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Coillte needs to clean up unhealthy situation over CEO’s pay

Posted on by David Murphy

wood

The salary of the boss of Coillte was reduced from a maximum of €312,000 to €191,000 for a new appointee in 2011

It is no secret that some of the chief executives of semi-state companies and their board were less than happy with the salary caps which were introduced by Public Expenditure Minister Brendan Howlin three years ago.

One of those was state forestry body Coillte whose former chairman said the restriction would inhibit it from attracting a sufficiently qualified CEO.

In 2011 Brendan Howlin reduced the salary of the boss of Coillte from a maximum of €312,000 to €191,000 for a new appointee.

It is a substantial cut, however, in making the reduction the Minister said  “in light of the ongoing severe economic conditions facing the country there is a need for leadership to be shown by those who hold high office across the public sector.”

For the past 18 months Coillte has not disclosed the salary of Gerry Birtchfield, the man doing the job of chief executive, because he has been working in an acting capacity while the Government decided whether a suggested merger of the forestry group and Bord na Mona should proceed.

There have been a number of calls for the salary to be disclosed but it has been kept secret.

While Coillte might be legally justified in arguing that because Mr Birtchfield is not a full time CEO and the salary cap does not apply to him, it gives little confidence that the organisation is keeping with the spirit of the salary cap.

Officials from the Department of Agriculture wrote to Coillte stating that his salary should not exceed €191,000. The company wrote back to say that because the role was temporary Mr Birtchfield was exempt and the board of the forestry organisation had agreed he should remain in position.

His current salary is from his position of Coillte Panel Products which does not publish accounts or disclose pay for senior executives.

Now that the state forestry body had decided to hire a permanent CEO it is possible Mr Birtchfield will apply for the position.

The salary caps were put in place when the Government was trying to reign in excessive pay at semi-state organisations during the bailout. There may be an argument for revisiting some of the caps in cases where there is hard evidence that they are considerably out of line with equivalent positions in the private sector.

However, the perception that Coillte found a way around a Government decision it did not like is an unhealthy situation.

No doubt the board will take account of the controversy and its impact on the reputation of Coillte when weighing up the merits of the candidates for the job of CEO.

Why the Watch wasn’t most important news from Apple event

Posted on by Will Goodbody

Apple's CEO Tim Cook announcing details of Apple Pay

Apple’s CEO Tim Cook announcing Apple Pay

By Will Goodbody, Science & Technology Correspondent

So, the hype has evaporated – for a while at least. The rumour mill can slow down, for a few months anyway. Apple has unveiled its new and updated products at a special launch event in California.

We now know the details of the two new iPhones – the 6 and 6 Plus. We know they are bigger than their predecessors, have an updated curvy look, an A8 chip, improved camera technology and a few other bits and bobs. Inevitably, they will sell in their millions, making the company even more money to add to its $160bn stash.

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The direct and indirect tax debate

Posted on by Sean Whelan

The European Commission has tax policy in its sights

The Nevin Institute’s report has sparked another debate about the country’s taxation system for individuals

By Sean Whelan, Economics Correspondent

ADDENDUM

Since we posted this blog Micheal Collins of NERI has posted a response to some of the issued raised here and elsewhere (see the IrishEconomy.ie thread especially).  It’s worth including all of it here, especially as it is in the form of a Q&A, so it is user friendly.  As we said, it has certainly kicked off a good debate.  The new NERI Q& A is further down the page, after the original blog post.

The Nevin Economic Research Institute seems to have kicked over a hornets nest with its latest version of a working paper claiming that top and bottom income deciles pay about the same proportion of their income in tax.

The premise is that while income tax is very progressive in Ireland, indirect taxes such as VAT tend are regressive.  Continue reading

Why Amazon paid $970m for Twitch

Posted on by Will Goodbody

 

Amazon already offers gaming services through its Fire TV set-top box

Amazon already offers gaming services through its Fire TV set-top box

By Will Goodbody, Science & Technology Correspondent

@willgoodbody

The owners of Twitch must be feeling pretty smug this morning. Last night they sealed a deal which will see them sell their mere three year old streaming service for just shy of $1bn. But while the price tag may be surprising to many, the buyer is even more unexpected. Because until a few months ago Twitch was reportedly in talks with Google with a view to a prospective tie-up.

So why Amazon, and why $970m? Few outside the world of gaming will know much about Twitch. But if you are a gamer, you’ve probably spent countless hours of your life using it. Twitch is a  video service for games, allowing them to stream and upload their gaming activities as they play to potentially millions of viewers who can follow every explosion and carjacking in real-time. A non-gamer might ask why? The 55 million unique visitors to the site, who together viewed over 15 billion minutes of content, would clearly respond why not?

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Interest rates will rise – it is just a question of when

Posted on by David Murphy

ecb

Many households have managed to pay their mortgages due to the substantial cut in ECB rates.

Central bankers in the euro zone, UK and US frequently adjust interest rates in unison.

That is not due to a herd instinct, but when conditions in one region merit higher or lower rates similar circumstances are often occurring elsewhere.

It does not always happen that way.

However, when the Bank of England makes noises about increasing interest rates it is worth asking the question whether the euro zone far behind.

In Ireland, the emerging recovery has been partly helped by a policy of exceptionally low interest rates. Last June the European Central Bank continued to reduce rates cutting to an unprecedented 0.15%.

Lower borrowing costs have eased pressure on Irish households – many of which are snowed under with high levels of debt.

Borrowers with tracker mortgages have seen a substantial 4.1% drop since the crash began in 2008. Those with standard variable loans have not been so lucky. Of course lower rates also mean reduced returns for savers.

In the UK this week, board minutes from the Bank of England revealed two members of its monetary policy committee had voted to hike rates.

The bank’s Governor Mark Carney, an Irish passport holder, has said “rates will need to start to rise” from their record low of 0.5%.

Analysts think that is likely to happen next year. Members of the monetary policy committee will examine wages, employment and economic growth before deciding when to tighten rates.

While growth in Britain has been the strongest of any of the G8 countries so far this year, the picture in the euro zone is more lacklustre.  Growth in the currency bloc was zero between April and June.

As Ireland picks up the pieces after the crash, the economy here is expected to expand much more quickly, possibly by 2.5% this year – although that turn-around follows a dramatic plunge in economic output.)

Inflation in the euro zone is running at 0.4% – far below the level at which the European Central Bank is comfortable.

There are a number of other measures which show conditions in the currency bloc remain sluggish.  With anaemic growth and weak inflation there is little incentive for the ECB to hike rates for the time being.

But when the recovery happens across the euro zone and inflation creeps up, Frankfurt will tighten monetary policy.

Many Irish households, which have been hit with higher taxes and wage cuts, have managed to pay their mortgages due to the substantial reduction in ECB rates.

For many, higher rates may be difficult to handle because their disposable incomes have diminished significantly during the crash.

It is not scaremongering to say rates will rise at some point in the future.

The question for the Central Bank, the Government and the banks here is what they will do to ensure a new group of householders don’t slip into arrears.

It is clearly going to be some time before Frankfurt increases rates.

And it would be reassuring to know the Irish authorities had at least considered the issue while they have the luxury of time.

Lessons from the banking crisis quickly forgotten

Posted on by David Murphy

 

portugal

Portugal’s Banco Espirito Santo went bust with losses of €3.6 billion

They say history repeats itself for those who were not watching the first time.

One lesson from the Irish banking collapse was putting the burden on the tax payer while senior bondholders got all their money back was an unfair, dangerous and destabilising error.

Ireland fully repaid senior bondholders who had lent money to the banks. That cost so much it was one of the reasons why the country had to be bailed out by the EU and IMF.

The experience in Ireland prompted Europe reconsider how banks should be rescued and who should pay.

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Fermanagh fracking fight perhaps a taste of things to come

Posted on by Will Goodbody

The government here has asked the EPA to carry out a study into fracking

The government here has asked the EPA to carry out a study on fracking

By Will Goodbody, Science & Technology Correspondent

@willgoodbody

In Belcoo, County Fermanagh opponents of fracking must be collectively exhaling. Over the past few months they took on Goliath. And yesterday they won – for now at least.

For months protests had been building there against an application by energy company Tamboran Resources to drill a fracking exploratory bore hole. Fracking involves the cracking open of deeply buried shale rock using high pressure fluid, which in turn releases gas that is then brought to the surface.

Tamboran estimates there could be up to £20bn worth of gas in the area around the border between Fermanagh and Leitrim. The problem is, however, the only way to get the gas out is from the northern side of the border, because fracking licences are currently not being issued by the government here while an in-depth study is being carried out.

Tamboran wanted to explore how much gas is under the ground there, by drilling a 750m deep hole in a quarry near Belcoo. It wasn’t planning to carry out fracking – just do some tests.

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Three reasons to look to the stars

Posted on by Will Goodbody

A supermoon rises next to the ancient Greek temple of Poseidon at Cape Sounion, some 65 kilometers south of Athens.

A supermoon rises next to the ancient Greek temple of Poseidon at Cape Sounion, some 65 kilometers south of Athens

By Will Goodbody, Science & Technology Correspondent

@willgoodbody

It’s been an exciting week for star-gazers, with the remarkable rendez-vous between the European Space Agency’s Rosetta probe and comet 67P/Churyumov–Gerasimenko. For a man-made object to travel 6 billion kilometres unscathed around the solar system over a decade and still manage to catch and begin orbiting a 4 kilometre target moving at 55,000 kmp/h is extraordinary. And happily, the best is yet to come, as Rosetta prepares to monitor and send a lander down onto the comet’s surface – unlocking, it’s hoped, wonderful secrets about life.

But back on Earth, the space fest is set to continue this weekend. Because Sunday and the early days of next week could end up being a super celestial showcase. According to the Irish Astronomical Association (IAA), on August 10th Ireland will enjoy its best SuperMoon until 2018, followed two days later by the peak of the Perseid Meteor Shower and a great series of passes by the International Space Station.

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Big banks back on the rise

Posted on by David Murphy

The billions poured Anglo and Irish Nationwide will never be seen again

The billions poured Anglo and Irish Nationwide will never be seen again

By Business Editor David Murphy

The country’s three biggest banks, AIB, Bank of Ireland and Ulster Bank, released financial results this week. All three are making progress (thanks to bailouts from Irish and British taxpayers.)

There are some common themes across all three.

They are making profits, their margins are improving and the amount they are setting aside for bad loans is also declining.

That is good news for bank shareholders. The State owns 14% of Bank of Ireland and 99% of AIB.

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The hard reality of the Irish software industry

Posted on by Will Goodbody

Around half of all software vacancies here are filled through inward migration

Around half of all software vacancies here are filled through inward migration

By Will Goodbody, Science & Technology Correspondent

@willgoodbody

Warnings about a skills shortage in the IT sector are nothing new. We’ve been hearing them for years now, mostly from the industry itself. Nor are they unique to Ireland. Because as the internet flourishes and technology becomes ubiquitous, the global demand for IT skills is rocketing, everywhere. Indeed the manpower shortage will be a little shy of 1 million people by the end of next year in Europe alone, according to a recent estimate from the European Commission.

But when an in-depth academic study of the software industry in Ireland finds the problem is so severe that thousands of new jobs set to be created by Irish based businesses over the coming months and years could end up in foreign countries, it’s worth taking note. Particularly at a time when unemployment remains close to 12%.

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