Business as Usual – Capital Programme to Proceed, No substantial changes to Tax Base

 

Taoiseach Brian Cowen has stated the introduction of a proposed property tax is “speculation” and a decision will be made by the Cabinet “in due course”.

Speaking at the Davos global economic summit in Switzerland, Mr Cowen said the issue would be considered by the Commission on Taxation which is due to report on taxation in September ahead of the December Budget.

“Our discussions are ongoing on that but I think we have the Commission on Taxation report which is due mid-year – mid to autumn – to be ready for consideration in our Budget proposals from next year on,” Mr Cowen told reporters.

The Central Bank yesterday advised the Government to consider a tax on residential property.

The assistant director of the bank, Tom O’Connell, said yesterday at the launch of the bank’s first bulletin of the year that a residential property tax should be one of the options considered. Mr O’Connell said a €1,000 annual tax on the 1.7 million dwellings in the State would yield €1.7 billion per year.

However, the Irish Congress of Trade Unions (Ictu) made clear that it is not in favour of the introduction of a property tax on all homes, rather on investment properties and “trophy homes” only.

The Taoiseach went on to state that there were:  “various views about how soon this recession might end and how prolonged it would be depending on how optimistic or pessimistic people are about it.

“There is no doubt that 2009 is going to be a very difficult year and next year for some will see a return of some growth. For us we will have to face into 2010 with the same determination that we face into this year.”

“It is clear from what we have seen in the last six months, from the downturn in economic activity, that we have to bridge the gap that has now arisen both in terms of expenditure cuts and taxation. It cannot be met by expenditure cuts alone, although they are an important factor in addressing the situation.

“Broadening the (tax) base and seeing what way we can build up our taxation base and at the same time stay competitive, do all we can for creating and maintaining jobs – that is the trick, that is the balance and judgement that can only be made closer to budget time.”

Talks on an economic recovery plan involving the Government, unions and employers continued today. Ictu general secretary, David Begg, last night said unions would have to be able to show “some progress immediately” in relation to tax as part of the social partners’ talks with the Government.

Minister for Finance Brian Lenihan told the Dáil yesterday that a broadening of the tax base is on the agenda but he defended the current income tax system as fair and progressive. Mr. Lenihan reaffirmed the Government’s commitment to the 12.5 per cent rate of corporation tax.

In a speech at Davos yesterday, the Taoiseach stated that Ireland’s capital programme was the largest in Europe. The Taoiseach went on to state the following: 

“We consistently pursue a pro-business and pro-employment tax regime;
we maintain a fit-for-purpose business regulation environment that recognises the need for control and certainty whilst avoiding unnecessary bureaucracy;
We remain committed to very substantial investment in key areas such as infrastructure, education and, critically, R&D, innovation and commercialisation.”

Comment: More of the Same –

It is quite clear from these collective statements from the Taoiseach, the Minister for Finance and ICTU that there are to be no substantial changes in the tax system. I

It is also clear from the Taoiseach’s speech at Davos, that substantial cuts in expenditure, are to be expected, and that state services such as Health and Welfare, and not the capital programme will be axed.

Source:

http://www.irishtimes.com/newspaper/breaking/2009/0130/breaking22.htm

Irish Army Military Equipment Sold for Next to Nothing

 

In the space of three years, from 2005 to 2008, the Department of Defence has auctioned off hundreds of unwanted vehicles for practically nothing.

 

The equipment included helicopters, navy boars, vans, trucks, minibuses and trailers. But despite there being more than 350 items on the lot, in total, these sales have brought in just €1.6 million.

 

This amount is hust a small fraction of the €100m brought in through the broader sale of army lands and properties throughout the last decade, according to figures obtained by the Sunday Tribune.

 

Over recent years the defence forces have held a number of auctions to offload equipment, but they have ceased since 2006. Now all vehicles are scrapped once taken out of service.

 

However, in 2004, a total of 194 vehicles were sold, amounting to some €79,100. 1992 and 1994 Ford Fiestas were sold for €4.70 and 48 Nissan Patrol jeeps ranging in age from the early to mid-nineties and in price from €545 to one cent.

 

In 2006, the auction included 17 Ford Transit vans, which were sold for between €33 and €1,033 each. A spokeswoman for the Defence Forces explained that all of the items were sold at auction and consequently, the price received was the highest on offer in each case.

 

“The condition of some of these vehicles that have been in use in the Defence Forces for about 10 years has to be taken into account,” she said.

 

Aside from ground vehicles, the list of sales also includes five helicopters sold for a total of €517,000, six Marchetti Aircraft €600,000 and a variety of naval vessels €344,226.

 

The most expensive items, apart from aircraft and boats, included a 93D ACMAT 4X4 Personnel Carrier for €5,474 and a Ford Backhoe Digger for €5,449.

 

A statement from the Defence Forces stated:

“It should be pointed out in the first instance that it is not generally the practice to sell defensive equipment or armaments of any nature. Such equipment is normally considered to be defunct and is scrapped. “Prior to 2004 and subsequent to mid 2006, vehicles have been taken out of service and scrapped.”

 

Source:

 

“Want a car for one cent? Try an Irish Army auction” Sunday Tribune, October 26th, 2008.

 http://www.tribune.ie/archive/article/2008/oct/26/want-a-car-for-one-cent-try-an-irish-army-auction/

Four Military Barracks Closed: Longford, Lifford, Letterkenny, Monaghan

 

Longford military barracks closed today. The closure went ahead despite several protests by locals, who expressed concerns about the economic impact of the move. Over the last few days, barracks in Lifford and Letterkenny have been shut down and Monaghan Barracks has also closed.

The closures were announced on budget day,  The four barracks were to to close by 31 January 2009 and St. Bricin’s Military Hospital in Dublin 7 is to close at a later date. The personnel affected have  been re-deployed to other barracks. The total number of personnel is approx. 650 military plus 40 civilian personnel.

Gerry Rooney, PDFORRA General secretary said “The closures will cause disruption to the soldiers stationed at the barracks concerned and will see between €6 million and €12 million lost to the local economies in north Donegal, Longford and Monaghan. In PDFORRAs view the closures are not necessary and will not contribute any additional money to the Government. Indeed, in the short term it will most likely see an increase in spending to up-grade barracks to accommodate those who are moved as a result of the closures. “

Gerry Rooney also said “The closure of St Bricin’s Hospital and its relocation to the DFTC could see the Defence Forces Medical Corps lose the specialist’s medical services provided by St Bricin’s which would undermine support for Defence Forces operations and the personnel who provide them”.

Sources:

http://pdforra.ie/News/index.php/2008/10/16/pdforra-criticises-closure-of-four-barracks-in-donegal-longford-and-monaghan-as-well-as-main-military-hospital/ 

http://www.oneconnect.ie/content/view/69/17/

http://www.rte.ie/news/2009/0129/longford.html

http://www.irishtimes.com/newspaper/ireland/2008/1024/1224715116100.html

http://www.budget.gov.ie/2009/financialstatement.html

€16.5bn cutbacks over five years planned for Ireland

 

The Taoiseach has told the Dáil that the Government plans to make an adjustment of €16.5bn over the next five years between taxation and expenditure cuts.

He said that this plan has been sent to the EU Commission. Step one was to finalise savings of €2 billion this year.

Mr Cowen said progress was being made in talks with the social partners and that they will know by the end of the week if they can reach agreement.

Comment:

It is unclear at this point if these cuts will be made in the capital programme or in state spending on social services such as health provisions.

Source:

http://www.rte.ie/news/2009/0127/politics.html

Anglo-Irish Nationalised: No decision about AIB & BOI

 

On January 15th, the Government took nationalised commercial lender Anglo Irish Bank. The move means the bank will now be fully owned by the taxpayer. The unprecedented decision was seen as a last-ditch attempt to rescue Anglo after a substantial number of depositors pulled their money out of it in the past number of months.

The Government will put an assessor into Anglo to establish what value, if any, can be put on the institution. There are no guarantees that existing shareholders in Anglo will receive anything following the assessment. The sudden move came after it emerged last month that the bank had concealed loans to its former chairman Sean FitzPatrick over a period of eight years. His loans stood at €87m last September.

The Government said the move, which marks the first time the Government has owned a bank since 2001, was taken to ensure the continued viability of Anglo-Irish Bank which has loans of about €100 billion on its balance sheet. It also added that a new board would be put in place apart from the newly appointed chairman Donal O’Connor.

“The funding position of the bank has weakened and unacceptable practices that took place within it have caused serious reputational damage to the bank at a time when overall market sentiment towards it was negative,” Mr Lenihan said.

He added that a planned €1.5bn recapitalisation of Anglo, which had been previously on the cards, was not now appropriate although he added that he remains fully committed to the funding proposals for Allied Irish Bank and Bank of Ireland.

Mr Lenihan would not be drawn on the cost of the move but he said it erased the need for the €440bn bank guarantee scheme to be utilised in the case of Anglo Irish Bank.

Anglo-Irish Bank, whose shares slumped to a year low of 12c just before Christmas from highs of €11, has been dogged by bad news for months and the institution, which is a commercial lender, has been long considered the most exposed to the troubled property sector.

Shares in other Irish financial institutions were hit hard amid worries the nationalization could indicate funding is becoming harder for the whole sector. The declines also came after ratings agency Fitch cut its ratings on the main Irish banks on the 15th January 2009.

 

On January 16th, shares in both Bank of Ireland were:

 

* UK:BKIR:  IRE:  3.38, +1.08,+47.0% dropped 11.1% and Allied Irish Banks (AIB):

 

 

* 2.65, +0.57, +27.4%)(UK:ALBK: slumped 22.7%.

 

It has been indicated since the bank guarantee that Bank of Ireland and Allied Irish Banks are also in line to receive capital injections of €2 billion. 

 

Source:

http://www.independent.ie/national-news/state-takes-over-anglo-irish-

bank-1603911.html

Mass Strikes in France

Nicolas Sarkozy now faces the first mass-protests over his handling of the financial crisis as unions prepare to paralyse France in a general strike uniting train-drivers, air traffic controllers, journalists, bank staff and even ski-lift operators.

“Black Thursday” is the first general strike since the French president’s election in 2007. All the leading unions have joined forces to protest that the government’s stimulus plans should focus less on companies and more on workers’ job-protection and purchasing power.

The protests reflect a mood of social unrest that has been building for months. Unemployment had dropped in the first half of last year but it is now spiralling, particularly among the young, and is forecast to reach 10% in 2010. The recession is predicted to be worse than thought while flagging exports and consumer sales have greatly affected the manufacturing sector.

The strike will unite private and public sector workers from schools, hospitals national TV and radio to postal services, bank clerks and supermarket employees. High school pupils, university lecturers, lawyers and magistrates will also protest Sarkozy’s reforms and planned job cuts. Despite the predicted chaos, one poll found that 70% of French people either support or sympathise with the strikes.

Source:

Guardian:

http://www.guardian.co.uk/world/2009/jan/27/strikes-protest-france-unions

Details of Dublin Bus Cost-Cutting Measures

 

Dublin Bus will cut 290 jobs, scrapping the weekday Nitelink service and removing 1,000 scheduled journeys from its timetable. Commuters face far more infrequent services after the company’s  proposals to take 120 buses from eight garages from March 1, as part of a radical cost-cutting plan approved by Transport Minister Noel Dempsey. 

It was reported in the Irish Independent that the main losses will be at:

* Harristown, where 30 buses are being dropped.

* 40 buses will be dropped in total between the two Donnybrook garages, with 23 buses cut at the Phibsboro garage.

* Twelve buses are being cut at Conyngham Road, eight at Ringsend, six at Clontarf and one at Summerhill garage.

* The Nitelink service will be cancelled from Monday to Thursday and final departures on Friday and Saturday nights will be at 3am instead of 4.30am. 

Changes to the late-night service will be implemented at an earlier date than the other cutbacks, from February 2. CIE has also indicated that there could be more cutbacks on the way.

CIE’s ‘Cost Effectiveness Plan‘, presented to staff revealed “additional corrective action” may be required. There were angry exchanges between Dublin Bus and its workers at a fraught meeting at the Gresham Hotel  last Friday 16th January with some workers walking out in protest as it ended. Management told staff that a €31 million reduction in costs was “urgently required” after it suffered €10m losses last year and projected €31m losses this year. There will be a reduction of 290 staff across all grades, including 160 temporary drivers, executive, clerical, operations and maintenance staff. 

Dublin Bus has estimated a potential loss of €31 million in 2009. Public transport subsidies for CIE companies remain some of the lowest in Europe. The government abolished the public transport fuel rebate late in 2008 even though CIE indicated the loss of this rebate would add millions in additional costs to CIE companies in 2009.

According to the Labour Party, the elimination of bus routes and services will be a “devastating blow for commuters and will particularly hit low income workers many of whom have no option but to use public transport to get to work.” Commuters had already been hit with fare increases of an average of 10 cent from the 1st of January last.

“However, what is most astonishing is that the Green Party members of government are prepared to support the decimation of critical public transport services across Dublin.”

The Labour Party went on to comment that if the Government was really committed to persuading more people to use public transport, they should do what other transport operators do and provide for a drop in bus and rail fares, rather than an increase.

 

Source:

http://www.labour.ie/press/listing/1232116353147420.html

http://www.independent.ie/national-news/dublin-bus-cuts-290-and-slashes-services-1605207.html

Closure of Psychiatric Hospitals to Intensify

 

 

Two of the State’s ageing psychiatric hospitals will be closed each year under the Government’s plan to develop community mental health care services, Minister of State for Mental Health John Moloney stated.

Minister Moloney said he expected to name by April the first two psychiatric hospitals that would close, resulting in the relocation of patients to more suitable community facilities.

Mr Moloney also made a commitment to “ring-fencing” funds from the sale of lands around the psychiatric hospitals for the development of mental health services.

A number of psychiatric institutions have already been closed and patients have been transferred to alternative community facilities.

Some 1,485 people remained in inappropriate conditions at psychiatric hospitals throughout the State as at the end of September 2008, according to Department of Health figures.

Closure plans have already been developed for nine hospitals in the HSE South area and for four in the Dublin-North East area. St Loman’s Hospital in Mullingar and Newcastle, Co Wicklow are also under active consideration for closure of facilities.

In the HSE West area, many of the large psychiatric hospitals have already been closed and patients transferred to alternative community accommodation. A closure plan for St Brigid’s Hospital has been agreed to by management and unions.

Mr Moloney also said today the admission of teenagers to adult psychiatric hospitals would be stopped by the end of 2010 with the opening of new beds at a number of units in Cork, Galway and Dublin.

The Minister stated that there was new funding to implement the Vision for Change plan this year because of the economic climate, but nonetheless stated that funds from the sale of lands around psychiatric hospitals would be put back into mental health services.

Some €42 million has been raised in recent years from the sale of four properties – St Loman’s Hospital, the Verville retreat in Clontarf, and two others.

“This funding needs to be made available now to fund new mental health infrastructure if we are to progress AVision for Change in the next few years,” Mr Moloney said. 

The Minister said he “fully accepted” that the closure programme for the psychiatric hospitals had been talked about “for some time”. But two hospitals would be publicly notified of their closure by April and he had almost signed off on this, he said.

Mr Moloney said that whilst the values of the properties in question had no doubt declined in the current economic environment, there was also “real interest” from developers in the lands attached to them.

He said he had been approached by developers interested in a “very valuable landbank” in Wexford, in which they saw “huge potential”.

“I think the most important part of today is that we are still conscious of the fact that people still reside in these institutions.”

That body also said the HSE’s implementation plan for the mental health policy was, in some areas “selective and vague” and with “too little detail and too many timelines that lack ambition”. A new implementation plan, due for publication by the end of 2008, will not now be ready for another “two to three months”, Mr Moloney indicated today.

The independent monitoring group also expressed concern that some €24 million of the additional €51.2 million provided to the HSE for mental health resources in 2006 and 2007 was not used for the purpose intended.

The minister acknowledged today there had been problems with the “diversion” of such funds within the HSE. He said he had been assured as recently as last week that some 94 per cent of the €51.2 million in funding had now been put in place.

“I want to put it on record that as Minister for Equality, Disability and Mental Health, I expect to see tangible evidence on the ground which reflects this substantial investment in mental health,” he said.

The Irish Mental Health Coalition chair John Saunders questioned whether the €42 million had already been transferred to the HSE, and if not, asked when that would happen.

Mr Saunders also asked what provisions had been made for the 1,500 people residing in the psychiatric hospitals set for closure.

“From a recent IMHC report Late for an Important Date, it is clear that mental health services have been experiencing a painfully slow reform process and basic accountability is absent. The result is that people using services, their families and carers are struggling to access services which meet the most basic standards laid down for mental health services.”

MHC chairman Dr Edmond O’Dea said “the long and inexplicable delay by the Health Service Executive (HSE) in delivering on its core recommendations causes us concern, three years on”.

 

Source:

http://www.irishtimes.com/newspaper/breaking/2009/0126/breaking59.htm

 

 

 

Bus Eireann to be downsized as Government eliminates Public Transport for Roads Programme

 

Bus Éireann is to cut 320 jobs and its fleet is to be reduced by 150 vehicles. The company informed its 2,700 employees of the decision today.

Bus Éireann also outlined a cost effectiveness plan with measures it says are necessary to ensure its success in ‘a very challenging economic environment‘. In 2007 the company made a profit of €7m but last year it had losses of €9m and that figure was projected to reach €30m in 2009. The company says that the ‘unprecedented economic downturn’ led to a 4% decrease in Bus Éireann customer numbers in 2008. It estimates that there will be a further 5% to 6% fall in passenger numbers in 2009.

Last week, Dublin Bus announced 290 jobs as part of a series of cost-cutting measures. Dublin Bus is also withdrawing 120 buses, which is 10% of its fleet. Dublin Bus stated that no routes will be removed, but some services would be “amalgamated” and that the frequency of buses would be “adjusted” in some areas.

In 2002, former Transport Minister Seamus Brennan outlined proposals to privitise Dublin Bus services. He said that 25% of Dublin’s bus services will be franchised out to the private sector from the beginning of 2004. He described the new arrangements as “controlled competition“.

Mr Brennan also set out proposals for abolishing the CIE holding company and allowing the three subsidiaries – Iarnrod Éireann, Bus Éireann and Dublin Bus – to exist as independent entities.

Comment:

CIE’s losses are minimal compared to the NRA’s huge and continuing cost “overruns, ” (€10 billion in 2004) which are simply being offloaded on to the taxpayer.

With regard to public transport, the real agenda is the forced elimination of public transport passengers onto the road network and the planned privitisation of CIE, which has been promoted since  the 1980’s.

Source:

http://www.rte.ie/news/2009/0120/buseireann.html

http://historical-debates.oireachtas.ie/S/0102/S.0102.198402010009.html

http://www.rte.ie/news/2002/1107/bus.html

http://socialist.csn.ul.ie/030115-l.pdf

Public Transport Services to be Axed

 

Minister for Transport Noel Dempsey has said Public Transport Services are to be cut back in 2009.

 Hundreds of jobs at Dublin Bus and Bus Éireann are now at risk as management and unions meet in the coming days to discuss the financial situations at both companies.

Dublin Bus has confirmed it will outline the findings of a review it has carried out into financial problems facing the company as a result of the economic downturn and it plans to address these problems to staff and trade unions on Friday the 16th January.

Plans by the government to make cuts on public transport in Ireland have been in the works for some time, with a consultants report recommending massive changes to transport provision.

Routes known to be  “under performing” are to be eliminated. It is expected that Dublin Bus will propose the withdrawal of 10% of the Dublin Bus fleet which would amount to around 120 buses and could result in the loss of up to 200 jobs.

Speaking to RTÉ News, the Minister said that some lessening of public transport services was inevitable given the difficult year companies face. In December the Minister informed Dáil Eireann that there needed to be ‘rationalisation’ within Dublin Bus. Dempsey stated that Dublin Bus was considering a number of options including the reduction in frequency or the complete withdrawal of buses from some routes.

In 2008, the parent company CIE reported a €39.5m operating deficit due a drop in demand for its services and increased fuel costs. The Department of Transport have confirmed that a cost efficiency review of CIE is still under way and the findings are due to be sent to the Minster in the coming weeks.

The harshness with which CIE’s debts are being regarded by the Government is in stark contrast to the latitude being granted the National Roads Authority’s cost overruns, up to €16 Billion in 2008 according to one source.

The Comptroller and Auditor General has previously expressed concern about the huge increases in spending on roads projects.  In 2002 the NRA was summoned before the Public Accounts Committee (PAC), to explain a massive €6.6 billion overrun. By 2004, the overrun had gone up to €10 billion. 

In 2005, PAC chairman Michael Noonan said the interim report would support Prime Time’s claims (‘The Money Pit’ Monday, 9 May 2005), that 30 road projects originally cost at €6 billion would end up costing the taxpayer €18 billion.

The only alternative to public transport is the Government’s tolled motorway network. There has been no viable explanation as to why Ireland, alone of any country in Western Europe, needs such an expensive road system, to the increasing disadvantage of public transport.

Sources:

http://www.rte.ie/news/2009/0113/transport.html

http://thetarafoundation.wordpress.com/2008/10/14/nra-has-cost-overruns-of-e16-billion-according-to-tarawatch/