Cowen – Lenihan rift continues

‘We live in an island and people will make their choices,’ Mr Cowen said yesterday. He was speaking about citizens of the Republic shopping in the North, a phenomenon that continues to undermine jobs in this jurisdiction. Insiders have interpreted this as a coded attack on Finance Minister Brian Lenihan, who referred to cross-border shopping as ‘unpatriotic.’

The two are said to be deeply divided on the economy. Mr Cowen has suggested that ‘something must be done to tackle the economic downturn’ while Mr Lenihan claimed this week on BBC’s Newsnight that Ireland has a ‘thriving’ economy.

The Government was to meet the social partners for talks on the proposed €2bn talks yesterday, but neither Mr Cowen nor any of his Ministers turned up. Instead, the talks, which featured no proposals, were chaired by Dermot McCarthy, secretary general to the Government. Mr David Begg was ‘surprised’ that there was ‘nothing very, very deep’ on the table.

Even insiders are unclear as to why crucial talks are being chaired in the absence of Government Ministers, and why the deadline for progress has been moved from this Tuesday to ‘the end of the month.’

Clear Blue Water

The first commandment enshrined in the Ethics in Public Office protocol is loyalty, Minister for Finance Brian Lenihan claimed today. ‘Loyalty to ones friends and donors is a core principal of the Fianna Fail party,’ he said.

The Minister agreed that giving oneself secret loans of €129m was ‘misconduct.’ He also admitted that the misconduct had caused ‘huge reputational damage’ to the bank.

‘But that’s all in the past now. We need to move on. We know from the Northern Ireland experience just how bitter things can get when mutual recriminations abound. As far as the Government is concerned the new, nationalised Anglo Irish Bank has clear blue water between itself and the misconduct that emerged in recent weeks. What’s past is past and I don’t want people harping on about it.’

The Minister asserted that there were no more skeletons in the Irish banking closet and vigorously denied that the past would come back to haunt the Government.

Minister for the Environment John Gormley said the decision had been taken in the national interest. ‘We back everything. Just give efficient light-bulbs the go-ahead and we’re yours,’ he said.

Budget Glas

The Finance Bill published today has a distinctly green taste.

1 aim, 4 objectives
Announcing the Bill Mr Lenihan said he wants:
to put in place measures to enhance our economic performance,
to maintain and enhance our international competitiveness,
to support enterprise
to restore stability to the public finances

4/7 Green measures
The Bill contains about 7 headline makers, 4 of which will please green supporters:

€200-a-year levy on car parking spaces in urban areas
€10 departure tax on airline passengers
Tax incentive for certain energy-efficient equipment
Tax relief of up to €1,000 a year for the purchase of bicycles and cycling equipment.

AMDG measures
Two more are concerned with social justice:
3% levy on incomes over €250,000 (should bring in €60m)
Minimum wage earners excluded from 1% income levy.

Finally the Capital Acquisitions Tax, which covers inheritance and gifts, increases by 22%.

The Next Steps:
The rest of our near future will be decided by the governor of the Central Bank, the Financial Regulator and PricewaterhouseCoopers. Mr Lenihan received all three yesterday, and is expected to either decide a way forward based on what they tell him or commission a report which will put their opinions in a glossier format.

Sensing a bargain, international private investment firms are expressing an interest in buying stakes in one or a number of our banks.

Liquiditas

The Government’s guarantee scheme is to be extended to foreign-owned banking groups with ‘significant’ operations in the State, the Minister for Finance Brian Lenihan said today.

In a statement the Minister said Ulster Bank and First Active; Halifax Bank of Scotland (Ireland), IIB Bank, owned by Belgium's KBC; and Postbank, a joint venture between Belgian-based Fortis and the Irish post office; would be eligible for the scheme.

The Minister for Finance said the scheme was being extended ‘to certain banking subsidiaries in Ireland with a significant and broadbased footprint in the domestic economy.’

Taoiseach Brian Cowen has threatened Irish consumers that if confidence in global financial institutions is not restored by Monday the Government will continue to nationalise institutions. Insurance companies, public houses and ailing restaurants will be the next businesses to avail of the guarantee.

The Taoiseach has warned he will not tolerate any abuse of the Government’s bail-out scheme.

By including the foreign-owned banks the State is increasing its potential liabilities under the scheme by approximately 10 per cent to €440 billion. As the Budget deficit amounts to €9 million, the scheme has raised concerns regarding the ability of the State to shoulder the guarantee.

‘We don’t have the money ourselves,’ said the Minister, ‘but our credit’s good.’

Budget plan revealed

Two key cuts have been revealed by the Minister for Finance this weekend.

In a decision that may prove unpopular, medical cards for over-70s are to be withdrawn.

‘This isn’t as bad as it sounds,’ said the Minister for Finance. ‘I have an uncle in Westmeath who’s always at the doctor’s, but it’s just to socialize. In some ways the waiting room is the new pub in rural Ireland. Taking your perscription is just something to do.’

‘At that age, having to remember anything keeps you on your toes. During the Celtic Tiger such practices were viewed benignly. But in the current climate the elderly will have to find ways of fighting isolation that are less costly to the public coffers.’

The second move is sure to send ripples of discontent through all Departments. In a move that will generate hundreds of millions for the exchequer, Mr Lenihan plans to let the entire civil service go.

The Finance Minister’s dislike of quangos was expressed as far back as two years ago, but his concern over the quality of the civil service has been longstanding.