Monthly Archives: September 2013

Im thinking of voting to retain the Seanad

Its strange to find oneself on the same side of a political argument as Fianna Fail. That’s now where I find myself with regard to the referendum to abolish the Seanad.

As an exercise in sheer political cynicism this referendum is hard to beat. Conceived by all accounts in a rush of political blood to the head to fill an empty season it sees parties engaging in volte face after volt face, playing ducks and drakes with the constitution for momentary political gain.

Fianna Fail say no to abolition. Having been in power since approximately the Jurassic period, they have over the years stuffed the Seanad with more political dinosaurs than one would find in a box set of Jurassic park but they now profess a desire for reform.

Sinn Fein were in favour of reform but are now against. I think.

Labour were also in favour of reform as late as 2009 producing a good piece on how this could be achieved.

There are many many reasons to abolish the Seanad. Forget the money for a moment – a working democracy requires politicians who can live on the wage, and who are well supported in terms of administrative and other capacity. Nobody seems to know how much it costs nor how much abolition will save.

Most people dont know who is in the Seanad. Just the other day I heard that Susan O’Keeffe, a really excellent journalist whom I had noticed had gone off the media, was in fact a S enator. Who knew. There are many many senators who pass through the chamber without troubling the world as to their existence as to senators. One whom I will not mention I was certain of as having died these many years past.  But many others, notably the university senators, are active. They do their job as legislators in bringing legislation to the floor. It is the government that as a matter of routine votes it down even when agreeing with it. This last year we have seen the following acts brought

  • Business Undertakings (Disclosure of Overpayments) Bill 2012 Ronan Mullen
  • Employment Permits (Amendment) Bill 2012 [Seanad] Fergal Quinn
  • Financial Stability and Reform Bill 2013  – Sean Barrett
  • Food Provenance Bill 2013 – Fergal Quinn
  • Mortgage Credit (Loans and Bonds) Bill 2012 [Seanad] Sean Barrett
  • Protection of Children’s Health from Tobacco Smoke Bill 2012. John Crown
  • Public Health (Availability of Defibrillators) Bill 2013 Fergal Quinn
  • Reporting of Lobbying in Criminal Legal Cases Bill 2011 John Crown
  • Seanad Electoral Reform Bill 2013. John Crown
  • Seanad, Bill 2013 [Seanad] [PMB] – Katherine Zappone and Feargal Quinn
  • Upward Only Rent (Clauses and Reviews) Bill 2013 – Fergal Quinn

Then there are the bakers dozen that the Taoiseach de Jure can appoint. Three words suffice to show how this works – Senator Eoghan Harris. But then there is Katherine Zappone.

It’s a rotten borough – leaving aside the university senators (and successive governments of all hues have refused to implement the 40 y old constitutional amendment to allow all graduates to vote leaving that franchise even more stunted and still the most representative)  and the taoiseachs nominees, they are elected by panels of county coucillors and a hodgepodge of other bodies on “panels”.  See the bottom of the page for a list. A rotten borough however should not in and of itself preclude either the election of good people nor the abandonment of the idea of elections. Reform the electorate is an alternative to abolishing the election.

The main reason though, apart from the fact that abolishing it would concentrate even more power legally as well as factually in the hands of the cabinet (the Dail being as dead a letter as the Seanad when it comes to holding said cabinet to account) , the Government seem not to be convinced. They refuse to put forward the man who thought this up, An Taoiseach, to debate. This is either an arrogant belief that it doesnt merit debate, or a feeling that the grounds given are sufficiently weak that even Michael Martin might shred them.

So, i’m thinking of voting to retain – that way we can at least debate reform having told the government we don’t want to be bounced into this. If the system is irreformable, then fine. But lets try first.

 

  • Administrative Panel     7 seats
  • Agricultural Panel         11seats
  • Cultural and Educational Panel   5 seats
  • Industrial and Commercial Panel  9 seats
  •  Labour Panel  11 seats

List of nominating bodies

  • Administrative Panel
    • Association of Municipal Authorities of Ireland
    • Central Remedial Clinic
    • Enable Ireland Disability Services
    • General Council of County Councils
    • Irish Deaf Society
    • Irish Kidney Association
    • Irish Wheelchair Association
    • Multiple Sclerosis Society of Ireland
    • National Association for the Mentally Handicapped of Ireland
    • People with Disabilities in Ireland

Agricultural PanelAgricultural Science Association

  • Central Fisheries Board
  • Dairy Executives’ Association
  • Irish Co-Operative Organisation Society
  • Irish Grain and Feed Association
  • Irish Greyhound Owners and Breeders Federation
  • Irish Thoroughbred Breeders’ Association
  • Munster Agricultural Society Company Ltd
  • National Association of Regional Game Councils
  • National Executive of the Irish live Stock Trade
  • Royal Dublin Society (RDS)

 

  • Cultural and Educational Panel
    • Aontas Múinteoirí Éireann
    • Association of Secondary Teachers Ireland (ASTI)
    • Bantracht na Tuaithe
    • Comhairle na dTréidlia
    • Comhaltas Ceoltóirí Éireann
    • Comhar na Múinteoirí Gaeilge
    • Comhdháil Náisiúnta na Gaeilge
    • Cónaidhm Éireannach na Múinteoirí Ollscoile
    • Conradh na Gaeilge
    • Council of the Bar of Ireland
    • Cumann Gairm-Oideachais in Éirinn
    • Cumann Le Seandacht Átha Cliath
    • Cumann Leabharlann na hÉireann
    • Dental Council of Ireland
    • Drama League of Ireland
    • Gael-Linn Teoranta
    • Gaelscoileanna Teoranta
    • Institute of Community Health Nursing
    • Irish Dental Association
    • Irish Georgian Society
    • Irish National Teachers’ Organisation
    • Irish Playwrights’ and Screenwriters Guild
    • Law Society of Ireland
    • Medical Specialists Limited
    • National Youth Council of Ireland
    • Pharmaceutical Society of Ireland
    • Royal College of Surgeons in Ireland
    • Royal Irish Academy
  • Royal Irish Academy of Music
  • Royal Society of Antiquaries of Ireland
  • Údarás na Gaeltachta

 

  • Industrial and Commercial Panel
    • Association of Advertisers in Ireland
    • Chambers of Commerce of Ireland
    • Chartered Institute of Logistics & Transport in Ireland
    • Construction Industry Federation
    • Cumann Aturnaethe Paitinní agus Trádmharcanna
    • Electrical Industries Federation of Ireland
    • Institute of Advertising Practitioners in Ireland
    • Institute of Bankers in Ireland
    • Institute of Certified Public Accountants in Ireland
    • Institute of Chartered Accountants in Ireland
    • Institute of Industrial Engineers
    • Institute of Professional Auctioneers & Valuers
    • Institution of Engineers of Ireland
    • Insurance Institute of Ireland
    • Irish Architects’ Society
    • Irish Auctioneers and Valuers Institute
    • Irish Business and Employers Confederation
    • Irish Computer Society
    • Irish Country Houses and Restaurants Association
    • Irish Exporters Association
    • Irish Hardware & Building Materials Association
    • Irish Hotel and Catering Institute
    • Irish Hotels Federation
    • Irish Planning Institute
    • Irish Road Haulage Association
    • Irish Tourist Industry Federation
    • Licensed Vintners’ Association
    • Marketing Institute of Ireland
    • Marketing Society Limited
    • National Off-Licence Association
    • Restaurants Association of Ireland
    • Retail, Grocery, Dairy and Allied Trades Association (RGDATA)
    • Royal Institute of the Architects of Ireland
    • Society of the Irish Motor Industry
    • Vintners’ Federation of Ireland
    • Wholesale Produce Ireland

 

  • Labour Panel
    • Irish Conference of Professional and Service Associations
    • Irish Congress of Trade Unions
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Irish Pension funds need to look beyond the obvious.

This is a version of a column published in the Irish Examiner 28 September 2013

Pensions are a time bomb that everybody knows is ticking away but few seem willing to defuse. Most politicians have over the years been happy to hope that when it does explode they will be long gone from the scene, and anyway maybe none of their constituents will be hurt. The recent proposals for mandatory provision are a good idea well grounded in best practice but are they enough?

Irish private pension funds have had a good year. This comes on the back of several horrible years. The year was good not just in terms of returns, 27% over the last four years or 6% per annum. It was also good in terms of inflows. This is important as the raid by the government on private pension assets has and had the potential to instill a lack of confidence. Yet we saw an inflow of 11%. Irish pension funds now stand at just over €80b.

This sounds a lot, but it is not really that much. Irish households have  on deposit in excess of €90b.  In a low interest rate environment where we are and will be for some time to come 80b will not yield much more than 4% pa. This amounts to,  gross of tax, about €6400 per person. This is not enough to live on. Thus pension funds need to either up the rate of return they will get or they need to increase the amount of money under management, or both .  The recent review of the Irish pension system by the OECD suggests that the private pension industry in Ireland, despite what many feel, is not overly expensive in terms of fees, measured internationally. What is problematic is that it is small. Smaller financial companies can find themselves at a disadvantage. While big is not always better, the efficiency of the pensions industry is probably best enhanced by it growing.

To get more returns is problematic. The strong 5-6% growth era of Ireland is over. We have not had that real growth since the mid 1990s and those conditions are not coming back. We have seen how problematic this can be when we chase that growth from credit pumping and / or property ponzi schemes. Thus pension funds that wish to increase growth in the longterm will need to consider thir asset allocation strategy very carefully.

If we examine Irish funds against European funds we find some significant differences.  Irish funds tend to have the highest allocation to equities and amongst the lowest to property. This is strange. Although we have been burned by the property crash commercial property should form a solid part of a pension fund. The nature of this asset class is that it is longterm. To some extent this underweighting is a reflection of the cycle we are in but Irish pension investors should consider if 2% is appropriate for the long term. Second, within this heavy equity allocation Irish pension funds are grossly overweight in holdings of domestic equity. They hold 32% of all assets in the form of Irish company shares. The market capitalization of Irish shares is approx. 0.2% of world shares. This overweighting in essence is a gigantic bet on the health of the Irish stock exchange.

Screen shot 2013-09-27 at 11.26.03

The domestic focus continues on the bond side, where only 5% of bond assets are non domestic government bonds. While Irish government bonds have performed very well over the last couple of years, falling yields being indicative of rising prices, pension fund investment is a longterm investment.

Screen shot 2013-09-27 at 11.27.27

It is in the area of alternative investments that we see what is for me the starkest difference. The UK has shown a consistent drift to greater allocation of investments in alternative (to stock and bonds) assets over the past decade, with now 11% of all assets allocated. For Ireland this is 3%. The UK is leading a field in which we are lagging. 24% of all plans in europe are planning to increase their exposure to alternative investment classes such as gold and private equity.

Alternative investments are not an asset class – they are a series of asset classes ranging from emerging market debt to copper futures. The main elements tend to be commercial property, hedge funds, commodities, and classes of debt. Looked at over the last decade or so, certain kinds of alternative investment classes have performed spectacularly well.  Amongst the top performers have been global infrastructure funds, commodities especially gold, and global private equity funds. Gold in particular has shown a remarkable sustained growth since 2000, even allowing for an element of froth. So also infrastructure, a trillion dollar market. And these are not especially volatile.

vol ret

Irish pension funds will get increased levels of assets as the governments mandatory policies come on stream. This is good, in the long term. But it will only show the full benefit if the domestic equity focus is scrapped and a much more imaginative asset allocation policy is put in place. Irish pension funds having weathered the worst of the crisis should now look outwards.

Punishing trade union members for being union members….

tolpuddA week is a long time in politics. A century is therefore much much longer. One of the great traditions of the many strands of the left was that the right to organize and to engage in collective action should be respected, both for individuals and groups. People have , literally, died for this right, three of them in the 1913 Lockout in Dublin.  There are parts of the world where union membership is a dangerous , costly business.

Ireland’s finances are in a mess. The decision of the Association of Secondary Teachers of Ireland to reject, in a democratic open vote, the Haddington Road Agreement will not make a jot of difference to this. The total savings of the agreement are calculated at €300m, which is a lot to thee and me but not a lot in the context of say the €100b we have poured into the banking mess.

Big-Jim-LarkinWe now have the strange situation where the Labour Party, the direct lineal descendent of the organizers of the 1913 lockout, are going to proceed to implement a policy whereby ASTI members will be financially penalized MERELY for being members of that union. Two teachers, doing exactly the same work, will now be treated differently by their employer just because they are members of different unions.  ASTI members will be locked out of any existing contractual incremental raises which non-ASTI members will be eligible to get ; Non-ASTI members will eventually get any pay cuts imposed restored, ASTI members will not ; There are other issues which amount to discrimination simply on the grounds of union membership. We don’t allow discrimination, overt calculated legally binding discrimination, on the grounds of race. Why on this?

Two questions emerge : First, what is the constitutional position of this discrimination? Second, how happy (as opposed to acquiescent) are members of the labour party with this?

swing_riots_lgI guess things have moved on. In 1913 James Nolan, Michael Byrne and  John Byrne died at the hands of officials on account of their membership of the ITGWU. Now they would just be fiscally punished. Conflating Pat King with Captain Swing may be rhythmical but its not logical. Punishing people for expressing their democratic views is unfair. From the political perspective this is the equivalent of the murder of the Duc D’Enghein – worse than a crime, it is a blunder. And its chilling – what is the next step? To impose extra taxation on people who reside in particular constituencies because they vote against the government? To cut the wages of those who are members of non-government political parties? Or those who are non-members? Fining people for not cheering when government ministers sweep by? Penalising union members just for being union members is rolling back 150 years of social democracy. That it is a so-disant social democratic party doing so shows how utterly corrupting is power.

Why you should get third level education…

Coz it pays off…

From the 2013 OECD Education at a Glance database, Indicator A7. Data are in those curious beasts, Purchasing Power Parity Dollars. These are dollars adjusted for relative purchasing power. Payoffs are divided between those that accrue to the recipient of the degree (private) and to the public at large.
irelandvrestcollege

irrcollege

totalcostbenefitcollege

detailedcostsbenefitscollege

Why do we hate teachers?

Schoolmaster-with-cane-be-006We seem to hate teachers, at least if one goes by some of the comments one sees. Teachers are pretty regularly called thugs, bullies, parasites, derided as lazy, seen as grossly self interested, motivated only by money (as opposed to the pure desire of those commenting to help the public and work pro bono), and castigated for little johnny not progressing fast enough.  With the news that ASTI (the main second level teachers union) has rejected the Haddington Road  Agreement, expect this vitriol to seep out of the media once more.

One of the more egregious but alas not uncommon type of comment comes from the commentator and financial advisor Eddie Hobbs, who tweeted saturday

“Next weeks common Q at school gates: Are you TUI or one of those spoiled ASTI muppets on €60 grand a head +pensions €1m, threatening my kid?”

This sparked a good few conversations on the twitter machine, with a few comments (in the high negative) from yrs trly. I had to head off mid stream to continue the shopping/mind the two year old/do Saturday things, but the conversation continued. Eddies crowning glory was to seem to suggest that the (female dominated, 65% of staff) ASTI decision to reject the haddington road agreement was down to PMT. Classy

@brianmlucey Sal 60k @NRD (ASTI TUI) +Pen accurate ref annuities. Not about performance, about affordability. Increase dose feminax

 

Its this kind of frankly odd mixture of loathing, name calling and incitement to class division that got me thinking : why do we hate teachers so?

Three things seem to be particular bugbears: salaries and pensions, inability to deal with underperforming teachers and holidays.

The first is of course subject to massive confusion. Even someone like Eddie, who’s job it is to deal in figures, seems unable to find out the average salary. And it’s hard. But for 2012 we had a 2011 spend of 1,180,m on second level teachers salaries this year, and 2,052 on primary. In 2011 we had 32489 primary teachers and 26185 second level. So it’s a salary level of 1180000/26185 or 45k average for second level and 2052000/32489 or 63k for primary teachers on average. This gives a total average salary of 3232000/58674 or 55k. Not bad but not 60k. There is more to this however, on which I will talk below.

The second issue is entirely correct. There is no reason, other than a combination of managerial sloth and union power, combined with a healthy dose of political cowardice over decades, why we have not gotten in place some system for inservice evaluation, with rewards and sanctions, for pretty much every aspect of the public sector. We still don’t.

The third is strange. Many seem to think that the purpose of schools is to act as free crèches for the kids. By all means lets cut down on holidays – but will it serve any educational purpose? If we look at the West German experiment it seems not to matter. Other research suggests similar. And again, there is more to this than meets the eye.

Surely the issue is : how are we doing? Data driven analysis or discussion is alien to Irish commentators it seems. In this field there is a wonderful resource : every year the OECD publish a report comparing a whole pile of metrics in education round the OECD. Its called “Education at a glance” and is well worth reading . It has lots of information on the structure, costs, benefits and so forth of all levels of education. Money values are reported in PPP$ which is to say US Dollars adjusted for relative purchasing power, reflecting that its cheaper to live in Portugal than Norway. Thus these are broadly comparable.

The 2013 edition is out but recently. Its instructive to look at the data on second level teachers.  In a lot of the metrics the data are split into Lower and Upper secondary. This is roughly up to the Junior Cert and then the senior cycle. Many states have separate junior and senior schools.

 

  • Irish education manages to graduate more of those who start education (89%) than the OECD/EU average 83/84
  • A second level education in Ireland pays off. For a man it has a lifetime present value of  $142k , for a woman $118. The oecd averages are $100 and $69
  • We spend more per student per annum at second level,  $11k than the OECD or EU average $9k. Looking at this in terms of GDP per capita the discrepancy is less : 28% v 26% for the OECD/EU
  • We spend less on (primary and secondary) education – 7.4% – as  proportion of total government expenditure than the  OECD or EU – 8.6% and 7.6%
  •   Total current spending including all wages (94% of all spending) is slightly higher than the OECD and EU averages (92%)
  • Salary costs per student per annum are $3800, compared to OECD average of 3400. In per capital terms its less of a discrepancy, 10.3% vs 10%
  • Irish teachers, compared to other tertiary educated workers, earn 82% of average salary. This is less than the EU or OECD average of 89%.
  • Irish teachers spend more time, net, teaching (735h) than the OECD or EU average ( 686h, 650h) .

 

So : we pay second level teachers a bit more, but we seem to get more out of them than our peers. Which makes the frank hatred evinced from some quarters hard to fathom. I personally believe it comes down to bad experiences. I had some truly horrendous teachers. But I had more ok and a couple of really good ones. Instead of arguing from simply the curdled reflection of our school days we might want to look at the data as they are now. And they show a decent system. Lets stop demonsing the people in it.

 

 

 

 

 

 

So ... think we should raise VAT?

Theres a report out that suggests that we could raise VAT, to get more tax, which would be nice. Or at least it would be if
a) all goods were price inelastic and demand for them didnt go through the floor
b) we werent already flatlining on sales and domestic demand.
But what do i know….

Most seems to focus on the zero rated and VAT exempt categories. Although there is no breakdown on the CSO database of these precise categories, the picture below covers most of these (but not 100% accurate – Books at 0% are lumped in with newspapers which are standard rated).

 

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Leaving Certificate Economics 2012: problems

Kevin Denny points out here a major set of problems. There are technical problems with wrong or irrelevant answers ; there is an underlying problem with an outdated syllabus. One hopes that this dissection will receive the same treatment as that which was afforded the math exam when problems in it were brought to light. Somehow I doubt it.
Following the problems here and in Math, one wonders also : what other subjects have 44y old syllabi? More immediately, what other exams might, if gone through in detail, show up issues in interpretation or errors? Chemistry? History? Physics? The response from the State Exams Commission has been underwhelming to say the least. It seems to amount to “no problem here because we say there is none”. This isnt good enough. At the very least Kevin deserves to have his questions answered in full. The 3800 students who sat economics at higher level also deserve this.