Thursday 25 December 2014

Ivan Yates: As Ireland emerges from bailout, the 'haves' don't care about 'have-nots'

Published 12/12/2013 | 23:32

As a child, I would sit in fascination to watch our cats on the back kitchen windowsill. After enjoying saucers of milk, they would contentedly spend hours licking themselves and then each other clean.

Tomorrow, the Government will formally hail the end of the bailout programme. Set-piece events have been organised to allow government leaders to lick themselves with self-praise on restoring economic sovereignty, emerging from the darkness, dispensing with the troika, ending the recession -- blah, blah, and more complacent blah.

Remember the 'Five Point Plan'? It was Fine Gael's simplified promise sheet to encapsulate their pre-election pledges in 2011. FG's US campaign consultants deemed that policy manifestoes were never read. Something catchier was required. These were the same guys who dreamt up the "sign the contract" mantra in 2007. At every available stump opportunity, Enda Kenny repeated them ad nauseam.

Here's a reminder.

Jobs: The jewel in the crown was to create a new quango called New ERA, which was a €7bn investment plan from the proceeds of privatisation.

This project was set to create 20,000 new jobs each year by public investment in energy, water, broadband and telecoms infrastructure. It's run into the sand. Junior minister Fergus O'Dowd is left with just the grandiose title. Failure to sell Bord Gais was the last nail in this coffin, with a €500m black hole in a much diminished jobs fund.

Budget and Public Sector Reform: A war on waste was to be waged, reducing public sector costs by 10pc, saving €5bn annually, eliminating 30,000 administrative public servants and abolishing 145 quangos.

No culture change has been effected, with about one-third of the targets achieved. The Haddington Road Agreement copper-fastened the principle of no compulsory redundancies, thereby neutering effective rationalisation. Failure to confront automatic pay increases through increments meant waving the white flag on improving efficiency.

It's emerged this week that everybody is entitled to extra pay for each year of service, irrespective of performance levels. Less than 1pc of 30,000 civil servants were deemed to be in the categories of "need improvement" or "unacceptable". If middle management rated staff as such, they would receive a call from personnel to explain that this would deprive them of a pay hike. Better to play the game, look away. There's no external evaluation system.

HEALTH: Elimination of long waiting lists, dismantling dual public-private health systems, and introducing the 'renowned Dutch model' of healthcare.

Delayed access to elective hospital treatments is sharply increasing again, after some initial progress. Two hundred thousand people have had to abandon private health insurance due to prohibitive cost increases. The Dutch themselves are dumping their universal healthcare project.

The Department of Health and HSE can't even agree a basic implementation plan for 2014. For three consecutive years there will be significant budget overruns, between €219m and €286m this year.

There is a €1bn credibility gap between the amount allocated and required for the coming year. Farcically, the HSE itself is due for abolition imminently. We could face 'meltdown manor' at Hawkins House, if the Government doesn't see sense soon.

Finally, we were promised New Politics: Thirty-five per cent fewer TDs and senators; a Citizen's Assembly to provide electoral reform; new powers to allow the Dail to challenge government decisions. Impressions were given of an end to cronyism.

What we'll get is an enlarged franchise of graduates to elect senators; a massive government voting majority, rendering this Dail chamber toothless and redundant; a continuation of blatant jobbery in selection of loyal political appointees to posts on menial state boards right up to senior judicial appointments. No radical electoral reform away from multi-seat constituencies is contemplated -- thereby perpetuating a system of self-serving parish pump politics.

Another weekend orgy of cheerleading in self-gratification and smug lectures of plaudits to themselves will only serve to alienate further those who are struggling to survive.

We all have no choice but to support a recovery narrative because it may unlock the personal spending psychology and positive investor mood that will stimulate a cycle of enhanced consumption, growth and job creation.

Naysayers are not wanted, because negative sentiment can be self-fulfilling and probably represents cul-de-sac politics. Instead, Government should focus on those for whom there is little imminent prospect of improvement. There are two distinct groups that spring to mind -- debtors and dwellers in rural Ireland.

I'm referring to those who are still immersed in personal debts of €160bn (including 100,000 mortgagors) and indigenous small business owners who are carrying unsustainable borrowings on their balance sheets. It is likely to emerge that the new insolvency regime still has fundamental flaws.

The Personal Insolvency Agreements (PIAs) still retain a veto by secured creditors, which can prevent viable plans involving debt write-downs being rejected. Only a few hopeless cases involving unsecured creditors have been approved to date.

The nuclear option of bankruptcy still retains an eight-year scenario of serfdom. The three-year term needs to be an absolute maximum period, which could be substantially reduced if there was full co-operation by the debtor.

Similarly, the five-year potential income payment term should have an inbuilt incentive to reduce it to two years. Ministers should actively monitor any lack of traction through the courts or ISI, with a view to encouraging workable debt deals like those that have been done in the corporate sector with Eircom, INM and Superquinn.

Just because the footfall in Grafton Street and Dundrum shopping centre at the weekends in mid-December is again reminiscent of the Tiger era and popular city centre pubs are packed, doesn't mean that the towns of Claremorris, Longford, Enniscorthy or Bantry are yet rebounding.

Ghost estates and empty Main Street commercial premises are visible symptoms of private despair. IDA new-job announcements seem to be increasingly concentrated in city locations.

Where is the semblance of a government's strategy for rural sustainability beyond Dublin 2 and Dublin 4? Depending on a trickle-down effect seems an improbable scenario. Two Irelands of 'haves' and 'have-nots' is an intergenerational and geographical sad story, because those on an upward thrust don't seem to really give a damn about the dislocated or marooned. What we need from Government, as we exit the bailout, is less political hoopla and more practical hope.

Irish Independent

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