Tuesday, May 23, 2006

Labour Target the Poor’s Savings

Isn’t great that a party in this country wants to jeopardise the future financial security of the Irish people so that they can open up their own little ideological Disneyland. And no I am not on about Sinn Fein’s tax policies I am talking about Labour and Aer Lingus.

The National Pensions Reserve fund in Ireland was a good example of future planning. Basically it committed all future governments until 2055 to set aside at least one per cent of GNP each year. This was so that when the demographics changed to Ireland having an older population that instead of the government requiring to raise taxes to fund pensions it would have this fund which is being invest carefully to cover some of the costs. Considering that most people in the middle class will have private pensions this fund is primarily going to be for the poor who can’t afford to pay into private pensions.

Aer Lingus is in need of investment. With the open skies deal with Europe and America. This opens up more opportunities for expansion for Aer Lingus and for Irish people to get more options in their airline destinations. Bertie said that it needs 2 billion to buy new planes to capitalise on this.

The object of the fund is “securing the optimal return over the long-term subject to prudent risk management”. Prudent as in cautious, sensible, careful. Ask any economist what is the most volatile industry in the world and I would guess that that many of them would say Airlines. Look at all the airlines that have gone bust in recent years. A website here lists 57 from November 2003 to December 2004. Major National carriers like Swissair, Sabena have gone to the wall. Many others have just managed to scrape through with massive losses. Aer Lingus it’s self just managed to survive thanks to major restructuring. And this is the industry that Labour want to invest what is basically the countries life savings.Which is supposed to be prudently, cautiously, sensibly, carefully invested. It really is complete and utter irresponsible lunacy.

When asked why Ireland needs a state owned airline Rurari Quinn answered. Eircom. That privatisation didn’t work with Eircom hence it wouldn’t work with Aer Lingus. This is complete and utter codswallop. Eircom was a monopoly and the infrastructure was privatised. As Mary Harney once said if there is anything worse then a state monopoly it is a private monopoly. This will not happen with Aer Lingus. Multiple airlines fly all over the world from Ireland. Ryanair even flies from some of the smaller airports like Kerry and Knock which Aer Lingus do not. The idea that if the government do not fund an airline that access to the country will be lost really is a bit naive.

As for these mythical Heathrow slots. What business would sell slots into the busiest International Airport in the world on the second busiest in the world air-corridor in the world. Which has one of the highest load factors. Even if an airline company did sell off the slots. The company that bought them would probably still fly into Dublin as it is probably one of the most profitable routes. And even if it was likely that a company would not want to fly the world’s second busiest air route. The government could when it is privatising Aer Lingus. place control of the landing slots in a semi-state company’s hands and rent them to airlines flying London-Ireland. The way to give the Irish people more choice, more value and more destinations to to privatise Aer Lingus.

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