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Broadband Better Value Than Fás

Posted on: July 9th, 2008

I have a view on the economy and the political battle that goes on, that nothing is as good or as bad as both sides are saying and not all of it is particularly relevant. I spoke to Minister Lenihan about this in the Senate because of its immedaite and persistent importance. I am a long time on record as stating that the stewardship of Mr. McCreevy, while it may have been an easy time, was superb in that he was prepared to take the economy in a new direction, which might have been at a political cost to himself – it may be why he is where he is now – but which was radical and introduced a new philosophy into the running of the economy which has worked extremely well.

In having set us on a sound course, it is a little strange that it appears this week that the Government has suddenly woken up to the fact that it could not last forever and that the kind of prosperity it created was not eternal. The reaction and the statement yesterday would make those of us who are great supporters of the fundamental thrust of the economic thinking wonder whether there was any other thinking among Ministers in the Government up to a few weeks ago, when they suddenly realised that the economy was in trouble.

The economy is in trouble. Let us face it, it is a crisis. No one element, but a mixture, is to blame. It includes lack of Government foresight and preparation, Government smugness and electoral timetables. There are the international forces as well.

It is up to the Government to take action, which it should have recognised a long time ago, to bring us back on course, not for the sort of prosperity to which we have been used because that is not likely to return, but to steady, moderate and encouraging growth.

For the Government to now state that the fundamentals are sound, is not true. The fundamentals were sound but not any longer. It depends to some extent on what fundamentals one chooses, and one can be as selective as one likes. One can take, as the Government side is taking, the NTMA, the National Pension Reserve Fund and other areas, and state that they are sound and we have done well. However, on the other side are the sudden downward spiral in the budget deficit, the worrying inflation rate, the soaring unemployment rate, the reaction in the stock exchange, which has knocked billions of euro off the value of our companies, and other such elements. It depends which one chooses, but we know that all those I have listed as on the minus side were not there a year ago. Therefore, things are bad, worrying and getting worse. It is a question of how bad they are and whether the Government is prepared to do anything about it.

It would be unfair at this stage to state that the problem has not been recognised and it would be unfair to state that the remedies have not been taken, partly because we do not know what the remedies are. The problem has been recognised in terms of rhetoric but we do not know whether the remedies are specific. In this regard, in terms of the principle of what the Minister spelt out today, I have little quarrel with him but in terms of implementation, I am very doubtful that it will happen because I do not understand why the specifics could not have been spelt out already.

However, I was encouraged to some extent by what the Minister’s aspirations and intentions appeared to be. He stated specifically there would be a review – not an encouraging word – of State agencies. I would have thought that if the Minister was trying to save €450 million this year, he would not have to look any further than State agencies. I would have thought that he need not worry about all the Departments saving small amounts of money. State agencies would save him €450 million in no time. In fact, he might not even have to look much further next year.

I would have thought that if he was looking at State agencies for €450 million, the Minister would not have to look any further than one of them. What will he do about FÁS? I do not know whether the Minister of State, Deputy Mansergh knows that the budget of FÁS is €1 billion a year, which comes straight out of the State coffers.

FÁS is a State agency which has attracted a great deal of unwelcome attention recently, not just because of the press publicity, which was attracted by extraordinary activities which involved an enormous and questionable waste of money and, therefore, serious question marks about the culture in FÁS, but because it was found by the Government’s own auditor, the Comptroller and Auditor General, to be wasting huge sums of money. It is an open goal for the Government. Its own auditor has found that FÁS is wasting money. There is a need, therefore, to review its €1 billion budget.

Although this is back of the envelope stuff, it is my guess from reading the FÁS annual report, which is fairly incomprehensible and totally uninformative about where the money is spent, that the €1 billion budget could be chopped by half and nobody would notice. I do not know what FÁS does. When I spoke about FÁS previously it showed me around and all I saw was empty offices, massive equipment and nobody there.

I do not doubt that FÁS does a certain amount of good work, but in terms of value for money this is a State agency which is in crying need of being drastically cut. It has become close to being a political slush fund. Nobody knows where the money goes, nobody knows where it is spent, nobody knows what the priority is but, because it must produce accounts, we know it receives €1 billion in funding and that it got more than €1 billion when unemployment virtually did not exist and it was meant to be sorting out the unemployment problem. Some of the money came from EU funding. If I was part of the Government I would be worried that the European Commission would shortly ask where its money was going because there are questions being asked by the Comptroller and Auditor General.

The Government should look at FÁS, state that it does some good work but that it knows money is being wasted and that its budget should be cut by half. That would solve the Government’s €450 million difficulty, but it will not do it because there are too many political implications. Let the good work go on but let the wastage stop. I do not know what FÁS does but we know it is wasting money.

I would make one appeal to the Government. When it is making cuts it could give a commitment, not only with regard to the NDP, to which it has responsibly made a commitment and with which all agree, but also to not cut the budget for the roll-out of broadband. This is the biggest infrastructural issue facing the Government and Ireland at present. It has the potential to do the maximum amount of damage to this country if we do not get it in order.

It is all very well for spokesman after spokesman to state we are well positioned for the next upturn – this is a kind of mantra one hears from every company in trouble. It is an untruth. We are not well positioned for the next upturn. If we do not have broadband, for which I do not care whether the Government gets the money from current or capital expenditure, or whether from borrowing, we will not be positioned at all for the next upturn and we will be on a downward slide where our competitors will overtake us in Europe and overseas. Let us get a commitment from the Government that, whatever happens, investment in that element of infrastructure is sacrosanct and will be maintained. Otherwise we will be on a inexorable slide and the Celtic tiger will be a distant memory.