Year: 2010

Submission to waste consultation

We made a submission to the public consultations on waste policy. It refers back to our earlier work.

The proposed waste policy is roughly equal to the Eunomia report (available on the consultation site), ignoring all the critique raised. Our submission therefore just repeats points made earlier. We also emphasize the procedural lapses in policy formulation.

Here’s our conclusion:

Waste policy development in Ireland is essentially on hold. In the past three years there have been a number of consultations, but, by and large, no definitive decisions by government. The development of waste policy in Ireland appears to have imposed costs with no discernable benefits in terms of policy development. It is a
case study in how not to go about consultation. Instead of being driven by a desire to set and meet environmental goals in a cost-effective manner, the proposals are to a considerable extent based on a predetermined view that incineration, especially large incinerators, should be discouraged but with no coherent economic or environmental rationale as to why policy should have as its goal this technology-specific bias. It is not supported by the government’s own international review.

Submissions received by the DoEHLG in this area have neither been published nor responded to, even where there has been ample opportunity and time to do so. There is no sign that this paralysis will come to an end shortly. The Draft Waste Statement promises that there will be an RIA undertaken as part of “further significant consultation and engagement”. This is likely to defer any decisions until 2011 and beyond. The reputational damage to Ireland, which is likely to spread to sectors of the economy beyond waste, as well as the likely failure to reach landfill targets in 2013 and 2016, is something that should not be contemplated lightly. It is somewhat ironic that a Draft Waste Statement that talks about sustainability and moving away from landfill may well end producing a less sustainable policy and more extensive use of landfill than anticipated.

Women’s Economic Opportunities

The Economist Intelligence Unit has a report on women’s economic opportunities, indexing and ranking countries’ relative performance. Leo Abruzzese discusses the general issues over at VoxEU. Let us focus on Ireland.

Ireland ranks 16th out of 113 countries. Better than most, worse than some. We cannot afford to hold back part of the workforce. Increasing productivity is one way of getting Ireland back on its feet.

Here are the factors that are keeping Ireland’s women down:

* Provisions for maternity and paternity leave

* Legal restrictions on job types

* De facto discrimination at work

* Access to child care

* Access to credit

* Adolescent fertility rate

* Non-ratification of the convention against all forms of non-discrimination against women

None of these issues were raised in the latest report on the Smart Economy. Making better use of existing resources is, apparently, not smart.

Ireland vs Iceland

There were a couple of mentions of Iceland on tonight’s Prime Time. One chap in a vox pop said they were living off food parcels while we were drinking pints. Brian Lenihan stressed that defaulting on seniors would lead to a fate worse than (paying back) debt, namely what Iceland has experienced.

So out of curiosity I went to the OECD’s statistical website to see what the quarterly accounts of the two countries have to say on the subject. I looked up the stats for quarterly GDP, seasonally adjusted, volume index, expenditure approach.

The relative declines of the two economies depend on the quarter you start from. Ireland peaked in 2007:4. Relative to that quarter, Ireland’s GDP in 2010:2 had declined by 13.4%. Iceland’s had declined by 11.8%.

But, to be fair to Ireland, you might also want to compare movements since the Icelandic peak, in 2007:3. Relative to that date, Iceland’s GDP in 2010:2 was down by 16.3%, while Ireland’s was down by 10.5%.

There is a twist in the tail, however. As we all know, GNP and GDP are very different in Ireland (and our GDP data have traditionally been regarded as unreliable because of transfer pricing). Taking Irish figures for GNP (seasonally adjusted, constant market prices) from www.cso.ie, you find that between 2007:3 and 2010:2, Ireland’s GNP fell by 17.0%, slightly more than the decline in Icelandic GDP during the same period.

If you are of the view that we should only be interested in developments since 2008:4, then the declines since then are: Iceland (GDP): 11.6%; Ireland (GNP): 9.9%.

And of course, if you regard GNP as the more reliable indicator in the Irish context, then it is important to note that Irish GNP has been continuously declining since this crisis started. Call me old-fashioned, but I am one of those fuddy duddy types who thinks in order for a recovery to count as a recovery, GNP should actually stop falling. Once again, Iceland and Ireland are not quite as different as the Minister made out during his interview.

As for unemployment, according to the OECD the harmonised unemployment rate for Iceland in 2010:2 was 6.8%. Our rate in July 2010 was 13.6%. I actually think that unemployment is important.

The Minister got very agitated about people suggesting that Irish taxpayers should not in fact pay back senior bondholders everything our rotten banks owed them. An increasing number of these rabble rousers are foreign, it should be noted. For example, the Roubini crowd said today that “we think it unconscionable that bondholders are protected at the expense of taxpayers”. There have been many such sentiments expressed in the international media in the last while. But the bogeyman used to shoot down any such suggestions when they are made in Ireland is invariably Iceland.

It is not such a slam dunk argument as the Government appears to think.

The Economist on Ireland

The Economist’s reflections on today’s announcements are to be found here.

Argument for an Election Growing?

Today’s banking announcements were marketed as bring finality to the banking crisis but that was always unlikely. The final costs and implications of the crisis still depend on stuff that happens in the future which, word has it, can be tricky to predict. Jagdip has an as-always excellent discussion of the various loose ends here. I think the point that AIB and BoI’s non-NAMA loan books have not been subjected to the same stress tests as Anglo’s is an important point and one that could come back to haunt us again.

On the fiscal front, Minister Lenihan’s announcement of a new four year plan is welcome. Though the official statement didn’t say this, the Minister’s said during his press conference this morning that the plan would detail both expenditure cutting and revenue raising measures which would make it a more credible plan.

That said, the effect of multi-year plan in convincing the bond markets that we are on the road to sustainability will be severely limited by the fact that the government will have at most two budgets, and far more likely one, before the next election.

With the government having taken the decision to stay away from the sovereign bond market until January, there is a strong argument in favour of calling an election to take place in November.  Each of the political parties could be given 3 weeks to prepare their own multi-year budget proposals, followed by a 3 week election campaign, giving a new government another four weeks to negotiate a program for government and introduce a December budget.

This course of action would have the following advantages.

1. Because we are on a temporary break from the bond market, the movements in bond spreads that would take place during the campaign would be essentially irrelevant. All that would matter at the end of the day would be the budget and multi-year plan implemented by the new government.

2. The multi-year plan would be seen by the outside world as having political legitimacy. The question of whether the government had a mandate to introduce unpopular measures would disappear. And despite regular claims from journalists that the opposition are irresponsible and have no policies, both Fine Gael and Labour did produce plans last year detailing how they would implement a €4 billion adjustment. Likewise, I would have little doubt that they would be forced to provide multi-year plans to match the government’s and that the election debate would be dominated by the comparison of these plans.

3. The difficult decisions in the upcoming budget would be taken by a new government, most likely with a large majority and not worrying about elections for another five years. Difficult decisions like the introduction of a property tax could be taken without concerns about discontented backbenchers and with the knowledge that the economic situation will look better in 2015.

I’m sure in writing this I’ll get the usual flak from the usual sources, claiming I’m putting this argument purely because I’m a Labour supporter or a Blueshirt or something or other. In truth, I have no affiliations or loyalty to any political party. I just think that there are a number of objective arguments for calling an election now.  If the government puts together a concrete multi-year fiscal plan and runs an election campaign on the basis of it, they will have done a considerable service to the country.