Eddie's Articles

Eddie's Speech to the Green Party Conference

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Switch  the Emphasis to Scarcity Pricing after Peak Oil  

More impact would be made on the public if the emphasis on the long-term impact of rising CO2 emissions and climate change, as encapsulated in the Stern report, was switched instead to a clearer focus on the much nearer impact of rising oil and gas prices, perhaps to scarcity levels.  Independent scientists examining the issue of peak oil have largely concluded that we are close to it and some of the economics surrounding this issue make for harrowing reading.  In our current national plan on sustainable energy it is not envisaged that oil prices will reach $100 a barrel until 2020 yet highly respected analysts and writers foresee prices rising upwards to $200 a barrel within the next number of years.

The world caught a glimpse of the imbalance between the huge demand of the developing world and efficient oil supplies last year when oil went to over USD 70 a barrel.  While there has been some slippage from this position it appears to me that the factors are temporary.  The facts are that the global economy has been built on access to cheap oil and arguably the Dollar is backed by it.  There is, within reason, an estimated 1.2 trillion barrels of oil in existing fields, which are now being depleted at a rate of 30 billion barrels per year.  There appears to be many other potential new fields ranging from Canadian oil sands to Antarctica , but when you measure the  Energy  Return on  Energy  Invested these sources look hugely expensive.  In 1999 the CEO of Halliburton reckoned that global demand would rise by 2% p.a. while supply would decline by 3%.  A short few years later the same person linked American foreign policy to energy.  His name is Dick Cheney, the current Vice President of the United States .  The invasion of Iraq occurred in the interim.

The facts are that demand is probably rising more quickly due to the huge appetite of China and India and , while OPEC may be pressurised from time to time  into higher  production  to stabilise the Dollar -based world economy , it cannot continue forever.  Meanwhile, alternative energy sources suffer from substantial problems including scalability , intermittent supply, energy density, and cost of production.  Neither is there an efficient replacement for oil as a transport fuel.  Based on current technologies some believe that oil would need to reach $150 a barrel before alternatives become efficient and even then all of the alternative energy sources added together won't plug the gap at a price which would avoid what appears to me to be the best case scenario.  This is a long-term period perhaps lasting a decade when we will experience something last seen in the 1970's and potentially double digit inflation.  And yes, when you consider that much of the reason our electricity costs compare unfavourably to competitors is because we've banned Nuclear energy, then its logical that we should, today, be at least debating how we can continue to carry the cost.

So, investing hugely in alternative energy such as wind and wave and in switching the emphasis in the National Development Plan from roads to public transport, is not just a matter of fulfilling our requirements on CO2 emissions.  It is an imperative in our economic competitiveness and also represents the tantalising opportunity of Ireland emerging as a global leader in alternative energy   from one of the most dependent on imported fossil fuels.

It seems to me that whichever way you slice and dice it the most successful economies and societies in the future will be those that have prepared themselves best for what is to come.  So if you want to convince Irish people about the need to change the way we insulate homes, change the way we move around the country and change the way we behave towards energy waste, start talking to them about the new energy age and what it means in the very, very, near future.


Tackle the Twin Monsters

Critics may believe that vigorously pursuing unrestricted competition across markets and sectors is some form of right-wing ideology.  It is not.  When markets and sectors are not benefiting from unrestricted competition generally it is the weakest in society that gets it in the neck.  For example, if planning permission for a discount foodstore is blocked by a commercial interest group, it matters not to me and other comfortable Irish that we have to travel 20 or 30km to the nearest big supermarket.  But, consider the impact on the weakest and poorest parts of our society who everyday face a fight to make both ends meet.  What happens when you're on the average industrial wage, you're rearing a family and you don't have a car to pop into to make a 60km round trip to buy cheaper groceries?  What happens when your children need expensive dental work and you don't have the luxury of going to Northern Ireland or flying to Budapest ?   

 Development Land & Windfalls; One of the greatest travesties in just economics has been the soft hand administered to developers and landowners who have been allowed to hoard development land on the one hand and make staggering windfalls for acquiring land along the public infrastructures that we've all paid for.  It is not an ideology, but simply just that annual development land taxes and development windfall taxes should be applied to penalise land hoarding on the one hand and recoup some of the massive public expenditure on infrastructure on the other.  Yet this remains silent in the broad thrust of economic policy of the present Government.  It is a simple statement of fact that most of the excessive costs, which we all bear day-to-day, is created by the viral effect of development land prices feeding through everything.  Are we so hog-tied to the revenues from the development and construction sector that we are incapable of delivering tax reform,still prefering to kowtow to big money even to the point of clinking drinks with multi-million Euro tax evaders here in Galway?

 Benchmarking; The second powerful interest group that needs tackling is the public sector and I refer specifically to benchmarking.  Successive partnership agreements, while needed to lift us out of the muck of the 1980's, have created a monster.  There is no real competitive forces within the public sector capable of driving efficiency and benchmarking copper-fastens that fact.  I have no objection to substantial sums of extra money over and above inflation being paid into the public sector.

But, consider what happens when this money, called benchmarking, is paid to all including the laggards.  Imagine the destruction of the soul and enthusiasm of our best public servants, our best teachers and our best Gardai when they see progress based on time spent on the clock rather than a meritocracy.

So let's make the payments as non-pensionable cash bonuses.  I'd love to see the best national teachers in a school, the ones that are going to have a lifelong effect on our children, get an extra EURO 30,000 or EURO40,000 in a year, while the drunk,  the lost,  the apathic, who's jobs are still safe, and who  are still guaranteed inflation linked increases in salary, don't get a sausage.

In none of the economic policies promoted by the main political parties is there a shred of courage on this matter, it seems.  Nobody appears to want to take on one-fifth of all of the voters in the next election.  But, when you talk to individual Gardai and teachers they will privately admit that the benchmarking system engineers, at best, mediocrity and must be unravelled.  When the public complains of rising prices, particularly from the public sector, and a lack of money, for example, in capitation fees to national and secondary schools, these in turn are linked to the way we pump massive sums of money into the public sector without an identified and measurable return for all to see.  There needs to be a fundamental rethink because right now with public sector being paid a substantial premium over the private sector, probably in the region of EURO 20,000 to EURO 30,000 a year when you factor in the value of the State pension scheme, the imbalance cannot continue on while Ireland 's competitive edge diminishes.  In the past, we have successfully carried a largely inefficient public sector, but if we want to regain our competitive edge it is here that most of the work needs to be done.

Is the mood changing?

Finally, and this is the most difficult part,  is to try to catch the mood.  We replaced the previous icons, the priest, the bankers and the politicians, as each self-destructed, with the money-makers.  These became the new icons as Ireland went from a largely agrarian society to a modern wealthy one.  You could now have whatever you wanted and benchmarking became the hand dealt to the public sector.  Year after year we read more and more about how wealthy we were becoming.   The Government got in on the act with barrages about how we've never had it so good, taking credit for our good fortune. No so long as we felt richer each year because out houses were worth more the borrowing,spending,and bumper tax cycle could continue. No wonder the new game became amassing things. This was how status in the new Ireland was to be defined.  You don't mind when you read about an Irish billionaire making a fortune on a hotel chain in some foreign country, but when Dennis next door drives home in his new Porsche jeep with tales of striking it rich on some apartment complex in Romania , you just don't envy him.  You hate him, because he has raised the game another notch.  Before, you see, making it meant having a second car in the drive, but now that's as passe as conservatories.  Then came the SUV's without tow bars, Prada bags, quad bikes  and finally cocaine the new high. We appeared to cease to live in a society but instead lived in an economy.  We talked less about migrant workers as fellow citizens and more as little energy units that were good for the economy.  Our leaders became economic managers  and we would forgive them just about anything so long as they continued to deliver growth on our balance sheets.

But my sense is that there is a dawning realisation that after all of the gridlock, the creche costs and the overvaulting ambition we are left with a hollow feeling that something just doesn't stack up.  My own view, for what it's worth, is that there is a latent thirst for a new direction  that values the group more than the individual, that  rebuilds society with values that aren't purely defined by money or monies worth, a replacement of managers of an economy with leaders of a society with a vision of what we want, a leadership that knows the way, shows the way and goes the way  and helps use to replace the knowledge of how to make money with the wisdom of what to do with it.

Against the backdrop of the matters I've covered in this short address I believe that it is timely in the development of this nation to have a strong green tinge in the next Government.  But it must be a green element full of pragmatism and commonsense on what will and won't work in lifting the spirits of the nation and in galvanising people along the road which must be taken.  This means shedding, as I know you are already doing, the suit and sandals, the old image of the looney environmentalists, the save-the-snails and the tree-huggers, bringing instead a freshness, a pragmatism and an integrity that's been sorely missing in the polictics of this country for far too long. I wish you well.

© Eddie Hobbs.com

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