Tag Archive for 'government'

The Speech Kenny Should Have Given

Published on 16 June, 2010. 0 Comments
The Speech Kenny Should Have GivenThese past few days have seen the downfall of Enda Kenny as leader of Fine Gael. Following the sacking of Richard Bruton, his leadership became untenable, following the resignations of nine further members of his front bench, his leadership became impossible. What is most unfortunate about the whole affair is that, after four decades of political life, Kenny’s career should come to an end with him trying so desperately to cling to power, damaging both himself and the party in the process.
Yesterday afternoon he had an opportunity to change that. After witnessing the resignations of most of his front bench, he was due to speak for a vote of no confidence in the Taoiseach, a situation where he, not Brian Cowen, would paradoxically be at the center of the Dáil’s attention. I had hoped that he may have taken that opportunity to make a speech that would be worth capping a political career with, but unfortunately he gave the same speech in the same way he always does, a speech that reminded many why they no longer wished for him to be their leader.
The following is, in a brief form, my humble opinion of what he should have said, of the kind of speech he should have given.
“This is not a time for business as usual, and it is not a time for politics as usual. If we are to recover as a nation, if we are to leave our children the Ireland they deserve, then we cannot keep along the same political path that is so well trodden in this country. We need a class of politicians for whom the notion of putting the interests of the country above their own is not simply rhetoric. We need a class of politicians who can pass that most difficult test of leadership, stepping aside.
This morning you and I were in very similar situations, Taoiseach. We are both leaders, and we both serve those who elect us. Over these past 24 hours I have come to accept that those who elect me, the Fine Gael parliamentary party, no longer have confidence in me, and that the only honorable thing to do is to step down as leader of the party. It has been the most difficult decision of my life as a public servant, but one which has become inescapable to me if I wish to truly place the interests of my political party and the Irish public ahead of my own.
Over the course of weeks, months, and indeed years, you too must have come to the realization that the people of this nation, the people you serve, no longer have confidence in you as their leader. Beneath all the bravado, beneath all the rhetoric, deep within you you have come to the same inescapable conclusion that I have over these past few days. It is not an easy realization to come to, Taoiseach, it is that one fear that shakes a politician to his very core, and it is that one truth that is hardest for us to accept.
Tomorrow I will be stepping aside, accepting my fate and doing what is best for the country. I ask you to do the same, to resign as Taoiseach, call a general election and allow the Irish people their right to choose a new government that truly represents them. It would not be an easy decision, it would require a courage, an honesty and a decency that have been lacking in politics for far too long. It would be a selfless decision that is worthy of a true statesman, a true democrat, and a true public servant. It would be a decision that could help signal a return to those highest of standards in political life that we so often talk about but so rarely act upon. Most importantly, it is a decision which you know in your heart to be right.
Put simply, Brian, it’s time for us to go.”

These past few days have seen the downfall of Enda Kenny as leader of Fine Gael. Following the sacking of Richard Bruton, his leadership became untenable, following the resignations of nine further members of his front bench, his leadership became impossible. What is most unfortunate about the whole affair is that, after four decades of political life, Kenny’s career should come to an end with him trying so desperately to cling to power, damaging both himself and the party in the process.

Yesterday afternoon he had an opportunity to change that. After witnessing the resignations of most of his front bench, he was due to speak for a vote of no confidence in the Taoiseach, a situation where he, not Brian Cowen, would paradoxically be at the center of the Dáil’s attention. I had hoped that he may have taken that opportunity to make a speech that would be worth capping a political career with, but unfortunately he gave the same speech in the same way he always does, a speech that reminded many why they no longer wished for him to be their leader.

The following is, in a brief form, my humble opinion of what he should have said, of the kind of speech he should have given.

“This is not a time for business as usual, and it is not a time for politics as usual. If we are to recover as a nation, if we are to leave our children the Ireland they deserve, then we cannot keep along the same political path that is so well trodden in this country. We need a class of politicians for whom the notion of putting the interests of the country above their own is not simply rhetoric. We need a class of politicians who can pass that most difficult test of leadership, stepping aside.

This morning you and I were in very similar situations, Taoiseach. We are both leaders, and we both serve those who elect us. Over these past 24 hours I have come to accept that those who elect me, the Fine Gael parliamentary party, no longer have confidence in me, and that the only honorable thing to do is to step down as leader of the party. It has been the most difficult decision of my life as a public servant, but one which has become inescapable to me if I wish to truly place the interests of my political party and the Irish public ahead of my own.

Over the course of weeks, months, and indeed years, you too must have come to the realization that the people of this nation, the people you serve, no longer have confidence in you as their leader. Beneath all the bravado, beneath all the rhetoric, deep within you you have come to the same inescapable conclusion that I have over these past few days. It is not an easy realization to come to, Taoiseach, it is that one fear that shakes a politician to his very core, and it is that one truth that is hardest for us to accept.

Tomorrow I will be stepping aside, accepting my fate and doing what is best for the country. I ask you to do the same, to resign as Taoiseach, call a general election and allow the Irish people their right to choose a new government that truly represents them. It would not be an easy decision, it would require a courage, an honesty and a decency that have been lacking in politics for far too long. It would be a selfless decision that is worthy of a true statesman, a true democrat, and a true public servant. It would be a decision that could help signal a return to those highest of standards in political life that we so often talk about but so rarely act upon. Most importantly, it is a decision which you know in your heart to be right.

Put simply, Brian, it’s time for us to go.”

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Some Hung Parliament Hypotheses

Published on 8 May, 2010. 5 Comments

Hypothesis 1: Any meaningful electoral reform in the UK would effectively prevent the Tories from ever having an overall majority again. Because of this, the Tories, whatever overtures they may be giving Clegg at the moment, can never credibly commit to real electoral reform.

The Tories have been a minority party in UK politics for three-quarters of a century. That may seem odd, given that they’ve come out with an overall majority of MPs in nine elections since, but you have to go all the way back to Stanley Baldwin in 1931 to find the last leader of the Conservatives to lead the party to get over 50% of the votes in a general election*. Even in Margaret Thatcher’s 1983 landslide, the Tories only managed 44% of the vote, but won a large majority of seats as the opposition vote was split between Labour and the SDP/Liberal Alliance. Winston Churchill, now considered one of the greatest Prime Ministers of all time, never even actually won an election on the popular vote. During his three elections as Tory leader, he managed to win a majority of MPs in just one, and even then with a slightly lower percentage of the national vote than Labour.

The Conservatives know all this, and David Cameron, a former student of politics, knows it as well as an of them. The history of the Conservative party since universal suffrage has been of a declining popular vote, mitigated only by the gradual split of the center-left between Labour and the Liberals. With the UK’s first-past-the-post electoral system, this had been good enough to secure frequent parliamentary majorities for the Tories, but under any even remotely proportional system their hopes for an overall majority would almost completely disappear. Their choices would either be eternal opposition, or a shift to the left for occasional coalition governments. Neither are particularly appealing to die-hard Tories.

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A Perfect Opportunity

Published on 20 February, 2010. 0 Comments

A couple of months ago, I blogged about the possibility of an experienced outsider being brought into the cabinet as Minister for Trade, Enterprise and Employment (Jim O’Hara being that outsider). Through the various twists and turns of Irish politics over the past week or so, a sequence of events has given Brian Cowen the perfect opportunity to make just such a shake-up:

  1. Willie O’Dea’s resignation from the cabinet
    With O’Dea gone from the Department of Defense, a cabinet reshuffle is now inevitable. While many are speculating that Cowen will simply appoint one of the junior ministers to fill O’Dea’s post, he hasn’t reshuffled his cabinet since taking office in 2008 (in a very different economic climate), and now would be the perfect time to do so. What’s more, with a vacant seat on the cabinet, an independent minister could be brought in without having to relegate any of the sitting Fianna Fail ministers to the backbenches. This could help diffuse any animosity that the FF parliamentary party might have about bringing in someone from outside Fianna Fail.
  2. Deirdre de Burca’s resignation from the Seanad
    As well as an opening in the cabinet, there’s now an opening in the Seanad, thanks to Deirdre de Burca. As she occupied one of the 11 Seanad seats reserved for nominees of the Taoiseach, Brian Cowen can now appoint whoever he likes, at as short notice as he likes, to replace her. Indeed, he could nominate someone on Monday morning, and by Monday evening they could be sitting at the cabinet table. Of course, as the seat was previously held by a Green, the Green Party will undoubtedly want another of their own to replace her. Cowen would do well to remind them that Fianna Fail recently elected Niall O’Brolchain as an additional Green senator to replace Labour’s Alan Kelly, and that Cowen’s appointee would be independent, rather than from Fianna Fail. Of course, if that didn’t work, a promise of an additional junior minister post for the Greens in the reshuffle would probably do the trick.
  3. Mary Coughlan’s cock-up over the Ryanair hangar proposal
    Mary Coughlan has made quite a few mistakes and gaffes during her tenure as Minister for Enterprise, Trade and Employment, but, at a time when unemployment is at its highest in a generation, her inability to secure 500 jobs that seemed to be offered on a plate by Ryanair is the first one to really make her position look untenable. What’s more, after O’Dea’s resignation, any further revelation in the Coughlan-Ryanair saga could have catastrophic consequences for the government. It would be best for Cowen to reassign her to a different portfolio as part of a wider cabinet reshuffle, which would prevent any arguments over her handling of Ryanair’s proposals from becoming a resigning matter. In order to illustrate that her movement out of the portfolio is simply part of the reshuffle and not a demotion, she could keep the position of Tanaiste in her new role.
  4. Greece’s future is still shaky
    Within the the next week, Greece is expected to try to raise up to €5 billion euros from international bond markets, which will be a big test of market confidence in their finances. If Greece struggles through this test, renewed pressure will come not only on them, but also on the other ‘peripheral countries’ in the eurozone, including Ireland. Brian Lenihan’s budget in December bought us a bit of leeway compared to Greece, Spain and Portugal, but we can’t count on that goodwill from the markets to last forever, and now would be a very good time to differentiate ourselves once again, by bringing in an outside expert to a major economic post on the cabinet. By picking the right person, and handling the international press well, any potential fallout from Greece’s problems could be neatly defected, keeping our own borrowing within reasonable costs.

I had previously suggested Jim O’Hara to take over the role of Minister for Enterprise, Trade and Employment, and I still think that he would be a very good choice. Of course, so long as Cowen were to avoid appointing anyone who was in any way involved in either the property or finance industries, there are quite a few successful Irish businessmen and businesswomen who would fit the bill, including some of the members of the Taoiseach’s own innovation taskforce. The important thing is to appoint someone who would be respected by the international business community, with any experience in high-tech exports as an added bonus.

Whoever Cowen were to choose, he now has a perfect opportunity to create a rare piece of good news for the government, and to end a dreadful couple of weeks for his party (and Irish politics as a whole) on a high note. Of course, whether he has the fortitude to make good on this opportunity is a different matter entirely…

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The Myth Of The Smart Economy

Published on 17 December, 2009. 1 Comment

Brian Cowen and company seem quite enamored with the term ’smart economy’ these days, chalking everything from Máire Geoghegan-Quinn’s European Commission portfolio to more jobs in the bookie’s up to the government’s dedication to all sorts of high-tech wizardry. In fact, if you were to ask a member of the government how they plan to bring Ireland’s economy back up from its knees in the coming years, you’re virtually guaranteed to hear the phrase smart economy along with its fellow buzz-term ‘green economy’ firmly lodged in their first sentence. This should be heartening to hear; a focus on high-tech, export oriented industries promises much more stable, long-term growth prospects for the coming decade than the national property bubble that we relied upon for the current one. Unfortunately, while our cabinet members have certainly learnt how to say the words smart economy, I don’t think any of them seem to have realised what they actually mean.

You might expect a government with such an attachment to the notion of Ireland being a high-tech hub to have some sort of record of positioning the country as an international leader in the field over the past decade. The reality as it turns out, is quite the opposite. It’s not just that we’re not at the top of the international league tables on this, we’re actually, in a word, shit.

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The Ethics and Economics of Inheritance Tax

Published on 8 December, 2009. 0 Comments

In the run up to the budget, with Ireland digging itself into more than €400,000,000 of extra debt every week, it’s unsurprising that there’s a lot of disagreement on how to bridge the gap between tax revenue and government spending. Some favour huge tax hikes, some want massive spending cuts, some are looking for both, and there are even a few who don’t want to have to deal with either, and hope that the whole thing will just sort itself out somehow. While I would more usually align myself on the side of spending cuts, there are a few avenues open for the government to increase tax revenue without pushing the economy further into recession, and I believe these should be fully exploited. In particular, there’s one form of tax of which there has been barely a whisper of discussion on of late, and that’s inheritance tax.

In Ireland, tax on inheritances comes in the form of the Capital Acquisitions Tax (CAT). This tax, which also covers gifts, was increased from a nominal rate of 20% to 22% in the April budget, but due to a range of exemptions and reductions that cover pretty much anything anyone would ever be likely to inherit, the actual effective rate will top out at 2% even on the largest inheritances, and in the vast majority of cases will be zero.

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Carbon Bonds Could Reduce Government Borrowing Costs Too

Published on 2 December, 2009. 0 Comments

After my post a few weeks ago proposing a form of emissions-linked government bond which I called a ‘carbon bond’, I’ve realised an unintended benefit that the carbon bonds would bring to any government that issues them: they would reduce long-term borrowing costs. This actually surprised me when I realised it, as it certainly wasn’t one of the intended consequences of issuing the bonds, but after considering the matter, it’s actually quite clear that borrowing costs would be lower for governments offering carbon bonds, subject to a couple of conditions.

I’m not going to go over a formal mathematical proof here (I like to think my blog hasn’t become quite that nerdy yet), but here’s the reasoning behind my claim:

Assume creditors are buying ten-year government bonds at an interest rate n. Now, if they also have the option of buying a ten-year carbon bond from the government, that carbon bond is going to have a base interest rate m, which would be increased by r if the government goes over its promised allocation of emissions permits by some given amount. We’ll assume that the market of creditors will place a probability p on the government actually having to pay out the higher m + r interest rate. The only reason that p would be zero would be if the markets had absolute and complete confidence that a government would never renege on its promises. We know that’s not true, so we can say that p is nonzero.

The expected interest payment for the carbon bond will be the base rate m plus the increment r times the probability p that the increment will have to actually be paid. That is, expected interest will be m + (p * r). Given the choice between either the regular government bond or the carbon bond, if one has an expected interest rate which is higher than the other, then creditors will simply all buy the one with the higher rate. This means that, in an efficient market, the expected rate for both should be equal, ie n = m + (p * r). Now, we know that both p and r are nonzero (if r was zero, then it would just be a regular bond), and are both positive. This means that m must be less than n for the market for both bonds to operate. That is, the base interest rate on the ten-year carbon bond has to be lower than the interest rate on standard government bonds. Which means that, so long as the government doesn’t actually deviate from its proposed emissions limits, issuing carbon bonds is going to be a definitively cheaper way to raise cash.

Of course, this is a simplified explanation; there would actually be a range of possible rs depending on how far over the emissions schedule the government went, and then a range of possible ps for the expected probabilities of each of those rs being paid out. However, the principle remains the same; markets are going to be willing to accept a lower base interest rate on carbon bonds so long as there is some non-zero probability that a higher interest rate will have to be paid out instead.

Interestingly, what a government would actually be doing with this scheme is betting on its own trustworthiness. The government is assuming with certainty that it will stick to its promises, whereas the markets don’t have the same faith. By issuing carbon bonds, a government can actually leverage this lack of trust in the form of lower interest rates. Of course, to benefit from these lower base rates, the government would actually have to stick to its promises, and can it really be that confident of itself?

Edit (30/03/2010): This post was originally written using the term ‘green bonds’. I’ve since changed all references to ‘carbon bonds’ instead. This is to bring the terminology closer to that used by Michael Mainelli and Jan-Peter Onstwedder in a proposal made last year, where they used the term ‘index-linked carbon bonds’ to describe effectively the same thing. The change should also remove any confusion with other uses of the term ‘green bonds’.

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Want to show the public and the markets that you're taking the economic crisis seriously, Mr Cowen? Then appoint Jim O'Hara to the cabinet.

Published on 10 November, 2009. 0 Comments

While bouncing from economic crises to political crises and back again at an astounding rate, Brian Cowen has stumbled upon a brief opportunity to make a move that would reflect well both upon himself politically, and give a piece of potentially good economic news for the markets to ponder over for once. In a few weeks time, elections will be held to fill two vacant seats in the Seanad. The electorate for both of these seats are current TDs and Senators, and as the government has majorities in each chamber, government nominees are effectively guaranteed to win both seats. This gives Cowen the ability to bring pretty much whoever he likes into the Seanad in time for the new year. What’s more important, though, is that Cowen can, by article 28.7.2 of the constitution, appoint up to two members of the Seanad to the cabinet, which means that he can use these open Seanad positions as a platform to bring expertise into the cabinet that simply can’t be found amongst the ranks of the Dáil.

While such a step would be almost completely unprecedented (the provision to appoint Senators to cabinet has only been used, to my knowledge, once in the history of the state), the situation we’re in is similarly unprecedented. We’re currently in the midst of the greatest fiscal, economic and employment crises to afflict any developed country since the great depression, and there are only three qualified economists sitting in the 166-seat Dáil, two of whom are on the opposition benches. The degree of experience within the business sector in the Oireachtas is similarly underwhelming, which means there is very little the government can do to increase its authority on matters of the economy without bringing in outside help.

Bringing in fresh blood to take over as Finance Minister is not possible, as the position constitutionally has to be held by a TD. However, the second biggest economic portfolio, the Minister for Enterprise, Trade and Employment, is a perfect position to bring outside expertise into. The current Minister, Mary Coughlan, is widely considered to be way out of her depth in the portfolio, and her repeated gaffes are doing the government little help in the popularity stakes. As such, bringing in a suitably qualified person in her place would help show both the electorate and the markets just how seriously the government are taking the current economic crises.

There certainly isn’t a shortage of candidates more qualified than Mary Coughlan for the position, but one that immediately springs to mind is Jim O’Hara. Jim O’Hara is currently Vice President of the Technology Manufacturing Group in Intel, and General Manager of Intel’s Irish operations, where he’s in charge of over 4000 employees. He’s very well respected in the business community, and he represents exactly the kind of high-tech, export-led industry that the government so desperately wants Ireland to become focussed on as we rebuild our economy. Furthermore, he showed during his involvement in the Lisbon Treaty campaign that he’s not only knowledgeable on political affairs, but also that he’s more than capable of presenting himself well in front of the political media.

Bringing him into the cabinet could be done quickly and easily. As it would be best for O’Hara to be seen as apolitical in his appointment, running him as a Fianna Fail candidate for one of the two vacancies directly would not be advisable. However, Cowen could simply call on one of Fianna Fail’s 6 Taoiseach’s appointees in the Seanad to resign from their current seat and run for one of the vacant seats (which they’d be guaranteed to win). O’Hara could then be appointed by Cowen as an independent appointee of the Taoiseach into then-vacant slot. Cowen could perform a mini-reshuffle of the cabinet (most likely giving Coughlan back the Agriculture portfolio she previously held, and pushing Brendan Smith back into a Junior Ministry), and appoint O’Hara as Minister for Enterprise, Trade and Employment before the start of the new year.

Brian Cowen needs to start taking radical steps towards both fixing the economy as well as improving the government’s tattered reputation if he wants to stay in office much longer. Most of the choices available to him would involve substantial opposition from vested interests across the country. He now, however, has the opportunity to make an unprecedented move that would be opposed by virtually no-one but Mary Coughlan. By appointing Jim O’Hara as Minister for Trade, Enterprise and Employment, Cowen could show just how seriously he’s taking the crisis, and that he’s willing to think outside the box in his efforts to do so.

And, as an added bonus for Cowen, the appointment would also be a political jab against Enda Kenny. Kenny decided last month that the Seanad is useless and he’d scrap it if elected Taoiseach, an announcement that was considered rash even by many members of his own party. By using the Seanad as a means to bring extra experience into the cabinet, Cowen could prove to Kenny that it isn’t so useless an institution after all.

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Abolishing the Seanad

Published on 18 October, 2009. 2 Comments

Fine Gael last night announced that, if elected, they’ll hold a referendum to abolish the Seanad. Right now is probably the perfect time to talk about reform of the way our system of government operates, as our Government and Oireachtas are almost completely incapable of dealing with the country’s fiscal and economic collapse, and public confidence in our elected representatives must be reaching an all-time low. Talking about the role the Seanad plays in the running of our country is a vital part of that, and discussions will inevitably come to either reforming the manner in which the Seanad is elected and operates, or getting rid of the Seanad and adopting a reformed unicameral parliamentary system if it’s deemed to make law-making more effective. These sorts of decisions are not to be taken lightly, as the choice of governmental system can have a profound impact on the country for generations to come.

Unfortunately, when Enda Kenny announced the party’s plan to abolish the Seanad, it wasn’t as part of an overarching review of our system of government, with a refashioning of the legislative branch carefully designed to be more effective at devising, amending and passing laws. It wasn’t advertised as a way to allow the country to cope better with the changed circumstances that we’ll have to deal with in the coming decades. Nope, the big headline reason given for abolishing the Seanad was that (along with reducing the Dáil by 20 members) it would save €150 million over the course of a Dáil term. That’s €30 million a year. To put that in perspective, the country’s current annual budget deficit is now approaching €30,000 million. So, Enda wants to make the biggest changes to the constitution in the history of the state, all for the sake of reducing our deficit by 0.1%.

Of course, Enda did hint to more political reforms as part of a “New Politics”, but it doesn’t inspire confidence that the headline reform is so blatantly populist. It also doesn’t inspire confidence that the whole process of devising a new legislative system for the nation has been fobbed off to the party’s environment spokesman, Phil Hogan, who doesn’t even sit on the Joint Oireachtas Committee on the Constitution, the body who’s job it is to discuss electoral reform.

By all means we should start talking about reforming the Oireachtas, in what it consists of, how it operates and how it’s elected. But that debate should be given the importance it deserves, and not simply used as a populist headline-grabbing stunt as Enda Kenny did last night.

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