Sunday 25 February 2018

The Punt: Austerity is only for the little people

Brendan Howlin Minister for Expenditure and Public Reform. Photo: Frank McGrath
Brendan Howlin Minister for Expenditure and Public Reform. Photo: Frank McGrath

Minister for Public Expenditure and Reform Brendan Howlin raised a wry smile among business owners and private-sector employees when he announced a concession for public servants this week.

Mr Howlin has again extended the deadline for public servants to retire on pensions calculated on the higher salaries in place before cuts introduced under the Haddington Road agreement.

The new deadline is June 2016.

Mr Howlin argues that if no extension was granted, it could prompt the retirements in the summer of huge numbers of senior staff, including office holders, medical and other specialists, as well as those at managerial ranks.

The department said public service staff who were most likely to consider retiring - and avail of the extension to the deadline - were those aged over 60 and also those within one or two years of the minimum retirement age, who may opt for an actuarially reduced pension.

How nice that public servants can retire at 60.

Most people in the private sector are lucky to get out at 65, with 66 now the age when those who retire can qualify for the State PRSI pension.

Of course, half of private sector workers do not have a private pension or even an occupational one.

But then they are helping to fund the €1bn of what is an effective subsidy from taxpayers that goes to pay for public sector pensions.

It seems that austerity is only for the little people in the private sector.

Tullow Oil chief Heavey facing the heat

Tullow's Aidan Heavey is facing into a very difficult year. The oil exploration company has suffered its first pre-tax loss in 15 years, and at $2bn, it wasn't an insignificant one either.

Tullow has become one of the only companies in the sector to sacrifice its dividend to deal with the sharp decline in oil prices, albeit it, with the backing of shareholders. The London-listed FTSE 100 company will also cut costs by $500m over the coming three years, half of which is expected to come from capital expenditure, also known as capex, while the remainder will include job cuts.

Oil companies across the globe have been hit by a 50pc drop in crude prices in eight months, putting them under pressure to slim down their businesses.

But Tullow's problems pre-date that slump.

A cursory glance of its stock performance over the last five years shows that near steady declines have been registered from early 2012 onwards.

Its five-year high was recorded on February 20 of that year, when the share price was just over £16. Now it's barely over £4.

Heavey has promised a shift in strategy towards focusing its capital expenditure on high-quality, low-cost oil production in West Africa. The company has also increased and diversified its sources of debt capital.

The pressure will be on in 2015 to deliver.

Website founder's no ordinary Joe

You probably won't have heard of a company called Maximum Media Network, but you might have heard of Joe.ie - at least if you're of a certain (younger) age.

The lifestyle website was founded by Castlebar, Co Mayo, native Niall McGarry.

Accounts recently filed by Maximum Media show that it has continued to reduce its accumulated losses.

In the previous financial year, for the 12 months to the end of April last year, it made a profit of about €175,000. That cut its accumulated losses to €30,727.

There's little other info to be gleaned from the accounts, but it's interesting that in a cut-throat environment, and where online users are bombarded with any number of social websites, that Joe.ie has managed to turn a profit.

McGarry, who founded Joe.ie in 2010, was on hand last month to speak at an entrepreneurship and marketing event and billed as a "hugely successful" Irish media entrepreneur.

He urged third level students to "make me excited to meet you". He told them that relevant experience and a good cover letter go further than grades alone.

In fact, just about anyone will tell you that grades don't usually mean much at all - unless you've failed, perhaps, which isn't necessarily going to do you much good.

He also said how he's planning to expand Joe.ie into the UK. That, of course, will take money. The Punt expects that McGarry might already be doing the rounds.

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