Today’s Irish Times publishes a letter from Tom Manning, who is Public Relations Manager, Metro North Project Director, in the Railway Procurement Agency (RPA).  He is (surprise, surprise) strongly defending the merits of the Metro North project against those who claim we cannot afford it and against those who see it as a vanity project which will not produce an economic return. 

This was on the day that the multi-billion-euro project in Dublin was given the green light by An Bord Pleanála.

So turkeys do not vote for Christmas.

As Kevin Myers recently pointed out, Metro North “is the brainchild of the Railway Procurement  [my emphasis] Agency, not the Railway Assessment Agency, which would, of course, assess things for a living, and would still have a job regardless of the outcome.   The Railway Procurement Agency does exactly what it says on the tin. It would be procuring railways to connect with rainbows, regardless, just like the Druids of Easter Island were ordering more statues even as the last of the island’s trees were being felled.”

The Railway Procurement Agency, insofar as their title means anything, exists to procure railways and things that railways need.  If we stopped needing to procure new railways, presumably the RPA would cease to be a required institution, and its employees and managers would be made redundant.  So we should not be surprised that Mr Manning and all his colleagues are very much in favour of pressing ahead with Metro North.

But I would like to see an up-to-date (and truly independent) assessment of the value of Metro North, based on current borrowing costs and Government expenditure priorities.  After all, Metro North will run through Bertie Ahern’s constituency; that alone should be enough cause for the average citizen to become suspicious of its real merits.

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On the first anniversary of its appearance, I thought I would re-run what was one of the most startling and amusing letters published in the Irish Times.

Knock apparition gatherings

Madam, – I’m a little confused that the Archbishop of Tuam, Dr Michael Neary, is discouraging people from gathering at Knock to witness apparitions which he believes “risk misleading God’s people and undermining faith”.

This is the same “faith” that believes that a cosmic Jew who was his own father by a virgin can enable you to live forever if you symbolically eat his flesh, drink his blood and telepathically tell him you accept him as your master, so he can remove an evil force from something invisible called your soul that is present because a woman made from a rib was convinced by a talking snake to eat an apple from a magical tree.

Yours, etc,

LIAM MEEHAN, La Vista Avenue, Killester, Dublin 5.

Wednesday, October 28, 2009

 Can anybody tell me whether this is an original formulation by Mr Meehan, or is he quoting/paraphrasing somebody else?

Well, the headline on this post is mainly just to get your attention, as I do believe we need more, not fewer, economists in Ireland, particularly (as Garret Fitzgerald has pointed out), in the Department of Finance.  In fact, I think economics should be a compulsory subject for all schoolchildren.

However, Jeremy Warner, assistant editor of The Daily Telegraph, has an interesting piece today called “Will someone please shut Krugman up” in which he condemns the US economist (and winner of the 2008 Nobel Memorial Prize in Economic Sciences) for his opposition to deficit-reduction measures in Britain.

Warner advises that “the idea that you can more or less indefinitely keep putting off deficit reduction until the economy is firing on all cylinders again just looks like an excuse to me for continuing to spend at unaffordable levels. …. [Krugman] conveniently skirts around the underlying issue, which is in essence that the country can no longer afford this expenditure……Osborne’s fiscal consolidation is aimed only at removing the structural deficit – which is the bit that won’t go away when the economy returns to normal. The Obama Administration’s reluctance to take similar action in the US is extraordinarily irresponsible, and one of the reasons why the Democrats are so hopelessly down in the polls.”

Here in Ireland, our own dismal scientists are fighting the same war amongst themselves: do we make huge cuts in government expenditure now, or phase them in over a longer number of years?   Read the rest of this entry »

Fr Sean Healy, the knows-enough-to-be-dangerous-but-not-enough-to-talk-sense spokesman for Conference of Religious of Ireland Social Justice Ireland, has claimed that €1.4bn could be saved by reducing the pension income tax relief to 20pc.  But as usual he has the numbers wrong.

Would employees be taxed (as a BIK – Benefit in Kind) on the value of company contributions to pension scheme on their behalf?  If not, then I can see that as being a major source of leakage which would depress the tax yield from the proposal.

But if private sector employees are to be taxed on employer contributions, then surely state employees should be taxed on the imputed value of the state’s contribution to their pensions?  Now that would be interesting.

In a paper presented to the recent Dublin Economic Workshop, a leading pensions expert said the only way to get savings of €1bn by cutting the pension tax relief to 20pc was to also tax the value of the contributions made to pensions by employers. This would hit public servants hardest, he said.  The value of an index-linked pension is massive.  I could see a public servant earning €50,000 having to pay an extra €4,000 or so in BIK.  Would that breach the Croke Park Agreement?

Fr Healy also fails to understand that employee pension contributions do not benefit from a permanent tax saving;  on the contrary, they are put into a fund and are later taxed when the employee retires and draws them down as a pension.  By and large, the tax is just deferred.

So if I only get 20% tax relief when I put the money into the scheme, but am taxed at up to 41% when I withdraw it, then why on earth would I continue to make such contributions?

The real impact of Healy’s proposal would be to make it even harder for the State to persuade private sector workers to fund an adequate pension for when they retire.  And ultimately such under-funded workers would fall back on the State’s coffers for assistance.

Another example of the law of unintended consequences.

This from last July: Facing Mecca Doesn’t Matter When You Pray, Says Islamic Leader

Muslims are supposed to face the holy city of Mecca in Saudi Arabia during prayer and the Indonesian Ulema Council (MUI) issued an edict in March stipulating westward was the correct direction from the world’s most populous Muslim country.  “But it has been decided that actually the mosques are facing Somalia or Kenya, so we are now suggesting people shift the direction slightly to the north-west,” the head of the MUI, Cholil Ridwan, told Reuters. “There’s no need to knock down mosques, just shift your direction slightly during prayer.” 

Ridwan said Muslims need not fear that their prayers have been wasted because they were facing the wrong way.  “Their prayers will still be heard by Allah,” he said

Reminds me of the “it’s a mortal sin if you don’t go to Mass on Sundays” rule which applied when I was young.  Then, in Ireland, it became acceptable to go to Mass on Saturday night if your local bishop consented to this in his diocese (whoops, I almost wrote his or her diocese).  So mortal sin became a function of time and geography.  That daft logic was the beginning of the end for my tenuous grip on the Catholic faith.

And more daftness here, this time Jewish daftness:    http://en.wikipedia.org/wiki/Sabbath_mode 

These examples, and there are legions of further examples, are beyond parody.  Is all religion destined to end in farce?  If it wasn’t so tragic, it would be funny.

Frankly, the gap between tax receipts and Government expenditure is so large that there will have to be both major tax increases and major spending cuts in December’s budget.  So here is what I think should be done. 

I haven’t costed the extra tax revenues or cost savings, because I don’t have the capacity to do so, but I am confident that the combined effect will comfortably exceed €4 billion, and perhaps much more.

FF are going down, so they may as well come out from their hiding place with all guns blazing, like Butch Cassidy and the Sundance Kid.  It might even get them a few votes from those who are realistic enough to know that there are no soft options left.

  • A new income tax rate of 50% for earnings over €100,000.
  • A temporary 3-year income tax surcharge of 20% of everybody’s final tax bill.
  • Bring anybody earning over €12,500 into the income tax net, at the lower rate of 20%.
  • Increase VAT to 22.5%.
  • Increase tax on petrol/diesel to UK levels.
  • Child benefit: (a) phase in a reduction of child benefit to UK levels over 3 years; (b) abolish child benefit for high income earners; (c) abolish child benefit for fourth and subsequent children who are born after 2011.
  • Introduce a new self-assessed annual property tax based on the aggregate of two measures:  (a)  based on house size, at a rate of €5 per square metre plus  (b) based on site value, at a rate of 0.2%; against the total calculated in this manner allow a credit for each property of €500.
  • Reduce all public sector pensions (both future and those in payment) by 30% of any excess over €50,000.
  • Reduce all public sector pay by 30% of any excess over €100,000  (such a high threshold would probably prevent too much flak from the Croke Park Deal hardliners).

Ouch, that budget would hurt like hell, but it might allow us retain our economic sovereignty.  Better sore than subservient.

Reports of a recent conference to mark the 100th anniversary of Florence Nightingale (!) caught my eye.

A one-day conference to mark the centennial year of the death of Florence Nightingale and the International Year of Nursing took place in Dublin Castle today, September 7th. 

The event, organised by the Department of Health and Children, the HSE and the Irish Nurses and Midwives Organisation (INMO) gave nurses and midwives from throughout Ireland the opportunity to celebrate the valuable contribution of Irish nurse and midwives to health care over the past century.

I’m happy for all those public servants and union activists who had a great day out wholly or largely at the taxpayers’ expense.  I’m also sure that the mileage allowances were generous.  And don’t worry that the health service can ill afford its employees taking a day off (for that’s effectively what it was).

What on earth is going on here?  Who signed off on this waste of time and money?  I wonder how many employers in the private sector would give staff a paid day off to attend such a junket?  (Actually, I don’t wonder any such thing, as I know the answer…..)