Ireland’s recovery is too fragile to withstand any tax cuts in the budget this year
Temporary budgetary advantages are no basis for a programme of tax cuts in the Budget. Is it too early to talk about tax cuts? Normally, it would be. With the Budget now taking place in October, speculation about it shouldn’t really be inflicted on anyone until July, right?
But this year is an election year. And many voters would like to, ahem, express a view on the expectations they had regarding the burden of tax. Expectations for tax cuts have also been stoked by recent ministerial comment. Furthermore, the penny is dropping that asking Irish industrial workers to pay marginal tax rates designed for Monaco millionaires is neither politically nor economically sustainable. So please Santa, please, can I have a tax cut?
‘Can Government afford to give you one?’ is the real question. Were the McCarthy report to be implemented, local government to be radically slimmed down and reformed, and the privatisation nettle grasped and were welfare to be focused on need rather than universality then, yes, tax cuts would be possible. And desirable.
But until politicians get an appetite for radical reform, the case for cuts must rest on buoyancy in the economy. And if the Government’s Stability Programme Update (SPU) forecasts are right, that particular beast remains elusive.
As that forecast acknowledges, the real “take off” in our recovery seems to have a rainbow characteristic to it: visible but always just out of reach. In its April 2012 stability programme the Government predicted that the economy would grow last year by 2.2%. It shrank by 0.3%. That 2.5% gap is, according to the SPU’s calculations, worsened by the underlying budgetary balance by around 1% of GDP.
And yet the Government met its target deficit. But this was because this structural decline was offset by several “lucky” events, including a €200m benefit from lower than expected debt interest payments (thanks to clever footwork by the NTMA buying back Irish bonds) and a higher than expected Central Bank surplus. The latter windfall is due to a temporary little arrangement whereby bonds sold by Government hang around on the Central Bank’s balance sheet for longer than the ECB would like them to.
Even if the NTMA can continue to imitate Muhammed Ali in his prime and even if the Government faces down the ECB, these temporary budgetary advantages are the only buffer against the budget deficit scraping against Excessive Deficit Procedure (EDP) limit. They are certainly no basis for a programme of tax cuts in the coming Budget. GNP growth last year – 3.4% isn’t much comfort here, arising as it does mainly from adjustments in the national accounts relating to multinational profit flows.
What about tax buoyancy? Aside from “lucky” events, if tax revenues started growing strongly enough and of their own accord, that would justify tax cuts, wouldn’t it?
If that were the case it certainly would. A fortnight ago news of a 4.7% jump in the first quarter’s tax take prompted hopeful murmurings. But the strongest growth rates are coming not from underlying buoyancy but from discretionary tax rate rises: annualised growth rates in March tax receipts for Capital Gains (80.2%), Capital Acquisitions (52.9%) and Stamp Duty (34.7%) are only sustainable if bank lending picks up. After the ECB’s November review, bank lending may just do that. But while this in itself would be welcome, tax cuts based on this would – as we now know from bitter experience – most certainly not. So a close look at the figures suggests tax revenue growth so far doesn’t offer too much hope.
Could that be about to change? SPU forecasts suggest the recovery is about to get stronger. From flat growth last year, economic growth is supposed to start averaging 2.5% a year over the next two years. But these stability forecasts have been saying this for the last three years in a row. In fact, given recent misses in GDP forecasts, it is surprising that the Independent Fiscal Advisory Council (IFAC) has been so quick to endorse these latest forecasts.
In my view, more caution is warranted about our near term fiscal position. Perhaps the IFAC is too understaffed to spot emerging signs of trouble. But they are there. For example, the April 2012 SPU forecasted GDP to grow by 2.2%, 3 and 3% respectively over the years 2013, 2014 and 2015. That’s cumulative growth over that three years of 8.2%. Instead, GDP fell 0.3% in 2013 and is forecast to average 2.5% this year and next. That’s cumulative GDP growth of 4.5%. So GDP will by the end of 2015 be 3.7% lower than we thought. So the Government must work harder – or get luckier – if it is to stick to its deficit targets.
Constantly kicking to touch our national debt ratio reduction underlines the problem. In April 2012 the stability forecast expected the debt ratio to peak at 120.3% last year and fall to 117.4 per cent in 2015. It rose instead to 123.7% last year and is forecast now to be at 120% in 2015. And that’s assuming no more nasty surprises on the GDP front.
So if you’re dying for a tax cut, don’t hold your breath. And if an election candidate promises you one, ask them how they expect to pay for it. The recovery is sadly still too weak to do so. And that leaves only two options: kicking debt ratio reduction below 120 per cent further down the road, or implementing radical, deep structural reforms. Unsurprisingly, few politicians during elections are willing to commit to the latter.
Why Facebook and Google are buying into drones
The profit motive is behind both firms’ investment in unmanned aircraft, whatever terms they might couch it in
Google recently acquired Titan Aerospace, a start-up firm that makes drones.
Back in the bad old days of the cold war, one of the most revered branches of the inexact sciences was Kremlinology. In the west, newspapers, think-tanks and governments retained specialists whose job was to scrutinise every scrap of evidence, gossip and rumour emanating from Moscow in the hope that it would provide some inkling of what the Soviet leadership was up to. Until recently, this particular specialism had apparently gone into terminal decline, but events in Ukraine have led to its urgent reinstatement.
The commercial equivalent of Kremlinology is Google- and Facebook-watching. Although superficially more open than the Putin regime, both organisations are pathologically secretive about their long-term aspirations and strategies. So those of us engaged in this strange spectator-sport are driven to reading stock-market analysts’ reports and other ephemera, which is the technological equivalent of consulting the entrails of recently beheaded chickens.
It’s grisly work but someone has to do it, so let us examine what little we know and see if we can make any sense of it. First of all, what do we know for sure? We know first of all that these two companies are run by smart people who have a deep understanding of the capabilities and potential of computing technology.
We also know that these folks have: total control of their companies on account of a cunning two-tier shareholding structure, which effectively liberates them from stock market control; megalomaniacal ambitions; and – for the time being at least – money-pumps, which provide limitless resources and enable their founders to indulge their ambitions and visions.
After that, all is speculation. The only thing we have to go on is what Google and Facebook have been up to in the public marketplace. And what they have been doing is acquiring companies in the way that, pacePG Wodehouse, ostriches go for brass doorknobs.
In the last 18 months, for example, Google has bought at least eight significant robotics companies, and laid out £400m to buy the London-based artificial intelligence firm Deepmind. Facebook, for its part, bought Instagram, a photo-sharing network, for $1bn and paid an eye-watering $19bn in cash and shares for WhatsApp, a messaging company. More puzzling was its decision to buy Oculus VR, a virtual reality company, for $2bn. And in the last few weeks, both companies have got into the pilotless-drones business. Google acquired Titan Aerospace, a US-based startup that makes high-altitude drones, which cruise near the edge of the Earth’s atmosphere, while Facebook bought a UK-based company, Ascenta, which is designing high-altitude, solar-powered drones that can fly for weeks – or perhaps longer – at a time.
In trying to make sense of these activities, we need to separate out short-term panic from long-term strategy. Facebook’s acquisition of Instagram and WhatsApp was the product of two things: naked fear and the ability to mint a particular form of Monopoly money known as Facebook shares. Users’ photographs are Facebook’s lifeblood, and Instagram’s meteoric growth suggested that it, rather than Facebook, might ultimately become the place where people shared their pictures. Much the same applies to WhatsApp: it was growing much faster than Facebook had at a comparable stage in its corporate development, and looked like eventually becoming a threat; besides, most of the $19bn price was paid in Monopoly money rather than in hard cash. As for the Oculus VR acquisition? Well, like the peace of God, it passeth all understanding.
Which leaves us with the strategic stuff. Here we see clear long-term thinking at work. The Google boys have decided that advanced robotics, machine-learning, distributed sensors and digital mapping are going to be the essential ingredients of a combinatorial future, and they are determined to be the dominant force in that.
As far as the high-altitude drones are concerned, Google and Facebook are on exactly the same wavelength. Since internet access in the industrialised world is now effectively a done deal, all of the future growth is going to come from the remaining 5 billion people on the planet who do not yet have a proper internet connection.
Both companies have a vital interest in speeding up the process of getting those 5 billion souls online, for the simple reason that the more people who use the internet the greater their revenues will be. And they see high-altitude drones as the means to that profitable end. They piously insist, of course, that this new connectivity will be good for humanity, and perhaps indeed it will. But ultimately profitability, like charity, begins at home.
Charlie Flanagan warns Govt. Cabinet to beware of a Sinn Fein/Fianna Fail coalition
Fine Gael chairman Charles Flanagan last night revealed there was growing concern in the party that complacency in the Cabinet could create a scenario where a Fianna Fail/Sinn alliance would be “a viable coalition option”.
Mr Flanagan was speaking as today’s Sunday Independent/Millward Brown poll reveals a SF/FF alternative, with the support of 42% of the public, is now 7% ahead of the Coalition in the polls.
He warned: “The Government is now in the scenario where we have lost the votes of a fifth of the electorate who voted for us in 2011.”
He added this gap means “a Sinn Fein/Fianna Fail coalition is appearing by stealth”.
Mr Flanagan also criticised the attitude of one government minister last year who said there was “no alternative” to the current Coalition.
He added: “I hope that attitude is not shared by his colleagues; there is always an alternative and in this case the alternative is Sinn Fein/Fianna Fail. We need to be careful we are not sleepwalking into such a scenario. There is a Europe-wide drift to extremism; that may occur here, Ireland is not unique. We are not insulated. There is growing and general concern in the backbenches that we cannot take SF for granted’.”
Mr Flanagan urged voters to “look closely” at Sinn Fein, adding that “their populism is a recipe for destruction.”
But he admitted that Sinn Fein could clean up in the forthcoming local and European elections.
Mr Flanagan told the Sunday Independent: “The Sinn Fein fear factor is being constantly diluted amongst the voters and will be further diluted if a raft of new Sinn Fein councillors are elected in two months’ time.”
He also warned that the Government must pay more attention to facing down a growing SF by being a more “reforming administration”.
“In the first half of its term the Government was dealing with the economic crisis; the second half should have a greater emphasis on reform with particular emphasis on the democratic revolution.”
What is it like for parents to have a child with autism?
One in 100 children have some form of autism, but what is it like for their parents?
About 1 in every 100 children are born with some form of autism in Ireland.
For children born with the disorder, there is an increasing, but still deficient, support network and awareness.
For parents of those children, it is a constant challenge, but one that many say comes with its own rewards.
A Facebook post from a mother whose two boys have autism was widely shared at the start of the month, to mark World Autism Awareness Day.
“When Autism was first mentioned to us, we were scared to death,” the mother says, echoing what Steve* says.
He was young when his son was born and says that while he was adjusting to becoming a dad, he received a bombshell.
“There’s no point saying that it wasn’t a shock or that you’re immediately ok with it. You worry.
“The doctors tell you about all of the support available, but that in itself sounds like a lot of work and doctors visits and struggles.”
Steve’s son is now eight and is in mainstream school, but that comes with its own challenges.
“It’s hard to ask kids to understand something as complex as autism. Luckily, the school are great.”
Other people
Of course, the reaction of children isn’t the only worry. Says the Facebook post from a Cavan mother:
“In the early days the hardest part was often the responses from other people. When we would tell them our son was going through assessment for autism they’d say “There’s nothing wrong with that child, sure isn’t he great there playing away on his own, quiet as a mouse”.
“You almost felt you were making it up, making it worse than it was. And it creates guilt in you for believing that something might be wrong. People said to me “He doesn’t look autistic” as if a child with autism looked a certain way. And I was even told “he’d grow out of it” which six years later he definitely hasn’t.”
“The problem I find is people think they know what autism is. But my son is very calm most of the time. People think he must not be autistic because he’s not like a guy they’ve seen on tv. But the reality is very different.”
The challenge: having a child is a big challenge, but having autism multiplies that.
“The things you take for granted in your daily life, are often the most challenging parts of our day, rigid routines, irrational fears, terrible meltdowns and restricted diets are all the norm for us.
I could write all day about the tears from my kids when they didn’t get invited to classmates parties or when another kid told them they were acting or speaking weird, listening to my son cry about being bullied in school, or going to endless meetings with the school to have his voice heard.
“Or the feeling you get when you notice strangers in a shop looking at your son as he jumps up and down flapping his arms in excitement.”
“Simple things become battles. Things that my friends don’t worry about with their are my daily worries. That frustrates me, but it’s something you learn to live with.”
Both parents say that they would encourage other parents to talk to their children about autism. Says the Cavan mother:
“Believe me exclusion and bullying does more damage to the child’s self esteem and self worth than the autism ever did. My boys have autism; they are different but not less.
Irish researchers discover a new method to produce large volumes of high quality graphene
The Science Foundation Ireland a funded materials science centre headquarters at Trinity College Dublin have, for the first time, developed a new method of producing industrial quantities of high quality graphene.
Described as a wonder material, graphene is a single-atom thick sheet of carbon. It is extremely light and stronger than steel, yet incredibly flexible and extremely electrically conductive.
The discovery will change the way many consumer and industrial products are manufactured. The materials will have a multitude of potential applications including advanced food packaging; high strength plastics; foldable touch screens for mobile phones and laptops; super-protective coatings for wind turbines and ships; faster broadband and batteries with dramatically higher capacity than anything available today.
Thomas Swan Ltd. has worked with the AMBER research team for two years and has signed a license agreement to scale up production and make the high quality graphene available to industry globally.
The company has already announced two new products as a result of the research discovery (Elicarb®Graphene Powder and Elicarb® Graphene Dispersion).Until now, researchers have been unable to produce graphene of high quality in large enough quantities.
The subject of on-going international research, the research undertaken by AMBER is the first to perfect a large-scale production of pristine graphene materials and has been highlighted by the highly prestigious Nature Materials publication as a global breakthrough (“Scalable production of large quantities of defect-free few-layer graphene by shear exfoliation in liquids”). Professor Coleman and his team used a simple method for transforming flakes of graphite into defect-free graphene using commercially available tools, such as high-shear mixers.
They demonstrated that not only could graphene-containing liquids be produced in standard lab-scale quantities of a few 100 millilitres, but the process could be scaled up to produce 100s of litres and beyond.
Prof Jonathan Coleman.Commenting on the development, Prof Jonathan Coleman, AMBER commented, “This shows how industry and academic collaboration can lead to research of the highest calibre, with real commercial applications. This paper combines basic and applied research and contains elements of physics, chemistry, materials science and chemical engineering. It brings together academic expertise with the wealth of experience provided by Dr Keith Paton, Thomas Swan’s researcher who is working with us here on-site in AMBER.
Graphene has been identified as a life changing material and to be involved at this stage of development is a wonderful achievement”.Harry Swan, Managing Director, Thomas Swan, added, “It was scientific excellence that first attracted us to working with Prof. Coleman and we have developed an excellent working relationship with both him and the AMBER research team. We have also been impressed by the speed at which the project progressed from initial discussions in 2011 through to product launch in early 2014.
This research and licence offers us the opportunity to produce and deliver a truly revolutionary material to many industries globally”.Minister for Research and Innovation Sean Sherlock, TD commented; “Professor Coleman’s discovery shows that Ireland has won the worldwide race on the production of this ‘miracle material’. This is something that USA, China, Australia, UK, Germany and other leading nations have all been striving for and have not yet achieved.
This announcement shows how the Irish Government’s strategy of focusing investment in science with impact, as well as encouraging industry and academic collaboration, is working.”Prof Mark Ferguson, Director General of Science Foundation Ireland (SFI) and Chief Scientific Adviser to the Irish Government added; “This is a very significant global achievement for Prof Coleman and AMBER.
The research and licence agreement with Thomas Swan is an example of the real industry partnerships which SFI is establishing and developing. This research discovery opens the door for industry worldwide to bring their graphene ideas to commercial reality and is an example of the innovative research being conducted by the internationally renowned SFI Research centres.”
Scientists discovered genetic switches that caused differences between us Humans and the Neanderthals
Israeli scientists made a major breakthrough as they discovered genetic switches that caused differences between extinct neanderthals and modern humans.
Israeli scientist published the research in an online edition of the prestigious journal and said “Science may explain what separates modern man, or Homo sapiens, from Neanderthals”. Human and their extinct Neanderthal cousins different in mind and body were found to be 99.84 similar genetically.
Four years after scientists discovered that the two species’s genomes differ by a fraction of a percent, geneticists said on Thursday they have an explanation: the cellular equivalent of “on/off” switches that determine whether DNA is activated or not. Many genetic switches are turned on in humans that are switched off in neanderthals and vice-versa, study revealed.
“People are fundamentally interested in what makes us human, in what makes us different from Neanderthals,”said Sarah Tishkoff, an expert in human evolution at the University of Pennsylvania, who was not involved in the new study. Discovering the differences in gene activation is “an amazing technical feat,” she said.
Study also revealed why humans have neurological and psychiatric disorders including autism and schizophrenia but our ancestor Neanderthals did not. In an interview, Carmel said “any given gene might “do many things in the brain.When dozens of brain-related genes became more active in today’s humans, that somehow produces the harmful side effect of neurological illness”. Scientists mapped neanderthal’s and human’s epigenome and found that more than 99 percent of the maps matched.
HOXD, a cluster of five genes which influences size and shape of limbs was found absent in the ancient species. Chris Stringer of the Natural History Museum in London said in an interview that the HOXD gene finding “may help to explain how these ancient humans were able to build stronger bodies, better adapted to the physical rigors of Stone Age life.
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