Tag Archives: Senators

Running for the Seanad

records-seanad2So, I had been asked by some people to consider this, in the upcoming election. Run for the university seats, they suggested. These were people I respected, from non-party backgrounds. Some were active in elected politics, others not. They made a persuasive case (but then, some are in the political world). I thought about it, took soundings and explored some ideas. I have made a decision about running.

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What should we do with the Seanad?

So what to do with the Seanad? It now seems certain that there will be referendum on the (very complicated) proposal to reduce the parliament from two to one chambers.

Leaving aside the practicalities of same, and disregarding whether after what promises to be a bruising abortion battle in the first half of the year and the prospect of another stiff budget in late 2013 the coalition really wants to go to the mat on this issue, what are the options for the upper house?

First, there is a widespread view that the Seanad is at best dysfunctional and at worst irrelevant. The most recent poll suggested that by a fairly large majority the electorate would see it as the latter, with 55% suggesting it should go.

Second, the option being put to the people is likey to be a single issue : yes or no to have the seanad retained. But this I might suggest is to oversimplify the issue. From leaving things as they are to complete abolition there is a wide range of options. Reform, which cannot I think come from within the existing structures, should be attempted before abolition.

Lets recap: the seanad can only delay legislation on bills, it can initiate legislation, and it has a most curious makeup. Of the 60 members 6 are elected by the graduates of two of the universities, even though the provision exists to extend this franchise; 11 are direct appointments by the Taoiseach, and 43 are elected by panels. For more details on these see the Seanad website

This brings me to my reform proposals, drawn from nothing much more than 48 years living in the country and watching with amazement the antics of the elected members.

  1. Widen the electorate. At present the electorate to the Seanad is extremely limited and wildly unrepresentative. Recall that there are 43 members elected by “vocational panels” To most people this is of course both opaque and an affront, as these panels are political panels regardless of their presupposed idea to represent various vocations. The electorate of these panels consists of county councillors, dail and Seanad members. For all the gross unfairness of the two university graduate constituencies at least they represent tens of thousands of people – 15,000 voted in the University of Dublin election and 33,000 in the National University election. By comparison the electorate for the panels is about 1000. People who are county councilors and who are graduates from the two universities thus have 7 votes for the upper house. And politicians wonder why the ordinary public hold them in some certain contempt? Widen the electorate. Make it universal. Indeed make it open to all who hold Irish citizenship regardless of location.
  2. Make it work. Its hard to have confidence in a house designed to act as a watchdog and oversight on the lower house when it doesnt. Its hard to recall the last time a Seanad voted down a Dail proposal. So if it wont do that make it work some other way. Make all newly proposed secretaries general of government departments and all CEOs of companies either owned by or in which the state has more than 33% stake appear before the Seanad, to ask and be asked hard questions. Make their appointment contingent on a positive vote.
  3. Break the link with the Dail. At present there is a widespread belief that the Seanad is a place where old politicians go to vegetate, failed Dail candidates go to ruminate on a renewed Dail run next time round, or else where aspirant Dail members cut their political teeth. In the same way as we broke the link between membership of the oireachtas and of county councils, we can and should do so for the two houses of the oireachtas. Make it impossible for anyone who stands for election to one to stand for election to the other within a 5 year period. This would force politicians to choose
  4. Make it last. Part of the problem it seems to me is that the Seanad is tied to the electoral cycle. This provides its reputation as a soft landing for rejected Dail candidates, which I suggest could be broken. But lets go further and break the link more, with a standing electoral cycle for the Seanad as 4 years. This would , I suggest, free the Seanad to do what it is we want it to do.
  5. Keep it on its toes. One of the nice things about the US system is that it has frequent elections. This at least in principle allows a regular and real pulse to be taken of the nation. Lets import this and have the electorate judge the seanad and the government by extension, with 1/4 of the members up for election every year. And no, this needn’t be a massive undertaking, our way of electing is archaic at best…but thats another issue.
  6. Give it teeth. If we are to have a second, upper house, then it has to be able to do more than delay legislatin. Let it have power to throw out bills and to make serious amendments.
  7. Make it serious. Although in theory the cabinet can contain Senators it very very rarely does. If the Senate is serious make 1/3 of the members of the cabinet be required to be from same. This would of course be feasible only if we at the very minimum allowed universal sufferage.
  8. Make them ours. This ridiculous corporatisim, whereby members are , mar dhia, elected to represent the interests of vocations, might have made some sense in the 1930s. It makes zero sense now. Widen the constituencies when we widen the electorate. Lets have a national and a diaspora constituency, where we have (say) 45 members in the national and 15 in the diaspora. Above all abolish the ability of the government to stuff party placemen and the forgotten into the Seanad. For every decent independent Taoiseach nomination there are a dozen who would make caligulas horse seem like Gladstone.
  9. Make it a prize. If the upper chamber is to be anything it should be reflective and thoughtful Lets make any Irish citizen who achieves an externally validated major prize a member for a term. What prizes? Lets start with the Nobels and the Field Medal (the nobel of Math). Lets consider others, such as chess grandmasters, or Schock prizes in logic, or an Oscar…. Lets make the Seanad reflect both our desires and our achievements.

Im sure there are dozens of other good ideas floating about. One of them is not a blanket abolition.

Default, Regulatory Capture and Banks

Last night in the (darkened, of course for the books and not very conducive to photography on the hoof) confines of the TCD Library Long Room Senator Sean Barrett launched “What if Ireland Defaults”, the book of essays previously noted on the irish debt and economic position. Having entered into TCD ESS (now BESS) in October 1981 I had an idea of economics as a possible route. I was still deciding when the first lecture I had in my second year was in a course which I was thinking maybe/mabe not. It was “public sector economics” and was taught by Sean. Immediatly I was captured, as Sean outlined in 20m a course that would give us a helicopter tour d’horizon (that turned out to be a tour de force) of the then myriad ills afflicting the Irish economy. And yes, dear children, they were arguably as bad as here and now.

Sean, along with such luminaries  Louden Ryan, John Bristow, Alan Mathews and John O’Hagan inspired a desire in me to work in this area and I have been honoured to have worked with Sean in particular as a student and latter as a colleague and constituent. Archaic and sclerotic as the Seanad can be at times, the reality is that the university senators have a large and diverse voting base to serve and they serve it well. Any changes in voting for Seanad Eireann should try to capture more of the essence of the university senators of all hues over the years.

Sean very kindly launched the book last night and his speech is reproduced, with permission, below.

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My first duty is to congratulate the three editors, twenty-one authors and the Orpen Press on the publication of this excellent volume. It deserves to be widely read as Ireland faces a continuing crisis in which unemployment has risen over three fold and our debt has risen from 28% of gross national income in 2005 to 114% in 2011 as noted by Stephen Kinsella and the combined debt burden of the state, household and corporate sectors is almost five times GDP as noted by Peter Matthews.

In the words of a great TCD man, Oscar Wilde, Miss Prism tells Cecily to read her political economy in the absence of her tutor. “The chapter on the fall of the rouble you may omit. These monetary problems have their melodramatic side.”

Ireland’s economic policy unfortunately followed Miss Prism’s advice. We sleepwalked into the euro currency and the regulatory body played lots of golf with bankers through an unsustainable property boom.   Stephen Kinsella notes that we doubled the national debt in 2008 by bailing out the banks. Relative to GNP this was a gold medal in regulatory capture by world standards. Regulatory capture of governments by national airlines or sheltered sector professions pales into insignificance compared to the Irish bank capture of the exchequer.

Kinsella states on p.85 that “we don’t need  to default on our debt but we may need some further assistance from the EU/IMF.”   Default, austerity and restructuring of debt are all reviewed by the various authors in this fine volume.  Nobel prizewinner Joseph Stiglitz warns that “financial integration raises the overall risk of large negative shocks” and that “capital market integration could increase, instead of lower , the likelihood of a financial crisis in a given economy.” (p.40).  As we survey the lack of an exit mechanism from the euro, the large differences in the sizes of the Eurozone member states, the one size fits all interest rate, the lack of fiscal transfers and labour market mobility between the members, and the lax entry requirements to the currency we see the urgent need for a look again at the optimal design of international financial architecture. This requires from Brussels and Frankfurt the words of explorer Tom Crean.  “I heard something I never heard before in service- I made a mistake!”

“How to Survive on the Titanic- Ireland’s Relationship with Europe” is therefore an apt title for Megan Greene’s chapter 6 in  the book.  She states that bringing back the drachma would be a much faster way than austerity to revive the Greek economy.  She notes Ireland’s five austerity budgets in a row and high unemployment. She sees the fiscal compact as a surefire recipe for recession in the peripheral countries. A compact is defined in the Oxford English dictionary as a small vanity case.

My Fiscal Responsibility Bill was introduced in the Senate last December.  The competing versions from the Fiscal Council and the Department of Finance have yet to appear and are overdue.  Ireland urgently needs to reform its governance. Far too many of those who caused this crisis have been exempted from its cost. Far too many institutions remain unreformed.

Elaine Byrne and Huginn Porsteinsson point out that Iceland was lucky. Their banks at ten times GDP were impossible to save.  Irish banks at five times GDP were thought possible to save and we will take far longer to recover.  A totally ludicrous project  is thus shown to be a better protection for the citizens than a scarcely plausible one.   The decision to save Anglo Irish Bank becomes ever more difficult to understand or defend.  The continuing decision to defend a bank that has been shut is impossible to support.

Making private debt public is a naked transfer of wealth away from taxpayers as noted by Tony Philips. Karl Deeter echoes many fears about our monopolistic pillar bank strategy designed to eliminate competition.  These are just some points that caught my attention. In fact on every page of this book there are interesting and stimulating ideas. I commend it warmly And again congratulate all those involved in an excellent venture.

Heel Prick Cards and National Priorities

I guess I had been vaguely aware of the controversy about the retention of “heel prick cards”, the cards containing the blood samples of over 1.5m irish born babies, from the heel prick blood test used on newborns.  This test is used to diagnose a variety of diseases, genetic and otherwise. Its been proven to be a valuable tool and is absolutely standard. The cards on which the blood samples are stored have up to now been retained, indefinitely. This is it seems about to change

In a nutshell the Data Protection Commissioner, working of course within his powers and quite properly as the law stands, has said that as these are personal data they must not be retained without permission of the person. The minister for health, a medical doctor we should recall, has agreed that these must be destroyed after 11 years retention.

I have to say this causes me great disquiet. First, this represents a unique national resource, containing a databank of the genetic code of the population. The research potential of this is literally incalculable. At a time when irish genetic scientists are forging ahead (in shrinking resources) on unravelling genetic deseases that are overly prevalent in the irish population (coeliac, SADS, and CF being amongst them) it makes no sense to discard such a resource.  In fact, it is a blunder of the first water.

Second, we have an opportunity here to engage in cold case analysis for unsolved crimes. As forensic science advances genetic material is more readily extractable from old evidence.  Running this against this national database can only assist the police in closing open unsolved cases. I am aware of the civil liberties arguments on genetic databases, but these tend in my view to be outweighed by the possibility of catching rapist, murderers and other criminals, no matter how much they think they have got away with it.

Yes, there is a legal barrier to this at present. But our governments over the years have shown themselves well able to act swiftly (if not always wisel) to put in place emergency legislation to protect financial interests. Lets amend the data protection laws, to give people a fortnight to ask for their samples to be destroyed, and then move on. This is a precious national resource and must be retained. The state in its foundation suffered a catastrophic loss of records with the philistines who colluded in the destruction of the records in the Four Courts. Lets not have further generations look back on this with a similar sense of “what were they thinking” . In a week when the government still have not cleared the use of personal data with the Data Protection Commission in order to chase households for the household charge they can ill afford to lurk behind Billy Hawkes in this regard. Lets see some leadership, some imaginative thinking from the Irish body politic…you in the back, stop sniggering….

Fiscal Compact Referendum : why I am voting “maybe”….

A number of people over the last while asked me how I intend to vote in the forthcoming referendum on the fiscal compact. At the moment  I am firmly in the I don’t know camp.
I have previously blogged and written about my concerns regarding the fiscal compact. I think we’re being asked to sign up for something which  is in principle a good idea, that is to say it is better for government not to be ill-disciplined with regard to the taxpayers money. There are problems with regards to how we measure some of the key aspects of this proposed fiscal compact, issues around its effectiveness, and concerns as to whether or not it will have an overly large impact upon the bond market.
If we do not sign up for this fiscal contact what happens?
We will not be thrown out of the Euro. No such mechanism exists, and if we can countenance a Eurozone which contains Greece then we can    imagine a Eurozone that contains an  Ireland which is not adhering to the fiscal compact.
Nor will we be thrown out of the European Union.
As things stand at present if we do not adhere to the fiscal compact then we will not be in a position, should we need to, to obtain funds from the proposed European Stability Mechanism.  Of course, obtaining funds from the European stability mechanism is only something that would occur if we required a second bailout, and the government have previously described the notion that we would need such a bailout as ludicrous. So would be signing up to obtain that which we do not need….
There is some question about whether or not not adhering to the fiscal compact would cast doubt on our bona fides in relation to  acting like a financially mature country.  The concern is that if we did not do so then, having to go back to the bond market as we will be doing if we believe the government, we would be facing into higher bond costs than would otherwise be the case. There’s nothing whatsoever to stop the Irish government from putting in place a domestically originated fiscal responsibility Bill. In fact, such an opportunity was presented by the tabling of exactly that Bill by Sen Sean Barrett, which the government declined to support but which to their credit did not vote down. A set of slides explaining the background to the bill and to fiscal rules in general is here.
There will not be a rain of frogs, nor will we see (somewhat contingent on the proposal in item 4) in mass outflow of deposits or a mass outflow of foreign direct investment. These may outflow anyway, but the mere declining to participate in a European fiscal compact (but making it clear that we would pretty much do the things that are  suggested by the compact, although in a more sensible manner)  is in my view unlikely to be the catalyst.
If we do not sign up for the compact then, as noted, we are not able to access the European stability mechanism.  This to my mind is perhaps the only compelling pragmatic reason to consider signing for the compact.  At present the funding under the first bailout extends through the end of 2013.  The intention of the government expressed the number of times is that we will then be “back in the market”, and able to borrow an reasonable terms both to fund our ongoing government deficit and to meet the maturity schedule of existing debt.  It is this issue that seems to be missed by many of the proponents of the no vote who seem to think that in voting no we will escape  austerity. Even on the governments own proposals we will still be running a deficit of approximately 3% of GDP in 2015.  Let’s assume that we decided to close the deficit by 2014, in that case we would have to take an additional €5-€6 billion out of the system over the next three years.  But even if we were to run a balanced budget by 2015 we would still not be of the woods. We face significant repayments of previously borrowed monies from 2014 onwards.

From 2014 to 2020  €30 billion worth of previously borrowed Irish national debt needs to be repaid.  If we are not able to borrow from the European stability mechanism to repay these then we will have to borrow from the bond markets, but in that case we will not, I would submit, be in a position to both borrow for the  maturity of existing debts and for ongoing deficits. In fact, with an ongoing deficit and not adhering to the European fiscal contract we would face very significant interest rates, perhaps in effect locking us out of the markets again, but this time with no European full-back. While it might be possible to borrow from the IMF this is not a guarantee. So if we do not sign up to the compact, cannot borrow from the European stability mechanism, and do not want to face enormous borrowing costs, we would have no choice but to be running a primary budget surplus by 2014. Given the deleterious effect that the existing “austerity” program is having on the economy, politics, and society, we need to ask whether or not imposing perhaps 50% more is either desirable or feasible? In other words, there is no magic relief from austerity. If we do not sign up for the compact then we are in effect going to have to massively accelerate our movement towards a budget surplus. If we do sign up for compact we’re going to commit ourselves to achieving a budget balance, but over a somewhat slower period.

One way in which we could perhaps begin to square this circle might be if we could get some relief on the money borrowed for the Irish banking recapitalization, now masquerading in most part as promissory notes.  Stephen Kinsella, Karl Whelan and yrs truly  spoke at length to the Oireachtas on the whys and wherefores of the Promissory Notes and how to escape the €3.1b anglo-tross which they represent .Unfortunately, once again the government seem to have ruled out any linkage between the promissory notes (approximately  €31 billion) being relieved from Ireland and a vote in favor of the fiscal compact. This morning the Taoiseach said that the Irish voters would not be bribed… I have a very distinct recollection of a previous Taoiseach returning in triumph from Europe weaving a cheque for the then outstandingly large sum of  £8 billion, prior to a referendum.  If it was good enough then to induce the voters to see the in pocket benefits of being on good terms with Europe then why not now?

Presentation to the Oireachtas Committee on Finance 15Feb2012

Below is a version of the written presentation I circulated to members of the Oireachtas Committee on Finance at our discussions today on ELA and Promissory Notes.

ELA is money. It is not a bond. Dealing with ELA does not involve dealing with bondholder although the money so created was used to redeem (pay off) bondholders. The acronym ELA stands for Extraordinary Liquidity Arrangement, and the name of indicates what it is. It is first and foremost extraordinary, in that it is a facility extended to commercial banks by central banks when ordinary (usually taken to be interbank or regular central bank ) short or medium term funding is not available for whatever reason. It is liquidity, in that it is designed to allow a bank to maintain liquidity to its operations and customers, rather than a solvency arrangement, which is designed to ensure that the organization is well capitalized and able to trade in the longer term. It is a basic tenet of corporate finance that we draw a distinction between these two concepts ; solvency, achieved through capital, is a longterm concept while liquidity is a rolling short-term issue. Liquidity crises, for countries or for companies, can arise when lenders no longer have confidence in the solvency of the borrower. This is what happened in September 2008, the initial focus being on the solvency of Anglo and Irish Nationwide (now collectively known as Irish Bank Resolution Corporation, IBRC).

ELA is money. In the normal course of events in the eurosystem money is created under agreed mechanisms. Central Banks have the power to create money ‘by fiat’ that is to say they can create it from nothing. ELA is not part of the normal operation of this monetary creation but is allowed in extraordinary circumstances. ELA is carried as an asset on the balance sheets of the creating central bank, in the case here the Irish central bank. It is not created by borrowing from other central banks. It is not a bond. It is not money loaned to the central bank of Ireland from the ECB, nor money loaned from the other central banks. It is money, as real as any other form of credit agancy. It is pure money creation, by fiat, allowed in exceptional circumstances. As of end-2011 this domestically created money amounted to some €44billion.

How is this money mobilized? When Anglo/INBS became hopeless and obviously insolvent the Irish government recapitalised them. The largest part of this recapitalisation was via the creation by the irish government of a Promissory Note which was issued to the banks. This was not and is not a sovereign bond. We know that it was not and is not as the ECB refused to accept this for normal liquidity operations, forcing Anglo/INBS to instead go to the central bank of ireland and swap this for money which was then used to finance Anglo/INBS, including paying off senior bondholders, paying staff wages, payment of interest on deposits etc. In effect the Central Bank of Ireland monetized the government IOU. The government have agreed to pay off the Promissory Note over a 15 year period. As there is, to put it mildly, considerable doubt as to whether the remaining assets of IBRC are sufficient to generate income to repay its debts the Minister for Finance in March 2010 as well as creating the Promissory Notes also gave (as of this date secret) letters of comfort to the Central Bank (Sole shareholder, the Minister for Finance) promising repayment of the ELA were IBRC unable to repay. Thus the state in effect is indemnifying itself against its own actions. An analogy might be that we borrow from a bank, put that money into a pocket, then move it to another pocket, then take it out and burn it. The effect is the same. Money is destroyed in the same amount as it was created, in order that the european money supply does not increas

How much is this going to cost us? In essence, through the next 15 years the state will repay the promissory note at a rate of approximately €3.1b per annum.

This repayment is treated in the government accounts as a capital expenditure, and can be found in Note 6 of the 2012 estimates as show above. This expenditure cannot therefore be deployed to other, productive, usage. Each year a capital allocation is made for the repayment of these. This capital must be either raised from taxation or borrowed. The true interest issue therefore of the Promissory Note is NOT the implicit interest rate which is paid on them, rather it is the cost of the funds borrowed to, in effect, recapitalize the banks holding the Promissory Notes. Thus seekingconcessions on the interest rate element of the Promissory Note is seeking the wrong concession.

Another issue as to why this matters and why we are paying is that Eurostat decided that as the Promissory Note was irrevocable it was appropriate to treat this as a €31b increase in the national debt, resulting in a world-beating 32% of GDP deficit in 2010. There is no doubt in my mind that the nature of the note and the consequent realization that it was in fact debt played a large part in the slow but inexorable locking out of Ireland from the regular bond markets and the need to become wards of the Troika.

What can be done about this and who can do it? The essence therefore is as follows: the Central Bank of Ireland has created money, outside the normal course of Eurosystem operations for the creation of money. This it is allowed to do under delegated power. However, this delegated power is circumscribed. In effect the ECB council can veto the action of the national central banks when they act in the manner in which the Central Bank of Ireland has done, but only by a 2/3 majority. Thus the presumption is that in general when central banks act to extend ELA they are doing so in a manner that does not interfere with the normal actions of the ECB.

This is where the crux of the matter lies I submit. While the creation of €40b or so of additional money by the central bank of Ireland is small in the context of a Euro area M3 (broad money supply) of €9800b, amounting less than 1/2 of 1%, the ECB has a mandated inflation fighting role. Add to this the historic antipathy of Germany, the dominant power in european monetary affairs, to any form of inflation and we see that the creation of money in this manner is potentially problematic. Were the Central Bank of Ireland not to require the repayment of the ELA, and the writing down of the money supply, this would represent a permanent increase in the monetary base of the Eurozone. 1/2 of 1% is not much but what if other countries were to commence to refinance their banks in this manner? What if in fact countries were to take up a suggestion made that the debtor countries refinance their sovereign debts in this manner? Ireland issues a €X hundred billion promissory note to IBRC, IBRC swaps that at the Central Bank of Ireland for newly created money, the NTMA issue a €X hundred billion bond for 100 years duration at a low interest rate, and IBRC purchases the bond with the real money which the state now has on hand on deposit to fund itself while we restructure the financial and economic system. What if Greece were to do this? Clearly we could quickly find hundreds of billions of ELA created euros being added. This is what is known as monetising the debt and it is anathema to the ECB for reasons of inflation as well as being a de facto breach of the rule that the ECB is not allowed to finance government deficits directly. Such monetary creation is further anathema to countries such as Germany who have in the past suffered episodes of hyperinflation. I would note that at 3% inflation we are far from hyperinflation. European money supply (M3) has remained within a narrow band of €9.2tri to €9.8tri since the middle of 2008 and in recent months has in fact begun to fall sharply again, having fallen heavily (as might be expected) in the   global financial crisis.  We are a long way from inflationary pressures.

It is highly probable that were countries to seek to do this they would find themselves running a real danger of being cut off from further and ongoing liquidity support, might be accused of having the central banks funding the deficit (deficit financing) and be in breach of treaties. Such a move would only be used in extremis but it does show that ELA has the potential for unlimited monetary creation and should be treated as such. It should be noted that we have had experience of a large currency union breakup in the recent past, with the breakup of the Rouble Zone, which zone lasted after the political union of which it was the currency, the Soviet Union.  . Nonetheless, such debt monetisation while a solution to the immediate liquidity problems of countries would in the long term pose a threat of inflation and would not in any case solve the solvency issues of countries or banks and might in the long term pose more problems than it would solve. However, in the here and now …

There are three ways in which we can deal with the cost of the ELA.

1. One is to extend the term of the ELA repayment from 15 years to a much longer period. Extending by 10 times, to 150 years would reduce the annual cost in the same manner. However, we would be ‘stuck’ with IBRC for potentially that period.

2. Another way we could deal with this cost is to simply write the whole issue off. This is NOT burning bondholders, nor is it burning ourselves. However, the consequence of removing the Promissory Note and associated Letters of Comfort might be to render IBRC technically as opposed to functionally dead. IBRC, if we write off the ELA and the associated Promissory Notes, would have remaining assets (loans not transferred to NAMA) and liabilities (some remaining ELA , some ECB loans, a small amount of deposits and some remaining bonds. If after restructuring the balance sheet IBRC is not able to service its liablities then it can and should be wound up. Again this seems to have been ruled our by successive governments and the ECB over the years, despite that it too would be the effect of saving the state the ongoing drain of €3.1b per annum.

3. A third solution would be to seek to defer, to continue in the kicking of the can at which successive governments and european institutions have excelled. We have already received deferment till 2014 of the implicit interest payment on the Promissory Notes, and if such were to be extended for a number of years the strain would be at least be deferred.

All of these however, of which I prefer the second, would require that the ECB accede to this request. The Irish voice on the ECB is not answerable to either this committee nor any organ of government, which is right and proper. It is in my view highly improbable that Governor Honohan has not raised these or similar proposals at the ECB, but the evidence is that so far there is no will from the ECB to allow movement. Why that is remains unclear as it has recently shown willingness to accept heretofore unpalatable actions in regard to Greece. Removing the burden of the Promissory Notes in some manner would only assist the government. It would assist it politically in terms of implementing the needed closing of the gap between state expenditure and taxation and it would assist in base monetary terms. If the Troika wish to have a ‘good example’ of its policies as opposed to a set of ‘horrible warnings’ they could do worse than quietly monetize the Irish banking debt, making clear that this is (at least in principle) a one off and reflects the reality that in doing so they acknowledge the role the Irish taxpayer has played in preventing contagion into the banking bond market in 2008/9.

Seanad : babies and bathwater

As we leave 2011 one of the government promises which they announced as part of their election appears to be still on track. They do appear to be intent on getting rid of the upper house of the Irish Parliament, Seanad Eireann
I’m not at all confident that is this a good idea.  Most people would say that the majority, of senators over the years have been anonymous, insignificant, and ineffective. This is unfair, as there are many good hardworking Senators, but the reality is that the perception lingers and many Senators remain anonymous to the people throughout their career.

The Irish upper house is elected in a curious manner. Of the 60 senators 11 are appointed directly by the Taoiseach, the Prime Minister. This was designed by the architect of the 1937 Constitution to ensure that the upper house would always have an inbuilt government majority. One of the only reasons to have an upper house is of course it can, in principle, hold the lower house to account. Being neutered from the start was hardly a good idea…
Of remaining senators six are elected, but on a very restricted franchise. Despite the fact that for decades and has been an opportunity to widen this franchise has not been done. The remainder is elected in a series of panels, basically ensuring
that the grip of the political parties remains intact. Details on the electoral process contained on its official website, here. The membership of the panels is in effect in the gift of sitting parliamentarians. A good description of how panels are constructed as contained in the citizen’s information advice
site, here

The existence of the Seanad is very deeply entwined In the Irish Constitution. Eliminating it therefore is a complex task. Ex-Atty Gen and also ex-Minister for Justice, Michael McDowell, has suggested that would in fact be easier to draft a whole new constitution than trying to amend the present one to reflect a vote to abolish the Seanad. I think he’s right, but there is no doubt there is widespread public disgust at how the shadows over the years has been, at least perceived, to be a dumping ground for ex-politicians, a training ground for wannabe politicians, and in general has resulted in the population of the upper house being for the most part either discredited, one proved, or anonymous. The reality is that when people think of high-profile solicitors for the most part the people they would name would be the University Sens. These are people who are elected, as I say, on a very restricted franchise. But at least they do have to face a wide constituency. In the last election there were 53,000 voters eligible to vote for the three senators on the University of Dublin panel.

Here follows, purely as an intellectual exercise, a set of reforms that might if implemented might result in a more user focused and effective upper house.

  1.  Let’s broaden out the electoral base. Since the seventh amendment in 1979 the provision has existed for the government, by law, to extend out the franchise from university seats beyond the existing universities. We need to go further than this, and make election to the Seanad by universal suffrage. I do not agree with the idea of seats in the parliament for persons not resident in the country. And yes, by this I include persons resident in Northern Ireland. I do believe however that we should have elections to the upper house for which anybody, regardless of citizenship, who is resident in this country for tax purposes may vote. I see no reason why, for example, a Polish or German national resident here for the last decade and tax compliant, cannot vote or indeed stand for election to the upper house.
  2.  Let’s have terms. Is jealous of 60 people there is no reason why we shouldn’t have a fixed term for Senate of say five years. The presence of these senators tied to the electoral calendar of the lower house. Let’s liberate it, let it be independent, but let’s have it like United States Senate, where one fifth of the members are up for election every year. Along with universal suffrage this would ensure that the upper house without is a continual “ thermometer” regarding political opinion in the state.
  3.  Let’s change the method of election. As I’ve stated we should of course of universal suffrage. One of the objections that people have raised when I have suggested the idea of the rolling electoral process such as in point to be that this would result in the vast expense and continual electioneering. There’s no reason why we have to continue to do things the way we have done. Electronic voting in Ireland has had a bad name since the absolute fiasco of the e-voting machines. There’s no reason why we shouldn’t experiment with, for example, voting online. In effect, and this is where tying the voting register to the tax register would come in useful, would ask the revenue to issue to each voter/taxpayer and alphanumeric multi- character code. They already do this if you want to use revenue online system. Recall that to have 12 senators elected each year then we need to have three or four constituencies, roughly approximating to the provinces perhaps. This is simply so that in retaining the single transferable proportional representation vote system we do not end up with vast and overwhelming election ballots. Each taxpayer now having received their unique code, the block of codes for each constituency should then be given over to an absolutely independent electoral commission. It would be be essential that there be no way in which an individual called would be tied by anybody to an individual taxpayer/vote. Information Commissioner should be tasked with overseeing this. The code which each taxpayer now possesses would be required as a one-time only login on a voting website. I’m sure there are huge technical challenges, but if Amazon and eBay can run sophisticated online electronic commerce there is no reason why we should be able to do this.
  4.  Let’s change what the Senate does. One of the problems at the moment as it is not clear what the Senate actually does. Yes, it debates legislation. But the government has an inbuilt majority and therefore the house cannot act as an effective block or oversight. Yes, with certain exceptions, senators can initiate bills. As we have seen in the recent example of Sen Sean Barrett, even when the government are in total agreement with the thrust of the bill, individual Senate proposals from non-government source will never get beyond a polite pat on the head. The government in its election promises made much about cleaning up the win which appointments are made to state bodies. Let’s give the Senate a role in this. All senior appointments to all state boards, all senior appointments in the civil service, all senior appointments to the army and police, the heads of all universities etc., should be required to go before a Senate committee. A majority vote of said committee would be required in order for the person to be appointed. Let’s have the Senate question people as their fitness for office. Let’s let the public see what the views, attitudes, ideas, and proposals are, of the most senior echelons of state apparatus before we find ourselves paying for them.
  5.  Lets make senators part of the government. At present, with some exceptions, Cabinet posts are open to senators. And yet, despite the government having the ability to point persons of merit from outside the party political process and then appoint them to senior cabinet positions, the last such senator to be appointed to a senior Cabinet office was that of Sen Jim Dooge over 30 years ago. My proposal above suggests that we abolish the ability of the Taoiseach to appoint people. The universal suffrage, on a rolling basis, should give a Senate, which is representative of the views of the people. Let’s incorporate those views into the Cabinet, by requiring that at least two Cabinet posts be held by Sens.

I’m sure there are other, no doubt better, proposals which people could make which would make the Seanad work more effectively. Let’s try proposals, let’s see if we can make the system work better. If having done our best to improve and reform the Seanad it’s still not working, then we should by all means consider getting rid of it. But getting rid of the Seanad, without having tried to reform at first, strikes me as a classic case of throwing the baby out with the bathwater