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The Journal
12 hours ago
- Business
- The Journal
Never mind the spin - Ireland isn't close to ‘breakeven' on the €21 billion AIB bailout
Paul O'Donoghue GOOD NEWS – WE'RE up on our big investment! 'What investment?' you cry. Why, the Great Bank Bailout investment, of course! You see, during the week the state sold its final shareholding in AIB. It was once assumed that a lot of the cash poured into the lender was a sunk cost. It turns out, that isn't the case. The government said during the week that, once everything is factored in, AIB will come extremely close to repaying its bailout. Some €20.8 billion was put into the lender during the financial crisis. The government so far has gotten back €19.8 billion. Eventually, the total recovered amount will likely rise to just over €20 billion. Multiple media outlets reported during the week that AIB will end up about '€700 million shy' of repaying the state. Essentially, coming very close to breakeven. This is based on calculations provided by the Department of Finance. The department said when you look at the bailout money collectively put into AIB, Bank of Ireland (BOI) and PTSB, 'the state is €0.6 billion above break-even on its €29.4 billion investment'. All of that sounds great. But it doesn't give the full picture. Here's why. A LUAS tram passes in front of AIB headquarters. Alamy Stock Photo Alamy Stock Photo The debt To cut a long story short – the government's figures don't take debt servicing costs into account. When the Irish state poured €29.4 billion into those AIB/BOI/PTSB during the financial crisis, it borrowed money to do so. This debt costs money to service – quite a bit. Let's start with AIB. As stated, the AIB bailout cost was €20.8 billion. The Comptroller and Auditor General (basically the state spending watchdog) previously estimated that, as of the end of 2021, debt servicing costs on the AIB bailout amounted to €7.1 billion. That amount is on top of the €20.8 billion – so straight away, the actual AIB bailout cost goes to €27.9 billion. And interest is still being paid on that money. In a statement to The Journal , the organisation said the report, published in 2022, 'is the most recent report the C&AG has published on this issue'. But as some interest would still have racked up between 2022 and now, it's likely the final AIB bailout cost, when debt servicing is included, is well above €28 billion. With this in mind, we asked the Department of Finance how taxpayers are €0.6 billion 'up' on the AIB/BOI/PTSB bailouts. A spokesman said: 'The figures are based on a simple cash in, cash out basis. We have never included debt servicing costs over the last 10 years of tracking these figures.' Advertisement Asked why debt servicing costs are not included, the spokesperson said: 'It [the Department] doesn't include debt servicing costs, which are under the remit of the NTMA'. The NTMA (National Treasury Management Agency) is the Irish agency which manages the state's assets. Let's think about that for a minute. The Department of Finance doesn't include the billions in debt servicing costs – which are real costs – because counting this is handled by a different state agency. Does that sound like a good reason to ignore billions in taxpayer funds spent? It would be one thing if profit and loss wasn't mentioned at all. But by saying taxpayers are actually in profit on the AIB/BOI/PTSB bailout, the Department's claims paint a misleading picture. Let's take a quick look at debt servicing costs for the three main banks. As of end 2021, the most recent figures available: AIB: €7.1 billion BOI: €0.7 billion PTSB: €0.7 billion That's an additional €8.5 billion. So rather than taxpayers being '€0.6 billion above break-even', we'd actually be about €8 billion down. Not even counting the additional debt costs paid since the end of 2021. It's also telling how the Department chose to highlight the 'investment' into AIB, Bank of Ireland and PTSB. It didn't mention the other two lenders we bailed out 'invested' in at the same time. This pair, of course, was Anglo Irish Bank and Irish Nationwide (INBS). Between them, they received bailout funds of €34.5 billion. The state has recovered about €1.1 billion of that amount. The remaining €33.4 billion is officially deemed an 'unrecoverable sunk cost'. Anglo and INBS were merged into a new state-owned entity called the Irish Bank Resolution Corporation (IBRC), which is trying to get anything it can back for taxpayers. So it's perhaps understandable why the Department would prefer to forget about these two when talking about how well we are doing on our banking 'investment'. Let's do a quick rundown of where things actually stand when looking at the Irish state's banking 'investments' – when including debt servicing costs. AIB – loss for the state. Likely in the region of €8 billion BOI – profit. Approximately €1.4 billion PTSB – state still holds 57% stake, currently valued at €600 million. State will likely finish at a loss of about €1 billion. Possibly less, depending on how much it ultimately sells the shares for. IBRC – loss. Likely in the region of €35 – €40 billion once all costs are included. Briefly returning to AIB. Seeing as the Department of Finance consistently refers to the bank bailouts as 'investments', it's worth briefly considering them as such. If someone invests €20.8 billion in 2010, and receives a payout of say €20.8 billion in 2025, how did they fare? Well, you *could* say they broke even, on a 'cash in, cash out' basis. But in reality, they lost money due to inflation. €20.8 billion in 2010 is worth the same as about €27 billion in today's money. And that's on top of… something… oh yeah, billions in debt servicing costs! How do we keep forgetting those pesky charges? When the government continuously forgets them as well, it can be hard to remember! We're down billions None of this is necessarily to say that bailing out the banks was the wrong move. The Irish state got something valuable for the AIB bailout. It ensured one of the country's main lenders didn't collapse. It also got a decent amount of the bailout money back in the end. At least, from AIB, PTSB and BOI. Likely a good bit more than was expected during the crash. That's all fine. So why can't the government be happy with that, rather than trying to spin that we are around 'breakeven' on our AIB 'investment'? To its credit, AIB's statement on its return to private ownership didn't make any mention of the state's 'return on investment'. So if AIB hasn't tried to claim this, why has the government? Put simply – the government is trying to spin that taxpayers got a return on the bank bailouts. Three of them, at least. But we didn't. Even on those selectively-chosen three bailouts, we're down billions and billions of euro. When the government is trying to rewrite history, it should be called out for it. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
The Journal
18-05-2025
- Business
- The Journal
Ireland's 'right to request' remote work law is useless - it should be overhauled
Paul O'Donoghue We're fans of the philosophical here at The Journal , so let's kick off this piece with a question. What is the point of new laws? Generally, it's to fix a specific issue. A problem is identified, the government thinks it can do something about it. It brings forward new legislation, and the issue is (hopefully) made somewhat better. With that in mind, one would be justified in asking: What problem was Ireland's 'right to request remote working' law trying to solve? Initially, it seemed to be that employees who worked remotely with little issue during the Covid pandemic would not be forced back to the office for no reason. That is clear from comments made by former Taoiseach Leo Varadkar. He said in January 2022 that the legislation would mean businesses need a 'very good reason' to refuse permitting their staff to work from home. But the legislation ended up being extremely watered down - something previously covered by The Journal . And now a recent string of decisions made under the legislation show how far it has strayed from its original intent. One published earlier this month may just be the final nail in the coffin for the legislation. It is significant, because it is the first award for a breach of the remote working rules. So, what happened? The full case details are available here , but here's a quick summary. A Salesforce recruiter wanted to relocate from Dublin to the west of Ireland, working remotely. He was granted permission by both his manager, and a director at Salesforce. Under the agreement, he would 'continue working remotely, attending the office as needed'. On that basis, the recruiter moved across the county. Less than a year later, Salesforce came back and said he would have to attend the office between three and four days a week. The reasons given were for in-person meetings with managers, and for the 'promotion of collaboration'. While the employee protested, citing a 550km round trip to the office, his request to work remotely was denied. So, he then took a case under Ireland's 'right to request' remote working legislation. Upon hearing his case, the Workplace Relations Commission awarded him €1,000, as it said Salesforce did not follow the correct procedure in dealing with his request. On the surface, this may sound like a (small) win for the employee. But really, when you look at the details, they just reinforce how flimsy Ireland's remote working law is. Advertisement To start – as previously outlined by The Journal - the 'right to request' law does not give employees any right to work remotely. In practice, a company can deny a remote working request on any grounds they like. A company can deny a remote working request on any grounds they like. © © While doing this, they only have to meet two requirements. One – show that the employee's remote working request was 'considered'. This requirement can be easily fulfilled. For example, TikTok previously did it by getting a manager and HR employee to meet to discuss a request. Two – issue a response to the employee's request within four weeks. If these two requirements are met, there is essentially no way for a company's decision to refuse remote working to be questioned. The only reason the Salesforce employee received the €1,000 award was because the company took longer than four weeks to respond. So, why does this show Ireland's 'right to request' remote work law is a waste? Because this is basically the worst case scenario for an employer – a small fine. Salesforce's Irish arm recorded just under €6 billion in revenue in its 2024 financial year . A €1,000 award wouldn't even register as a fraction of a rounding error. There is nothing for companies to be afraid of here. The two 'right to request' steps are so easy to fulfil that it is simple for any employer to do so. In the event that they don't, the worst they will face is a tiny penalty, which is unlikely to have any meaningful impact. It's worth remembering that, even in its original '13 reasons' iteration, the 'right to request' law was heavily criticised. The Irish Times pointed out in 2022 that the originally listed 13 reasons were not exhaustive. Employers could still reject a request for not being suitable on 'business grounds,' which was extremely broad and vague. The Irish Legal News then noted that this would have given 'complete discretion to the employer' whether workers could work remotely. 'This arguably renders the right to remote work illusory,' the publication said. But while the initial legislation was weak, at the very least, employers would have had to justify their decisions in refusing remote work. It wouldn't have been much, but it would have been something. However, even this small right was stripped away. Changes to the act In November 2022, the government changed the 'right to request' Act, as it was rolled in with other legislation . It was reported that this shift would mean the rules set would be 'weighted more towards employees'. Read Next Related Reads Remote working: Denis O'Brien reminded us of the outdated work practices we've left behind Analysis of remote work: 'It's not in decline - demand is higher than ever' Companies would apparently now have to consider both 'their needs and the needs of employees when considering a request'. Unhappy employees would also get the right to appeal decisions at the Workplace Relations Commission (WRC). However, we can clearly see that the reality is even less effective than what was originally proposed. The WRC has specifically said that the new measures are 'very limited'. Where a request for remote working has been refused, WRC inspectors are unable to investigate the merits of a decision made by an employer. All they can do is check if the employer followed the two steps outlined earlier. That's it. Dozens of optimistic employees have taken cases under the 'right to request' Act. Besides the Salesforce employee, none have been successful. And as we've seen, the €1,000 handed out in that one case is unlikely to give other businesses pause when it comes to considering remote working requests. Ireland's 'right to request' law has been described by one prominent employment solicitor as a 'toothless tiger' . Frankly, that feels kind. As things stand, the law is basically zero help to employees. The government, or opposition politicians, should consider looking to bring back the spirit of the original proposal. The law can be done properly It is difficult to tell private firms how to manage working arrangements with their employees. But other countries have brought forward legislation with some meaning to them. These include Angola , which gives stronger remote working rights to pregnant women with health complications, or those who have young children or disabled dependents. Poland also has similar measures for pregnant workers or those with children under four. These countries show that this can be done. The original intent of Ireland's remote working law was good. However, under pressure from business lobbying, the execution has been extremely poor. Ireland's remote working law is functionally useless. It is basically a waste of time for all parties. For employers, who have to go through the song and dance of 'considering' requests, hopeful employees who don't get any real rights, or the WRC inspectors who can basically do nothing. But it doesn't have to stay this way. We have enough evidence to show now that the law isn't working as it should be – legislators should take another crack at it. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
The Journal
22-04-2025
- Business
- The Journal
Ireland's plans to become the 'Saudi Arabia of offshore wind' were dealt a major blow last week
Paul O'Donoghue IRELAND'S PLANS TO develop its offshore wind industry are at a tipping point. The country has ambitious plans to build huge projects around the coast. The plan is that these offshore wind farms would help meet Ireland's electricity needs, providing a sustainable form of energy as we transition away from polluting fossil fuels. In fact, Ireland plans to build so many of these offshore wind farms that not only would they meet the state's electricity needs, but they would ideally generate surplus energy, meaning we could export electricity to mainland Europe. They are seen as a long-term, clean source of power which would increase Ireland's energy security while potentially making the nation richer. On paper, this all sounds amazing – and many have claimed that the plan gives Ireland the potential to become the 'Saudi Arabia of offshore wind'. But this vision received a major blow last week with the scrapping of the planned Sceirde Rocks development, which would have seen up to 30 turbines built off the coast of Galway. A planning application for the project was submitted in January. But last week, the company behind the plans announced that it wouldn't go ahead with the project. The Currency reported that this was due to the developers realising that the site would have been vulnerable to extreme weather, including waves of up to 23 metres. Apparently, the issue was first realised during strong storms over the winter. The decision was a serious blow to Ireland's vision of developing its offshore sector: although the State had planned to have 5 gigawatts (GW) of offshore wind energy operating by 2030, that is no longer possible without the Sceirde Rocks project. It's often estimated that about 20 GW would meet all of Ireland's electricity needs – so having 5GW by 2030 would have been a big step in the right direction. To put this in practical terms, there are 1,000 megawatts (MW) in every GW, and 1 MW of offshore wind energy could meet the annual electricity demands of about 750 homes. Sceirde Rocks was a 450MW project – so 0.45GW – so would have produced enough energy for about 350,000 homes every year. By March, there were six offshore wind farms which had a reasonable chance of being completed by 2030. Sceirde Rocks was one of them. These six developments had a combined capacity of slightly under 4.3 GW; without Sceirde, that number will drop to around 3.8GW, almost a quarter of Ireland's 5GW target. Government inaction One of the reasons Ireland is lagging is the slow pace of government action on tackling climate change. Offshore wind is a relatively new technology involving a massive, long-term investment, and private companies tend to want to get state contracts before they build wind farms. This is where Ireland's 'ORESS' [Offshore Renewable Electricity Support Scheme] comes in. Under the first version of this, called ORESS 1, private companies which were already developing their own project sites bid for government contracts. These contracts are extremely valuable, as they guarantee that the State will buy the electricity produced by an offshore wind farm at a certain price. That makes projects much more secure, as the developer knows they'll have a means to sell their electricity after investing massive amounts of time and money. Of the six developments mentioned earlier, four won contracts under ORESS 1- and Sceirde was one of them. The two projects which were unsuccessful in ORESS 1 still have to make sure they find someone who will buy the electricity produced by their wind farms. Although the developers of each have said they are confident of signing deals with large companies that want the power, these agreements have not yet materialised. Advertisement So the fact that one of the four ORESS 1 winners is no longer going ahead with its project is bad news, as it would have been hoped that they were a lock and could therefore contribute to Ireland's 2030 goals for wind power. One might ask that if one of these ORESS 1 projects is gone, why doesn't Ireland just start some new projects under an ORESS 2? That was the idea, but progress is slow. The government is planning an ORESS 2.1 auction, but it will be different compared to ORESS 1. To apply for ORESS 1 funding, developers had to earmark sites they had chosen to build wind farms on themselves. However, in ORESS 2.1 – and under all future ORESS auctions – the government will instead decide where new offshore wind farms get built. In theory, this is a good thing because it will allow the state to manage resources like the grid better, rather than rely on what private companies are doing. But to achieve this, the government needed to pass new, complicated legislation which it has been extremely slow to do. The plan was to hold the ORESS 2.1 auction in 2023; now, the hope is it will be ready by the middle of this year. Planning delays Because of how long Ireland's planning process takes, it will be impossible for an ORESS 2.1 winner to get a contract in 2025 and complete construction by 2030. At least six years would be needed, and even that's an optimistic timeline. So what does this mean for Ireland's 2030 targets? Ireland has the aim of generating 80% of its electricity from renewable sources by 2030. Various sources have put the country on track to miss that target, such as an estimate published last August . Ireland's offshore projects were factored into those numbers – so the less offshore wind we produce, the further away we will be from meeting the generation targets. There are other 2030 goals that the offshore projects factor into. For example, Ireland is aiming to reduce its emissions by 51% by 2030 compared to 2018. As things stand, it's estimated that Ireland's actual emissions reductions will be in the region of 29% – again, below the target. The cancellation of the Sceirde Rocks will likely mean even lower emissions reductions, putting us even further away from our target. These targets are EU binding, which also means that missing them leaves us open to penalties . Those penalties have a level of uncertainty around them too, given that many EU member states will likely miss their climate targets – it's not clear if officials will pursue financial and legal action against all of them. But arguably, developing these renewable projects is something Ireland should do anyway. The energy price spikes of 2022 demonstrated the importance of having energy security. Ireland's offshore wind sector could, in large part, provide that. But Sceirde Rocks pulling out is a case of one of the most important projects falling at the first major hurdle. Big infrastructure projects face being tied up for years in long appeals and judicial reviews. Some of the offshore projects have already faced this challenge. The Sceirde Rocks failure bodes ill for both Ireland's ambition to overhaul its way of producing electricity, and for its multitude of 2030 goals. With only five potential windfarms now standing (three of which have secure routes to market), Ireland should look to make the planning process as quick and simple as possible. Delays and failures aren't factored into the plan – we can't afford any more. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. 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