Tuesday 27 September 2016

Shane Ross: How a quango fooled the nation

Shane Ross

Published 06/01/2013 | 05:00

Dear Hugh, You guys never lost it. God bless you and your Fianna Fail connections. Last Thursday your little orphan, Enterprise Ireland, pulled a stroke that would have left your pals in the soldiers of destiny salivating. Enterprise Ireland shot out an end-of-year statement that fooled the nation.

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News was short last week. The media was struggling for the smallest scrap. During these fallow periods fantasies become fact. Your favourite agency, that great misnomer of the public service, Enterprise Ireland (EI), satisfied their appetite. You dished up a diet of "good news" that the hungry hacks swallowed hook, line and sinker.

So upbeat were the reports that an innocent observer could be forgiven for believing that EI was on the point of singlehandedly solving our unemployment problem.

RTE, that benign critic of the activities of fellow state agencies, plugged Enterprise Ireland's message on its news website: "Enterprise Ireland supported-firms created 13,600 jobs in 2012" blared out the helpful headline.

Of course that was only half the story.

Yet the state broadcaster carried the good news on every bulletin.

On RTE's Drivetime one commentator went so far as to suggest that EI itself had "created" 13,600 jobs.

Nothing of the sort had happened.

Nevertheless, Hugh, such opportunist news management by a state quango reminds me of one of your other little sidelines. Combined with your chair of Enterprise Ireland, you are on the Advisory Board of the supreme spinner, superquango National Treasury Management Agency (NTMA). You are an insider.

You were close to former Taoiseach Brian Cowen to whom you made a donation. The NTMA, like EI, is a past master at bullish "end-of-year" statements designed to fill the news vacuum during the Christmas famine.

Anyway 2012 was a great year for you personally, Hugh. While the nation was in dire straits you scooped the pool.

Not only did you manage to draw fees from Enterprise Ireland and the NTMA , you even chaired utility company Siteserv, steering it through a controversial sale.

The reality is that you had a better year than Enterprise Ireland. But you could have fooled me. While you hide your successes below the radar, EI sexes up its activities in front of a bleary- eyed post- new year media.

Granted, your pet state agency lashed out taxpayers' funds to companies where 13,600 jobs appeared. Unfortunately companies funded by EI simultaneously lost 9,800 jobs. The upside: 3,800 net jobs were created by someone – not necessarily EI.

The downside: in 2012, Ireland was paying a heavy price for money wasted by Enterprise Ireland in the past. Some 9,800 jobs are a lot to lose.

To be fair the job losses were not totally buried in the "good news" bulletins; but they were not immediately apparent until the froth you had peddled was allowed to clear, revealing the less palatable side of the story.

Skillful spinning.

The reality is far from the spin. Poor Enterprise Ireland is a grant guzzler. It has a monstrous budget of no less than €343m to "create" jobs. It receives over €300m from the taxpayer and €19m from the European Union.

Hugh, your little orphan also spends nearly €90m a year on "administration, operation and promotion". In other words, on itself. This includes your €20,000 fee. Incredibly, when EI is calculating its key cost- per- job figure of €12,000 it omits this massive €90m a year spent in hot pursuit of jobs! How convenient. The cost per job as declared is grossly understated.

If you gave €343m to a real entrepreneur like Michael O'Leary to create jobs I guess he would tell you to jump in a lake. He would insist that government agencies do not create jobs and that the whole exercise is a waste of money.

Subsidies are of doubtful value because weak businesses develop a dependence on them. They become subsidy junkies.

And talking of such dependence, I want to ask you whether in recent years you continued to prop up EI's more wobbly companies with subsidies?

Is EI still acting as a crutch for its earlier mistakes?

Is it true that EI shored up its fading ventures – branded euphemistically as "viable but vulnerable" – because your baby would look lame if past proteges collapsed under current financial pressures?

Has EI been throwing good money after bad? The 2011 accounts – signed by you, Hugh – refer to a mysterious Enterprise Stabilisation Fund for such companies "experiencing difficulties".

The funds were used to "help" these companies to survive the global downturn. . . and "to sustain employment". Was this merely a slush fund to massage the figures?

If these companies had been allowed to fail, Enterprise Ireland would have had egg all over its face. Did the new fund cushion the convalescents, thus ensuring consistent plaudits?

Not that your little quango deserves too many plaudits. Despite the frantic spinning last week the cost per job has rocketed in recent years. As measured by Enterprise Ireland itself (with its very generous, but flawed, method of calculation) each job costs the taxpayer over €12,000. Back in 2006 it stood at €4,835 . Today it has soared to two-and-a-half times that figure. Saving all those jobs from oblivion has come at a huge cost.

Worse still, Enterprise Ireland is not making even the most remote dent on Ireland's unemployment numbers. They remain obstinately stuck at 14.6 per cent – despite all the brouhaha in your press releases.

Hugh, we must ask "Do we need you at all?" Your mandate is to create jobs. You receive nearly €350m to achieve this. Instead, you buy them and parade them as trophies. Many of them do not last. A miserable 3,800 jobs costing more than €12,000 each (under a flawed calculation) is a paltry return. We already have Fas with a budget of €950m, Udaras na Gaeltachta, Shannon Development Authority and the IDA. All are funded by taxpayers. Unemployment figures are still going up. Emigration is a far greater friend to the jobless figures than any of the grant-giving quangos.

But well done, Hugh. The joint press conference – shared between your minister Richard Bruton and Enterprise Ireland – was a tour de force. Richard has unfortunately dumped his critical powers when it comes to making "good" jobs announcements in front of cameras.

This cannot be the same Richard Bruton who promised to declare war on the quangos when he was in Opposition? He even pledged to remove all quango directors within six months of reaching office.

God forbid, Hugh. You would have been one of the first for the chop. Happily Richard is suffering from acute amnesia. The quango boards are safe. You, as a Fianna Fail favourite, are still in situ – but do not expect to be reappointed. Fine Gael and Labour now regard state agencies as their own outlet for patronage. A blueshirt or a tamed comrade is likely to succeed you.

Never mind, you have had a good run . And Enterprise Ireland is still fooling the people.

Yours sincerely,

Shane Ross

Sunday Indo Business

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