Wasteful Spending Must be Cut in Wake of Coronavirus

Now that Ireland is entering a period of extended lockdown, which the people are complying with, people are asking what will the future hold.  Money will of course be tight in the future,  so wasteful spending will need to be curtailed.

The virus will simply not go away post lockdown but will be around in our environment for some considerable period of time. Quite considerable sums will have to be spent recalibrating the health service. In this context we have the European Investment Bank, the Commission's Bank, providing €530 million to fund the Celtic Interconnector to France:

https://www.dccae.gov.ie/en-ie/news-and-media/press-releases/Pages/Press-Release-Government-Secures-%E2%82%AC530m-EU-grant-for-Celtic-Interconnector.aspx   

We already have so much wind on the Irish grid, that huge surges occur whenever a low pressure system passes through. Not only are conventional plants being curtailed, but so to are the two Waste to Energy plants in Ireland, 50% of whose electrical output is renewable as that is the fraction of biomass in the incoming municipal waste. Their furnaces have to be maintained at a minimum of 850 C, to combust the incoming waste, so the steam is diverted away from the generators and into the cooling system. in 2018 these two plants curtailed the equivalent renewable electricity of 1.5 times what the Dart used that year, dumping instead the energy (in the case of Dublin Waste to Energy into Dublin Bay). As we know the whole programme is a mess.

If we consider the East West Interconnector built a few years ago from Malahide in Dublin to North Wales, this was a completely uneconomic project, as the Irish Academy of Engineers pointed out several times, neither was there any justification other than to facilitate more wind energy. Hence no commercial bank would have provided the funding. The EIB stepped in with a €300 million loan, the EU Commission gave direct funding of €100 and suddenly the €600 million project was viable. The UK paid not a penny for the infrastructure and our network charges on our electricity bill, which is around 30% of it, went up by about 5% to pay these loans back. We don't have those hundreds of millions to be just wasted in this manner in the months ahead, there is after all resonance in that we need ventilators not wind turbines. 


The millions to be spent on the North south Interconnector now also looks questionable. What of the billions being spent every year on NGOs ? In the wake of the coronavirus pandemic, difficult financial decisions will have to be made to ensure essential services such as health and social welfare are maintained. Priorities will have to change.

Increase in Irish Foreign Aid Ignores Real Problems in Africa

The Irish government intends to increase foreign aid even though current spending is massive for a small country like Ireland at  € 742 million per year. Most of the media and politicians do not seem to care that the problems in places like Africa are complex and cannot be solved by yet more foreign money. The Irish government have long held a simple maxim - if there's a problem, throw more money at it (see our health sector), rather than attempting to understand the root causes and build solutions from there. Recently, African leaders have highlighted some of these root causes but only Dublin politician Maureen O'Sullivan dared to raise them in the Irish parliament :

At a recent event in Dublin, the Rwandan ambassador made the point that $63 billion in illicit flows leaves the developing world. That is more than the foreign direct investment and aid going into those developing countries. Policy coherence would mean Ireland taking meaningful steps on tax justice. The Tánaiste may say that we got rid of the single malt, which is positive but it does not go far enough. What was needed was to take the steps the BEPS process has designed to tackle the underlying problem and prevent replacement structures emerging.

The policy incoherence is also seen in trade treaties in the imbalance between what the developed country gains and the minor gains for the developing world. For example, the Ireland-Ghana tax treaty prevents Ghana taxing the capital gains of mines, factories and large businesses owned by Irish companies. No spillover analysis was done prior to the treaty, which allowed for that and other examples of unfairness [link].

The President of Ghana, a country with some of the best farming and mineral resources in the world, recently told Macron that he wanted to move Africa away from being a dependent nation - "beyond aid". For President Akufo-Addo, the loss of Africa's best youth to Europe is something to mourn, not something that should be celebrated and encouraged, which seems to be the attitude of NGOs in Europe. 

https://www.youtube.com/watch?v=ZQcCk6x56QE

Why aren't governments listening to African leaders ? Well for a start there are the financial incentives in maintaining the foreign aid industry rather than helping to fix the underlying problems. Irish NGOs receive €5.5 billion per year from the Irish taxpayer.  The tax treaties are benefiting Irish companies operating in Africa. What of cocoa, one of Africa's largest raw material exports ? Europe dominates the worldwide chocolate market. It is Europe's top processed crop export and Europe is also the world's largest producer and exporter of chocolate. While Africa exports the vast majority of cocoa beans to Europe, it's share of global chocolate exports is less than 1%. There is significant room to increase chocolate production in Africa, could the foreign aid money be used to help local entrepreneurs there? Imagine Ireland's economy without the food production industry and we can begin to understand the challenges facing Africa.   

There is a long way to go to make Africa go "beyond aid", but it requires new thinking, rather than the old outdated aid industry, to fix it.