IRELAND

Candidacy procedures are fair and do not overtly discriminate against parties or groups. However, the manner in which political parties are funded makes it difficult to launch a new party and protects the political status quo.
To be eligible for election to the Dáil Éireann, the lower house of parliament, a person must be a citizen of Ireland, over 21 years of age and not otherwise disqualified from election to the Dáil. Certain categories of persons are disqualified. These include members of any local authority, members of the European Commission, judges, advocates general or registrars of the European Court of Justice, members of the Court of Auditors of the European Community, members of the national police force (the Gárda Siochána), full-time members of the defense forces, civil servants whose contract of employment does not explicitly state that they may be a member of the Dáil, persons of unsound mind, persons presently in prison serving a term greater than six months, persons in a state of undischarged bankruptcy, the president, members of the Seanad or upper house of parliament, and the comptroller and auditor general.

Irish elections attract widespread and detailed coverage in the press, on radio and on TV. There are strict rules regarding media coverage, especially on radio and TV, designed to ensure equity of treatment between the political parties. The state-owned broadcasting company (RTE) allows equal access to all parties that have more than a minimum number of representatives in the outgoing parliament. Smaller political parties and independent candidates receive less favorable treatment in terms of access to the media, but this is perhaps inevitable, as it would be impossible to provide all the small parties and independent (non-party) candidates equal coverage with the major parties in the national media. However, any imbalances that may exist at the national level tend to be offset at the local level through coverage by local radio stations and newspapers.
An important feature of Irish elections at all levels is the saturation use of posters to elicit support for candidates. Subject to normal public safety and anti-litter regulations, all parties and candidates are free to erect posters on public spaces.

There is no overall register of the population in Ireland, so the voters’ register has to be compiled by local authorities, who are not always diligent in keeping their registers up to date.
While problems with the Electoral Register persist in certain areas, there is no evidence of systematic discrimination or disenfranchisement of any groups in society. Nonetheless, the repeatedly exposed inconsistencies in the Electoral Register display a lack of investment in the electoral process and even a lack of concern for its integrity. In June 2008, the government set up a working group to advise on the design of an Electoral Commission, which would have responsibility for drawing electoral district boundaries and maintaining the electoral register. As many as 16 or 17 separate pieces of legislation will need to be reviewed or repealed in order to give it the authority it requires.
Voting is not compulsory. However, choice of the date of election has been made to maximize participation, and polling stations remain open from 07:00 a.m. until 22:00 p.m.

The Standards in Public Office Commission supervises the disclosure of interests, compliance with tax clearance requirements, the disclosure of donations and election expenditures, and the expenditure of state funds received by political parties. It has oversight authority and reports to the chairman of the Dáil Éireann on the following matters:
• the acceptance and disclosure of donations received by political parties, members of both houses and of the European Parliament, and candidates contesting Dáil, Seanad, European Parliament and presidential elections;
• the opening and maintenance of political donation accounts;
• the limitation, disclosure and reimbursement of election expenses;
• state financing of qualified political parties; and
• the registration of “third parties” (i.e., campaign/lobby groups or individuals which accept a donation for political purposes which exceeds €127 in value) and other persons.
The Standards Commission is required to facilitate the inspection and copying, by any person, of donation statements, election expenses statements and other documents furnished to it under the legislation.
The commission’s latest published annual report is for 2008. This shows that in 2007, total funding of €12,974,613 was paid to qualified political parties under the Electoral Acts and the Party Leaders Allowance Act.
Each of the 14 political parties registered to contest a Dáil or European election was required to furnish a donation statement to the Standards Commission by March 31, 2007. Donations received during 2007 which exceeded an aggregate value of €5,078.95 were required to be disclosed. The maximum value of donations a political party can accept from a single person in a single calendar year is €6,348.69. Donations received a single donor in the course of a single calendar year must be aggregated for the purposes of observing the disclosure and maximum acceptance limits. The total value of donations disclosed by parties during 2007 was €266,484.98.

Public and private media are wholly independent of government. The state broadcasting (radio and TV) company is supported by the fees from a mandatory license. It is obliged to give balanced coverage of political events and to guarantee access to a variety of political views. Access by political parties for electioneering purposes must also be balanced. The state broadcaster does not enjoy a monopoly in any area of broadcasting, but faces competition from private TV and radio stations.
Oversight of broadcasting and print media has recently been recast under new legislation. The Broadcasting Authority of Ireland (BAI) was established on October 1, 2009 following the enactment of the Broadcasting Act 2009. Its terms of reference require it to “ensure that the democratic values enshrined in the constitution, especially those relating to rightful liberty of expression, are upheld, and to provide for open and pluralistic broadcasting services.”
The BAI’s Compliance Committee can investigate and rule on complaints relating to issues of fairness, objectivity and impartiality. Under this heading, it can enforce the requirement that all news broadcast by a broadcaster is reported and presented in an objective and impartial manner, without any expression of the broadcaster’s own views. In the treatment of current affairs, including matters which are either of public controversy or the subject of current public debate, broadcasters must ensure that reports are fair to all interests concerned and that the broadcast material is presented in an objective and impartial manner, without any expression of the broadcaster’s own views. Any viewer or listener may refer a complaint to the BAI if they are unhappy about program content on an Irish licensed broadcasting service, either radio or television.
The Press Council of Ireland and the Office of the Press Ombudsman were established on January 1, 2008. Citizens now have access to an independent press complaints mechanism that is described as “quick, fair and free.” Among its aims is “to defend the freedom of the press and the freedom of the public to be informed.”
Thus, the relationship between the press and the government is an arm’s length one. Systematic preferences or biases undoubtedly exist in press editorial coverage, but there is sufficient variety of editorial opinion and adequate complaints procedures to prevent any undermining of the democratic process.
Attempts by governing parties to curtail the freedom of the press appear to be virtually nonexistent, although the use of public relations firms and “spin doctors” to present news in the light most favorable to those in power is widespread.

For a country of just 4 million people, the variety of print, radio and TV media in Ireland is striking. The range of newspapers in circulation is wide, and is augmented by the circulation of Irish editions of several UK tabloids, as well as the mainstream “broadsheet” UK newspapers. In addition to the range of “public service” state-owned radio and TV stations, a variety of privately owned stations also exist. Irish listeners and viewers also avail themselves of UK English-language stations, which are widely received in the country. Therefore, there are few grounds for worry as to the plurality of opinions to which Irish readers, listeners and viewers are exposed.
There is a plurality of ownership in the Irish media – the sector includes state radio and TV, private radio and TV, a variety of newspapers with varied private ownership, and many small-circulation magazines that purvey alternative political views and philosophies.
Of course there are suspicions about the influence and power of big businesses over the media, as well as criticisms of the views promoted by the state-owned broadcasting company.
One large multinational company is particularly dominant in the print media. But it has not restricted the range of political views expressed by its journalists in individual newspapers (or indeed within the pages of a single paper), although there has undoubtedly been bias in the treatment of individual issues and political notables.
Irish libel laws are restrictive and may impair the ability of investigative journalists to have their work published. This reduces the effective freedom of the press. Frequent calls have been made to bring the libel laws into line with those prevailing in the United Kingdom. However, the restrictions imposed by the existing laws do not imply any bias toward one end of the political spectrum or the other.

There were no significant changes in this area during the reference period.
Freedom of information (FOI) legislation was introduced in 1997. It provides for public access to data and information about decision-making in the public administration, subject to the exclusion of 12 areas (including defense, government meetings, areas of commercial sensitivity and so on). The act was amended in 2003 in a more restrictive direction. Charges to the public for obtaining information were raised. The amendment provoked more controversy than the original act. Reservations have been expressed about the scale of charges now in place and the wide range of material excluded from the scope of the act, conditions which restrict the public’s access to information compared to the situation between 1997 and 2003.
Nonetheless, the FOI legislation has been used with considerable effect by individuals and more frequently by the press to gain access to information regarding the manner in which ministries reach decisions or the expenses incurred in public procurement, and to highlight instances of the waste of public funds.
Government departments, ministries and agencies now have information officers to channel information to the public. In some cases these officers act as purveyors of objective information; others act as “spin doctors” putting interpretations on events that suit politicians.
The Central Statistics Office (CSO) is responsible for the collection and dissemination of official statistics. An independent National Statistics Board oversees its performance. This office is located in the Department of the Taoiseach (the prime minister’s office) and is not answerable to the ministers responsible for areas covered by the statistics. These ministers have no right to edit or censor statistics released by the office. Sensitive data (such as figures on inflation, unemployment, etc.) are made available to ministries shortly before their publication, but there is no right to alter these data or to interfere with the manner in which they are presented. The Irish CSO enjoys a good reputation internationally in terms of its independence from political interference and the technical competence of its staff.

In principle, all citizens have equal access to the law and the courts. Under the Criminal Justice (Legal Aid) Act 1962, an extensive system of free legal aid has evolved. This act provides that free legal aid may be granted, in certain circumstances, for the defense of persons of insufficient means in criminal proceedings. The grant of legal aid entitles the applicant to the services of a solicitor, and in certain circumstances up to two counsel, in the preparation and conduct of his/her defense or appeal. The courts, through the judiciary, are responsible for the granting of legal aid. Applicants must establish to the satisfaction of the court that his/her means are insufficient to enable him/her to pay for legal aid him/herself. This is purely a discretionary matter for each court and is not governed by any financial eligibility guidelines. The court must also be satisfied that by reason of the “gravity of the charge” or “exceptional circumstances,” it is essential in the interests of justice that the applicant should have legal aid. However, where the charge is one of murder, or where an appeal is one from the Court of Criminal Appeal to the Supreme Court, free legal aid is granted merely on the ground of insufficient means.
In practice, of course, the best legal advice is very expensive and available mainly to the rich (including those who have become rich on the proceeds of organized crime). The high fees charged by the country’s leading lawyers undoubtedly limit the effectiveness of equality of access to justice.

Freedom of speech, freedom of assembly, and the right to form unions and associations without religious, political or class discrimination are enshrined in the Irish Constitution. These rights have been protected and upheld by the Irish courts over the years, subject only to normal restrictions regarding sedition, blasphemy and breaches of the peace.
The most important issue in this area has been the historical restriction on the ability of the Irish Republican Army (IRA) in its various manifestations to recruit members or to be represented through normal parliamentary channels. The IRA is classified as a terrorist organization and holding membership in it is illegal. More controversially, restrictions have been placed on Sinn Féin (the political wing of the IRA). Under Section 31 of the Broadcasting Act (1960), the relevant minister has powers to “direct the [Broadcasting] Authority in writing to refrain from broadcasting any particular matter or matter of any particular class, and the authority shall comply with the direction.” In 1971, these powers were used to prevent Sinn Féin and IRA spokespersons from broadcasting or being interviewed on the airwaves. This directive was repealed in 1994. No group is presently excluded from access to the airwaves.

There are strong antidiscrimination provisions on the Irish statute books. The 1998 Employment Equality Act, 1998 and the Equal Status Act, 2000 outlaw discrimination in employment, vocational training, advertising, collective agreements, the provision of goods and services, and other opportunities to which the public generally has access, on nine distinct grounds. These are gender; marital status; family status; age; intellectual and physical disability; race; sexual orientation; religious belief; and membership in the Traveler community. The Equality Authority is an independent body set up under the Employment Equality Act,1998 to monitor discrimination. It is active in the areas listed above. Cases of discrimination have been successfully pursued in the courts and the threat of such actions is effective. The Office of the Director of Equality Investigations (ODEI) – the Equality Tribunal – was established as an independent statutory office under the Employment Equality Act, 1998 to offer an accessible and impartial forum to remedy unlawful discrimination. It investigates or mediates complaints arising under employment-equality and equal-status legislation. Complaints of discrimination, including harassment, may be made with reference to the nine grounds listed in the act. The areas covered include employment, the disposal of goods and property, the provision of services and accommodation, and certain aspects of education.
These agencies have been active in recent years and successful in prosecuting cases on behalf of parties who felt they had been discriminated against.

By and large, government and administrative units act predictably and in accordance with known rules. However, ministers have the discretion to use ministerial orders that might be regarded as arbitrary and unpredictable. These orders are liable to challenge and judicial review, which places an effective limit on the discretion that ministers may exercise. The Law Reform Commission is an independent statutory body established under the Law Reform Commission Act, 1975 that keeps this issue under review. A recent commission report cites the limits placed on administrative discretion, the judicial power to compel disclosure of administrative files and the right to a fair hearing, and concludes that while “(t)here can be little doubt about the courts’ power to give relief in appropriate cases, the means of access to that relief is capable of improvement.”
Politicians are prohibited by law from interfering with the course of justice. In February 2010, former Green Party leader Trevor Sargent resigned as minister of state in the Department of Agriculture after accepting that he had made “an error of judgment” in contacting the police (the gardaí) about a case involving a constituent.
A significant degree of discretion is vested in the hands of officials (elected and non-elected) in relation to infrastructure projects and town and rural planning. These issues became very significant and controversial during the economic boom of the late 1990s and early 21st century. In some cases, decisions regarding land use may be unduly influenced by negotiations and bargaining between vested interests rather than the outcome of the application of objective rules and regulations. However, these decisions can be appealed to an independent planning board. In the current severe economic contraction, very few significant infrastructural projects are being initiated, so these issues are of less concern. Nonetheless, the number of judicial investigations (tribunals) currently under way is evidence that in the past there was widespread misuse of discretionary power by ministers and governments.
By far the most conspicuous and longest-running tribunal is the “Tribunal of Inquiry into Certain Payments to Politicians and Related Matters” (commonly referred to as the Moriarty Tribunal). This is a public inquiry established in 1997, focused on the financial affairs of certain politicians. However, since 2007, the inquiry has focused on the circumstances surrounding the awarding of the second GSM mobile phone license in 1996 (the biggest contract ever awarded by the state to a private company). The tribunal is investigating whether this award was influenced by payments to politicians. The tortuous inquiry is still ongoing.
While the thoroughness of this investigation offers some support for a belief in the accountability of ministers to the judicial system, the scale of the suspected wrong-doing and the delays in obtaining a clear verdict in the case are disturbing evidence that, at least in the past, administrative procedures in some important areas were not performed in accordance with the law. Further evidence of the problems associated with the tribunal process emerged in March 2010, when the chairman of the Moriarty Tribunal admitted to significant errors in his draft report, ensuring further delay.

The independence of the judiciary is jealously defended. Indeed, a somewhat dysfunctional example of the strictness with which this independence is guaranteed by the constitution arose in 2010, when the government attempted to impose a pay cut on the judiciary in line with all public service workers. Article 36 of the constitution enables the parliament (Oireachtas) to regulate “the remuneration, age of retirement and pensions” of the judiciary. However, to preserve judicial independence from influence by government, Article 35.5 states that “the remuneration of a judge shall not be reduced during his continuance in office.” This second provision was invoked to block any reduction in judicial pay, even though such a reduction would have been part of a national policy on public sector pay, and in no way represented a targeting or victimization of any individual judge or group of judges for their views or behavior. For the same reason, in the spring of 2009, the government did not apply a newly introduced public-sector pension levy to judges. Judges have been invited to submit to pay reductions voluntarily.
There has been some tendency recently to pass minimum-sentencing legislation for certain crimes. While this is viewed in some quarters as a possible encroachment on judicial independence, in reality this legislation appears to have had little impact.

It is the function of the government to decide who should be appointed to the Supreme Court. The government advises the president of Ireland of its nomination of a candidate, and the president formally makes the appointment. The Judicial Appointments Advisory Board (JAAB) acts in an advisory capacity. Advertisements are placed in the public press inviting suitably qualified persons to apply to the JAAB when a vacancy occurs on the Supreme Court. The Oireachtas (a term that encompasses both parliament and president) has the power to appoint a person who has not applied to, and has not been considered by, the JAAB. If it does so it must publish a notice in the official gazette (the Iris Oifigiúil) stating that it has made such an appointment outside the JAAB procedure.
Under Article 35.4.1 of the constitution, no judge of the Supreme Court or the High Court may be removed from office except for stated misbehavior or incapacity, and then only upon resolutions passed by the lower and upper parliamentary houses calling for his removal. Judges are now required to retire on reaching the age of 70.
Concerns about the political independence of the judiciary are more prevalent at lower levels than in the High or Supreme Courts. The lower courts are more likely to have to adjudicate issues where local political pressures are strong (especially in relation to planning laws and commercial matters, as well as cases involving constituents of local politicians). The remit of the Supreme Court is more removed from day-to-day political pressures, and there have been few allegations of political bias or party-political interference in its work. The court has also been relatively infrequently involved in major social issues where a clear liberal/conservative split would emerge, as seems to be frequently the case in the United States.

Statutory provisions relating to corruption in Ireland include the Prevention of Corruption (Amendment) Act, 2001 and the Ethics in Public Office Act, 1995. The latter contains disclosure requirements for significant decision makers in a wide range of public bodies, aimed at ensuring that decision makers are not inappropriately influenced by any outside interests. In 2003, a code of practice for office holders was drawn up. This establishes guidelines for the conduct of office holders, civil servants, etc. with respect to impartiality, avoiding conflicts of interest, accepting gifts, post-employment work, and other such issues. Former civil servants are precluded from taking private sector jobs in sensitive areas for a period after leaving office. This restriction does not apply to elected office-holders, but a similar ban is under consideration.
The Compellability Act, 1997) gives parliamentary committees the statutory power to compel the attendance and cooperation of witnesses and the furnishing of documents. It also confers High Court privilege on all persons directed to give evidence or present documents to such committees. This is virtually identical to the absolute privilege enjoyed by members of two houses of parliament. These two elements are essential to the act: the power to compel the giving of evidence and the power to grant privilege and immunity to those required to testify. The symmetry means that those compelled to answer questions must be given protection from any adverse legal consequences stemming from their complete responses. Virtually every citizen is compellable under the act, including elected public representatives and public office holders (except the president and members of the judiciary). A partial restriction also applies to civil servants, police officers and members of the army who may not question or express comments on government policies. Also relevant are the requirements for politicians to disclose gifts and other potential mechanisms of influence.

During 2008 and 2009, the Irish economy suffered its worst setback in more than 60 years. The impact of the world recession that began early in 2008 was particularly severe in Ireland, and blame for some of this disproportional impact has to be laid at the door of Irish economic policymakers.
The world financial crisis was bound to have a severe impact in Ireland, which is a small open economy, is deeply integrated into global trade and is heavily dependent on its International Financial Services Center for employment and tax revenue. However, the global recession revealed weaknesses in Irish economic policy that aggravated the impact of the inevitable downturn and plunged the country into a crisis from which it has yet to emerge.
The dimension of the current economic crisis is frightening:
• Irish GDP (in real terms) declined by 13% between the end of 2007 and the end of 2009.
• The construction industry shrunk by more than half, and is still contracting.
• The unemployment rate rose from 4.5% to over 13.5%.
• Net immigration to the country was reversed.
• The state of public finances deteriorated sharply. The fiscal deficit reached 12% of GDP in 2009.
• Finally, the banking system is in a “zombie” state, and is dependent on state guarantees to save it from insolvency. A “bad bank” (the National Asset Management Agency, NAMA) has been created to take over the banking system’s nonperforming assets.

NAMA was established in 2009, taking over the first tranche of impaired loans in April 2010. The size of the operation is staggering. The assets involved had a book value in the region of €90 billion, the equivalent of more than 40% of Irish GDP. They are to be purchased by NAMA at a discount estimated to be 47%. This is still above their “long-term economic value.” NAMA’s business plan is based on the projection or hope that the assets underlying the loans it is acquiring will appreciate over the next seven to 10 years, resulting in a long-term profit for taxpayers, who are liable for the securities being issued to the banks in exchange for the impaired assets. Over this period, NAMA will be the world’s largest property management company.
In addition to the taxpayer’s exposure to the risk that NAMA’s business plan falls through, another substantial burden is being placed on taxpayers associated with the need to inject public funds into the banks, as part of the recapitalization required to allow them to meet solvency requirements and begin to function as normal banks. The total amount that will be required is not yet known, but it will be substantial. There is much debate as to whether it might instead have been less costly in the long run for the government to have nationalized banks that were of systemic importance to the economy, rather than to have taken the route of recapitalization.
In assessing the quality of economic policy-making, the most salient event was the near-collapse of the Irish banking system in September 2008. The system was saved by a government guarantee scheme that exposes the Irish taxpayer to an unknown, but very large, liability in order to protect bank depositors. These events proved that the “principles-based” or “light touch” banking regulatory framework in place during the credit boom that contributed to the crash of 2008 was totally inadequate. Shortly before the storm broke, the Irish public was assured that Irish banks were extremely well capitalized. The regulator failed to uncover major irregularities in one of the larger banks. These issues are now the subject of police investigation, but though officials of one of the rogue banks now in public ownership have been held for questioning by the police, none of the protagonists in this affair yet face criminal charges.

The unemployment rate rose from a “full employment” level of 4.5% at the beginning of 2007 to a crisis level of 13.5% early in 2010. Labor market policies have not been successful in averting a steep rise in unemployment.
The flexibility of the Irish labor market has made it relatively easy for employers to reduce their labor force.
The main unemployment insurance schemes are preoccupied with coping with the increased volume of claims, and play little role in active job placement and training. It is recognized that in certain situations the unemployed have little incentive to accept any job offers that might become available, due to the fact that their social welfare entitlements are high relative to potential take-home pay associated with employment. This is a common complaint during times of economic crisis, when there are downward pressures on wages and the tax burden is increasing, and the unrecorded or “black” economy becomes more significant.
Ireland’s national training and employment agency, FÁS, has been the subject of much critical scrutiny over the past two years. In November 2008, the agency’s director general resigned amid public controversy concerning overspending on expenses and travel. In January 2010 the Comptroller and Auditor General published a report into FÁS internal oversight and governance covering the period from 2002 to 2008. The examination found that failure to fully implement elements of the agency’s oversight plan exposed FÁS to the risk of losses, as well as to the risk of expending resources inefficiently. A risk-management system adopted by the FÁS board in 2005 did not function effectively. There were breaches of internal procurement and payment procedures, and key units failed to detect or react appropriately to this noncompliance. It was found that monitoring visits to external training providers were not as frequent as envisaged under FÁS’s own procedures, program output was not recorded in terms of results such as persons achieving certification, and there was no evaluation of the extent to which the program’s training objectives were achieved.

The current global downturn has been accompanied by a collapse in international foreign direct investment (FDI). Having reached an all-time high in 2007, worldwide flows fell by 14% in 2008 and by a further 30% in 2009. This collapse might be expected to have had particularly adverse implications for Ireland, given the dependence of its modern manufacturing sector on FDI.
However, the evidence suggests that the country has fared better than might have been expected on this front. This is borne out by a recent study of the performance of Ireland’s inward FDI sectors during the current recession, which shows that foreign-owned firms played an important role in helping to stabilize the economy in the face of severe downturns in both the export and domestic markets. This was due to the fact that export demand for pharmaceutical products and medical devices in particular remained relatively buoyant. Employment in Irish-owned and state-assisted firms, on the other hand, fell more over the course of the downturn than did employment in the private sector as a whole. Sectors such as information and communications technology (ICT), pharmaceuticals and international financial services are experiencing substantial structural change, and their future prospects will depend on ongoing developments in the global FDI market, including the growing sophistication of China’s manufacturing sector and changes in the international regulatory and corporate-tax environments, especially in the United States.
Thus Irish policymakers are struggling to compete in a complex environment to attract and retain leading-edge firms. The evidence from the recent recession suggests that they have been reasonably successful in this area.
Subsidies both to foreign-owned and domestic industries are justified on the grounds that they may stimulate research and development. Enterprise Ireland is a state development agency focused on transforming Irish industry, concentrating on indigenous Irish companies. Its objectives include helping these firms to invest in research and innovation. Educational expenditure, especially at the tertiary level, is directed toward encouraging cooperation between universities and industry. There has been an explosion of “business studies” courses at all levels and an emphasis on stimulating entrepreneurship. Start-up businesses are encouraged by a tax regime and compliance legislation that are, by European standards, not excessively burdensome.
Evidence indicating the success of the measures listed above in stimulating indigenous technological innovation remains patchy, as shown by the modest rate of new patents registered by Irish firms and researchers.
The trend in unit wage costs is cause for concern with regard to Ireland’s competitiveness. Ireland has been losing competitiveness on this front due to (1) a relatively high rate of wage inflation and (2) the appreciation of the euro relative to the U.S. dollar (which remains a more significant trading currency for Ireland than for any other euro zone country). Membership in the euro zone and its effects on the Irish economy are important aspects affecting the country’s overall competitiveness. The recent strength of the euro (especially relative to the U.S. dollar and UK pound sterling) has serious adverse implications for Ireland’s competitiveness. These have been partially offset by reductions in Irish wages and prices in 2008 and 2009, and more recently by the depreciation of the euro.

There is no social consensus in Ireland as to what constitutes an equitable distribution of the burden of taxation across different social groups. This is a recurrent item for discussion between the “social partners.”
Irish tax policies have failed to generate sufficient revenue to provide the level of public goods aspired to by the Irish people and their elected representatives. Indeed, during the current crisis, the structure of Irish taxation has been seen to be inadequate to finance the current level of spending for services such as health in particular, but also education, environmental protection and physical infrastructure. This is due to the collapse of tax revenue since 2007 and the emergence of a budget deficit equal to 12% of GDP, despite emergency increases in income levies, cuts in public service pay and reductions in the provision of public services.
Ireland has long relied on a low corporate tax rate as an instrument to attract foreign direct investment. The philosophy of generating tax revenue from a low tax rate on a large number of firms, rather than a high tax rate on a smaller number of firms, has been vindicated over time and is broadly supported.
The equity of the tax system, especially as it operated during the years of the boom, is now widely questioned. The bursting of the property bubble has led to severe criticism of the plethora of tax breaks (many related to property development) that reduced the tax burden on the very wealthy, who could afford to avail themselves of these advantages. Data from the Revenue Commissioners released in 2009 showed that about one in five of those earning between €250,000 and €500,000 paid less than 5% of their income in taxes in 2007. However, the introduction of a minimum tax rate in 2007 resulted in an increase in the average income tax rate paid by the highest income groups. Local taxes on private houses were abolished in 1978, a measure now seen as increasing the bias of the tax system in favor of the wealthy, but no consensus has emerged as to what form a new tax on property should take.
A Commission on Taxation was established in February 2008. It published its report in 2009, recommending, among many other measures, a broadening of the base of the tax system, the reintroduction of a tax on private residences, the abolition of many special tax relief and allowance provisions, and strict rules concerning the minimum tax payable by high income earners. The 2010 budget removed many of the remaining tax breaks and incentives that served as loopholes favoring the wealthy. However, apart from the imposition of a minor tax on second homes, no progress has yet been made on the introduction of a broad-based tax on private residences.

In 2007 Ireland recorded a small surplus in its general government balance. By 2009 this had turned into a deficit equal to 12.5% of GDP. The deterioration in public finances in 2008 was very sudden, as tax receipts collapsed and current spending continued to increase. Gross national debt was only 25% of GDP at the end of 2007. By the end of 2009 it had risen to 65%, and is projected to reach 80% by the end of 2011.
The rise in the level of borrowing has led to a risk premium on Irish government bonds that reached almost three percentage points early in 2009, but (as of the time of writing) subsequently fell back to 1.5 percentage points. In accordance with the update of Ireland’s stability program (published as a part of the country’s 2010 budget, in accordance with the terms of the Maastricht Treaty), the government has committed itself to reducing the deficit to 2.9% of GDP by 2014. This would lead to a stabilization of the debt/GDP ratio in the region of 80% of GDP.

The credibility of this program is very much open to question. By the close of the review period, three months into 2010, the economy was showing few signs of renewed growth and the government’s tax receipts continued to lag behind budget projections. To reduce the deficit by over four percentage points of GDP in 2011 would require another drastic round of cuts in expenditure and/or increases in taxes. Given the resistance that has built up to the measures taken in the budgets of 2009 and 2010, which at best stabilized public finances, it is difficult to envisage the government meeting the targets outlined in the 2010 budget program.
The government is thus faced with the prospect of failing to meet the target of stabilizing the public finances, while continuing to withdraw aggregate demand from the economy during the depths of a recession. In this context, the best that can be said of budgetary policy is that the goal is to restore stability to public finances, but the prospects for delivering this are poor.

No other area of public service provision arouses as much controversy in Ireland as health care. The media is filled with complaints about waste, inefficiency and poor service in public hospitals. On the other hand, policymakers and politicians with responsibility in this area point to progress being made, as evidenced by rationalization of care delivery, improved services and better outcomes.
The body responsible for the delivery of public health services in Ireland is the Health Services Executive (HSE), created in 2005 through the amalgamation of regional health boards that had previously run the system in a fragmented way. The HSE now has a budget of €17 billion, equal to 10% of GDP. During the period under review, it continued the task of rationalizing and streamlining the delivery of public health services, and has claimed significant success in many areas, notably cancer and primary health care. The rationalization of the health services sector has inevitably involved centralization of specialized facilities in a smaller number of “centers of excellence” as compared to the historical network of small-scale units dispersed in a large number of places throughout the country. Given the country’s low population density, it is inevitable that specialization along these lines entails longer travel times for some patients. This reorganization has provoked widespread protests and demonstrations in favor of maintaining a full range of services in small local hospitals.
Any evaluation of the Irish public health services today should bear in mind both the low starting point in the 1990s, and the exceptional growth in the population since that time, in particular the recent baby boom which has placed substantial pressure on maternity and pediatric services. Revelations of overcrowding, inefficiencies, waste, poor services, and extremely long waiting lists for access to specialized services continued unabated over the reference period and receive prominent press coverage. The gradual improvements in the overall delivery of health care and outcomes have received less publicity.
The Irish health care system is a two-tier system, with about half the population relying exclusively on the public health system and the other half enjoying additional services mainly paid for through private insurance policies. Thus, the system cannot be scored highly on the inclusiveness of public health care provision. Private health insurance is a way of avoiding the waiting lists typical of public hospitals. This generates inequalities in access to health care. But an increasing proportion of the population has found private health insurance too expensive, and has switched to exclusive reliance on the public health system. This has increased the strain on the system.
During the reference period, several problems received widespread publicity, notably in regard to the failure to diagnose cancers in public care patients and the recent revelation that an extraordinary number of X-rays were not properly dealt with in one of the largest hospitals in the country. In March 2010, the Health Information and Quality Authority (HIQA), the national body responsible for standards and safety in the health services, issued a statement saying that it believed as many as 57,000 backlogged X-rays remained unread. This is only one, albeit one of the worst, example of the grounds for concern regarding absolute standards as well as value for money in the Irish public health services.
On the other hand, the substantial increase in resources devoted to cancer screening under the National Cancer Control Program was judged to have resulted in significant progress in this area, according to a review published by HIQA in February 2010.
Undoubtedly severe problems of overcrowding persist in many public hospitals, despite the increase in resources made available. An unexpected source of this pressure has been the steady increase in population and the number of births, despite a resumption of emigration. The number of births registered in Ireland rose from 61,000 in 2005 to 75,000 in 2008, an increase of 28% for which no additional budgetary provision was made, as the birth rate was expected to fall. Despite these problems, the infant and maternal mortality rates have continued to decline and are today among the lowest in the world.

Irish social policy places a high priority on poverty reduction. The income tax system is quite progressive and the tax system as a whole is broadly progressive. During the boom years, increases in social security expenditures – pensions, family income support, unemployment benefits and the like – were designed to lift those dependent on these income sources out of absolute poverty. This goal was facilitated by the rapid growth in national income and above all by the fall in unemployment.
In 2008, 14.4% of the population was at risk of relative poverty. This is a slight reduction from earlier years. More up-to-date figures are not yet available, and it is to be feared that the steep rise in unemployment will have increased the incidence of relative poverty. On the other hand, the nominal value of social welfare payments (including pensions) was maintained in 2009 and 2010 even as the price level fell. According to the widely used Consumer Price Index, the Irish price level fell by 8% between September 2008 and February 2010. Yet most social welfare payments (including pensions) are now 3% higher in nominal terms then they were at the end of 2008. This outcome was not a conscious policy, but rather the result of political resistance to a downward adjustment in social welfare payments even during a period of deflation.
Controversy arose from the July 2009 decision to close the Combat Poverty Agency and integrate its work with that of the Office for Social Inclusion, forming the Social Inclusion Division within the Department of Social and Family Affairs. Various interpretations of this change have been made, but undoubtedly the agency’s very critical commentary on government policy played a part in this decision.
The provision for spending on Social and Family Affairs in the 2010 budget was 66% higher than that in the 2007 budget, due to a combination of increases in benefit levels and increases in the numbers of individuals qualifying for payments. The current economic and fiscal crisis is placing a severe strain on the country’s ability to maintain its relatively high rates of social welfare payments as unemployment rises (and, longer term, as the population ages). But the commitment to poverty reduction and social inclusion built up over the boom years has so far been maintained, albeit at substantial cost to the Exchequer.

The Irish income tax system incorporates a principle of “individualization,” which means that at any given level of combined income, the tax burden is lower on households in which both spouses are employed outside the home than in those in which only one spouse works outside the home. To give a specific example, under the 2010 budget, a household with two children and an annual income of €60,000 pays €14,400 in taxes when all the income is from one earner, but only €9,000 if there are two income earners in the household. (A single person earning €60,000 faces a tax bill of €19,020.)
The tax code therefore generates incentives for spouses to take up employment outside the home. However, the progressive structure of the income tax system implies in many cases that a second partner entering paid employment faces a 43% marginal tax rate plus an additional 6% social insurance levy. Importantly, child care expenses are not deductible against taxable income. In reality, then, significantly less than half of the gross earnings of the second earner would be taken home in after-tax, after-expenses income.
Child benefits are payable for families with dependent children, standing currently at €150 a month for the first two children (with higher rates for subsequent children). In the 2010 budget, the “early child care supplement” previously payable for pre-school-age children was removed, but increased provision for early schooling was introduced.
Although children are not obliged to attend school until the age of six, 65% of four-year-olds and most five-year-olds are enrolled in the infant classes in primary schools in Ireland.
The current economic crisis has had a more severe impact on employment opportunities for men than for women, as is to be expected in view of the collapse in employment in the construction sector and the relative stability of employment in services (including public services). Male employment has fallen by 15% from its peak in 2007, but female employment is down by only 4%. The labor force participation rate among women has held up in the recession – it is now close to 55% compared to only 50% in 2005. At the same time, the Irish birth rate (and fertility rate) has remained stable at a relatively high level, despite the worsening economic situation.

The Irish system of pension provision rests on three pillars: a public old age pension (funded on a pay-as-you-go basis through social insurance contributions that at present equal ), occupational pensions (funded by contributions from employers and employees), and personal, individual pension plans.
The adequacy of the first pillar, the state pension, has increased in recent years, and the goal of raising it to one-third of (pre-tax) average employment income has been endorsed by all the main political parties. The pension is not income-related. It is a flat amount, equal at present to €920 a month for a fully qualified individual. There are increases for qualified dependents. The pension has risen significantly in real terms over the past two years, partly due to the fact that it has not been adjusted downward to reflect the period’s falling prices.
According to the National Pensions Framework (NPF), between 2004 and 2008, consistent poverty among older people fell from 3.9% to 1.4% while the proportion of older people at risk of poverty has fallen from 27% to just over 11%.
At present, the normal qualification age for pensions is 66, but there is a transitional retirement pension beginning at age 65. The proportion of persons of working age relative to those over 65 years of age is projected to fall from the current 5:1 ratio to less than 2:1 by mid-century. This will increase the burden associated with financing the state pension. With this in mind, the NPF proposed abolishing the retirement pension and raising the qualifying age for the main pension to 67 in 2021 and 68 in 2028.
Ireland ranks with the United Kingdom and the Netherlands among Europe’s best in terms of the size of existing private pension funds relative to GDP. About 55% of the workforce has made some pension provision for their retirement outside the main state scheme. The government has sought to increase this proportion to 70%, but no progress has been made on this front in recent years. However, the second pillar of the national pension system, occupational plans, has come under very severe pressure following the stock market crash of 2007. Irish pension schemes were heavily invested in equities (and within this asset class, a disproportionate share was held in Irish equities). A majority of occupational schemes now face very large deficits, and are struggling to bring forward funding proposals to the National Pensions Board.
As a result of the occupational pension funding crisis, many defined-benefits (DB) programs are now being wound up or closed to new members, and continuing members are being moved to defined contribution (DC) schemes. This implies that members rather than employers will in the future bear the risk associated with fluctuations in asset values.
For those not already covered by occupational pension plans, and who have no voluntary private schemes, the NPF envisages making enrollment in a pension program semicompulsory in the future. (The basic idea is to impose a system of auto-enrollment, making it incumbent on employees to opt out rather than to opt in). This has some of the features of an increase in the rate of contribution to the Social Insurance fund.
As the main state pension program is run on a “pay-as-you-go” basis, it cannot be regarded as sustainable in view of (1) the increasing proportion of the population that will be of pensionable age, (2) the increased longevity of this population, and (3) the massive fiscal deficit that has emerged since 2007. The proposals in the recently launched NPF address the sustainability issue, but not convincingly. Moreover, the proposals contained in the NPF have yet to be implemented.
In the past, the pension system fared well in terms of poverty reduction and intergenerational equity, but these achievements are now threatened by the underlying issue of sustainability.

Over the last two decades Ireland has moved from being a sending country with high rates of net outmigration, to having the European Union’s highest rate of net immigration during the early years of the 21st century, and back to a position of net emigration since 2008. These changes reflect the movement of the economy from recession to boom and back to recession.
However, the large inflow of immigrants to the country during the boom years rapidly increased the foreign-born population resident in Ireland, a situation likely to be a lasting legacy of the period. While immigrants from a wide range of countries – European and non-European – are now resident, the most significant immigration flows in recent years have come from the new EU states, with Poland and the Baltic countries figuring very prominently. These new residents have also shown the highest outflow rate since 2008. This reflects their concentration (especially the males among them) in construction-related employment. The unemployment rate among those who have remained in Ireland is higher than among native-born workers. At the end of 2009, the unemployment rate among Irish nationals was 11.9%, compared with 19.5% among nationals of the recent EU accession states. The acquisition of nationality is not a burning issue for these immigrants who have the right to reside and work and own property in Ireland by virtue of their EU citizenship.
The increase in arrivals from non-English-speaking countries in the last 10 years has placed a strain on the educational system. Additional resources have been provided to help cope with this challenge, but these are not regarded as adequate. There are signs of increasing gaps between schools in relatively deprived areas of the main cities, which often have high concentrations of children holding non-Irish citizenship, and schools in the more affluent areas with lower such concentrations.
There is evidence that immigrants in general, and those whose native language is not English in particular, are employed in occupations below their skill levels, and that they suffer some penalty in terms of earnings relative to their Irish-born counterparts.
Nationals of non-EU countries constitute only about 3% of the adult population, and this share has been falling since the onset of the recession. However, it is among this group that the greatest problems of residency and employment rights, as well as broader integration problems arise.
Forced integration does not seem to be an issue, although there are obvious difficulties facing small minorities in a country that is still overwhelmingly Irish, while their children face additional difficulties in a school system that is still largely under Roman Catholic management.

External security does not loom large in Irish policy-making or political debates. Irish military spending is small relative to GDP (less than 0.5%) and very small in absolute terms. Ireland has close relationships, if not formal military alliances, principally with the United Kingdom and the United States. This has allowed Ireland to enjoy a position of formal “neutrality” and minimum expenditure on defense.
In recent years, Ireland’s armed forces have been active under U.N. auspices. A recent example is the deployment of almost 500 Irish soldiers as part of the U.N.-authorized European Union Force Chad/CAR mission in 2008. In many instances, the payment received from international organizations has rendered this participation relatively profitable from a national point of view.
A new and serious external threat is the internationalization or globalization of Irish crime through involvement in the illicit drugs trade and in human trafficking.
The island of Ireland is well-placed to serve as an entrepôt for smuggling drugs from outside Europe to serve the European market. Cooperation between the Irish and European police services and coast guards has increased, and there have been major seizures of drugs in transit through Ireland in recent years, but it is difficult to gauge the efficacy of these surveillance operations relative to the scale of the problem.

With the retreat of the security threat represented by privately organized groups such as the Irish Republican Army in its many manifestations and its counterparts in the Loyalist community in Northern Ireland, concern about internal security issues faded in Ireland. However, in the course of 2009 and 2010, there has been some increase in the number of violent incidents in Northern Ireland, and anxiety has grown that there could be a renewal of threats from this source.
At present, the main actual threat to internal security is criminal activity, and particularly crime related to the drug trade and “gangland warfare.” But despite the widespread perception to the contrary, Irish crime rates are relatively low by international standards, and with the exception of controlled drug offences have not risen very dramatically in recent years. For example, the number of homicides rose from 82 in 2003 to 137 in 2006, but fell back to 80 in 2009. The low serious-crime rate may not be due to the effectiveness of internal security policies, but is rather a fairly longstanding feature of Irish society.
The police force enjoys a good relationship with the majority of the population, although tensions exist in certain areas and between certain social groups and the police force.
The rise of “organized crime” and “gangland activities” related to the drugs trade is probably the biggest single threat to internal security today. This has been accompanied by an increase in the use of firearms by criminals. Despite this, the main police force remains unarmed. The low detection and conviction rates for this type of crime are disturbing. The difficulty of obtaining convictions is increased by witness intimidation, which has occurred in some high-profile trials.
Politicians have responded to the increase in gangland activity by approving a significant increase in the recruitment and training of police personnel, and by stricter criminal justice legislation with an emphasis on mandatory sentencing and some restrictions on the traditional “right to silence” of the accused. In 2009, the government introduced legislation which would allow gang members to be dealt with in the same way as members of the Irish Republican Army, that is, through the juryless Special Criminal Courts, in which gardaí representatives can offer expert evidence about gang membership.

By the start of the period under review, Ireland had in place a wide range of measures to protect and preserve the environment. These included the banning of smoky fuels from urban areas, a total ban on leaded petrol, a levy on plastic bags that had been a serious litter problem, and the introduction of environmental waste charges levied on households and businesses. The Environmental Protection Agency was established in 1992 as an independent public body dedicated to ensuring that Ireland’s environment is protected, monitoring changes in environmental trends, and detecting early warning signs of neglect or deterioration.
Ireland has signed up to the Gothenburg protocol and the EU national emission ceiling directive, which focuses on improvements in public health, and reductions in acidification and eutrophication. In 2007, a national environment program was released setting out the nation’s plan for compliance with EU goals in these areas.
Ireland is a part of the EU Emissions Trading Scheme (EU ETS), which will run until 2012 so as to coincide with the first Kyoto commitment period. While recession is not an instrument of environment policy, the severity of the current economic retraction has led to a sharp fall in emissions, waste, congestion and other environment problems.
The Green Party is a junior coalition partner in the government that was formed after the 2007 election, and can claim significant successes in some areas of environmental policy. The 2009 budget introduced a new basis for the annual road tax on cars, graduated according to carbon emissions. The only new tax introduced in the 2010 budget was a carbon tax of €15 per ton. Ambitious targets have been set for further reductions in greenhouse gases and the development of renewable energy. Measures were announced in April 2010 aimed at ensuring that 10% of the Irish automobile fleet will be comprised by electric vehicles by 2020. These incentives include the elimination of vehicle registration tax on these cars, a €5,000 additional incentive to encourage drivers to switch to electric vehicles, and the creation of 3,500 battery-charging points nationwide. This scheme has been criticized for being too costly relative to the environmental or other benefits it is likely to bestow.
The strains on the Irish environment became very evident during the extreme weather conditions during the winter of 2009 – 2010. First, exceptional concentrations of rainfall in parts of the country led to severe and protracted flooding. Controversy has revolved around the responsibility for the problem’s scale. Among the factors blamed were excessive construction on natural flood plains, inadequate management of rivers and other waterways, poor management of hydroelectric programs, and a general lack of environmental protection skills and resources among local authorities.
The second extreme weather event was the cold spell from mid-December 2009 to the end of February 2010, which was the coldest period on record since the early 1960s. In addition to the serious impairment of transport due to the inability to cope with snow and ice, a serious water shortage developed in the Dublin area due to water main damage and households’ practice of leaving water taps running to avert freezing. This highlighted the waste that results from a failure to charge for domestic water consumption. While it is not reasonable to make judgments based only on the experience of historically very rare events, these crises created the impression that Irish environmental policy had failed to protect the environment in certain basic ways.

Support for research, development and innovation figures prominently in Ireland’s industrial policy rhetoric. The state industrial promotion agencies exploit the fact that state aid to industry is compatible with EU policy provided that it fosters innovation and R&D.
In the educational sphere, the Science Foundation Ireland (SFI) organization is charged with implementing the National Strategy for Science, Technology and Innovation 2006 – 2013. A sum of €8.2 billion has been allocated for scientific research under the National Development Plan (2007 – 2013). SFI will invest up to €1.5 billion in academic research over this period.
While policy is supportive of research and innovation in indigenous firms, the most striking success of Irish industrial policy has been in attracting foreign-owned firms in high-tech sectors to Ireland. Although the inflow of foreign direct investment to Ireland has fallen to a relatively low level during the current recession, there have been several recent announcements of significant investment in R&D activities by foreign-owned (especially U.S.) firms. The location of these activities in Ireland has created opportunities for innovative small Irish firms to develop technologies enabling them to supply inputs to the new foreign-owned firms.
On the other hand, there are widespread and loud complaints from the business sector about Ireland’s information and communication technology (ICT) readiness. These complaints are supported by some of the data in the World Economic Forum’s latest Global Information Technology Report (March 2010), which contains the Networked Readiness Index 2009 – 2010. Ireland ranked only 23rd (out of 133 countries) on this measure, and also scored poorly in terms of government prioritization of ICT (63rd out of 133 countries), government procurement of ICT (59th), importance of ICT to government vision (56th), and government success in ICT promotion (64th).

During the years of the “Celtic Tiger” boom, Irish politicians often invoked the strong educational system and high levels of attainment as key contributing factors. As the boom turned into bust, unemployment levels soared and the inflow of foreign investment stalled, confidence in the merits of the educational system faltered.
There is now greater awareness of the problem represented by the significant proportion of each cohort that leaves or drops out of the educational system with few or no formal qualifications and low attainment on most academic indicators. This problem was exacerbated during the employment boom, when job opportunities were plentiful even for those with relatively low skills. Now many of those who grasped at early employment opportunities have lost their jobs, and have few qualifications to help them obtain new employment. Moreover, the efficacy of FÁS, the main training agency, is in doubt.
A lively debate developed early in 2010 about the quality of degrees and certificates awarded by Irish secondary and tertiary educational institutions. Significant “grade inflation” has been documented. Some leading industrialists, including the former CEO of Intel, a company that employs several thousand graduates in Ireland, have expressed disquiet about a possible decline in Irish academic standards, while admitting that this is a worldwide phenomenon. Two separate reports commissioned by the minister for education and published in March 2010 confirmed that there was a problem in this area.
The equitableness of public resource allocations for education is also widely questioned. As in most countries, the resources per pupil or student increase steadily the higher up the educational scale one goes, but access becomes narrower in social terms. There is also disquiet at the fact that the secondary educational system is two-tier. A minority of private, fee-based schools are much more socially exclusive, and achieve higher academic results, than the majority of non-fee schools. Yet both groups receive roughly the same levels of state support, with the result that public funds exacerbate inequalities in educational provision. Similarly, universities and colleges do not charge fees, regardless of the family circumstances of the students. This use of public money in such an untargeted manner is perceived as perpetuating social inequality in educational attainment.