Statement by Seamus Healy TD (WUAG) 087-2802199
The South Tipperary Workers and Unemployed Action Group will place a protest picket on a meeting called by Eamonn Gilmore to commemorate the centenary of the founding of the Labour Party in Clonmel in 1912
The meeting will take place in the Minella Hotel on the afternoon of Sunday, December 2, three days before the budget.
The picket will mourn the passing of the Labour Party as an organisation representing the interests of Irish workers.
Former Mayor of Clonmel, Darren Ryan has resigned from the Labour Party in a controversy surrounding the commemoration.
Cllr Ryan (South Tipp Co Co), Cllr Bobby Fitzgerald (Carrick-on Suir UDC and South Tipp Co Co) and Senator Denis Landy (Labour) have announced that they will not be attending the commemoration.
Cllr Bobby Fitzgerald has now called on Eamonn Gilmore to resign as Labour leader. On Tipp FM he said : “Labour needs real leadership and that there is a groundswell of opposition to Eamon Gilmore within the party.”
The Labour Party now has no representative on Clonmel Borough Corporation. WUAG is the biggest party on the Corporation holding 5 of the 12 seats.
The resignation statement of Cllr Ryan (from Clonmelonline) and a recent article from the Clonmel Nationalist on the turmoil in the Labour Party are pasted below.
A statement by Seamus Healy TD (WUAG) following the farcical attempt to commemorate the founding last May is also appended
Cllr. Darren Ryan resigns from Labour Party—–from Clonmelonline
Clonmel Cllr. Darren Ryan has announced his resignation as a member of the Labour Party.
“Firstly this is not a decision I have taken lightly, I have discussed this in detail with my family and close supporters who are 100% supportive of my decision. I have found my position as a Cllr to be untenable in a Party that has lost its traditions and values, Labour in Government has completely turned its back on the very people it claims to represent, the four founding principles of the Party, ‘freedom, equality, community and democracy’ have not been to the forefront of the parties mind whilst making decisions in Government, this is evident by the decisions it’s taking in Government.
Labour has forgotten its founders and birthplace. Every day I have families make contact with me worrying about how their loved ones are going to be cared for with the cut in home help hours; I have students in contact with me who have had to leave college and university because of costs and lack of payment of their grants; I have people in contact with me who are losing their jobs and in fear of losing their homes, I come from a working class background and know only too well the strains that are being placed upon families and, I can no longer be a member of a party that is placing huge burdens on homes.
I see at first-hand how ‘middle Ireland’ are continuously being asked to take the burden of the pain, just because two people are working in a house does not automatically mean that they have huge incomes, or are able to manage any further cuts to their salaries. Labour seem more interested in bailing out the banks than assisting the very people who held the belief that they would be different in Government.
From my involvement with so many community groups I see at first-hand how communities and sections of society are continuously being hit, these are the very groups that are keeping our towns and villages alive, sometimes the only lifeline people have.
When I had the great privilege of serving the people of my town as their Mayor & First Citizen, the Labour Party celebrated its Centenary on 27th May 2012, the very date that Connolly, Larkin and O’Brien stood in our Town Hall 100 years ago, the Party leadership at the very last minute pulled out of those celebrations despite months of planning and preparation. Now they have decided to visit Clonmel on Sunday 2nd December to celebrate, and are not even visiting that very chamber.
This is despite the fact that I, as a public representative was not consulted in anyway shape or form. I found out through a text message of the planned event for 2nd December. In a letter sent out by the Party Leader to members, he says “it would be unthinkable of the Party to not celebrate its Centenary in a significant way” to me this is a huge insult to the members of Labour in Clonmel.
I worked with the majority of my colleagues on Clonmel Borough Council to get a plaque erected and unveiled on the 27th May and the Labour Party snubbed that event. If they think that this was an insignificant event then shame on them, as that plaque was unveiled to the memory of so many people who dedicated their lives to the Labour movement not just to the current Party.
Clonmel has suffered enough from this Party making decisions in Government, I pleaded with them to save Kickham Barracks, I pleaded to save St. Michael’s Unit, to no avail. It is my very strong opinion that Clonmel appears no where on the priority list of the Labour Party. It is my job to represent the people of my town and if the Party of which I am a member of is not making the right decisions, then I see no future within that Party.
Cllr. Ryan will now represent the people of Clonmel on Clonmel Borough Council & South Tipperary Co. Co as an Independent.
From Clonmel Nationalist Published on Wednesday 14 November 2012 09:21
Two senior South Tipperary Labour party figures have declared they will not be attending their party’s
planned celebration in Clonmel next month to mark the centenary of the party’s foundation in the town.
Cllrs Darren Ryan and Bobby Fitzgerald have announced they will boycott the special Labour Party
meeting scheduled to take place at The Minella Hotel in Clonmel on the afternoon of December 2 because
the anniversary had already been celebrated in May at events organised by the local party organisation.
Labour Party leader Eamon Gilmore was scheduled to unveil a commemorative plaque at Clonmel Town Hall
on the anniversary day, May 27, and a special meeting of the Labour Parliamentary Party had been
planned at Clonmel Park Hotel the same weekend as part of a series of celebrations in the town to mark the
centenary, organised by local Labour members.
But just weeks before the celebrations, the Labour leadership pulled out because of their close proximity to
the referendum on the fiscal treaty. The decision caused consternation and upset within the local party
organisation at the time.
Cllrs Ryan and Fitzgerald’s announcement that they won’t attend the Labour event in Clonmel on December
2 comes in the wake of South Tipperary Senator Denis Landy walking out of a meeting of the Labour Party
Parliamentary Party last week after Eamon Gilmore announced the plans.
Landy is understood to have been upset at being left out of the loop by the party leadership over the
meeting being organised in his constituency.
Cllr Darren Ryan, who was Mayor of Clonmel in May, said he wouldn’t be attending the centenary meeting
on a point of principal.
He first heard about the party hierarchy’s plans last Friday. He knew little about the plans and wasn’t
consulted in any way about them.
“I won’t be rolling out the red carpet,” he declared.
“The Labour Party leadership were invited to attended the unveiling of a plaque at Clonmel Town Hall to
commemorate the founding of party on May 27.
“In my opinion, I celebrated the centenary in a right and fitting manner and the leadership of the party
chose not to attend it. That was my celebration so I will not be attending this and nor will any of my
supporters be attending.
“I think it’s disappointing. It looks like a last minute rush before the end of the year to get the celebration done,” he continued.
Cllr Ryan added that when the Labour leadership pulled out of the Clonmel celebrations in May he was given a “clear and solid promise” that Eamon Gilmore would visit before the end of his term as mayor but
that never happened.
Meanwhile, Cllr Fitzgerald from Carrick-on-Suir said he wouldn’t be attending the celebration because the anniversary was already celebrated by the local Labour party organisation on the actual date when the party was founded in the town 100 years ago.
“It’s too little, too late,” he told The Nationalist.
Cllr Fitzgerald said he wasn’t happy with the way Senator Landy was treated at the Labour Parliamentary Party meeting last week He also took issue with the fact that Eamon Gilmore was planning to visit Clonmel now but wasn’t prepared to do so during the the centenary celebrations organised when there was a Labour mayor of Clonmel earlier this year.
A Labour spokesman, meanwhile, said the details of the party’s centenary meeting in Clonmel will be announced later this week. While he was unable to confirm at this stage whether party leader Eamon Gilmore will be attending, he said it was hoped to have at least some senior Labour figures there.
“We wanted to make sure there was a significant event taking place in the town in 2012. It’s an event that is focusing mainly on the party membership and will give them an opportunity to look back on the history of the party and look at our place as a progressive party in the years and decades ahead.
Extract from Letter from Seamus Healy TD (WUAG)
Dignified Protest in Clonmel at Labour Party Hypocrisy May 29,2012
A dignified and successful protest organised by the Workers and Unemployed Action Group was held outside the Town Hall Clonmel on Sunday last.
The event was organised to protest against the savage austerity being imposed on the Irish people by the Labour Party in Government and to expose the claim that the Labour Party of today has anything in common with the all-Ireland Labour party founded by James Connolly and Jim Larkin in Clonmel 100 years ago.
As is now usual the Labour Party was in hiding, they had run away again, cancelling the ceremony and sneaking into the Town Hall ‘earlier’ for a private unveiling. Three weeks ago Eamonn Gilmore and the Labour Leadership ran away, pulling out of the Clonmel Commemoration and giving the pathetic excuse of the Referendum.
This time the excuse was even more bizarre and unbelievable. The excuse this time was “security concerns”. The suggestion was that the Gardaí had advised Labour to cancel the ceremony. The Gardaí have confirmed publicly that they did not advise this and of course the protest proceeded peacefully and without incident, as was always going to be the case.
ESRI in Denial
The Irish Times (Jan 12) has given free rein to the ESRI to cover up its past. Above all, ESRI failed to give adequate warning of the danger to the Irish economy from the combination of excessive bank borrowing abroad and excessive lending both at home and abroad.
The level of denial by the ESRI itself and the extent of the protection from criticism it has enjoyed in the media has particular dangers for citizens. The dangers in the current austerity policy are sure to be understated by ESRI if radical change in the governance of the Institute does not take place.
ESRI director is given the facility of a personal opinion piece in the newspaper, to-day Jan 12. In addition, under the heading “Director says ESRI economy warnings ignored“ Paul Cullen of the Irish Times political staff wrote an article which contained no quotations from anybody other than the ESRI director. I had been interviewed for half an hour on telephone by Paul Cullen in advance of the publication of the article. The article begins: “SUCCESSIVE GOVERNMENTS deliberately ignored warnings from the Economic and Social Research Institute about the dangers of an overheating economy, according to its director, Prof Frances Ruane. Prof Ruane yesterday defended the independence of the ESRI and the accuracy of its forecasting in the face of trenchant criticism last week by departing staff member Richard Tol.” In a third article, also by Paul Cullen, some criticism is carried including a criticism of the governance of the Institute by myself. This article says that the Institute circulated Morgan Kelly’s article (July 1997) predicting the “bust” without saying that the Institute had dissociated itself from it! As I explain below, the Institute was saying the opposite at the time.
What are the facts? The Irish economy was in mortal danger in Summer 2007. “Members of the Media should note that Professor Morgan Kelly is not a staff member of The ESRI. Whilst this Article has been accepted for publication by The ESRI, the views expressed are not the views of The ESRI”. This is the legend that accompanied the circulation by ESRI of the article by Morgan Kelly in July 2007 predicting the bursting of the property bubble and its consequences. There is no record in the article of the director being asked to explain this disclaimer.(The journalist had discussed this contention in my letter to all media with me)
But what was the ESRI itself saying at the same time in Summer 2007? In Spring 2006 the Institute had predicted a soft landing saying: “We add our voice to those expressing concern about the possibility of a bubble bursting. However, this does not imply that a sharp fall will occur. A soft landing is still the more likely outcome.” In its Quarterly Economic Commentary, Summer 2007, a “smooth transition” was predicted. “As the housing boom comes to an end, the economy must move resources to other areas of economic activity, such that the transition is as smooth as possible in terms of output and employment. We are optimistic that a smooth transition will occur and this is reflected in our forecasts for services and industry growth. However, if the current high rate of CPI inflation feeds into excessive wage demands, this could endanger a smooth transition. (Preamble to QEC, Summer 2007). And in its General Assessment, the same publication states : “With employment growth slowing, tax revenues growing more slowly than last year and early indicators of activity in house building pointing towards a slowdown, our task in producing forecasts has been to estimate whether the slowdown will be moderate or otherwise.For now, our belief is that the slowdown will indeed be moderate.”
The same publication pointed to dangers to their optimistic outcome. Was there any mention of excessive bank borrowing and lending? Not a word. The main danger was wage inflation according to ESRI. Government and employers cannot have been unhappy with that!
The contention in my letter to the media that the warnings were so understated as to be totally ineffective is more than justified. This is particularly so as the warnings were addenda to optimistic predictions at a time when the country was hurtling towards receivership.
Professor Richard Tol recently departed from the Economic and Social Reserch Institute. In an interview with Colm Keena (Irish Times Jan 2) he criticised the lack of academic freedom at the Institute. Read full article pasted below. As the role of the ESRI is to advise the government and the citizens on economic matters the statements made by Professor Tol should give rise to great concern. Yet ESRI had not seen fit to comment on these statements(Jan 2) until Sunday Jan 8. I believe that my letters to the media and my tweets played a role in eliciting the reply. The issue is covered in an article in Sunday Independent Jan 8 (Analysis, Daniel McConnell P8) and was discussed on Marian Finucane Show on Sunday Jan 8. Richard Toll, in the course of his interview with Daniel McConnell, stated “You work on the basis of professional integrity. In the ESRI you are not supposed to talk outside your area of expertise. That is perfectly acceptable. However, in the last two years or so there was quite strong pressure from the director to keep messages out of the media that are not politically acceptable or that might upset council members or funders.” A tweet by Richard Toll is also quoted:”It was funny to hear academics complain about distant threats to academic freedom. At the ESRI, we were muffled,” The ESRI has denied the allegations saying: “The allegations made by Richard Tol are wholly unsubstantiated.”The article from the Sunday Independent is pasted below.
In the course of the Marian Finucane Show distinguished Journalist, Sam Smyth said:”They say that if you live in Rome you shouldn’t fight with the Pope and there is a relationship between the state and the ESRI”. He seemed to be justifying the ESRI position. Of course, the lack of freedom for the ESRI and its researchers to criticise government policy is the core issue.
My letter(text below) to the editor on this matter was published in Irish Independent to-day, Jan 6
From Paddy Healy Convener of Campaign for Academic Freedom, 086-4183732
88 Griffith Court,
Academic Freedom and ESRI
“Members of the Media should note that Professor Morgan Kelly is not a staff member of The ESRI. Whilst this Article has been accepted for publication by The ESRI, the views expressed are not the views of The ESRI”. This is the legend that accompanied the circulation by ESRI of the article by Morgan Kelly in July 2007 predicting the bursting of the property bubble and its consequences. Professor Richard Tol ,who has recently left ESRI, is right when he says: “the institute did issue warnings about policy during the Ahern years, but did not do so loudly enough”.
In fact the warnings were so understated as to be totally ineffective.
The allegations of lack of independence and absence of academic freedom for researchers at ESRI by Richard Tol are a very serious matter for Irish citizens. The institute is largely funded by the state. Citizens are entitled to expect full and unbiased information in economic matters. The council of ESRI is a self-perpetuating establishment club. Candidates for election to the governing body must be pre-approved by a majority of the existing members of the council.
The remedy for this extremely unsatisfactory situation follows from the remark by Richard Tol “In a university you can say what you like if you behave responsibly. It’s not the same with the ESRI”. Clearly the ESRI should be subsumed into a university or other third level institute where academic freedom is either guaranteed by law or enshrined in contracts of employment.
Paddy Healy 086-4183732
Note from Paddy Healy
In 2005, as president of Teachers Union of Ireland, I was proposed for a vacancy on the Council of ESRI by Dublin Institute of Technology having been a member of the Governing Body and Academic Council of DIT for several years.
My nomination was declared invalid at the AGM as my candidacy was not “pre-approved” by the existing Council.
Economist criticises aspects of ESRI
Mon, Jan 02, 2012
ENERGY ECONOMIST Richard Tol, who has left the Economic and Social Research Institute (ESRI) to take up the position of professor of economics with Sussex University, has criticised aspects of the public think-tank.
Prof Tol said the financial position of the institute affected the independence of the work it produced. He said people who worked there were discouraged from expressing personal opinions to journalists or on social media sites such as Twitter.
Efforts to contact representatives of the institute were unsuccessful.
Prof Tol spoke to The Irish Times yesterday after he had posted a number of comments on Twitter about his decision to leave the ESRI after five and a half years. “In a university you can say what you like if you behave responsibly. It’s not the same with the ESRI,” he said. “If you violate policy and upset people, you can get into trouble.”
He said the institute’s independence was compromised by the fact it got so much of its funding from government. He said this could manifest itself in the way the research it conducts is put into the public domain.
He was critical of the standard of information technology available at the institute.
In one of his tweets he said it was not a coincidence he was one of five senior research professors who had left over the past number of years. The institute has about 40 research assistants and about 10 research professors, he told The Irish Times. “So five in the last five years is significant.”
The ESRI was set up during the Lemass era to improve the quality of policy analysis available to the government.
Prof Tol said the institute did issue warnings about policy during the Ahern years, but did not do so loudly enough.
He said the institute did not have a banking expert even though during the bubble years banking was one of the economy’s largest sectors. “So the whole thing of the bank crisis caught the ESRI from left field.”
The international financial crisis, he said, was caused by factors that the whole of the international economics profession believed could not happen. “So you can’t blame the ESRI on that.”
When Ireland was joining the euro the institute had warned that fiscal policy would have to take account of the new situation, but Charlie McCreevy then became minister for finance “and went in the opposite direction to where we should be going”.
This was criticised by the institute but not loudly enough, he said. “The ESRI can make its voice heard, but it didn’t.”
Prof Tol said the view of many people in the institute now was on the financial threat to its survival – and personal relief that they had a job.
He said there were many positive aspects to working in the institute, not least the people he worked alongside and the fact he was able to engage in applied research.
A native of the Netherlands, he said he would be sad to leave Ireland, which he really loved. However, his wife was a civil engineer and they had two children.
“Ireland is facing 10 years of austerity. Leaving Ireland is the best thing you can do at the moment if you are responsible for a young family.”
© 2012 The Irish Times
Daniel McConnell: A fearless whistleblower or a disgruntled crank?
The ESRI and Richard Tol are at war since the economist’s bitter departure, writes Daniel McConnell
It was a most bizarre image. The lead story on the main evening news on RTE showed a scruffy, long-haired foreigner packing up his house to move to England.
This same man starkly warned that despite cuts of over €24bn in government spending since 2008 Ireland faces another decade of austerity.
But most controversially, Richard Tol, non-conformist voice and energy economist, also had some harsh words for his former employers and colleagues in the State’s economic think tank, the Economic Social and Research Institute (ESRI).
During that RTE interview, he called into question the organisation’s independence and condemned it for a lack of transparency.
However, online — his favoured medium — Tol went for the jugular.
Over a 48-hour period, the 42-year-old Dutch academic made a host of serious allegations into how the ESRI operates, about its transparency, its relationship with Government and how it is funded.
Today, the ESRI hits back very strongly at the various allegations made by Tol online and during an interview with this newspaper. It vehemently denies the failings alleged by Tol, rejecting his outlook almost entirely. “The allegations made by Richard Tol are wholly unsubstantiated.”
His criticisms of the ESRI on television were somewhat muted and restricted, no doubt by the station’s lawyers, and Tol himself is bemused that his departure was given so much prominence. “It is a slow news day if the lead story is the hairy guy packing a box,” he tweeted.
But it was on Twitter that Tol made the most serious allegations about the organisation.
He accused it of being a xenophobic and nepotistic body which is caught in a timewarp using antiquated technology. He also stated that he was the fifth senior person to leave the institute, implying cultural and endemic problems at the ESRI.
“It was funny to hear academics complain about distant threats to academic freedom. At the ESRI, we were muffled,” he tweeted.
“The wife said: The ESRI reflects all that is good and bad about Irish society. She is right,” he wrote a short time later.
For those left behind in the ESRI, Tol is a trouble-making crank who has sought to wash his dirty laundry in public.
For others, in a country which has a shameful record of treating whistleblowers poorly, Tol was a welcome dissenting voice holding up a mirror to reveal our flaws as well as our strengths.
In the wake of his outbursts online, the Sunday Independent spoke to Tol to try and see if he would elaborate on the serious allegations he made about the state’s economic think tank.
According to Tol, the ESRI has many faults and many positives. The faults, he says, are incredibly serious and strike to the core of its credibility. He calls into question its independence and its transparency.
“Transparency is most important and at the ESRI the models used for our analysis is not transparent at all. The way it is, you aren’t sure who contributed what to a particular paper; accessibility to information is not there. This is one of the most serious issues affecting the ESRI,” he said.
I ask him about independence and academic freedom.
Tol detailed his often fractious relationship with his superiors within the ESRI, and said that clear pressure was brought to bear on him and his fellow researchers by the director of the ESRI, Frances Ruane, to keep “politically unacceptable” messages suppressed.
“You work on the basis of professional integrity. In the ESRI you are not supposed to talk outside your area of expertise. That is perfectly acceptable. However, in the last two years or so there was quite strong pressure from the director to keep messages out of the media that are not politically acceptable or that might upset council members or funders.”
He said that he had fallen foul of Ruane’s instructions and was disciplined as a result.
“The ESRI is supposed to be an academic institution,
where you can speak on the basis of evidenced-based analysis. Disciplinary measures have been taken. Pressure came in the form of conversations, emails and letters. Such measures have been taken against me. I have had many conversations with the director, so my comments would not have come as any surprise to her,” he said.
In response, the ESRI said: “ESRI researchers are free to participate in public debate. There are no restrictions on ESRI staff members discussing their research in whatever forum they deem appropriate. Indeed, research staff members have participated in wide-ranging discussions in many media outlets.”
The Sunday Independent has obtained a copy of the institute’s protocols for publishing material, and researchers are subject to a host of detailed instructions in how to “disseminate” information to the public.
Researchers must run press releases by the director or her nominee before release, and opinion pieces for national publication in a newspaper must be cleared by a colleague, head of division or the director before being submitted. Researchers are permitted to upload material to certain websites like the Irisheconomy.ie without clearance from superiors if it is in their field of expertise.
“Staff at the ESRI know there is a policy about the relaying of information and are expected to adhere to that policy. If they don’t, disciplinary measures are utilised, and were in the case of Richard Tol,” the ESRI spokeswoman said.
Tol was also critical that websites such as Twitter and Facebook were blocked for staff by the ESRI, reflecting an attitude toward technology more suited to the 1990s.
Tol’s statements about xenophobia and nepotism are the most controversial.
He alleges that within the ESRI, those from Ireland were in someway treated above those from foreign countries, which impacted on people’s career prospects.
He said: “There was a hierarchy within there. It was native Irish first, then English, then European, then others. This impacted on how fast you got promoted.”
The ESRI has strongly refuted any suggestion of favouritism, saying it has staff from many nationalities currently employed there. It stated it has fully developed human resources policies and such a scenario just simply couldn’t occur.
Tol went further, alleging that racist complaints made by staff toward colleagues were “ignored” by the director and by the council of the ESRI.
“Some people made racist remarks toward their colleagues. Complaints about racism and such racist remarks were ignored by management and even the council of the ESRI. It shouldn’t happen. It wasn’t racism, say white versus black, but it was racist comments directed at colleagues. It is totally unacceptable. Just because it is more common in Ireland doesn’t make it right,” he said.
“With regard to Professor Tol’s comments on xenophobia and racism, similar allegations were made in the recent past by Professor Tol when they were fully investigated and found to be groundless,” an ESRI spokeswoman said.
She said the ESRI had an employment equality policy and a code of business conduct for employees in numerous areas, including racism. These policies are brought to the attention of all members of staff. Complaints are dealt with under the grievance policy and procedure agreed between management and staff.
On his allegation of nepotism, Tol said this related to the hiring of “friends or allies” by powerful people within the organisation, irrespective of their abilities.
“Some of the more powerful people seem to have the right to appoint their friends to positions. It was easy to spot when you looked at the publication records, who the more productive ones are.”
In response, the ESRI said: “There is no basis for his comments on nepotism. All new appointments at the ESRI are made on the basis of public advertisement. The ESRI uses fully open and transparent procedures for appointments and promotion of research staff to ensure that these are made on merit. Interview boards always include an outside expert to ensure the independence and transparency of the process. The recommendations of the interview board must be approved by the ESRI council.”
Opinion within Irish academia about Richard Tol’s departure to the University of Sussex is mixed, with some, like Colm McCarthy of this newspaper and UCD, describing him as a “big loss to ESRI”.
He wrote: “Best of luck Richard”.
Others were less kind. Stephen Kinsella, an economist at the University of Limerick who moderated a discussion on the influential Irisheconomy.ie website, said the opinions expressed were “very polarised.”
“Richard Tol had the ability to be dismissive and condescending of other people’s work, especially in the area of environmental economics,” wrote a contributor named Mr Rudgelift.
“Richard seems to have annoyed some and said some extreme things and I had to delete some of the more personal attacks on him. But from my point of view, I always regret the loss of such a contrarian voice,” added Kinsella.
Below is an unedited version of my letter published in Irish Times to-day Dec 28
Paddy Healy 086-4183732
Minister Rabitte (Irish Times letters Dec 27) seeks to contradict the piece by Fintan O’Toole on fuel poverty (Irish Times December 20)
The Labour- Fine Gael government has introduced two cuts in fuel allowances since coming to power. From September, the smokeless fuel allowance was abolished and the annual allowance of free units was reduced from 2400 to 1800. In Budget 2012, the heating period was reduced by 6 weeks. Fuel allowance is a means tested payment. Only the poor are entitled to this benefit.
The piece of research to which Minister Rabitte and Fintan O’Toole refer is“Fuel Poverty, Older People and Cold Weather: An all-island analysis”, (at http://www.publichealth.ie). It found that the excess winter death rate in the Republic for the winter of 2006/7 was 1,281. Of these, 1,216 were aged over-65. The majority died of cardiovascular and respiratory illness – cold-related conditions. The fuel allowance in the year in question was only fractionally less than that now available and fuel prices are now much higher.
During the new year, 2012, the hundredth anniversary of the proposal by Connolly and Larkin to the Irish TUC meeting in Clonmel that a Labour Party should be founded will occur. It is scarcely credible that a party which claims Connolly as founder should be cutting fuel allowances to the poor. This is all the more so as the Labour Party, just over a year ago when in opposition, introduced a private members motion in Dáil Éireann (October 12, 2010) calling on the government to increase fuel allowances!
Fintan O’Toole was right to refer to refer to “the unacceptable reality that current policies are making Ireland a cold house for basic decency.”
How Low can they GO?
In the recent Budget the period for which the poor and the old receive free gas and electricity units was reduced by six weeks. During the warmer summer months, Minister for “Social Protection”, Joan Burton(LabourParty Deputy Leader) announced cuts to the home benefits package for pensioners and social welfare beneficiaries. The allocations of electricity units and gas units so important for home heating were reduced by between 20% and 25% and the smokeless fuel allowance payable in Dublin was abolished. These are means tested payments which means that they are only paid to people at risk. AGE ACTION IRELAND has stated “Research on fuel poverty and older people by the Dublin Institute of Technology and the Institute of Public Health shows that during the winter of 2006/7 there were 1,281 excess winter deaths*. Of these, the vast majority were older people (1,216 were aged over-65).
The piece of research referred to by Age Action was publicly launched last week by Minister Rabitte (Labour Party) In Irish Times 20/12/2011, columnist Fintan O’Toole analyses Minister Rabitte’s launching address-Paddy Healy
RABITTE OUT IN THE COLD ON ELDERLY FUEL CUTS
Irish Times Tue, Dec 20, 2011
Pat Rabbitte is wrong that the fuel crisis is not as bad as reported. In fact, it is likely to be much worse, writes FINTAN O’TOOLE
OSCAR WILDE said he could resist everything except temptation. We, his compatriots, can imagine everything except reality. Collectively, we find it hard to believe what we see around us.
One of the things that’s easiest to spot in public spaces is old people sheltering from the cold. You see them in Ikea, sitting in the restaurant half the day over cheap cups of tea. You see them in shopping centres, where benches are being removed, not to stop teenagers from congregating, but to prevent the clusters of elderly heat-seekers. You see them in public libraries. You even see them on trains, riding up and down the lines with their free travel passes. And these, of course, are the luckier ones, the ones who are mobile and healthy enough to be able to get out of the house. But seeing is not believing.
Last week, there was a strange vignette of official incredulity. Minister for Energy Pat Rabbitte launched a report by the Institute of Public Health on fuel poverty among the elderly. It is a very serious, scholarly piece of work, conducted on an all-island basis by a team of researchers from the Republic, Northern Ireland and Britain, led by Prof Patrick Goodman of Dublin Institute of Technology.
One of its findings is that 51.1 per cent of older people surveyed said they “went without necessities such as food and clothing in order to pay for heat over the winter period”.
This is not a comfortable finding for a Minister in the week after a budget that has cut the fuel allowance period by six weeks. How did Pat Rabbitte deal with it? By claiming it did not exist. According to The Irish Times report of the launch, “he said the claim that half of older people were forgoing essentials to heat their home had been published in a press release but was not in the report. He added that no politician or social worker would believe that it was true.”
In fact, the finding appears twice in the report: on page 12 and on page 60. When this was pointed out to the Minister, he stood by his position that it could not be so, pointing out that the survey was “not a representative sample of older people”.
This is true, but probably not in the sense that Rabbitte meant. No one claims the survey is representative, in the sense that, for example, an opinion poll using weighted demographical sampling might be. Its aim is somewhat different: not to tick boxes, but to get a good sense of the actual experience of older people during last winter.
The sampling method, using bodies such as Age Action, Energy Action, the Rural Transport Network and Dublin City Council’s sheltered housing liaison officers to distribute the surveys, probably does distort the results somewhat. But – and here’s the real point – it distorts them by understating the problem. People who are isolated from networks and services were excluded. People who have problems with literacy or blindness couldn’t complete the written survey. Such people are more, not less, likely to suffer from deprivation.
There is a further factor at work: the “mustn’t grumble” ethic of the elderly. Older people don’t like to complain. In the same survey, 90 per cent of the respondents listed their health status as fair to very good, even though 75 per cent had a long-term illness. They are an almost comically stoical bunch.
One respondent with both Parkinson’s disease and arthritis gave her health status as “good” and explained that “as long as I am mobile and above ground I tend not to panic or bitch”.
How probable is it that these same people are wildly exaggerating when they say they sacrifice food or clothing for heat?
And yet, the official view from the Minister is that it simply could not be true that anything like half of older people are doing without other necessities in order to heat their homes. “No politician or social worker would believe that it was true.”
That no politician, moving from heated offices to heated cars, would believe it is understandable. But I’m not sure the incredulity would extend to anyone who works with Age Action, Friends of the Elderly, St Vincent de Paul or social services. The only sense in which it is not “true” is that its reality is impermissibly awkward.
This vignette is eloquent in its own way as an example of the cognitive dissonance of officialdom. Cognitive dissonance is the condition that affects people when their belief system comes into conflict with reality. They close the gap, not by altering their belief systems, but by redefining reality.
In this case, Pat Rabbitte’s belief system (social justice) is in radical conflict with most of what he’s doing in Government. So he’s redefining reality: it is simply not possible that the Government is cutting fuel allowances for people who are already suffering deprivation in order to stay warm.
Otherwise, he would have to face the unacceptable reality that current policies are making Ireland a cold house for basic decency.
© 2011 The Irish Times
As the Richer get Richer 17 Billion Must be Taken from Super-Rich to Avoid Austerity!
A statement from the Central Statistics Office on Wednesday last showed that the wealthiest top 20% had 5.5 times more income than the poorest 20% in 2010 and this has grown from 4.3 times in 2009. Net Financial Assets(shares etc) which are mainly the preserve of the rich have increase by 45 billion since 2008 and are now above pre-crash (2007) levels. These are facts issued by the state. The rich are,in fact,getting richer as the poor get poorer! ULA is demanding that, in the Budget, 10 billion be taken from the Assets of the top 5% of wealth holders, 5 billion be taken from the incomes of the top 5% of income earners and that measures be introduced to take 2 billion off tax exiles.
This will avoid further cuts and extra taxes on low and middle income people and can be used to reverse the imposition of the Universal Social Charge and cuts in social welfare, health and education and to allow for an ambitious state job creation programme
Explanatory Document on Taxation
10 Billion in Wealth Tax on the Top 5% of Wealth Holders, 5 Billion in Income Tax from Top 5% of Incomes, 2 Billion from Tax Exiles
Personal Assets Tax
There is currently no annually recurring tax on wealth or assets in Ireland. Such a tax was imposed by Minister for Finance Ritchie Ryan during the 1973-1977 Fine Gael-Labour Coalition Government. It was subsequently abolished by the succeeding Fianna Fail Government. Assets taxes still exist in a number of countries including France, Norway, Switzerland and in a number of states of the USA. Many were abolished in other countries under the influence of neo-liberal Thatcher-Reagan economic ideology which has brought the world to the current economic crisis.
Recent statistics from the CSO show that in 2010 the financial assets of Irish people (not businesses) were as follows:
CSO Nov 2011 Personal Financial Assets (millions)
(Financial wealth below is made up of cash, shares, pension and insurance funds (net equity) and business assets/liabilities of self-employed/sole traders. Land, housing and non-financial personal property (e.g. yachts, art, etc.) are not included. Gross financial wealth refers to total financial assets; Net financial wealth refers to gross financial wealth minus liabilities -almost all liabilities refer to loans-CSO). (loans include mortgage loans and credit card debt-PH)
Total Financial Assets Total Financial liabilities Net Financial Assets
2007 310,711 199,036 111,675
2008 281,650 209,774 71,876
2009 304,885 206,620 98,264
2010 311,372 194,219 117,153
These figures show that net personal financial assets of have increased by 45 billion since the low point of 2008. Total and net financial assets are now above 2007 level, that is before the crash. The rich are Getting Richer while the Poor are Getting Poorer http://www.cso.ie/en/media/csoie/releasespublications/documents/economy/2010/isanonfinfin2010.pdf
The net figure underestimates the assets of the wealthy as a far higher proportion of the liabilities including mortgage and credit card debt are held by those with no asset other than the principal private residence which is not included in the gross figure.
Recently (Nov 2011) Credit Suisse, the Swiss finance house, has published an analysis of wealth distribution in Ireland.
It shows that the top 1% of the Irish population hold 28.1% of all wealth and the top 5% hold 46.85 of all wealth.
Credit Suisse estimates that financial assets make up 47 percent of total assets (Table 2-4 on page 71 in Credit Suisse Global Assets Report). This means that there is €311 billion in financial assets and €351 billion in non-financial assets for a total of €662 billion (using latest CSO data). After financial liabilities of €194 billion, total net wealth is €468 billion.
As 28.1% of net wealth is held by the top 1%, they hold 131.5 billion of total net wealth.
As 46.85% of net wealth is held by the top 5%, they hold 219.3 billion of total net wealth
These are a significant underestimations as total liabilities of households which have been deducted lean proportionally most heavily on the less wealthy households.
The Revenue Commissioners have no data on the assets of specific individuals as assets tax was abolished over 30 years ago. Such a register should be established by law immediately so that there is complete transparency in relation to the ownership of wealth. The overall data above was deduced by the Central Statistics Office from other data.
ULA has set a target of collecting 10 billion per year in assets tax from the top 5% until the fiscal deficit is removed and 5 billion annually thereafter.
As these assets are not contingent on receipt of income or income changes, ULA proposes that the deadline for payment be March 1, 2012. This would facilitate early implementation of our job creation programme
The 10 billion in revenue from assets tax is available for purposes such as job creation, elimination of USC, restoration of cuts in welfare etc
It is a matter for government which has Department of Finance , Revenue Commissioners, Central Statistics Office etc at its disposal to devise legislation to reach the target revenue of 10 billion from the top 5 % and that, in particular that the homes , farms and pension funds of those outside the top 5% be exempt.
The measure proposed is a tax on personal assets only not on the assets of businesses
If the target revenue of 10 Billion is not reached by March 1, further measures should be introduced.
There was an increase in income inequality between 2009 and 2010 as shown by the quintile share ratio. The ratio showed that the average income of those in the highest income quintile was 5.5 times that of those in the lowest income quintile. The ratio was 4.3 one year earlier. CSO Press Release Nov 30,2011
There can be little doubt that the imposition of an assets tax would increase the yield from income tax. The contrast between large assets and low declared incomes in the non-PAYE sector would become clear.
The most recently published official statistics are for 2009
The top 5% of earners had a total income of 18 billion Euro in 2009 (22.6% of all income) and paid only 4.9 billion in income tax. If tax reliefs and capital allowances claimed are taken into account, their Gross Income, which is their actual income, is 19.8 billion. (Revenue Commissioners, Statistical Report, Table ISD1)
Deductions from that table, show the top 5% of units have 24% of all income and pay 46% of all income tax. Notwithstanding right wing propaganda, this is to be expected as they have a totally disproportionate share of discretionary income. The imposition of the USC and increased taxation of the lower paid will have significantly reduced the 46% figure in 2010. They only paid 25% of their own total income in tax in 2009
Tax reliefs which proportionally favour the rich are very high in Ireland at 20.2% of total tax revenue as against 8.5% in Germany, 5.1% in the Netherlands (OECD, Commission on Taxation)
Official figures show that those individuals as opposed to couples in receipt of incomes over 100,000 Euro only paid 31.4% of all income tax in 2008 (Irish Times Com Keena 20/3/2009). Figures for 2009 indicate little change in this regard.
Due to heavy impositions on those in receipt of low incomes in more recent budgets this percentage has probably decreased and 10,677 units (0.5% of earners) earned 6.01billion in 2009 or 7.33%% of all income. They paid c (Revenue Commissioners Statistical Report 2010) These very rich earned on average 563,000 Euro each. There is no significant change expected to these figures expected in 2010. It can reasonably be assumed that such people avail of considerable tax breaks and have the advice of tax experts. This 0.5% of earners paid 1.783 billion in income tax in 2009 leaving them with an “after-tax” income of 4.27 billion or 400,000Euro each.
ULA proposes that the minimum effective tax rate on this group be adjusted to yield an additional 2.5 billion to the exchequer leaving them with after-tax income of 1.77 billion or 166,000 Euro each.
The next 0.5% of income recipients(9,933) just below the top group had a gross income of c. 2.3 billion and paid c. 608 million in tax. ULA proposes to take a further 0.5 billion off this group leaving them with 1.2 billion Euro or 121,000Euro each in after tax income
The ULA target is to generate 3 billion Euro from the top 1% of income earners.
Because of massive tax reliefs enjoyed by high earners the use of minimum effective tax rates is a sure means of extracting additional tax from high earners.
This would require a scale of minimum effective tax rates on all income ramping upwards from the current level of 30% as incomes exceed thresholds of 100,000, 150,000, 200,000,250,000 etc. The minimum effective rates may have to be as high as respectively 35%, 40%, 45% , 50% and 60% for those earning above 300,000. The current minimum effective tax rate only applies to those with income of over 125,000 Euro claiming tax relief in excess of 80,000 Euro! This restriction should be abolished.
There must be no increase in the effective tax rates of those with gross incomes below 100,000 Euro
The total increase in revenue due to the preceding measures is 13 billion
Increased Taxation of Very High Incomes
High incomes are very lightly taxed in Ireland and the burden of income taxation on low and middle incomes was hugely increased by the imposition of the Universal Social Charge and by reduction of personal tax credits and thresholds.
There are approximately 88,500 income recipients (4.1% of taxpayers) with incomes between 100,000 and 200,00 euro and these are outside the top 1% of income recipients discussed above. They have a total income of 11.6 billion and paid 2.57 billion in tax in 2009. ULA proposes to increase the income tax yield from this group by 2 billion, through a combination of minimum effective tax rates on all income and higher marginal tax rates on income above 100,000Euro, leaving them with 7 Billion Euro, an average 79,600 Euro each in after tax income . While retaining this revenue target, adjustments of taxation will be necessary within this group in order not to penalise tax payers with an adult dependent or couples who are jointly assessed for tax.
The deployment of minimum effective tax rates is designed to combat the loss of revenue due to tax reliefs enjoyed by the rich. Relief on pension contributions to provide pensions capped at 50,000 per annum per adult should be continued.
The cumulative revenue total raised by the above measures is now 15 billion Euro
The Domicile Levy introduced in Budget 2011 to address the problem of tax exiles has generated a paltry 1.5 million in revenue and is clearly totally inadequate.
It is reasonable to expect that citizens of Ireland who have income generated in Ireland and/or assets held in Ireland should pay tax to the Irish state. The United States expects its citizens resident abroad to pay US income tax when their earnings abroad exceed a certain threshold. Failure to do so attracts public disapproval. Irish tax exiles, on the other hand, are fawned on by politicians. Denis O’Brien was invited by Eamonn Gilmore to the Farmleigh conference at the behest of Fine Gael. Michael Smurfit was appointed honorary consul to Monaco by Charles Haughey and furnished with a diplomatic passport. The Labour Party leader is continuing Mr Smurfit in office.
The ULA proposes that the principles underlying US practice be applied to wealthy individuals living abroad.
We call on the Government to introduce measures in Budget 2012 to require by Law that Irish citizens resident abroad for tax purposes pay to the Irish exchequer annual amounts of tax as follows:
1 Assets Tax: An assets tax of 10% on net global personal assets in excess of 2 million Euro less the assets tax paid to the state in which the Irish citizen is resident.
2 Income Tax: A minimum effective income tax rate of 50% on annual global income in excess of 200,000 Euro, less the income tax paid to the state in which the Irish citizen is resident.
3Current Domicile Levy of €200,000 introduced in Budget 2010 to be increased to 500,000Euro per year. This levy should apply to all Irish-domiciled individuals who are Irish citizens to ensure that wealthy Irish domiciled individuals make a contribution to the State during these times of economic and fiscal difficulty. The Levy will apply to wealthy Irish-domiciled individuals with Irish located capital greater than €2 million, worldwide income in excess of €1million and an Irish income tax liability less than €500,000. Persons liable to the Levy will have to pay it regardless of where they live or where they are tax resident.
It is impossible to predict the revenue which would be generated by the above measures. However the deadline for paying the assets tax, domicile levy and preliminary income tax should be set at March 1, 2011. If the income generated falls below a projected 2 billion for the year as a whole, further changes should be made to remedy the short fall
Other measures are also open to the Minister in his budget such as drastically reducing the number of days the “exile” can stay in Ireland while retaining residence abroad for tax purposes.
ULA has set a minimum initial target of 2 billion Euro in revenue from the above 3 measures
“Now that the recession has bitten hard and deep we have a scale of expenditure that is completely out of step with our ability to fund it. We do not have the means or revenue as a country to support our level of spending.”Burton Seanad, Nov 17
This is completely wrong. The truth is that the government has decided that the poor and middle income earners will bear the brunt of the fiscal adjustment (3.8m) . Net Financial assets(shares etc) of irish households increased by 45 billion over the last two years as private sector investment fell by 30 billion. The government should take 10 billion of the 45 billion in a wealth tax instead of spending cuts. The spending cuts will continue to destroy jobs (315,000 since 2007 and 3000 net fulltime jobs in the first 3 months of this government)
Dr Nat O’Connor, Director of TASC, the progressive research group last Thursday told a conference that the “Troika” had informed him that if money could be raised in alternative ways, they would have no problem with that.
So cuts in welfare are purely a Labour/Fine Gael decision
Contrary to claims that welfare in Ireland is high and a ‘disincentive’ to work, welfare payments in Ireland are among the lowest in the original EU fifteen states. A report by the EAPN from Sept 2009, based on figures for 2006 comparing social protection spending in the EU 15, found that while there was an average spend of 27% of GDP, Ireland came 13t out of 15 with 18.2%.
The net replacement rate, welfare compared to previous income was only 34.5% in Ireland, again the lowest in the EU 15. Social protection in Ireland is even below the average of the EU 27 which contains many countries much poorer tan Ireland
It is appalling that social welfare should top the cuts league according to the leaked German draft.
“The (leaked) EU documents appear to suggest that the savings will be achieved by welfare fraud elimination, cuts to other entitlements and a reduction in the number of people eligible for benefit payments.” (Journal.ie)
Earlier this month the Government stated its intentions:
They(GOV) stress that instead of “pursuing across-the-board reductions in primary social welfare rates”, the Government will take a “selective approach” to “reforming entitlements”, and state:
“The Department of Social Protection will build on their recent studies on working age payments, child income support and disability allowance with a view to producing, after consultation with stakeholders, a comprehensive programme of reforms that can help better target social support to those on lower incomes, and ensure that work pays for welfare recipients.” (Jounal.ie)
Already people with perfectly legitimate welfare claims are being cut off like flies through use of new arbitrary criteria and in a savage Scrooge operation heating support has being reduced to the poor and the old this Christmas leading to more unnecessary deaths this winter.
Now Burton wants to cut Child Benefit even to the needy. Brnardos has described this measure as “crossing moral boundaries”
How Low can she Go?
It may not be widely known that the proposed transfer of illness benefit payment to employers includes public sector employers and state companies- This means that these cuts will end up in hospital wards, schools and local authority services and on bin charges, electricity and gas bills.
This reduction in demand by people who spend all their money every week will lead to further job destruction by government as shops and small businesses continue to close
I would be not as neutral or “agnostic” as David Begg on the transfer of the first four weeks of sickness benefit to employers. There are serious concerns arising from Burtons Seanad Speech on Thursday night.
Firstly, many businesses including small shops, cafes and hairdressers have less than ten employees. To trade they must replace sick employees. Now they must pay benefit to the sick employee as well. Many are hanging on by their finger nails and will close, adding to the dole queues.
In relation to large profit-making Irish and multinational companies, my concern is not for such companies but for their employees. Trade unions are not permitted in these companies. Burton said in the Seanad that the transfer of the first 4 weeks sick leave to employers would enable employers to “manage absenteeism”. Does this mean that a sick cert from an employee’s GP will no longer guarantee payment of sickness benefit.?
Will people who have not fully recovered be forced to go back to work too soon?
There are also predatory employers in some parts of the public sector with whom the health of employees would not be safe.
I have no confidence that a Minister who has cut winter fuel allowances to the old will give first priority to the health of employees in the new legislation she will introduce to implement the changes.
Paddy Healy 087-4183732 firstname.lastname@example.org
NOV 18 2011
Austerity is not Working
Michael Burke At TASC Conference 2011
‘Investing in Recovery’ session, FEPS/TASC Autumn Conference, October 15th
*Throughout the Nation Income & Expenditure Accounts for 2010 are used unless otherwise stated http://www.cso.ielrefeasespublications/documentv/Aron®my0current/nie.pdf
It is customary for the government, Dept of Finance, and its supporters in academia and the media in Ireland to look at the situation from the wrong end of the telescope- to begin with a symptom of the crisis – the deficit – and not the crisis itself. But because it is familiar, for now the same process of working backwards is adopted.
In the National Income and Expenditure Accounts 2010, Total Borrowing of the public sector in 2010 was €51.9bn (Table 21, line 236)*. This arose primarily because total receipts of€48.8bn were exceeded by total outlays of €103bn (other items excluded). However, of that deficit €32.2bn was grants to enterprises (Line 244, the bank bailout). Therefore the borrowing requirement excluding the bailouts was €19.7bn. These fiscal deficits, excluding bailouts have been rising, not falling, even though there have been cuts in spending and tax increases.
We can arrive at the ex-bailout deficit by adding ‘Grants to enterprises’ (line 244) to net lending/borrowing (line 253). So net borrowing/lending was as follows:
2005 €3.5bn 2006 €5.7bn 2007 €0.9bn 2008 -€11.3bn 2009 -€17.8bn 2010 -€17.4bn (other items account for the reduction below €19.7bn).
The government has attempted to close this deficit by reducing its own spending and increase taxes on the general population, which also reduces their spending power and the incentive for businesses to invest. As those deficit numbers demonstrate, ‘austerity’ to reduce the deficit has been a complete failure.
Failure of Policy
In terms of current transfer payments, the government has cut €1.76bn in social welfare payments between 2008 and 2010 (Table 24). The effective cuts are much greater than this due to rising demand from increased population and increased impoverishment. Yet the total level of current spending has risen by €4.2bn, from €29.6bn to €33.8bn. The single biggest rise is in debt interest payments, from €2bn to €4.9bn. Unemployment assistance has risen by €1.6bn, redundancy payments by €300mn, unemployment benefit by €350mn, welfare allowances by €200mn. Employment support services fell by €100mn, pension contributions from employees have fallen by €380mn.
In terms of investment government gross fixed capital formation fell by €1.8bn in the two years to 2008 (Table 25). So, the €1.8bn decline in investment more than accounts for the decline in the deficit in 2010 from 2009 (€0.4bn).
Taking all categories of government spending (Table 26), both current and capital spending, we see the following declines from 2008 to 2010: Defence €100mn, ‘other government services’ €2.9bn, education €400m, health €900mn, housing €500mn, other community services €500mn, agriculture €1.4bn, mining €400mn and transport €1.5bn. In addition local government cut spending (Table 27) on housing by €900mn on transport by €800mn and on all types of economic and community services by a combined €1.7bn. Altogether these amount to spending cuts of €12bn.
Again the real effects of the cuts are greater, given both higher prices and increased demand. Yet the deficit has risen as spending has risen, up €26bn, central and local government combined. Apart from the bailouts (€4bn in 2009, €32bn in 2010), social security welfare payments have risen by €2.Sbn, of which unemployment assistance and unemployment benefits account for €2bn.
Government supporters continue to suggest that it is a bloated public sector which is responsible for the fiscal crisis, despite all evidence showing that this economy has one of the lowest levels of government spending in the Euro Area. Achieving deficit-reduction by these means has proved impossible, the deficit has widened. Even if all the cuts equalled savings (which is clearly not the case) the entire public sector would have to be sacked in order to achieve deficit-reduction as the wage, salary and pension bill of central and local government combined is €18.2bn (Table 24, line ) is lower than the €19.7bn deficit.
The other track the government has pursued has been increased taxation. The monthly and annual exchequer returns were always a very poor guide to the actual state of government finances in particular as they exclude social security payments. They are even less useful now after the introduction of the USC, which is not included. But the NEE does list tax revenues more comprehensively, even if detail is absent (Table 22).
Taxation revenues have fallen for 3 consecutive years as key categories of activity started to contract in 2008. Despite a series of tax hikes taxation revenues have fallen from €59.2bn in 2007 to €43.3bn in 2010. This loss of €15.9bn effectively accounts for over 90% of the deficit, not increased spending. Only welfare payments have risen.
In total, the government has aimed at ‘fiscal consolidation’ of €14.6bn (not including the November 2010 Budget). This was split €9bn in spending cuts and €5.6bn in tax increases. The tax increases were focused on incomes and on consumption (VAT). Taxes on capital and on profits were untouched.
To see the effect of these lopsided tax measures, we can note that taxes paid by individuals incomes or consumption comprise income tax, motor tax, customs and excise, VRT, while taxes paid on capital or
capital transactions comprise CGT, CAT and stamps. Leaving aside social insurance contributions, taxes on corporations comprise corporation tax, the employment levy and a portion of motor tax (Table 22).
From 2007 (the last year of the boom) to 2010 the total amount of taxation paid from these sectors under those heads was as follows (€bn):
Individuals 34.2 26.3
Capital 6.7 1.5
Corporations 8.5 6.1
Social Insurance 9.1 8.7
Total (incl. misc. items) 59.2 43.3
In fact businesses contribution to social insurance was €5.7 in 2007 falling to €5bn in 2010 (Table 1, lines 3&10). Therefore it is possible to rewrite the table above distributing the different contributions of employers and employees to SI (€bn).
Individuals 37.6 30.0
Capital 6.7 1.5
Corporations 14.8 11.1
Total (incl. misc. items) 59.2 43.3
Individuals formerly provided 63% of total tax revenues. Despite a fall in their incomes, their tax contribution has risen to over 69% of the total.
So far, we have dealt with the deficit and the failure of government policy. But these are only symptomatic of the crisis, which is an economic crisis. In nominal terms (excluding the effects of price changes) GDP has fallen by 17.9% between 2007 and 2010 (Table A). But investment (gross fixed capital formation) has fallen by 66%. It also accounts for the bulk of the decline in GDP, €32.3bn of a total loss in output of €34bn. By contrast, while households have been very badly hit, the decline in household consumption is €11.3bn and a fall of 12%.
We can also locate the source of the decline. While both central and local government investment has fallen by €2.9bn between 2007 and 2010 (Table 21, line 249) the remaining €29.4bn is the decline in the investment of the private sector. In effect, a private sector investment strike accounts for 86% of the total loss of output.
How To Address the Investment Strike?
In 2010 the total level of private sector investment was €11.4bn. Yet the private sector’s share of value added in 2010 was €54.8bn (Table l, line 13, minus lines, 2, 3, 9 & 10). For comparison, in 2007 the private sectors’ level of investment was €41.3bn of a net income of €68.2bn. In 2007 the private sector was willing to invest over 60% of its net income whereas in 2010 it invested less than 20% of its net income.
All private investment is made for a profitable return. Public investment is also made for a return, but usually the direct return accrues to the private sector (a new road, or educating a student) and only indirectly to the public sector via increased tax revenues. The investment strike arises because the private sector does not expect profitable returns on investment.
In fact the corporations in the Irish economy have been making savings over a prolonged period (Table 11, line 141) when the normal functioning of a market economy is that the household sector saves and ° the corporate sector borrows in order to invest, via the medium of the banks. But because the Irish corporate sector’s income as a proportion of total value added has been so high (exceeded only by Greece) it has felt no need to borrow to invest. Now that its income has fallen it has responded by maintaining savings (at a reduced level of income) and cutting investment.
As we have shown, there was a €43.4bn discrepancy between the income and investment of the private sector in 2010, which is greater than the entire shortfall in output since the recession began. In Keynes’s phrase, ‘the level of investment determines the level of employment and output’. We also know that businesses will invest once more when they foresee a profitable return on investment, which in turn depends on a resumption of growth.
Therefore, what is proposed is a series of temporary measures (windfall taxes, levies, charges, commissions, licenses, the labels are less important) by the government to channel a large portion of
that €43.4bn towards the needed investment in rail, ports and other infrastructure, superfast broadband, housing and education. The shortfall is in the order of €30bn. To engineer a recovery a fraction of that would be necessary. But once a strong recovery is underway, businesses will be induced to invest the remainder themselves simply from the profits available and may even begin to borrow for productive investment from the banks. However, this will only occur if the upturn in investment is orchestrated by the public sector.
How Low can they GO?
During the warmer summer months, Minister for “Social Protection”, Joan Burton(LabourParty Deputy Leader) announced cuts to the home benefits package for pensioners and social welfare beneficiaries. The allocations of electricity units and gas units so important for home heating were reduced by between 20% and 25%. AGE ACTION IRELAND has stated “Research on fuel poverty and older people by the Dublin Institute of Technology and the Institute of Public Health — funded by CARDI and due to be published in the coming weeks — shows that during the winter of 2006/7 there were 1,281 excess winter deaths*. Of these, the vast majority were older people (1,216 were aged over-65). How many preventable deaths will take place this winter?
The latest figures from CSO show that the nett financial assets of Irish households increased by 27 billion euro in 2009 and gross financial assets have increased by a further 7 billion in 2010. Not a penny in tax on these assets has been imposed by the Labour government.
Homeless charities say demand for their services has increased by up to 40% in the current year. Yet HSE has just announced cuts to services to the homeless. Kathleen Lynch (Labour) is Minister for State at the Department of Health and children.
Please sign the Age Action Petition here http://www.emailmeform.com/builder/form/FOyR76aN2J6UCXnG2
Paddy Healy 086-4183732
FROM AGE ACTION IRELAND
Sign petition to help protect vulnerable older people this winter
Wed, 26/10/2011 – 15:23
Age Action is urging the Government to reverse cuts to the free gas and electricity units for pensioners, amid growing concern at the severe hardship which the cuts will have for the most vulnerable of older people this winter.
Read Full Statement http://www.ageaction.ie/sign-petition-help-protect-vulnerable-older-people-winter
How Low Can They Go?
Hundreds of older people die each winter in Ireland because they cannot afford to keep themselves warm. Lives could be saved if the Government reversed its decision to cut their electricity and gas units.
I call on the Government to reverse the cuts to the free gas/electricity units available under the Household Benefits Package, given the increased hardship it will cause for older people on low incomes.
Click on Link Below to sign the petition
Homeless services to be cut by 10%
Irish Times Thu, Oct 27, 2011
HEALTH AUTHORITIES are cutting funding for homeless services in parts of the capital by up to 10 per cent over the coming winter months, despite growing pressure on services.
Service providers say the cuts will impact heavily on their ability to provide shelter and support to homeless people at a time when they are under strain.
The Health Service Executive (HSE) – one of the main funders of homeless services – told providers last week it is cutting between 5 per cent and 10 per cent of grants which were due to be paid between October and December of this year.
However, homeless charities say they have recorded increases in demand for services of between 20 and 40 per cent over the past year. Services say they are continuing to give out sleeping bags at night-time due to ongoing shortages of emergency beds.
Dublin Simon’s chief executive Sam McGuinness said: “With the harsh winter already upon us and demand for homeless accommodation stretching all service providers to the limit, it is unacceptable for the most vulnerable and destitute to suffer further HSE year-end panic cuts because of their spending excesses.”
Focus Ireland’s chief executive Joyce Loughnan said if deeper cuts were to be made at this late stage in the year, it would hit its ability to provide “vital lifeline services” to homeless people.
The funding cuts were confirmed this week by the Dublin Region Homeless Executive – a partnership run by the city’s four local authorities – which is in charge of organising homeless services in the capital.
The two main areas affected are Dublin south-west – which includes Tallaght, Clondalkin and Kildare – and Dublin south-central, which includes much of the inner city.
These areas are due to receive cuts of between 5 per cent and 10 per cent respectively, on top of cuts of 5 per cent earlier this year.
In a letter to one service provider dated October 13th, the HSE said: “It is recognised that maintaining services will require significant levels of change, flexibility and creativity.
“Therefore, you will need to make the savings to remain within the budget through value-for-money initiatives and other administrative efficiencies in order to achieve a break-even financial position by year’s end.”
In a statement, the Dublin Region Homeless Executive said the overall implication and impact of the cuts had been “fully considered” by the HSE.
It added there had not been a reduction in funding from the Department of the Environment, the other main source of public funding for homeless organisations.
In the meantime, the Dublin Region Homeless Executive has been working to secure longer-term beds for dozens of people in emergency accommodation to help alleviate pressure on services.
© 2011 The Irish Times
Bad politics behind great oil and gas giveaway
Irish Times, Tue, Aug 23, 2011
OUR CHILDREN and grandchildren will see us as a weak and inept generation.
They will wonder how we blew the boom, why we put €30 billion into Anglo Irish Bank and Irish Nationwide, how we gave up our economic sovereignty without much of a fight. They will feel bitterness at the way we pushed them, as children, to the top of the queue for so-called austerity.
And unless we act now, that bitterness will turn to contempt. They will hate us for the way, as well as leaving them with a legacy of unpayable debt, we also gave away something that might have been of real use to them, the chance to use our natural gas and oil resources for their benefit.
I’m returning to this issue because it seems to me to be a touchstone for our entire political culture. We can use it to address three big questions: have we learned anything? Is there really a shift in the way we do politics? And have we any capacity for the kind of radical thinking we need?
The question of what we’ve learned is stark. In September 2008, our system of governance – Civil Service, regulators, government – faced a historic test. It failed catastrophically. Why? Because, under the pressure of the banking crisis, it fell back on its ingrained habits and attitudes. It had acquired the habit of doing what the banks asked it to do. In a closed system of decision-making, that habit made a grotesquely irrational decision seem like common sense.
Just as the Department of Finance was habituated to doing what the banks wanted, the mindset of the Department of Natural Resources is shaped by the perceived needs of the oil and gas companies. That mindset has proved to be resilient. Two successive ministers – Eamon Ryan and Pat Rabbitte – have entered it from the outside, with some history of scepticism, and quickly gone native. Each has ended up speaking a language that is indistinguishable from that of his Fianna Fáil predecessors.
Which brings us to the second question: has anything changed in our governing political culture? Leave aside for the moment the substantive issue of why we’re ceding control of our natural resources on the worst terms in the developed world. Just consider the way this is being done. It is closed, top-down, peremptory. Even our parliament doesn’t get to have any say.
Rabbitte’s position is that an Oireachtas committee can consider the licensing terms but that, in the meantime, he’ll go ahead and award the licences anyway. As a process, this is the same parody of democracy that has us where we are.
Third, is there the slightest possibility of imaginative thinking? Last week, I made a concrete suggestion: that the State seeks a partnership with Norway in the development of our oil and gas. It is not a mad idea. Norway has the money and expertise. In the 1970s, it offered us a deal on sharing oil and fisheries. Norway (unlike Ireland) has a large stake in the Corrib gas field. It is actively expanding its operations around the world.
Rabbitte replied to my piece in these pages last week. He didn’t dismiss this suggestion or show why it is absurd. Rather, he completely ignored it. He’s comfortable with a phoney argument between “fantasists” who think there’s a free pot of gold out in the Atlantic and pragmatists like himself. But the idea that there might be an imaginative pragmatism, a hard-headed defence of the public interest, simply cannot be countenanced.
And this, I’m afraid, is where official thinking is still at. It poses false alternatives: we either submit to the abject position of powerlessness we occupy or we’re deluding ourselves. Any notion that we might actually use the collective power we still have is literally unimaginable. So we have to accept “reality”, however miserable it may be.
Just how miserable it is is illustrated by figures cited by William Hederman in the Sunday Time s. He quotes the former managing director of the Corrib Gas project, Brian O’Cathain, as predicting that the State may end up with as little as €340 million in tax over its lifetime. O’Cathain actually suggested at a public debate in December that Corrib may in the end pay no tax at all.
Nor is there anything in the current regime to force companies even to land oil and gas in Ireland; they can ship it or pipe it to the United Kingdom or Holland if they wish. There is no guarantee of a single Irish job being created. But none of this is even up for discussion.
If you knew nothing at all about the issues at stake here and merely looked at the process by which decisions are being made, you’d put your shirt on those decisions being bad ones. It’s always a good bet that closed, top-down policymaking, with minimal information and no serious willingness to consider alternatives will have awful results. We know that from very bitter experience. Or we would do if we hadn’t forgotten it already.
© 2011 The Irish Times
Councillor Cian O Callaghan,Labour Party, Fingal Co Council, has Described Minister Rabittes position on development and control of our Oil and Gas resources as “rubbish”
email@example.com or 086 286 6631. http://cianocallaghan.com/2011/08/response-to-article-by-minister-rabbitte-on-oil-and-gas-deposit-taxation/
Letter to Irish Times Friday Aug 19
Sir, – Minister for Energy Pat Rabbitte’s assertion that Ireland’s tax take on our oil and gas: “compares favourably with all similar countries but not with Norway” (Opinion, August 19th) is misguided.
A report by the US government accountability office in 2007 found that Ireland has the second lowest government take on oil and gas deposits of 142 countries studied. Furthermore the headline figure of 25 per cent tax cited by Mr Rabbitte will never be applied under our current taxation regime due to the generous availability of tax loopholes to offset exploration and drilling costs.
It is time that we ditch the failed economic policies of the last government; and instead we should adopt the European norm in tax take for oil and gas. – Yours, etc,
CIAN O’CALLAGHAN, Howth,
Response To Article By Minister Rabbitte On Oil And Gas Deposit Taxation
This is a statement that I, Cian O’Callaghan, issued to media outlets today:
“In today’s Irish Times Minister Pat Rabbitte T.D. argues that Ireland’s tax take on our oil and gas: “compare favourably with all similar countries but not with Norway.” This is complete nonsense.
“A report by the US Government Accountability Office in 2007 found that Ireland has the second lowest government take on oil and gas deposits of 142 countries studied. The Department of Communications, Marine and Natural Resources reported in 2006 that average government takes range from 25% -90% across the world. They further found that the European average government take excluding Ireland is between 35% – 65%. The assertion that the Irish government take at 25% compares favourably only rings true for the corporations that wish to exploit our resources. For the rest of us it represents an insane act of economic treason, offering to give away some €750 billion worth of oil and gas over the coming decades at the worst possible terms and conditions for the Irish people and Irish economy.
“The headline figure of 25% tax cited by Minister Rabbitte will never be applied under our current taxation regime due to the generous availability of tax loopholes to offset exploration and drilling costs. Recent Research by William Hederman (see http://www.irishoilandgas.com) reveals that corporations may pay as little as 7% of the revenue from Irish oil and gas fields. The application of tax on declared profits only and not on the actual wealth and value of the oil and gas reserves further benefits oil corporations to our detriment.
“Minister Rabbitte further argues that a lack of interest from multi-national companies in Ireland over the last two decades vindicates the tax regime that was put in place by Fianna Fáil. He fails to acknowledge that our oil and gas reserves are now a much more attractive proposition for exploration and drilling than two decades ago. There are three key reasons for this:
• First as larger oil and gas deposits elsewhere are depleted, attention is turning to smaller deposits such as those located on our offshore.
• Secondly rising oil and gas prices determine that smaller deposits are now a viable proposition.
• Thirdly technological advances in exploration and resource exploitation over the last two decades have increased profitability rates from smaller fields.
“These three key changes have dramatically altered the oil and gas exploration market requiring that we urgently re-examine our tax take before the latest round of licences are granted. It is time that we ditch the failed economic policies of Fianna Fáil and instead we should adopt at least the European norm in tax take for oil and gas. It is absolutely certain that our off shore fields will be exploited over time. The only question is will we benefit from the exploration of the natural resources that we own.”
Fintan O’Toole’s original article is here:
Pat Rabbitte’s article is here: