Nuala Haughey: The first official report on the workings of the Regulation of Lobbying Act 2015 offers important insights into how the new transparency regime is working after less than a year in operation.
Showing posts with label transparency. Show all posts
Showing posts with label transparency. Show all posts
Wednesday, 29 June 2016
Monday, 26 May 2014
Thomas Piketty in The Financial Times and Tax Transparency
Nat O'Connor: It's an old stereotype that you can tell who are the serious left-wing economists by whether or not they read The Financial Times. The point being that only those who understand what 'the other side' is saying can hope to critique it. Well, this works both ways and it is no surprise that the FT's economics editor, Chris Giles, has been reading Thomas Piketty's Capitalism in the Twenty-First Century and has had a poke at it.
Specifically, Giles criticises the data on income and wealth inequality upon which Piketty's critique of capitalism as we know it is based.
Note: if you are not a subscriber, you need to sign up for a free FT account, which allows you to read a small number of articles per month.
Giles's critique is here (and also here) with a much longer blog version too that goes into some detail.
However, the strength of Piketty's work is precisely the level of detail that he has amassed and made publicly available online. Piketty and colleagues have built up The World Top Incomes Database from tax data from numerous countries, and they continue to refine and expand this data source - with the aim of including more countries and including new sections on wealth inequality alongside income.
Piketty himself dismissed the FT critique, in a letter published by the FT here. And other academic economists have supported him (Washington Post).
This is not to say that Piketty's data is perfect. However, as others have said, there is plenty of alternative supporting data that reinforces the central tenet that economic inequality has been rising inexorably in recent decades. What should be noted is that it took a number of serious academics - including Piketty - several years of work to collate and organise public data on taxation that arguably should have been readily available in machine-readable formats for public consultation.
In Norway, tax returns are publicly available online (in Norwegian); including the names and addresses of people alongside their income, wealth and how much tax they paid. In Sweden, there is a similar system, although you have to apply to see the data and the person concerned is notified who has sought to check their records. This openness about distribution in the economy allows policymakers in those countries to respond more quickly and accurately to ensure balanced development and shared prosperity.
Culturally, many people in Ireland may not be ready for that level of transparency and honest discussion about money. But there is an onus on Revenue and other public bodies to publish clear, accurate information about income and wealth in as much detail as possible; even if anonymised. Only this way can citizens can see who is winning and losing from the current set of laws and practices that shape our economy and tax system, and make up their own minds whether the growth in economic inequality is an acceptable price to pay to maintain our current economic model.
For the curious, Revenue do publish annual statistical reports, and the latest income distribution report gives useful data for 2010. However, both the format (PDF) and the time-gap between the latest data and now makes these reports less useful than they could be. Some of this data is discussed in more detail in TASC's recent report: A Defence of Taxation
Specifically, Giles criticises the data on income and wealth inequality upon which Piketty's critique of capitalism as we know it is based.
Note: if you are not a subscriber, you need to sign up for a free FT account, which allows you to read a small number of articles per month.
Giles's critique is here (and also here) with a much longer blog version too that goes into some detail.
However, the strength of Piketty's work is precisely the level of detail that he has amassed and made publicly available online. Piketty and colleagues have built up The World Top Incomes Database from tax data from numerous countries, and they continue to refine and expand this data source - with the aim of including more countries and including new sections on wealth inequality alongside income.
Piketty himself dismissed the FT critique, in a letter published by the FT here. And other academic economists have supported him (Washington Post).
This is not to say that Piketty's data is perfect. However, as others have said, there is plenty of alternative supporting data that reinforces the central tenet that economic inequality has been rising inexorably in recent decades. What should be noted is that it took a number of serious academics - including Piketty - several years of work to collate and organise public data on taxation that arguably should have been readily available in machine-readable formats for public consultation.
In Norway, tax returns are publicly available online (in Norwegian); including the names and addresses of people alongside their income, wealth and how much tax they paid. In Sweden, there is a similar system, although you have to apply to see the data and the person concerned is notified who has sought to check their records. This openness about distribution in the economy allows policymakers in those countries to respond more quickly and accurately to ensure balanced development and shared prosperity.
Culturally, many people in Ireland may not be ready for that level of transparency and honest discussion about money. But there is an onus on Revenue and other public bodies to publish clear, accurate information about income and wealth in as much detail as possible; even if anonymised. Only this way can citizens can see who is winning and losing from the current set of laws and practices that shape our economy and tax system, and make up their own minds whether the growth in economic inequality is an acceptable price to pay to maintain our current economic model.
For the curious, Revenue do publish annual statistical reports, and the latest income distribution report gives useful data for 2010. However, both the format (PDF) and the time-gap between the latest data and now makes these reports less useful than they could be. Some of this data is discussed in more detail in TASC's recent report: A Defence of Taxation
Tuesday, 18 June 2013
Tax transparency: a step change or climate change?
The OECD has another new report out today on tax
transparency, this time to tie in to the G8 meeting in Enniskillen. Formally,
this report was commissioned by the G8, though any impression given that the G8
are driving OECD activity in this area may be misplaced.
So what’s in this one? Well, an ambitious title for a start –
“A Step Change in Tax Transparency” which is calculated to raise expectations
and signal a serious commitment to change. The content focuses on reassuringly practical
aspects of automatic exchange of tax information between jurisdictions. Anyone
who has ever worked in a large organisation knows how difficult it can be to
persuade computer systems or databases on one side of the building to talk to
those on the other, so you can imagine the difficulties inherent in exchanging
taxpayer information automatically between, say, the UK and Mozambique. This
report seems to have been written by someone who has thought about the issues
and is genuinely trying to work them out. The recommendations are practical,
and focus on establishing relationships, getting the legal basis clear,
defining the scope of information to be exchanged and lining up IT systems to
receive the information.
Notably, the use of a common multilateral convention on
information exchange is proposed as a practical solution. This has echoes of the
idea floated by the OECD in April of a single multi-lateral tax treaty to replace
all or part of the 3,000+ bilateral tax treaties currently in force around the world.
The latter is of course a far bigger
proposition, and one which has serious potential to close off aggressive “treaty
shopping” activities – the kind of artificial channelling of funds around the
tax treaty network designed to avoid withholding taxes. It would be interesting
if information exchange opened up the real possibility of this kind of close
coordination.
There are obvious issues to be overcome, not least building
the capacity of taxing authorities in less developed countries not only to
gather and provide the information but to securely store and process it, and in
setting the scope of information to be reported and defining what entities
provide that information. Calling this one report a step-change may be gilding
the lily, but taken with the OECD’s work on BEPS, recent UN guidance on
transfer pricing for developing countries and more widespread developments on
capacity development for taxing authorities in the Global South, this is
certainly part of a shift in the climate around international tax avoidance.
Maybe not a step change just yet, but definite signs of climate change.
Sheila Killian
@islandtotheleft
Tuesday, 20 November 2012
Ireland – caught in the low corporate tax trap?
Daragh McCarthy and Aoife Ní Lochlainn: In the wake of the Public Accounts Committee in the UK interrogating a trio of multinational executives on the meagre sums of corporate tax paid by many trans-national companies, last Saturday’s episode of the Business on RTE featured a segment on the topic that closed with Feargal O’Rourke of PwC saying that he expected to see these companies pay “a fairer rate of tax” in the coming years. It appears that the pressure for reform is building.
The issue has garnered a significant amount of media attention over the past couple of months—from the storming of Google’s offices in Paris to the naming and shaming of Facebook, Starbucks and Apple in the UK press. Senior government officials in many EU countries are openly voicing their discontent with the increasingly aggressive tax dodging strategies employed by these corporations, and the European Commission is scheduled to discuss the international tax practices of multinational businesses on December 5th. It remains to be seen if this is simply bluster, or if there is a genuine will to devise a coordinated pan-national strategy to reduce tax avoidance.
A recent report by TASC, Tax Injustice: Following the Tax Trail highlighted how the Irish tax system is a key component of a subsidiary-based structure that drastically reduces the overall tax bill of transnational businesses. A friendly tax environment has been a central part of the effort to lure multinational corporations to Ireland. FDI of this nature has been at the core of successive governments’ industrial policy for over half a century, and this policy is generally regarded to have been successful.
Accommodating these companies has come at a substantial cost, however. Contributors to this site have noted the obsessive focus on FDI is likely to have hindered the development of indigenous firms. The contribution made by multinationals to the Irish exchequer has diminished considerably in recent years; currently it is down 2.5 per cent year-on-year. The recent spike in media attention heightens the risk of damage to the state’s reputation. This summer, the US Senate’s Permanent Subcommittee on Investigations sought to establish Ireland’s role in “tax practices that range from egregious to dubious validity.”
However, while much of the media focus of the past few weeks has been on the use of tax loopholes to decrease tax bills in European countries, it remains the case that these countries are still better equipped to address the consequences of such corporate behaviour than countries in the Global South. Tax avoidance by companies and individuals hampers the capacity of these states to develop their economies and pay for much needed public service.
According to Christian Aid, between 2005 and 2007, six Irish Aid programme countries lost nearly €82 million in tax revenue to EU or US – almost 17 per cent of total Irish Aid budget for the countries concerned. A recent report by the Tax Justice Network (TJN) claimed that since the 1970s, 139 low-to-middle income countries have lost a total of $7.3 to $9.3 trillion to tax dodging by the super rich. This vast sum is more than enough to cover the debts of these countries, whose aggregate gross external debts stood at $4.08 trillion in 2010.
The TASC report contains a number of recommendations for tackling tax injustice, including the introduction of country-by-country reporting. However, while increased transparency would help countries better understand the methods of tax avoidance, it will not in and of itself solve the problem and is unlikely to appease many of Ireland’s critics.
The issue has garnered a significant amount of media attention over the past couple of months—from the storming of Google’s offices in Paris to the naming and shaming of Facebook, Starbucks and Apple in the UK press. Senior government officials in many EU countries are openly voicing their discontent with the increasingly aggressive tax dodging strategies employed by these corporations, and the European Commission is scheduled to discuss the international tax practices of multinational businesses on December 5th. It remains to be seen if this is simply bluster, or if there is a genuine will to devise a coordinated pan-national strategy to reduce tax avoidance.
A recent report by TASC, Tax Injustice: Following the Tax Trail highlighted how the Irish tax system is a key component of a subsidiary-based structure that drastically reduces the overall tax bill of transnational businesses. A friendly tax environment has been a central part of the effort to lure multinational corporations to Ireland. FDI of this nature has been at the core of successive governments’ industrial policy for over half a century, and this policy is generally regarded to have been successful.
Accommodating these companies has come at a substantial cost, however. Contributors to this site have noted the obsessive focus on FDI is likely to have hindered the development of indigenous firms. The contribution made by multinationals to the Irish exchequer has diminished considerably in recent years; currently it is down 2.5 per cent year-on-year. The recent spike in media attention heightens the risk of damage to the state’s reputation. This summer, the US Senate’s Permanent Subcommittee on Investigations sought to establish Ireland’s role in “tax practices that range from egregious to dubious validity.”
However, while much of the media focus of the past few weeks has been on the use of tax loopholes to decrease tax bills in European countries, it remains the case that these countries are still better equipped to address the consequences of such corporate behaviour than countries in the Global South. Tax avoidance by companies and individuals hampers the capacity of these states to develop their economies and pay for much needed public service.
According to Christian Aid, between 2005 and 2007, six Irish Aid programme countries lost nearly €82 million in tax revenue to EU or US – almost 17 per cent of total Irish Aid budget for the countries concerned. A recent report by the Tax Justice Network (TJN) claimed that since the 1970s, 139 low-to-middle income countries have lost a total of $7.3 to $9.3 trillion to tax dodging by the super rich. This vast sum is more than enough to cover the debts of these countries, whose aggregate gross external debts stood at $4.08 trillion in 2010.
The TASC report contains a number of recommendations for tackling tax injustice, including the introduction of country-by-country reporting. However, while increased transparency would help countries better understand the methods of tax avoidance, it will not in and of itself solve the problem and is unlikely to appease many of Ireland’s critics.
Tuesday, 10 January 2012
The data being sent to IMF and EU bodies should be public
Nat O'Connor: The latest IMF report on Ireland has an important annex: Annex 1. Provision of data (pages 81-82), which gives a list of "indicators and reports" that "shall be made available to the staff of the European Commission, the ECB and the IMF by the Irish authorities on a regular basis." A unit within the Department of Finance will "coordinate and collect" the relevant "data and information". (It is an update on a list that formed part of the original agreement with the IMF and EU bodies; pages 33-34 here).
A lot of this data is very valuable for understanding and analysing the Irish economy and the effects of Irish Government policy. It is reasonable for the IMF, EC and ECB to seek this data to monitor Ireland's ability to repay the money we borrowed from them. Indeed, it is valuable to have their expertise on what data is required to monitor our economy and national debt. However, now that this data is being collected, it should as a matter of course be made publicly available within Ireland as well.
For clarity, the entire Annex is repeated at the end of this post. There are 22 sets of data referred to: F1 to F11 are from the Departments of Finance and PER; N1 to N5 are from the NTMA; and C1 to C6 are from the Central Bank.
First of all, it should be noted that some of this data is already available, but the majority of it is not. Secondly, it is not clear that all of the required information will exist at the time when it is supposed to be submitted. Thirdly, it should be acknowledged that there may, in a limited number of cases, be legitimate reasons for not publicly releasing some of these datasets. For general principles on what might be legitimate reasons for not releasing data, I would refer to the guidelines given in the Freedom of Information Act 1997. However, just because the release of some information can be blocked, does not mean that it should be. Certainly, any refusal to publish a dataset should be explained by the relevant Minister to the Oireachtas.
Conversly, as part of the Government's announced reform of the national Budget process, it may well be their intention to publish this sort of data. Its release would certainly help the Oireachtas to hold the Government to account. Access to this data would also probably be necessary for the new Fiscal Advisory Council to be effective.
F6 is an example of good practice in relation to the budget. It requires the publication of revenue and expenditure plans for the next four years. This original requirement helped open up the Budget process and multi-annual budget planning will hopefully become standard practice even once the agreement with the IMF and EU concludes.
Much of the data being required refers to the national debt. The sustainability of Ireland's debt is crucial to whether or not the economy can recover, or whether a prolonged period of stagnation - or indeed some form of default - is inevitable. There are periods in the history of most states when political discourse is dominated by the debt and the deficit. This is certainly the case in Ireland today. There is a pressing need to ensure that this discussion is grounded in accurate facts and figures, and does not lead to wrong information being spread in public.
The implication of F10 is worrying. The data required here is "Assessment report of the management of activation policies and on the outcome of job seekers' search activities and participation in labour market programmes." One one level that is useful data. However, it is not balanced by other data in the list, and may give a distorted picture of the Irish economy. Labour activation is to be welcomed, but priority should be given to ensuring that jobs exist in the first place, before putting pressure on people who are unemployed.
The Government has signalled that we will make use of our crisis by improving our systems of oversight and scrutiny, to make sure that a similar crisis does not happen again. An important step in that direction would be the regular release of these datasets, on a single website, in machine readable format, at the same time (if not before) they are sent to the IMF and EU bodies. For example, the website of the Fiscal Advisory Council could be used for this purpose.
The extent of the national crisis requires the Government to repeatedly ask the public's patience and understanding for the difficult decisions it has to make. But confidence in those decisions is eroded when access to the relevant data on the economy and national debt is denied. Genuine reform of economic and budgetary policy should begin with a new openness in relation to data, including the full set of data currently being sent to the IMF and EU bodies.
...
Annex 1. Provision of data
During the programme, the following indicators and reports shall be made available to the staff of the European Commission, the ECB and the IMF by the Irish authorities on a regular basis. The External Programme Compliance Unit (EPCU) of the Department of Finance will coordinate and collect data and information and forward to all external programme partners.
Ref.
Report
Frequency
To be provided by the Department of Finance in consultation with the Department of Public Expenditure and Reform as appropriate
F.1
Monthly data on adherence to budget targets (Exchequer statement, details on Exchequer revenues and expenditure with information on Social Insurance Fund to follow as soon as practicable).
Monthly, 10 days after the end of each month
F.2
Updated monthly report on the Exchequer Balance and General Government Balance outlook for the remainder of the year which shows transition from the Exchequer Balance to the General Government Balance (using presentation in Table 1 and Table 2A of the EDP notification).
Monthly, 20 days after the end of each month
F.3
Quarterly data on main revenue and expenditure items of local Government.
Quarterly, 90 days after the end of each quarter
F.4
Quarterly data on the public service wage bill, number of employees and average wage (using the presentation of the Pay and Pension Bill with further details on pay and pension costs of local authorities).
Quarterly, 30 days after the end of each quarter
F.5
Quarterly data on general Government accounts, and general Government debt as per the relevant EU regulations on statistics.
Quarterly accrual data, 90 days after the end of each quarter
F.6
Updated annual plans of the general Government balance and its breakdown into revenue and expenditure components for the current year and the following four years, using presentation in the stability programme's standard table on general Government budgetary prospects.
30 days after EDP Notifications
F.7
Data on short- and medium- /long-term debt falling due (all instruments) over the next 36 months (interest and amortisation) for Non-Commercial State Agencies
Quarterly , 30 working days after the end of each quarter
F.8
Data on short- and medium- /long-term debt falling due (all instruments) over the next 36 months (interest and amortisation) for local authorities
Quarterly, 30 working days after the end of each quarter
F.9
Data on short- and medium- /long-term debt falling due (all instruments) over the next 36 months for State- owned commercial enterprises (interest and amortisation)
Quarterly, 30 working days after the end of each quarter
F.10
Assessment report of the management of activation policies and on the outcome of job seekers' search activities and participation in labour market programmes.
Quarterly, 30 working days after the end of each quarter.
F.11
Report on progress achieved towards interim PLAR targets and actual and planned asset disposals.
Quarterly, 10 working days after the end of each quarter.
To be provided by the NTMA
N.1
Monthly information on the Government's cash position with indication of sources as well of number of days covered
Monthly, three working days after the end of each Month
N.2
Data on below-the-line financing for central Government.
Monthly, no later than 15 days after the end of each month
N.3
Data on public debt and new guarantees issued by central Government to public enterprises and the private sector.
Monthly, 30 working days after the end of each month
N.4
Data on short-, medium- and long-term debt falling due (all instruments) over the next 36 months (interest and amortisation) for central Government.
Monthly , 30 working days after the end of each month
N.5
Updated estimates of financial sources (bonds issuance, other financing sources) for the banking and Government sectors in the next 12 months
Monthly, 30 working days after the end of each month
To be provided by the Central Bank of Ireland
C.1
The Central Bank of Ireland’s balance sheet.
Weekly, next working day
C.2
Individual maturity profiles (amortisation only) for each of the domestic banks will be provided as of the last Friday of each month.
Monthly, 30 working days after each month end.
C.3
Detailed financial and regulatory information (consolidated data) on domestic individual Irish banks and the banking sector in total especially regarding profitability (P&L), balance sheet, asset quality, regulatory capital; PLAR funding plan forecasts
Quarterly, 35 working days after the end of each quarter
C.4
Detailed information on deposits for the last Friday of each month.
Monthly, 30 working days after each month end.
C.5
Data on liabilities covered under the ELG Scheme for each of the Covered Institutions.
Monthly, 30 working days after each month end.
C.6
Deleveraging committee minutes and deleveraging sales progress sheets, detailing pricing, quantum, and other relevant result metrics.
Monthly, reflecting committee meetings held each month
A lot of this data is very valuable for understanding and analysing the Irish economy and the effects of Irish Government policy. It is reasonable for the IMF, EC and ECB to seek this data to monitor Ireland's ability to repay the money we borrowed from them. Indeed, it is valuable to have their expertise on what data is required to monitor our economy and national debt. However, now that this data is being collected, it should as a matter of course be made publicly available within Ireland as well.
For clarity, the entire Annex is repeated at the end of this post. There are 22 sets of data referred to: F1 to F11 are from the Departments of Finance and PER; N1 to N5 are from the NTMA; and C1 to C6 are from the Central Bank.
First of all, it should be noted that some of this data is already available, but the majority of it is not. Secondly, it is not clear that all of the required information will exist at the time when it is supposed to be submitted. Thirdly, it should be acknowledged that there may, in a limited number of cases, be legitimate reasons for not publicly releasing some of these datasets. For general principles on what might be legitimate reasons for not releasing data, I would refer to the guidelines given in the Freedom of Information Act 1997. However, just because the release of some information can be blocked, does not mean that it should be. Certainly, any refusal to publish a dataset should be explained by the relevant Minister to the Oireachtas.
Conversly, as part of the Government's announced reform of the national Budget process, it may well be their intention to publish this sort of data. Its release would certainly help the Oireachtas to hold the Government to account. Access to this data would also probably be necessary for the new Fiscal Advisory Council to be effective.
F6 is an example of good practice in relation to the budget. It requires the publication of revenue and expenditure plans for the next four years. This original requirement helped open up the Budget process and multi-annual budget planning will hopefully become standard practice even once the agreement with the IMF and EU concludes.
Much of the data being required refers to the national debt. The sustainability of Ireland's debt is crucial to whether or not the economy can recover, or whether a prolonged period of stagnation - or indeed some form of default - is inevitable. There are periods in the history of most states when political discourse is dominated by the debt and the deficit. This is certainly the case in Ireland today. There is a pressing need to ensure that this discussion is grounded in accurate facts and figures, and does not lead to wrong information being spread in public.
The implication of F10 is worrying. The data required here is "Assessment report of the management of activation policies and on the outcome of job seekers' search activities and participation in labour market programmes." One one level that is useful data. However, it is not balanced by other data in the list, and may give a distorted picture of the Irish economy. Labour activation is to be welcomed, but priority should be given to ensuring that jobs exist in the first place, before putting pressure on people who are unemployed.
The Government has signalled that we will make use of our crisis by improving our systems of oversight and scrutiny, to make sure that a similar crisis does not happen again. An important step in that direction would be the regular release of these datasets, on a single website, in machine readable format, at the same time (if not before) they are sent to the IMF and EU bodies. For example, the website of the Fiscal Advisory Council could be used for this purpose.
The extent of the national crisis requires the Government to repeatedly ask the public's patience and understanding for the difficult decisions it has to make. But confidence in those decisions is eroded when access to the relevant data on the economy and national debt is denied. Genuine reform of economic and budgetary policy should begin with a new openness in relation to data, including the full set of data currently being sent to the IMF and EU bodies.
...
Annex 1. Provision of data
During the programme, the following indicators and reports shall be made available to the staff of the European Commission, the ECB and the IMF by the Irish authorities on a regular basis. The External Programme Compliance Unit (EPCU) of the Department of Finance will coordinate and collect data and information and forward to all external programme partners.
Ref.
Report
Frequency
To be provided by the Department of Finance in consultation with the Department of Public Expenditure and Reform as appropriate
F.1
Monthly data on adherence to budget targets (Exchequer statement, details on Exchequer revenues and expenditure with information on Social Insurance Fund to follow as soon as practicable).
Monthly, 10 days after the end of each month
F.2
Updated monthly report on the Exchequer Balance and General Government Balance outlook for the remainder of the year which shows transition from the Exchequer Balance to the General Government Balance (using presentation in Table 1 and Table 2A of the EDP notification).
Monthly, 20 days after the end of each month
F.3
Quarterly data on main revenue and expenditure items of local Government.
Quarterly, 90 days after the end of each quarter
F.4
Quarterly data on the public service wage bill, number of employees and average wage (using the presentation of the Pay and Pension Bill with further details on pay and pension costs of local authorities).
Quarterly, 30 days after the end of each quarter
F.5
Quarterly data on general Government accounts, and general Government debt as per the relevant EU regulations on statistics.
Quarterly accrual data, 90 days after the end of each quarter
F.6
Updated annual plans of the general Government balance and its breakdown into revenue and expenditure components for the current year and the following four years, using presentation in the stability programme's standard table on general Government budgetary prospects.
30 days after EDP Notifications
F.7
Data on short- and medium- /long-term debt falling due (all instruments) over the next 36 months (interest and amortisation) for Non-Commercial State Agencies
Quarterly , 30 working days after the end of each quarter
F.8
Data on short- and medium- /long-term debt falling due (all instruments) over the next 36 months (interest and amortisation) for local authorities
Quarterly, 30 working days after the end of each quarter
F.9
Data on short- and medium- /long-term debt falling due (all instruments) over the next 36 months for State- owned commercial enterprises (interest and amortisation)
Quarterly, 30 working days after the end of each quarter
F.10
Assessment report of the management of activation policies and on the outcome of job seekers' search activities and participation in labour market programmes.
Quarterly, 30 working days after the end of each quarter.
F.11
Report on progress achieved towards interim PLAR targets and actual and planned asset disposals.
Quarterly, 10 working days after the end of each quarter.
To be provided by the NTMA
N.1
Monthly information on the Government's cash position with indication of sources as well of number of days covered
Monthly, three working days after the end of each Month
N.2
Data on below-the-line financing for central Government.
Monthly, no later than 15 days after the end of each month
N.3
Data on public debt and new guarantees issued by central Government to public enterprises and the private sector.
Monthly, 30 working days after the end of each month
N.4
Data on short-, medium- and long-term debt falling due (all instruments) over the next 36 months (interest and amortisation) for central Government.
Monthly , 30 working days after the end of each month
N.5
Updated estimates of financial sources (bonds issuance, other financing sources) for the banking and Government sectors in the next 12 months
Monthly, 30 working days after the end of each month
To be provided by the Central Bank of Ireland
C.1
The Central Bank of Ireland’s balance sheet.
Weekly, next working day
C.2
Individual maturity profiles (amortisation only) for each of the domestic banks will be provided as of the last Friday of each month.
Monthly, 30 working days after each month end.
C.3
Detailed financial and regulatory information (consolidated data) on domestic individual Irish banks and the banking sector in total especially regarding profitability (P&L), balance sheet, asset quality, regulatory capital; PLAR funding plan forecasts
Quarterly, 35 working days after the end of each quarter
C.4
Detailed information on deposits for the last Friday of each month.
Monthly, 30 working days after each month end.
C.5
Data on liabilities covered under the ELG Scheme for each of the Covered Institutions.
Monthly, 30 working days after each month end.
C.6
Deleveraging committee minutes and deleveraging sales progress sheets, detailing pricing, quantum, and other relevant result metrics.
Monthly, reflecting committee meetings held each month
Friday, 2 December 2011
Budget 2012: Where's the substance?
Peadar Kirby: Amid all the kite flying, the scaremongering and the testing of the electorate’s pain threshold, the central lesson of the preparations for Budget 2012 has been lost. For more clearly than anything that the FG/Labour coalition has done since taking office, the way Budget 2012 was prepared shows that we are back to politics as usual Irish-style.
Two aspects invite attention. The first is the process and the second the content. Budgets should be seen as opportunities to debate national choices for expenditure and taxation, choices that ultimately involve values about the sort of society we want in the future. New left governments in Latin America have over recent decades experimented with forms of participatory budgetary processes that draw wide sections of the population into deliberating on these choices and, in the case of Brazil at least, having a real say in what choices are made. Instead, in Ireland we have a process made behind closed doors with various options floated to gauge public reaction but with final decisions made only by cabinet. We take this for granted but it is an appallingly undemocratic and irrational way of doing things. We might have expected that, with so much emphasis on political reform, the opportunity would be taken to open up the process on this occasion.
Inevitably, such a process undermines any prospect that preparing the budget might at least begin to address the major questions about expenditure and taxation that face this society. We urgently need a public debate on the balance between expenditure and tax increases that should characterise our adjustment and, much more importantly, about the sort of taxation system we need if we are to achieve greater resources for national development and greater equity and fairness in where we get these from. This is perhaps the single most urgent reform we need as a society and, judging from the preparations for Budget 2012, we are not going to get it.
One might be forgiven for drawing the conclusion that our political and economic leaders see a value on so distracting and frightening the citizens, that no one dares raise these wider issues. It is yet another sign, if one is needed, that we badly need the sort of vibrant citizens’ movement that is beginning to emerge in other societies. One issue at the top of its agenda should be the right to have a say in preparing the national budget.
Two aspects invite attention. The first is the process and the second the content. Budgets should be seen as opportunities to debate national choices for expenditure and taxation, choices that ultimately involve values about the sort of society we want in the future. New left governments in Latin America have over recent decades experimented with forms of participatory budgetary processes that draw wide sections of the population into deliberating on these choices and, in the case of Brazil at least, having a real say in what choices are made. Instead, in Ireland we have a process made behind closed doors with various options floated to gauge public reaction but with final decisions made only by cabinet. We take this for granted but it is an appallingly undemocratic and irrational way of doing things. We might have expected that, with so much emphasis on political reform, the opportunity would be taken to open up the process on this occasion.
Inevitably, such a process undermines any prospect that preparing the budget might at least begin to address the major questions about expenditure and taxation that face this society. We urgently need a public debate on the balance between expenditure and tax increases that should characterise our adjustment and, much more importantly, about the sort of taxation system we need if we are to achieve greater resources for national development and greater equity and fairness in where we get these from. This is perhaps the single most urgent reform we need as a society and, judging from the preparations for Budget 2012, we are not going to get it.
One might be forgiven for drawing the conclusion that our political and economic leaders see a value on so distracting and frightening the citizens, that no one dares raise these wider issues. It is yet another sign, if one is needed, that we badly need the sort of vibrant citizens’ movement that is beginning to emerge in other societies. One issue at the top of its agenda should be the right to have a say in preparing the national budget.
Monday, 21 November 2011
Let's Have More Budget Transparency
Nat O'Connor: Seán Whelan on RTÉ Six One News last Friday quipped that democratically elected representatives were the first to see Michael Noonan's budget proposals... except that they were not our elected representatives, but those of the German people.
It is unfortunate that the Dáil did not receive the draft papers before the Bundestag, but a more important lesson from the episode is that there is every reason to increase the transparency of budget documentation and proposals from now on.
Irish democracy did not collapse because draft proposals on VAT increases and other measures were circulated before the Government met to consider them. Instead, the democratic process was strengthened by their release.
Strong democracy is when everyone has the right to participate in the decisions affecting themselves and, crucially, the resources they need to do so. Information is just one of the essential resources people need to understand and meaningfully participate; through discussion, lobbying, etc.
Consider the traditional budget process, by way of contrast:
1. All proposals are initially developed in secret by the Department of Finance. (Drafts may or may not be circulated, but certainly not to Opposition spokespersons or the public).
2. Government Ministers are briefed by the Minister for Finance in a meeting of the Government, and may even be asked to agree proposals at the same meeting - without access to alternative expert opinion, advice, etc. Even if they do not agree them in the same meeting, they have only days to seek advice and cannot avail of a richer public discussion with analysis from all perspectives.
3. Some, all or none of the budget proposals may be discussed by Government Ministers with their colleagues on the backbenches of the Dáil. Advice from chosen experts may or may not be sought, at the discretion of each Minister.
4. The final Budget is kept secret until read out by the Minister for Finance on Budget Day. In fairness, the IMF/EU obligation to publish a four-year plan has created more openness.
5. Opposition spokespersons and economic commentators prepare most of their responses in the absence of information about the Budget proposals, often based on rumours or leaks. They are only given minutes to prepare a response to the actual proposals, and must make off-the-cuff responses without research or advice. This makes for shallow analysis that tends to highlight more immediate proposals, or more populist concerns, while neglecting deeper effects on the economy and society.
6. The Dáil votes on the Budget without most of the TDs having read the documents. Strictly speaking, TDs vote on a series of 'financial resolutions' based on the Budget speech. There will be (limited) time for discussion later when the annual Finance Bill, Social Welfare Bill, etc are introduced to make most the resolutions into law. However, votes on resolutions are sufficient for measures that come into effect at midnight. And legislation is sometimes rushed through the Dáil; like last year's Social Welfare Bill the very next day.
Traditional Budget secrecy is seriously flawed and undemocratic. It is also a hugely inefficient and impractical way to run the Government in an advanced economy!
For example, the proposal to raise VAT by 2 percentage points has a range of complex effects on the economy. It requires TDs to know what goods and services attract the standard rate of VAT, as well as to know that VAT dampens employment in the economy less than income tax but more than wealth taxes. The regressive nature of VAT also needs to be explained - that is, that people on lower incomes pay proportionately more of their incomes. It takes time to put together analysis and briefings for those making the decisions, let along for those whose lives will be affected by them.
This year by accident (and again because of the IMF/EU loan) we have a new and improved process:
1. Draft proposals from the Department of Finance are aired in public.
2. Economic analysts (including think-tanks), sectoral lobbyists and the general public are given time to reflect on these proposals and respond to them. An informed public debate is possible.
3. The members of the Government and TDs on both sides of the Dáil can learn from the public discussion and expert analysis. The Government has the option of fine-tuning or even changing proposals.
4. The Budget Day proposals are likely to be less of a surprise and Opposition spokespersons will have had access to information and advice to prepare more detailed and considered responses.
5. TDs have had the benefit of public discussion and contact from their constituents before voting on the Budget.
Does anyone have a problem with making this more open approach permanent?
There are a couple of issues raised by more openness, but in balance I don't think they outweigh the benefits.
The Government is not weakened in its ability to choose to accept or modify proposals. Getting more feedback from lobbies, experts and constituents can only be a good thing. The Government is not exhibiting weakness by changing proposals in the face of evidence, although they would have to justify decisions that appear to simply cave in to politically powerful lobby groups.
(In practice, capitulation to lobbyists tends to happen between Budget Day and the final Finance Act three months later, which often contains quite different proposals - especially on the minutae of tax law - than were in the Budget. However, media and public scrutiny of the Finance Act is very limited).
One tricky issue relates to the 'midnight' proposals: changes that will apply with near immediate effect. For example, excise might change at midnight to prevent people stocking up on alcohol beforehand.
Whether people should get more than a couple of hours warning on such changes is an open question. It may be more effective for raising revenue, but it is arguably more democratic if people know what's being proposed and have a chance to react to it (even if that reaction is a trip to the off-licence). After all, the Government can never fully predict the 'behavioural' effects of Budget changes. And the short-term loss of excise revenue may be off-set by longer-term public understanding and acceptance of how we pay for the services provided by our state.
And if there really are some new taxes that require secrecy before being announced 'with immediate effect', good quality analysis on the day can be preserved through 'lock ins'. They do this in Canada. Several hours before the budget announcements, a selection of Opposition spokespersons and their advisors are locked into a room without mobile phones but with a copy of the budget documents. In another room, a selection of journalists and economic analysts are likewise locked in with the budget. The result is that Opposition responses and expert analysis can be based on the detail of what's being proposed.
Voting on how public money is spent is one of the main purposes of parliament and the Constitution of Ireland makes it very clear that the Government can only spend money in line with budgets agreed by the Dáil.
There is every reason why the vital scrutiny of public money should be as open as possible.
It is unfortunate that the Dáil did not receive the draft papers before the Bundestag, but a more important lesson from the episode is that there is every reason to increase the transparency of budget documentation and proposals from now on.
Irish democracy did not collapse because draft proposals on VAT increases and other measures were circulated before the Government met to consider them. Instead, the democratic process was strengthened by their release.
Strong democracy is when everyone has the right to participate in the decisions affecting themselves and, crucially, the resources they need to do so. Information is just one of the essential resources people need to understand and meaningfully participate; through discussion, lobbying, etc.
Consider the traditional budget process, by way of contrast:
1. All proposals are initially developed in secret by the Department of Finance. (Drafts may or may not be circulated, but certainly not to Opposition spokespersons or the public).
2. Government Ministers are briefed by the Minister for Finance in a meeting of the Government, and may even be asked to agree proposals at the same meeting - without access to alternative expert opinion, advice, etc. Even if they do not agree them in the same meeting, they have only days to seek advice and cannot avail of a richer public discussion with analysis from all perspectives.
3. Some, all or none of the budget proposals may be discussed by Government Ministers with their colleagues on the backbenches of the Dáil. Advice from chosen experts may or may not be sought, at the discretion of each Minister.
4. The final Budget is kept secret until read out by the Minister for Finance on Budget Day. In fairness, the IMF/EU obligation to publish a four-year plan has created more openness.
5. Opposition spokespersons and economic commentators prepare most of their responses in the absence of information about the Budget proposals, often based on rumours or leaks. They are only given minutes to prepare a response to the actual proposals, and must make off-the-cuff responses without research or advice. This makes for shallow analysis that tends to highlight more immediate proposals, or more populist concerns, while neglecting deeper effects on the economy and society.
6. The Dáil votes on the Budget without most of the TDs having read the documents. Strictly speaking, TDs vote on a series of 'financial resolutions' based on the Budget speech. There will be (limited) time for discussion later when the annual Finance Bill, Social Welfare Bill, etc are introduced to make most the resolutions into law. However, votes on resolutions are sufficient for measures that come into effect at midnight. And legislation is sometimes rushed through the Dáil; like last year's Social Welfare Bill the very next day.
Traditional Budget secrecy is seriously flawed and undemocratic. It is also a hugely inefficient and impractical way to run the Government in an advanced economy!
For example, the proposal to raise VAT by 2 percentage points has a range of complex effects on the economy. It requires TDs to know what goods and services attract the standard rate of VAT, as well as to know that VAT dampens employment in the economy less than income tax but more than wealth taxes. The regressive nature of VAT also needs to be explained - that is, that people on lower incomes pay proportionately more of their incomes. It takes time to put together analysis and briefings for those making the decisions, let along for those whose lives will be affected by them.
This year by accident (and again because of the IMF/EU loan) we have a new and improved process:
1. Draft proposals from the Department of Finance are aired in public.
2. Economic analysts (including think-tanks), sectoral lobbyists and the general public are given time to reflect on these proposals and respond to them. An informed public debate is possible.
3. The members of the Government and TDs on both sides of the Dáil can learn from the public discussion and expert analysis. The Government has the option of fine-tuning or even changing proposals.
4. The Budget Day proposals are likely to be less of a surprise and Opposition spokespersons will have had access to information and advice to prepare more detailed and considered responses.
5. TDs have had the benefit of public discussion and contact from their constituents before voting on the Budget.
Does anyone have a problem with making this more open approach permanent?
There are a couple of issues raised by more openness, but in balance I don't think they outweigh the benefits.
The Government is not weakened in its ability to choose to accept or modify proposals. Getting more feedback from lobbies, experts and constituents can only be a good thing. The Government is not exhibiting weakness by changing proposals in the face of evidence, although they would have to justify decisions that appear to simply cave in to politically powerful lobby groups.
(In practice, capitulation to lobbyists tends to happen between Budget Day and the final Finance Act three months later, which often contains quite different proposals - especially on the minutae of tax law - than were in the Budget. However, media and public scrutiny of the Finance Act is very limited).
One tricky issue relates to the 'midnight' proposals: changes that will apply with near immediate effect. For example, excise might change at midnight to prevent people stocking up on alcohol beforehand.
Whether people should get more than a couple of hours warning on such changes is an open question. It may be more effective for raising revenue, but it is arguably more democratic if people know what's being proposed and have a chance to react to it (even if that reaction is a trip to the off-licence). After all, the Government can never fully predict the 'behavioural' effects of Budget changes. And the short-term loss of excise revenue may be off-set by longer-term public understanding and acceptance of how we pay for the services provided by our state.
And if there really are some new taxes that require secrecy before being announced 'with immediate effect', good quality analysis on the day can be preserved through 'lock ins'. They do this in Canada. Several hours before the budget announcements, a selection of Opposition spokespersons and their advisors are locked into a room without mobile phones but with a copy of the budget documents. In another room, a selection of journalists and economic analysts are likewise locked in with the budget. The result is that Opposition responses and expert analysis can be based on the detail of what's being proposed.
Voting on how public money is spent is one of the main purposes of parliament and the Constitution of Ireland makes it very clear that the Government can only spend money in line with budgets agreed by the Dáil.
There is every reason why the vital scrutiny of public money should be as open as possible.
Thursday, 3 March 2011
Political Reform Starts with Disclosure about Our Economy
Nat O'Connor: The Irish Examiner reports the not unexpected news that "Negotiators trying to hammer out a Fine Gael/Labour programme for government have been given a sharp reality check by the state’s top financial experts." This is not surprising, but if the commitment to significant political reform by both parties is met, it does not need to happen again.
Cynics have been saying throughout the election that promises made in manifestos will dissolve once Fine Gael and Labour spokespersons get full access to the facts and figures from the Department of Finance, NTMA, Central Bank, etc.
My less cynical interpretation is that, yes, we know that Ireland is one of the most secretive democracies (which I argue here for example, pages 12-13). So yes, we knew that manifestos were written on the basis of imperfect information. The question for the future is whether Fine Gael and Labour are committed to changing this dynamic.
In the next few days, they are naturally going to be fully focused on absorbing whatever new (awful) information they have received to see how this affects their economic plans and what kind of agreement they can still make with one another.
However, the commitment to political reform starts on Day One. Never mind the Constitution, the ultimate fate of the Senate, Dáil standing orders or the plans to restore freedom of information legislation. As important as all of these things are, what matters most is for our political leaders to think differently, and to act differently, from the outset.
In terms of openness and transparency, this means that whatever information they have received from the state's "top financial experts" should be further disclosed.
Fine Gael and Labour need to ask themselves the question: should they have known all of this new information before the election? If so, they need to disclose this information to all TDs immediately. If not, democracy is fundamentally weaker in this country than others - because if party manifestos in future are to continue to be based on incomplete or misleading data, then voters will be kept in the dark and asked to choose blindly between policy promises that are inevitably going to be compromised by economic reality. Disclosure, on the other hand, would mean that voters would have a genuine choice between different policy responses to that economic reality.
Fine Gael and Labour should also ask themselves: how many different sources of independent economic analysis have had access to complete information about our economic situation? Is it healthy or useful that academics and researchers are working with incomplete information? If it is not useful - and it is hard to see how it could be - then there should be disclosure, now.
But let's pause and consider the forces acting against Fine Gael and Labour as they attempt to introduce real and lasting political reform in the area of open government and transparent decision-making.
'Culture' can be defined as doing the same kind of thing in the same kind of way over time. Families, counties and nations have different cultures, precisely because they have consistent patterns of behaviour that distinguish them from one another. Our political and administrative culture is no different: there are plenty of patterns of behaviour that have not changed in decades, and one of the strongest reflexes in Irish politics is secrecy.
Our culture of secrecy is reinforced by the simple, but effective, argument of 'why do things differently?' Secrecy is power. If the new Government starts giving more - and better quality - information to Opposition TDs, researchers and journalists, inevitably this information will be used to challenge, probe and scrutinise the detail of Government decisions and the reasons for those decisions. And who'd want that in a democracy? Particularly, in a democracy that is financially ruined in no small part because a small cabal of people who thought they knew best believed they could bluff their way through economic disaster by hiding as many unpleasent facts as possible.
There are other forces promoting secrecy. Fine Gael and Labour will need to build a reasonably robust working relationship, if they are to form a coalition. Any commitment to working together in coalition means that they will need to develop some level of trust with one another. Otherwise they won't share information with each other, and there will be confusion and contradictory statements and policy coming out of Government all the time. Yet, trusting one another may mean not revealing 'secrets' in public. Coalitions are naturally motivated to be more secretive than single party Government, as 'leaks' are seized upon as evidence of treachery by one side or the other, if the leak happens to reveal information that favours one party's position over another's.
Another barrier to openness is fear. As well as the fairly well known effects of releasing information (in terms of what Opposition TDs and other will do with it), there is also a fear of the unknown. What if 'the markets' had access to all this information? What would it do for Ireland's international business reputation?
The evidence from other countries suggests that it would be welcome. People working in finance and business like to have access to information they can rely on, even if it is unpleasent. A major part of the problem with our banks has been the policy of dredging the lake rather than draining it. Stakeholders need to see the bottom, before they can plan any further business with our banks.
Ireland's old-fashioned adherence to secrecy would be comical - like Yes, Minister - if it were not so painfully out of step with how modern, advanced industrial economies go about the business of generating economic policy, through open, rational debate about the facts and how different economic models would react to those facts.
Disclosure does not have to be 'all or nothing'. I am willing to bet that most of the information currently being received by Fine Gael and Labour's teams could be fully, publicly disclosed. However, if there are details that are genuinely sensitive, there are many potential mechanisms to deal with this.
Disclosure to all TDs would be a start. If these men and women are going to be voting in the Dáil on the likely coalition's economic policies and future budgets, then they should be fully informed, so that they can scrutinise these policies. I am willing to bet that many Fianna Fáil TDs in the last Government were not given anything like full access to economic data.
Full disclosure of all sensitive details, on condition of secrecy, to economic-related parliamentary committees occurs in other countries. That way, the Oireachtas could regain some relevance to the Irish people because debate could be informed by complete factual information. Other countries ensure more quality debate by organising 'lock ins' for spokepersons, researchers and journalists hours before publicly releasing information, like budgets. This ensures realistic analysis , not 'off the cuff' comment.
In addition, disclosure to academics and independent reseachers would ensure that the Government and Dáil would have access to a range of analysis from different perspectives on the economic challenges facing us. Ironically, the Government may have the data, but it requires experts to provide the analysis. There is no guarantee that the future Government would pay attention to this advice any more than internal advice, but they would at least be unable to claim ignorance; unlike the outragous claim to RTÉ by ex-Taoiseach Ahern that "I would have loved if somebody somewhere had told me what was going on in the banks in this country but nobody ever did."
Of course, the counter-argument from the masters of secrecy would be that once you start disclosing information outside of the inner circle, it will leak further and further. Before you know it, everyone will know the real story about the Irish economic situation! And who'd want that?
Cynics have been saying throughout the election that promises made in manifestos will dissolve once Fine Gael and Labour spokespersons get full access to the facts and figures from the Department of Finance, NTMA, Central Bank, etc.
My less cynical interpretation is that, yes, we know that Ireland is one of the most secretive democracies (which I argue here for example, pages 12-13). So yes, we knew that manifestos were written on the basis of imperfect information. The question for the future is whether Fine Gael and Labour are committed to changing this dynamic.
In the next few days, they are naturally going to be fully focused on absorbing whatever new (awful) information they have received to see how this affects their economic plans and what kind of agreement they can still make with one another.
However, the commitment to political reform starts on Day One. Never mind the Constitution, the ultimate fate of the Senate, Dáil standing orders or the plans to restore freedom of information legislation. As important as all of these things are, what matters most is for our political leaders to think differently, and to act differently, from the outset.
In terms of openness and transparency, this means that whatever information they have received from the state's "top financial experts" should be further disclosed.
Fine Gael and Labour need to ask themselves the question: should they have known all of this new information before the election? If so, they need to disclose this information to all TDs immediately. If not, democracy is fundamentally weaker in this country than others - because if party manifestos in future are to continue to be based on incomplete or misleading data, then voters will be kept in the dark and asked to choose blindly between policy promises that are inevitably going to be compromised by economic reality. Disclosure, on the other hand, would mean that voters would have a genuine choice between different policy responses to that economic reality.
Fine Gael and Labour should also ask themselves: how many different sources of independent economic analysis have had access to complete information about our economic situation? Is it healthy or useful that academics and researchers are working with incomplete information? If it is not useful - and it is hard to see how it could be - then there should be disclosure, now.
But let's pause and consider the forces acting against Fine Gael and Labour as they attempt to introduce real and lasting political reform in the area of open government and transparent decision-making.
'Culture' can be defined as doing the same kind of thing in the same kind of way over time. Families, counties and nations have different cultures, precisely because they have consistent patterns of behaviour that distinguish them from one another. Our political and administrative culture is no different: there are plenty of patterns of behaviour that have not changed in decades, and one of the strongest reflexes in Irish politics is secrecy.
Our culture of secrecy is reinforced by the simple, but effective, argument of 'why do things differently?' Secrecy is power. If the new Government starts giving more - and better quality - information to Opposition TDs, researchers and journalists, inevitably this information will be used to challenge, probe and scrutinise the detail of Government decisions and the reasons for those decisions. And who'd want that in a democracy? Particularly, in a democracy that is financially ruined in no small part because a small cabal of people who thought they knew best believed they could bluff their way through economic disaster by hiding as many unpleasent facts as possible.
There are other forces promoting secrecy. Fine Gael and Labour will need to build a reasonably robust working relationship, if they are to form a coalition. Any commitment to working together in coalition means that they will need to develop some level of trust with one another. Otherwise they won't share information with each other, and there will be confusion and contradictory statements and policy coming out of Government all the time. Yet, trusting one another may mean not revealing 'secrets' in public. Coalitions are naturally motivated to be more secretive than single party Government, as 'leaks' are seized upon as evidence of treachery by one side or the other, if the leak happens to reveal information that favours one party's position over another's.
Another barrier to openness is fear. As well as the fairly well known effects of releasing information (in terms of what Opposition TDs and other will do with it), there is also a fear of the unknown. What if 'the markets' had access to all this information? What would it do for Ireland's international business reputation?
The evidence from other countries suggests that it would be welcome. People working in finance and business like to have access to information they can rely on, even if it is unpleasent. A major part of the problem with our banks has been the policy of dredging the lake rather than draining it. Stakeholders need to see the bottom, before they can plan any further business with our banks.
Ireland's old-fashioned adherence to secrecy would be comical - like Yes, Minister - if it were not so painfully out of step with how modern, advanced industrial economies go about the business of generating economic policy, through open, rational debate about the facts and how different economic models would react to those facts.
Disclosure does not have to be 'all or nothing'. I am willing to bet that most of the information currently being received by Fine Gael and Labour's teams could be fully, publicly disclosed. However, if there are details that are genuinely sensitive, there are many potential mechanisms to deal with this.
Disclosure to all TDs would be a start. If these men and women are going to be voting in the Dáil on the likely coalition's economic policies and future budgets, then they should be fully informed, so that they can scrutinise these policies. I am willing to bet that many Fianna Fáil TDs in the last Government were not given anything like full access to economic data.
Full disclosure of all sensitive details, on condition of secrecy, to economic-related parliamentary committees occurs in other countries. That way, the Oireachtas could regain some relevance to the Irish people because debate could be informed by complete factual information. Other countries ensure more quality debate by organising 'lock ins' for spokepersons, researchers and journalists hours before publicly releasing information, like budgets. This ensures realistic analysis , not 'off the cuff' comment.
In addition, disclosure to academics and independent reseachers would ensure that the Government and Dáil would have access to a range of analysis from different perspectives on the economic challenges facing us. Ironically, the Government may have the data, but it requires experts to provide the analysis. There is no guarantee that the future Government would pay attention to this advice any more than internal advice, but they would at least be unable to claim ignorance; unlike the outragous claim to RTÉ by ex-Taoiseach Ahern that "I would have loved if somebody somewhere had told me what was going on in the banks in this country but nobody ever did."
Of course, the counter-argument from the masters of secrecy would be that once you start disclosing information outside of the inner circle, it will leak further and further. Before you know it, everyone will know the real story about the Irish economic situation! And who'd want that?
Friday, 19 November 2010
The IMF: Bringing in more transparency?
Nat O'Connor: One of the clear risks to Ireland's economy and society is that we can go back to business as usual. In fact, if we don't make any particular effort to do otherwise, we are more likely than not going to slip back into bad habits, old networks and 'traditional' ways of doing business. Indeed, the IMF's mission chief, Ajai Chopra, is quoted as warning that it's important in boom times to be wary of claims that 'this time will be different' in respect of the risk of a crash. There is no better example of this risk than Ireland's obsession with secrecy. We can either continue to accept that politicians, bankers, devleopers and clergy 'know best' and so we don't need to know; or we can demand a new way of doing business: transparently.
A major cause of the ongoing banking crisis has been the drip-feeding of information from the banks, and the lack of total disclosure on just how bad their books are. One welcome aspect of the IMF's visit will be a forensic examination of the banks once and for all.
Meanwhile, the Governor of the Central Bank has been praised for giving clear information about what's likely to occur with the IMF, and why.
The Taoiseach said that the Governor's view did not necessarily reflect that of the Government. “The governor gave his view. He is entitled to give his view.”
The Taoiseach is quite right. The Governor is meant to be an independent officer of the state, and he should speak independently. What is wrong is that the Government chooses not give an equally clear (albeit divergent) explanation of the situation. Instead, the Taoiseach continued that "we have to determine what is the best option for our country and for our people at the time." In other words, the Government will decide for us - not with our participation in the discussion.
The Minister for Finance told the Dáil yesterday that "If the Government has been reticent in making public comment, it has been in the interest of protecting the taxpayer".
The Minster continued "Jumping to conclusions ahead of the facts is not to the benefit of the taxpayer, nor is it in our interest to do this in advance of the discussions that are now taking place." It is entirely reasonable that the Minister cannot be expected to have all facts to hand, but he can be expected to explain what he knows and what he intends to do.
It would be healthier for Ireland if we had a multitude of voices and a competition of ideas, based on expert knowledge and evidence. This would not threaten the Government. Yet, people in Ireland often have to look to foreign media for more balanced and varied coverage on our own crisis!
It is a cliché that we are living in an information age. But some practical implications of that are that it is easier than ever to access people's academic writings or more personal musings in blogs or newspaper articles. Hence, we can make up our own minds what we think of our 'leaders' and their point of view.
For example, there is no need for the IMF's mission chief, Ajai Chopra, to be a mystery. We can read his blog to get an idea about his analysis of economic matters. And we can look back over his previous work, such as his analysis of Korea in 2001, which has some similarities to the Irish case. He acknowledged then the need for growth stimulus as part of budgetary measures, and cautioned about austerity measures that were damaging to economic growth: "We are not advocating irresponsible fiscal policy. At the same time, however, there is a danger if fiscal conservatism is carried too far as it could exacerbate the downturn in the economy."
In a similar vein, transparency can bust the exaggerated myth of our lost sovereignty; for example, John Bruton's lament. He said "We’re now in a position where we’ll still be making the decisions but we won’t be making them on our own, we’ll have others looking over our shoulders". And what's the problem with making decisions in the open, and accepting comments on them?
Based on its track record, the IMF team is not going to tell the elected Irish Government what to do in the four-year plan or the Budget. It may advise or give a technical opinion, particularly on what they believe will or won't work. But national sovereignty over the choice of tax measures and cuts to public spending remains firmly in the hands of the Government and the Dáil. Any attempt to blame the IMF for directing cuts towards lower income families or people who depend on social welfare will be untrue. All the IMF can do, if announced austerity measures are not followed through on, is suspend access to the money we want them to lend us. But if we meet our targets on closing the deficit, than we'll be able to borrow. And a growth strategy must be part of our plan.
The Taoiseach has denied talking in riddles about the current situation. "Work has not been sufficiently completed, or options put before the Irish Government in sufficient detail, for us to decide what our ultimate position will be. We are engaged in those discussions in an open and transparent way," he said.
What this comes down to is that the Government does not appear to believe that its duty is to tell people what is going on, to explain or clarify the understandable confusion and worry about the arrival of the IMF. The Government will announce its decision, once that decision has been made.
We have a choice for the future. We can accept the old style of leadership from behind closed doors, or we can demand that in future our political leaders have a duty to tell us, in clear terms, what is going on and what our options are, before they make a final decision that may burden a generation with debt.
In this context, the Irish Examiner makes a worrying claim: "The EU-IMF investigators will uncover significant fraud and corruption in their examination of the Irish banking sector according to a leading European economist who worked with the IMF."
Ireland's banking sector is "not like the USA with a highly complicated system. Its simply three to five banks with loan books. It’s typical of what can happen in a small country where everyone knows everyone and as long as everything is going well, nobody notices," said Dr Gros.
"Iceland found that senior politicians, regulators and bankers were all at fault for bringing down the country’s economy." And Dr Gros fears something similar will be discovered here.
It is perhaps not surprising that during his first meeting with an Oireachtas committee, the open-speaking Governor of the Central Bank called for an inquiry into how the crisis began, in order to get to the root causes and to make sure we don't go back to business as usual.
By way of contrast, the traditionally secretive UK Government is today making available data on 195,000 items of spending for the first time ever. The Cabinet Office minister said "This government has the clear ambition is to make the UK the most transparent and accountable country in the world." The Guardian has a live blog on the experiment and diverse opinions on the benefits of openness.
A major cause of the ongoing banking crisis has been the drip-feeding of information from the banks, and the lack of total disclosure on just how bad their books are. One welcome aspect of the IMF's visit will be a forensic examination of the banks once and for all.
Meanwhile, the Governor of the Central Bank has been praised for giving clear information about what's likely to occur with the IMF, and why.
The Taoiseach said that the Governor's view did not necessarily reflect that of the Government. “The governor gave his view. He is entitled to give his view.”
The Taoiseach is quite right. The Governor is meant to be an independent officer of the state, and he should speak independently. What is wrong is that the Government chooses not give an equally clear (albeit divergent) explanation of the situation. Instead, the Taoiseach continued that "we have to determine what is the best option for our country and for our people at the time." In other words, the Government will decide for us - not with our participation in the discussion.
The Minister for Finance told the Dáil yesterday that "If the Government has been reticent in making public comment, it has been in the interest of protecting the taxpayer".
The Minster continued "Jumping to conclusions ahead of the facts is not to the benefit of the taxpayer, nor is it in our interest to do this in advance of the discussions that are now taking place." It is entirely reasonable that the Minister cannot be expected to have all facts to hand, but he can be expected to explain what he knows and what he intends to do.
It would be healthier for Ireland if we had a multitude of voices and a competition of ideas, based on expert knowledge and evidence. This would not threaten the Government. Yet, people in Ireland often have to look to foreign media for more balanced and varied coverage on our own crisis!
It is a cliché that we are living in an information age. But some practical implications of that are that it is easier than ever to access people's academic writings or more personal musings in blogs or newspaper articles. Hence, we can make up our own minds what we think of our 'leaders' and their point of view.
For example, there is no need for the IMF's mission chief, Ajai Chopra, to be a mystery. We can read his blog to get an idea about his analysis of economic matters. And we can look back over his previous work, such as his analysis of Korea in 2001, which has some similarities to the Irish case. He acknowledged then the need for growth stimulus as part of budgetary measures, and cautioned about austerity measures that were damaging to economic growth: "We are not advocating irresponsible fiscal policy. At the same time, however, there is a danger if fiscal conservatism is carried too far as it could exacerbate the downturn in the economy."
In a similar vein, transparency can bust the exaggerated myth of our lost sovereignty; for example, John Bruton's lament. He said "We’re now in a position where we’ll still be making the decisions but we won’t be making them on our own, we’ll have others looking over our shoulders". And what's the problem with making decisions in the open, and accepting comments on them?
Based on its track record, the IMF team is not going to tell the elected Irish Government what to do in the four-year plan or the Budget. It may advise or give a technical opinion, particularly on what they believe will or won't work. But national sovereignty over the choice of tax measures and cuts to public spending remains firmly in the hands of the Government and the Dáil. Any attempt to blame the IMF for directing cuts towards lower income families or people who depend on social welfare will be untrue. All the IMF can do, if announced austerity measures are not followed through on, is suspend access to the money we want them to lend us. But if we meet our targets on closing the deficit, than we'll be able to borrow. And a growth strategy must be part of our plan.
The Taoiseach has denied talking in riddles about the current situation. "Work has not been sufficiently completed, or options put before the Irish Government in sufficient detail, for us to decide what our ultimate position will be. We are engaged in those discussions in an open and transparent way," he said.
What this comes down to is that the Government does not appear to believe that its duty is to tell people what is going on, to explain or clarify the understandable confusion and worry about the arrival of the IMF. The Government will announce its decision, once that decision has been made.
We have a choice for the future. We can accept the old style of leadership from behind closed doors, or we can demand that in future our political leaders have a duty to tell us, in clear terms, what is going on and what our options are, before they make a final decision that may burden a generation with debt.
In this context, the Irish Examiner makes a worrying claim: "The EU-IMF investigators will uncover significant fraud and corruption in their examination of the Irish banking sector according to a leading European economist who worked with the IMF."
Ireland's banking sector is "not like the USA with a highly complicated system. Its simply three to five banks with loan books. It’s typical of what can happen in a small country where everyone knows everyone and as long as everything is going well, nobody notices," said Dr Gros.
"Iceland found that senior politicians, regulators and bankers were all at fault for bringing down the country’s economy." And Dr Gros fears something similar will be discovered here.
It is perhaps not surprising that during his first meeting with an Oireachtas committee, the open-speaking Governor of the Central Bank called for an inquiry into how the crisis began, in order to get to the root causes and to make sure we don't go back to business as usual.
By way of contrast, the traditionally secretive UK Government is today making available data on 195,000 items of spending for the first time ever. The Cabinet Office minister said "This government has the clear ambition is to make the UK the most transparent and accountable country in the world." The Guardian has a live blog on the experiment and diverse opinions on the benefits of openness.
Wednesday, 17 November 2010
Crisis shedding light on the Irish state
Peadar Kirby: We may live in very exceptional times, in which the speed of how the Irish crisis is developing is literally breathtaking. Yet, for all that, what is most disturbing is how it manifests just how little has actually changed, illustrating yet again in stark terms some long-standing features of how the Irish state operates. Despite the intense focus on the immediate pressure of events, it is most important that we recognise the very familiar posture adopted by Irish policy makers and by the Irish state, since it highlights what will have to change if we are to have any hope of building a more sustainable and equitable future. Another way of putting this is to state that the largely economic and financial discourse that dominates debate needs to be balanced by a discourse that focuses on the administrative and the political features of the current crisis.
While it is true that a crisis requires crisis management, what we need to examine is how this crisis is being managed, as it is this which is very revealing. What is most striking is that politicians and policy makers give the impression of being dragged along by events to which they are reacting, with little sense of forward planning. While this might be understandable amid a crisis that is far more severe than could have been reasonably anticipated, it also needs to be recognised that the intensity of the crisis right at this moment derives from the fact that the state has a very poor capacity for longer-term forward planning and has failed to even begin to address the challenge of designing a more adequate system of taxation. These failures cannot be blamed on the present crisis as they are very familiar features of the Irish state. Why did it take so long to realise that the present crisis required multi-annual budgetary planning (indeed long before the present crisis, this capacity should have been developed) and, even more glaringly, why have the recommendations of the Commission on Taxation not been used as the basis for a re-design of the taxation system? If this had been done, not only would it help inform the budgetary strategy but it would also have helped give a sense of confidence that the state would be able to deal with the crisis.
Take the issue of corporation tax. What is remarkable about the present debate on these issues is just how successfully powerful vested interests have created a firm consensus throughout Irish society that the present level of corporation tax is untouchable. It is simply ruled out as a possible subject of debate any time it is raised, and the Irish media and Irish society as a whole (judging by the complete lack of debate on the issue) seem to acquiesce in this. Is this not extremely revealing? At a time when we are agonising over cutting back welfare payments, pensions, various supports for the most vulnerable in our society, and core funding for our health and education services, and are being told that the pain must be widely shared, we all seem to accept that powerful global corporations who declare a very high level of profits in Ireland should share absolutely no part of the adjustment. This remarkably benign and subservient treatment is based on the claim that raising corporation tax by a percentage point or two might undermine a core part of the state’s development strategy. But instead of debating whether this might be so, and seeking evidence as to what impact it might have, we simply succumb to a response based on fear.
Long before the present crisis, it was evident that the normal posture of the Irish state, particularly in the social sphere, was reactive crisis-management. There are very few examples where the state proactively instituted an ongoing process of reforming itself so as to avoid the emergence of crises. Indeed, the very term ‘reform’ appears to be equated to a process of cost-cutting rather than to a complex process of institutional design so as to more effectively achieve public goals. One could adduce numerous other examples which illustrate both the lack of policy-making based on hard evidence and also the lack of a process of robust and wide deliberation in the formulation of policy. The first weakness derives in part from the gap that has for too long separated those who make policy from those who could provide evidence that might inform the process; instead, civil servants all too often rely on consultants who are not intimately familiar with the latest research nationally or internationally. The second gap derives from the weakness of a culture of robust deliberation, not only in the political realm but also in the media. One can only hope that the present crisis will make policy makers more aware of the need to draw on social scientific evidence and generate a broader debate on the options facing us as a society. There is some evidence that the latter is happening; I’m not aware of much evidence that the former has begun.
While it is true that a crisis requires crisis management, what we need to examine is how this crisis is being managed, as it is this which is very revealing. What is most striking is that politicians and policy makers give the impression of being dragged along by events to which they are reacting, with little sense of forward planning. While this might be understandable amid a crisis that is far more severe than could have been reasonably anticipated, it also needs to be recognised that the intensity of the crisis right at this moment derives from the fact that the state has a very poor capacity for longer-term forward planning and has failed to even begin to address the challenge of designing a more adequate system of taxation. These failures cannot be blamed on the present crisis as they are very familiar features of the Irish state. Why did it take so long to realise that the present crisis required multi-annual budgetary planning (indeed long before the present crisis, this capacity should have been developed) and, even more glaringly, why have the recommendations of the Commission on Taxation not been used as the basis for a re-design of the taxation system? If this had been done, not only would it help inform the budgetary strategy but it would also have helped give a sense of confidence that the state would be able to deal with the crisis.
Take the issue of corporation tax. What is remarkable about the present debate on these issues is just how successfully powerful vested interests have created a firm consensus throughout Irish society that the present level of corporation tax is untouchable. It is simply ruled out as a possible subject of debate any time it is raised, and the Irish media and Irish society as a whole (judging by the complete lack of debate on the issue) seem to acquiesce in this. Is this not extremely revealing? At a time when we are agonising over cutting back welfare payments, pensions, various supports for the most vulnerable in our society, and core funding for our health and education services, and are being told that the pain must be widely shared, we all seem to accept that powerful global corporations who declare a very high level of profits in Ireland should share absolutely no part of the adjustment. This remarkably benign and subservient treatment is based on the claim that raising corporation tax by a percentage point or two might undermine a core part of the state’s development strategy. But instead of debating whether this might be so, and seeking evidence as to what impact it might have, we simply succumb to a response based on fear.
Long before the present crisis, it was evident that the normal posture of the Irish state, particularly in the social sphere, was reactive crisis-management. There are very few examples where the state proactively instituted an ongoing process of reforming itself so as to avoid the emergence of crises. Indeed, the very term ‘reform’ appears to be equated to a process of cost-cutting rather than to a complex process of institutional design so as to more effectively achieve public goals. One could adduce numerous other examples which illustrate both the lack of policy-making based on hard evidence and also the lack of a process of robust and wide deliberation in the formulation of policy. The first weakness derives in part from the gap that has for too long separated those who make policy from those who could provide evidence that might inform the process; instead, civil servants all too often rely on consultants who are not intimately familiar with the latest research nationally or internationally. The second gap derives from the weakness of a culture of robust deliberation, not only in the political realm but also in the media. One can only hope that the present crisis will make policy makers more aware of the need to draw on social scientific evidence and generate a broader debate on the options facing us as a society. There is some evidence that the latter is happening; I’m not aware of much evidence that the former has begun.
Thursday, 14 October 2010
Realistic Fiscal Planning Requires Much More Budget Transparency
Nat O'Connor: The BBC reports (here) that in a rare public act, Communist Party elders in China has issued a call for increased free speech, which is allowed in their constitution but firmly denied in practice. For example, they call for a change in "the mission of propaganda authorities, from preventing the leak of information to facilitating its accurate and timely spread".
It is all too easy for us to see the issue of free speech as only a struggle in authoritarian regimes, where the situation is undeniably much worse than here. But, as organisations like The Story, PoliticalReform.ie or Transparency Ireland will testify, there is a need here too for public authorities to change from "preventing the leak of information" and do much more to facilitate "its accurate and timely spread". The Budget is one example of where there is a lack of accurate and timely information in Ireland.
The UK have much improved the ease with which the general public, businesses and civil society organisations can access and get to grips with budgetary documentation. The UK Budget website not only provides a clear set of documents, but also provides a range of other supporting material. There are links to user-friendly summaries of the budget material for the members of the public, as well as a business-focused summary. The Treasury uses Internet new media to communicate with citizens (e.g. YouTube Treasury channel). Spending information is also provided as raw data in spreadsheet format. This is highly relevant to allow business, policy analysts and civil society organisations across the country to do their own analysis of expenditure.
In TASC's pre-Budget proposals launched today (executive summary), one of the issues TASC addresses is the lack of transparency about Budget documentation. In addition to a range of other proposals, TASC is calling on the Government and Department of Finance to improve transparency by:
• Providing Budget documentation and supporting material in easily accessible formats, appropriate to the needs of different sectors;
• Making all data relating to the Budget available in raw form (e.g. spreadsheets) so that analysis can be conducted;
• Compiling a single database of all state assets and liabilities, revenue and expenditure, and making it publicly available online;
• Allowing written Parliamentary Questions over the summer recess period when these are related to preparation of Budget proposals, as this will allow for an improved level of debate and analysis by opposition parties;
• Publishing an annual Equality Statement, showing the distributional impact of all Budget measures.
Consider just one example. At present, TDs and Senators do not have the right to ask Parliamentary Questions during the summer recess, the length and timing of which is determined by the pro-Government majority in the Dáil. Usually, the Department of Finance is busy preparing the Budget over the summer and by end-October it is almost too late for any Opposition amendments to influence their thinking, no matter how sensible they might be. This year the Dáil returned on September 29th, giving the Opposition only two weeks to send in PQs and seek data upon which to cost their own Budget proposals. And then, the ‘goalposts’ were shifted twice, with the Government’s call for a €4 billion fiscal adjustment, and then the demand to come up with a multi-annual plan. How can they come up with sensible suggestions, if they don't have access to up-to-date and detailed financial information?
There is also something terribly wrong with the fuss about Opposition leaders being given the opportunity to access information held by Finance officials. In almost every other democracy in Europe, detail is provided to parliamentary committees in a timely manner, including sensitive material that is kept confidential in a mature fashion by committee members. As I have argued elsewhere, Ireland’s Cabinet is uniquely secretive. It is an aberration of democracy that access to ‘secret’ Finance files should be a ‘special treat’ for the Opposition; and this information is only made available because Ireland is plunged into possibly the greatest post-War crisis of any Western economy! It should be absolutely normal for much more detailed information to be routinely made available to parliament, researchers and the wider public, so that policy mistakes such as we have made can be identified and corrected much sooner, and multi-year planning can proceed on the basis of evidence and detailed analysis.
The existence of the dedicated Budget.gov.ie website is welcome, but the material seems to be primarily provided for policy-makers, without regard for the needs of the general public to access and understand what is being done with their money. The budgetary process is one of the most important annual elements of democratic politics in Ireland. It lays out the framework of resources within which Government policy objectives are to be achieved. How many or how few resources are allocated to different areas is a clear indication of the Government’s priorities. Easy access to this information by all citizens should be a basic democratic requirement. It should be clear to everyone where tax money is coming from, and where it is being spent. This is a basic democratic right.
In addition, basic data on Ireland’s financial situation falls short of what is needed. There needs to be a single source that compiles all State assets and liabilities in one place. This should include data on the total assets and liabilities of all state bodies, semi-state companies, etc. It should also include social insurance alongside other taxation and expenditure, as well as data on the deficit, national debt, economic activity, etc.
Finally, the Budget has the potential to greatly change the distribution of wealth and income through changes to taxation and social welfare, as well as to change the level of funding for public services upon which many people rely – especially people on low incomes. For example, the Scottish government produces an Equality Statement as part of its budget documentation. TASC argues that Ireland should provide a comprehensive analysis of the distributional impact of measures as part of the annual Budget documentation.
It is all too easy for us to see the issue of free speech as only a struggle in authoritarian regimes, where the situation is undeniably much worse than here. But, as organisations like The Story, PoliticalReform.ie or Transparency Ireland will testify, there is a need here too for public authorities to change from "preventing the leak of information" and do much more to facilitate "its accurate and timely spread". The Budget is one example of where there is a lack of accurate and timely information in Ireland.
The UK have much improved the ease with which the general public, businesses and civil society organisations can access and get to grips with budgetary documentation. The UK Budget website not only provides a clear set of documents, but also provides a range of other supporting material. There are links to user-friendly summaries of the budget material for the members of the public, as well as a business-focused summary. The Treasury uses Internet new media to communicate with citizens (e.g. YouTube Treasury channel). Spending information is also provided as raw data in spreadsheet format. This is highly relevant to allow business, policy analysts and civil society organisations across the country to do their own analysis of expenditure.
In TASC's pre-Budget proposals launched today (executive summary), one of the issues TASC addresses is the lack of transparency about Budget documentation. In addition to a range of other proposals, TASC is calling on the Government and Department of Finance to improve transparency by:
• Providing Budget documentation and supporting material in easily accessible formats, appropriate to the needs of different sectors;
• Making all data relating to the Budget available in raw form (e.g. spreadsheets) so that analysis can be conducted;
• Compiling a single database of all state assets and liabilities, revenue and expenditure, and making it publicly available online;
• Allowing written Parliamentary Questions over the summer recess period when these are related to preparation of Budget proposals, as this will allow for an improved level of debate and analysis by opposition parties;
• Publishing an annual Equality Statement, showing the distributional impact of all Budget measures.
Consider just one example. At present, TDs and Senators do not have the right to ask Parliamentary Questions during the summer recess, the length and timing of which is determined by the pro-Government majority in the Dáil. Usually, the Department of Finance is busy preparing the Budget over the summer and by end-October it is almost too late for any Opposition amendments to influence their thinking, no matter how sensible they might be. This year the Dáil returned on September 29th, giving the Opposition only two weeks to send in PQs and seek data upon which to cost their own Budget proposals. And then, the ‘goalposts’ were shifted twice, with the Government’s call for a €4 billion fiscal adjustment, and then the demand to come up with a multi-annual plan. How can they come up with sensible suggestions, if they don't have access to up-to-date and detailed financial information?
There is also something terribly wrong with the fuss about Opposition leaders being given the opportunity to access information held by Finance officials. In almost every other democracy in Europe, detail is provided to parliamentary committees in a timely manner, including sensitive material that is kept confidential in a mature fashion by committee members. As I have argued elsewhere, Ireland’s Cabinet is uniquely secretive. It is an aberration of democracy that access to ‘secret’ Finance files should be a ‘special treat’ for the Opposition; and this information is only made available because Ireland is plunged into possibly the greatest post-War crisis of any Western economy! It should be absolutely normal for much more detailed information to be routinely made available to parliament, researchers and the wider public, so that policy mistakes such as we have made can be identified and corrected much sooner, and multi-year planning can proceed on the basis of evidence and detailed analysis.
The existence of the dedicated Budget.gov.ie website is welcome, but the material seems to be primarily provided for policy-makers, without regard for the needs of the general public to access and understand what is being done with their money. The budgetary process is one of the most important annual elements of democratic politics in Ireland. It lays out the framework of resources within which Government policy objectives are to be achieved. How many or how few resources are allocated to different areas is a clear indication of the Government’s priorities. Easy access to this information by all citizens should be a basic democratic requirement. It should be clear to everyone where tax money is coming from, and where it is being spent. This is a basic democratic right.
In addition, basic data on Ireland’s financial situation falls short of what is needed. There needs to be a single source that compiles all State assets and liabilities in one place. This should include data on the total assets and liabilities of all state bodies, semi-state companies, etc. It should also include social insurance alongside other taxation and expenditure, as well as data on the deficit, national debt, economic activity, etc.
Finally, the Budget has the potential to greatly change the distribution of wealth and income through changes to taxation and social welfare, as well as to change the level of funding for public services upon which many people rely – especially people on low incomes. For example, the Scottish government produces an Equality Statement as part of its budget documentation. TASC argues that Ireland should provide a comprehensive analysis of the distributional impact of measures as part of the annual Budget documentation.
Wednesday, 28 April 2010
Can we have some more transparency please?
Slí Eile: In regard to Anglo-Irish Bank claims have been made that: (i) winding up would cost Ireland €70bn and (ii) defaulting on some €15bn in 'senior bond debt' for Anglo-Irish would have systemic and negative impact across the entire financial system. It would help if someone could guide the taxpayers of Ireland to (a) a full set of meaningful and informative accounts of the 'state owned' Bank and (b) a breakdown of lenders and investors as distinct from deposit holders and others with the claimed total liability of near €70bn. A search of the Annual Report of Anglo for 2009 shows an Annual Report here. On page 38 of the Annual Report a total liability of €97bn is reported. This breaks into €51bn in 'customer accounts' (of the great, the good and the humble), €20.5bn in deposits from banks and €17.3bn in 'debt securities in issue'. A further €5bn is in subordinated liabilities and 'other capital instruments'. How much of these liabilities are, ultimately, to the Irish Government, other Irish banks, investors and lenders from outside the State? What concentration of liability rests with a small circle of high-wealth individuals?
Could the people who have to pick up the bill please have a full, transparent and detailed account of who owns what to who. If we are to gamble with €20bn plus in capital transfers and thereby add to EU-measured Government debt, could we have a full cost-benefit analysis accesible to the Oireachtas and civil society? Too much to ask?
Could the people who have to pick up the bill please have a full, transparent and detailed account of who owns what to who. If we are to gamble with €20bn plus in capital transfers and thereby add to EU-measured Government debt, could we have a full cost-benefit analysis accesible to the Oireachtas and civil society? Too much to ask?
Monday, 19 April 2010
Irish versus Transparency?
Nat O'Connor: Am I the only one who was wondering why it was taking so long for the Finance Act 2010 to be publicly available? (It was signed into law by the President on 3 April).
It appears to be due to Section 10 of the Official Languages Act 2003, which requires major documents to be published simultaneously in both Irish and English. The work of translating the Act will take several weeks. Hence, it could be well into May before it is available in either hard copy or online.
Meanwhile, the Act is law. On 9 April, the Minister for Finance signed Statutory Instrument (SI) 147 of 2010 bring the VAT changes into force. This SI refers to the original Act, yet interested parties cannot look up the sections mentioned because the Act is not available yet.
This all creates a transparency gap, which could last anything up to two months, given that this Finance Act is particularly long.
Now, it is not as bad as all that, because the Oireachtas website publishes each stage of the Finance Bill as it went through both houses. The final version ("as deemed to be have been passed by both Houses of the Oireachtas") is the same text as the Finance Act. (This document is also available in print from the Government Publications Office).
So the practical part of the transparency gap is resolved because the provisions of the Official Languages Act are neatly side-stepped. Although Irish speakers are currently denied the ability to discuss the technical detail of the final version of the Bill as Gaelige, as it is in English.
But does all this really create a major lack of transparency? Not in practical terms, once I learned that the final Bill on the Oireachtas website text won't be further amended. Maybe this was obvious from the 'deemed passed' label, but as someone looking at the later amendments of the legislation, I want to see the definitive text of the Act, so I can be absolutely certain there will be no more last minute changes.
I have a lot of sympathy for frustrated Irish speakers, who for decades were denied the ability to interact with public bodies in their native language. But there is a basic 'rule of law' requirement that if a new law is brought into force, then on principle the text should immediately be available, without delay.
The Official Languages Act doesn't state that legislation must be published simultaneously, only the more general heading of documents of "major public importance". Yes, I think the Finance Act 2010 is of major public importance. But I think the principle of transparency of the law, that laws must be published when they come into force, must take precedence.
In which case, one option is that the translation must take place before the Act becomes law; which means that this too must be completed within the strict time limits established by the Constituion for money bills.
It appears to be due to Section 10 of the Official Languages Act 2003, which requires major documents to be published simultaneously in both Irish and English. The work of translating the Act will take several weeks. Hence, it could be well into May before it is available in either hard copy or online.
Meanwhile, the Act is law. On 9 April, the Minister for Finance signed Statutory Instrument (SI) 147 of 2010 bring the VAT changes into force. This SI refers to the original Act, yet interested parties cannot look up the sections mentioned because the Act is not available yet.
This all creates a transparency gap, which could last anything up to two months, given that this Finance Act is particularly long.
Now, it is not as bad as all that, because the Oireachtas website publishes each stage of the Finance Bill as it went through both houses. The final version ("as deemed to be have been passed by both Houses of the Oireachtas") is the same text as the Finance Act. (This document is also available in print from the Government Publications Office).
So the practical part of the transparency gap is resolved because the provisions of the Official Languages Act are neatly side-stepped. Although Irish speakers are currently denied the ability to discuss the technical detail of the final version of the Bill as Gaelige, as it is in English.
But does all this really create a major lack of transparency? Not in practical terms, once I learned that the final Bill on the Oireachtas website text won't be further amended. Maybe this was obvious from the 'deemed passed' label, but as someone looking at the later amendments of the legislation, I want to see the definitive text of the Act, so I can be absolutely certain there will be no more last minute changes.
I have a lot of sympathy for frustrated Irish speakers, who for decades were denied the ability to interact with public bodies in their native language. But there is a basic 'rule of law' requirement that if a new law is brought into force, then on principle the text should immediately be available, without delay.
The Official Languages Act doesn't state that legislation must be published simultaneously, only the more general heading of documents of "major public importance". Yes, I think the Finance Act 2010 is of major public importance. But I think the principle of transparency of the law, that laws must be published when they come into force, must take precedence.
In which case, one option is that the translation must take place before the Act becomes law; which means that this too must be completed within the strict time limits established by the Constituion for money bills.
Wednesday, 20 January 2010
The Division of Power Requires Stronger Accountability Institutions
Nat O'Connor: Many current news stories are about accountability, either seeking it or the lack of it. In some cases, there is a clear public understanding of the process we use for seeking accountability. But when it comes to the causes of the banking crisis, there isn't.
Ireland has a number of what you might call 'accountability institutions'. The reports of Eamonn Lillis's trial for murder are familiar territory for most of us. We know about the role of the judge and jury, the prosecution and the defence. We know that Lillis is innocent until proven guilty and that the prosecution are looking for evidence that indicates Lillis's guilt 'beyond all reasonable doubt'. If it were a civil proceeding, only the lower threshold of 'the balance of probability' would have to be met. And in either case, the trial is held in public and reported daily. Most importantly, the proceeding guarantees some kind of result. Either he's innocent or guilty; and if guilty, the judge will impose some kind of sentence.
However, when it comes to the banking inquiry, we seem to lack a sense of how we get accountability. What is the correct place for the inquiry to occur? Who should be involved? What is the correct threshold for evidence? And what guarantee do we have about the outcome?
Maybe the most pressing question is why is this a choice for the Government? Whatever happened to the idea of the division of powers? In parliamentary democracies, one role of the legislative is to hold the executive to account. In the case of our parliament, we were reminded that Oireachtas committees do not have the right to make judgements about disputed claims of fact. This would appear to be a real weakness.
Why don't we have accountability institutions that get automatically activated for public interest inquiries, in the same way that the courts are activated when the DPP decides to prosecute. It is not unreasonable to suppose that a strong, independent inquiry might uncover some embarrassing findings for the Government. All the most reason why governments should not have the power (and temptation) to set up weak or slow inquiries.
What we have had, over the last couple of decades, are a series of ad hoc decisions by successive governments to use different institutions at different times, including tribunals, Oireachtas inquiries (e.g. DIRT) and various commissions of inquiry, such as the Government is proposing in relation to the causes of the banking crisis. Even institutions of the same type work differently in the detail. For example, bizarrely, the Moriarty Tribunal transcripts are copyrighted to a private company, unlike the other Tribunals, which publish their transcripts online.
The Tribunals have been a hugely costly way of patching the gaps in our system of accountability institutions. Setting up some sort of permanent mechanism that can be activated to deal with public interest inquiries would seem to be a priority, whether it is through giving Oireachtas committees more powers or through some other body.
In relation to the Government's proposed commission, according to the Irish Times, the Minister for Finance has said that "an Oireachtas committee would then have an opportunity to examine the report and call witnesses if it wished". But this exposes another weakness in the balance of power. Except for the Public Accounts Committee, Oireachtas committees are chaired by a Government appointee and they all have a pro-Government majority. Hence, their ability to provide independent and robust analysis is limited, especially if there is anything embarrassing to the Government.
The lack of consistency and potential weakness of public interest inquiries is not the only gap in the system. Yesterday, Transparency Ireland launched a report into the weak whistleblower protection in Ireland. Transparency Ireland argue that: “We know what we know about corruption in our banking system and regulatory failure because of whistleblowers. Yet those who would report wrongdoing in our banks and public service still have little or no legal protection or guidance. The situation doesn’t just leave thousands of people exposed to disciplinary or legal action - it leaves the country exposed to another financial crisis”. They are calling for a universal system, like the one that works well in the UK, which will protect whistleblowers everywhere in the State equally. The full report (PDF) can be read here.
Various whistleblowers spoke at Transparency Ireland's launch yesterday, including Eugene McErlene, who was the internal auditor who exposed overcharging in AIB in 2000/2001. McErlene spoke of the very difficult experience of being "isolated" when he spoke out about the wrong-doing that he uncovered. There simply were no adequate accountability institutions in place to which he could turn to. It was very revealing to read an article from last year in the Irish Independent reporting that McErlene does not hold a grudge against AIB. Instead, his frustration was directed at the Financial Regulator.
The issue of how best to find out the root causes of the banking crisis is not just about the detail of the proposed commission such as who's on it, or how many sittings will be private or public (although these are important details). We need to take a long, hard look at our whole system of accountability institutions, from the Oireachtas to the regulators, which are meant to investigate errors and wrong-doing. And the division of powers in a democratic state requires that strong independent accountability institutions will be activated when the public interest requires them, even if their findings may be embarrassing to the executive of the day.
Ireland has a number of what you might call 'accountability institutions'. The reports of Eamonn Lillis's trial for murder are familiar territory for most of us. We know about the role of the judge and jury, the prosecution and the defence. We know that Lillis is innocent until proven guilty and that the prosecution are looking for evidence that indicates Lillis's guilt 'beyond all reasonable doubt'. If it were a civil proceeding, only the lower threshold of 'the balance of probability' would have to be met. And in either case, the trial is held in public and reported daily. Most importantly, the proceeding guarantees some kind of result. Either he's innocent or guilty; and if guilty, the judge will impose some kind of sentence.
However, when it comes to the banking inquiry, we seem to lack a sense of how we get accountability. What is the correct place for the inquiry to occur? Who should be involved? What is the correct threshold for evidence? And what guarantee do we have about the outcome?
Maybe the most pressing question is why is this a choice for the Government? Whatever happened to the idea of the division of powers? In parliamentary democracies, one role of the legislative is to hold the executive to account. In the case of our parliament, we were reminded that Oireachtas committees do not have the right to make judgements about disputed claims of fact. This would appear to be a real weakness.
Why don't we have accountability institutions that get automatically activated for public interest inquiries, in the same way that the courts are activated when the DPP decides to prosecute. It is not unreasonable to suppose that a strong, independent inquiry might uncover some embarrassing findings for the Government. All the most reason why governments should not have the power (and temptation) to set up weak or slow inquiries.
What we have had, over the last couple of decades, are a series of ad hoc decisions by successive governments to use different institutions at different times, including tribunals, Oireachtas inquiries (e.g. DIRT) and various commissions of inquiry, such as the Government is proposing in relation to the causes of the banking crisis. Even institutions of the same type work differently in the detail. For example, bizarrely, the Moriarty Tribunal transcripts are copyrighted to a private company, unlike the other Tribunals, which publish their transcripts online.
The Tribunals have been a hugely costly way of patching the gaps in our system of accountability institutions. Setting up some sort of permanent mechanism that can be activated to deal with public interest inquiries would seem to be a priority, whether it is through giving Oireachtas committees more powers or through some other body.
In relation to the Government's proposed commission, according to the Irish Times, the Minister for Finance has said that "an Oireachtas committee would then have an opportunity to examine the report and call witnesses if it wished". But this exposes another weakness in the balance of power. Except for the Public Accounts Committee, Oireachtas committees are chaired by a Government appointee and they all have a pro-Government majority. Hence, their ability to provide independent and robust analysis is limited, especially if there is anything embarrassing to the Government.
The lack of consistency and potential weakness of public interest inquiries is not the only gap in the system. Yesterday, Transparency Ireland launched a report into the weak whistleblower protection in Ireland. Transparency Ireland argue that: “We know what we know about corruption in our banking system and regulatory failure because of whistleblowers. Yet those who would report wrongdoing in our banks and public service still have little or no legal protection or guidance. The situation doesn’t just leave thousands of people exposed to disciplinary or legal action - it leaves the country exposed to another financial crisis”. They are calling for a universal system, like the one that works well in the UK, which will protect whistleblowers everywhere in the State equally. The full report (PDF) can be read here.
Various whistleblowers spoke at Transparency Ireland's launch yesterday, including Eugene McErlene, who was the internal auditor who exposed overcharging in AIB in 2000/2001. McErlene spoke of the very difficult experience of being "isolated" when he spoke out about the wrong-doing that he uncovered. There simply were no adequate accountability institutions in place to which he could turn to. It was very revealing to read an article from last year in the Irish Independent reporting that McErlene does not hold a grudge against AIB. Instead, his frustration was directed at the Financial Regulator.
The issue of how best to find out the root causes of the banking crisis is not just about the detail of the proposed commission such as who's on it, or how many sittings will be private or public (although these are important details). We need to take a long, hard look at our whole system of accountability institutions, from the Oireachtas to the regulators, which are meant to investigate errors and wrong-doing. And the division of powers in a democratic state requires that strong independent accountability institutions will be activated when the public interest requires them, even if their findings may be embarrassing to the executive of the day.
Saturday, 24 October 2009
Publishing tax returns, Norwegian style
An Saoi: Thanks to this article on the BBC’s website, I have wasted hours of my own and my employer’s time looking at the tax returns of the rich and famous of Norway. I was able to do this because the Norwegians publish the income returns of all. For example, a Mr. Tore Lie tops the list in 2008 with an income of 101,870,780 NOK or about €12M and he paid 34,164,782 NOK or say €4M in tax. Anyone with a bit of basic Norwegian can read all about him here.
For those with an interest in football, Steffen Iversen - formerly of Tottenham Hotspur and now with Rosenborg Trondheim - earned a mere 5.2M NOK about €600,000 and paid nearly half of it in tax.
Fascinating as the details are, does publishing the information do any good? Or is really just a way of satisfying idle curiosity? Personally I am in favour, but consider the whining farmers made about the publication of their social welfare payments from Dept of Agriculture! Perhaps Ms. Burton should propose it as an amendment in the forthcoming Finance Bill? Any views?
For those with an interest in football, Steffen Iversen - formerly of Tottenham Hotspur and now with Rosenborg Trondheim - earned a mere 5.2M NOK about €600,000 and paid nearly half of it in tax.
Fascinating as the details are, does publishing the information do any good? Or is really just a way of satisfying idle curiosity? Personally I am in favour, but consider the whining farmers made about the publication of their social welfare payments from Dept of Agriculture! Perhaps Ms. Burton should propose it as an amendment in the forthcoming Finance Bill? Any views?
Wednesday, 2 September 2009
NAMA is still not very transparent
Nat O'Connor: Brian Lenihan on NAMA: “...there has been very little criticism on the vast bulk of the legislation. In areas such as transparency and accountability, I am open to suggestions on amendments from the opposition. The bulk of the controversy has focused on two sections of what is a very long bill - and they are the sections dealing with the valuation procedures.”
Not to say there are no valid alternatives, but given that NAMA is Government policy and is likely to go ahead, barring a General Election or other major upset in the meantime, are there indeed no criticisms of the other details of the draft legislation?
I'm working off this copy of the draft proposals.
Rather than produce a massive list, I'm going to focus on additions that would assist transparency and accountability.
One obvious measure would be if NAMA were included under the Freedom of Information Acts. This would ensure that individuals directly affected by NAMA have a right of access to documentation relevant to their cases. It would also allow the public to have access to the background material that informed NAMA's decision making. Inclusion under the FOI Acts would be a useful guarantee of openness, and the confidentiality exemptions in that legislation would protect individual and commercial privacy. Of course, FOI is not enough of a guarantee of openness on its own as the legislation has been weakened so much, but it would be a symbolic step in the right direction, if the Minister is really seeking to increase transparency and accountability.
Another area for openess is around the fact that the Minister will have the right to issue Guidelines or Directions to NAMA (sections 13 and 14). It is important for transparency that these should be public documents as soon as they are issued.
NAMA will be obliged to provide a Committee of the Oireachtas with "such information as it requires" (section 51), but the Government generally retains a majority vote on all these committees. It would be much better if some mechanism ensured that Opposition parties on a committee could call for information that they deem necessary to perform their duty of holding NAMA (and the Government) to account.
The Minister is to have the power to require NAMA "to report to him or her, at any time and in any format that the Minister directs, on any matter," (section 49). And all such reports will automatically be "deemed to be confidential information". Would this confidentiality clause prevent the Minister from disclosing one or more of these reports? Or limit his/her ability to answer questions to the Oireachtas? This clause could be deleted and the information would still be protected by the confidentiality provisions in the Constitution, Official Secrets Act, Freedom of Information Acts and Data Protection Act.
Of further concern is the fact that the NAMA Bill proposes to introduce new confidentiality provisions and offences (sections 171 and 7 respectively). Ireland has more than sufficient information law to regulate such matters. These provisions suggest a worrying concern for secrecy and are discouraging, despite the Minister's claim that he is open to suggestions for how to make the operation of NAMA more transparent.
Not to say there are no valid alternatives, but given that NAMA is Government policy and is likely to go ahead, barring a General Election or other major upset in the meantime, are there indeed no criticisms of the other details of the draft legislation?
I'm working off this copy of the draft proposals.
Rather than produce a massive list, I'm going to focus on additions that would assist transparency and accountability.
One obvious measure would be if NAMA were included under the Freedom of Information Acts. This would ensure that individuals directly affected by NAMA have a right of access to documentation relevant to their cases. It would also allow the public to have access to the background material that informed NAMA's decision making. Inclusion under the FOI Acts would be a useful guarantee of openness, and the confidentiality exemptions in that legislation would protect individual and commercial privacy. Of course, FOI is not enough of a guarantee of openness on its own as the legislation has been weakened so much, but it would be a symbolic step in the right direction, if the Minister is really seeking to increase transparency and accountability.
Another area for openess is around the fact that the Minister will have the right to issue Guidelines or Directions to NAMA (sections 13 and 14). It is important for transparency that these should be public documents as soon as they are issued.
NAMA will be obliged to provide a Committee of the Oireachtas with "such information as it requires" (section 51), but the Government generally retains a majority vote on all these committees. It would be much better if some mechanism ensured that Opposition parties on a committee could call for information that they deem necessary to perform their duty of holding NAMA (and the Government) to account.
The Minister is to have the power to require NAMA "to report to him or her, at any time and in any format that the Minister directs, on any matter," (section 49). And all such reports will automatically be "deemed to be confidential information". Would this confidentiality clause prevent the Minister from disclosing one or more of these reports? Or limit his/her ability to answer questions to the Oireachtas? This clause could be deleted and the information would still be protected by the confidentiality provisions in the Constitution, Official Secrets Act, Freedom of Information Acts and Data Protection Act.
Of further concern is the fact that the NAMA Bill proposes to introduce new confidentiality provisions and offences (sections 171 and 7 respectively). Ireland has more than sufficient information law to regulate such matters. These provisions suggest a worrying concern for secrecy and are discouraging, despite the Minister's claim that he is open to suggestions for how to make the operation of NAMA more transparent.
Subscribe to:
Posts (Atom)