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Interview with Declan Purcell: Chairperson of the Competition Authority In an interview with Sarah Kilduff, the Chairperson of the Competition Authority discusses the ongoing work of the Competition Authority and the influence of the EU/IMF memorandum of understanding on competition policy Functions: Law and mergers
The Authority has three main functions, the first of which is the enforcement of competition law. The second is the review of prospective mergers. Mergers over a certain threshold have to be submitted to the Authority; a function held by the Minister for Enterprise prior to 2002. The Authority has one month initially to examine a potential merger. This may lead to a second phase involving a full, more detailed investigation. Most mergers are cleared during the initial phase. Should a case go the the second phase, the parties will agree to undertake certain commitments or to put in place a structural remedy. If this doesn’t happen, and the Authority is still concerned that the merger will result in a “substantial lessening of competition”, the Authority will block the merger. Since 2002, the Irish Authority has blocked three mergers. While this can be “daunting and challenging work” as the limited staff numbers must become experts on the given sector in short period of time, certain mergers must be blocked for the sake of the consumer.
The third function requires the Authority to act as an advocate and advisor to the Government, Ministers, other public authorities or bodies and the general public about the implications for competition policy, particularly in relation to new laws and regulations which may stifle or restrict competition. Public Affairs Ireland
INTERVIEW Chairperson of the Competition Authority Declan Purcell .............................................1
PRIVATISATION Michael O’Connor analyses the findings from the recent McCarthy Report.........................5
CROKE PARK AGREEMENT John O’Dowd discusses progress being made in relation to redeployment ...............7
REGULATORY AND LEGISLATIVE AFFAIRS Cassandra Byrne & Jarlath Heneghan discuss expert witness immunity and the effects of recent UK case law......................9 Oisin Tobin & Philip Nolan outline existing copyright law in Ireland and the potential for altering the current regime.........................11
ECONOMICS Charles Larkin explains in-depth the IMF organisation and how it comes to allocate loans to individual countries.......................13
EDUCATION In part two of his contribution to the PAI Journal, Ciaran Sugrue examines the ‘Draft National Plan to Improve Literacy and Numeracy in Schools’................................15
The role can be particularly difficult, Mr Purcell mentions, as competition policy is often perceived as being rightwing. “People must be assured that competition in a market is a good thing. While not everyone would be convinced, competition is not rightwing and we promote competition in an objective, non-ideological way” Mr Purcell added. The Authority’s role is to “protect and promote competition as a concept” to get the most competitive economy that can be achieved and remove both private and public restrictions on competition so that consumers can
Directory of Amnesty International Ireland Colm O’Gorman analyses the Government’s pledges on reform of mental health services ............18
REGIONAL ISSUES Adrian O’Donoghue evaluates the development of the ‘knowledge economy’ at a regional level...........................................20
CORRUPTION Imelda Higgins examines the legal aspects of bribery and how this has changed and developed over the years . ........................22
RETAIL David Fitzsimons analyses the effects of JLCs, upward-only rent reviews and Local Authority rates on the retail industry..........24
June 2011 Issue No. 77
Interview benefit. “For an agency of our size, this is a tall order - it spans the whole economy and we cannot be experts in everything” Mr Purcell continued. With a background within Governmental departments, Mr Purcell notes how working in an agency differs greatly from working within the Department; it is an all encompassing role involving attendance at Oireachtas Committees, media appearances amongst other engagements. It can be “quite demanding particularly when you consider the multifunctional nature of the agency”.
Uncovering the sheltered sectors: Medical and legal professions
The Authority has undertaken detailed studies of the economy, the most recent being research on seven sheltered sectors, primarily those domestic sectors that are hidden from real market forces i.e. forces that those who export may be affected by. The job of the Authority has been to uncover these legislative shelters and make the sectors involved more competitive. Several of these professional services (such as legal services) are supplied to businesses. If their cost structure is higher than needs be, this will mean higher business costs and in turn a less competitive economy. To give another example, Mr Purcell explained that if there are rules and regulations restricting the ability of GPs to compete with one another, the consumer can end up paying more; this contributes to an increase in the cost of living which feeds into wage demands. In turn, higher wage demands result in higher business costs, and a less competitive business sector. All of this feeds right up into the wider economy. If the supply of medical services is more protected than is required, that leads to higher costs for consumers, and ultimately higher costs for the economy.
Changing the status quo
To take another example, the Authority identified a whole series of legislative and regulatory restrictions on lawyers’ ability to compete with one another. According to Mr Purcell, there is an urgent need for an independent regulator and “division of roles” in the legal profession which would eliminate the current scenario whereby the Bar Council and the Law Society both represent and regulate the barrister and solicitor professions respectively. This would be similar to the medical profession where the Medical Council is effectively the rule-
Public Affairs Ireland June 2011 maker and policeman and the Irish Medical Organisation serves as the representative Trade Union. The roles are also separated in dentistry and other professions. Other barriers uncovered include a consumer’s inability to go directly to a barrister for legal advice, as well as the solicitors’ monopoly on property conveyancing. Mr Purcell stressed that “this self-regulatory role of the legal profession must be eliminated” yet he continued that the people affected are often keen to retain the status quo; one of the main obstacles facing the Authority.
Many common themes can be identified across the professions analysed (architects, engineers, dentists, optometrists, solicitors, barristers, vets and GPs). There can, to begin with, be restrictions on getting into these professions or getting started in practice once qualified. Then once you are in there may be restrictions by law on what you can do, for example dentists were prohibited from advertising until only two years ago, a factor stemming from tradition. “By getting these rules amended or removed, we are all the time trying to free up a market so that consumers know what they are buying, they can shop around, and the professions are actively competing for consumers”. This will also serve to make each profession more dynamic. It is nevertheless a slow process Mr Purcell affirmed, but “that is the nature of the process”.
Compromised work of the Authority
Replying to comments made recently that the work of the Authority is compromised, Mr Purcell stressed that there is a limit to what can be done. The Authority’s numbers have been reduced to 36 people to span their entire range of activity. “I am not going into special pleading, we are not a special case, there is no point in doing that but I wouldn’t want people to get carried away with what they think we can do. Mr Purcell continued by saying that “the more successful the Authority is, and the more aware people are of what you are doing, the higher the expectations are. What one needs to recognise is that enforcement investigations are particularly complex”. He highlighted that this is particularly difficult in relation to cartels whereby the Authority is trying to prove that people have colluded quietly to fix prices.
Declan Purcell began working in the Department of Enterprise, Jobs and Innovation as it is now known in 1976 where he in charge of the drafting of the Sale of Goods and Supply of Services Act 1980 and the Companies Act 1990, an extensive piece of Company Law. In 1998, Mr Purcell was asked to join the Competition Authority as a Member and remained as such until April 2010 when he was appointed Chair of the Authority. “With seven investigators working fulltime in the cartel division we would be doing well if we uncover one important cartel a year. Gathering evidence in a criminal case is painstaking, you have to be realistic about what you can do” he warns.
Where are these cartels?
The prerequisite for uncovering cartels (price fixing or bid-rigging for a procurement contract) is a whistleblower, Mr Purcell responded when questioned on how these entities are uncovered. Due to the nature of the conspiracy involved the Authority and other competition authorities around the world need a whistleblower. While it is not impossible to uncover a cartel without one, an inside source with firsthand evidence is crucial. To encourage whistleblowing, the Authority has a joint cartel immunity programme with the DPP. Has there been an increase in cartel activity in the current economic circumstances? “History will show that there is more temptation to engage in cartel activity in a downturn, and we have to question whether we are that much different to history or to the experience of other countries” Mr Purcell replied. “Simple economics would tell you that if businesses have their margins heavily cut, the temptation to discuss price-fixing no doubt increases”. Yet, he could not confirm that the Authority itself has seen more cartels in recent times. When asked about the investigation into milk price fixing and the search on the premises of the Irish Farmers Organisation Mr Purcell declined to comment adding simply that “investigations take time”.
Memorandum of understanding
Asked whether he feels the new Government will prioritise competition policy, Mr Purcell did not deny the pressure the current Government finds itself under. “In the current Public Affairs Ireland
Public Affairs Ireland June 2011 climate, should the Authority suggest regulatory reform, there will almost certainly be a counter-voice arguing from the other side”. Yet, increasingly recent governments have embraced a proactive competition policy. Competition policy is highlighted within the memorandum of understanding between the EU, IMF and Ireland. These organisations, when looking at an economy from the outset, also question how competitive the economy is in general and ask what structural areas in the economy need reform. These organisations routinely come to a Competition Authority and ask them what sectors they think can increase the structural efficiency of the economy. “As it happens”, Mr Purcell explained, “we had recommended a number of reforms in relation to the medical and legal professions which had not been implemented”. With the arrival of the EU-IMF, the Government committed to these reforms in the memorandum of understanding. Making these commitments Mr Purcell affirms “is the surest guarantee” the recommendations will be acted upon. Ireland has the advantage, he continued, compared with other governments in similar economic circumstances, that while some of our sectors are sheltered, there are less of them now compared to other countries. Energy policy, efficient delivery of water and more effective retailing are also included in the memorandum. The Government has committed to introduce legislation by the end of Q3 2011 that will implement the recommendations in relation to the GP and legal professions. This will involve opening up access to the GMS, so that every GP is allowed to treat public patients and to allow for the establishment of an independent regulator for the legal profession. Mr Purcell admits that while he would have preferred no bailout in the first place these are positive advances in the context of competition policy. The reforms will take a little time to take hold but “they are changes that need to be put in place so it is nevertheless good to see them being committed to”.
More effective deterrents – Civil Sanctions
Mr Purcell stressed the complexity surrounding enforcement investigations and explained that while the Authority must have evidence in Court, they have to reach high standards of proof. Some cases can end up in an economic argument between the Public Affairs Ireland
Authority and the defence with both sides asserting their version of economics. This kind of case has its own complexities. It is no easier, Mr Purcell continued for private cases, the number of which taken in Ireland is quite small. If a private plaintiff is successful with a lawsuit they are in a position to receive a remedy of damages. The only remedies for the Authority are an injunction or a declaration from the High Court stating the other side was wrong; “a judicial rap on the knuckles” in other words. This, Mr Purcell affirms is a questionable deterrent. While bad publicity is an important but real deterrent, “if all we can get from the High Court at the end of the day is a declaration, this is not good enough and only costing the taxpayer money” Mr Purcell states. The Civil case involving the beef industry which began in 2003 and finished in 2011 had been up to the Supreme Court and then the EU Court and back down again. The Authority held its position on this case until the other side withdrew. While substantial sums of the Authority’s costs were paid the question remains about how much of a deterrent this case really was. “This was an important case to bring and persist with and at the end of the day it established important principles and points of law that will be useful to us in the future”. With the impending competition legislation Mr Purcell is hopeful it will contain improvements to the sanctions regime. He believes that the Bill should include the majority of recommendations from a submission delivered to the Department of Enterprise a year ago
by the Authority.
Future of the Authority
The Merger of the Competition Authority and the National Consumer Agency announced in October 2008 will not happen until the legislation is enacted, which will be approximately a year according to Mr Purcell. This delay cannot slow the work of the Authority however and they continue nevertheless in planning this merger and considering how it will function. There is currently a four person board working full-time who take important Authority decisions collectively. This time last year, the Authority found themselves barely reaching their quorum (statutory minimum requirement of Members) with no time for a public competition to appoint replacement Members. Emergency legislation was subsequently enacted by the Oireachtas and two Members were appointed for a period of 12 months. As the year has now passed, the Chair is unsure as to what will happen next. Nevertheless, Mr Purcell concluded, “there will have to be a solution and we look forward to seeing what that is. All of the Member positions were advertised recently, so let’s hope there’s a speedy conclusion to that process”. In conclusion, Mr Purcell highlighted that “there is a consistent frustration that we cannot do more, but there are lot of positives, we are beginning to see the emergence of a competition culture among the public - something that was not very evident in Ireland four to five years ago”.
Public Affairs Ireland June 2011
A Public Affairs Ireland Conference
Cloud Computing and Ireland - unleashing the potential!
A special Public Affairs Ireland conference on the potential for Cloud Computing in Ireland and the opportunities it provides for the public sector Thursday 30th June 2011 Conrad Hotel Dublin Sponsored by EMC/CISCO/MOP/VMware
• What is Cloud Computing? • What is the potential for Cloud Computing in Ireland? • What role can Cloud Computing play for the public sector? • Can Cloud Computing address issues about confidentiality and security? • Can Cloud Computing help to deliver connected government? • How has Cloud Computing benefited organisations that use it? • Does Cloud Computing represent value for money?
The new Government has identified Cloud Computing as an area of growth and development in the coming years. The Programme for Government contained a specific commitment to make Ireland a leader in the emerging IT market of Cloud Computing – a sector which has been identified as yielding potentially significant employment and investment potential by 2014 – including employment potential of up to 10,000 new jobs. The new Government has also committed to promoting the greater use of Cloud Computing in the Public Sector. The advantages of such a programme for the public sector, particularly in the current economic climate, are significant – for example greater use of cloud computing in the public sector can reduce the significant additional financial investment in hardware, ongoing maintenance and additional technical resources. Importantly investing in Cloud Computing can also allow the public sector to capitalise on this new approach to the delivery of ICT services and to tap into global developments in this exciting new area.
What challenges will the adoption of this new technology raise around the protection of personal data and privacy? How will the traditional concerns of the Public Sector around confidentiality, privacy and security protocols be met and how has Cloud Computing worked already in a number of real cases? These are among the issues that will be addressed at this special Public Affairs Ireland conference on Cloud Computing. The keynote address will be provided by the Minister for Enterprise, Jobs and Innovation Richard Bruton TD and delegates will also hear from the Data Protection Commissioner, Billy Hawkes and the Chair of the National Competitiveness Council, Dr. Don Thornhill. Other speakers include leading international industry experts from EMC, Cisco, VMware and Accenture as well as a leading IT lawyer from MOP. The conference, which is sponsored by EMC, CISCO, VMware, and MOP will examine the potential role that Cloud Computing and innovative IT technology can make in the delivery of public services in a practical, targeted and focused way.
Public Affairs Ireland
Public Affairs Ireland June 2011
PRI V A T IS A T I O N
Report of the Review Group on State Assets and Liabilities Michael O’Connor discusses the recent McCarthy Report on State Assets. The Review Group on State Assets and Liabilities was established in July 2010 to advise the then Minister for Finance on how state assets can be better deployed or disposed of to support economic recovery for the State. The Review Group was given the following terms of reference: • To consider the potential for asset disposals in the public sector, including commercial state bodies, in view of the of the indebtedness of the State; • To draw up a list of possible asset disposals; • To assess how the use and disposition of such assets can best help restore growth and contribute to national investment priorities; and • To review, where appropriate, relevant investment and financing plans, commercial practices and regulatory requirements affecting the use of such assets in the national interest. The Review Group began its work in July 2010 and reported to the new Minister for Finance in April 2011. In the interim, a new Government was elected with new a Programme for Government (Government for National Recovery 2011-2016) and more fundamentally the Government has had recourse to official financing from the International Monetary Fund (IMF) and EU institutions.
The Report of the Review Group on State Assets and Liabilities contains 55 recommendations dealing not only with the potential for asset disposals, but also market changes and the regulatory reform necessary to underpin competition and investment in key areas of our economy. The key recommendations in the report can be summarised as follows: • There should be a planned programme of asset sales to reduce the State’s very high level of indebtedness; • There should not be an accelerated Public Affairs Ireland
sale process. This would inhibit attainment of value and in many cases would not be prudent or even possible given the requirement for revised regulatory procedures and complex legislation; • The Review Group did not put valuations on individual State assets stating that these depend on many factors and ultimately on what a purchaser will pay. It is stated that the net asset value of commercial company assets whose disposal is recommended to be about €5bn, but the report adds that net asset value is no more than a rough guide
“The Report of the Review
Group acknowledges that the establishment of the Group
pre-dated Ireland’s resort in November 2010 to IMF and EU Funding”
to what might be realisable; • Core transmission assets in gas and electricity should not be sold to private interests in the immediate future; • There should be changes in the governance of State bodies while they remain in public ownership to enhance efficiency and performance; • There should be a review of regulatory arrangements and a new structure for the oversight of regulatory agencies; • Not all assets should be disposed of. In the case of land-based assets in particular, it is proposed that the State sell the rights to reap the produce of the land but not the land itself; and • Intangible assets (rights, licences, options, leases etc.) should be treated in exactly the same way as tangible assets. They should invariably be sold to the highest bidder. The Report of the Review Group acknowledges that the establishment of the Group pre-dated Ireland’s resort in November 2010 to IMF and EU Funding. The IMF Memorandum of Understanding of November 2010, while not prescribing any target or milestones for a state asset sale programme, does list as an action to be completed by the end of Q4 2011: “Building on the Forthcoming Report of the Review Group on State Assets and Liabilities the Government will undertake an independent assessment of the electricity and gas sectors. State authorities will consult with the Commission Services on the results of this assessment with a view to setting appropriate targets”. The Minister for Communications, Energy and Natural Resources has announced recently (Energy Ireland Conference, Croke Park, Dublin, June 1 2011) that there will be an in-depth review of Ireland’s energy policy carried out by the International Energy Agency. The IEA review will be wide ranging and will include a detailed assessment of the efficiency of the Irish electricity and gas sectors
PRI V A T IS A T I O N
taking into account the EU regulatory context. In April last the Government announced that it had successfully concluded the first and second Quarterly Programme Review Mission with the EU Commission, the ECB and IMF. In this context it was announced that the Government is due to consider a potential programme for asset disposals based on the Programme for Government and the Review Group on State Assets and Liabilities and that the Government will discuss its plans with the European Commission, the IMF and the ECB when it has finalised its response to the Review. The Programme for Government issued by the new coalition Government in March contemplates the sale, of “certain assets” over time, and for the purpose of financing the Government’s investment programme. Drawing from the recommendations of the Review Group, the Government proposes to target up to €2bn in sales
Public Affairs Ireland June 2011
of non-strategic state assets. However, the Programme does make it clear that assets will only be sold when market conditions are right and when adequate regulatory structures have been established to protect consumer interests. Commenting at Energy Ireland the Minister for Communications, Energy and Natural Resources had the following to say in relation to the energy sector: “It is my own view that given the importance of the sector to the very economic and social functioning of the State that the State must continue to have a strong and direct presence in generation, networks and supply. This must be done in a way that protects overall economic competitiveness and does not deter private sector involvement in generation and supply. I do not, however, wish to see a situation where Ireland would be unduly dependent on foreign owned energy companies in a situation where
Ireland would be a small component of a larger European market. This approach does not preclude extracting value from the strong and profitable state companies that we have built. The process of extracting such value and indeed implementation of any other structural change within the State energy sector must however meet the simple test that they are in the public interest in its widest sense”. To conclude, what the Report of the Review Group means for State Companies and Bodies remains to be seen. What is clear however, is that it must be read in light of the new Programme for Government, the current and future requirements of the IMF and EU institutions and the rate of progress towards national recovery. Michael O’Connor is a Partner and Head of the Projects, Energy and Construction Group at Matheson Ormsby Prentice.
Public Affairs Ireland
Public Affairs Ireland June 2011
CR O K E P A R K A G REE M EN T
Redeployment in Non Commercial Semi State Bodies John O’Dowd reflects on developments in relation to redeployment among semi-state bodies. It is clear from participant inputs to a recent PAI workshop on redeployment that managers in NCSSBs (Non-Commercial State Sponsored Bodies) have significant concerns and information gaps about redeployment in NCSSBs. Key concerns for managers focus on whether further Government cutbacks in numbers will undermine service delivery and how to sustain employee morale over the coming period. The main information gap is quite simply: How does redeployment, as provided for in the Croke Park Agreement, work in practice? The first report of the Implementation Body points to impressive first-year results with staff numbers down by 5,349 and with gross sustainable savings of €289m exceeding the set target. The report also highlights large-scale redeployments such as 1,000 Community Welfare Officers redeploying from the HSE into the Civil Service. However, many commentators have argued that getting costs down through headcount reductions arising mainly from ‘natural wastage’ is the easy part of public service reform. The more difficult part will be effecting significant changes in the organisation and delivery of services where this requires changes in work practices.
The Croke Park Agreement commits the parties to ‘the four r’s’, i.e. ‘rationalisation, reconfiguration, reorganisation, and restructuring’. Redeployment is an essential strand for this to occur as it secures the employment of those whose work will be displaced through restructuring. The agreement also allows public service bodies that require additional staffing to secure them through the redeployment process. Redeployment is, therefore, central to the whole drive for public service reform. Progress is being made. The Public
Appointments Service has established ‘resource panels’ onto which NCSSBs can place surplus staff by grade, location, number etc. Other agencies can then draw from these PAS panels when they have sanction for appointing additional staff. The Comprehensive Spending Review due in September is widely expected to lead to further overall reductions in staffing levels as well as to widespread reorganisation and restructuring of public agencies and departments. The likelihood must be that this will necessitate additional numbers of public service posts being placed on these panels. Most NCSSBs don’t appear to have had any experience of redeployment to date and the operation of the system is not widely understood as a consequence. It is clear that Government and parent departments need to increase their communications with the NCSSBs which form an important part of the public service. A useful start would be to provide more information about how redeployment is currently working through the PAS ‘resource panel’ system and about how organisations might plan for their own participation in this new system. Dr John O’Dowd is a specialist in organisational change and dispute resolution. He co-delivered the recent PAI Workshop: How Will Redeployment Impact on Me? A Practical Guide for Public Servants.
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Public Affairs Ireland
Public Affairs Ireland June 2011
PUBLIC AFFAIRS IRELAND PROFESSIONAL DEVELOPMENT
Upcoming Seminars at PAI Risk Management in the Public Sector Tuesday June 28 Dealing with Difficult Staff Wednesday June 29 Financing Energy Savings Thursday 30 June Legal Professional Privilege Tuesday July 5 Public procurement in a climate of reduced resources Tuesday July 5 Delivering public services while working with reduced budgets Thursday July 7 Training & Development Strategies for the Public Sector Tuesday September 13 Minute Taking Wednesday Septmember 14 http://www. publicaffairsireland.com/ events/556-minute-taking Inspiring Leadership Thursday September 22
Debt Recovery Thursday September 22 Practical Writing Skills Tuesday September 27 Managing Performance throughout the year Wednesday September 28 Microsoft Excel Stage 1 Wednesday September 28 Legal Professional Privilege Wednesday September 28 Giving Excellent Customer Service Wednesday October 12 Editing Skills Tuesday October 18 Leading & Supervising Teams Tuesday October 25 Using the Labour Relations Commission & Conciliation Services Wednesday October 26 Key Skills for Effective Communications Thursday October 27 Writing for the Web Thursday October 27
To register your interest for any of the seminars or courses please email email@example.com or call 01 8198500 or book online at www.publicaffairsireland.com
Public Affairs Ireland
Public Affairs Ireland June 2011
RE G UL A T O R Y A ND LE G ISL A T I V E A FF A IRS
Abolishing immunity: Are expert witnesses under siege? The immunity from being sued that expert witnesses have typically enjoyed in the UK for hundreds of years has been abolished in a recent landmark decision by the Supreme Court of England and Wales. In this article, Jarlath Heneghan and Cassandra Byrne question what this means for the role of the expert witness in Ireland. The Supreme Court of England and Wales in Jones v Kaney  UKSC 13 has decided that there is no continuing justification for expert witness immunity. Up to now, expert witnesses in England and Wales have benefitted from the same immunity from being sued which judges, juries and witnesses of fact also enjoyed. This applied to both expert witness testimony given in Court and to experts’ conduct in Court proceedings. Until 2002, barristers and advocates had similar immunity. Immunity of expert witnesses meant that they could not be sued in contract or tort for either evidence given or reports relied upon in Court. They could however remain liable for ordinary professional advice or opinions given to clients outside a dispute context. A reason for abolishing expert witness immunity is the public policy argument that experts should be accountable for their conduct and if a breach of duty arises that there should be a potential remedy. There is a historical perception in some quarters that there could be a conflict between experts’ duty to their client and the Court, particularly if faced with providing evidence contrary to their client’s interest. This case however enforces the position that there should be no such conflict. Experts’ immunity from defamation claims arising from their services is not affected by this case. As an English case it is only binding in England and Wales it is therefore of persuasive authority only in Scotland, Northern Ireland and Ireland.
What is an experts witnesses’ liability?
Expert witnesses can now be subject to claims of negligence arising from their failure to exercise reasonable skill and care in providing expert witness Public Affairs Ireland
services. In this case the Court held that if an expert gives an independent and unbiased opinion which is within the range of reasonable expert opinions, they will have discharged their duty to their client. Therefore experts who have pro-actively and professionally engaged in the process of giving expert advice or testimony
are likely to satisfy these criteria.
Expert witnesses and the Irish Courts
Several cases in Ireland have examined expert witness immunity. One of the leading cases is the Irish Supreme Court decision in Looney
Practical Implications Some practical implications which will impact service providers and clients alike could include: • Experts’ professional indemnity insurance costs may increase. • Caveats may be introduced to Experts’ professional indemnity insurances by insurers. • Experts may seek contractual limitations in their appointments. • Increased risk of liability may arise from either opinions given by expert witnesses or their conduct during proceedings. • Experts should be comfortable with their advices and be flexible in providing opinions. • In giving joint reports, consultants need to remain independent and keep the client informed. • Experts may limit advice within areas of specialisation and appropriate qualifications, expertise and experience will be paramount. • The overall quality of reports and services would be likely to improve.
RE G UL A T O R Y A ND LE G ISL A T I V E A FF A IRS
v the Governor and the Company of Bank of Ireland & Morey (Unreported, Supreme Court, 9 May 1997) which upheld witness immunity. The case provided that a Court could suspend witness immunity (which would include experts) if the witness makes defamatory or malicious statements. The principle of expert witness immunity was reinforced in the decisions of O’Keeffe v Kilcullen  IEHC 17 and WJ Prendergast v Carlow County Council, Redvers Skelton (2007) IEHC 192. Some statutes further expressly support the principle of immunity for example, immunity of experts in arbitration proceedings is reinforced by the Arbitration Act 2010. Whilst Jones v Kaney is not binding in Ireland could it persuade law makers to sweep away one of the last bastions of legal immunity? If expert immunity were to be abolished by the Irish Courts it would, in our view, be unlikely to give rise to increased negligence claims as experts are generally professional in their approach. Indeed the Court
Public Affairs Ireland June 2011
in Jones v Kaney stressed that in practice, liability of experts ought to be “highly exceptional”.
In our view, any removal of this last bastion of immunity is unlikely to open the floodgates for claims against expert witnesses. Furthermore, the numbers of expert witness service providers are unlikely to be dramatically reduced
“Whilst Jones v Kaney
is not binding in Ireland could it persuade law
makers to sweep away one
of the last bastions of legal immunity?”
due to fears of increased litigation. However, there is a potential risk that there could be additional costs passed on to clients and increased focus on contractual terms and conditions by experts. There are certain practical implications for both clients and expert witnesses which will flow from the case. Experts will seek to mitigate any increased risk, whether perceived or actual, arising from this case. It will remain to be seen what approach the Irish Courts will take when next considering the issue of expert witness immunity. For further information, please contact Cassandra Byrne, Senior Associate (FCIArb, Accredited Mediator) or Jarleth Heneghan, Partner (FSCSI, FRICS, FCIArb, Accredited Mediator) both of William Fry Projects & Construction Department.
Public Affairs Ireland
Public Affairs Ireland June 2011
RE G UL A T O R Y A ND LE G ISL A T I V E A FF A IRS
Copyrights and Copywrongs: Reforming Irish Copyright Law to bolster the digital economy Oisin Tobin and Philip Nolan examine the current copyright regime, the key points of conflict surrounding copyright law, and the potential for changing Irish copyright law. Business, and by extension the economy, is fundamentally about buying and selling things. Historically, those things have been tangible commodities, like food or consumer products. However, in a “knowledge” or “creative” economy the focus is no longer on selling tangible goods; the focus is on selling content. From a legal perspective, when one buys content, one is buying copyright. As a result, copyright lies at the very heart of the knowledge economy. This new found economic importance has seen copyright taken out of dusty law libraries and thrust into the centre of heated political debates about piracy, the rights of creators, the legitimate expectations of users and the best way to promote innovation and economic growth. The EU has released numerous reports, the most recent being published on May 24 2011, containing proposed amendments to the copyright regime. Our neighbours in the UK have also focused intense political energy, including that of the Prime Minister, on possible reforms to their copyright system. Brian Cowen, then Taoiseach, announced in December 2010, that the Government was of the view that the existing copyright regime was outdated and said that “the Digital Media sector requires copyright laws that are flexible and suitable for the modern internet environment”. This position is shared by the current Government which was demonstrated on May 9 2011 when the Minister for Jobs, Enterprise and Innovation, Richard Bruton, TD announced the establishment of an expert committee to investigate whether the current copyright regime poses a barrier to innovation. In particular, the Committee is to consider the possibility of introducing a US style “fair use” exemption to copyright protection. The purpose of this article is to explain the key points of conflict surrounding copyright which the Committee, and Public Affairs Ireland
by extension the Oireachtas, will have to tackle should it decide to reform the Copyright and Related Rights Act, 2000.
There is no general requirement that the work be meritorious or artistic in some way. Copyright is a property right as a matter of Irish law. The essence of this right is the ability to exclude others from using the copyright protected work in certain ways without the permission of the creator. This prohibition obviously includes copying the work, but making the work available to the public or adapting the work without permission is also illegal. Consequently, copyright imposes considerable restrictions on the access and use of creative content. While this is obviously highly beneficial for the creator of the work, it is detrimental to persons who wish to use the work in a certain way. In the absence of any exceptions to copyright, the budding user will either have to buy the copyright outright from the author (this is called an assignment) or get the author’s permission to use the work (known as a licence). From the perspectives of users of copyright, their view is that the current regime is too favourable to creators and is at the expense of people who wish to use existing content in new and innovative ways. This has come to a head in the area of internet for two
The basic tension: Creation vs. use
The debates around copyright are often presented, somewhat misleadingly, as being a clash between authors and creators and online IP pirates. While copyright piracy is a fundamental economic problem which needs to be tackled, the controversies surrounding copyright are much more complex. The law of copyright, like all laws, fundamentally aims to strike a balance between two sets of competing interests; those of the people who create content and those who seek to use it. Broadly speaking, copyright is created whenever one creates a sufficiently substantive original work which is fixed in some permanent form. This is usually a literary work, though other sorts of work such as sound recordings and performances are covered. The scope of copyright is actually far wider than most people realise; an email or handwritten note is likely to be protected by copyright.
RE G UL A T O R Y A ND LE G ISL A T I V E A FF A IRS reasons. Firstly, the technical design of the internet means that accessing any information on the net requires that the information be copied. Consequently, nearly every action online potentially infringes copyright and will either require a statutory exemption (such as those used by internet service providers such as UPC) or permission from the copyright holder. Secondly, the culture that has grown up around the web, and the business models that the web fosters, are largely based around “remixing” existing content and making it available in new and more accessible ways. An excellent example of this is provided by YouTube, business model of which is fundamentally based on hosting and distributing copyrighted works created by third parties. When Minister Bruton expressed the opinion that copyright may be hampering innovation he most likely meant that Irish companies, and international companies considering setting up operations in Ireland, may be deterred from engaging in the sort of innovation that potentially breaches Irish copyright law. While the Minister’s position may have merit, it must not be forgotten that having strong copyright laws can protect creative industries and encourage them to base their operations in Ireland. The creative sector is another potential plank of economy recovery, as evidenced by the proposals to set up an International Content Services Centre. This is our policy conundrum; how do we strike a balance between encouraging innovation based on the creation of new content or by having content hosted in Ireland (by having strong copyright laws) whilst at the same time encouraging innovation based on the new and creative use of existing content (by having weak copyright laws). This is a much more vexing issue than is often presented. It is made more difficult by the fact that any substantive reform of copyright poses acute legal, as well as political and economic, difficulties.
Working within boundaries
When tackling any problem one needs to lay down from the outset, the restrictions within which one must work. When it comes to reforming Irish copyright law, the Committee and the Oireachtas will have very little space for manoeuvre. There are three legal (as opposed to merely political) barriers that any reform of copyright will need to tackle. Firstly, in Ireland copyright is
Public Affairs Ireland June 2011
protected as a human right of the author under the Constitution. While the exact scope of the constitutional right to copyright is somewhat unclear, it is very likely that any reduction in the scope of the protection afforded will be met with a constitutional challenge. Secondly, Ireland is obliged, under international trade law, to maintain a certain level of copyright protection. The Berne Convention, TRIPs Agreement and WIPO Treaty all provide that exceptions to copyright cannot conflict with the “normal exploitation of the work” and cannot “unreasonably prejudice the legitimate interests of the author”. Any reform which resulted in a breach of these international obligations would carry grave reputational consequences. Thirdly, and most importantly, much of Ireland’s copyright regime comes from European law, most notably the Copyright Directive. Of particular note here is the fact that the Copyright Directive provides a seemingly exhaustive list of exemptions to copyright protection. These exemptions are quite limited and defined (e.g. the making of copies for research) and it is highly questionable whether, as a matter of European law, Ireland could introduce new categories of exemption, such as the “fair use” doctrine which is to form the centre of the Committee’s work.
What is fair use?
As noted above, European copyright law (and by extension Irish copyright law) contains a large number of specific, but narrow, exemptions to copyright protection. This approach has the advantage of providing legal certainty; both creators and users of copyrighted material know what is and is not permitted. Conversely however, this approach may prevent the use of copyrighted material, without permission, in ways that could be seen as socially beneficial. In contrast, US law offers a broad “fair use” copyright exemption. This is a general exemption from copyright for “purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship or research”. In determining whether a use is “fair” a judge is required to consider: 1. The purpose and character of the use, including whether the use is of a commercial nature or is for nonprofit educational purposes; 2. The nature of the copyrighted work; 3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
4. The effect of the use upon the potential market for or value of the copyrighted work. The obvious advantage of fair use is that it gives the copyright regime a great degree of flexibility, and may allow an innovator to use copyrighted material without the author’s permission or a clear statutory exemption, in ways which they can prove to a court is socially beneficial and does not unduly impinge upon the copyright holder’s rights. Conversely, the clear disadvantage of this regime is its acute uncertainty. It can be exceptionally difficult for a specialist IP lawyer, let alone a potential entrepreneur, to determine whether or not the proposed use, and by extension business model, is protected or not. In addition, a fair use approach would have certain constitutional consequences particularly given that the ability to shape the scope of copyright would shift from the legislature (both in Brussels and Dublin) to the Courts.
The future direction of Ireland’s creative and technology sectors will depend on the copyright law we adopt. Individuals, particularly in business, respond to incentives. If our copyright regime incentivises the creation and location of content in Ireland by offering strong protection, then we will likely see an increase in this sort of activity. If, on the other hand, our regime encourages the use of existing copyrighted material in innovative ways by non-creators, then we will likely see a surge in the number of enterprises focusing on this. The challenge is to strike the correct balance between these two competing, and perhaps conflicting, objectives. It is a challenge which is made much more onerous by the fact that Ireland’s copyright regime is largely governed by laws outside of the control of the Oireachtas. It is into this difficult mire that the Committee must venture. We wish them the best of luck. Philip Nolan is a Partner and Head of the Commercial Department in Mason Hayes+Curran. Oisín Tobin is a trainee solicitor in Mason Hayes+Curran and a scholar and doctoral candidate in Trinity College, Dublin where he specialises in internet law. Oisín’s doctoral work is supervised by Dr. Eoin O’Dell, one of the members of the copyright review committee.
Public Affairs Ireland
Public Affairs Ireland June 2011
EC O N O M ICS
Indebted Nations and the IMF Charles Larkin describes the make-up of the International Monetary Fund, the process by which the organisation allocates loans to countries in need and how its intervention in Ireland may be more positive than is commonly believed The image of economic iniquity changes over time. In the Nineteenth Century an empty treasury and the sight of a Royal Navy gunboat off the coast of the country’s capital was a declaration that a country had failed economically. Since the 1960s the British dreadnought has been replaced by the arrival of a handful of technocrats at the airport. Those men and women work for the International Monetary Fund (IMF). Ireland’s recent bailout has highlighted an organisation that has been subject to vilification and scorn for many decades and is seen as an agent of the socalled Washington Consensus; a by-word for fiscal retrenchment, deregulation and economic liberalisation at any socio-political cost. In this article I will explore the role of the IMF globally and then look at its involvement in Ireland.
Establishment of the IMF: Bretton Woods
The IMF is an international organisation that was designed during World War II as a solution to the beggarthy-neighbour policies of the Great Depression. These policies involved sequential competitive devaluations by the industrialised countries of the world that set in motion the political maelstrom resulting in the passing of punitive tariffs sending the world economy deeper into depression. The economic distress these policies created was seen as the main cause for the rise of fascist political parties that were the impetus of World War II. As a result, the two framers of the organisation were Harry Dexter White of the US Treasury and John Maynard Keynes of King’s College Cambridge. The organisation was intended to run a global currency system where devaluations were be taken out of the hands of politicians and placed into a new technocratic secretariat. Keynes and White expected it to be accompanied by a global currency (bancor or unitas, depending on the plan) and to provide significant short Public Affairs Ireland
1970s the IMF has been involved more heavily in the developing world and transition economies.
The IMF: Inner workings
Dr Charles Larkin
term loans to assist countries suffering balance of payments deficits. Keynes’ plan went so far as to request resources equal to 47 percent of the economic value of global trade. This approach was abandoned for a much smaller and less interventionist IMF based on gold at $35 an ounce. The less radical IMF was partly a result of Washington’s reaction to White’s alleged position as a spy for the Russians. The agency set up in 1944 at a meeting in a resort in the Bretton Woods, which became the vernacular for the IMF, World Bank and the currency system operated by those two organisations. This linked all the world’s currencies to the US dollar and from the dollar to gold. Since 1971, when the US dollar broke with gold, the IMF’s original purpose was ended with resulting collapse of the Bretton Woods System. Since the
“The IMF when it enters
a country does a general assessment of the fiscal
position of the state and of
the financial and monetary sectors”
The day-to-day operations of the IMF are controlled in Washington, where the headquarters building is located. The staffers are doctoral-level educated economists with experience in macroeconomics and international economics as well as financial systems. The organisation is relatively small for its remit, with approximately 2,500 staff. The make-up of the staff in terms of nationality is quite wide but in terms of training it would be relatively homogenous, representing the nature of the academic economics community. The likely incoming IMF Managing Director, Christine Lagarde, has indicated that she would continue to push for greater diversity in the secretariat on grounds of ethnic and gender backgrounds and at all pay grades. The 187 members are represented bi-annually by ministers and central bank governors but most operations are conducted at the executive board level where representatives of national treasuries and central banks (typically civil servants) act as Executive Directors or Alternate Directors and interact with staffers and the Managing Director. The Managing Director is the public face of the IMF and responsible for driving its agenda and engaging in the high-level geopolitics of international bailouts and international economic agreements. Since 1946 it has been the convention that the IMF leader is European (West 1946-89) and the World Bank is American. Though all members of the IMF are international public servants (as such non-US nationals do not pay tax on their salaries) they are not the same as international diplomats. This was made very clear with the recent scandal involving the former Managing Director Dominique Strauss-Kahn.
The IMF’s loans are provided to countries that have suffered from short-term balance-of-payments crises or have found themselves in a situation where their government has become unable to borrow. This may be due
EC O N O M ICS
to the international capital markets charging high interest rates or general fear on the part of the markets that the country will default or devalue its currency, precipitating a default. In the Irish context, since the country is within a currency union there is no fear of devaluation but the international capital markets have begun the process of excluding Ireland and Ireland’s banks (which are in a large part owned, supported or guaranteed by the State) from access to capital. The IMF when it enters a country does a general assessment of the fiscal position of the state and of the financial and monetary sectors. If it deems that the situation requires a temporary bridging loan the IMF has several facilities by which that loan can be made available. Since the IMF operates much like a credit union for countries, small loans tend to come with no conditions but loans over 100 percent of a country’s subscription (deposits) come with conditions and a sliding scale of interest rates attached. Those conditions can be harsh on an economy, especially since they are orientated towards the repayment of the loan and creating a sustainable fiscal path immaterial of the wider political and social consequences. The conditions are agreed with the IMF through its Executive Board, where Ireland has representation in the form of an Alternate Director, and the Irish Government. Given the current austerity approach, the IMF’s conditions would not be dissimilar to many of the proposed actions towards fiscal consolidation. The IMF’s recommendations on the more intractable difficulties of the Irish banking sector are more difficult to predict. It has been a feature of many critiques that the IMF is an extremely reductionist organisation and has done serious economic, political and social damage to programme countries. The IMF has learned the lessons of the interventions on the 1997 Asian Crisis and the multiple interventions into the Argentinean economy. It has become more open and transparent in its actions and willing to engage with civil society. The IMF has even set up an Independent Evaluation Office to critique its own actions in these programme countries. This is a marked change from a decade ago. The Fund’s programme of resource expansion and the changing of internal governance procedures and national levels of representation to reflect the new economic realities of the post-
Public Affairs Ireland June 2011
2007 world will go a long way to make the IMF approach to programme countries more comprehensive. The expertise of the IMF’s staff is offered as part of any loan facility conditionality but it can be provided without lending through the Policy Support Instrument. The Policy Support Instrument is orientated towards developing and emerging market countries. The funds provided for the European bailouts matches its support, in terms of outstanding lending, to the rest of its programme countries. The IMF, only recently, has had the ability in terms of funds to re-engage with wealthy countries, and within that group the organisation’s resources have been severely stretched.
Over the past three years, the organisation has rapidly reformed and will be almost unrecognisable to the IMF of the late-1990s. The crisis in Europe has placed the IMF back into the heart of economic triage and geopolitical economic negotiations. The IMF views the problem in Europe
“The IMF coming to a
national capital does bring with it the connotations of a Royal Navy gunboat off the shores of an indebted nation”
as being financial, not exclusively fiscal, which is where many European acts would like the policy discussion to remain. Ireland’s programme, being part of the national economic policy portfolio, has the potential to act as a check on ECB and EU Commission policies that are more interested in the symptomatic manifestations of the crisis as opposed to the root causes. The IMF also offers Ireland the potential to engage in rapid economic policy reforms, many of which are politically difficult as they provide an entity to blame. These reforms are not only in the general macroeconomic and microeconomic policies of the country but also in the methodology used by the national civil service in the formation of policy in the past.
Though the IMF coming to a national capital does bring with it the connotations of a Royal Navy gunboat off the shores of an indebted nation, the solutions it offers are altogether more effective. The reforms of the IMF that have taken place thus far and those expected to be completed will make the organisation much more sensitive to the countries socio-political stability as well as its economic stability. The challenge for Ireland is to use this opportunity to draw from the significant expertise of the IMF in policy and geopolitics to obtain a growth-inducing and more Eurozone-stabilising agreement with our European partners. Dr Charles Larkin is a research associate with Trinity College Dublin. Public Affairs Ireland
Public Affairs Ireland June 2011
EDUC A T I O N
Re-dressing Ireland’s educational problem: Is ‘Better Literacy and Numeracy for Children and Young Adults’ the answer? In part two of his contribution to the Public Affairs Ireland Journal, Ciaran Sugrue analyses the ‘Draft National Plan to Improve Literacy and Numeracy in Schools’. Introduction
In the earlier piece published in the April/May issue of the Public Affairs Journal (pp. 12-13), the general argument advanced by me is that there are several possible contributing, competing and potentially conflicting explanations as to why the performance of Irish 15 year olds achievement on PISA reading tests have declined during the past decade and why science and mathematics results leave scope for further improvement. This complex web of interwoven considerations suggests that ‘silver bullet’ solutions are unlikely to succeed. Yet, doing nothing in the face of such challenging complexities is not an option. The Department of Education and Skills (DES) would have had advance notice of the PISA results, thus providing opportunity for a pre-emptive response after the PISA results were made public. In November 2010 it published ‘Better Literacy and Numeracy for Children and Young Adults’ with the sub-title: ‘A Draft National Plan to Improve Literacy and Numeracy in Schools’ (DES, 2010). This is the official roadmap for re-dressing the PISA problem. Significantly, it is a draft that solicited “suggestions and comments for improving this draft plan” (p. 53) while the timeframe to do so was particularly brief - by end of January 2011. Some of those who had the subsequent opportunity to meet with its authors, members of the inspectorate, felt that the script was already determined. Is this plan fit for purpose? In addressing this question, it is also possible to provide a provisional assessment as to its likelihood of success.
Structure and content of the draft plan for literacy and numeracy
Beyond the introduction the draft plan is set out over 53 pages in eight sections as follows: • Improving teachers’ and ECCE (Early Childhood Care and Education) Public Affairs Ireland
signal some recognition of the complexity of the issue, requiring a more comprehensive and multifaceted strategy if improvements are to be achieved, fashioned as improved learning outcomes. Nevertheless, the devil is in the detail/it falls short in the detail. In this article, I begin with some general observations regarding the draft plan, isolate some elements for particular scrutiny, and offer some suggestions for its possible enhancement.
The genesis of the plan?
practitioners’ professional practice • Building the capacity of school leadership • Giving priority to language skills, literacy and numeracy in early childhood, primary and post-primary education • Targeting available additional resources on learners at risk of failure to achieve adequate levels of literacy and numeracy • Fostering continuous improvement in literacy and numeracy in schools • Enabling parents and communities to support children’s literacy and numeracy development • A consistent national focus on the prioritisation of literacy and numeracy in the educational system and beyond. Clearly, the headings cited above
“the plan has resorted to a
recipe language that would be unacceptable in an
While the immediate impetus for the plan is almost certainly the PISA results, knee jerk reactions and responses, are rarely either sufficient, successful or sustainable when one utilises the benefit of hindsight and more considered perspectives. One means of deconstructing the plan therefore is to ask what is its provenance? Since it is often the norm to argue that education reform should be driven by evidence based practice then what evidence does the inspectorate cite in support of the objectives it advocates in the construction of the future? This plan for literacy and numeracy is without any signposts in the form of a bibliography. Even when specific studies by the ERC, UCC and ESRI are mentioned there is a complete absence of either footnotes or references to indicate precisely the evidence being cited. Rather, the plan has resorted to a recipe language that would be unacceptable in an undergraduate essay such as ‘research has shown’ (pp. 9, 26, 29, 30), with variations such as ‘research shows’ (p. 35), ‘research has consistently shown’ (p. 16), as well as ‘research tells us’ (p. 43). This is not an exhaustive list but it is sufficient to support the view that this is unacceptable, and unbecoming of senior policy personnel. Since some are likely to interpret this comment as being typical of an academic, somewhat pedantic, perhaps even a little superior, let me explain and
EDUC A T I O N illustrate its significance by way of example. The Government in England commissioned a report into the teaching of early reading that was completed in 2006 (Rose, 2006). This report recommended “that the systematic phonics approach selected by schools should be synthetic phonics” (Wyse & Goshwami, 2008, p. 691). However, what these researchers demonstrate is that this Rose recommendation had almost no research to support it, and the research cited in its support was seriously flawed from a design perspective. It lacked rigour and robustness, while ignoring more compelling research that did not support its conclusion. Yet it was adopted by government, pursued vigorously as a policy and policed by OFSTED. Enabling public, professionals and consumers of policy therefore to interrogate research evidence is critical both to the robustness of research claims, as well as to the veracity of policies on which such research are based. Despite this major inadequacy, the plan recommends ‘robust school self-evaluation’ (p. 23). While the evidentiary warrants for the direction of the policy are notable by their absence, the contrast provided by the frequency of the words test(s), testing and tested which appear 34 times, leaves the reader in little doubt that more frequent compilation of test results at various points in both primary and junior post-primary schooling is clearly a strong plank of the plan. While the benefits of tests and testing cannot be denied, their limitations, their impact on practice teaching to the test with a consequent hollowing out of curricula and pedagogy, have been well documented, their negative consequence on levels of literacy exposed, their contribution to a widening attainment gap identified, and their contribution to learner disengagement, disaffection and early school leaving recognised (Kortez, 2010; McNeil, 2000). Such a narrow focus on test data leads to a cyclically reductionist policy cycle whereby a narrow evidentiary base becomes increasingly the exclusive basis of policy fine-tuning. Test scores can be improved but at the expense of improved levels of literacy, and numeracy. Accumulating such evidence has potential to put the inspectorate in a more powerful position of influence at the policy-making table at a time when its membership has been seriously depleted with a concomitant tendency to exaggerate the importance of testing and the aggregation of results. On the
Public Affairs Ireland June 2011
other hand, greater assertiveness and authority on the part of the inspectorate is eagerly awaited by some as an antidote to what is perceived as the over-bearing influence of the teacher unions. Whatever the dynamics of power relations, a pre-occupation with test results, a central tenet of this plan, has considerable potential to distort reform efforts. Nevertheless, the plan’s focus on high standards, their promotion and attainment is most laudable. It indicates its intention to specify “clear learning outcomes, exemplified by samples of student achievement at each level” and this ‘evidence’ “will provide robust national standards against which teachers will be able to judge and report on the progress of their students” (p. 40). The availability of the exemplars of standards of excellence will be of major benefit also for informing parents regarding the attainment of their children. However, in this regard also, too much emphasis on testing is likely to promote further ‘standardization’ rather high standards and the attainment of excellence (Darling-Hammond, 1997).
Leadership, self-evaluation, continuous improvement
Another potential strength of the plan is its intention to bring about greater continuity between the primary and junior post-primary sectors, an artificial boundary that is both a historical legacy and a contemporary anachronism. However, if this is to succeed, there
needs to be much greater focus on processes rather than outcomes. Although the plan is replete with references to teaching, more emphasis on literacy and numeracy in initial teacher education and certification, pedagogical processes remain something of a secret garden. While self-evaluation is intended to build teacher capability to use evidence in a more sophisticated manner for the purposes of informing the teaching learning processes, as long as State examinations remain a dominant high-stakes reality, and the status of teachers determined by the grades achieved by learners, the possibility for pedagogical innovation remains seriously circumscribed. At various points in the draft plan it appears that it is being used as a means of re-dressing the documented problem of curriculum overload in both the primary and postprimary sectors, but care needs to be taken that such thinking does not accord with a ‘back to basics’ mindset, something that would seriously jettison efforts at promoting creativity and imagination, capabilities that are frequently heralded as indispensable in the ‘knowledge economy’ (Hargreaves, 2003). There is a notable absence of commitment of resources to this endeavour—thus the implication is that ‘more for less’ is what is expected of teachers. In this regard it is worth noting Elmore’s advocacy of the ‘principle of reciprocity’ which requires that incremental improvement in teacher capability needs to be matched with professional learning support (Elmore, Public Affairs Ireland
Public Affairs Ireland June 2011 2004). Such an approach requires that “the head teacher and a team of highly trained support staff roll up their sleeves and work with and alongside the school’s teachers … to make improvements together”(Hargeaves & Shirley, 2009, p. 98). In the absence of such support, and even with it, longitudinal evidence on the impact of testing strongly suggests that after an initial spike in the poorest results, within three to four years, this ‘improvement’ plateaus and initial gains are difficult to sustain (Mangan, Gray, & Pugh, 2005; Thomas, Peng, & Gray, 2007). These longitudinal trends in English secondary schools are open to optimistic and pessimistic interpretations. From an educational disadvantage perspective, one where the plan argues that at this point gains are evident due to the DEIS initiative, it is worth noting: “that a small minority [of schools] had significant improvement trajectories in an upward direction particularly those with lower value added starting points” (Thomas et al., p. 283). Consequently, persistent failure in the Irish context to deal with structural inequalities in the system, one might say a more systemic commitment to re-dress social inequalities, (‘rudaí a D[h]EISiú’), it is much more likely that “the enduring gulf between more and less effective schools” will continue to be “resistant to change” demonstrating, yet again, “that there … [are] clear limits to improvement even over ten years”
EDUC A T I O N
(Thomas et al., p. 283). Yes, leadership and self-evaluation are critical ingredients in capacity building that require sustained commitment to professional support that are most likely to be seriously compromised in the absence of sustained commitment to redress structural reform beyond school communities. In primary and postprimary schools, time is a major resource and unless dedicated amounts are committed to professional learning, the current feachtas on literacy and numeracy will founder. Additionally, it is necessary to dispense with the ‘myth of continuous improvement’ and to recognise “that long term improvement requires periods of consolidation, that discontinuity must be explicitly brought into the process” (Bolton & Heap, 2002, p. 313). At a time of unprecedented constraints on public finances, this literacy and numeracy plan poses a major challenge to teacher agency and a sense of professional responsibility. In rising to that challenge, by putting flesh on the bones of the ambition inherent in the draft plan, the teaching profession is being afforded an important opportunity to enhance its status, claims to expertise, its morale, and sense of professionalism, but if this is to happen it must be supported, and test results must not be used as a ‘naming and shaming’ device as has happened in other jurisdictions. The ultimate litmus test of this latest policy
initiative will be the quality of teaching and learning, the satisfaction of learners both as citizens and participants in the economy. This plan therefore is but the first salvo in creating a mindset that more of the same is not an option and discontinuity with current pedagogical orthodoxies the boarding pass to the rising generation’s educational futures. Ciaran Sugrue is Professor of Education, School of Education, UCD. He has worked in the Irish Education system in a variety of capacities including: teacher, schools inspector, teacher educator and researcher. He worked at the Faculty of Education, University of Cambridge. He was General Editor of Irish Educational Studies (1998-2008), serves on the editorial boards of several international journals, is a past president of the International Study Association of Teachers and teaching, and was involved in creating the Irish Primary Principals Network (IPPN). Currently, he is extern examiner for the Doctoral Programme at the University of Bath, UK, and for the Masters in Leadership at University of Limerick. Should you wish to view any of the sources used in this article please contact editor@publicaffarsireland. com
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Public Affairs Ireland June 2011
Mental Health Reform as a human right Amnesty International Ireland Director Colm O’Gorman discusses the Government’s pledges on mental health reform and what needs to be done to ensure Ireland has a mental health service that not only meets international human rights requirements but actually improves the lives of those who use it. On the final leaders debate of the General Election, Enda Kenny was asked what his key social justice issue would be if he became Taoiseach. He said simply, ‘mental health’. Now three months into his tenure as head of the Irish Government, unfortunately very few conclusions can be drawn. However Amnesty International Ireland (AI) is encouraged by the inclusion of specific pledges in the Programme for Government, suggesting that much-needed mental health reform is now seriously on the cards. Among its pledges in relation to mental health, the Programme for Government has committed to reviewing the Mental Health Act 2001 against international human rights standards; acknowledged the need for a cross-departmental action on mental health; recognised that ring-fencing money is essential if this Government is to fully implement the five-yearold mental health policy, A Vision for Change, and finally close all unsuitable psychiatric institutions and provide more appropriate community based facilities. These are all essential steps if Ireland is truly to deliver a modern mental health service and honour its commitment to ensure everyone in the country enjoys their right to the highest possible standard of mental health, a commitment it made when it ratified the International Covenant on Economic, Social and Cultural Rights in 1989.
Mental Health Act 2001
Earlier this year the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment found our Mental Health Act 2001 (the Act) was failing to protect people’s human rights and made clear recommendations to correct this situation. The Act regulates the treatment of people who are detained against their will. It is absolutely essential this law has the protection of the human rights of the individuals at its core. AI has also conducted its own line by line review of the Act, highlighting the key human rights issues and offering recommendations to bring the Act in
Amnesty International Ireland and Mental Health
line with the international human rights standards the Government is legally obliged to recognise. The Mental Health Act 2001 introduced a number of provisions, which improved Ireland’s compliance with international human rights law at that time. As such, it was a welcome development in the year of its enactment and must be credited as such. However, there have been many developments in international human rights law and in the domestic legal environment, which have caused some of the Act’s provisions to become outdated. Nothing illustrates the progression of human rights in this field more clearly than the adoption of the UN Convention on the Rights of Persons with Disabilities (CRPD or the Convention) in December 2006. The CRPD moves towards a social model of disability which does not focus on the individual but on the physical and social environment; it recognises that society itself needs to adapt to allow persons with disabilities to participate in society and enjoy their rights.
Our concerns with the Act include the lack of protection for so-called ‘voluntary patients’, the urgent need to amend the Act in relation to the use of electro convulsive therapy and the need for an independent capacity assessment. The use of tribunals, which are supposed to independently assess whether a person should be detained under the Act, also needs to examined and updated. It is essential to ensure that recovery is at the heart of this Act. The
AI has been campaigning on the issue of mental health and human rights since late 2003. It was a new departure for AI, which was more traditionally associated with prisoners of conscience and campaigning against the death penalty. But in the early 2000s AI’s international body voted to expand the remit of the global human rights movement to work on economic and social rights in addition to civil and political rights. The backbone of AI’s mental health work is Article 12 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) which Ireland ratified in 1989, meaning they have an international legal obligation to deliver this right to everyone in Ireland. In 2009 the latest phase of the campaign was launched, focusing on making mental health a political priority. The campaign strategy marked an international first for the organisation as it was devised in partnership with people who have had mental health problems, ‘experts by experience’. It’s overall goal was to ensure mental health was made a political priority, and the success or this was judged against three objectives related to the need for the Mental Health Act 2001 to be reviewed against international human rights standards; for a cross-departmental approach to mental health; and for the Government to consider law as a key driver for mental health reform. adoption of the recovery approach as promoted by A Vision for Change, like the CRPD, demands a paradigm shift in our approach to mental health services and legislation. AI believes that as part of this extensive, planned review, the department should consider additional legislation to drive the much-needed reform of mental health services. The commitments to increase the spend on mental health services by ring-fencing €35m annually from within the health budget to develop community based mental health teams and services shows that the new Government is serious about Public Affairs Ireland
Public Affairs Ireland June 2011 implementing A Vision for Change. AI strongly welcomes this. We also urge the Government to provide greater certainty over the way mental health is financed.
A Vision for Change
Accountability for the mental health budget is essential as, to date, implementation of the recommendations of A Vision for Change has been painfully slow and is currently far behind schedule. One explanation for this was uncovered in a report by Indecon International Economic Consultants published by AI in 2009, which found that there continues to be an imbalance between the level of resources allocated to inpatient services as compared to community-based services. We have received little indication to suggest the situation has changed greatly in the past couple of years and in fact, the most recent report from the Inspector of Mental Health Services also acknowledged that the impact of economic difficulties meant the future of mental health policy was hanging in the balance. He said “Unfortunately and ironically, when cuts are made, it is the progressive community services which are culled, thus causing reversion to a more custodial form of mental health service”.
AI is aware there is a financial crisis and that it is making the mental health crisis worse. Financial stress, debt and unemployment are putting a massive burden on people’s mental health. Demand for services is growing as people look for support, and suicide and self-harm levels rose sharply last year. Therefore in times of economic difficulties it is even more important to have clear accountability and an efficient programme of reform must be central to the delivery of mental health policy. However, the economic downturn has led to cuts in mental health services, and while there have been some exemptions from the recruitment moratorium, mental health service staffing has suffered so badly that valuable progress has been reversed. We know that more than half of all staff cut from the HSE in 2009 came from the mental health services, despite the fact they only represent 9 percent of the HSE’s workforce. While the moves to shut down old Victorian style institutions is underway and welcome, in 2011 we still have the shameful situation of people living in conditions described by the Inspector of Mental Health Services as “entirely unacceptable and Public Affairs Ireland
inhumane” in one facility. In 2009, there were 200 admissions of children into adult inpatient mental health units, a practice that the Inspector for Mental Health Services has described as “counter-therapeutic” and “almost purely custodial”.
Inefficient use of resources, a slow pace of reform and a crisis in staffing have brought us to a critical place. People’s lives, their ability to recover, to live a full life in the community, to work and maintain family contacts are all factors at stake here. We must act now. Irish people deserve a mental health service that not only meets our international human rights requirements, but actually improves the lives of those who use it. In order for this to happen there has to be accountability for the reform, delivery and transformation of our mental health services. But so far we have not had a detailed, time-lined and resourced implementation plan for A Vision for Change. The Programme for Government has committed to implementing the policy and they now have a unique opportunity to bring about the change so desperately needed. This is even more important in light of the Government’s plan for the introduction of Universal Health Insurance. We strongly believe that the next step has to be the introduction of new law that places a statutory obligation on the health service provider to implement A Vision for Change. Most importantly, this would ensure that successive governments deliver mental health services that respect the human rights of those who need them. Such an approach is endorsed by the World Health Organisation (WHO) and the Independent Monitoring Group of A Vision for Change. International human rights watchdogs, such as the Committee for International Covenant on Economic Social and Cultural Rights, have also suggested that law is a viable route to the realisation of the right to mental health, if all other avenues have failed. If the Programme for Government commitments on mental health were prioritised and introduced they would help realise people’s right to mental health in a way that has not yet been achieved in Ireland to date. Political will is clearly needed to make this happen. But building political will by itself does not lead to sustainable change. For this to happen, we need to ensure Irish legislation cements these changes for many years to come.
H e a l th
Mental health and the law
As a human rights organisation, AI is campaigning to ensure everyone in the country is able to enjoy their human right to the highest possible standard of mental health – a promise the Irish Government made in 1989 when it ratified the International Covenant of Economic, Social and Cultural Rights. This is not a right to be healthy, rather it is a commitment that the Government must always be striving to improve the standard of services (medical and social) for people with mental health problems, even during times of economic recession. To fulfil human rights law, mental health services must be available, accessible, acceptable and of good quality. But mental health fell off the political agenda and, neglected and under-funded for decades, has hit crisis point in recent years. Mental health legislation in Ireland is out of line with international human rights standards and there is a lack of a focus on a people’s recovery and right to live in their community. Since 1984, successive Irish governments have promised to provide modern mental health services, but progress has been painfully slow. This is because there is a lack of planning, transparency and accountability for delivering on mental health policy. And while there have been recent improvements in closing down the old institutions, the community services to replace them have simply not been developed. The next steps have to involve a full scale review of the Mental Health Act 2001, to bring it in line with international human rights standards, and the introduction of new law to ensure the long-promised reform of mental health services is enacted. AI believes these pieces of legislation would represent ‘gamechanging’ moments for mental health in Ireland. They would deliver accountability, improvements in the lives of people accessing services and would make political will sustainable. It would mean greater choice for people and stronger protection of their human rights. In particular it would mean people could live in their community and recover their lives as well as their health. Colm O’Gorman is the Executive Director of Amnesty International Ireland.
RE G I O N A L ISSUES
Public Affairs Ireland June 2011
Evaluating the regional knowledge economy: A case study of the BMW Region Adrian O’Donoghue analyses a recent report on the Regional Knowledge Economy and discusses some of the concerns it raises. The development of the ‘knowledge economy’ in Ireland has long been a national strategic objective, but while policy and programmes to deliver this ‘smart’ economy outcome have been rolled out over the last decade, there has been limited analysis of the impacts at regional level. Building upon the 2004 report, Audit of Innovation in the BMW Region which provided a useful benchmark of the region’s innovation performance, the BMW (Border, Midland and Western) Regional Assembly, the body charged with overseeing the expenditure of regional development funds from the EU, has published An Audit of the Innovation System in the BMW Region: An Evaluation of a Regional Knowledge Economy which was recently launched by the Minister for Enterprise, Jobs and Innovation Richard Bruton TD. The report examines the region’s innovation and economic performance and identifies the key challenges and opportunities for job creation and economic growth in a range of emerging high value economic sectors. This article reviews the main findings of the report and also the results of a recent OECD report on regions and innovation policy.
Rural economy with lower value-added activities
The Border Midlands and Western (BMW) Region was designated an EU objective 1 region from 2000-06. Objective 1 areas are those lagging behind in their development and where the GDP is below 75 percent of the community average. The region is made of up of 13 counties, accounts for 47 percent of the land mass of Ireland and had a population of 1.1m at the last census. The Region is less densely populated than the Southern and Eastern (S&E) Region and is principally a rural economy which
continues to be reliant upon ‘primary’ sectors for employment. The Region has a lower proportion of the labour market with just 28.9 percent (Q4 2010) of all those employed in Ireland, but only produces 18.5 percent (2008) of national output (Border 7.8 percent, Midland 3.9 percent, Western 6.8 percent). The report also found that up-skilling remains a key challenge for the BMW Region with a lower proportion of professionals, employers and managers than the Southern and Eastern Region.
Low levels of public and business expenditure of R&D
The BMW Region has one University, NUI Galway and five Institutes of Technology (Athlone, Dundalk, Letterkenny, Galway/Mayo and Sligo) along with the Marine Institute, the Teagasc Rural Economy Research Centre as well as St. Angela’s College Sligo. However, the Region’s share of public research and development (R&D) investment remains low. Since 2000 the Region has received just 13 percent of awards under the Programme for Research in Third Level Institutions and 11 percent of Science Foundation Ireland awards. While these programmes have developed capacity, the distribution of this funding has important consequences for the BMW Region’s comparative research and innovation capacity. Further evidence
from ESPON (European Spatial Planning Observatory Network) found that R&D policy across EU countries was adversely impacting on spatial balance by reinforcing existing concentrations of activity, while economic geography literature suggests that spill-overs from research can be quite limited in distance. For this reason, the BMW Region, and indeed all regions, needs to ensure the development of relevant research capacities, complemented by mechanisms to ensure effective dissemination/diffusion of knowledge and enhanced absorption capacity within individual firms. This is necessary in order to ensure the commercialisation of research outcomes on a widespread basis. These challenges are also reflected in the BMW Region’s total share of Ireland’s BERD (Business Expenditure on R&D) which stood at 19 percent, while 21 percent of total R&D personnel were employed in enterprises in the Region. It is worth noting that since 2000, 19 percent of Enterprise Ireland’s expenditure on enterprise programmes has been allocated to the BMW Region.
Emergence of dynamic knowledge-led sectors
The report highlighted the emergence of dynamic knowledge-led sectors in the BMW Region which illustrates the gradual evolution of the economy towards one led by knowledge intensive sectors. Estimated to be worth close to €1bn to the local and regional economy in 2008, further opportunities were identified for job creation and growth in Medical Devices, Computer and Communication Hardware, Pharmaceuticals and Software and Communication Services. Collectively, these sectors alone were found to employ almost 27,000 within the BMW Region and are also more resilient to the challenges posed by the economic downturn. The report evaluates the performance of Knowledge Intensive Service companies which provide services such as ICT, R&D and Management Services and are key inputs into the knowledge economy as well as vital indicators of the scale of knowledgePublic Affairs Ireland
Public Affairs Ireland June 2011 intensive activity taking place in a region. Of those Knowledge Intensive Service companies surveyed, graduate employee levels were found to be high (78 percent) with more than half (52 percent) reporting entirely graduate workforces. Those companies offering these services were found to be mostly small in size with 90 percent employing fewer than 10 employees.
Lower satisfaction level with innovation services provided by the public sector
From surveys undertaken with innovation-active firms, the report concluded that innovation activities were market led rather than grant driven. Grants were found to be a key consideration when engaging with the public sector, whereas the availability of specific/renowned competencies was identified as the main factor for engaging with the private sector. Further analysis of the regional innovation system found a 78 percent satisfaction rate amongst companies who engaged with the public sector, which compares unfavourably (92 percent) with the satisfaction levels of those who employed the innovation services of the private sector. Several barriers were identified by companies who engage with academia: • Accessing the appropriate points of contact • Lack of co-ordination • Difficulty in accessing appropriate services • ‘Culture gap’ between academia and industry • Lack of awareness of available funding • Opportunity cost of investing in innovation/R&D activities. The internal culture in higher education institutions was identified as a serious constraint to engaging in technology transfer in the higher education sector. There are limited incentives for staff to engage and inadequate processes to facilitate this engagement, particularly in the Institutes of Technology. Given the shift in emphasis whereby the State is seeking more tangible and immediate returns on investment in the knowledge economy, this finding should be one of considerable concern. This issue requires particular and immediate attention, indeed the report strongly advocates the development of technology transfer intermediary bodies between industry and academia which can help overcome the barriers identified and the ‘culture gap’ that Public Affairs Ireland
More explicit regional dimension to innovation required
The BMW Regional Assembly’s report recommends that there should be a more explicit regional dimension in national innovation policy to reflect local and regional economic realities and build on existing networks and linkages in order to fully exploit the potential of each region. This recommendation is also grounded in the European Commission’s flagship initiative Innovation Union approach to developing Europe’s innovation capacity under the Europe 2020 strategy. The Commission points towards the need for Member States to reform both the national and regional R&D and innovation systems to foster excellence and smart specialisation. This challenge needs to be confronted by the Irish Government by gaining a greater understanding of the regional (and ultimately national) comparative advantages in order to maximise the potential for high value economic activity, consistent with the National Spatial Strategy. One of the recommendations of the report argues that regional innovation strategies can take national considerations into account but also form a more effective level of implementation at the regional and local level, for example in the medical devices sector in the West Region. The first positive step in this direction has come from the National Strategy for Higher Education to 2030 which recommended the development of regional clusters of collaborating institutions, but this should be executed through an informed process for regional development.
OECD and regions and innovation policy
In May this year, the OECD published a report entitled Regions and Innovation Policy which found that the territorial approach is now entering the new innovation paradigm in two distinct ways. The first of these is the mounting concern for the regional and spatial dynamics of innovation in national policies and the second comes from those regional strategies which are put in place to address sustainability and development challenges. Neither of these are currently being addressed in Irish innovation policy. Indeed the argument in favour of the current policy has been that Ireland is too small to pay any significant attention to the needs of individual
RE G I O N A L ISSUES regions through regional innovation or ‘smart specialisation’ strategies. This is not just an Irish phenomenon as countries such as New Zealand, Portugal and Greece have also been deemed by their Governments to be either too small or centralised to promote distinctive regional innovation policies. In their conclusions the OECD identifies several key areas for policy improvement: 1. Acknowledge the diversity of regional economic and innovation profiles 2. Open the ‘black box’ of regional innovation policies to identify the scale and scope of innovation policy in regions 3. Enable regions to become agents of change
A ‘one-size-fits-all’ approach to regional innovation not appropriate
The OECD demonstrates from empirical evidence on specialisation and innovation how varied regional innovation systems are and argues that there cannot be a ‘one-size-fits-all’ approach to it. A greater appreciation that regional competitiveness can improve national innovation and performance is also highlighted. This is an issue that requires further attention, in particular for Irish economic and innovation policy makers. The OECD advocates the development of an innovation-driven vision based on solid analysis of regional assets and relevant global trends to complement science, technology and innovation strategies adopted at the national level.
Drawing on our own analysis and that of the OECD, we can conclude that a greater focus on building regional research and innovation capacity within Irish STI (Science, Technology and Innovation) policy would enhance the capacity for regions to grow and impact positively at local, regional and national levels. The BMW Regional Assembly report is available for download at www. bmwassembly.ie. To see a full list of sources used in this article please contact editor@publicaffairsireland. com. Adrian O’Donoghue is a Researcher and Policy Analyst with the BMW Regional Assembly.
C O RRUP T I O N
Public Affairs Ireland June 2011
Bribery in the political world: Legal framework Imelda Higgins examines the legal aspects of bribery and how this has changed and developed over the years. Allegations of corruption have featured occasionally in the discourse around Irish politics over the last 20 years. This article focuses on one type of political corruption, namely bribery often referred to as the “quintessential form of political corruption”, to such an extent that, traditionally, the criminal law has viewed political corruption and bribery as synonymous. Prior to 1995, the main anti-bribery provisions were to be found in the common law and in the statutory offences contained in the Prevention of Corruption Act 1889 and the Prevention of Corruption Act 1906. Since that time the criminal law on bribery has been significantly strengthened. This article traces the main developments in this respect and considers some of the remaining weaknesses.
Historically, culturally and geographically, bribery is the subject of vigorous condemnation. From the fifteenth century B.C. on, there has been a concept that corresponds with the word “bribe”, the “concept of a gift that perverts judgment.” An Egyptian Pharoh, Horemheb (1342 – 1314 BC) issued the first recorded law of a secular penalty for bribetaking. Over seven centuries ago, Dante placed bribers in the deepest circles of Hell, reflecting the medieval distaste for corrupt behavior. More recently, the American Constitution made bribery and treason the two explicitly mentioned crimes that could justify the impeachment of the U.S. President. There are several reasons for this almost universal condemnation of bribery. Traditional antipathy stems from the fact that the very objective of bribery is to corrupt and in the act of corrupting: it undermines the equality of individuals before law; induces a betrayal of trust; and violates the paradigms of natural justice. More modern reasons also include the economic harm caused by bribery and the damage which it causes to public confidence in democracy and democratic institutions.
The criminalisation of bribery
As mentioned, prior to 1995, the primary statutory bribery offences were contained in the Prevention of Corruption Act 1889 and the Prevention of Corruption Act 1906. Since that time, those acts have been amended on a number of occasions. Moreover, the Criminal Justice (Theft and Fraud Offences) Act 2001 (the CJ (TFO)A 2001 introduced two new bribery offences. The Prevention of Corruption Act 1889, as amended (the “PCA 1889”) criminalises the bribery of certain public office holders. The Prevention of Corruption Act 1906 as amended, (the “PCA 1906”) criminalises the bribery of agents, which it defines as someone “employed by or acting for another”. It covers bribery in both the public and private spheres at home and abroad. The CJ(TFO)A 2001 criminalises the bribery of national or EU officials where the payment of the bribe is to induce that official to act in a way which damages or is likely to damage the financial interests of the Community. The amendments to the PCA 1889 and the PCA 1906 have significantly strengthened those acts. In particular, they have extended their personal and material scope including providing for their extra-territorial application and for managerial liability in the case of offences by bodies corporate. In addition, the Prevention of Corruption (Amendment) Act 2001 provides for two new presumptions of corruption which facilitate the prosecution of
“Bribery offences are
notoriously difficult to
investigate and prosecute, partially because of the
lack of a specific victim
and the consensual nature of the offence.”
bribery offences by shifting the burden of proof once certain requirements are met. It also empowers a member of the Garda Síochána to obtain a search warrant when investigating bribery. For its part, the Proceeds of Crime (Amendment) Act 2005 amends the 2001 Act by, inter alia, empowering the Gardaí to seize suspected bribes under the PCA 1906 and a circuit court judge to order its forfeiture if satisfied that it is such a bribe. Finally, the PCA 2010 further extends the scope of the PCA 1906 and introduces new whistleblower protection for those reporting suspicions of bribery either to their employer or to the Gardaí.
Other relevant offences
Recent years have also seen the introduction of two other offences which are significant in terms of combating bribery, namely money laundering and account offences. Bribery and money laundering are closely connected and anti-money laundering measures can make bribery more difficult. In particular, “[t]o the extent that it is difficult to launder kickbacks and bribes, the barriers to corruption are raised, there is more likelihood of getting caught, and the amount of corruption in the system should decline.” Money laundering was first criminalised in 1994 but the current offences are contained in the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (the “CJ(MLTF)A 2010”). The Act essentially makes it an offence to conceal, handle or otherwise deal with property which is the “proceeds of criminal conduct” while knowing, believing or being reckless as to whether the property constitutes such proceeds (CJ(MLFT)A 2010, s 7(1)). The proceeds of a crime such as bribery will include not only the bribe itself, but profits or other benefits derived by the briber from the transaction, including for example from a contract obtained through bribery. The CJ(MLTF)A 2010 also requires bodies most likely to be used for money laundering purpose, such as financial and credit institutions, to introduce a number of anti-money laundering measures (CJ(MLTF)A 2010, Part 4) Public Affairs Ireland
Public Affairs Ireland June 2011 and to make suspicious transaction reports to the Gardai and to Revenue where they suspect money laundering activity (CJ(MLTF)A 2010, s 42). Accounting offences can facilitate the detection of bribery offences as “[a]ccounting acts as an information system which provides transparency, which in turn allows for the detection and reduction of corrupt activities” Moreover, accounting offences tend to be easier to prove than bribery. The CJ(TFO)A2001, essentially criminalises false accounting (CJ(TFO)A 2001, s 10) as well as requires auditors to report suspicions of false accounting to the Gardaí (CJ(TFO)A 2001, s 59).
Asset recovery laws
Other significant developments have occurred in the area of asset recovery. As corruption is primarily motivated by profit, both criminal and non-criminal based asset recovery is increasingly viewed as a key element in combating bribery and other corruption offences. The fact that the bribe and other benefits may be confiscated is likely to be a deterrent to at least some individuals. Moreover, forfeiture may reduce the ability of persons involved in bribery to pay bribes by confiscating their financial assets. The Criminal Justice Act 1994 introduced conviction based recovery whereby a court can order the confiscation of assets derived from a criminal conduct following a conviction. For its part, the Proceeds of Crime Act 1996 introduced non-conviction based recovery which provides for the civil confiscation of assets suspected to derive from criminal activity. Moreover, the Proceeds of Crime (Amendment) Act 2005 introduced new provisions relating to “corrupt enrichment” which is, as its name suggests, specifically concerned with confiscating the proceeds of corruption. It empowers the High Court to order the recovery of a pecuniary or other advantage or benefit obtained as a result of “corrupt conduct”, a term which includes conduct which is an offence under the Prevention of Corruption Acts 1889 – 2010. Consequently, once the High Court is satisfied that someone has profited from bribery they can order the recovery of that profit absent any conviction for bribery.
Bribery offences are notoriously difficult to investigate and prosecute, partially because of the lack of a specific victim and the consensual nature of the offence. Over the past years, there have been a number of Public Affairs Ireland
significant extensions in the Gardaí’s powers of investigation. In particular, as mentioned above, the PCA 2001 introduced the power to obtain search warrants and the PCA 2010 introduced whistleblower protection for those reporting bribery. Moreover, the Criminal Justice (Mutual Assistance) Act 2008 gave the Garda Siochana the power to obtain account information and to monitor bank accounts. In addition, in 2009, the Oireachtas adopted the Electronic Surveillance Act 2009, which sets out a statutory framework through which members of An Garda Síochána can legitimately monitor and retain details of personal conversations and communications. Prior to that Act there had been some doubt as to whether evidence obtained through convert surveillance was admissible in court. Such evidence is frequently of significant importance in proving bribery. The Criminal Justice Bill 2011 will, if enacted, also significantly affect the ability to effectively investigate and prosecute bribery. It will create a new offence of failing to report information to the Gardai. It will also empower the Gardaí to apply for a court order requiring any person with relevant information to produce documents, answer questions and provide information for the purposes of the investigation of relevant offences. It also contains measures relating to how documents are to be produced to the Garda. These measures are aimed at reducing the delays associated with the production of large volumes of poorly ordered and uncategorised documents to the Garda in the course of its investigations.
Items still on the agenda
Despite the very significant improvements to that legal framework over this period several problems remain. Specifically, the bribery offences are currently contained in a range of different statutes each with a different scope of application and with different sanctions. These urgently need consolidation into a single statute in the interest of transparency and consistency. In addition, while the current statutes appear sufficient to cover instances of direct bribery between individuals, they are not easily applied to cases involving intermediaries and/or corporate entities both of which frequently feature in corrupt transactions. While a person who uses an intermediary may be convicted of bribery, to do so, it is necessary to show that they have the requisite intention. This may not be
C O RRUP T I O N possible in cases where an individual deliberately distances himself from the intermediary’s activities. While it is possible to prosecute a corporate entity for bribery, the basis for attributing intention to such an entity is not entirely clear. This may inhibit the prosecution of corporate entities. While individuals engaged by such entities may still be prosecuted, this is best viewed as a supplement to corporate liability rather than as a substitute. Specifically, imposing liability on the corporation itself is likely to have different deterrent effects from those where liability is restricted to individuals. More generally, too little emphasis is placed on corruption prevention and in particular, in educating public officials and the public regarding the nature and consequences of corruption. Prevention is a key component of a successful anti-corruption strategy as evidenced by the United Nations Convention against Corruption. That Convention requires State parties to take appropriate measures to raise public awareness regarding the existence, causes, gravity of and threat posed by corruption. Moreover, according to the UN’s anti-corruption guide: Mobilizing public opinion in support of strong anti-corruption measures also entails mobilising popular support for high standards of integrity and performance in public and private administration and opposition to corrupt practices wherever they occur. If this is done, anti-corruption strategies are unlikely to fail. If it is not, they are unlikely to succeed. Finally, there is a dearth of information regarding the actual process of investigating bribery by the Gardaí. For example there are no published statistics on the number of bribery investigations commenced nor on the number of prosecutions or convictions. Without such statistics it is difficult to determine the effectiveness of the new enforcement environment or to address any continuing inadequacies. Imelda Higgins is a barrister who advises regularly on corruption law issues including; ethics, political finance, freedom of information, bribery, money laundering, asset confiscation and enforcement. She also lectures on corruption law at Trinity College, Dublin. Should you wish to view any of the sources used in this article please contact editor@publicaffarsireland. com
R e ta i l
Public Affairs Ireland June 2011
JLCs and the Retail Industry David Fitzsimons discusses what effects the Joint Labour Committees, upward-only rent reviews and Local Authority rates have on the retail industry. The importance of the retail industry to Ireland’s economy cannot be overstated. Currently one in every eight workers are employed in the sector. While retail sales have fallen considerably as a result of the recession, out-of-date regulations around wage setting and commercial rents are proving bigger obstacles to the industry’s recovery. If the new Government’s proposed reforms are carried through, retailing can play a very significant part in new job creation and economic recovery. The construction sector was the only industry to be hit harder by the recession than Ireland’s retail industry was. This will give you some idea of the severe blow that has been dealt to both retail owners and employees in recent years.
Decline versus incline
Retail sales volumes have fallen by an average of 30 percent since their peak in 2007. Incredibly, May 2011 was the 39th consecutive month of retail sales decline. Most significantly, over 40,000 jobs have been lost in the industry since 2008. Last year alone saw over 168 insolvencies in the industry, with many of these being multiple store chains, resulting in a significantly higher figure for store closures. Announcements of job losses continue to be a regular occurrence for retailers throughout the country. Given these facts, any reasonable commentator would expect retailers’ costs to have fallen in a similar manner. This would help stores to adjust their business costs to the greatly changed commercial realities. Unfortunately however, the reality is very different. In the parallel universe that exists for Irish retailers, a large number are seeing some of their biggest costs like rent, local authority rates and wages actually increase. How can this be so? The answer is that the Irish retail industry is hamstrung by a variety of regulations, some very old and some new, which are artificially keeping costs high. Chief among these are the Joint Labour Committee (JLC) wagesetting structures, upward-only rent reviews (UORRs) and local authority
Joint Labour Committees
JLCs are bodies where union and employer representatives agree legally binding contracts on pay rates and terms and conditions for sectors such as hospitality, agriculture and catering. Employers view these committees as being union biased, which is reasonable when one considers that these committees don’t involve an independent chairman. In fact of the last 300 JLC rulings only one has found in favour of the employer. While common sense would suggest that in an industry that has seen sales volumes fall by an average of 30 percent, wages would drop or at least not increase, the opposite is the case. As a result of the most recent JLC agreements, the wages in many retailers’ outlets have increased significantly. In fact, as recently as January 2011 a JLC rate increased was borne by the retail industry. Reform of
“The Irish retail industry is hamstrung by a variety of
regulations, some very old and some new, which are artificially keeping costs high”
the JLC wage-setting structures is a crucial part of the reform package being progressed by the new Government to assist Irish businesses and boost employment. JLC agreed pay rates and Sunday premia need to be adapted to take account of the current economic reality and of changing societal trends, where Sunday is for many, just another normal working day. The signals are mixed though on the prospects of meaningful reform and, in spite of the very strong case to be made, it is by no means a done deal. From recent media reports it appears that the review of the JLC system, initiated by the last Government, is set to recommend that the current system remains in place, with only very minor changes made. More significant reform is certainly needed. Thankfully, it appears that Minister Richard Bruton is willing to initiate change. In early May he signalled that he strongly supports a radical overhaul of JLCs. Speaking to the BMW Regional Assembly, the Minister signalled his support for streamlining overtime arrangements, curbing automatic entitlements to special premium payments and giving greater provision to respond more flexibly to changing market circumstances. If JLCs are reformed in a meaningful manner, the retail industry is strongly committed to investing in our businesses and hiring additional staff. An average of five new positions per company afflicted by the JLCs could be created and 24 current positions secured. Overall, this means that 7,000 new jobs could be created in the retail industry if significant reforms are fully implemented.
Upward-only rent reviews
The second big challenge facing retailers is the detrimental upwardonly rent review. These anachronistic regulations mean that rents can only increase when they are periodically reviewed. Retailers who have seen their sales plummet are being asked by landlords, in particular the large private property companies and institutional investors, for increases in their rent, with many being aggressively litigious. Irish retail rent levels are now more than double that of other jurisdictions, causing large Public Affairs Ireland
Public Affairs Ireland June 2011 scale business failure and significant job losses. Untenable rents have left many retailers under significant pressure to trade and have directly contributed to 44,000 retail industry job losses in the past 30 months. Retailers such as Celtic Bookmakers, Hughes & Hughes, Sasha, Four Star Pizza, Toni & Guy and Chartbusters have all cited extortionate rents as the fundamental reason for their failure. Considering the fact that rents increased by 240 percent between 2000 and 2007, while the consumer price index increased by only 30 percent in the same period, there is considerable scope for rental reductions while still paying landlords a fair rent and allowing a reasonable return on their investment. The majority of leases in existence today were not created during the boom years. The average lease in Ireland today is circa 13 years old but the rental levels that tenants paid were increased to boom market rents by the rent review process. This is best shown by a typical example known to the author - a 750 sq ft shop in a Dublin suburban shopping centre built around 1996. The headline rent in the lease was €40,500 (IR£32,000). At review in 2001 this was increased by a Chartered Surveyor acting as an arbitrator in the rent review process to €88,000, an increase of 114 percent. In 2007 this was increased during the rent review process to €181,000, a further increase of 105 percent. Under existing lease law a tenant has no right of appeal against a rent review awarded by an arbitrator (arbitrators are generally Chartered Surveyors drawn from the various property firms). In a ten year period the rent on this shop increased by 358 percent. Globally the Consumer Price Index and derivative indices influence upward and downward commercial rent movements. The Republic of Ireland and the UK are the only EU states that allow upward only rent reviews. However, in the UK, the combination of a floating exchange rate and the pre-pack administration process have meant that commercial rents have increased far more gradually than in Ireland. A positive start was made when upward and downward rent review clauses were introduced for new commercial leases in March 2010. Unfortunately though this has led to the disappointing situation where similar retail businesses are operating sideby-side, but with the more established business facing the huge disadvantage of having to pay, what is essentially penal rent. According to economist Public Affairs Ireland
Colm McCarthy, UORRs must be addressed to assist the functioning of the commercial property market. Again, the new Government, and the Minister for Justice and Equality, Alan Shatter, TD, in particular, is to be congratulated for moving at an early stage to initiate real reform in this area. He has signalled that he hopes to oversee the introduction of upward and downward rent reviews for existing leases during 2011. The legal advice to RetaiI Excellence Ireland from eminent senior counsel is that this change will be fully constitutional, as Government intervention in private contracts is a common occurrence. A recent example is the decision by Government to force residential property developers to implement social housing provision. Leaving it to the market is not an option. Landlords have had the last three years to resolve the matter with their tenants and in most cases have failed to do so. It is now time for legislative intervention. Recent comments claiming changes to UORRs will lead to a reduction in the value of NAMA’s Irish loan book by as much as 20 percent or between €2bn and €4bn fail to take into account either the €600m annual cost of an additional 30,000 unemployed retail workers or the benefits to the state, as Ireland’s largest tenant, of lower rent
Local Authority Rates
The final piece of the puzzle is local authority rates. All of the political parties have failed to grasp the issue. Many of the party policies talk of the necessity for cost reduction, but no real strategy underpins their promise. Likewise none of the parties have addressed the issue of the new rateable valuation calculation,
R e ta i l
which has been rolled out in Dublin local authority areas and delivered significant increases in rates in those areas. It is disappointing that none of the political parties have insisted on a mandatory rates reduction programme. Instead retail sales continue to decline, while rates continue to increase. It is imperative that a political solution is found. In summary, Ireland’s retail industry, one of the country’s largest employers, has been one of the worst affected sectors by the current recession. Among the biggest impediments to the industry’s stabilisation and recovery are those imposed by outdated regulations on wages and rents. The new Government recognises this and has initiated long overdue reforms in the areas of JLCs and upward-only rent reviews. Government intervention will save many thousand jobs and create tens of thousand more. Full introduction of these reforms will ensure that many retailers will be able to protect over 30,000 retail jobs that are currently under threat and will foster a retail industry environment conducive to the creation of a further 20,000 jobs over the next three years. David Fitzsimons is Chief Executive of Retail Excellence Ireland (REI). It is a not for profit organisation, owned by its members which invests in innovative and exciting learning, market intelligence, commercial services, Government representation and member networking initiatives. Retail Excellence Ireland involves over 650 leading retail companies who operate over 8,500 stores in the Irish market.
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