Speech by Minister of State Brian Hayes TD to the British Irish Assembly meeting in Dublin Tuesday May 15th 2012.
Ladies and gentlemen, I am delighted to be here with you this morning.
I served for over 8 years as a member of the British Irish Assembly and during that time made some great friendships across the Irish Sea. I want to put on the record my appreciation of the work you do. I genuinely believe that this body can play an important role in developing even further the British Irish relationship.
Indeed, the success of the peace process in trying to make Northern Ireland work on the basis of agreement and non violence, is a genuine international achievement that all mainstream parties on these islands, in government or out of government, can be proud of. The Good Friday Agreement is the historic and binding agreement of this generation. Making it work, inside Northern Ireland, between the North and the South and between both our Islands; is our collective responsibility. It is a British Irish project that must be nurtured to bring about the ultimate reconciliation between Green and Orange. The Agreement cannot be taken for granted
This body is crucially placed in encouraging governments across these islands to develop the true potential of working together on so many issues of common concern.
Many great Irish people have also graced this Senate chamber –none more so than the great Irish poet, W B Yeats, who was a senator in the 1920s. Former Taoiseach Garret Fitzgerald began his political career in this room in 1965. Former President, Mary Robinson also served with distinction in Seanad Eireann, as did our current President. And of course former Gordon Wilson, the embodiment of true reconciliation, also served as a Senator here in the 1990s.
Being here together in this chamber reminds us of what we all have in common – a tradition of parliamentary democracy, free speech, respect for the rule of law and many other shared political values.
And we share so much more besides. Indeed the most famous Irishman of all, St. Patrick, was born in Britain and brought to Ireland as a slave in the 5th century AD. I don’t think we have ever said ‘thank you very much’ for St. Patrick. So you gave us St. Patrick; and in return we gave you Terry Wogan and many more besides.
Geology and geography have placed our two islands side by side. It was always inevitable that our histories would be both intertwined and entangled. Relationships within Ireland and between our two islands have been at times difficult over the centuries. But they have never been as warm, as mature and as settled as now. We now have the chance to develop what was once described as the “ totality of relationships” on these islands.
The evolving nature of the relationship between London and Dublin was very obvious in the joint statement issued by Prime Minister David Cameron and Taoiseach, Enda Kenny, after their meeting on March 13th.
The statement primarily focuses on the future and looks forward to a decade of ‘renewed and strengthened co-operation between our two countries’. Arising from that meeting a joint study on economic relations is being supervised by the Cabinet Secretary in London and the Sec General of the Taoiseach’s Department in Dublin. The study is expected to identify areas of co-operation and mutual benefit.
All administrations on these islands share similar budgetary and economic challenges and we also share them with many other members of the European Union. These challenges are complex and not open to simple solutions.
There is the problem of accumulated debt brought about by the complacent and in some cases the reckless expansion of credit.
The collapse in economic activity is putting budgets all across Europe under immense pressure. We now know to our cost the failure of light touch regulation to the banking and financial system. Like nuclear reactors when banks implode the fallout is dramatic.
Then what of the debate between austerity and stimulus. And of course what is the most effective balance between taxation and spending? How can the economies of Europe return to a sustainable growth path? How can the trade imbalances within Europe be addressed? And there is the issue of unemployment, particularly unemployment among young people and the need to do everything in our power to get people back to work. To give people the dignity of work.
There is a real danger in many European countries, including our own of a lost generation of young people. I personally believe the issue of inter-generational equity is a real and pressing issue. In difficult economic times solidarity with young people must be at the top of our agenda. The common good and our long-term interest should encourage us to support young people into active employment.
Last year the Irish government introduced a limited internship programme called Jobsbridge. This gives people experience in the public and private sector related directly to their skills. Those involved in Jobsbridge receive unemployment benefit and a small additional payment per week for a nine month internship. This has been reasonably successful and we are expanding it this year. Job activation measures are certainly an area where we can learn from each other – with a clear focus on what works and what doesn’t work.
And there is of course a very big shadow on the horizon – the fate of the Euro. Whether we are members of the Euro or not, we all have an interest in safeguarding the common EU economy.
If I have learned one thing since this crisis began it is this – confidence is critical to banking, to currencies, to economies and to the financial system itself. When confidence drains away no institution is safe.
The Euro, the common currency of 17 countries and 330 million people continues to be pressurised by events. The Euro zone is involved in a protracted effort to retrofit the common currency and make it fit for purpose.
Doing so is like carrying out open-heart surgery on a patient while he is still walking around. I think significant progress has been made and the work continues. But success is never guaranteed. Ireland will have its own decision to make by way of referendum on the Stability Treaty on May 31st.
As politicians must be aware that the economic crisis has undermined trust in politics itself. Dangerous voices and dangerous forces are emerging in Europe once again. We must never take for granted what has been achieved in Europe during the last 60 years.
Just one statistic to remind us – historians have estimated that approximately 80 million people died violently in Europe in the first fifty years of the last century. The Peace Process for Europe – the European Union must continue to have our active support.
The Irish government aim to have a budget deficit of under 3% by 2015. We also aim to have our overall debt levels, as a percentage of GDP on a downward trajectory in the same year.
We have managed to stabilise our banking system and the economy. We are now showing modest growth. We have continued to renegotiate elements of the bailout programme. We have had a measure of success and the work continues, particularly in relation to the burden placed on the taxpayer by the government guarantees given to the banks in autumn 2008.
At the same time a broad based programme of structural reform of the public sector is being undertaken and the government is driving forward a very strong agenda of reform with a particular emphasis on supporting the business sector. Despite unemployment of over 14%, which is far too high, we still have 1.8 million people at work. That’s 800,000 more then was the case 15 years ago.
There is a vast amount we can learn from each other. I have been in contact with colleagues in Northern Ireland and in London to see how we can learn from each other in areas of public sector reform.
In areas like shared services, property management, procurement worth 21 billion euro on the island of Ireland, we have much to learn from shared experience across these islands. Changing how governments provide services and learning from mistakes made and successes achieved, is something that is in all our interests.
Overall between 2009 and 2015 the Irish public service will reduce from 320,000 people to about 280,000. The total pay and pensions bill should reduce by 3.5 billion Euro. Our priority is to keep the front line of police, nurses and teachers in place while reconfiguring the back office staff. Getting through this economic crisis requires fundamental reform of the public sector. It’s an enormous challenge.
Ireland continues to attract a high level of Foreign Direct Investment and this inward investment is contributing to economic stability. Irish exports remain very robust, with a very strong trade surplus. Indeed the value of exports to the UK was up by 15% in January. This trend is probably helped by a weak Euro, as Britain still remains the key market for indigenous Irish companies. The Irish growth sectors include Tourism, Agri/Food and professional services.
Ireland now has a thriving international ICT sector and a very large pharmaceutical/chemical industry, both driven by international companies. The government continues to pursue policies that seek to stabilise the property sector and return that very important sector to a reasonable level of investment and a reasonable level of transactions.
The Irish government also sees growth in the renewable energy sector. On this point I want to refer to the electricity connector between Ireland and Britain, the cable for which is being currently laid.
This is a €600 million project – grant assisted by the European Union to the tune of €125 million and also supported by a loan of €300 million euro from the European Investment bank.
When people criticise the EU for not supporting growth they should remember projects like this. Indeed as the joint statement by the two prime ministers in March made clear they see renewable energy as an area of enhanced co-operation. New ideas being discussed such as new transmission lines and combining wind energy and hydro storage, must play a part in this debate.
I think if all the administrations on these islands presented a combined renewable energy strategy to the European Union significant new investment might be available. Certainly when Ireland assumes the presidency of the EU during the first half of 2013 we will be pursuing this agenda very vigorously.
There are also some grounds for optimism in Europe. The ECB, under the leadership of Mario Draghi has shown skill and flexibility. In recent days the German Central Bank has raised the possibility of a higher rate of inflation in Germany than the Euro zone average and the German Finance Minister Wolfgang Schauble has indicated that he would like to see significantly higher wage levels in Germany, as a means of boosting demand across the EU.
So there is clear evidence of a shift in emphasis, reflecting the changing political mood across Europe.
The banking situation across Europe continues to be a danger. Financial services are of particular concern to London/Edinburgh and Dublin
We live in uncertain times, both politically and economically. Our ability to predict is extremely weak. We need to consider very carefully how to present policies and manage expectations. We also need to be very cautious of ideologies.
Now is the time for practical common sense solutions. We must be guided by what works.
Luke Johnson writing in the Financial Times last week got it right when he said;
“ There will be no big fixes. Instead governments need to seek pragmatic deals by any means necessary.”
I support that approach.
I am realistic about the challenges facing Ireland, Britain and the European Union but I remain optimistic about the outcome. I believe persistence; determination and hard work will see us through to a better place.
Finally can I say that there is an onus on all Governments, on these island, to maintain a high level of ambition for what the British Irish relationship can achieve. Your role as fellow parliamentarians is crucial in bringing about the potential of that relationship.
As we remember the decade to 1912 to 1922, we are, in a very real way, looking ahead to what relations on these islands might be like in 2022. Let us do that together and with renewed confidence.
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The No campaign cannot answer the hard questions – Hayes
Minister of State at the Department of Finance, Brian Hayes, has again called on the No campaign to account for how the country will be funded in the event of a No vote in the Referendum on the Stability Treaty on 31st May.
“There is a glaring hole in the argument being presented by the No side. It is incapable of providing a credible answer to the question of how the State will fund the running of the country in the event of a No vote. I again call on them to provide a clear answer to this fundamental question.
“Where will Ireland get the money it needs when the current bailout funding runs out at the end of 2013? During the following two years in 2014 and 2015 Ireland will need to borrow approximately €35 billion. This amount is made up of new lending to balance the budget and the refinancing of some existing debt. We cannot avoid these funding requirements.
“There are only two sources of funding. Ireland could attempt to borrow on the international markets or could enter into second bailout. The key question for the No campaign is this; how does a No vote help Ireland exit the bailout fund and raise its own money?
“Does a No vote make outside investors more confident about putting their money into Ireland? I think the answer is very clear. A No vote will lessen investor confidence and will make it virtually impossible for Ireland to borrow on the international markets.
“Regarding the prospect of a second bailout, the question for the No campaign is this; how does rejecting the Treaty and an Irish veto, if that were possible, on the ESM, the eurozone support fund, help Ireland access European funding in the future? Again the answer is obvious; a No vote doesn’t help. A No vote means Ireland remains part of the problem.
“Without access to the international markets and without access to European Union funding the No campaign has an obligation to spell out what taxes and what cuts they would put in place to balance the books.
“A Yes vote on May 31st is a vote to continue on the road to recovery. A No vote will undermine Ireland’s ability to borrow on the international markets. It will also cut off Ireland’s access to European funding. A No vote would leave Ireland up the proverbial creek without a paddle.”
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The IMF is no fairy Godmother – Hayes (Irish Indpendent 01.05.12)
We have already seen a number of canards thrown into the referendum debate. One of them was by the Sunday Times hinting last Sunday that Ireland may have a ready source of new and easy funding from the IMF if we needed a second bailout. For Ireland’s sake let us hope they don’t get what they wish for.
The IMF is the lender of last resort. It is a rules based organisation. As the IMF will tell you, the interest they charge on borrowed money can be seen on their shop front window. It’s higher than the blended European loans and they tend not to do, go it alone lending for states that cannot borrow elsewhere. If we lock ourselves out of the ESM by voting NO, the IMF are hardly likely to lend to us when we have decided to exclude ourselves from a new Euro lending facility. That’s particularly the case when you come looking for a second bailout.
According to IMF rules each country, including Ireland, has a quota of Special Drawing Rights [SDRs]. Under these rules funding to a country is capped by access limits of 200% of quota in any one year and to total lending of 600% of quota. The IMF does allow for exceptional access criteria when quotas can be exceeded.
The €22.5 billion pledged by the IMF to Ireland in December 2010 was at that time 23 times Ireland’s lending quota. Ireland’s quota was increased in March 2011. Even so Ireland is still exceeding its IMF quota by 15 times. The IMF rules were stretched to the limit by Ireland’s original bailout. Because the IMF was part of a wider troika of support the Board of the IMF, after taking extensive legal advice, decided to proceed to support Ireland. But they did so on the basis that two thirds of the bailout money came from the European Authorities and where they had preferred creditor status over European Loans.
Of course it is technically correct to suggest that we could seek another loan from the IMF. Any country can apply to the IMF for a loan. Just like anybody can apply to their bank manager for a large loan. If you have already exceeded by a very large margin your loan limits your bank manger is not likely to give you another loan. Ireland has already maxed out its IMF loan.
Are those on the No side seriously suggesting that the IMF are going to turn around and give us another large loan? The idea that the IMF is some kind of fairy godmother is frankly ludicrous. The IMF always insists on being the preferred lender when it makes a loan. It always insists on getting its money back first. That the IMF might lend Ireland additional support after we had cut ourselves off from EU funding is simply not credible. And we know from its history that when the IMF is the sole provider of finance it drives a very hard bargain. In a default situation the IMF might help. But their help would include some very nasty medicine indeed, much worse than anything seen so far.
As regards the approach being taken by Mr Hollande it is worth making the following points. Mr Hollande is still a candidate in electioneering mode. To see Mr Hollande as a white knight against fiscal consolidation is to totally misread the situation.
Mr Hollande and his chief financial adviser have both made it clear since the first round of voting that they intend to abide by the rules of the Fiscal Treaty. Both of them have stated their intention of bringing France’s budget deficit below 3% by 2013 and into balance by 2017. That is faster than even Ireland is planning. As a government we have a budget target of below 3% by 2015. And let us not forget one simple fact. There are 27 members in the European Union. In 2011 Ireland had the worst budget deficit in the whole of the EU. There is an economic and political imperative that we bring our budget into better balance and our debt levels on a downward trajectory.
It was too much debt that brought this country to its knees. Those who oppose this Treaty seem to believe that even more debt is the solution. If that remotely credible? We now know that too much debt is a vicious trap. We need to return to sound finances and sustainable development. The last thing we need is more debt that can be left to our children to pay off.
Of course Ireland supports a renewed emphasis at EU level on investment, growth and jobs. We have been pushing that agenda very strongly. We will have a clear opportunity to shape that debate when Ireland takes over the Presidency of the EU at the beginning of next year. Jobs continue to be at the centre of this government’s economic strategy. The government is prepared to listen closely to reasonable proposals. The government is prepared to engage directly with Trades Unions and other organisations on getting this country back on the road to recovery. But a vote against the Treaty will bring no benefits. It will only bring fear uncertainty and risks. Voting no will tie the hands of the Irish government at EU level. It will mean Ireland continues to be a problem, not part of a solution.
Fundamentally this Treaty is about keeping the euro safe and strong. It is about restoring confidence. It is about bringing stability to the Eurozone. Peter O’Neill, Managing Director of IBM Ireland, put it very succinctly last Sunday. He wrote “without investment, there will be no growth. Growth is the only way out of the current situation”. I agree with his real world assessment as against believing in the magic of fairy godmothers.
BRIAN HAYES TD is Minister for State at the Dept of Finance
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No one has a gun to our Head over Stability Treaty
There are no faceless bogeymen in Europe trying to do down Ireland
Minister of State at the Department of Finance, Brian Hayes, has criticised as disingenuous and negative the approach taken by opponents of the Stability Treaty referendum. Speaking at a Fine Gael meeting in Ennis this evening (Friday), Minister Hayes said that passing the Stability Treaty is vital in order to save the euro.“I reject the lazy and populist categorisation of the Stability Treaty as a coercive and unwelcome measure against a defenceless Ireland. It feeds into a false narrative of victimhood and fatalism. Let me be clear, there are no faceless bogeymen in Europe trying to do down Ireland. The opposite in fact is the case.
“When this country faced bankruptcy, it was the European Union that organised a rescue fund. Without the support of the ECB, Irish banks would not survive. The European Union continues to provide very significant funding to Ireland every year to the order of €1.8 billion, in farm support payments, education and training, research and development and other programmes. The EU is proposing to increase its annual budget by 6.8% which will have significant knock-on effects for Ireland. It’s time we stopped scapegoating the EU and other European countries.
“The Stability Treaty is not about austerity. It is about something much more fundamental. The Stability Treaty is about saving our common currency – the euro in our pocket. We all have an interest in defending the euro, keeping it strong and safe and ensuring that it retains its value. Common rules, common regulations, good governance and sound financial management are all-necessary if the euro is to survive. This is what the Treaty is all about – keeping our currency safe from attack and making the euro fit for purpose.
“I reject the proposition that this Government is pursuing a policy of austerity. Not raising income tax rates, not cutting social welfare rates, no changes in the Croke Park Agreement, taking 300,000 people out of the universal social charge, restoring the minimum wage to €8.65 – where is the austerity in those measures?
“I also reject the constantly repeated story that the Irish Government and the European Union do not care about investment and jobs. This is the opposite of the truth. This Government has put job creation at the heart of its economic strategy and continues to push the investment, growth and jobs agenda at European meetings. We will drive the agenda forward when Ireland becomes President of the EU at the beginning of 2013.
“As a country which is heavily dependent on the jobs and revenue provided by Foreign Direct Investment, we need to pass this treaty. A No vote would leave us outside the Eurozone and would greatly diminish our attractiveness to international businesses looking for a European presence.
“The recovery in Europe and Ireland must be built on a solid foundation, namely a strong and stable currency. The Stability Treaty is about making our common currency, the euro in our pocket, safe and secure. Confidence is the key ingredient. Without confidence no currency is safe. Without confidence investment will not happen. The Stability Treaty will build confidence in the euro and in the Eurozone financial system. Every Irish person who uses the euro has a personal interest in making sure our currency is safe and holds its value. A sound currency and a robust Eurozone financial system will allow Ireland and the European Union get back on the road to recovery and sustainable growth.
“A No vote on May 31st will bring back risk, will bring back uncertainty and will bring back fear. A No vote will damage confidence in Ireland and undermine our recovery. A No vote will cut us off from EU support funds if we ever need them.
“A Yes vote will encourage confidence in Ireland. A Yes vote will be good for stability. A Yes vote will be good for investment, growth and economic recovery. A Yes vote will help keep the euro in your pocket safe and strong. That is why I am advocating a Yes vote on May 31st.”
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OPINION: AT THE heart of any currency system is a precious commodity; more precious than gold. That commodity is confidence. Take away confidence and no currency is safe. The collapse of a currency or the rapid destruction of its value has profoundly negative consequences for any country.
We in Ireland have been very privileged. We have always been members of a stable currency union except for a brief period when we floated as part of the European Exchange Rate Mechanism.
In 2010 and part of 2011 the spectre of a euro collapse made an unwelcome presence. Uncertainty, fear and panic began to spread like a dangerous virus across Europe. Confidence began to ebb away, inter-bank lending stalled and capital began to fly to perceived safe havens. Banks began to see a run on deposits and many ordinary citizens showed more confidence in their mattress than in their local bank. People in Ireland felt a new kind of fear for the first time in their lives. We don’t want to bring it back.
Having looked into the abyss, euro zone leaders and European institutions stepped back from the brink and set about saving our common currency. And let us not forget that basic point. The euro is Ireland’s currency. It is our currency. It is in Ireland’s national interest to strengthen its defences.
The economic crisis exposed serious weaknesses in the design and management of the euro system. European leaders have been involved in an effort to retrofit the euro system and make it fit for purpose.
It’s been a bit like carrying out major heart surgery while the heart is still beating.
The Fiscal Stability Treaty is just one part of the major reconstruction of the euro system. Other elements include the European Financial Stability Fund, the European Stability Mechanism, the European Banking Authority, the Six Pack programme, a more flexible approach by the ECB – which saw two massive injections of liquidity into the banking system – and ever-closer co-ordination of euro zone economic policies.
Strengthening the euro system of itself will not restore the euro zone to robust economic health, but it is an absolutely necessary condition for a return to sustainable growth in Europe.
At the centre of the current Irish debate on Europe is the issue of debt and the interest rate burden associated with that debt. And let me challenge those who say this Government is pursuing some kind of harsh austerity programme. A government deficit of 8.6 per cent of GDP in 2012 is not austerity. No reduction in basic social welfare rates; taking 320,000 people out of the universal social charge; no increase in income tax rates; staying with the Croke Park deal; restoring the minimum wage to €8.65. Show me the austerity in any of these measures?
And let us look at the most basic point of all. Leaving aside all interest charges on government debt we still need to borrow in the order of €10 billion to balance the books in 2012. Where is the austerity in that?
The dilemma we face is this: the property price bubble also inflated a bubble in central government and local authority revenues. The property bubble burst. There is no going back to the fantasy world of the final years of the Celtic Tiger. We have to live and pay our way in the world as it is now. Wishing it different will not make it so.
That real world is the troika providing Ireland with the resources and the time to sort our financial problems.
That real world is also the fact that the Irish banking system is highly dependent on ECB support for its very survival.
And any objective commentator will accept the fact that this Government has shown persistence, determination and firmness of purpose in renegotiating the bailout programme. A measure of success has been achieved. The work continues.
But we face a basic choice now. We can choose to bring our finances into better balance or we can choose to remain under the control and in the permanent care of the troika.
And central to the debate about debt is the question of inter-generational equity. Borrowing for current spending is in effect this generation taking from the future to maintain today’s lifestyle.
It is the workers of tomorrow who will have to pay back this debt and the interest payments on it. Equity demands that we not shackle our children with an unjust burden of debt. We have an obligation to live within our means.
Those who advocate even higher levels of spending must answer some very simple questions. Who will lend us the money and how will we pay it back? And if we cannot borrow the money what new taxes and what extra cuts will they impose?
A Yes vote on May 31st will be another step on the road to recovery, towards making the future more stable and more secure. A Yes vote will be a major confidence-building measure for Ireland and the euro.
A No vote will increase uncertainty, will introduce new risks and will cause a return of instability.
A No vote will undermine the international confidence in Ireland, which this Government has fought so hard to restore.
A No vote will certainly increase borrowing costs for Ireland when we do return to the markets and it could even fatally undermine our capacity to return to those markets.
Voting No will not stop this treaty going ahead. And it will make it more difficult for Ireland to access European Union funding if we need it in the future.
Why throw away that insurance policy? Voting No would be like shooting ourselves in the foot.
We must not take for granted what has already been accomplished.
Government finances are on track to a better balance and a sustainable path. The economy is showing some signs of growth. People are longer afraid of losing their deposits. That most precious of commodities, confidence, is making a comeback.
Those who always say No have no real solutions. They think we can sail away in a leaky currach to some kind of Tir na nÓg where the sun always shines and credit always flows. If we listen to their siren voices Ireland will find itself on the rocks.
We need to be realistic. We need to be pragmatic. We are being asked to make a choice on May 31st. And before we make that choice we must ask ourselves a simple question. Which choice will make this country, this economy, safer, more secure?
If we ask ourselves that question I believe the overwhelming response will be a Yes vote.
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Speech by FG Minister of State Brian Hayes TD at the FG Ard Fheis 2012
The public sector in Ireland has a proud record of service to the Irish state and to the Irish people. Out of the violence, destruction and chaos of the War of Independence and the Civil War a viable state was established in the 1920s. The politicians and the public sector of those early years of independence showed character and firmness of purpose in establishing the young state on sure foundations.
They didn’t lack ambition. Just one reminder of that period – when the power station at Ardnacrusha on the river Shannon was built it was the largest hydro generating plant in Europe. When World War Two engulfed Europe the public sector was critical in maintaining basic services in this country. It was the public sector that delivered electricity, the key to modern living, to every house in the country. In later years it was Ken Whittaker and other senior public servants who showed the way out of the economic and social doldrums of the 1950s.
This country is now facing challenges of a scale we have not faced since the early years of the state’s existence. Tribunals of enquiry have exposed major flaws and corrupt practices in our political system, also affecting parts of the public sector. The economic crisis which overwhelmed our country was caused by profound failures in our private sector.
The economic crisis has also highlighted extreme weaknesses in how we govern and in how we manage and supervise our affairs. We must be clear headed in our analysis of our difficulties and honest in telling people what needs to be done. And when tough decisions have to be taken we must be guided by principles of justice and fairness.
So let us be frank with each other. There is no going back to the way things were. Carrying on as before is no longer an option. And while we continue to deal with the fallout from the economic crisis we must also be fully aware that the world we live in is changing at an accelerating rate. Change and very rapid change is the new normal. The choice facing Ireland is simple. We can change or we can stay in the long term care of the troika.
In February 2011 this government was given a clear mandate for change. If Ireland is to prosper it is essential that the public sector work in tandem with the government embrace reform. The government can provide the leadership, the commitment and the political support for change. But it will be up to the public sector to deliver the change agenda.
As a clear indication of its intent the government established a new Department of Expenditure and Public Sector Reform. Within that we have set out the most radical reform of the public sector ever. It’s a plan that is backed by real timelines and political responsibility.
I want to be very clear. This government wants the Croke Park agreement to succeed. We are ambitious for change in redesigning a new public service. Those who want to replace Croke Park need to set out what they would put in its place. This party rejects the false debate which pits public and private sector worker against each other. Those who work in the public sector of this country are not the enemy. It’s a complex organisation but must deliver the changes we need. Without the agreement of the public sector we cannot set our targets for reform.
Bashing the public sector has become something of a popular blood sport in some sections of the media. The government will not play that game. We do not see the public sector as our opponent. On the contrary the government is asking the public sector to be its partner in the Reform Agenda.
We have delivered. We said we would reduce public sector numbers and we have. The Irish public service is now under 300,000 and over 6 years will reduce by about 40,000 or 12% of the total. We have to do more with less and that’s what is happening.
Reform is not just about reducing the size of the public service but it’s also important that we radically reform the way we organise ourselves to deliver services so as to ensure value for money and improve performance. This requires us to look at new operating models. Using the shared services model we will use the flexibilities under Croke Park to ensure reform is driven forward and public services are delivered in a more efficient, cost effective way. The Government has now given the Department of Public Sector Reform the strategic mandate to proceed with the shared services agenda on a sectoral basis. We have set up a National Shared Services Office as a platform to strengthen programme managers and suppliers. The independent focus of the Shared Services Office facilitates better resource management, control of expenditure, better service and performance delivery and monitoring.
As well as structural and organisational reforms, I believe that we need to focus on cultural change. Culture is perhaps the most difficult element to manage in any system, but it is also the most important factor. Changing attitudes to embrace a more open, flexible and service-centred public sector is central to the success of the reform programme. But this will not happen by accident. We must win hearts and minds by putting in place the processes and structures to empower public servants to assume ownership of the change process.
The Taoiseach has set himself a target of making Ireland the best small country in the world to do business in by 1916. The government and the public sector working together as a team can achieve that. But we can also do much more. We can make Ireland one of the best countries of the world to live in – for all our people. Hard work, persistence and determination will get us there.
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Speech by Brian Hayes TD, Minister of State at the dept of Finance, to the Annual General meeting of the Executive of Laois Offaly Fine Gael Monday March 26th.
“If we don’t broaden the tax base by introducing a property tax, its inevitable that tax on work will rise” – Hayes
Those who say don’t pay the household charge – need to explain what services they want to see axed. Pretending that there is some painless solution to this is utterly delusional.
If we don’t want to see jobs being lost because of a taxation system that taxes the hell out of people for working, then the only way to resolve our problem is to look at new sources of taxation.
Leaving aside all interest payment on state debt, including socialised bank debt, the state still needs to borrow about €10 billion every year to meet existing spending commitments. An excluding interest payment, which is an interesting but pretty futile exercise, Ireland’s primary budget deficit was close to 7% of GDP last year. This is much higher than either Greece or Portugal the other two countries in bailout programmes.
This cannot continue. The gap between spending and revenues must be closed. This can only be done by a combination of spending cuts, new taxes and a return to growth. As regards tax the choice is between tax on work or other tax streams. The government has made a clear choice. We want to avoid raising income tax rates so as to protect the 1.8million jobs currently within the economy. We also want to send out a clear signal that people must be better off working.
Simply hiking up income tax rates only helps the black economy and ultimately reduces the revenue potential of the state.
We haven’t increased taxes on work. We have set ourselves very ambitious job targets. We want to increase employment by 100,000 by 2016 and we have set a target of 2 million people at work by 2020.
These are ambitious targets but we believe we can achieve them. Within weeks of coming into office we produced a jobs initiative reducing VAT and PRSI in the tourism/hospitality sector. And it worked. Tourism figures were up and employment in the sector increased.
We also introduced the JobBridge scheme providing 5,000 internship places for young people. This programme has reached its target. Last month Richard Bruton launched the Action Plan for Jobs setting out 270 different actions to be taken during 2012, all directed towards job creation.
Joan Burton also produced the Pathways to Work programme with ambitious target for reducing unemployment. She has set two clear targets. One, to reduce long term unemployment by 75,000 by 2015 and two to reduce the average time spent on the live register from 21 months today to less than 12 months by the end of 2015.
On the international stage the Taoiseach and all ministers have been selling a strong message that Ireland is open for investment and is on the road to recovery. That hard work is paying off. 2011 was the best single year for Foreign Direct Investment into Ireland and the pipeline of investment continues to remain strong in 2012.
The government can only do so much. Governments don’t create jobs but they most certainly create the conditions where jobs can be made. One of the reasons why we need a property tax is to broaden the tax base and keep tax on work as low as possible. All the available international evidence shows that increasing tax on work puts more people on the dole. So far we have been successful in not increasing tax on labour. Actually we have reduced it, by reducing the threshold on the USC we have managed to take over 300,000 people out of the USC net all together.
Broadening the taxation base in this country is right given the collapse of our public finances. Those who pretend that we can have the same number and quality of public services without new taxes, such as property tax, are deluding themselves and the public. In fact without a property tax, it’s inevitable that tax on work will go up. In a circumstance where the marginal rate of income tax is 51% ( 41% rate plus 11% between USC and PRSI) increasing this further will have a harmful effect on jobs and make the task of recovery even harder.
The current debate on the household charge goes to the heart on what we have to do as a country. Our taxation base is down by a third, largely due to the collapse of the housing market and the loss of transactional taxes like stamp duty. We can’t repair the public finances without broadening the tax base. And we have to do that without taxing people out of work. That’s the dilemma we face.
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Large Range of Procurement Initiatives Recently Launched by the State
Brian Hayes TD, Minister of State with special responsibility for the Office of Public Works (OPW), today gave details of a range of procurement initiatives launched by the National Procurement Service (NPS) of the Office of Public Works (OPW). The Minister was making a keynote speech at the opening of the National Procurement Conference in the Alexander Hotel, Dublin 2.
Minister Hayes said: “Public Service expenditure (all-island) on the procurement of works, goods and services amounts to approx €21 billion per annum. This represents approx 10% of GDP, a very significant volume of economic/commercial activity. The new Programme for Government has identified the role public procurement can play in becoming a tool to support innovation and to ensure access by Small and Medium Sized (SME) businesses to the public service market”.
“Only this week I launched a prime example of innovation: the Framework for Managed Print Services which is expected to generate savings of up to €22 million annually over the next two to four years. A managed print service provides a print solution that is strategic and cost effective. It provides the public sector access to a modern and reliable service that has been tailored for the specific needs of the organisation. It is a tool for real public service reform that provides transparency in cost, and generates savings that will be of direct benefit to all of the taxpayers of this country. Last week I launched a pilot project on e-Invoicing across a number of Government Departments and other public sector bodies. The full rollout of e-Invoicing could lead to multi-million euro savings for the exchequer in terms of reduced administrative and transactional costs, as well as providing savings to suppliers to the public sector. In addition, Irish service providers in this area could become leaders in this technology across the EU Member States”.
The Minister continued: “there is a need for Government to achieve increased value for money from the marketplace. In 2011 centralised procurement arrangements realised savings in excess of €29 million through the establishment of cost effective, centralised contracts in many areas of large spending including: electricity, gas, stationery, clothing and uniforms, paper, cars/vehicles, advertising and janitorial supplies amongst others. These contracts also result in considerable savings on administration costs. The Public Service needs to realise real and immediate efficiencies in the procurement process that will translate into verifiable savings”.
Minister Hayes continued: “The publication by the Department of Finance of Circular 10 of 2010 is a very significant development in ensuring that SMEs are not excluded from public procurement. This emphasises the need for transparency: placing tenders valued at €25,000 or above on www.etenders.gov.ie. It ensures that criteria & insurance are proportionate to risk/value of the contract. It reduces the administrative burden by allowing tenderers self-declare their capacity to undertake the contract and it puts an emphasis on contracting Authorities encouraging joint bidding among tenderers”.
“The launch of a new Suite of Procurement documentation in June 2011 considerably reduces the administrative burden on both suppliers and buyers. It means that suppliers wishing to compete for contracts can now expect to receive the same documents regardless of which public body issues them. Such a development should significantly reduce costs for suppliers when transacting business”.
“For Irish Public Service procurement the www.etenders.ie website is a very important platform. Through this website, suppliers wishing to do business with the State can see, and compete for, all contracts over the value of €25,000. In 2011 the NPS expanded the number of suppliers registered on this site to in excess of 80,000”.
The Minister concluded by recommending all delegates visit www.procurement.ie, a dedicated NPS website which is a valuable source of information for both buyers and suppliers. It is recommended that companies register as suppliers through this site, view upcoming opportunities and avail of a range of guidance material across the Government procurement spectrum.
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SMEs to Participate in a Major Government Framework for Managed Print Services that will Deliver Significant Savings to the State
Brian Hayes TD, Minster of State with special responsibility for the Office of Public Works (OPW), today announced the launch of the Framework for the Supply of Managed Print Services. The Framework is expected to generate savings of up to €22 million annually over the next two to four years[1].
For the majority of public sector bodies their current office print regime is rather ad-hoc. A typical Government office has multiple print and imaging devices such as; photocopiers, scanners and faxes. These devices come from a wide range of different suppliers with separate supply and servicing arrangements. The ratio of print devices to staff is often in the region of 1:2 and in some cases as low as 1:1 as a large number of staff would have their own desktop printer. Un-managed print environments result in a plethora of supply arrangements generating a multitude of monthly invoices for processing, covering the supply of; toner, devices, repairs, maintenance and spare parts amongst others. This type of print environment is costly, inefficient and impossible to manage.
A Managed Print Service provides a print solution that is strategic, cost efficient and provides the public sector access to a modern and reliable service that has been tailored for the specific needs of the organisation. A single, yet comprehensive, invoice is issued every three months that covers all aspects of the print service. All-inclusive costs are measured simply and transparently on a per click basis. Framework Members will provide a minimum service level of 98% up-time and will manage the operation of the service remotely. Remote monitoring will allow for the development of preventative strategies and rapid responses.
This Framework Agreement has been established following an open competitive process, on E-Tenders and in the Official Journal of the European Union, by the National Procurement Service (NPS) of the Office of Public Works (OPW). The Framework, which is valued at €100 million over a two year period, is available to the entire, non-commercial, public sector clients including; Central Government Departments, Offices and non-commercial agencies, Local Authorities, the Irish Health Sector, the Education Sector, An Garda Siochana, the Defence Forces and the Irish Prison Service.
The Managed Print Service Framework is made up of seven pre-qualified suppliers, three of which are multi-nationals and four are indigenous SMEs, (see Appendix 1). All Framework Members have a significant operational presence in Ireland. SME participation in the Framework is broad and ranges from direct membership, to SMEs delivering the services on behalf of Framework Members.
At the launch Minister Hayes said: “This Framework Agreement ticks all of the boxes as far as whole of Government Policy is concerned; it promotes indigenous SME involvement, it satisfies green public procurement requirements and it helps to fulfil many of the requirements of the Croke Park Agreement and Public Sector Reform Agenda. More significantly however, this Framework will deliver significant savings of up to €22 million per year. Subject to a full uptake, it is estimated that in the first two-years duration of the Framework, there are potential savings of €44 million. Using this Framework Agreement cuts the operating cost and substantially reduces the time required to go to market for individual Client Authorities”.
The Minster concluded by saying: “This Framework provides a tool for real public service reform that generates transparency in cost and generates savings that will be of direct benefit to all of the tax payers in this country”.
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First Preparatory Meeting of the 20th OSCE Economic and Environmental Forum
Address by Minister of State, Brian Hayes, T.D.
First Preparatory Meeting of the 20th OSCE Economic and Environmental Forum
Anti-Money Laundering and Countering the Financing of Terrorism
6 February 2012, OSCE Congress Centre, Hofburg, Vienna
Thank you Mr. Chairman.
Secretary General, Excellencies, Ladies and Gentlemen,
I am honoured to address this opening session of the First Preparatory Meeting of the 20th OSCE Economic and Environmental Forum which takes place this year during the Chairmanship of our Organisation by Ireland. I would like to convey a warm welcome to all participants both personally, and on behalf of my good colleague, Deputy Prime Minister Eamon Gilmore, the OSCE Chairperson-in-Office.
I am delighted that such a high number of distinguished participants are taking part in this conference – officials and experts from participating states, representatives from international organisations, civil society, private sector and academics. I look forward in particular to the contributions from my fellow speakers in this morning session, the OSCE Secretary General Ambassador Lamberto Zannier; the OSCE Co-ordinator for Economic and Environmental Activities, Mr. Goran Svilanović, Mr. Drew Sullivan, an Investigative Journalist from the Organised Crime and Corruption Reporting Project, based in Bosnia and Herzegovina; and Mr. Vincent Schmoll, a Senior Policy Analyst from Financial Action Task Force.
Both the FATF and the media play crucial but very different roles in the fight against money laundering and terrorist financing. The FATF are at the forefront of inter-governmental efforts to develop and promote national and international policies to combat these threats. The media and civil society more broadly, help encourage accountability on the part of Governments and assist in raising awareness on issues. Both interventions I am sure, will be very helpful in providing an introduction to the key issues and current challenges.
This conference is the first of this year’s Economic and Environmental Forum. From here we will travel to Dublin for the Second Preparatory Meeting in April and then finally on to Prague in September for the Final Meeting of the Forum where this process will conclude. We find ourselves positioned today at the outset of a journey, embarking on what I hope and believe will be a stimulating and fruitful endeavour. I would intend, therefore, in these opening remarks to offer some observations, drawn from the experience and activities of Ireland and the OSCE to date.
I hope our expectations will be ambitious but at the same time grounded in identifying practical options for this Organisation through cooperation between participating States and in cooperation with our international partners.
Each year the OSCE Economic and Environmental Forum offers a platform to bring together OSCE participating States, OSCE Partners for Cooperation, and our partners in international organisations and civil society to discuss issues of relevance to our work in the Economic and Environmental Dimension. Today, as we find ourselves facing unprecedented economic and environmental challenges, the relevance of our work and its links to security in our states, is all the more pertinent.
The theme for this year’s Economic and Environmental Forum is “Promoting Security and Stability through Good Governance”. It has been acknowledged by OSCE participating States that good governance at all levels contributes to prosperity, stability and security. It makes the work of governments more transparent. In addition, clear legal and institutional frameworks attract inward investment – a factor particularly relevant in the current economic climate.
Good governance is, therefore, an issue, which Ireland believes should be at the heart of the work of a security organisation such as the OSCE.
Our discussions over the course of the Forum process will address issues related to the fight against corruption, money laundering and terrorist financing. All of these are challenges shared by participating States. All flourish where governance is weak and ineffective. All, if left unchecked, undermine economic development and expose states to greater security risks. Combating them requires political will and close cooperation between governments, the private sector and civil society, and in this regard, Ireland believes that the OSCE and indeed this Forum process, offers an excellent platform from which to progress this.
The OSCE documents and decisions agreed to-date are aimed at bolstering the OSCE’s work in this area. Strengthening good governance is given a high priority in the OSCE Strategy document for the Economic and Environmental Dimension, which was adopted in Maastricht in 2003. This document also includes a commitment by participating States to develop, implement and enforce financial legislation and regulations on combating money laundering and corruption and criminalising the financing of terrorism. This specific commitment forms the basis for our discussions over the coming days.
The commitments on Good Governance contained in the so-called Maastricht Strategy have also been supplemented by several Ministerial Council and Permanent Council Decisions on specific issues such as: combating corruption; combating transnational organised crime; enhancing legal cooperation in criminal matters to counter terrorism; addressing transnational threats; suppressing terrorist financing; and supporting initiatives related to the work of the Financial Action Task Force.
Taking into account the scale of the issues which our Forum theme will address, and the level of support which I believe exists amongst the participating States for activities in this area, the number and scope of our OSCE commitments on such matters, to date, is limited. However, that has not prevented the OSCE, through the work of the Office of the Coordinator for Economic and Environmental Activities, led by Mr. Goran Svilanovic, and the OSCE Field Operations, from undertaking vital work aimed at assisting participating States to prevent money laundering and combat the financing of terrorism. I wish to commend the OSCE for its increased efforts in recent years to tackle these destabilising activities.
Currently, the OSCE supports the participating states in adopting and following the Financial Action Task Force’s 40+9 Recommendations on anti-money laundering and countering the financing of terrorism. At the request of countries, the OSCE has organised public and private sector trainings, workshops and national capacity training largely with national financial intelligence units (FIUs).
By prioritising this area, the Office of the Coordinator for Economic and Environmental Activities has developed a number of important objectives to enable the OSCE to aim to work at its full potential. They include:
- Improving the understanding of the underlying threat at the national, regional and international level in order to most effectively address threats to economic stability;
- Developing a coherent OSCE role that complements the activities of others;
- Proactively engaging with other international organisations, including the World Bank, IMF and the United Nations Office on Drugs and Crime (UNODC).
Last year, the OSCE made some significant strides in this field. The Organisation worked with a number of participating States to assist with international information exchange aimed at addressing money laundering and terrorist financing. The OSCE also assisted a number of states to bolster domestic interagency co-operation with the aim of increasing the effectiveness of national efforts.
Looking ahead, the OSCE plans to focus on a small number of core activities including national risk assessments, interagency co-operation, capacity building, international information exchange and better coordination between public, private and international organisations.
Ireland is particularly supportive of the work undertaken by the OSCE on national risk assessments, which it does in partnership with the Work Bank and the International Monetary Fund. A national risk assessment is a process by which a threat of money laundering is identified, the country’s vulnerability is examined and the likelihood of money laundering successfully occurring is assessed. As evidence of our support, Ireland is funding the preparation of an OSCE publication on Anti-Money Laundering national risk assessments. A key aspect of the publication is to provide guidance on the collection of data for a national risk assessment and to assist on how the findings of such assessments may be used to formulate national policy. This publication will be launched at the second preparatory conference in Ireland in April.
I would like to turn briefly to the situation in Ireland. In 2010, the Irish Government introduced new legislation – the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 – which strengthened Irish law against money laundering and terrorist financing and brought it in to line with the 3rd Money Laundering Directive and the latest FATF recommendations. It incorporates the Directive and FATF requirements regarding the adoption of a risk-based approach. This will allow the effected financial and other bodies to concentrate their resources where the risks of money laundering and terrorist financing are greatest.
Effective implementation of anti-money laundering legislation is critical. For this reason, the 2010 Act assigns specific responsibility to the Central Bank of Ireland and to other competent authorities to monitor compliance and to take whatever measures are reasonably necessary to secure compliance with the provisions of the Act.
It is no secret that the Irish banking sector has been through a turbulent time lately. All of us in Ireland have been affected one way or another by this crisis. Stronger and more effective regulation in the financial services sector has been identified as an essential building block of the recovery which is now underway. Effective compliance has to be the new cornerstone of this new thinking. That is now universally recognised.
In the context of money laundering, the Central Bank of Ireland clearly recognises the importance of better and more robust regulation. The money laundering unit of the Central Bank of Ireland is one of the few areas of the Irish public service which is recruiting new staff to ensure that the money laundering legislation is implemented effectively by the sectors for which it has responsibility.
The enactment of Ireland’s money laundering legislation represents a significant element in the new and stronger regulatory regime for the financial services sector. It represents a commitment on the part of the State to have a legislative regime in respect of money laundering and terrorist financing which will be equal to the very best in the international arena.
Another critical aspect of the fight against money laundering and other serious crimes is a state’s ability to confiscate the proceeds of criminal activity. Ireland provided a role model in this area with the establishment of the Criminal Assets Bureau in 1996 to confiscate the proceeds of crime in cases where there is no criminal conviction. The Criminal Assets Bureau is a multi-agency body consisting of police officers, customs officers, tax officers and benefit agency personnel who are able to pool the information available to each agency. Although the Criminal Assets Bureau continues to be successful in targeting the proceeds of criminal activity, the Irish Government is committed to further strengthening its powers.
At international level, the Bureau continues to work closely with similar agencies in other jurisdictions to identify, track down, and seize assets gained through criminal activity. I am aware that this topic, and specifically the work of the Criminal Assets Bureau, will be addressed by the April conference in Dublin where it is planned to have a discussion on the identification and recovery of stolen assets.
Conclusion
Ladies and Gentlemen, money laundering and the financing of terrorism are in many cases transnational in nature. Certainly, they represent common challenges from which no state is immune. Although efforts to combat them rely on effective policies at a national level, these are enhanced and reinforced when they form part of a broader multilateral and international approach. International organisations and multilateral fora play an important role in promoting good governance. They facilitate the crucial cooperation that is needed between states to counter challenges such as corruption, as well as to foster mutual accountability.
The OSCE is only one of a number of such organisations working on these issues. I am delighted that many of these organisations are represented here today. The task for the OSCE is to better define the role that it can play in supporting existing international efforts, both collectively and within participating States.
I also believe there is such scope. We will bring forward proposals in this regard as we prepare, later in the year, for the Dublin OSCE Ministerial Council in December. We would welcome the ideas and suggestions of all organisations represented at the Forum on what shape this might take. In this regard, I hope we will have an extremely productive discussion over the next two days.
To conclude, I would like to thank all those who have agreed to speak and moderate over the different sessions. I am certain you will offer us much food for thought and am sure your presentations will stimulate much interesting discussion both within the sessions and also outside of the meeting.
As I mentioned at the outset, the next stage in our dialogue will take place in Dublin in April. We look forward to extending you a warm welcome on that occasion.
Thank you.
LENDING TO THE REAL ECONOMY IN 2012 CRUCIAL FOR OUR RECOVERY
Speech by Brian Hayes TD, Minister of State at the Department of Finance at the IBF Conference shaping the Future Mortgage Market,
Wednesday January 18th
Introduction
The residential property market in Ireland is in a dysfunctional state. Since taking office this Government has taken two very significant initiatives to return the property market and the property industry to a more normal state.
The banking announcement on 31st March 2011 restructured the core banks to ensure that there is over €20 billion of new mortgage and SME lending available from the pillar banks between 2011 and 2013. Bank of Ireland has already announced a special fund for new buyers and I understand that others are considering launching mortgage initiatives shortly.
Last month’s budget introduced measures to assist the property sector at its core. These measures were designed to foster greater certainty/confidence about the future of the property market. The creation of confidence in this sector and the availability of credit is vital to return the property market to a more normal market. The challenge now to the banks is to make mortgage credit available to allow people to avail of the Budget incentives as announced.
Nobody wants a return to the excesses of the wild years – the toxic brew of crazy borrowing by developers, the mad and bad lending by banks, the poor to non-existent bank regulation and worse politics.
It might have been a great party. But it sure left this country with a hell of a hangover that will take some time to resolve. However it is in the national interest that we have a functioning property market, both residential and commercial. By that I mean a market with a reasonable level of transactions and a return to a sensible level of new developments.
A market that functions like a yoyo is in nobody’s interest. I appreciate that the residential property mortgage market is a complex mix of product types. While all the talk has been of arrears, people on tracker mortgages have benefited substantially in recent years as euro zone interest rates have fallen to record low levels with a further reduction possible or even likely in 2012. Of course the same tracker mortgages products are part of the problem facing lending institutions.
As Government we are acutely aware of the difficulties currently facing many mortgage holders. We have kept our promise. We have stayed engaged in finding practical solutions to what are very real problems.
The measures include a strong Code of Conduct on Mortgage Arrears by the Central Bank and a formal Mortgage Arrears Resolution Process. The government has moved to help people who have become unemployed and are in serious difficulty with their mortgage payments. The Department of Social Protection Mortgage Interest Supplement Scheme provided funding of the order of 75million euro.
The government has also insisted that people on local authorities mortgages benefit from interest rate reductions. And as the banks know, we have adopted a muscular approach with you on passing on interest rate reductions.
Last year the government also established the Keane Group to look at the increasing problem of mortgage arrears. That committee reported in October and the government has moved quickly to implement some of the recommendations. We are committed to advancing further proposals in the early part of this year to help those caught up in the appalling situation and are working at a cross departmental level to achieve this.
The debate in both houses of the Oireachtas and the submissions received from outside groups are helping form the response of Government. This year, as a matter of priority, the Government will also introduce a new bankruptcy and personal insolvency law. This is a reform long overdue and absolutely essential in creating an even pitch between lenders and borrowers.
The government of course is a strong player in the rental sector. The Department of Social Welfare is spending of the order of 500 million euro a year on rent supplements for social welfare recipients. Critically the Government has recapitalised the domestic banks and in that recapitalisation, provision was made for possible losses on the mortgage book. It is now up to the banks that the Government has recapitalised and indeed the other mortgage providers to work closely with the Central Bank and move quickly on a case-by-case basis with people in difficulty.
In the December Budget, the Government kept its promise to those in negative equity, to those who bought in the period 2004 to 2008. We increased mortgage interest relief to this group as promised.
As regards residential property prices we all know they continued their steep decline in 2011. As we know trying to catch a falling knife is always dangerous. Nevertheless the relationship between average incomes and average house prices and interest repayments on a fixed interest mortgage is now in better balance.
In fact in some parts of the country house prices are below current replacement costs, which is an indicator that values might have fallen below reasonable long-term value. In order for recovery to happen it is important that the market has reached the bottom, I hope that will be in 2012.
In the December budget, the government did provide a strong incentive to first time buyers to enter the market in 2012. This will help a little. But restoring the residential property market to a better place will depend on that elusive potion. Confidence. Stability in the euro zone and a return to growth and employment in the Irish economy will be important in restoring confidence.
Availability of finance is also a critical element. After the trauma suffered by the banks in recent years and the real problem of mortgage arrears there may well be reluctance by the banks to issue new mortgages.
But credit is the lifeblood of an economy. While the bank recapitalisation exercise is of course about repairing the balance sheets of the banks, it is also about improving credit and getting lending out to the real economy. For the domestic banks that were part of this exercise the State has provided the capital and there is a need for the banks get lending going again on a responsible basis.
In the interest of future stability we also need to look at best practice in the provision of mortgage finance. Is it wise for instance to have variable interest rates for a principal private residence? Would it not be wiser to insist on fixed interest mortgages in this specific sector? We also need to look at the provision of third party guarantees. Such guarantees were certainly a distorting factor in recent years. Insisting on a reasonable deposit also contributes to stability. There is the big question on whether some residential mortgages should be on a non-recourse basis only. Introducing such a provision would have a dampening effect on lending but it would also inhibit reckless lending.
And there are also wider social policy issues. In a world where the nature of employment is changing at a rapid pace we do need a major debate on Ireland’s great love that is never afraid to speak its name – Ireland’s love affair with home ownership and property. As a matter of policy we need to develop a vibrant rental sector with strong protection for tenants and which will be attractive to companies and institutional investors seeking long-term returns.
To conclude, the government will stay involved with the property sector, particularly the residential sector. We will do so because an active property market is good for the economy. Above all we will stay engaged because the residential property market is also about peoples’ homes. And homes are essential to stable social relations. Homes are about peoples’ lives and their dreams. Minimising the number who will actually loose their homes is the key objective for this administration and working up solutions to bring that about is what we are about.
Speech by Brian Hayes TD, Minister for State at the Dept of Finance, speaking at the annual Trim Chamber of Commerce dinner Friday 13th Jan
No one owes us a living – playing the blame game will do nothing for Ireland
Thank you for your invitation to speak at the Trim Chamber of Commerce annual dinner. As Minister responsible for the OPW, we have a very special relationship with Trim given the fact that the HQ of the OPW is based here in Trim. When times are tough there is a temptation to wrap the comfort blanket of victim hood tightly around us. We must resist that temptation. Victim hood is not a very useful response to the political and economic challenges now facing our country. Yes we are in the middle of an international economic storm. Of course the uncertainty over the Euro is making our situation difficult to chart a way back. But 80% of the crisis we face is all of our own making and can only be fixed by decisions we take. Blaming the IMF or the European authorities is a pointless exercise in victim hood. Without the availability of funding from them, we would have to align our revenues and spending virtually right away. Stripping out money set aside for the banking system, the gap between Exchequer revenues and spending this year will be close to 15 billion euro, giving an indication of the difficulty of that task. Can people even begin to understand the impact of cutting the voted expenditure of Government Departments and agencies on social protection, health services and so on by between 25 and 30 per cent in one year to close this gap between income and expenditure. Because that’s what we are talking about.
Those who argue that we should say good-bye to the troika are intent upon bringing about a nuclear winter to this country. Presenting us as victims either at home or abroad can be self-fulfilling. The better response to a national crisis is to get back up and get into fight back mode. Of course there are constraints. Nevertheless each and every one of us has the capacity to make a difference. As a country we still have choices to make and the freedom to make those choices. I do not underestimate the challenges facing us. In November 2010 Ireland was battered and bruised and on the ropes. At that stage outside assistance was necessary. And let us be absolutely honest about the situation. In November 2010 there were no private investors willing to lend to the Irish government or to the Irish banks at affordable rates. Without the bailout programme and the ongoing support of the ECB the Irish banking system would have totally collapsed and government finances and the Irish economy would be in complete meltdown. The European Union, the ECB and the IMF are providing critical support to the Irish government and the banks and giving this country the time, the means and the opportunity to sort out our problems. They have been open to discussion and reasoned arguments. The goal of the Programme is to get Ireland and the banks back to the market and out of the programme and all parties are committed to ensuring that the appropriate measures are taken in the future and are confident that the objectives of programme will achieved. Since it came into office, this Government has taken every opportunity to seek ways to enhance the terms of the programme and to reduce the burden of debt on the Irish people. Most notably, the Government, with the assistance of the Troika and other member states, has successfully reduced the cost of the EU funding to Ireland leading to a savings of some €10 billion
Only a few weeks ago the ECB gave three-year money at 1% interest to all European banks, including Irish banks. This was one of the key demands of the government. This long term funding allows the banks to do what banks are supposed to do – provide credit to existing businesses and new start-ups. Intense and robust negotiations continue with the troika on many aspects of the programme, including in relation to the ongoing cost of funding and restructuring of the banking sector. As stated by the Taoiseach in the Dail during the week technical discussions are ongoing between officials in this area. Bringing this country to a safer, better place will be no easy job. Success will depend on our capacity to turn the economy around. The Government is focused on the real task of restoring sustainability to our public finances, repairing our banking system and generating economic growth. We have had a measure of success last year. As the Taoiseach said yesterday in London, our focus must now be on growth at home and abroad. Despite the adjustment last year of 6billion euro the economy grew for the first time in three years. That was led by Exports recovering. In the Agri/Food sector, in tourism and the IDA has its best year for a decade in attracting new investment – 168 projects in all. The IT sector is very dynamic with all the big names now having a presence in Ireland. We live in a tough, competitive world. Nobody owes us a living. Our prosperity depends on our ability to sell goods and services at home and abroad. We must stay competitive in the areas of cost, quality, customer service and innovation. The government has a clear focus on supporting the export sector and SMEs. In the budget we introduced significant new support for business wishing to grow their exports in new markets. The Minister for Enterprise and Jobs, brought forward a range of measures to support SMEs and job creation. Initiatives include a partial loan guarantee scheme, a Micro Finance Start-Up Fund, seed and venture capital initiatives. Further initiatives will follow in the near future. The property sector is a critical sector of any economy. Nobody wants a return to the crazy years – the toxic mix of greedy developers, mad lending by the banks, poor banking regulation and even worse politics.
However it is in the national interest that we have a functioning property market, both commercial and residential. A property sector with a reasonable level of transactions and some new development is required. In the recent budget the government introduced a number of targeted measures to support the property market. These measures by themselves are not sufficient to jump-start the market. Availability of finance is also critical to a well functioning property market. The banks have a clear responsibility in this regard. The banks have been well capitalised by the government and must now focus on lending money into the Economy. Mortgage interest relief for first time buyers has been extended into 2012. While family homes are now very affordable many potential buyers may struggle to receive mortgages. The government has set mortgage lending targets for the covered banks and will ensure that banks are making credit available to people to buy their first home. There is a way out of this crisis. We can come back from the appalling mess we have been asked to clean up by the Irish People. But blaming others as some kind of default position is no answer to our predicament.
BT Public Service Reform Breakfast Briefing – Thursday, 12 January, 2012
Introduction
- Thank you to BT Ireland for inviting me here today. I am delighted to have the opportunity to discuss Public Service Reform. I am also pleased that we have the opportunity to hear from Sandwell Metropolitan Council about their work on a virtual contact centre with BT and to hear from EMEA about what is happening in other jurisdictions. I believe that briefings like this are very helpful in sharing experience of the important work that is being done to change how we design and deliver public services
Public Service Reform Objectives
- As you know, the Programme for Government has a strong emphasis on reform and the ambitious action-focused Public Service Reform Plan which was published in November sets out an ambitious range of actions and associated timelines. The benefits that these reforms will yield are significant; not only in terms of savings needed by the State in relation to fiscal consolidation, but in the delivery of more cost effective, integrated, customer-focused public services.
- We want to make the changes set out in the Plan because they are the right thing to do, and we have to make these changes as we have no other choice due to our fiscal crisis.
- The planned reduction in Public Service numbers – a further 23,500 from end 2010 to end 2015 – means that we have to change the very way we do our business. This year alone, we expect a further reduction of 6,000 staff, which will leave the total number of staff at a level last seen in 2005. This reduction in numbers mean that whether we like it or not, our organisations and public servants must change and be flexible in terms of the way we work.
- Nobody thinks this will be easy but it must be done and it must be done now. We have a clear plan about how to achieve a more efficient, integrated and citizen-centric Public Service and I know that we can all work together to accomplish this.
Progress to Date
- This Government took the issue of reform serious from the very start. We started with a top down approach when we reduced pay of Taoiseach and Ministers, changed Ministerial transport arrangements and introduced new pay ceilings for senior public servants. We have also reduced the number of Oireachtas Committees, reconstituted the Top Level Appointments Committee (TLAC) and changed the TLAC terms that apply to Secretaries General on retirement.
- I know that, despite significant achievements, we have all seen plans to reform the Public Service in the past that have not lived up to expectations, in some cases because of a lack of focus on action and delivery. The core of our Public Service Reform Plan is implementation and delivery with real actions, real deadlines focusing on real results.
- This time a dedicated Reform and Delivery Office has been established in the Department of Public Expenditure and Reform to lead and co-ordinate the implementation of the Reform Plan. This Office is being led by a new Programme Director, Paul Reid, who has considerable experience of leading major change in the private sector.
- Minister Howlin and I are both fully committed to supporting the Office and I am involving myself very directly in the areas of shared services, procurement, property management reform and Government level performance measurement (‘GovStat’).
Shared Services
- The use of Shared Services will be expanded in all sectors, particularly in back office areas, such as payroll, HR and pensions to reduce duplication of effort and allow the targeting of scarce resources on strategic priorities. Considerable progress is already being made in developing a shared HR service for the Civil Service and plans are being advanced in other areas. A Shared Service Transformation Manager will also be appointed in the Reform and Delivery Office.
Procurement
- Significant progress is also being made in the area of procurement by the National Procurement Service (NPS), particularly in terms of developing centralised contracts for commonly used goods and services. The NPS has identified the top 50 categories of procurement expenditure for intervention.
- The NPS currently has in excess of 45 national frameworks agreements and contracts, valued in excess of €450 million, in relation to energy, office/ICT supplies, vehicles, fuel, advertising, print services etc. Agreements already in place have maximized volume discounts and provided for reductions in costs for suppliers and for State bodies.
- Procurement savings amounted to €30 million in 2009, €40 million in 2010 with €50 million targeted for 2011 and we will target further ambitious savings in the coming years. The Reform Plan sets out a range of detailed actions to this end.
Property Management
- How we manage the State’s property interests is obviously important in terms of minimizing our cost base. We will realise significant savings in the management of the property portfolio by reviewing our leasehold and maintenance agreements and by raising additional capital through the sale of excess property, where appropriate.
- The Public Service Reform Plan sets out some specific actions in this area including developing a property management plan with a particular focus on Office accommodation and improving strategic decision making capability in relation to property inventory.
Government Level Performance Measurement (‘GovStat’)
- There is a need for improved openness and transparency in the delivery of public services. Building on the successful experience of the HealthStat initiative in the health sector, we are currently evaluating the potential for a wider GovStat initiative, which would be a whole-of-Government performance measurement system. The objective of this would be to provide greater performance information and increase accountability in the delivery of public services.
- Equally important is the use of eGovernment in the Public Service. In this context, we will use new and emerging technologies in imaginative ways to improve public service delivery and to ensure that services reach the people for whom they are intended. The eGovernment Strategy, which is close to completion, will ensure the Public Service continues to develop informational and transactional online services which deliver real benefits to citizens and business.
Critical Success Factors
- A sustained effort will be needed by all stakeholders if we are to achieve the full range of goals set out in the Public Service Reform Plan. We are dealing with hundreds of diverse organisations with 300,000 employees and it is important to acknowledge both the scale of the task and the critical success factors involved.
Croke Park Agreement
- In terms of the Croke Park Agreement in 2012, the priorities for the Government have to be using all the opportunities under the CPA to:
- maximise the productivity of the existing staff. That will be pursued through
for example annual and sick leave reform, redeployment and rerostering,
better performance management;
- extracting additional costs where possible, for example through the
Government’s comprehensive review of allowances and premia pay, the tech
pay review in the Defence Forces, maximising civilianisation in the justice
sector which has the added benefit of releasing uniformed personnel for other
duties, reforming the payment structures for lab technicians and radiographers
in the health sector, and, not least,
- enabling the Government’s ambitious public service reform programme
announced last November.
Some of these issues are being led centrally by D/Public Expenditure and Reform. In parallel, the Implementation Body has now asked for new action plans from the sectors. It is now time for local management to show a level of ambition about opportunities for change under the Agreement. There are sectors where both the challenges and the opportunities are very great. Management agendas that were hard won in Croke Park now need to be pursued by sectoral management even where that means that they have to go into a difficult negotiating space.
That will also be challenging for their interlocutors on the union side. The almost unprecedented atmosphere of industrial peace across the public service, which is the major benefit of the Agreement to date, presents the space for both sides to get engaged on this work.
Senior Public Service
- To ensure that the Public Service has the required delivery capability to meet the reform challenge, we need to strengthen public service management and leadership across the Civil Service and Public Service.
- The Senior Public Service (SPS) will create opportunities for training and development for individuals and also remove barriers to mobility across the Public Service in line with the commitments contained in the current Programme for Government.
- Over time, it will enable the available talent across the system to be deployed more effectively in pursuit of Government priorities. Such a pragmatic approach is essential to developing the collaborative culture needed to tackle the biggest cross-cutting social and economic challenges.
- The SPS currently operates within the Civil Service, but will be extended to the wider Public Service. To support this objective redeployment legislation is being prepared to provide for mobility across the wider Public Service.
Top-level commitment
- We, all, have an important role to play to ensure the delivery of reform. I, along with my Government colleagues, am truly committed to the task at hand but we need the active support and involvement of all public service staff.
- As senior public servants, we need your support to carry out the difficult task ahead and deliver the planned actions that are essential for delivering reform. All staff in Public Service have a role to play, no matter where they are or what they are working on, from those working in the back office to those dealing with customers on the front-line.
Good communication
- Effective communication is imperative if we are to achieve the required changes. A comprehensive communications strategy, which will include both central and sectoral elements, will be developed shortly. It is vital in achieving buy-in from staff and the public, as well as keeping the public informed of developments. It is critically important that there is clear ongoing communication with front-line staff and an openness to new ideas for efficiency and reform, be that from front-line staff, the private sector, the general public or elsewhere.
Conclusion
- It is important to also recognise the achievements of the Public Service and the good work that has been done so far. The Public Service should be proud of what has been accomplished so far. We must continue on this path knowing that the future of the State depends on what we achieve. We need to engender a renewed sense of pride in our Public Service.
- As I have said, everyone has a part to play in reforming the way the Public Service does business. We all know what we have to do. The reality is that frontline services will suffer if we don’t reform now. We have out work cut out for us but we can achieve reform and deliver that a Public Service that we can be proud of and that is truly among the best in the world.
- We need to deliver quality services with significantly reduced resources and staff numbers. We need to focus on supporting citizens and businesses where and when they need it most, making the interaction with the State as simple and seamless as possible and improving the customer’s experience in engaging with Government.
