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Thursday 27 April 2017

Richard Curran: Five vital concessions Ireland should seek in Brexit talks

UK Prime Minister Theresa May will trigger Article 50 on Wednesday Picture: Reuters
UK Prime Minister Theresa May will trigger Article 50 on Wednesday Picture: Reuters
Richard Curran

Richard Curran

British Prime Minister Theresa May will trigger Article 50 on Wednesday which will begin the negotiations for the UK's exit from the EU. The negotiating game will be played out mainly in Brussels and London. The Irish Government has to ensure its voice is heard at the table.

We are told that Downing Street and many of the senior politicians in EU member states fully appreciate the importance of the special circumstances Ireland faces from Brexit in relation to the North and preserving the Good Friday Agreement.

Some wanted Enda Kenny to push in Brussels for a full exemption for Northern Ireland from the deal which would allow it to remain as part of the single European market even if the rest of the UK left it. This position never stood a chance because Theresa May has said "all of the UK" is leaving the EU, and the largest political party in the North, the DUP, isn't pushing for that exemption.

But what can the Irish Government push for at the talks and stand a reasonable or realistic chance of securing by way of exceptions or a special deal? Here are five suggestions.

1. Preserving the Common Travel Area. This should be possible as it is primarily a matter between the UK and Ireland. However, the legislation that protects it gives full rights to citizens of both countries in each other's territories. So after Brexit, Irish people should still be able to go to Britain, never mind the North, and work without having to secure visas, and also retain full social welfare entitlements. The UK seems happy for this to continue, but senior politicians in Poland, Hungary or Latvia for example, could feel it gives preferential treatment to Irish people over their citizens who are also EU citizens but may be shut out. The Irish Government must ensure it goes through in full.

2. Ireland must secure a deal that ensures people from South of the Border do not have to pay external increased fees to attend a university in the North, and vice versa. It would seem to follow that if the Common Travel Area were maintained in full, that Irish people could study in British universities after Brexit without incurring massive hikes in fees. Equally, securing the right for joint North/South applications for EU research funding particularly in education should be sought.

3. If trade tariffs went up between Ireland and the UK on energy, our energy costs would sky rocket. We import the vast majority of our energy needs from the UK, irrespective of its country of origin. This should be easy to secure as tariffs do not currently apply on Russian gas coming into EU countries like Germany. However, more specifically, Ireland must ensure the all-island single electricity market is preserved. Both electricity grids work as one and are managed by a single all-island entity.

4. Whatever about customs checks of vans and lorries holding up cross-border commuters, tourists, shoppers and families, we must ensure there aren't further delays checking cars. Personal travel allowances govern what value of goods you can bring from outside the EU into the EU for personal consumption. At around €430, the levels are pretty low.

After Brexit there will be an onus on customs authorities to do spot checks on people who may be breaking those limits by literally checking their cars. Negotiating an increase on those limits for the island of Ireland, could ensure fewer delays at the Border. Otherwise we would have an Irish solution of turning a blind eye or pretending it isn't happening.

5. Some industries in Ireland will be seriously challenged by the economic cost of Brexit. Our Government may need to provide some kind of financial or legislative supports for those businesses in the form of grants or tax breaks. We must ensure the EU doesn't seek to block those initiatives on the basis of competition or state aid rules. Exceptions should be sought here. There's even a case for getting the EU to co-fund some of the assistance that may be needed in key sectors. This will prove very tricky to secure.

Many a pension slip 'twixt cup and lip' for UCD/TCD

Nama is hiring new auditors. The C&AG will continue to audit the agency, but Nama is also seeking external auditors. Perhaps following the spat between Nama and the C&AG over the valuation of the Project Eagle portfolio, Nama might think it will get a highly commercial approach to its accounts and processes from external auditors.

Well, state bodies audited by both the C&AG and external auditors don't always end up taking the same view on accounting assumptions. Take Trinity College Dublin and UCD for example. Both are audited by KPMG, which has qualified both of their accounts for the last number of years on how they treat their pension liabilities.

Back in 2010 the state absorbed in law, any possible future pension liability shortfalls that might arise on a number of their defined liability pension schemes. But both TCD and UCD had other more recent pension schemes dating from 2005 which received approval from government departments at the time but were never formalised under statute.

As a result they were not included in the legislation in which the State guaranteed all future liabilities. The governing bodies of both universities believe that based on the practicalities of the situation, the liabilities of these schemes can be treated as guaranteed by the state in their accounts and have quoted the C&AG as agreeing with that view. But KPMG nevertheless sticks in a qualification on the accounts in the absence of legislation covering the liabilities.

The figures involved are huge. The current value of TCD's total future pension liability is €1.3bn. Of that, the liability on schemes not directly guaranteed in legislation is €459m - not exactly small change. The cost of servicing its pensions is €50m a year while Trinity spent €25m in 2015 on employer contributions to pensions. Members contributed €2.2m.

At UCD the current value of the total future pension liability is €1.8bn of which €619m of future liabilities have not been covered by statute. Employer pension costs are €28m per year while members chipped in €9.6m in 2015.

Based on tradition, past experiences and advice from civil servants, the universities should not be overly worried, but as they say there is 'many a slip twixt cup and lip.'

Capitol Hill vote will burst Wall Street's bubble

You know Wall Street stocks are over-valued when their performance hangs on a handful of Republican votes on reforming a health care bill. The value of several stocks had been depending on a package to slash the cost of providing health care to the lower paid. It had been seen as a bellwether for US president Donald Trump's ability to get other measures through.

As he tried to get an Obamacare reform package through Congress and the Senate, the stock market worried that if he failed, he would not achieve the $337bn in deficit savings to fund proposed Corporation Tax cuts.

The Bill was withdrawn on Friday evening. After some initial signs of deep losses, US stocks managed a mixed finish. Hospital stocks soared in response, while companies that stand to benefit from other Trump proposals faltered.

It is bizarre and deeply troubling when some Wall Street stocks are dependent on Republicans securing a health care reform package which would have ensured that 14m fewer Americans have health cover next year.

Clearly the corporation tax cuts have been priced into the stock market and they are there to be lost if Trump cannot deliver on tax reform, because he can't afford it.

Unfortunately, the White House's determination to cut corporation taxes means it will probably find the savings elsewhere. It has already said it wants to slash the Environmental Protection Agency's budget by 31pc, something else which might be blocked in Congress.

Trump is discovering there is more to governing than Tweets. It is only a matter of time until Wall Street realises the same.

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