You really can’t win. On Wednesday morning, news started to emerge that the Government had done a deal with drug companies which would save up to €200 million a year. It was a hard-fought agreement, secured over many months of talks. The Minister for Health greeted it as a good day for patients.
A few hours later, news emerged of a parliamentary reply by Minister for Finance Michael Noonan. He told Fianna Fáil finance spokesman Michael McGrath that the unexpected jump in the size of our economy, in last week's official figures from the Central Statistics Office, brought the unwelcome consequence of a €280 million bill for the State, in terms of the increased size of our annual contribution to the EU.
The bigger your economy, the more you pay to Brussels, and the bean counters don’t much care whether your national economic figures are inflated by aircraft being relocated to Ireland, or whatever. The numbers are what they are.
So, the gains from the savings arising out of the pharma deal were more than offset by the losses from the higher EU contributions. That said, while the corporate restructurings behind our surge in GDP have often brought limited extra cash to the economy, they are one of the big contributors to the surge in the corporation tax take for Revenue. Corporation tax last year came in a whopping €2 billion above target.
Higher GDP also makes it a bit easier to meet our EU targets for the public finances. So, the dodgy GDP data is not all bad news.
Free access
Still, when times are still tight, it is unfortunate to see Ireland moving further into its role as net contributor to the EU budget.
Between our entry to the old EEC in 1973 and 2013, Ireland was a net recipient of EU funds, getting more out than we put in. This changed in 2014 when we paid in €1.69 billion and received €1.52 billion in return. Lest this lead to an outbreak of “What did Europe ever do for us?”, it is as well to note that we have received some €50 billion over the 40-odd years since we joined, in cash terms, and that EU money remains a major contributor towards farm incomes. We also still receive money in areas such as training and research.
And the unquantifiable economic benefits of membership – in terms of attracting US multinationals here and offering free access for Irish businesses to Europe – are immense.
In any case, it would be a mistake for the Government to hold out much hope of getting a cut in the level of EU contributions. Even if there is agreement on some new way to measure the level of economic activity here, the rules say that EU budget contributions are based on an agreed definition of what is called Gross National Income – a variation of the GDP and GNP figures with which we are familiar.
There have, of course, been some famous deals done on EU contributions in the past. The best known is the UK "correction", or rebate, agreed in 1984 after the then prime minister Margaret Thatcher demanded some of "her" money back. This sees the UK getting a refund of two-thirds of the difference between what it pays in and what it receives from EU programmes. The rationale was that because it received relatively little under the Common Agriculture Policy (CAP), the UK deserved a break. The reality was, of course, pure politics.
Subsequently, there were rows as first Germany and then the Netherlands, Austria and Sweden negotiated deals to ensure they did not pay too much of the gap left by Britain’s rebate.
Yet, in an enlarged EU, with tight national budgets, it is pretty hard to see any “special” deals being done now.
In fact, given that the reason for the big jump in our national income was tax-based practices on which our EU partners would frown, it is impossible to foresee leeway for Ireland.
Our EU partners would point straight at our corporation tax jump and argue that some of this cash was rightly theirs.
As most of these corporate actions are likely to provide benefit to our exchequer for some time to come – and to our GDP figures – the essentially unreliable nature of the data on our economic growth provides a tricky enough backdrop as the impact of Brexit on the EU budget comes to be considered. There are important reasons why we need more reliable economic data. We need to be able to present a coherent picture to investors. And we need proper data so we can judge the state of our own economy.
We may also need to be able to put a case to Brussels in the next few years that, despite the figures, the economy here is not at risk of a “overheating”.
Because, if they judge it is, room for budget giveaways could be restricted under EU rules which, put in plain language, consider it not a good idea to pour petrol on a fire.
Proper information
Of course, this is precisely what we did in the past. And, quite aside from the backstop of the supervisory hand of the EU Commission, we need proper information to stop us doing it again.
How the “new politics” might deal with the notion that, because the economy is so strong, less should be given away is anyone’s guess.
It seems more set up for the Charlie McCreevy approach of “when I have it, I spend it”.
Footnotes . . .
"Bad girls finish first," is the maxim on the wall of cosmetics retailer Benefit's new Dublin outlet, opening shortly in a building once occupied by the Old Lady of D'Olier Street herself, The Irish Times.
Caveat’s memories of the premises, which this newspaper sold and upped sticks from in 2006, do not include any similar words of wisdom. Sadly, nor were staff ever assured that “looking good is the best revenge”, as printers’ ink grime, editors’ sweat and the potent whiff of a nearby takeaway combined to create a workplace that was strictly glamour-free.
Benefit, on the other (finely manicured) hand, is the San Francisco company behind such “instant beauty fixes” as the Browvo! conditioning eyebrow primer, the PoreFessional instant wipeout mask and the Erase Paste brightening concealer, which all sound like a very serious business indeed.
The Puff Off! under eye gel may well prove particularly useful to hacks with dark circles under screen-burned, deadline-dulled eyes.
But, as for Benefit’s advice to “glow up . . . don’t grow up”, D’Olier Street’s radiance-eschewing former inhabitants would merely have interpreted that instruction as code to light a cigarette and blow smoke rings all over their ancient machines.
Pokémon Go maker Niantic may not have foreseen the level of popularity the augmented reality game would reach, but we doubt they would ever have imagined it would be used as a dating tool. Already hailed as a way to make friends and broaden your horizons, Pokémon Go could now help you track down your soul mate.
A new service, Pokedates, is using the game as the hook to match potential Pokémon trainers with a more romantic conclusion in mind.
Powered by project Fixup, the service asks a few questions, then pairs you up with a like-minded hunter to go on Pokémon Go dates. They’ll email you the date details and, like many things, the first one is free but you’ll have to pay for them to fix you up after that.
It’s all in the spirit of fun, but there could be some issues. Will there be cross-team dating? If so, gym battles could get a bit heated. If you spot a Pikachu, who gets it?
It’s a minefield.
Amazon is taking the sharing economy to the next level, recruiting amateur drivers to deliver packages for the global online retailer.
Amazon Flex, which was piloted in Seattle, is coming to the UK, offering drivers an hourly rate to work in areas of their own choosing. It estimates that rate could be between £13 and £15 an hour, but that includes tips and could vary depending on how long the deliveries take. Drivers use a smartphone app to choose where and when they want to work, and to give them directions to customers’ homes; customers can track their orders.
The new arrangement is part of the same-day service offered to Prime Now customers, which includes 15,000 products that can delivered within the hour.
The rollout is expected to start later this month in Birmingham and, according to the Financial Times, Amazon has been advertising for drivers on Gumtree and Craigslist. E-commerce delivery experts ParcelHero said the move would transform home deliveries.
“By launching its new crowdsourced driver scheme in the UK Amazon steals a march on Uber, who have been slow to get their UberRush ‘Uber for things’ delivery service off the ground here,” said ParcelHero’s head of public relations, David Jinks.
“Turning its local customers into delivery drivers means Amazon can give even more delivery choices to shoppers while slashing its own logistics overheads.”
