Sunday Independent – Four Essays Right On

This week-end I find myself keeping bad company. Bad company keeping was a grave sin in the halcyon days of the Catholic Church in Ireland. I have a confession to make – The Sunday Independent published four articles the contents of which I fully agreed. John Drennan’s “Where will it all end?
IMF would be shocked if it ran the rule over us. It’s time for FF to stop fooling us – and for Ireland to stop colluding with FF in the fooling.”

Then Eamonn Delaney writes an essay “Keep our outspoken Senate and its meaningful debates.” Again I agree. He cites David Norris, Paschal Donohoe, Ronan Mullen, Dan Boyle, Eugene Regan, Ivana Bacik, Terry Leyden, Fergal Quinn, Eoghan Harris, Mary O’Rourke, Shane Ross, Joe O’Toole, Mary White, Alex White, Ciaran Cannon and writes about the knowledge based debates that take place in the Senate.

Delaney poses the question what is the point of Farmleigh think-ins when we have the Senate. I think that Enda Kenny should revisit his opinion on the Senate and reform the made of election to the Senate. The list system for parties should fill the majority of Senate seats. The University seats should be abolished. There should be direct elections from the regions mirroring the European Constituencies to the Senate with nominations confined to nominating bodies including the all of the Universities and third level colleges. The Senate does play a useful national role which should not be denigrated. Those senators who want it abolished should resign now in the interests of logic.

The Third Excellent Essay is written by Dr Leo Varadkar TD for Dublin West.
Now I have no doubt that Varadkar is some distance in front of Brian Lenihan Jr in ability and I rate Mr Lenihan highly. Varadkar writes that “The money raised by privatising some state assets could be invested in telecommunications and energy. ….We don’t need three publicly owned companies generating electricity and two supplying it. One of each would be fine”. Varadkar states that “Everyone agrees that we should not sell strategic assets or natural monopolies like the electricity grid, the gas pipelines or the railways. We don’t want a repeat of the Eircom debacle.”

My tuppence worth on this is the preservation of jobs in state industry and anything that is to be sold off should be examined carefully for unintended consequences. The wreckage of Ireland has gone too far for any further own goals by incompetent or arrogant politicians.

Leo Varadkar is my nominee this week for POLITICIAN THAT IS A NATIONAL ASSET and should be re-elected for his contribution – not to Fine Gael but to the country.

Here is the entirety of his article:-
The summer recess might be a bit of a holiday for some politicians but for most of us it is a chance to catch up on correspondence, constituency and committee work, policy writing and reading without the pressure of Dail debates, votes, late sittings, delegations, party events and media appearances.
For me, it has been a good chance to get to know my new brief as Fine Gael’s spokesperson for Communications and Energy. I spent a day on site with Eircom looking at wires, cabinets, exchanges and high-speed broadband in the home.
I spent another with the ESB looking at power lines, control centres and electric cars and have been to see Eirgrid, Bord na Mona and the Energy Regulator among others. An Post and Bord Gais are still on the list. I even made one of my regular trips out to RTE but this time in a new capacity as broadcasting falls into the brief too.
Most of the semi-states are under the Department of Communications, Energy and Natural Resources which make it a very interesting ministry to shadow.
In terms of reading, I’ve been catching up on official reports and documents that I hadn’t got around to reading during the busy plenary session. There’s still about a hundred to go but I am getting there. One of the most interesting reports was Recovery Scenarios for Ireland, an ESRI paper that looks at the effect that the recovery will have on employment, living standards and the national debt. In the High Growth scenario (4.2 per cent per year), the economy will recover by 2015, unemployment will be under 5 per cent, the national debt will stabilise at 91 per cent of GDP and the budget will be close to balance.
Under the Low Growth scenario (3 per cent), unemployment will be over 7 per cent, the national debt will be more than 100 per cent of our GDP and we will fail to meet the EU deficit target of 3 per cent. It’s amazing the difference that 1.2 per cent of growth per year can make.
The challenge for the next government is to ensure that we achieve high growth rather than low growth. I believe that privatisation could fund the stimulus that we need to achieve that high growth scenario.
There are lots of things we can do to boost growth. Restoring competitiveness largely by reducing costs across the economy is one of them. Keep our taxes relatively low is another. So is investing in education, training and research.
Whatever we do, we still need to reduce the amount of money the Government spends on public services and we probably need to raise taxes a little. But what we really need is stimulus.
Could selling some State assets and using the proceeds of privatisation cleverly fund that stimulus? I think it could.
The Government raised over €8bn from privatisations in the last 15 years and used most of it to start the National Pension Fund which now stands at €20bn.
Could we do it again but this time use the money to stimulate the economy?
Everyone agrees that we should not sell strategic assets or natural monopolies like the electricity grid, the gas pipelines or the railways. We don’t want a repeat of the Eircom debacle.
But we don’t need three publicly owned companies generating electricity and two supplying it. One of each would be fine. Selling Bord Gas Energy, ESB Powergen or even just an equity stake in an integrated ESB, some of the overseas assets and subsidiaries that belong to the semi-states, RTENL, franchising the national lottery and auctioning radio licences and spectrum could raise as much as €5bn if done at the right time while retaining all of natural monopolies in public ownership.
Staff would also benefit by getting a share of the companies. By taking water services away from local authorities and setting up a new semi-state, Irish Water, all of the borrowing to upgrade the water network could be done off balance sheet, freeing up another €3bn. The semi-states could be put under the control of a single holding company. As in Singapore, that holding company would co-ordinate their assets and activities and reduce their borrowing costs.
Some €2bn or more could be invested from the National Pension Fund into the new holding company on a commercial basis. This would yield a total of €10bn that could in turn be invested in the economy in telecommunications such as broadband fibre, wind energy and the grid to take it. As well as this, many of the projects that have been cancelled by the Government, such as the train line to Navan, forestry projects and the Western Rail Corridor, subject to a cost-benefit analysis, could be put back on track.
Instead of spending €5.5bn on capital investment and new infrastructure as the Government plans, we could spend €7.5bn a year. The difference would be roughly 1.2 per cent of GDP, exactly what it takes to turn a low growth scenario into a high growth one.
Seems like a good idea to me.
Leo Varadkar TD is Fine Gael spokesperson on Communications and Energy

My Final Indo accolade of the week is to the editorial writer on Anglo now just a bottomless pit.

Anglo now just a bottomless pit

When we asked you a few weeks ago if the Anglo bailout should continue, a massive 24,000-plus of you said No.
Again in our Quantum Research poll this weekend, it is clear that you have no time for the most expensive waste of taxpayers’ money in the history of the State. And yet the Government persists. The money that is being pumped into Anglo Irish Bank — the latest estimate of €24.4bn is by no means a guaranteed final figure — is astonishing and frightening.
It is the equivalent of taking 85 cent out of every euro of tax the Government will collect this year and it will push the budget shortfall above 20 per cent — by far the largest deficit in the eurozone. This wasn’t supposed to happen, of course. These figures were meant to be kept off the national balance sheet by some trick of the loop. But Eurostat saw us coming with that one and said forget it.
Why are we so wedded to this cure that is so severe it has the capacity to just make us worse if not actually kill us? The reason is that the Government is terrified anyone will think bad of us — the EU, the European Central Bank, the markets (a euphemistic name for foreign banks and
bondholders) and is therefore determined that every cent borrowed will be repaid and that no Irish bank will renege on any debt.
But all banks are not equal. Bank of Ireland and AIB made some serious mistakes and contributed through greed and bad judgement to our current economic mess. But Anglo Irish was the chief culprit. Now Bank of Ireland and AIB have to be helped back to a normal lending regime. Anglo Irish is a different matter. It would seem simple to say let Anglo Irish go to the wall and hang the consequences. But the Government complicated that potential strategy when it nationalised Anglo Irish. In doing so they elevated the possible collapse of an insignificant financial institution into a default on sovereign debt. But that does not mean we have to keep pouring money into this basket case without asking any further questions.
While there is no significant body of opinion advocating throwing deposit holders to the wolves, there are many who would like to see that fate befalling the bondholders who gambled on Anglo Irish by lending at very attractive rates of interest. By all the laws of gambling, they have lost and should take their beating. At worst, they should face a severe writedown on their speculative investment. But the Government is determined that this will not happen. All will be paid — in full — no matter what the cost. To do otherwise would be to risk damage to our international creditworthiness. This is caution taken to an extreme.
Just what is the point of continuing Anglo Irish Bank? We have variously been told that it will be gradually run down or that it will be split into a good bank/bad bank, with Nama taking its property loans. Nama exists to clear up the mess that came from speculative lending by all the banks — but chiefly by Anglo — in the property development market. Nobody knows if Nama will make a profit or a loss or break even. It all depends on how much the combined total of property loans — good and bad — turns out to be worth. The idea of letting Nama have the good loans as well as the bad is to give it a chance of at least breaking even. Now there is a court case in which a developer, Paddy McKillen, is seeking to have his loans, which are performing, kept out of the hands of Nama.
He is entitled to make that case and he may win, and if he does others may follow and Nama’s chances of even washing its face will disappear. But what is extraordinary is that the new directors of Anglo Irish are fully backing the idea of withholding performing loans from Nama. This is the same Anglo which caused Nama to be set up in the first place, and which is dependent on Nama for its continued existence. It is like a thief who has been caught red-handed bargaining over which parts of the swag he should have to return. It is cheek of the worst kind. So too is the unashamed manner in which Anglo Irish can put itself forward as the epitome of probity required to come into a retail giant like Arnotts to sort out its financial difficulties.
The reason given for even considering the continued existence of Anglo is that it may again become a bank of business. That is extraordinary. We cannot afford to go there again, even if the faces at the top of this toxic entity have changed. Given how deeply in thrall to Europe and other outsiders our Government is, it is bizarre that it is the EU Commission that will decide next month whether or not Anglo can be allowed continue to exist as a financial institution. If the commission says No then the bank will have to be wound up and we will be back to talking about whether we do it quickly or slowly and whether or not we pay everyone. We can only hope the commission says “Non” and that this brings the Government to its senses and makes them realise that €24.4bn and rising is just too high a premium to pay against the possibility that someone somewhere might think ill of us for a while — something which bond-dealing activity last week strongly indicates has already happened anyway.
Sunday Independent