Sunday, May 27, 2012

Is the Interim Board of Tallaght Hospital delivering reform or merely hindering progress?

Tallaght Hospital opened as an acute general 615-bed hospital in June 1998 operating on a 24/7 basis. It is the newest of the Dublin academic teaching hospitals and is aligned to the medical school at Trinity College. It employs 2,545 persons and caters for a population of approximately 500,000 – 11% of the total population of Ireland and cares for all categories of patient with any degree of seriousness or severity of ailment, adults and children.

This public, State-funded, voluntary university teaching hospital has been the subject of a very highly critical report by the Health Information and Quality Authority (HIQA) in reaction to risks to the health and welfare of patients associated with the systems of care provided in this Hospital. This was especially apparent with respect to elevated levels of clinical risk to patients who required acute admission being accommodated on the corridor adjacent to the Emergency Department. Patients awaiting transfer to an inpatient bed were warehoused, like cars on junk lot, and the investigation revealed their clinical health and welfare was not being adequately dealt with.

Tallaght Hospital was under the overall control of a 23-person board of directors in 2009 whose mandate, defined by charter, was criticised as ‘not in line with the principles of modern corporate governance’. The Board’s Code of Governance, which was adopted as recently as 2005, articulated its role as being to ‘develop and review on a regular basis the mission, vision, objectives,, functioning and strategic plan of the Board, establish, implement, and evaluate a quality management system for the regular assessment and review of patient care and manage the property and finances of the Hospital’

The investigation examined the effectiveness of the planning, accountability and oversight arrangements operated by this Board and the oversight arrangements with the Health & Safety Executive with a view to seeing how the HSE held the Hospital to account for the quality and safety of the services that it was providing. Patients experienced long waiting times to be seen by a doctor, a lack of communication and the indignity of being accommodated for long periods of time on a public access corridor.

Public Admission

The investigation found that between January and June 2011 that 14% of the people attending the Emergency Department left without completing their care. The waiting time in the Emergency Department for a non-admitted patient from January to August 2011 was typically 6-7 hours but some patients waited for up to 61 hours before being discharged. Unscheduled patients who attended the Emergency Department and subsequently required inpatient admission while awaiting transfer to an inpatient bed were accommodated on a trolley either within a designated area within the Emergency Department or on a public corridor while over 80% of them waited, on average, 13 hours for an inpatient bed. One patient waited 140 hours.  This is Dublin – not Harare.

Patient Care

Patients of the Hospital experienced long delays for diagnostic tests; an ultrasound scan, for example, could take up to nine months. In June 2011, 52% of all patients were waiting over 90 days to be seen in the Out Patients Department by a specialist team. The length of patient stay at Tallaght Hospital was outside the national average of 5.9 days. No hospitals in Ireland publish hospital waiting times for inpatient waiting lists.

A fish rots from the head and this investigation found that Tallaght Hospital, with its 23-person Board, did not have the relevant diversity of knowledge, skills and competencies required to carry out the full range of oversight responsibilities necessary. The appointment process to the Board was also criticised.

Sub-committees of the Board established to manage the activities of the Hospital had no executive powers but merely advised, reported to and made recommendations to the 23-person bloated conclave of inertia and incompetence.

Concern was also expressed about financial management, financial transparency and commitment control and there were insufficient controls in place to ensure compliance with public procurement legislation.

There have been four incumbents in the chief executive role at Tallaght Hospital suggesting that it was as shabbily led as the State featherbedded Irish Red Cross. There was no clear process of delegation from the Board to the Chief Executive and supporting team in relation to the delivery and performance.

The framework for accountability and oversight relationship between Tallaght Hospital and the HSE is reflected in a Service Arrangement – but this, too, was flawed. There was no reconciliation between funds available, budgetary overspend, catchment areas, innovation and research, demand and capacity and the core business of delivering high quality safe care to patients. There was no evidence to demonstrate a clear understanding of the collective roles and responsibilities of each statutory and non-statutory hospital’s contribution to the overall delivery the HSE service plan for the catchment area Tallaght Hospital serves.

That slovenly Board tolerated a culture of patients lying on trolleys in corridors for long periods of time. A new interim board of 16 members has been appointed, nine of whom are non-executive. The Tallaght Hospital web site does not provide a biography of any of them to indicate the nature of Board tenure; the area of skill, expertise and competence that each brings to this Board nor is there anything published to indicate why the public should trust them.

Two sets of abbreviated minutes in respect of board meetings in January February are published but there is no performance indicators, no financial information, no insight into how the recommendations of the HIQA report are being responded to nor archived data in respect of prior years.

These two Board meetings last a total of five hours. No information is published as to what has ensued to enhance public confidence in this Hospital since the end of February – 100 days ago. Another case of the blind leading the bewildered without any evident engagement with the most important stakeholder, the public?

HIQA recommended that this interim board be dissolved and replaced by a new substantive board of no more than 12 members with demonstrable expertise to effectively govern Tallaght Hospital.  The new board should be selected and appointed through an independent process established by the States and on the basis of having the necessary skills, experience and competencies to fulfil the role effectively.  Individuals with conflicts of interest, including employees of the Hospital, should not be appointed to the Board.

A stronger performance management of board members should be introduced whereby there is an effective code of governance in place. Understandable, concise and relevant information that demonstrates that Tallaght Hospital is achieving strategic objectives and effectively managing the available resources and providing good safe care needs to be available for public inspection.

The board needs to understand their fiduciary duties as opposed to their tribal interests and the consequences of decisions and indecision.

This HIQA investigation is a commendable piece of work and the visible results of the recommendations need to become apparent very quickly.

Friday, May 18, 2012

Mahon Tribunal legal costs likely to to exceed €196 million

 

The estimated outstanding third-party Tribunal legal costs arising arising from public hearings of The Mahon Tribunal.  Discovery costs are based on the number of pages discovered pursuant to orders of the Tribunal – an estimated 1.6 million pages at €35 per page.

Brief fees are estimated to be €27,866,599.  These are calculated on the basis of 300 solicitor briefs at €50,000 each; 122 barrister briefs at €33,333 each and 203 senior counsel briefs at €50,000 each.

The senior counsel attendance rate is estimated at €4,000 per day (total €2,824,000 for 706 days) while the corresponding figure for junior counsel is €2,667 per day (total €3,147,000 for 1,180 days).  Solicitors costs are based on 1,759.5 days attendance.

The breakdown is:

 

Representation at Public Hearings € 51,432,559
Third-party discovery costs € 56,000,000
Outstanding Third-Party costs €   6,000,000
Miscellaneous costs €   4,000,000
TOTAL €117,432,659
After 20% reduction €  93,946,127
Tribunal costs paid to the end of 2011 €  97,351,980
Tribunal own estimated costs 2012 onwards (including litigation costs and taking account of the projected reduction in Tribunal’s staffing and other costs) €    5,000,000
ESTIMATED GRAND TOTAL €196,298,107

Thursday, May 17, 2012

Chronic and chaotic failure of county and city councils to collect commercial water rates

The latest news about the collection of the Household Charge is that approximately 940,000, or approximately 56% of all active households in the country have paid the charge that fell due on 31st March and 44% have not.

Big Phil Hogan, Minister for the Environment, Community and Local Government has promised the full consequences of the law will follow Household Charge freeloaders, who want others to pay the cost of flushing their toilets and washing their hands.

The average person in Ireland is estimated to use 140M3 of water per year. This compares to an average of between 50M3 and 100M3 in other European countries, all of whom charge for water usage. It is estimated that 17% of the territory of the EU experiences water scarcity, while Ireland has the capacity to support industries in certain locations that are relatively water-intensive in their usage profile. An estimated 77% of Irish households are connected to public mains while the balance are connected to group water schemes. Sixty seven per cent of houses are served by public waste water infrastructure while the balance (418,000 homes) are dependent on septic tanks or other treatment sources.

During the past decade the State has invested in the region of €5.8 billion.  Each county is the recipient of substantial investment in water services. Co Cork has been the largest recipient (€485 million) and Leitrim, its population of 32,100 and a 12-year supply of vacant houses, has been the recipient of over €50 million in water investment.

The operating cost of providing the 1,000 water and sewerage services in the country costs approximately €60 million each month and commercial water rates ought to yield €199.7 million per annum towards this.

At the start of 2010 arrears of commercial water rates amounted to €151.7 million, a sum equivalent to 75% of what is billed in a full year.

The rate charged for commercial water is not regulated but ranges from €1.75 per M3 in Kildare to €3.04 per M3 in Wicklow.

Kildare had a revenue deficit of €3.9 million at the end of 2010. It collected 55% of the commercial rates billed that year and ended the year with arrears €460,000 higher at the end of the year notwithstanding the writing of arrears of €450,000 at the beginning 2010.

Wicklow had a revenue deficit of over €2 million at the end of 2010. It collected only 41% of the commercial rates billed in 2010 and ended the year with arrears of €2.5 million, some €300,000 less than at the start of 2010 having written off €166,727.

Commercial water charges in Ireland are competitive when compared when large population centres in Ireland are compared with large population centres in Europe.  But there is a lack of transparency as to how water is priced in Ireland for commercial use.

The best performing councils with respect to collecting commercial water rates accounted for 16% of the arrears (€25 million) and were the recipients of 22% of the capital investment in the past decade (€1.3 billion).  The include, in order of efficiency:

 

COUNCIL

ARREARS,
Jan 2010

% 2010 Annual Commercial Water Rates

CAPITAL
INVESTMENT 2000+

Louth

€1,229,063

18.1%

€58 M

South Tipperary

€614,978

21.2%

€95 M

Waterford

€459,742

23.2%

€182 M

Limerick

€2,085,419

28.1%

€113 M

Cork City

€1,636.204

28.5%

€56 M

Waterford City

€1,380,934

29.4%

€89 M

Kerry

€2,572,154

33.7%

€121 M

Limerick City

€3,016,409

42.3%

€58 M

North Tipperary

€1,517,791

46.6%

€118 M

Fingal

€7,195,551

48.3%

€224 M

Kilkenny

€2,345,612

49.4%

€127 M

Monaghan

€964,533

52.4%

€75 M

€25,018,390

 

€1,321 M

 

The worst performing councils at collecting commercial water rates accounted for arrears in excess of €126 million but are recipients of €4.5 billion in capital investment:

 

COUNCIL

ARREARS
Jan 2010

% 2010
Annual Commercial Water Rates

CAPITAL INVESTMENT,
2000+

Wexford

€11,368,930

328%

€178 M

Wicklow

€2,816,501

175%

€247 M

Carlow

€831,676

148%

€103 M

Donegal

€10,808,845

135%

€352 M

Meath

€5,088,552

134%

€295 M

Dun Laoghaire-Rathdown

€9,019,916

130%

€169 M

South Dublin

€8,763,741

116%

€108 M

Sligo

€3,364,804

112%

€89 M

Leitrim

€864,453

108%

€51 M

Mayo

€5,948,122

101%

€205 M

Galway

€4,542,483

96%

€464 M

Offaly

€2,360,511

90%

€131 M

Cavan

€1,903,905

82%

€107 M

Laois

€1,713,232

79%

€134 M

Galway City

€3,173,645

77%

€114 M

Dublin City

€21,373,541

77%

€418 M

Clare

€6,511,277

75%

€236 M

Westmeath

€2,640,106

74%

€218 M

Cork

€14,437,,859

73%

€485 M

Longford

€1,320,871

72%

€75 M

Kildare

€6,303,713

66%

€207 M

Roscommon

€1,571,007

63%

€138 M

€126,727,690

 

€4,533 M

 

The average cost of a cubic metre of water for commercial use in Ireland is €2.08>

The following table compares the cost charged by the least efficient providers and the most efficient providers:

 

LEAST EFFICIENT €/  M3 MOST EFFICIENT €/ M3
Wexford €2.71 Louth €1.55
Wicklow €2.45 South Tipperary €2.70
Carlow €2.30 Waterford €2.12
Donegal €2.41 Limerick €2.60
Meath €2.30 Cork City €2.30
Dun Laoghaire-Rathdown €2.24 Waterford City €1.53
Sligo €2.07 Kerry €1.79

 

Apart from the non-payment of commercial water rates there is a huge issue about the inability to accurately account for water in Ireland and some of this arises from massive leakages in the infrastructure. It is estimated that 43% of treated potable water in major population centres is unaccounted for and lost before reaching designated users.

The provision of water and the treatment of waste water by 34 different local authorities impedes the development of an effective and coordinated water service and the outbreak of cryptosporidium in Galway City in 2007 did little to enhance public confidence.  Added to that is the gross incompetence of councils to collect lawful debt and you have the makings of a nightmare gridlock.

The immediate consequence of this is that the 940,000 householders who paid the Household Charge are also paying a further €96 million in other taxes to compensate for the parasites and freeloaders who do not pay commercial rates.

Tuesday, May 15, 2012

The slovenly and and the well managed housing renters among Irish local authorities?

Are you in the market for local authority housing?  If you also happen to be not so inclined to pay the rent you ought to rent a house from one of the more slovenly county or city councils whose debt debt collection competence is weak.  But if you are an on-time payer there are other housing providers that are likely to warmly welcome you.

There are two issues to be concerned about are:

Which councils will allow housing rent arrears to build up?

Which councils will most likely write-off arrears outstanding?


Ten Councils Most Tolerant of Rent Arrears

These ten allowed arrears of almost €35 million to build up at the start of 2010 – equivalent to more than 25% of the total housing rents collectible in 2010

 

JURISDICTION ARREARS OF HOUSING RENT,
to Jan 2010
ARREARS % HOUSING RENT ACCRUED 
for 2010
Galway City €1,855,044 31.5%
South Dublin €5,981,156 27.5%
Dublin City €19,526,762 26.5%
Mayo €900,145 22.6%
Roscommon €708,301 22.5%
Dun Laoghaire-Rathdown €2,706,951 21.3%
Westmeath €720,808 19.5%
Kildare €2,706,951 18.0%
Waterford City €1,144,964 17.8%
TOTAL €34,957,620 25.4%

 

 

 

 

 

 


 

 

 

 

Ten Councils Least Tolerant of Rent Arrears

These ten collect what’s owing on time with little wriggle room for skiving and scrounging

 

JURISDICTION

ARREAR OF HOUSING RENT,
to Jan 2010
ARREARS % HOUSING RENT ACCRUED 
for 2010
Monaghan €59,426 2.1%
Wicklow €182,975 3.3%
North Tipperary €87,774 3.5%
Fingal €620,924 4.5%
Kerry €272,898 4.6%
Wexford €381,659 5.0%
South Tipperary €153,327 5.3%
Laois €240,193 5.4%
Carlow €187,830 6.2%
Co Waterford €183,596 6.7%
TOTAL €2,370,637 4.6%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
If you are unfortunate enough to incur a build-up of arrears then it is important to know which council is most likely to write off what is outstanding.
 
Councils Offering Most Generous Rent Write-Offs
 

JURISDICTION

HOUSING RENT ARREARS WRITTEN OFF IN 2010 MOST GENEROUS WRITE OFFS AND WAIVERS,
IN 2010
Limerick City €236,604 35.1%
Carlow €35,839 19.1%
Monaghan €10,358 17.4%
Westmeath €116,732 16.2%
Waterford City €185,119 16.2%
Roscommon €112,733 15.9%
Wexford €56,412 14.8%
Wicklow €21,042 11.5%
Galway €66,207 9.2%
Meath €54,286 8.3%
TOTAL €895,332 18.7%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

Councils Offering the Least Generous Rent Write-Offs, or none

JURISDICTION

HOUSING RENT ARREARS WRITTEN OFF
IN 2010

LEAST GENEROUS WRITE OFFS AND WAIVERS, IN 2010

Waterford

€0

0%

Fingal

€0

0%

Cork City

€0

0%

Offaly

€655

0.2%

Clare

€2,781

0.4%

North Tipperary

€786

0.9%

Sligo

€3,279

1.1%

Louth

€4,375

1.5%

Mayo

€14,682

1.6%

Longford

€10,654

1.7%

TOTAL

€96,812

0.2%

 

The award for the softest touch councils housing departments, based on allowing arrears build up and then offering generous write offs goes to Co Roscommon, Co Westmeath and Waterford City Councils.

If you pay rent and don’t accrue arrears you will be most welcomed by Fingal, and Waterford County Councils.

Monday, May 14, 2012

The chaotic, poorly-led Department of the Environment, Community & Local Government

There are no fewer than 124 local authorities in the State which have directly elected representation – 5 city councils, 29 county councils, 5 borough councils, 75 town councils, 8 regional authorities and 2 regional assemblies. While these ostensibly have an independent existence their mother ship, or spiritual temple, is the Department of Environment, Community and Local Government.

Big Phil Hogan and his predecessors, Éamon Ó Cuív, John Gormley, Dick Roche, Martin Cullen, Noel Dempsey and Padraig Flynn in the twice rebranded role of Minister for the Environment, Community and Local Government have an atrocious and inept record of effective political leadership. 

Despite, or perhaps as a consequence of it, a private members bill to bring the scrutiny of local authorities into the ambit of the Comptroller & Auditor General emerged and failed at the behest of the Government in Dáil Éireann on Friday 11 May 2012.

The Government, it seems, ‘supports the principle of greater scrutiny of public money – but only in the context of public sector reform’.  Virtue is a sun-bathed, idyllic resort located far away.

The audit of local authorities is carried out in Big Phil’s own department under his jurisdiction.  This begs the question of what happens to the audit findings advocated by local government auditors.

Going back to 1997 the jurisdictional landscape of this Department if littered with milestones and tombstones of disgrace that include:

  • Dempsey’s inauguration of The Mahon Tribunal in 1997 without effective independent oversight of the cost implications or spending or accountability.
  • Cullen’s escapade with electronic voting machines and his subversion of the purpose of the Planning and Development (Amendment) Act 2002 which allowed gobshite developers evade their statutory duty of providing 20% of development for social housing.
  • Grossly inadequate oversight or control of the Dublin Dockland Development Authority whose buccaneering legacy has left taxpayers with a financial nightmare costing hundreds of millions of Euro – despite the Department being represented on this board at a senior level.
  • The Building Societies Act 1989 sponsored by Flynn and successor legislation promoted by Roche at the behest of predatory building society executives out for a quick kill by abandoning mutual status, a stunt that eventually obliterated the sector at enormous public cost and scuppered the building society sector.
  • Failure to rein in the exuberant planning permission zeal of gombeen local councillors whose legacy is a collapsed construction sector and a landscape pock-marked with ghost housing estates.  By the end of 2009 some 42,058 hectares of land was zoned for development – 450% of actual need. The land and development component of NAMA’s €31.78 billion portfolio includes land and development assets in Ireland listed with a value of €5.3 billion.

    Interestingly, housing completions in Ireland and Spain in 2007 were 18 per 1,000 citizens – more than twice the rate of housing construction elsewhere in Europe.  Mortgage debt increased from €47.2 billion (45% of GDP) in 2002 to €139.8 billion (74% of GDP) in 2007, an increase of 196%.
  • Inaugurating a Household Charge and only collecting 58% of the target revenue.

The loss of sovereign economic independence in 2010 has resulted in a major tightening of local authorities State supported budgets – mainly on the capital side. 

The State provides these bodies with €4.45 billion per annum under a variety of labels from a diversity of government departments.  That sum is approximately €1 billion less than the sum thrown at them in 2007.

The principal source of the independent income of local authorities is derived from the commercial rates, commercial water rates, development contributions and various charges and borrowings.

Collectively their revenue expenditure in 2010 was €4.45 billion, a very modest drop of €62 million on peak spending in 2007.  Capital spending was pared from €6.2 billion in 2007 to €2.8 billion in 2010 but the population expanded by over 330,000 (8.2%) in this period. The losers as a result of the cut back in the capital budget were contractors and professional service providers.  Despite the downturn local authorities spent €1.9 billion on land between 2007 and 2010.

Their combined balance sheet includes fixed assets valued at over €90 billion, listed at cost of acquisition, not prevailing market value.  The fixed assets include land and housing valued at original cost of over €20 billion.  The local government auditor points to the need for an asset revaluation but when will this occur?  How can the accounts of local authorities be true and fair if the valuation of important assets ignores the collapse of the property market?

The next big test of Big Phil’s political virility will be reflected in how he controls spendthrift  councils.  Too many of them are running outrageous accumulated deficits and the financial position of Donegal and Sligo County Councils is beyond the pale.

 

LOCAL AUTHORITY JURISDICTION ACCUMULATED REVENUE DEFICIT
2010
IMPROVEMENT
DETERIORATION
2007-2010
Co Donegal €12,704,598 -€434,780
Co Sligo €9,981,616 €8,512,114
Meath €8,329,809 €1,427,445
Co Waterford €6,916,907 €32,230
Co Wexford €6,365,810 €2,491,097
Co Kildare €3,913,254 -€2,550,187
Mayo €2,747,647 -€1,177,314
Co Wicklow €2,092,176 €330,661
Westmeath €2,046,872 €1,618,639
Offaly €1,899,146 €1,834,156
Co Galway €1,383,882 €2,147,187
Co Longford €595,892 €2,095,687
Co Leitrim €123,121 €363,739
Galway City €67,743 €8,177,154
     
  Commercial Rates collected in 2010 as % Commercial Rates Billed
in 2010
Commercial Water Rates collected in 2010 as
% Billed Commercial Water Rates Billed in 2010
Co Donegal 64.3% 35.6%
Co Sligo 78.7% 48.1%
Meath 86.8% 39.5%
Co Waterford 73.2% 62.1%
Co Wexford 76.5% 37.4%
Co Kildare 80.6% 55.9%
Mayo 83.0% 50.7%
Co Wicklow 76.5% 41.1%
Westmeath 85.2% 36.1%
Offaly 93.4% 37.1%
Co Galway 78.2% 49.6%
Co Longford 85.3% 55.9%
Co Leitrim 78.0% 41.2%
Galway City 63.7% 55.9%
NATIONAL AVERAGE 80.5% 52.4%
     
  Available Houses,
2009
Potential
Oversupply, or
- Undersupply
Co Donegal 13,874 9,064
Co Sligo 5,436 3,727
Meath 9,179 610
Co Waterford 4,509 2,276
Co Wexford 9,419 3,757
Co Kildare 10,075 1,504
Mayo 9,875 6,104
Co Wicklow 5,486 914
Westmeath 5,571 2,393
Offaly 4,159 1,641
Co Galway 12,990 6,975
Co Longford 4,385 3,169
Co Leitrim 3,871 2,836
Galway City 3,087 -56
STATE 260,032 120,248

 

Wednesday, May 9, 2012

County and city councils heading for a painful financial nose dive

There are 29 county councils and 5 city councils in Ireland.  Local administration also includes 5 borough councils, 75 town councils, 8 regional authorities and 2 regional assemblies.

The largest component are county councils and the city councils and their financial position has taken a hammering over the past five years.

They collectively have a cumulative income for revenue purposes of €4.6 billion which has not materially changed between 2007 and 2010.  It is derived from rates (27.1%), State grants and subsidies (40.7%). goods and services (23.9%) and other sources and charges.

Their revenue spending is on roads, transportation and safety (19.7%), environmental services (17.5%), water (16.4%), housing (14.6%) with the balance on agriculture, education, recreation and amenities.

They also spent €2.8 billion on capital investment, down from a capital spend of €6.3 billion in 2007.  The largest item of expenditure in respect of capital are payments to contractors, although they amount spent on contractors has dropped from €3.2 billion to €1.3 billion in the downturn, Councils are substantial buyers of land spending €583 million in 2007 and, surprisingly, €308 million in 2010.  Fees are another major absorber of public funds with €410 million spent under this heading in 2007 and €188 million in 2010.  Expenditure on land and other assets in the four years came to €3.8 billion while €818 million was realised from land disposals, some of it no doubt attributable to McCreevy’s public sector decentralization fiasco.

A curious feature of local authorities is that they have fixed assets of over €90 billion, which includes land valued at €2.2 billion, housing valued at €17.9 billion as well as parks, other buildings, plant and machinery, roads and infrastructure, water and sewerage treatment and heritage assets.  But these assets are valued at their purchase price in the case of assets acquired since 2003, not at their prevailing market price.  A revaluation would surely have major implications for their capacity to carry debt.

Their financial position has grown very precarious.  Ten of them have €81.3 million in the bank while 24 of them owe the bank €62.6 million.

The accumulated surplus on the revenue accounts of the councils amounted to €34 million in 2007 but four years later this surplus had dropped to €18.7 million.  The most financially robust are the four Dublin councils and Cork Co Council, which between them had cash balances of €71.3 million at the end of 2010.

The most severe revenue deficits are in Donegal, Sligo, Meath, Waterford and Wexford whose combined population has increased by 58,000 to 623,000 in the 2011 Census.  Donegal Co Council saw its deficit rise to over €12.7 million – equivalent to over €78 for each resident of the county.  Sligo Co Council saw its revenue deficit increase from €1.4 million to €9.9 million in four years. The revenue deficit at Offaly Co Council by 2,822% since 2007, from €€64,990 to €1,899,146 in 2010. The population of the county expanded by 8.2% in that five-year period.

The main non State sources of cash-flow for councils are rates, housing rents, commercial water charges and repayments of housing loans.

The councils  started 2010 with arrears of rates and commercial water rates of  €404 million but they wrote off €83.7 million as non-recoverable with bad debts in respect of rates accounting for 80% of this write-off.  Billing from these sources in 2010 amounted to €2.1 billion but almost €500 million of this remained uncollected by the year end.  If the amount written off at the end of the year was consistent with the amount written off at the start of 2010, a further €100 million is likely to be written off.

Escalating bank debt, an inability to collect from debtors and overvalued assets are likely to combine and make the majority of the State’s 29 county councils and five city councils a financial basket case.

Wednesday, May 2, 2012

The cost of British and Irish diplomacy in the EU

Last year diplomacy the administration cost of diplomatic representation in 26 other EU Member States cost the British Government over €141 million last year while the Irish Government spent €19 million on our diplomatic enterprise in the Member States.  That excludes the €3.3 million Ireland spent on the permanent representation to the EU in Brussels.

British diplomacy in Ireland costs HM Government €2.7 million while Irish diplomacy in the United Kingdom cost €4.5 million, including almost €1.25 million spent on offices in Armagh and Belfast.  Ireland’s diplomatic spend in the UK is broadly similar to the British diplomatic spend in Cyprus.

Six years ago Ireland spent over €7 million in Great Britain maintaining offices in Cardiff and Edinburgh as well as the embassy and visa office in London.

There are just five jurisdictions in the world where Britain does not have a diplomatic presence.  Ireland currently has 56 embassies, 10 consulates and 7 multilateral missions with entities such as the European Union, United Nations, Council of Europe and the OECD.  Several ambassadors carry accreditation to third countries on a non-resident basis, such as The Holy See.

The following is a comparison of actual 2011 costs of maintaining these embassies:

 

COUNTRY

UK – €

IE – €

AUSTRIA

  6,810,326

   655,547

BELGIUM

  8,428,181

   799,662

BULGARIA

  3,469,899

   360,831

CYPRUS

  4,544,052

   366,537

CZECH REP

  4,624,478

   570,991

DENMARK

  5,509,086

   393,102

ESTONIA

  2,328,663

   378,515

FINLAND

  4,789,540

   508,919

FRANCE

12,797,155

1,647,082

GERMANY

18,979,903

    926,903

GREECE

  7,698,253

    471,858

HUNGARY

  5,339,509

    486,420

IRELAND

  2,767,729

ITALY

-1,651,964

1,146,284

LATVIA

  1,812,955

   183,604

LITHUANIA

  1,812,955

   414,957

LUXEMBOURG

  1,677,422

   387,042

MALTA

  2,809,973

   324,249

THE NETHERLANDS

  5,755,805

   652,113

POLAND

  8,050,601

  737,398

PORTUGAL

  4,751,460

  427,883

ROMANIA

  4,153,139

  472,071

SLOVAKIA

  2,102,514

  356,754

SLOVENIA

  1,946,207

  400,385

SPAIN

14,553,068

  971,078

SWEDEN

  5,502,374

  616,346

UK

4,502,655

TOTAL

€141,263,284

€19,159,126

[The negative figure showing for the British embassy in Italy is due to income from other Government Departments and impairment (property revaluation) costs.]

Ireland’s diplomatic footprint in North America costs €4.4 million; BRICS €4.2 million, Latin America €1.3 million, The Middle East €2.5 million, Asia-Pac €4.9 million and the United Nations €3.2 million.

The are also diplomatic offices and embassies that support the Irish Aid programme and in other locations, such as Norway, Turkey, Nigeria and Switzerland.

Tuesday, May 1, 2012

State savings soar while Irish consumers shy from housing market

House purchase transactions slump ….

Irish house prices have been collapsing since they peaked in 2007. The rate of the decline reached 16.7% on an annual basis last year. Sellers have severely reduced their asking prices, sometimes by as much as 70% from their peak expectation

New mortgage lending is down by 30% at the end of 2011 compared to a year earlier.  Some 11,000 property loans amounting to €2.1 billion were granted in 2011 compared to 110,800 with a cumulative value of €27.8 billion in 2006, although the fall in house prices account for a significant element of this dramatic change. Official statistics indicate that 10,500 residential units were completed in 2011 compared to 93,000 in 2006.

The downturn in housing means lower levels of tax relief claims for mortgage interest:

Tax Year Number of Mortgages Tax Relief Cost € Million
2008 778,100 705
2009 782,700 486
2010 490,900 375
2011 488,000 357

There has also been a dramatic slump in the amount of stamp duty that that State has been collecting in respect of purchases an long-term leases of residential property where stamp duty of €10,000, or more applied (typically on property selling for €1 million, or more):

Tax Year Number of Stamped Instruments
2006 33,192
2007 26,072
2008 14,888
2009   5,809
2010   3,027
2011     646

State savings rise …

But despite these aggressive price drops consumers remain reluctant to buy houses in case prices will fall further and this dynamic could well exacerbate further price drops. A shortage of mortgage credit is also compromising the market.  High levels of youth unemployment or emigration reduces the potential number of first-time buyers.  Those in jobs perceive less security or the prospect of further drops in their income or the threat of economic uncertainty.

At some stage demand will recover and the strong increase in consumer savings with State will help this.  State savings are a component of the spending capacity of the exchequer supplied by domestic private investors. Total State savings have increased from €6.24 billion in 2007 to the current level of €14.5 billion.  Expressed as a percentage of GDP State savings has risen from 3.3% in 2007 to 12% in March 2012.

The principal saving products are:

SAVINGS PRODUCT % Total 2007 % Total 2012
3-year Savings Bond, (3.23%) 26.9% 33.4%
4-year National Solidarity Bond, (3.56%)       -   2.0%
5.5 –year Savings Certificates, (3.53%) 35.7% 31.2%
6-year Investment Savings, (3.37%)   6.5%   3.7%
10-year National Solidarity Bond, (4.14%)       -     .7%
Deposit Accounts (1%) 20.8% 18.5%
Prize Bonds 10.1% 10.5%

 

The annual coupon of 1% on the National Solidarity Bonds and the interest on deposit accounts are subject to Deposit Interest Retention Tax, currently levied at 30%.  Otherwise the returns on State savings are not subject to tax.

There has also been a significant growth in the popularity of Prize Bonds.  The 50th anniversary of the introduction of Prize Bonds was marked in 2007 when the total amount outstanding was €632 million.  This grew to €1.47 billion in 2011.

The National Pension Reserve Fund was valued at €14.5 billion at 31 December last.  This comprises a Discretionary Portfolio valued at €5.4 billion and the Directed Portfolio valued at €9.1 billion.  Funds in the Discretionary Portfolio are not all readily available.  There is a legal commitment to invest €1.2 billion in various targets of which €800 million are in Ireland – for water metering.  A Strategic Investment Fund will channel resources ona commercial basis from the National Pension Reserve Fund towards productive investment on the basis of a matching commercial contribution from private investors in areas of strategic significance – such as infrastructure, venture capital and the provision of long-term capital for SMEs  Last November €250 million was committed to a new infrastructure investment fund which is seeking €1 billion from institutional investors.