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7 Oct, 2015

IMF shows confidence in Ireland’s economic prospects

By |2018-03-16T12:05:15+00:00October 7th, 2015|News|Comments Off on IMF shows confidence in Ireland’s economic prospects

Tom Ferris is a Consultant Economist specialising in Better Regulation. He was formerly the Department of Transport’s Senior Economist.

 

 

IMF SHOWS CONFIDENCE IN IRELAND’S ECONOMIC PROSPECTS

 

Introduction

The International Monetary Fund (IMF) has just published its latest global economic forecast. It foresees lower global economic growth in 2015 compared to 2014. On a regional basis, it forecasts a modest pick-up in advanced economies. And, by contrast, slow growth is forecast for emerging markets, mainly reflecting weakness in the large emerging economies, especially China and oil-exporting countries. But Ireland remains on track in its economic recovery.1

No great surprises

The forecasts contain no great surprises. Advance speeches have been signalling ‘slow-growth’. In a speech in Washington on 30 September,Christine Lagarde, Managing Director of the IMF, shared the information that

“...global growth will likely be weaker this year than last, with only a modest acceleration expected in 2016. The good news is that we are seeing a modest pickup in advanced economies... The not-so-good news is that emerging economies are likely to see their fifth consecutive year of declining rates of growth”.2

Composition of Growth

In this most recent forecast, the global economy is expected to expand by just 3.1% this year, and 3.6% next year. This represents a downward revision from previous forecasts; by 0.2% in both cases. It is pointed out that even though wealthy countries are showing signs of recovery – led by US growth forecasts at 2.6% for 2015 and 2.8% for 2016 – the world economy is on track for its worst year since the global recession of 2009. The IMF concludes that "

[d]ownside risks to the world economy appear more pronounced than they did just a few months ago ...”

Prospects across the major economies remain uneven. Relative to last year, the recovery in advanced economies is expected to pick up slightly, while activity in emerging markets and developing economies is projected to slow for the fifth year in a row, primarily reflecting weaker prospects for some large emerging market economies and oil-exporting countries.

With declining commodity prices, depreciating emerging market currencies, and increasing financial market volatility, downside risks to the outlook have risen, particularly for emerging market and developing economies. Global activity is projected to gather some pace in 2016. In advanced economies, the modest recovery that started in 2014 is projected to strengthen further. In emerging market and developing economies, the outlook is projected to improve: in particular, growth in countries in economic distress in 2015 (including Brazil, Russia, and some countries in Latin America and in the Middle East), while remaining weak or negative, is projected to be higher next year, more than offsetting the expected gradual slowdown in China.

The IMF recognises that its forecasts are not just about ‘economics’. Political factors are very relevant. In that regard, the IMF note that

“Geopolitical tensions are assumed to stay elevated, with the situation around Ukraine remaining difficult and strife continuing in some countries in the Middle East. These tensions are generally assumed to ease, allowing for a gradual recovery in the most severely affected economies in 2016–17”.

Ireland’s Economic Performance

Against a sluggish global outlook, the IMF is quite optimistic about Ireland’s prospects. The Table below shows that the IMF has increased its forecast for growth in Gross Domestic Product between April 2015 and October 2015. With the expected better economic performance, the unemployment rate is forecast to fall further, with an 8.5% unemployment rate by 2016. This is a remarkable reduction from 15.1% in February 2012. As regards consumer price forecasts, the IMF sees no change as between the forecast for April 2015 and that for October 2015.

              Table: IMF Forecasts for Ireland, April 2015 and October 2015

2014

2014

2015

2015

2016

2016

IMF Forecast Dates

Apr-15

Oct-15

Apr-15

Oct-15

Apr-15

Oct-15

Real Gross Domestic Product (% annual change)

4.8

5.2

3.9

4.8

3.3

3.8

Consumer Prices (% annual change)

0.3

0.3

0.2

0.2

1.5

0.2

Current Account Balance (% of GDP)

6.2

3.6

4.9

3.2

4.8

3.0

Unemployment (%)

11.3

11.3

9.8

9.6

8.8

8.5

5 Oct, 2015

The Problem with the Bail Bill

By |2018-03-16T12:05:17+00:00October 5th, 2015|News|Comments Off on The Problem with the Bail Bill

Michael Williams is a retired solicitor; he practiced as a lawyer for 30 years. He left the firm at which he was a partner to become a Professional Mediator. He has served on the Board of Academy of Family Mediators, and chaired its Ethics Committee. He is also the author of Serving the People?: The Need for Reform in the Irish Legal System (Liffey Press; 2013), which argues for major reform in the Irish legal system, and he has contributed to many other media outlets on Court reform.

The Problem with the Bail Bill

The Bail Bill 2015 proposes important changes in our law, so we should examine it carefully. Our criminal justice system is founded on the proposition that a citizen accused of crime is innocent unless, at his trial, he is proved guilty “beyond reasonable doubt”. Someone standing trial is not “presumed” to be innocent. He is innocent unless a fair trial leads to a finding that he must be guilty, because no other possibility is credible. We start from these propositions:

  • An accused awaiting trial is an innocent person.
  • Imprisoning him will inflict incurable injustice if he is acquitted at his trial, as the law presumes he will be.
  • However, society is entitled to ensure that an accused does not abscond, and does not do anything – such as trying to intimidate witnesses – that might prevent a fair trial.
  • Only a judge, not a member of the Gardaí, should authorise imprisonment of an accused person pending trial – though the Supreme Court’s decision in Ryan v. Governor of Midland Prison raises “reasonable doubt” about judges as protectors of citizens’ rights.

The presumption of innocence requires authorities to watch their language. We may say an accused is innocent unless proved guilty, but not “until proved guilty”. “Until” assumes it will happen, that is, that the accused is guilty. Deplorably, the Department of Justice’s announcement of the Bill uses this word.

Looking at the Bill, Section 5 requires someone seeking bail to prepare a detailed statement of his assets, earnings, etc., and of his previous convictions, and makes him guilty of a crime if his statement is inaccurate or incomplete. The Section expects the judge that hears the bail application to take previous convictions into account and assume the accused is probably guilty of the current one, and should be locked up to prevent him from committing more crimes. Extraordinarily, the Section allows the judge who hears a bail application to prohibit publicity if reporting it might prejudice his trial. The presumption of innocence is to be preserved at the ultimate trial, though ignored at a bail hearing.

Section 16 provides for bail being granted subject to a condition “that the accused person shall not commit an offence while on bail”. At first sight, that seems absurd. How can it be proved that this condition has been broken without a trial, presumably after the trial on the first charge, when, whatever its outcome, bail will no longer be needed? But it has another purpose. You may be willing to act as a surety for someone close to you (for example, a family member who is a drug addict) if your only obligation is to see that he turns up for his trial. But you will think twice if you know your surety will be forfeited if he commits a crime in the meantime. The intention, clearly, is to make it harder for an accused to get bail by discouraging people from acting as sureties.

Section 16 proposes that someone on bail may be arrested and a judge may rescind his bail if the Gardaí think he is going to break one of the conditions of his bail. It also allows the driving licence of someone accused of a serious driving offence to be suspended pending trial. If, like so many, his job depends on his being able to drive, he will presumably lose his job while awaiting trial, and will not get it back even if he is acquitted.

The following is a fair summary of Section 27:

“If someone is accused of a crime, a judge who thinks he’s probably guilty, is a habitual criminal, and is likely to do it again, should order him to be locked up without bail – especially if he seems to be an alcoholic or a drug addict.”

In summary, Sections 5, 16 and 27 all propose to substitute preventive detention for the presumption of innocence.

Section 28 would allow a “complainant” to give evidence on a bail hearing. Obviously, lawyers for the accused must be allowed to cross-examine the “complainant”, and the hearing will become a mini-trial. So an accused is to be tried twice, first to see if he should be deprived of his freedom pending trial, and then to see if he is guilty. The injustice of this hardly requires comment. There is no mention of the additional legal fees the State must incur by holding two trials.

Nor is there any mention in the Bill or the Government material introducing it of the obvious response to crimes committed on bail: speedy trial. Someone deprived of freedom pending trial should be tried within days—at most, weeks—to minimise the inevitable injustice he will have suffered if he is acquitted. If the authorities are afraid an accused on bail may commit crimes, the best way to prevent that, and protect the rest of us, is, again, a speedy trial.

In setting aside the presumption of innocence, the Bill proposes to demolish a fundamental protection not only for habitual criminals but for all citizens against State oppression. It will make little difference to what I call “criminals of greed” such as financial fraudsters or organised drug dealers. It is not aimed at them, but at unfortunates who are addicted to drugs or alcohol and whose addiction pushes them into crime. That is, at people who need help, not punishment, whom we as a society have failed, and continue to fail.

It may be politically expedient before an election for the Government to seem “tough on crime”. But this Bill abuses not only legal rules but fundamental principles that protect all citizens from injustice. We should reject it.

2 Oct, 2015

Smart Public Procurement: More flexible, more transparent, and more cost effective

By |2018-03-16T12:05:17+00:00October 2nd, 2015|News|Comments Off on Smart Public Procurement: More flexible, more transparent, and more cost effective

A full house at the Westin Hotel

 

PAI Director Don Bergin welcomed a full house at the Westin on Wednesday, 30 September 2015. The theme of this year’s annual public procurement conference was “Smart Procurement”. According to Mr Bergin, this means a “more flexible, intelligent way to adopt public procurement” practices.

 

Minister of State at the Department of Public Expenditure and Reform, with special responsibility for Public Procurement, Simon Harris TD, was first to the podium. Governmental priorities were his topic of conversation.

Minister Harris addresses the crowd

 

He noted that the remit of the state was two-fold: it has to make sustainable savings, while still using its “immense purchasing power” to encourage SMEs. The OGP, in cooperation with the Department, released data recently which shows that in recent years, 93% of spending stayed within the State, and 66% of this went to SMEs.

His office have accelerated some of the new EC directives to bring themselves up-to-date. This includes moving into an online sphere, and breaking larger contracts down in to lots.

Of particular interest to the Minister was a targeted social clause framework, “a massive tool whereby one can achieve social good”. The Devolved School Building Programme was one example of this type of community benefit clause, a programme where the public and private sector work together to reach a mutually beneficial and successful outcome.

 

Minister Harris was followed by Claudio Romanini. Mr Romanini, of the European Commission, aimed to outline the forthcoming new directives. They are what he dubbed “a series of compromises”.

“What we did was try to favour smart procurement by structuring the directive as a toolbox: having provisions for the different procedures, making it obligatory for member states to put them all in place. Authorities then have the ability to choose the particular procedure for the type of procurement they intend to do.”

At the end of the day, he said, it is important to remember that these provisions are not “one size fits all”, and flexibility was key when drafting them.

They also make procedures much simpler, more concise. The introduction of online systems, featuring, for example, the European Single Procurement document, will make the application process much simpler for sellers. This is expected to be in place by December. To be smart about the new system, you must really analyse your need, and organise your contract before you go to tender. “Most of the effort will be made before launching,” said Romanini. Paul Quinn later commented that “lowering the burden on bidders to the minimum is welcome”.

“The new directives will bring about a cultural revolution”, wherein all parties are less burdened by strict legislation and bureaucracy.

 

Paul Quinn, of the Office of Government Procurement, gave a brief history of the OGP: set up during the recession, its main aim was lowering costs and getting better value for money. This is something that “has not gone away, even though we are coming into better times”. The savings they make, per annum, equates to 2,000 frontline jobs. Whereas when they were set up, one in every four euro was going outside the state, now less than 7% does. Ultimately, the aim of the OGP is bringing transparency to public expenditure. For the first time, according to Mr Quinn, the OGP’s spend analyses will “try to give a sense of how and why the money was spent”.

 

Hugh Cummins, senior associate with Philip Lee, closed the first session with a discussion of systems and strategies for smart procurement.

The main system that can be used for smarter procurement, according to Mr Cummins, is competitive dialogue. This is a way to come up with creative solutions for your problem. You can take the information you learn from the dialogue process, distill it down and come up with a solution to your problem. Then, you can put out a contract for the supply of that solution. “At the start, you don’t know how you’ll solve your problem; now you do, through competitive dialogue.”

He also lauded the introduction of the electronic options, which he dubbed a “reverse eBay”. His final advice was to “look at the procedure front-to-back, back-to-front, be ready for stumbling blocks. Preparation is key.”

 

Discussion was lively throughout the morning

 

After a short break, Kerri Crossen, a partner at Philip Lee, took to the podium to discuss possibly remedies for disputes.

She noted that in the past there may have been reluctance to bring about challenges to contracts, as there was a lot of sway held in interpersonal relationships where marketplaces were small. However, in the last eighteen months, “the area of procurement litigation has become very active. Litigation in high courts increased by large amounts in the last few years.”

She spoke at length about the new remedies regulations which have come in of late. These remedy regulations were greatly changed by OCS v Dublin Airport Authority (Supreme Court July 2014). They also have retrospective effect.

On the new regulations, Ms Crossen said we will need to see how they are tested in the High Court. “While the new legislation beds down, watch this space”.

 

Patricia Callan of the Small Firms Association was next up, with an examination of the contribution made by small firms to procurement—which she said was notable. “We are a nation of small businesses”, with 84% of our SMEs being micro, and 97% small.

She, respectfully, refuted the OGP’s claim that 66% of government procurement went to small firms. Instead, it went to SMEs. The distinction, she said, is that we only have 500 large companies in Ireland. What is medium to the EU is a large company here. This definition of SME distorts the accurate view of where business is going.

She urged buyers to consider implications of their decisions in procurement, not just from a financial standpoint. “How many people have lost their jobs because of your decisions?

[It’s] not just about saving money. You do need to look at it in a bigger, macro-micro picture.”

Her main piece of advice was, “rather than reinvent policy, [we should] just implement the rules we do have”.

 

Catherine Carmody of Kerry County Council said that smart procurement practices is at the heart of what her office do. They, like the OGP, have moved on from simply trying to make savings. Their number-one priority is to be compliant and transparent.

She favoured a move towards a Most Economically Advantageous Tender (MEAT) Framework, which not only looks at the immediate monetary cost of the tender, but of the cost through its whole life-cycle. It forces buyers to be more careful about how they tender. She noted that there has been times when her office has been under pressure to publish a tender before it was “ready”. Ms Carmody said, “we can’t. If we run with them, then we realise they’re not ready, we may have to collapse them. This takes longer,” as well as costing additional money.

Ultimately, she said, with inflation, costs are increasing and it’s very hard to prove there are savings there. The main savings are savings in efficiencies.

 

Throughout the morning, a number of points were reiterated throughout the presentations. Firstly, that the new directives will bring about plenty of savings in efficiencies. The less time spent on the process, the better. The less of an encumbrance the process is to buyers and bidders, the better.

Secondly, as with all undertakings of the government, procurement should be a transparent process. The new directives aim to increase both transparency and accountability.

Smart procurement, according to many of our speakers, does not only entail selecting the lowest-price tender. There are many costs to consider, which are not monetary.

Finally, a strong theme of the morning was that we have, of late, made headway towards a more flexible, broadly-advantageous, smart system of procurement, but there is still a ways to go.

 

This conference was kindly sponsored by Philip Lee

 

 

Speakers (in running order)

Don Bergin, Director at Public Affairs Ireland (First session chairperson)

Simon Harris TD, Minister of State at the Department of Public Expenditure and Reform with special responsibility for Public Procurement

Claudio Romanini, European Commission

Paul Quinn, Government Chief Procurement Officer

Hugh Cummins, Senior Associate, Philip Lee

Thomas Hunter McGowan, CEO, Intertrade Ireland (Second session chairperson)

Kerri Crossen, Partner, Philip Lee Solicitors

Patricia Callan, Director, Small Firms Association

Catherine Carmody, Procurement Manager, Kerry County Council

1 Oct, 2015

Negotiating TIPP: Are the EU and USA getting any closer to a Transatlantic Trade and Investment Agreement?

By |2018-03-16T12:05:13+00:00October 1st, 2015|News|Comments Off on Negotiating TIPP: Are the EU and USA getting any closer to a Transatlantic Trade and Investment Agreement?

Tom Ferris is a Consultant Economist specialising in Better Regulation. He was formerly the Department of Transport’s Senior Economist.

 

Negotiating TIPP: Are the EU and USA getting any closer to a Transatlantic Trade and Investment Agreement?

Introduction

As the negotiations for a Transatlantic Trade and Investment Partnership (TTIP) between EU and the USA trundle along, it’s creating a mountain of paper and generating quite conflicting views (TTIP is now known as “tea-tip”). The eleventh round of talks is scheduled for mid-October in the US. Supporters of TIPP argue that it will cut red tape and reduce restrictions on investment on both sides of the Atlantic. Opponents argue that it could threaten consumer protection, social rights, health, agriculture, the environment, and data protection. We highlighted some of the issues in a blog last April1. This article looks at some of the latest developments on the TTIP process.

Removing the Secrecy

Up to now, one general criticism was that TIPP negotiations were taking place in secret. The EU has taken this criticism on board and now has a dedicated website providing a wide range of up-to-date information2.

This website contains a wealth of information:

  • a wide range of TTIP documents – including summaries, and the EU's negotiating guidelines and opening positions;
  • a calendar of upcoming TTIP events – including negotiating rounds and stakeholder meetings; and
  • videos and photos.

Filling the Information-gap

In addition, EU officials are engaging widely in debates about TIPP. Just to take one example: on 25 September, Cecilia Malmström, EU Commissioner for Trade, addressed Columbia University on “TTIP and Beyond: EU Trade Policy in the 21st Century. She admitted that TIPP was ambitious, pointing out that

"Our aim is an advanced set of rules on issues like state-owned enterprises, localisation requirements, raw materials and energy. We are also trying to break new ground in international regulatory cooperation – in general and for nine specific sectors including pharmaceuticals, cars and cosmetics”.

The European Commission Representation in Ireland is also making its voice heard. Its website states that, as far as TIPP is concerned,

"...a successful pact is expected to benefit Ireland more than any other EU Member State. That’s because almost half (49%) of Irish exports outside of the EU end up in the US, compared to the combined average of 16% for all Member States, and 25% of foreign direct investment (FDI) in Ireland comes from the US”.

The Irish Government has also published its views on TIPP. Specifically, the possible impact of TTIP on Ireland was examined in a report prepared for the Irish Government. The consultants, Copenhagen Economics, undertook the study and this is available here. The Irish Government accepts that legitimate concerns have been raised about the possible negative impact of TIPP on Ireland. Anxious that the negotiations be transparent,  the Department of Jobs, Enterprise and Innovation has provided a response to a number of the issues raised, such as the Investor-to-State Dispute Settlement Scheme, Public Services, Regulatory Cooperation, Food Standards, particularly Genetically Modified Organisms and Hormone Treated Beef, and Transparency. The responses are set-out in a briefing note available here.

The views of one negotiator

David O’Sullivan, EU Ambassador to the United States, addressed a seminar in Dublin last September on “Transatlantic Relations and TIPP”. He argued that TTIP “...will be a powerful shot in the arm for Ireland as it rebuilds its economy on a more diversified, sustainable basis”. Notwithstanding the clear benefits to Ireland from trade, the Ambassador acknowledged

"...that there are people and organizations here that are less enthusiastic. This is not surprising coming on the back of a period of difficult austerity which made some people rightly resentful, like they were not at the Celtic Tiger party but somehow have ended up with the bill”.

He went on to discuss issues that have raised concerns, namely Regulatory Cooperation, Investor-to-State Dispute Settlement Scheme (ISDS), and Agriculture. The transcript of David O’Sullivan’s address is available from the Institute of International and European Affairs (IIEA) here.

TIPP negotiations continue

TIPP is far from being a done-deal. Ambassador O’Sullivan summed up the current position as follows: “Negotiators have their work cut out for the coming weeks and months when they meet next month for the 11th round of negotiations”. It is likely that negotiations will continue well into 2016. Further, even if agreement is achieved at ambassadorial level, over all agreement at EU and USA government level will then be required.

From an EU perspective, if the negotiation process is successfully completed, the draft TIPP texts will have to be approved by the twenty-eight EU's Member States in the Council and then ratified by the European Parliament. Even if agreement is achieved at overall EU level, there may still be agreement required at EU Member State level. Depending on the policy areas are covered in the final TIPP agreement, the twenty-eight national parliaments of the EU's Member States might also have to approve the deal. So there is still a long way to go yet.

19 Aug, 2015

Department of Finance’s Consultation on Taxing Expenses of Travel and Subsistence

By |2018-03-16T12:04:08+00:00August 19th, 2015|News|Comments Off on Department of Finance’s Consultation on Taxing Expenses of Travel and Subsistence

Tom Ferris is a Consultant Economist specialising in Better Regulation. He was formerly the Department of Transport’s Senior Economist.

Department of Finance’s Consultation on Taxing Expenses of Travel and Subsistence

 

You still have time to submit your views on the tax treatment of expenses on business travel and subsistence; provided you do it before next Friday (21 August 2015). That is the closing date for the Department of Finance’s current Public Consultation. Specifically, the objective of the consultation is to facilitate a review of the current law and practice in relation to the tax treatment of expenses of travel and subsistence for employees and office holders. This may not be the most exciting topic to hold a consultation on, but it is important to businesses in watching their costs. The Department of Finance Consultation Paper can be accessed here.

The responses to the consultation process will provide an input into the Department of Finance’s review of the law and practice in relation to:

  • the granting of a tax deduction in respect of expenses of travel incurred by employees and office holders, and
  • The circumstances under which expenses of travel may be reimbursed free of tax by an employer to an employee or office holder.

What now?

At the heart of this consultation are the circumstances in which any travel and subsistence expenses should be allowed to be deducted for tax purposes. The law, as it stands, is quite specific; but it is also quite narrow. Section 114 of the Taxes Consolidation Act (TCA) 1997 states that

"Where the holder of an office or employment of profit is necessarily obliged to incur and defray out of the emoluments of the office or employment of profit expenses of travelling in the performance of the duties of that office or employment, … there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed.”

 So the law is clear as to the conditions under which tax may be deducted. The holder of the office or employment of profit must be “necessarily obliged to incur” expenses of travelling and must be obliged to do so “in the performance of the duties of that office or employment”.  In short, there must be a necessity to incur expenses and the expenses must be incurred in the performance of duties.

The Consultation Paper makes the point that the expenses of travel that qualify for a tax deduction are generally restricted to expenses necessarily incurred on temporary absences from an individual’s place of work so long as those absences arise in the performance of the duties of the office or employment. Expenses of travel incurred by those who hold travelling appointments such as travelling salesmen, service engineers and bus drivers, also qualify for a tax deduction.

What is excluded?

The Consultation Paper provides examples of travel and subsistence that do not qualify for a tax deduction. Examples include expenses of travel incurred on journeys from home to work, work to home and between separate employments; these do not qualify for a tax deduction. Specific instances where a tax deduction would not be granted include the travel expenses incurred:

  • by a nonexecutive director on the return journey from home to attend a board meeting;
  • by an external examiner travelling to a third level institution; and
  • by a director (generally of a small company) on the return journey from home to a workplace.

Why review existing practice?

The Consultation Paper admits that differing views have arisen in a number of areas in recent times. It refers, in particular, to the tax treatment of expenses of travel:

  • by employees or office holders on the return journey from home to work;
  • by non-executive directors on the return journey from home to attend board meetings;
  • by directors (generally of small companies) on the return journey from home to a workplace where most of the work is carried out at the workplace but an office is maintained in the director’s home where some administrative work (e.g. issuing company invoices, preparing VAT returns) is carried out;
  • by employees or directors on the return journey from home to a workplace where most of the work is carried out at the workplace but some of the work is carried out in the home; and
  • by employees or directors on the return journey from home to a workplace where a small proportion of the work is carried out at the workplace (e.g. reporting to manager on performance, targets, etc.) but most of the work is carried out in the home. In some scenarios, the individual may opt to carry out the work at home while, in other cases, no workplace is provided by the employer.

The consultation process allows those with particular views on any of foregoing areas to make their views known to the Department of Finance.

Is competitiveness being adversely affected?

The tax treatment of the expenses of non-executive directors raises particular issues for companies competing in international markets.  Some tax practitioners argue that expenses of non-executive directors, including the costs of air travel and hotel accommodation, when incurred wholly, exclusively and necessarily in the performance of professional duties should not be taxable.  According to Sarah Connellan, tax partner with EY Ireland

"In general business expenses incurred by employees and directors can be reimbursed tax-free as long as certain conditions are met...But currently directors who sit on Irish boards – whether they’re multinational or Irish business – pay tax on travel to and from those board meetings, regardless of whether that individual comes from within Ireland or comes from abroad.”1 Where this happens, an additional cost is being incurred by businesses – or directors – and, as a result, places Ireland at a competitive disadvantage when it comes to attracting foreign businesses, as well as overseas-based directors.

Overview

Businesses and directors now have an opportunity to make their views known to the Department of Finance. Any legislative changes relating to the treatment of expenses arising from this current review will obviously be drafted in the light of comments received and in liaison with the Office of the Revenue Commissioners. No legislation makes all taxpayers happy. However, taxpayers will still have the right to appeal to the Appeal Commissioners if they are not happy about the treatment of expenses under any amendments that may be made to existing legislation.  

12 Aug, 2015

SIPTU proposal for new Social Solidarity Contribution to replace USC

By |2017-06-10T23:56:51+00:00August 12th, 2015|News|Comments Off on SIPTU proposal for new Social Solidarity Contribution to replace USC

Ger Gibbons is a researcher with SIPTU, Ireland's largest trade union.

SIPTU proposal for new Social Solidarity Contribution to replace USC

The Universal Social Charge (USC) was introduced in the early stages of the economic crisis, solely as a revenue-raising measure. It remains firmly associated with the years of austerity and a very significant imposition on low- to middle-income earners that should be abolished.

It is time to begin the process of moving from the USC to a new progressive mechanism. SIPTU is proposing a new Social Solidarity Contribution accompanied by a specifically linked Social Solidarity Contribution Credit.

Our proposals are based on four key principles:

i) Retaining the progressive elements of the existing USC;

ii) Dedicating the yield for social investment purposes;

iii) Ensuring transparency as to the use of contributions;

iv) Reducing the charge on low- to middle-income earners.

In order to reduce the current levy on low- and middle-income earners we propose that the current rates and bands should remain unchanged. A new Social Solidarity Contribution Credit of 775 for all income earners earning up to 100,000 should be introduced and a 10% rate (as suggested by the Department of Finance in 2011) should be applied on income over 100,000.

The effect of these measures would be to exempt all incomes up to the Living Wage (i.e. approximately 23,250) and to considerably reduce the levy on other low- to middle-income earners.

The yield from the Social Solidarity Contribution would not go into central exchequer funds. It would be dedicated exclusively to redressing the ongoing social damage caused by the crisis and to addressing the key social challenges now facing Irish society.

The Social Solidarity Contribution would invest in childcare and early-school learning, education, life-long learning and re-training, healthcare, and eldercare services and support for independent living (thereby helping to address the issue of late discharges from hospitals).

Contributions would also be used to prepare for the ageing of Ireland’s population in the years ahead, such as by developing the statutory component of a second pillar pension system.

In contrast to the existing USC (which simply merges into central exchequer funding), the Government would be required to provide clear and regularly updated information to the public as to how SSC contributions are being used. Countries such as Norway, Sweden and the UK have begun to do this over recent years. Ireland should now do the same, starting with the SSC.

There is little doubt that some aspects of the existing USC are progressive, particularly in comparison to other parts of the Irish taxation system. The USC applies to many different types of income and has fewer exceptions and reliefs. This means that wealthier income earners cannot avoid paying the USC whereas they can (and do) quite easily escape other forms of taxation. These progressive features should not only be retained under the Social Solidarity Contribution but should be “exported” across the wider Irish taxation system so as to ensure all income earners pay their fair share.

Despite these progressive features, other aspects of the USC are deeply regressive. The charge amounts to a “flat tax” on all income between 17,576 and 70,044 with the 7% rate applying throughout. There are also substantial “step-effects”, with sizeable jumps in liability over a relatively narrow increase in income (e.g. from 1.5% to 3.5% over 12,012 and 3.5% to 7% over 17,576). Furthermore, the standard rates do not increase in line with income beyond the 8% rate above 70,044.

In our view, the best remedy is a credit of 775 which would be specifically linked to the Social Solidarity Contribution. Everyone would get the same on all liable income up to 100,000 per annum. Thereafter, it would cease to apply. Moreover, those on incomes above that level would pay a higher levy of 10%. This would ensure that the greatest proportionate benefit would accrue to low and middle income earners.

The current USC has contributed between one-fifth and one-quarter of total income tax each year since its introduction in 2011. The most recent estimate is that it will make the same yield in 2015. Our proposal is aimed at yielding at least the same amount as the USC, but through a fairer mechanism that involves effectively lower contributions from low- to middle-income earners counter-balanced by higher contributions from higher-income earners.

We estimate that introducing a Social Solidarity Contribution Credit of 775 per annum for all income earners earning up to 100,000 could cost in the region of 900 million. The cost of maintaining reduced rates such as for medical card holders and income earners aged 70 and over on incomes of less than 60,000 would also have to be considered.

In order to introduce the SSC Credit, additional resources would be raised by bringing in the 10% rate proposed by the Department of Finance in 2011 on income above 100,000. This could reduce the estimated 900 million cost by approximately 100 million to 125 million.

Additional resources could also be raised through new revenue raising measures. These could include reform of Capital Acquisitions Tax and the introduction of a Net Wealth Tax (estimated yield of 400m), reform of tax expenditures, such as those related to property and pensions (estimated yield of 100m), online betting tax (estimated yield of 70m), and increases in excise on tobacco (estimated yield of 35m).

These measures would be in line with EU rules that ‘excess’ spending growth (i.e. beyond Ireland’s permitted ‘fiscal space’) be resourced through discretionary taxation. Our proposal is a demand for a progressive mechanism that effectively eliminates the charge entirely for income earners below the Living Wage (i.e. 23,250 a year), that cuts it by half for all individuals on the standard band threshold (i.e. 33,800) and that reduces it considerably for middle-income earners. Meanwhile, it would raise the same level of much-needed revenue.

Any further cuts to the top rate of tax, aside from accruing to a minority of taxpayers, would only undermine the progressive elements of our proposal, and should not be pursued.

5 Aug, 2015

Healthy Workplaces

By |2017-06-10T23:56:51+00:00August 5th, 2015|News|Comments Off on Healthy Workplaces

Kate O'Flaherty is the Director of the Health and Wellbeing Programme in the Department of Health, the unit which coordinates the implementation of the Healthy Ireland Framework. A pharmacist by professional background, Kate also has an MA in Journalism and has worked as a journalist and communications consultant, specialising in health.  In 2007 she joined the Pharmaceutical Society of Ireland, the pharmacy regulator, as Head of Communications and Public Affairs, and in 2010 undertook an additional role as Head of Pharmacy Practice Development. Kate moved to the Department to head the recently established Health and Wellbeing Programme in July 2013.

Healthy Workplaces

A new national focus on ‘Healthy Workplaces’ is one of the priorities under the “Healthy Ireland” agenda for Minister for Health Leo Varadkar TD.

The Minister recently announced that he had received Cabinet approval to draft a Health and Wellbeing Bill that would require public service employers to develop ‘healthy workplace’ policies to promote the physical, mental and social wellbeing of employees. This new requirement is intended as a positive action measure to support an enabling environment for the development of healthy workplace practices and plans. Alongside this, the Department of Health, in partnership with a wide range of stakeholders across public and private sectors, will develop an overarching Healthy Workplace Framework to support employers in developing policies and plans to suit their particular circumstances, and to facilitate the identification and sharing of best practices.

So, why the focus on workplaces? According to the World Health Organisation (WHO), workplace health programmes are one of the best ways to prevent and control chronic disease, and also to support mental health. The impact that the workplace can have on health and wellbeing is increasingly recognised at international level. For example, the UK’s National Institute for Health and Care Excellence (NICE) recently published guidelines that advise that promoting a positive culture that improves the health and wellbeing of employees is good management and leads to healthy and productive workplaces.

Making health and wellbeing a core priority in any organisation requires the commitment of the leadership, but there is also a leadership role for the public sector in driving the Healthy Ireland agenda, which aims to increase the proportion of people who are healthy throughout their lives with a renewed focus on prevention and empowerment of individuals, families and communities to look after their own health and wellbeing.

And we know that the health of the nation could be significantly improved on a number of fronts by supporting people to make healthier lifestyle choices, and by helping to reduce the social and environmental barriers to making those healthier choices. And while some of our key health indicators have improved in recent years, for example in relation to smoking, the levels of overweight and obesity, physical inactivity and mental health difficulties in our adult population continue to be issues of significant concern.

As many adults spend a significant portion of their time in workplaces, then it makes sense to ensure that the delivery of our national strategies and initiatives consider how these supports and messages are integrated into the resources provided within workplaces. For example, later this year we will be publishing Ireland’s first National Physical Activity Plan, which has been developed in conjunction with the Department of Tourism, Transport and Sport and a range of other stakeholders; this Plan will include a focus on promoting physical activity in the workplace, and making it easier for people to be more physically active as part of everyday working lives.

The development of a national framework will provide us with the opportunity to recognise and enhance existing initiatives, to facilitate the sharing of experience and learning, and also provide the necessary supports and tools for organisations or companies who haven’t yet developed their own resources.

While the value of a collaborative approach is clear, it must also be recognised that there won’t be a ‘one size fits all’ when it comes to healthy workplace policies. So while we will support organisations in identifying and implementing initiatives, they will be able to do so within the context of their own organisational characteristics and circumstances, and in collaboration with their own employees.

This ethos of collaboration will be central to this initiative, to help learn what works best and share that learning across a range of sectors. In the public sector, the potential impact is significant, given that public sector companies and agencies employ about 15% of the total workforce. And the approaches to improving the health and wellbeing of employees within workplaces will also have positive effects on their families and wider communities.

Our initial informal engagement with a range of stakeholders has signalled that there is a significant appetite for a focus on workplace health, and that the strategic importance and benefits of a healthy workplace are increasingly understood and recognised. A healthy society and workforce benefits all sectors, so a wide and collective response will multiply efforts and deliver better outcomes.

It is clear that improving the health and wellbeing of our population will play a central and supportive role in Ireland’s short- and longer-term economic recovery programme, as well as reducing the prospect of unaffordable health costs, which will certainly arise if current health trends are not addressed.

Through our Healthy Ireland Cross-Sectoral Group, which comprises senior officials from government departments, plus a number of key agencies such as the HSE, EPA and HSA, we are establishing a group to support and oversee the development of the healthy workplace framework. And in the coming months, we will be engaging with key stakeholders on this project to build our overall capacity to improve health and wellbeing in our workplaces, and to support a culture that truly values the health and wellbeing of our population.

30 Jul, 2015

Dynamic capability: A basis for sustainable performance?

By |2017-06-10T23:56:51+00:00July 30th, 2015|News|Comments Off on Dynamic capability: A basis for sustainable performance?

Dr Brian Harney is a lecturer in Strategic Human Resource Management at Dublin City University Business School and Programme Director of the MSc in HRM. His research explores the intersection of strategy and HRM with a particular focus on SMEs and knowledge intensive contexts.

Dynamic capability: A basis for sustainable performance?

While all organisations need appropriate resources to function, it is what organisations do with their resource-base that ultimately determines the nature of their success. In particular, how does an organisation create, nurture and reconfigure its resources to keep in tune with external changes and emerging challenges? How does management leverage the human capital and knowledge-base of employees to foster creative behaviours and encourage constant process improvement? Understanding the ability to refresh, renew and transform extant resources and routines lies at the heart of what are termed “dynamic capabilities”. Once exclusively associated with high-tech firms and fast-paced change, the significance of dynamic capabilities is now more universally recognised, including for public sector organisations as they attempt to grapple with wicked problems, societal challenges, and crisis situations (Osborne and Brown, 2013).

What are dynamic capabilities?

Effective management requires the coordination of an array of internal organisational processes, routines and activities (Andrews et al., 2015). Dynamic capabilities refer to organisation’s internal capability to excel at certain tasks, to continuously reflect and improve, and to anticipate and lead transformative change. Dynamic capability is not about once-off change or transformation, but rather having the processes and systems in place that represent an ability to continuously manage change and deal with challenges in a systematic and on-going fashion. According to one of the key proponents, dynamic capabilities represent “the firm’s ability to integrate, build and reconfigure internal and external competences” (Teece et al., 1997: 516). The notion of dynamic capability brings together innovation, organisational learning, and knowledge management. In essence, it captures the capability of an organisation to interact with its resource-base so as to “reconfigure” and “refresh”existing resources and “create” new ones. This capability enables the organisation to “reflexively revisit” what it does by incorporating feedback, assessing against value delivered and to learn from both failure and success. While precise definition of dynamic capability remains abstract and contested, for many, they represent the organisation’s ability to engage in double-loop learning; challenging the way things have been done, questioning underlying assumptions and working out more effective and efficient ways to realise outcomes. The idea is that such an occurrence is natural and systematically embedded in the “behavioural orientation” of an organisation(Wang and Ahmed, 2007).

Building dynamic capability

If the significance of dynamic capability is recognised, a key question becomes how to create and sustain dynamic capability. Dynamic capability is composed of dual processes. First are processes that focus on exploitation activities centred upon deploying the existingresource-base to maximum effectiveness. While such exploitation is necessary for immediate organisational level success, it is not deemed sufficient for longer term viability. By contrast, exploration involves innovation, proactively engaging with stakeholders and examining future potential, needs and opportunity. The processes of exploration form the core of dynamic capabilities as they are focused on future resource-creation, concentrating on how to create new resources and renew existing resources in line with challenges and changes in the environment.

Building on his seminal definition, David Teece (2007) identifies three key processes, or “micro-foundations”, necessary to build dynamic capabilities: sensing and shaping capabilities; seizing capabilities; and managing threats and reconfigurations(Teece, 2007, p. 1342). Sensingcapabilities are those that enable the organisation to search internally and externally for new opportunities and to be discriminating in analysing and filtering the findings in order to extract maximum potential value. Seizingcapabilities are those which underpin the development of opportunities which are thrown up from the earlier sensing activities. Seizing might involve selecting a new service delivery architecture, managing new platforms and complementarities and managing latent resistance to change. Finally, the third micro-foundation of dynamic capabilities is the management of threats and reconfigurations. This is the orchestration of internal capabilities to enable the required adaptation or development. This involves the development of agile structures of support, new governance arrangements, effective knowledge management, and learning capacities that assist the innovative process and support the development of new knowledge. Some key features of these three micro-foundations, coupled with sample applications are highlighted in the Table below.

Do dynamic capabilities matter in the public sector?     

A fundamental challenge in building dynamic capability relates to changing the collective behaviour of employees together with their associated routines, work patterns and daily activities (Fallon-Byrne and Harney, 2015). Irish evidence from public sector managers and employees suggests that organisational interventions to this effect can reap benefits. The national survey of employers in Ireland found that organisational interventions in the form of empowerment-enhancing strategies, learning and positive relationships had a cumulative impact on the likelihood of workplace and outcome innovation, including in the public sector (Watson et al., 2010). A recently completed PhD thesis by Lucy Fallon-Byrne (2013) examining the “microfoundations of dynamic capability for innovation” likewise found a positive impact of these managerial practices as perceived by employees in Irish public sector workplaces. This demonstrated that organisational interventions in the form of empowerment-enhancing strategies, learning, and good management-employee relations were positively associated with both employee outcomes in the form of job satisfaction and commitment, and also broader outcomes such as product, service and workplace innovation. Research has also examined broader structural configurations most likely to be associated with high organisational capability in UK central government departments. The findings suggest the benefits of low structural complexity and consistency in staffing as key attributes associated with high-capability departments (Andrews et al., 2015).

Summary

While the precise definition of dynamic capability is subject to continuous academic debate and empirical scrutiny, it is hard to argue with the overall logic of illuminating internal processes. Understanding and nurturing dynamic capability can be a way to foster better and more proactive policy-making, delivered in a manner that is continuously attentive to multiple needs, stakeholder demands and key challenges. The significance of innovation and doing things better or different has been long evoked in the public sector, with little sense of how this may occur or what change may look like. A focus on dynamic capabilities brings forward important insights, opening up modes of questioning such as: how does this organisation learn and unlearn? How is knowledge shared? How are new opportunities and the potential to do things in different ways seized?

At a minimum, a focus on dynamic capability triggers important conversations. Ultimately, it can encourage a (re)examination of whether organisational interventions are appropriately designed to systematically foster much heralded learning, effective delivery and adaptability.

References

  • Andrews, R., Beynon, M., and McDermott, A. (2015) “Organizational capability in the Public Sector: A configurational approach” Journal of Public Administration Research and Theory, Forthcoming, doi: 10.1093/jopart/muv005
  • Fallon-Byrne, L. (2013) “Developing the microfoundations of dynamic capability for innovation: a human resource management perspective”, PhD Thesis, Dublin City University.
  • Fallon-Byrne, L. and Harney, B. (2015) “Micro-foundations of dynamic capabilities for innovation: A review and research agenda”, Irish Journal of Management, Forthcoming
  • Osborne, S., and Brown, L. (2013) “Introduction: innovation in public services” In S.
  • Osborne, and L. Brown (Eds.), Handbook of Innovation in Public Services, Edward Elgar Publishing: 1-11.
  • Teece, D., Pisano, G., and Shuen, A. (1997) “Dynamic capabilities and strategic management”, Strategic Management Journal, 18: 509-533.
  • Teece, D. (2007). “Explicating dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance”, Strategic Management Journal, 28: 1319-1359
  • Wang, C., and Ahmed, P. (2007) “Dynamic capabilities: A review and research agenda”, International Journal of Management Reviews, 9, 31-51.
  • Watson, D., Galway, J., O’Connell, P. and Russell, H. (2010). The Changing Workplace: A Survey of Employers” Views and Experiences, Dublin: National Centre for Partnership and Performance.
22 Jul, 2015

Low Pay Commission recommends an increase in the National Minimum Wage

By |2018-03-16T12:04:06+00:00July 22nd, 2015|News|Comments Off on Low Pay Commission recommends an increase in the National Minimum Wage

Tom Ferris is a Consultant Economist specialising in Better Regulation. He was formerly the Department of Transport’s Senior Economist

Low Pay Commission recommends an increase in the

National Minimum Wage

The Low Pay Commission has just recommended that the National Minimum Wage should rise to €9.15 per hour. This represents an increase of 5.8% on the current rate of €8.65. The full report, issued on 21 July 2015, is available on the website.

Basis for Recommendations

Donal de Buitlear, who chairs the Commission, did not get unanimous agreement for the report—but he did produce a very comprehensive report supporting the case for the proposed increase in the National Minimum Wage. The report examined submissions from interested parties and consulted directly with workers and employers in relevant economic sectors on the minimum wage. It also took into account a range of considerations including:

  • The available evidence that suggests that moderate increases in the minimum wage will not lead to significant loss of jobs;
  • The Irish economy is recovering although it still faces risks particularly in the external environment;
  • The number of people in employment is increasing;
  • Unemployment remains high but has declined particularly in the last year;
  • Competitiveness has improved, partly due to exchange rate movements and it is important that this trend is maintained;
  • While inflation has been relatively low, the minimum wage has effectively remained at its current level for the past eight years;
  • It is of critical importance to enterprise development that the design of both the tax and PRSI systems creates the right conditions for job creation, including the incentives (from both employer and employee perspectives) for employees to work additional hours and to increase pay where appropriate.

Tracking the National Minimum Wage

The National Minimum Wage was introduced in Ireland under the National Minimum Wage Act 2000.In April 2000, the Irish government set a £4.40 minimum wage (equivalent to €5.58). The current rate is €8.65. It has remained at that rate since 2007, except for a period in 2011 when it was cut by €1 by the previous Government. The current Government reversed that cut in July 2011. The table tracks the ups and downs of the National Minimum Wage since 2000.

    

Not everybody agrees

The recommendations have the support of six of the nine members of the Low Pay Commission. Of that six, the three members with a business background believe that the change of rate should be implemented but not sooner than the second quarter of 2016. Three members did not support the recommendations at all, and produced their own minority reports. Patricia King,General Secretary of the Irish Congress of Trade Unions, and Gerry Light of the Mandate trade union stated in their report that

“We disagree with the recommendation as set out in the substantive report of the Low Pay Commission with particular reference the recommendation to increase the hourly rate of the National Minimum Wage by 50c”.

And Edel McGinley, director of the Migrants Rights Centre Ireland stated in her minority report that she was

“...unable to endorse the 50c recommended increase of the LPC as it does not adequately respond to the needs of workers on the minimum wage”.

What next?

Speeches by the Taoiseach and the Tanaiste at the launch of the Low Pay Commission report indicate that this is a report that will not gather dust on a library shelf. The Taoiseach, Enda Kenny, said that

“The recommendations of the Low Pay Commission will be addressed in the Budget in October, alongside changes to the taxation system and the welfare system, so that all elements of our plan to make work pay will reinforce each other."

In turn, the Tanaiste, Joan Burton, said

“The evidence is now in, the Commission's recommendation is clear and I look forward to implementing that recommendation in due course. Any potential anomaly in the PRSI system arising from the Commission's recommendations will be addressed at the appropriate time in the context of the Budget”.

The Low Pay Commission has only completed the first stage of its work in recommending an appropriate rate for the National Minimum Wage. It is now up to the Government to implement the recommendation.

The Members of the Commission are:

  • Dr Donal de Buitléir, Chairperson, Director of PublicPolicy.ie.
  • Vincent Jennings, Chief Executive Officer, Convenience Stores and Newsagents Association Patricia King, General Secretary of ICTU
  • Gerry Light, Assistant General Secretary, Mandate Trade Union
  • Caroline McEnery, Director, The HR Suite; HR & Business Solutions
  • Edel McGinley, Director, Migrant Rights Centre Ireland
  • Mary Mosse, Lecturer in Economics, Programme Director for Postgraduate Research, Department of Accountancy and Economics, Waterford Institute of Technology
  • Tom Noonan, Chief Executive, Maxol Group, Former IBEC President;
  • Professor Donal O’Neill, Department of Economics, Finance and Accounting, NUI, Maynooth

The Commission has been appointed for a three-year period. Its future work will focus on getting a better understanding of the impacts of low pay policy in Ireland on both employees and employers, and the wider economy. As well as examining other aspects of the low pay environment, the Commission will be reviewing the National Minimum Wage on an annual basis. There are many interested parties who will follow the Low Pay Commission’s deliberations with a keen interest.

21 Jul, 2015

Anonymous Hactivism: Can we be blasé about security threats to digitised information of public bodies?

By |2018-03-16T12:04:06+00:00July 21st, 2015|News|Comments Off on Anonymous Hactivism: Can we be blasé about security threats to digitised information of public bodies?

Maureen O’Sullivan a lecturer in law (Above the Bar) at NUI Galway, a Fellow at the Oxford Centre for Animal Ethics and Chairperson of the Vegetarian Society of Ireland. She is also a PhD candidate at the University of Edinburgh where she is doing a PhD in reform of the European patent system.

Anonymous Hactivism: Can we be blasé about security threats to digitised information of public bodies?

Recently Ireland was put on alert over threats to the Dáil by Anonymous, the decentralised international hactivist group that, when they parade in public, don Guy Fawkes masks to hide their identities. When Ireland moved to amend and tighten its copyright laws three years ago, government websites were attacked and there have been more recent threats.

The most recent was to crash the government website and release sensitive information in a response to the imposition of water charges, taxation and the austerity regime to which Ireland has been subjected for the past number of years. In the several videos posted online, some express fears that this regime will be imposed country-by-country across the world. Others allude to the death of governments and the rise of governance of a global nature that is unelected and unaccountable. Occasionally, members of Anonymous are caught and their identities are exposed and they may be arrested. In reality, however, many online activists are always going to be at least one step ahead of endeavours to track them down and so this activity is not likely to be halted. In any case, in an era of shrinking democracy and a consolidation of wealth and power by a handful of corporations – who keep much of their information online “securely” – as citizens see their representation erode, responses of various natures will inevitably ensue. Hactivism has increased simultaneously with globalisation and some of its ills, perhaps, reflect some of the ills of those who come under attack.

In terms of the history of hactivism, many of the pioneers of free and open source software lament the use of hacking to describe illegal intrusions into protected systems – in their lingo, this activity would be described as “cracking”. Some crackers are simply daredevils who gain cracker or hacker kudos within online communities for daring forays, but others represent malign security threats for a variety of motivations. Nonetheless, hacking and, more recently, the term “hactivism”, coined by the Cult of the Dead Cow, has come to mean unauthorised incursions into the realms of the insufficiently protected zones for political reasons. The Hacktivismo Declaration urges online civil disobedience against states that do not respect Article 19 of the Universal Declaration of Human Rights, which protects freedom of speech from state censorship. The Declaration also supports access to information and riles against governments that do not adhere to this responsibility. A promise to circumvent any repression of online freedoms is made.

Some so-called hactivism may itself be state-sponsored; former Soviet Union members such as Estonia have suffered attacks from Russian-based sites, although state collusion has not been confirmed in this case. During the so-called Arab Spring, hactivist attacks erupted as governments sought to control access to certain information and communication on the Internet. Hactivist activities thrive as state security agencies from different countries cooperate amid the forces of globalisation. It is difficult to judge these actions from an ethical perspective: it has often been said that technology is neutral and only attains a value, be that negative or positive, depending on the use to which it is put. However, many state agencies are unduly relaxed about their digitisation programmes and the information that they make available on the Web. A good example of this trust in permeable software systems can be seen in England and Wales’ new land registration legislation in 2002. The main reform was the abolition of the paper office and the requirement of completion of online transactions in order to secure transfer of ownership. Unfortunately, bureaucrats are not often attuned to what might go wrong and the proposed system has been beset with problems, not least of all was that fact that it was easily hacked. In any case, not all the country is connected to high-speed broadband, so transactions may not always be as easy to effectuate in rural areas.

With so much riding on a simple click, the abolition of a paper trail – whilst on the surface appearing environmentally-friendly – was also viewed with scepticism and a lack of trust from local land registries. Moreover, in an unstable world with democracy in an increasingly fragile state, citizens may not be exactly enthralled with the idea of gaining title through compliance with state bureaucracy. Hactivism can be a warning shot to politicians not to forget the origin and legitimacy of their power.

Rather than introducing taxes that have garnered so much hostility both online and offline, Ireland should follow the lead of cities such as Paris which, in 2014, introduced a participatory budget in which all citizens have the right to vote on how a portion of the municipal budget is spent. This practice is routine in new and emerging democracies in Latin America such as Brazil, Colombia and Peru, having been founded in the Brazilian city of Porto Alegre in 1989. Many European cities, especially in southern Europe, are following suit and when governments are more transparent, citizens are more engaged. This scheme has also been used state-wide in Brazil, so arguments about logistics were unfounded. One gets the feeling that this may not be on the agenda of many current regimes but public anger is a challenge to politicians to remember that we live in a representative democracy and that when the representation weakens, often the populace will seek more direct involvement by many different means. We must ask ourselves whether worrying about software security – which is extremely difficult to achieve – is the crux of the issue or whether the real problem is that many computer programmers are angry enough with governments to threaten their activities in one of the few ways they can.

Would Anonymous have attacked and threatened to attack if the Irish were happy with water charges? Is the problem then, about secure software or unpopular taxes? Rule with consent and perhaps we can then judge whether we have a problem with software security or not.