Why does it cost so much just to buy and sell something?

Late last year, the ECB issued a press release and  this document about the cost of making a payment (like handing over cash, writing a cheque or sending a payment by direct debit). The question it prompts is ‘why does it cost so much to do something as simple as making a small payment?’ More worryingly it makes you wonder, ‘Why is cash still the cheapest way to do payments, despite all the problems of security, handling and so on that go into a cash payment’? The document is as as infuriating to digest and understand as it is interesting in its subject matter and approach.

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The Irish Government Accounts and what Kevin Cardiff did wrong.

NamaWineLake comments on the €3.6bn Irish government mis-accounting scandal. Basically, the national debt was miscounted and the boss of the Department of Finance (Kevin Cardiff) was called into the Public Accounts Committee.

NamaWineLake says that the error was (a) statistical and (b) not a cash item and suggests that the matter is therefore less serious. I think this is a mistake.

It is not true to call the error simply a ’statistical error’ or to forgive it because it was not a figure that directly relates to cash or because it does not directly effect interest payments. It is an accounting error. (Arguably, accounting is a species of statistics, but that would require a tendentious argument.) Regardless of what type of error it is, it is a very significant error indeed. Three billion, six hundred million euros is an awful lot of wonga, whatever way you consider it.

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IT expenditure and failure – submission to public expenditure consultation

Re: Government Expenditure Review

Dear Minister,

I’m writing someone who has worked in various ways with government over the last several years, in particular in relation to technological projects. Principally these were:

• postcodes (through my role with NSAI/ICTSCC)
• various transport IT projects, including the integrated ticketing system, ‘real time passenger information’, and the ‘travel planner’.

Without exception the outcome from these projects has been disastrous. The problems were perfectly forseeable. My conclusion is that our whole procurement system is broken and this is actually damaging our country. This is not just about spending too much, it’s also about total failure to deliver.

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Is the eircom dream finally over?

The dream that once was eircom was that a 75-year-old semi-state company could be transformed into the major national broadband provider through the combination of union/worker ownership and private capital. That dream now seems to be well and truly dead. What put the nail in the coffin in the last week or so is that eircom’s cable competitor, UPC,  is now offering 12 Mbps speeds as its entry-level broadband service. This means that UPC’s cheapest broadband package is faster than eircom’s most expensive.

This is bad, but it isn’t necessarily fatal. Eircom can come out of this, but it will require some big steps.

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Government and brokenness

Conor O’Neill writes about ‘where does Ireland go from here?’

I agree with Conor on what is wrong but I basically disagree with his views on how it should be resolved. Basically, Conor’s view is that:

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Fianna Fail plays another mé féin move.

They have lost the support of the Dail, but they want to stay on in government and try and pass a budget. All this will do is cause a crisis when the budget fails to pass. It will give the IMF and the others the shakes. Even if the budget does pass, there will have to be a new budget in 2011 when the new government gets in and that will cause more mayhem and confusion.

What is this all about?

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Change is a comin’, if we want it

I was down at government buildings tonight and following the tweets about what was happening, which was a lot more informative than RTE.

It is strange times, but what does it all mean? What is the significance of it? And what happens next?

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Ten reasons not to be optimistic about Ireland

1. The government has no plan. It is taking all the government’s energy and ingenuity to plan as far as the middle of next month. (On the bright side, no one is expecting them to be in government for much beyond March or April.)

2. The opposition has no plan. They should have plenty of time to come up with a strategy for governing Ireland for the next ten years but they haven’t. A good strategy, a bad strategy, a left wing strategy, a right wing strategy, even a right-on strategy. Nothing. (On the bright side, there are people who can help them come up with a plan, if they just look around themselves and listen. There is a great plan to be hatched, but it will take time and consideration.)

3. The ‘permanent governmment’ of civil servants has no plan. The younger generation of civil servants are just not coming up with the goods at present. They are not seeing the future, and from appearances, it looks like they have no idea what we should do next as a country. I do not know if this is because they are incapable, or whether it is because they are still under the thumb of the shortsighted idiots who got us into this mess. (On the bright side, we now benefit from people in Ireland who have been involved in public administration in every country in the world, something we never had before. We can bring their expertise to bear.)

4. Good people are talking about leaving and some of these people are starting to leave. In fact, the government is hoping some 100,000 will leave. Some of this is inevitable as we cut spending in areas like university R+D. But there doesn’t seem to be any planning or consideration or strategy. (On the bright side, we can still get the most critical people to stay,if we figure out what we are doing.)

5. We need reform, but there is no reform going on. We are fooling ourselves that the likes of the Croke Park Agreement will bring reform, but we all know the truth, that these changes are just play-acting, part of a concerted ongoing attempt by government, unions and business to avoid reform as much and as long as possible.

For instance, our national transport system is a travesty, despite billions of euros of investment. Fewer people use public transport now than in 2002, even though the capacity of the service has been increased by 20 percent in the meantime. The people in charge refuse to acknowledge that anything is seriously wrong. (On the bright side, if we just reconsider how we operate and market transport, like they did in Los Angeles, we could have one of the best, most effective systems in the world.)

Ordinary working people know reform is needed and are ready for personal sacrifice. The core front-line staff of the public service are just waiting for leadership, waiting for someone to show them the way, and resolve what needs to be done.

And anyway, the scale of the fiscal crisis will mean that reform is going to be forced upon us all, whether the people who control the levers like it or not.

6. We are fooling ourselves fiscally. Enormous fiscal adjustment is needed, and the situation is far more than the government is admitting. Whether you do less cuttingin the short term, or more cutting in the long term, it doesn’t really matter. We need to radically change the way public services are structured in this country. (On the bright side, there is plenty of capacity in place to provide good services, because of the availability of skilled people and a surfeit of buildings that can be adapted.)

7. We lack certain core capabilities. We do not have enough science and engineering graduates. We do not have enough marketing and business capability to turn good ideas into revenue. Some of this is actual ability, most of it is planning, and a lot has to do with confidence and putting the best foot forward. (On the bright side, we can address these problems, through immigration and improved education/training.)

8. We are laggards. We are not forward-looking enough as a nation. While the UK and the US are thinking about reform of government through transparency and open data, we are still staring at our navels, wondering where it all went wrong. We should be like the Icelandic people, demanding transparency for the future so that it doesn’t all go wrong again. These types of initiatives should be easy in a small country like Ireland, where the scale of everything is manageable, and everybody knows one another. (On the bright side, we have a young population, as sophisticated and knowledgeable as young people anywhere.)

9. We have gotten ourselves a bad rap. We are being ridiculed abroad. We have screwed things up for the whole European Union and the Euro. Our leaders have left us looking like fools. On the other hand, there is goodwill towards Ireland and we can turn it around if we start doing the right things.

10. The whole thing seems hopeless at times. And it is hopeless, if we carry on as a nation doing the same stupid things, acting in the same stupid manner. But things can change. We can change them.

Ten reasons to be optimistic about Ireland

1. There is finally going to be change in Ireland, real change. Old things are going to be torn down. They need to be torn down because they cost too much, deliver no value,  and we can’t afford them anymore. They should have been torn down long ago. The fiscal crisis is the catalyst for dealing with deep problems.

This might not be the ideal sort of change. It is coming too late. It would have been better to reform when there is money around. But better late than never.

2. There are loads of incredibly brainy and talented people in Ireland. To take my own pet area of transport, have a look at Hit The Road. A transport planner built with no cooperation, funding or assistance from the backward-looking transport providers. Brilliant.

3. Our Department of Finance, the Achilles heel that led to our destruction, is now under adult supervision.

Since September, a permanent team of ECB “observers” has taken up residence in the Department of Finance. Although of many nationalities, they are known there, dismayingly but inevitably, as “The Germans”.

(Source: Morgan Kelly, Irish Times)

4. There is going to be an election soon. This will cause some instability, but it will at least mean that the country will no longer be in the hands of the wide boys and piss artists who ran it into the ground.

5. Property and goods are coming down to something like a reasonable price now (although no one can get credit to buy anything, but that will sort itself out too). You can actually buy a house for under 200,000 euros. You can have a decent standard of living.

6. Wages are becoming realistic and people are available to hire. In international terms, this makes us viable and competitive again.

7. There is a global recovery, although it is fragile. We are a globally oriented economy, so that’s good for us. Exports of services have stayed steady through the crisis, indicating that our customers have confidence in us. (However, these figures do need to be handled using gloves, see below.)

8. Ireland has a gateway to the world. That is because there is a lot of multinational presence here. That is important because it gives us a gateway to the world. It gives us an international outlook (or at least it should). It gives our people practical hands-on understanding of the global economy.

(What gives us this gateway? Some people think our strong export edge is because of how competitive we are. In reality all it proves is that we have a competitive tax system. But how we got this advantage isn’t the point, what matters is how we take advantage of it).

9. We have plenty of infrastructure. We have loads of new roads and transport capacity. There are loads of houses and apartments. All this is in place and means that we are ready for massive growth. (However, we really have to think about and plan how we actually use this infrastructure. Higher landing charges are unlikely to bring more visitors to Dublin Airport, for instance.)

10. The last point comes back to people. We have a young population, unlike most of the Western World. This is their home and they’ve weathered the crisis so fare, in spite of the fact that some of them are lumbered down with debt. They like it here and they want to be the engine of growth that will make this a great place to grow old and retire in.

Ireland’s Nokia

Ireland has a world-leading retail brand, which is famous among consumers all over Europe and the world. Not only that, but it has developed into the uncontested leader in its field, in terms of volumes and profitability. It is the biggest international player. It is innovative and has opened new frontiers. It provides services in neglected regions. It has helped the poor to better themselves. It has helped build political and social cohesion.

This company is Ryanair, the world’s favorite airline. Despite having the biggest international airline in the world based in our yard, we in Ireland cannot figure out how to sort out our tourism problem. We wonder what to do about unemployment after the closure of SR Technics as we turn away Ryanair jobs and write nasty articles full of innuendo. At the same time, we bring in the man who closed down Sabena and try to convince ourselves that he is somehow going to turn around our sub-scale flag-carrier into a European player. This is just hubris.