Irish politics insincerely enmires itself in the need for joined-up thinking, that ubiquitous cliché. But it skirts around the best place for it: amalgamating our erratic but once again soaring economic genius with other more real agendas – making sure we pursue ends and not just means, that we advance social, environmental, cultural and transparency agendas. Quality of Life. Not just GDP, which measures, according to Bobby Kennedy, “everything except that which makes life worthwhile”.
Once in a while we get an insight into where our politicians stand on the economy and society. For example, Enda Kenny’s principal vision is to make Ireland the best little country in the world in which to do business. That’s shocking dereliction for a country’s chief visionmaker.
The only “absolute red line” issue in 2010 for the Minister for Finance, Brian Lenihan, in international talks about Ireland’s banking bailout was retaining Ireland’s Corporation Tax Rate of 12.5%. Then-Tánaiste Mary Coughlan confirmed it was “non-negotiable”.
Similarly tax credits for research and Ireland’s 12.5 per cent corporation tax rate, were among the “red line issues” for Ireland outlined by the Minister for Finance Michael Noonan to an EU committee on taxation that visited Dublin last year after the LuxLeaks tax-avoidance scandal.
It is clear that petty red lines flow in the blood of most of our inestimably unimaginative leaders.
Not once has a government minister asserted that social-welfare rates, income inequality, Traveller welfare or quality-of-life indicators were any sort of red-line factor. It’s always wheedling businesses and its horrible corporation-tax rates.
Sometimes we see deference to corporations and multinationals in a broader vista. There was Michael Noonan’s ludicrous slurpings over a bovine Donald Trump on a red carpet at Shannon on the promise of some golf dollars to the peasants in Doonbeg. There’s the silence on Shannon rendition flights since ethical objections to the warfare and kidnappings effected by transient US troops using the airport as a base risk attracting a spoonful of disapproval from our friends in the headquarters of capitalism. There is our longstanding deference to international pharma and the inflationary effect this has on Irish medical costs, because many of its purveyors have their EU headquarters in Ireland.
But the most Orwellian moment in the history of tax and the relationship between corporations and governments everywhere came at the end of August, courtesy of the EU Commission’s ruling on Apple’s tax liabilities to Ireland. It was pure Myles na Gopaleen.
The EU Commission of course dramatically ruled against Apple, whose EU headquarters employing 6000 people is Cork. Apple paid an effective rate of tax on its earnings in 2014 of 0.005% (not much). It has pulled off the scam by filching profits into a special ‘stateless company’ with its headquarters in Ireland. Apple paid the standard 12.5pc corporate tax on its Irish earnings – indeed it is our biggest taxpayer – but it contrived simply not to earn much in Ireland.
“The profits did not have any factual or economic justification. The “head office” had no employees, no premises and no real activities,” said Margrethe Vestager, the EU spoilsport competition chief.
Paul Ryan, speaker of the US House of Representatives – admittedly not the smartest guide, claimed: “This is precisely the kind of unpredictable and heavyhanded taxation that kills jobs and opportunity”. Moving sharply to contradict himself he then pontificated: “Above all, this is yet another reason why we need to fix our tax code. We need more American companies to invest their money and create jobs right here in the United States. Today’s decision should be a spur to action”.
Perhaps indeed it should. But you’d think even Paul Ryan would know that the action should be for people, not for corporations.
The mishmash of national rules and bilateral treaties that determine how much tax companies owe, and to whom, is egregiously dated. It was designed for the manufacturing age. Business today is increasingly digital, services-based and driven by intangible assets, including rights to exploit intellectual property, from patents to logos. These are easier than physical assets to shift from subsidiaries in high-tax countries to those in low-tax ones. Hence the relentless rise of tax planning as a fundament of multinationals’ greedball business plans. The OECD conservatively reckons that the resulting revenue losses to national exchequers have grown to as much as $240 billion a year, or 10% of global corporate income tax. The ethics of this are revolting.
The growth of the likes of Apple, the world’s biggest company by capitalisation, is at the expense of ordinary people whose countries forego the benefits of equitably taxing them. The US’s 500 largest firms hold more than $2tr in profits offshore. Its tax laws encourage this, because – to facilitate American corporate colonialism – profits its companies make abroad are taxable in America only when repatriated. Unless Donald Trump comes to town.
Anyway the Commission wants Apple – with perhaps (many) others to follow – to reimburse Ireland for unpaid taxes of €13bn, plus interest that might amount to another €6bn. That’s €2,600-€4,000 per head of population: far more to the poor if equitably distributed.
This could change the country, beleaguered after nearly a decade of austerity. It could take a chunk off the national debt, which now stands at €200 billion. It could pay a few years of the Universal Social Charge (USC) which brings in around €4bn a year annually.
It could put a rocket under the school building programme between 2016 and 2021 currently limited to capital of €2.8bn, intended to deliver 310 major extension/refurbishment projects and 14 new schools. More enticingly still €13bn is the exact figure budgeted for our health system this year. Or it could pay more than twice over for the Government’s Action Plan on Housing which commits €5.5bn for building social housing and infrastructure between now and 2021. The government claims €5.5bn would fund 47,000 social houses and help to end long-term homelessness.
So why do we hear so much about the need to feed our economic side and so little about boosting the stuff economics allows us to achieve.
The reason is that our politicians are captive and deferential. And I mean you Trump-slurping Michael Noonan. Twenty years ago as Minister for Health he refused, on civil service and legal advice, to grant significant aid payments to victims of the State-occasioned Hep C blood-contamination scandal and resisted Donegal mother Brigid McCole who was forced to take court action for compensation but died before she could benefit. It had been forgotten but for a decade the debacle was a byword for a Minister, who knew better, favouring the economy over morality and decency.
So what would we do with the Apple money and, with or without it, how should we shift politics?
EQUALITY AND A SOCIAL AGENDA
It is abhorrent that so much about a child’s future is determined from the age of two, and by its parents and background. My inclination is to compensate for this. That’s what I mean by equality. Equality is the central political value as it a human-on-human, relative one, not focused on non-human means to ends like capital in all its forms.
Village goes on about the difference between equality of opportunity, which is really freedom, and equality of outcome which compensates for the accidents of birth. Freedom and equality are poles. All political activity can be charted on their axes.
What Equality Means
A famous recent tome called ‘The Spirit Level’ documents a lot of the knock on effects of equality and inequality, highlighting the “pernicious effects that inequality has on societies: eroding trust, increasing anxiety and illness, (and) encouraging excessive consumption”. It shows that for each of eleven different health and social problems: physical health, mental health, drug abuse, education, imprisonment, obesity, social mobility, trust and community life, violence, teenage pregnancies, and child well-being, outcomes are significantly worse in more unequal rich countries”.
Taking physical health as the indicator, Ruth Barrington, head of the Health Research Bureau said, in 2007, that 5,400 people die here every year because of deprivation. A report, ‘Poverty is Bad for your Health’, claimed: “It has been estimated that 5,400 fewer people would die prematurely each year if death rates were reduced to match those in Europe by tackling social deprivation and inequalities”. She based this calculation on a report by the Institute of Public Health, ‘Inequalities in Mortality’. Why don’t we measure this stuff stringently and try and change any scandalous phenomena it points to? Why have we instead made GDP – a measure which treats an oil-slick and its clean up as a (desirable?) boost to growth – the principal gauge of our success. And that’s leaving aside the fact three quarters of the growth was illusory, a confection of the perversions of a couple of unnamed multinationals.
Anyway, using economic wealth as a gauge of personal fortune, unfortunately in Ireland the top 1% owns 15% of wealth; the top 10% owns 54% of wealth’ and the top 20% owns 73%. The share of gross pre-redistribution income going to the top one per cent of earners increased from 34 per cent in 2011 to 39 per cent this year. And over half of the increase in total income (€21 billion) over the last five years has gone to the top 10 per cent of earners. The bottom 50 per cent of earners got just six per cent of it. We’re bad on wealth distribution; now quite so bad on (post-tax) income distribution.
Towards the end of the boom and during the downturn the Gini coefficient, which measures income equality, improved in Ireland, postredistribution – through direct taxation and welfare. The effect of redistribution is much less the case for example in the US where welfare is more basic. Indeed of the 31 wealthy countries included in an OECD analysis for 2009, Ireland had the highest level of inequality for direct income by some distance but Ireland’s tax and transfer system, on the other hand, had the biggest impact on reducing the level of income inequality, putting us 17th out of 31 countries and making us more equal than the OECD average albeit by a narrow margin, from the late noughties.
Having disimproved in the early years of the boom from 30.2 in 2000 to 32.4 in 2005, income inequality in Ireland has narrowed during the economic crisis due to the protection of welfare rates and middle-income earners shouldering the burden of tax increases, according to the ESRI. In 2011 and 2012 it was 31.1, falling to 30.0 in 2013. The ratio in the UK is 38; and in the US it is 42. However there is no room for complacency as it leaves us more unequal than we were in 2000 and other measures eg figures for the top 10% of income earners versus the bottom 10% of income earners – Gini measures the ratio across the board – and measures which on wealth, not income, show more of a problem. According to leftist think-tank, Tasc: “Wealth is highly concentrated, with 72.7% of net wealth held by the top 20% , which is higher than the Euro Area average of 67.6%. The bottom half of the distribution has around 5% of wealth (4.9%).
The top 10% have more than half of all the net wealth in Ireland (53.8%). The Top 5% have 37.7% while the Top 1% has 14.8%
(In passing we may note that in 2014, Oxfam reported that the 85 richest people in the world have as much wealth as the 3.5 billion poorest.)
The figures are also distorted as many of the least provident simply emigrated. Extraordinarily one in six of all those over the age of 15 who were born in Ireland are living abroad and there seems little sign this is changing.
Ireland’s July unemployment rate was 8.3. Youth unemployment was 17.8 percent. The unemployment Rate in Ireland averaged 10.91 percent from 1983 until 2016, reaching an all time high of 17.3 percent in December of 1985 and a record low of 3.70 percent in December of 2000.
The deprivation rate is still very high, at 31. The adult consistent poverty rate was 7.9% in 2014 A recent report from UNICEF shows 30% of Irish children suffer from material deprivation, and lack essential items.
According to TASC the proportion of children living in consistent poverty in Ireland almost doubled during the economic recession from 6.3% in 2008 to 11.2% in 2014. This equates to 138,000 children, or one in eight, living in consistent poverty. We have nothing to be complacent about in terms of the material circumstances of our population.
The most recent data showed there were more than 2000 children in homeless accommodation in Dublin in August, up from 1275 last August and 780 in January 2015.
At the end of June there were 38,000 mortgages in arrears more than 720 days and 98000 or 13% in arrears. 50,000 debts have been sold to unregulated private investors. Household debt was €148.5bn at the end of March.
And there are 4000 asylum-seekers in direct provision with their 1000 court cases. awaiting decisions on their asylum applications in shoddy accommodations, unable to work driven by the unethical goal of policymakers is to deter asylum seekers from coming here in the first place. The numbers seeking refugee status here have fallen from a high of 11,500 asylum applications in 2002 to fewer than 1,000 last year.
Thankfully Ireland does not suffer from significant racism: there is, for example, no organised racialist organisation. Nearly one in eight people living in Ireland comes from abroad, according to research by Eurostat, 11.8 per cent of the population: Ireland had the sixth highest proportion of foreign nationals. By contrast only 7.9% of British are non-nationals.
As of 2014, Poles made up the largest grouping of non-nationals in Ireland at 22 per cent (or 118,042), followed by British 21 per cent (115,658); Lithuanians 7 per cent (35, 617) and Latvians (20, 086) and Nigerians (19, 727) 4 per cent each.
So the equality statistics are important but in a centralised but parochial society like Ireland’s they mask particular points of dysfunctionality.
The environment isn’t a vested interest so it doesn’t rate as an issue for politicians in Ireland. We emit twice as many greenhouse- gas emissions as the Swedish per head: at 16.7; the UK for example is at 10, while the EU average is 11 and Sweden’s is down at 7.4. To put this in perspective the US’s are 23 and Ethiopia‘s only one.
We throw tantrums for Irish exceptionalism on climate change and have duly prevailed in Europe which has now recognised the special position of Irish agriculture, the biggest sectoral emitter largely because of flatulent cows, in European climate-change policy. We’re not and we did not deserve to get any exemptions at all. We’re rich. If cattle farming is noxious, the world needs to stop it, not allow more of it to happen in Ireland which does it marginally less noxiously than most others. If we want to save humanity we’ve to eat fewer burgers. Though of course we don’t.
According to the Environmental Protection Agency (EPA (2014) the majority of Ireland’s most important habitats are reported to be poor or bad conservation status, including raised and blanket bogs, dune systems, oligotrophic lakes, fens and mires, natural grasslands and woodlands. Many protected species have favourable conservation status but certain species, particularly of wetland and freshwater environments, such as the Atlantic salmon and freshwater pearl mussel are reported to be of bad conservation status.
A recent Birdwatch Ireland assessment of the population status of Ireland’s birds indicates that of the 199 species assessed, 25 were placed on the red list (i.e. of most conservation concern). There is evidence that some species are still undergoing significant declines (e.g. kestrel and skylark) or have become extinct in Ireland (corn bunting).
An anecdote illustrates the disengagement of the political classes. At a dinner for business- people last year, then environment Minister, Labour’s Alan Kelly, was engaged by a Green Party spokesperson who sat next to him but whom he did not recognise. The conversation turned to climate change and the Minister grew increasingly frustrated and then furious at the tenor of the criticism. Eventually, he told the spokesperson to “get out of my face!”. Subsequently, one of Kelly’s handlers approached, to advise that whatever she wanted, the Department would be doing the opposite. Simon Coveney is no better. A longstanding panderer to Irish agriculture, he is about to send central Dublin down a dead end of character-destroying high-rise development. He simply doesn’t care enough to think expansively or independently.
More generally it is shocking that while climate change is beginning to register among the chattering classes there is little awareness that 50 percent of wild animals have disappeared over the last forty years. The number of wild animals on Earth – vertebrates – has halved in the past 40 years. If half the animals died in the zoo it would be front page news. Half the planet dies and it’s dreary negativity. Let’s talk about the Rose of Tralee.
Even after the publication of the Mahon Tribunal report and its findings of systematic corruption, Penrose’s successor Jan O’Sullivan was unmoved, describing criticisms of a cover-up as a smokescreen. It took a High Court case, by former Donegal Planner Gerard Convie, to force the government into a u-turn.
After the RTÉ Investigates programme which uncovered extraordinary dodginess in planning last year, the government sheepishly announced a package of ‘radical’ planning measures which included the belated publication of the independent review, further rehashed details on the proposed Office of the Planning Regulator (the major recommendation of the Mahon Tribunal) and a ‘roadmap’ for the forthcoming National Planning Framework (NPF). The independent review uncovered considerable evidence of malpractice throughout the planning system and includes 29 recommendations to improve “standards of transparency, consistency and accountability” which the Department says it will implement.
Without good governance we can’t guarantee that any of the agendas we need will be delivered.
We’re too centralised. We have no directly elected mayors and the number of councillors has reduced since the downturn from 1627 to 949. There is little accountability for local expenditure. The proceeds of the property tax are not really put into local services.
As to corruption the truth about the tribunals is that they rarely nail the culprits. From the Beef Inquiry, let down by a compromised chairman; to the Mahon Tribunal which unduly and arbitrarily relied on the evidence of the unreliable Gogarty and Dunlop; to the Moriarty Tribunal which pulled its punches after a half-cocked interim report and assault by Denis O’Brien; to the Smithwick Tribunal which changed its mind about the identity of the key colluder; to the Ansbacher cover-up, an investigation into which has run dry again; to a number of Banking Inquiries which didn’t call key witnesses, they haven’t had the means to find out who is telling the truth and often rely arbitrarily on witnesses.
Two tribunal reports – Mahon and Moriarty – made precise recommendations as to ethics in government. They largely overlapped. Government claimed some years ago that almost half (29) of the 64 recommendations made by the Mahon tribunal have already been implemented or are in the process of being implemented. If anyone had the energy they’d second-guess that, but I’d estimate the figure as closer to half of what they claim, with most of the important ones ignored.
Ireland slipped one place on Transparency International’s Corruption Perceptions [as opposed to Corruption Reality] Index for 2015. The findings showed a fall in Ireland’s ranking since 2014 from 17 to 18 out of 168 countries, but a slight improvement in its score from 74 to 75 out of 100. Transparency International considered the failure to publish new anti-corruption legislation, four years after it was announced, was hugely disappointing.
The last government did advance the Freedom of Information, lobbying and whistleblower regimes. Whistleblower legislation was introduced this year embracing workers in all sectors. And lobbying legislation though it only guarantees to record that meetings took place not what was said; and establishes cooling off periods for officials before they go into private-sector jobs of only a year, not the two years originally promised.
Political funding has massively changed, with much now coming from uncorrupting government funds. Nevertheless for example the Mahon tribunal recommended that the threshold over which political donations should be disclosed should be reduced to €55 for individual candidates and €175 for parties. In fact Government reduced these limits to €600 and €1,500 respectively. Ten times more.
The independence of the Revenue Commissioners has been placed on a statutory basis, and the Central Bank’s regulatory powers have been enhanced.
There also appears to be reduced tolerance for nepotism though as a country we appear still to have no particular problem with parochial improprieties such as Councillor-driven planning permissions and Garda favours.
Denis O’Brien is Ireland’s most powerful media owner and richest man and a big supporter of the main governing party FG ,and mate of Bill Clinton. The Moriarty Tribunal, which was instigated after the Planning Tribunal to look into political corruption found that, Communications Minister, Michael Lowry a self-righteous Fine Gael who was excitingly beholden to Ben Dunne, a supermarket mogul with a cocaine habit, assisted Denis O’Brien’s consortium Esat Digiphone in acquiring Ireland’s lucrative second mobile phone licence in the mid-1990s This ultimately made O’Brien the richest man in Ireland. At an infamous meeting in Hartigan’s a grubby bar off Stephen’s Green in Dublin, Lowry tipped O’Brien off as to how to secure the bid.
The Moriarty Tribunal noted that O’Brien had “made or facilitated three payments to Lowry, the deciding Minister, of around $1m: £147,000 sterling, £300,000 sterling and a benefit equivalent to a payment in the form of O’Brien’s support for a loan of £420,000 sterling”.
O’Brien now has nearly 30% of INM, the Independent Newspaper group Ireland’s biggest newspaper group, though he denies he controls it; and owns several radio stations.
In 2013, I wrote in Village that Denis O’Brien was exercising an extraordinarily chilling effect on journalists. I detailed his litigious “promiscuity”. The first six journalists I spoke to for a profile of him, big beasts in Ireland’s world of journalism, wouldn’t comment on him for fear of litigation, for fear of having their careers damaged as happened to several..
Although O’Brien at one state informed Village that “I take very serious objection to the use of the word ‘corruption’ Village has always taken the line that you can say Denis O’Brien was corrupt. However, spineless Irish media had chosen to learn an entirely different lesson: Not to mention that, or him!
Onto this lethal deferential background then came the decision of one of Ireland’s soberest TDs, Independent Catherine Murphy, last year to read details not of that impropriety but of Denis O’Brien’s banking arrangements with State-owned IBRC into the parliamentary record. She claimed he was getting an interest rate of 1.25% when the state-owned successor to Anglo Irish Bank which held his loans was charging everyone else 7.5%.
Because she said it in parliament the matter is constitutionally protected. The constitution is clear.
When Murphy raised it in the Dáil, lawyers acting for O’Brien immediately demanded the country’s media censor reporting the parliamentary of proceedings. Following poor legal advice RTE, the national broadcaster, the Irish Times and of course The Irish Independent Group, arguably controlled by O’Brien, complicitly did not report on this. I noted that when the legal advice was inevitably found by the High Court to be nonsense their bosses should resign. But it was; and they didn’t.
O’Brien also incidentally extracted an apology from IMN in 2015 for saying he controlled it. Which sort of proved the point that he half did. And that ‘Independent Newspapers’ is an oxymoron.
The media in Ireland are not safe, not democratic.
Recent CSO figures showing the Irish economy grew by a massive 26pc last year – more than three times faster than first thought – were quickly dismissed as “farcical” at home and abroad. Nobel Prize-winning economist Paul Krugman described the phenomenon as “Leprechaun economics”, as experts lined up to explain why the figure doesn’t reflect reality.
Nevertheless the debt mountain built up paying off bank debts and funding the current deficit in the years of austerity is shrinking. Soon it will look almost normal by European standards.
Ireland is predicted to be the fastest-growing economy in Europe this year according to new figures from the European Commission, with the EU’s executive arm expecting the economy to grow by 4.9 per cent this year – not 26%.
The predicted GDP growth rate is higher than the figure of 4.5 per cent for 2016 estimated four months ago. The Commission also revised upwards its estimates for 2017 to 3.7 per cent, up slightly from the growth rate of 3.5 per cent predicted in February.
The 4.9 per cent GDP growth rate contrasts with the euro zone average of 1.6 per cent growth expected this year, down slightly from the 1.7 per cent growth forecast in February. Germany, Europe’s largest economy, is expected to grow by 1.6 per cent in 2016 with a 1.3 per cent growth rate expected for France. The deficit – which at one point soared to 30 per cent of GDP but which was for a long time over 10 per cent – will shrink to less than 1 per cent this year.
We could be facing a €13 – €19bn boost to our public finances. There is palpably scope for radical social action.
Politics is of course the agencys for these agendas: for balancing the rest of them against vested economic agendas and so-called imperatives. The extent to which the priority has shifted from tax cuts to public spending increases was evident from a recent claim by Minister for Finance Michael Noonan that about 85 per cent of available extra resources this year was going to extra public spending rather than tax cuts.
The Government remains committed to whittling away at USC for lower and middle-income earners over the coming years. But it seems it is a lot more committed to more spending on public services. Noonan speaks repeatedly of investment in “schools and hospitals” on Tuesday. Largely absent has been the emphasis more customary from Fine Gael in recent years about “putting money back into people’s pockets”.
Noonan recently told Sean O’Rourke:
“Governments govern from the centre if they’re doing their job properly. And sometimes depending on conditions they have to veer to the right sometimes they have to veer to the left. And if you think a simple model for left and right whether you spend more or you don’t spend more.
This government is moving left of centre because we know that public services have been very damaged and we didn’t invest in them over the last five years simply because we didn’t have the money. Well we have the money now and we’re going to do it”.
The Apple debacle shows the need for acute scepticism, and mobilisation.
By Michael Smith