that struck me was the tone of the Minister's language. He was really working hard to sell the idea that his policies were working and that Ireland is on the cusp of another economic upswing. Of course, in explaining how we had come to such a state of chassis, no mention was made of the pro-cyclic policies that had been followed for the previous 10 years by various FF ministers for finance. The presentation was also a far more somber affair than previous budgets with no call to patriotic duty or standing ovation. From the other side of the house, there was little in the way of heckling and considering that most of the details had been leaked over the previous week there was ample time to think up some good Statler and Waldorf routines.

Social Welfare

The minister opened the section on Social Welfare with this gem: "The Government is proud of its unrivalled record in increasing the level of social welfare payments." In other words, we're happy that we've gotten you all addicted to free money that we threw away in a completely unsustainable fashion. Making that statement on the floor of the house takes some balls. He then went on to stiff those who were never going to vote for FF (the under 25s) and protect at all costs those who do (pensioners).

While I accept that the cost of welfare has grown to unmanageable proportions, it is hard to reconcile cutting unemployment for the young to €100 while leaving the OAP and specifically public sector pensions untouched. In fact, public sector pensioners might think they are getting a great deal but now that the link to existing pay rates has been broken, at some point in the future this will come back to haunt them. I would also be interested to see what legal and logistical obstacles there are to means testing or taxing child benefit. This government has no problem in discriminating between young adults with regard to unemployment, 3rd level grants and various other categories so why should child benefit be such a sacred cow?

Public Sector

The wage bill in the public sector has been under sustained attack in the media for the last year, even after the so-called pension levy was introduced. So to see across the board cuts is not entirely unexpected. After the fiasco of the unpaid leave deal last week the cuts became inevitable. But what was not expected was that even the lowest paid in the public sector were going to be hit. Another €1500 from someone on €30k is a huge hit since they will see pretty much all of it disappear from their net pay. For someone paying at the higher rate, being down gross about €5000 will come back to about €2700 after taxes, levies etc. Now where is the equity and protection of the vulnerable?

VAT and Excise

The other main talking point is the reduction in Excise on alcohol and the general reduction in VAT. The first is a handout to the vintners as you can be sure that the price of a pint in central Dublin is not 12c cheaper today. Perhaps it will persuade people to cut down slightly on the Newry exodus but only if they were primarily going up there on a booze trip. If clothing and food was also on the shopping list then the excise reduction will have very little impact.

The VAT decrease will make no difference at all. This time last year retailers absorbed the 0.5% increase and so it is probable that the reduction will not be passed on as it is really a return to the status quo ante. Finally, the increase in excise on fuel, or Carbon Tax as they are spinning it, is again going to hit the less well off most as irrespective of the size of your income, you still have to heat your house in the winter and keep a car on the road.

Good News

The one item of good news was the Irish domicile levy for the super rich who have moved their wealth offshore to avoid taxes. One wonders if that was a last minute addition in response to Newstalk's pontificating on the day before the budget. It does strike me as a bit of a two finger salute to Denis O'Brien and Bono in particular but one to be welcomed if it hits the pair of them in the pocket a little.

Tuesday, December 8, 2009

Calm before the Storm

Tomorrow afternoon Brian Lenihan will give his budget address to the Dáil for 2010. At this stage a lot of the potential cutbacks have been leaked in one form or another but there is still scope for surprise. Remember back a few years when Charlie McCreevy stood up in the chamber and announced the decentralisation plan without having discussed it with Cabinet, without costings and with no regard for the spatial strategy that had been announced only a few months previous? I doubt that Lenihan will have a trick that big up his sleeve but it will be interesting to see what unleaked measures there are.

The main thing that I'm going to be looking out for is the reaction from FF back benchers during the speech and in the immediate aftermath. The early budget in October 08 was greeted with a standing ovation from the government benches after Lenihan's call to patriotic duty, yet within days TDs were scrambling to distance themselves from the medical card cuts. Having learned that lesson, the FF crew kept to their seats in the supplementary budgets in early 2009 where the increased income and pension levies were introduced.

It will also be interesting to watch the responses of the other parties. Richard Bruton's speeches have always been a bit disjointed compared to those of Joan Burton and even Arthur Morgan. Perhaps the others have the benefit of the time that Bruton is on his feet to plan out their thoughts a bit more carefully. However, it always seems as though Burton is the one landing the punches on the government both through cutting wit and hard facts and figures. Needless to say, RTE and the other media outlets will cut away from the Dáil before the opposition speeches are complete to allow the talking heads get in their tuppence worth. There are times you wish there was a CSPAN type broadcaster in the state. Luckily I'll have the whole "debate" streaming to the laptop so I won't miss a thing. Twitter won't know what hit it either.

Sunday, December 6, 2009

Minority Government

As previously discussed the government has been leaking support like a sieve over the last few months. Just when I thought that they'd survive until after the budget before any further defections. But yesterday, Galway West's Noel Grealish, withdrew his support for the government. That reduces Cowen's support to 81 with 76 against and 7 floating votes so we're now in minority government territory.

So why has Grealish bailed now? Well firstly it is clear to see that there is no hope of three govt TDs being returned at the next election and with O'Cuiv and Fahey still in the Dail and O'Brolchain about the join them in the upper chamber Grealish has to make his move. It is also likely that he is going to demand a special Gregory-like deal for Galway before voting with the government again. With the recent flooding around the Claregalway area, it could be quite an expensive path for Cowen to have to take.

Wednesday, December 2, 2009

Mandatory Unpaid Leave

I think I give up at this stage. The government committed to permanently reduce costs on public sector pay by €1.3B in 2010 and the trade unions committed to not letting the wages of their members be reduced. That seems like a fairly solid impasse to me, at which point some leadership could have been shown by government by holding its ground and letting the unions call for strikes and then wait to see who blinked first. Each day of striking was saving around €50M according to reports so it wouldn't take long to come to a resolution.

Instead the partnership fiasco seems to be coming back from the dead with the introduction of the unpaid leave scheme that is being touted at the moment. While the details are sketchy, it seems as though all public sector workers will have to take 12 days of unpaid leave next year.

The first question to ask is how much of a percentage pay cut is that equivalent to. Is it 12 days out of 365 (about 3.3%) or is it 12 days out of 365-104-24-9 = 228 (about 5.3%)? Depending on the specific contract, public servants are employed on an annual basis or on an hourly rate. In the former case it is likely that workers will loose 3.3% of pay, the latter getting stuck with 5.3% and of course it is the lowest paid who tend to be on the hourly rates. Score one for the fat cats over the cleaners and security staff.

Secondly, you have to ask will there be an impact on service given? In my section there is always a backlog after returning from holidays so I would think there will be some impact. If it is the case that this leave will not affect service in some areas then you have to ask why isn't the fat cut from the system first. Also in frontline services such as nursing temporary staff will end up being hired as cover which will end up costing more to the tax payer in the long term.

Thirdly, there are rumours already doing the rounds that while the cost will be cut in 2010, the leave will be spread over 2011-2013 to reduce impact. That to me sounds very much like this is a once off event that will be reversed in the 2011 budget. So much for the permanent reduction in costs. And if the scheme is continued we'll just end up with more and more deferred days so that by 2020 or so, most staff in the public service will have a serious backlog of days off that they have already had taken from their pay.

Finally, who gave the unions the mandate to agree to such a hairbrained scheme? I certainly don't remember it being on the table before. If the deal is announced in the budget next week is that it or do the union's have to have another ballot? I'm sorely tempted to bail from SIPTU if this is the sort of carry on they get up to.

This entire process is a sop to the retired and about to retire section of the community. After last year's bad press with the medical cards, the govt will try to do anything to avoid a repeat scenario even if it means dumping even further on the lower paid and junior workers in the public sector. The lump sums and final wages must be protected at all costs and to hell with everyone else.

Tuesday, December 1, 2009

Sophistry in Language

Something that has really started to annoy me in politics is the relentless sophistry and weaseling out of a previously held position through alternative definitions. When will the spirit of the statement and not the word of the statement be what drives people. Examples include
Green Party entering government
Trevor Sargent says he will not lead the Greens into government with FF. So immediately after negotiating a programme for government he resigns to let John Gormley lead them in.
Unions agreeing to mandatory unpaid leave
Union leaders were mandated to stick to a no reduction in wages line in the recent talks. So instead they agree to mandatory unpaid leave which to all intents and purposes is exactly the same thing.
Various statements on no more taxes
A few months ago on The Last Word, Brian Lenihan had a bit of a George HW Bush moment when he promised that no additional taxes would be raised in the upcoming budget. Watch out for all sorts of increased levies, contributions and deductions that are totally different to taxes.
Enough is enough. When will these people ever have the courage to stick to a position or if they change come out and say that either they were wrong or have had their opinion modified through new information or debate. Do they really thing that they are fooling anyone?

Government majority shrinks again

Yesterday, Jim McDaid, loudmouthed TD for Donegal North East, announced that he was no longer going to automatically support the government. While the reason for the withdrawl of support seems to be the result of a spat in the local Cumann of FF, it doesn't come as a great surprise since in August/September McDaid suggested the government call an early election once NAMA and the budget are done.

This leaves the Dail arithmetic finely balanced, which considering the efforts El Berto went to only 30 months ago to ensure a substantial majority, is a big turn around for the books. By my reckoning the state of play is as follows
  • FF - 74 (78 less Ceann Comhairle, Brennan, Behan, Gallagher, McDaid plus Flynn)
  • FG - 52 (51 plus Lee)
  • Lab - 20
  • PD - 2
  • Green - 6
  • SF - 4
  • Other - 6 (5 less Flynn plus 2 FF defectors)

While Devins and Scanlon are not under the whip directly it is extremely unlikely that they will vote against the government under any circumstances short of a straight vote in favour of nuking Sligo.

With 164 voting members (Gallagher's seat still empty and the CC) the government have 82 votes with the opposition parties on 76. Even if all the independants vote with the opposition, the CC will have a casting vote and will support the government side. Small wonder that the Taoiseach is in no hurry to call the by-election for Pat the Cope Gallagher's seat in Donegal SW as the mé féin demands from JHR, Lowry and the FF defectors will become greater and greater.