“When I have it, I spend it and when I don’t, I don’t” and other tales of budgetary madness

Former Minister for Finance Charlie McCreevy conjured up his own epitaph when he uttered the now legendary description of his budgetary tactics that went something like “When I have it, I spend it and when I don’t, I don’t”.  This phrase has become somewhat folkloric.  Its attribution is cited as sometime in the mid 2000s and the exact wording changes depending on the telling.  It is a tale of legendary negligence, a legitimation of the burn after earning that characterised the production of Celtic Tiger wealth.  It was a warning sign of the inevitability of hard times to come that we mostly chose to ignore.

McCreevy’s comment is iconic of the era in which it was uttered.  During the Celtic Tiger period a collective consciousness was arguably created in which most of us believed in the myth of eternal economic growth (or if we didn’t, we at least did not think about the consequences of collapse so often).  In a way the Government had convinced people that they didn’t really need state support.  On some level we all knew that the Government were squandering the tax intake but it didn’t somehow seem essential to (most of) our daily lives.  We were producing our own wealth, creating our own opportunities.  They had pulled off the neoliberal trick of convincing the country that it wanted less and not more state intervention.  And this produced new types of citizens.  In the space of a generation the Irish had gone from a people that saved before they bought, questioned any extravagance, and were wary of debt, to a nation only too happy to blow their paycheque on nights out, put the bills on the credit card, and become sodden in debt to buy their dream home and all the trimmings in one go.  For a long time the Irish had been a people who simply didn’t have it to spend.  Now that we had it, by god we were going to spend it.

This attitude was actively encouraged by the Government in almost everything they did.  They transferred the tax burden to assets, property in particular, and talked up the property market at every turn, encouraging people to buy, buy, buy.  They generated an economy based on consumption and called it growth, and they dealt in macro-economic statistics to obscure the uneven and precarious nature of this ‘expansion’. 

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We don’t have ghost towns like this… yet

Gary, Indiana in the USA has a population around 100,000 and practically no jobs or services. It is the recipient of Obama’s stimulus package to resuscitate the economy. A report on BBC 2 last night looked at the city to examine the impacts of recent economic policy in the US. Watch an excerpt and read more here.

Gary is one third poor, 84% African American, and has seen its population halve over the past three decades. If crime, as the official figures suggest, has recently dropped off then – say the critics – that is because population flight from the city is bigger than the census figures show.

In Ireland, we don’t have ghost towns like Gary yet. If we get out-migration then we might do in a few places as oversupply decay and other buildings are vacated as people leave. However the size of the country will probably mitigate the stark neglect experienced in many areas of the US (the Ozark Mountain region depicted in Debra Granik’s recently released film Winter’s Bone offers another example). Nevertheless, Gary is a bleak vision of uneven development under capitalism.

Cian O’ Callaghan

 

What’s going on with Cork Docklands?

As a grand urban project Cork Docklands has certainly had its share of problems.  Managed by City Council in lieu of devolving responsibility to a separate authority like the DDDA, the process has been one of slow evolution, as the local authority within their limited powers attempted to stimulate developer interest, steer existing landowners towards considering redevelopment, and keep the project a priority within national capital funding streams, all the while adhering to best-practice in international planning standards.  Iconic tasters like the City Quarter Development on Lapps Quay and the Elysian offered appetisers for the banquet that was to come when the area twice the size of the city centre would be redeveloped.

Howard Holdings City Quarter Development on Lapps Quay

By 2008, it looked like the main course was about to be served when a number of large sites were lined up within various stages of the planning process, most notably Howard Holdings Atlantic Quarter that was set to become the lynchpin of the entire project.  Gradually the major players had lined up behind the plan.  But just as the steel and concrete of these sites was about to turn the ethereal work of the planning authority into something rigid and fixed, the gathering black cloud of recession cleared the playing field and scattered all betters to their proverbial hedges.  The Docklands project went from being a question of ‘when’ to again being a question of ‘if’.

One of the biggest problems facing the project was Central Government’s unwillingness to unambiguously commit to funding the infrastructural provision needed for upgrading the waterfront.  On the surface, Central Government have always claimed that Cork Docklands is a policy priority with their full support and backing.  However, this commitment has yet to translate into budgetary provision making the capital needed available to Cork City Council.  Such a scenario continues unabated.  Speaking recently about the lack of provision for Cork Docklands within the Government’s infrastructural investment programme, Minister for Education Batt O’ Keeffe suggested that

“There’s no point in me making predictions but the Government is committed to the Cork Docklands. It’s an issue we will be discussing at Cabinet in early September and you can be sure that Micheál Martin and myself will be to the fore ensuring Cork gets its fair share.”

Despite the less than certain assurances of capital investment, developers such as Greg Coughlan of Howard Holdings’ were confident enough in the project to invest millions in assembling sites and enlisting architects and consultants to construct lavish plans and hyperbolic promotional videos.

Artist Impression of Howard Holdings proposed Atlantic Quarter Development

Coughlan is currently facing jail for contempt of court for failing to supply a statement of his assets to investors pursuing him for €28.1 million for loans relating to a Polish development.  On the front of the Irish Examiner a few months ago, this news was presented next to that of planning permission being granted (though not funding committed) for two new bridges in the docklands, part of the irony being that Coughlan’s Atlantic Quarter development was one of those set to benefit most from these new river crossings.

Thus it seemed as if Cork Docklands had anchored in a kind of development limbo.  The plan had been rolled out to such an extent that it wasn’t going to just disappear into thin air.  The Dockland project exists, has been made to exist over the last decade through a few plans and strategies, hundreds of newspaper articles and speeches, countless conversations, negotiations, and schemes, and a couple of prominent developments.  At the same time the financial crisis was sucking the Irish property market into a sink hole, the gaping hole in the Irish banks and the staggering levels of vacancy and oversupply putting a more or less abrupt end to new development.  It seemed like something as ambitious as the scale of Cork’s Docklands project wouldn’t be enlisting any cranes for a while.

But recently Cork has again begun to rumble with the promise of new projects to replace those that have stalled.  In light of the sudden absence of the events centre first intended for Mahon Point and subsequently as part of Atlantic Quarter, Owen O’ Callaghan has recently slated plans to build a 5,000 seat venue in a development on Albert Quay.  In the same week as O’ Callaghan’s plans were announced, An Bord Pleanála ruled against Origin Enterprises 11-storey office-based development on Kennedy Quay (Irish Examiner). 

The most extravagant of these plans is Gerry Wycherley’s €750 million planning application to redevelop the Marina Commercial Park (MCP).  The proposed development features more than 800 apartments, providing homes for up to 2,230 people, a marina where they can park their boats (you’ve just got to love that feature), a range of community amenities, a visitor and science centre, the Ford Experience, which is expected to attract up to 300,000 visitors annually, and a new central plaza to provide a hub for the community, including a creche and library.  The aims are ambitious.   As suggested by the Cork Independent, the “planning application aims to transform the 24-acre, MCP into a vibrant, socially inclusive community within the City’s south docklands, where people will live, work and play, creating 1,200 jobs in the process”.  An article in the Irish Independent rather grandly suggested that “Cork is to defy the recession by pushing ahead…” with the project.

Artist Impression of Wycherley's plans for MCP

But at the same time these rumblings on the waterfront could be as far away from becoming a reality as Brando’s mumbled dreams of being a contender.  Wycherley’s proposal comes with a series of caveats.   He lists three factors “outside of [the company’s] control” that need to happen before they can move on the project.

“Firstly, we don’t know how long the planning application will take to process. There is no reason why it wouldn’t get planning permission as we’re compliant with everything but we don’t know how long it will take. Secondly, there is a serious infrastructure deficit at the moment. Centre Park road will have to be raised at least three metres as well as improving transport links between the site and the city centre. Finally, even if the other two were there in the morning, we couldn’t do anything because the market isn’t there. It would be commercial suicide to move on this without the market but we need to have everything ready and in place for when the market turns.”

All in all these conditions are pretty significant ones, which at heart expose how much the property market in Ireland has changed in the last two years.  Wycherley is hedging his bets on all counts.  The application is essentially suggesting what could happen with the site and certainly not what will happen.  It is no longer a case that Government capital expenditure can in any way be assumed to be forthcoming.  The Government’s precarious backing of the Cork Docklands project is now even less assured given the chronic hole in the public finances.  Just as significant is the fact that there can no longer be assumed that there is a market for commercial and especially residential property in Ireland.  In essence Wycherley’s proposal is saying what could happen in an alternative reality where the Irish Government had money and the property boom was still booming.  While he is certainly cognisant of these factors, there is still a hint of the blind Celtic Tiger confidence in the way the project is talked up.  He suggests that “Obviously, at the moment, the residential market has bombed so we won’t start building the residential part of the project until there is a clear demand and we can move units. But I’m confident that the market will pick up. The demographics are good in that regard”.  The rationale behind such good demographic projections, however, remains patently unclear.  For Cork City Council the announcement of the project is clearly positive in that it keeps the Docklands within the public eye and provides them with a more tangible bargaining tool to lobby Central Government for capital funding.  If the proposal is in line with the planning regulations for the site (which the developer claims it is) they will grant it planning permission. Yet there is something illusory about all of this which begs the question as to what planning permission actually means in an Ireland after NAMA.  Clearly from his own admission Wycherley has no intention of starting development on the site immediately, nor in any defined time period.

Perhaps lustrous plans like these are means of looking sharp for upcoming NAMA nuptials, a pretty peacock’s plumage to appease and please the prospective mate.  Because in most cases it is now NAMA that hold the power over Ireland’s urban future.  For sites to go into development the final say rests not with the developer or with the local authority, but with NAMA.  How exactly this new arrangement will pan out will decide a lot about the future of the country.

As for Cork Docklands, the project will undoubtedly soldier on, this latest episode one more in a its storied evolution.  While proposals like this one can provide media fodder that keeps Cork’s ambitions of density and sustainability front and centre in a news nation characterised by misery and miasma, it is important not to get caught up again in the tornado of excess that characterised the Celtic Tiger.  Cork’s fastidious record of strategic planning may have had the outcome of some developments receiving an unfortunately anti-climatic opening, but this culture should be retained in the face of less optimistic times.  What is important now may not be the grand statement but ensuring that when development happens it is to a scale appropriate to encourage sustainable growth.

Cian O’ Callaghan

 

Strategic planning versus housing vacancy in Cork

According to the 2006 census there were 51,441 housing units in Cork City of which 6167 were vacant (exc. holiday homes).  Between Apr 06 and end of 2009 the DEHLG housing completion data reveals an additional 3,579 units were built.  To put that in perspective, in 1996-2006 the number of households increased by 2,636 well below the vacancy and new build rates.  At the same time, Cork’s development over the last decade offers one of the best examples of plan-led development in Ireland. The Cork Area Strategic Plan and the Cork Docklands Development Strategy both aimed to implement an approach to development that was coordinated at the urban and regional levels, and aimed to stimulate growth that was in line with NSS guidelines and best practice in spatial planning.  So, if Cork followed an evidence-based approach to planning for development, why is it now suffering such high levels of vacancy?

There are a range of factors that influence this.  For one, development in Cork has suffered from unfortunate timing.  For the last decade, the projected growth expected from the docklands project has informed the scale and type of development in Cork city.  Cork is not characterised by urban density and does not have a legacy of apartment living.  The docklands project sought to fundamentally alter this pattern.  The project planned to stimulate the growth of the knowledge economy in Cork city by providing new office spaces in the docklands.  Additionally, the docklands would provide a range of new amenities (schools, parks, crèches, bars, restaurants, cafes) that would encourage both single residents and families to live and work in the city centre.  By the time the recession hit, the docklands project had yet to really get off the ground.

However, the developments that had happened in the city had based themselves on these projections.  Thus, developments like the Elysian that aimed to capitalise on the emerging trend towards apartment living were coming on stream at a time when the property market was imploding, making them an even more risky proposition in that they not only had to contend with a distressed market but also battle against entrenched consumer preferences.  At the same time, new housing estates were being developed in the suburbs.  Many of these came on stream at the wrong time.  Additionally, many prospective buyers had been priced out of the market as property prices soared, forcing them further out into the county.

Similarly in the County, expected growth was predicated on the designs of the CASP to create a commuter zone around the metropolitan city region.  Many speculative housing developments sought to capitalise on these trends.  Both the CASP and the CDDS are long-term strategies that were only beginning to see tangible results over the last three or four years.  As such, the recent surge of development interest in Cork was unfortunately in synch with the crash.

While these projects were certainly based on a strong rationale couched within the logic of spatial planning, it should also be said that the levels of growth expected from these strategies was excessive; the outcome of entangling reasonable and sensible projections with the fever dream of the Celtic Tiger.  Furthermore, even though Cork attempted to implement an evidence-based forward planning approach parts of the city and county were also characterised by the type of ad-hoc and clientalist developmental practices seen in other counties.  As David Counsell suggests in his study of the CASP, while on paper the plan suggested a coordinated effort by City and County Councils to plan and manage the growth of the region, the actuality was more fragmented.  Local Councillors still managed to rezone land for  development in towns and villages upon which massive housing estates were built that were in excess of reasonable demographic projections and against the objectives of the CASP.  Many of these developments are now unfinished ghost estates, while others are situated in areas without proper social provisions.

Rather than indicating the futility of evidence-based planning, the case of Cork demonstrates the problems associated with the fragmentation of the Irish planning system.  In the absence of joined-up planning, local authorities have only limited abilities to guide development in coordinated ways, and are often at the whim of local Councillors and developers.  While Cork certainly was not immune from the frenzied over-development of the Celtic Tiger period, the fact that to a certain extent this development followed a coherent plan means that in the long-run this may not be as destructive as in other counties, where development has left run amok without rhyme or reason.  Furthermore, it speaks more fundamentally about the difficulty of implementing a strategic approach to planning in the Irish context.  Because of the vagaries of planning structures and the lack of statutory regional policies, strategic planning is constantly challenged and undermined.

Cian O’ Callaghan and Rob Kitchin

 

The neoliberal swibbles: Recovery, reform and governmentality in contemporary Ireland.

“In fact, I’d say the real war was a war over swibbles.  I mean it was the last war.  It was the war between people who wanted swibbles and those who didn’t… Needless to say, we won” (Philip K. Dick, ‘Service Call’ 1955).

In Philip K. Dick’s short story ‘Service Call’ the world is (about to become) policed by biological telepathic organisms encased in mechanical housing.  These entities called ‘swibbles’ were developed and sold as a way of stopping conflict ensuing from ideological differences.  When a swibble comes across an individual that holds an ideological perspective different from the mainstream they are literally ingested by the machine.

'Service Call' by Philip K Dick available in Volume 4 of the Collected Stories (Gollancz)

Therefore people install swibbles in their homes to monitor their thought process and ensure they do not stray from the established ideology, a way of demonstrating their adherence to the hegemony.  As the swibble repairman in the story proudly proclaims:

“There won’t be any more conflicts, because we don’t have any more contrary ideologies.  It doesn’t really matter what ideology we have; it isn’t important whether it’s Communism or Free Enterprise or Socialism or Fascism or Slavery.  What’s important is that every one of us agrees completely; that we’re all absolutely loyal.  And as long as we have our swibbles… You know the sense of security and satisfaction in being certain that your ideology is exactly congruent with that of everyone else in the world.  There’s no possibility, no chance whatsoever that you’ll go astray – and some passing swibble will feed on you”

Dick’s story offers a science fiction metaphor for what Foucault terms the practice of ‘Governmentality’.  Governmentality accounts for the range of practices and discourses that are encompassed within the apparatus of the state.  Part of this process involves the construction and prescription of ‘truth’ which are produced through tactics of governing, and reproduce systems of power.  Foucault argues that the emergence of modern government has resulted “…on the one hand, in the formation of a whole series of specific governmental apparatuses, and, on the other, in the development of a whole complex of knowledges [savoirs]”. 

 

Front page news

The front page of this mornings MetroHerald ran with a story claiming that the government had issued a “tacit threat” to Passport Services that the division could be outsourced if proposed strike action continued.  The article claimed “Passport Services could be shifted to another department or even outsourced, top Government officials warned yesterday”.  Tucked away on page 5 was a story about Brian Cowen’s backing of the board of Anglo’s decision to give salary increases to 78 staff.  The front page of the Irish Independent advertised two opinion pieces: One by Martina Devlin titled “My passport nightmare” and another by Brendan Keenan titles “Nursing the banks back to health”.  The rhetoric implied by these headlines is another example of the current trend of pitting ‘public’ and ‘private’ sectors against each other.

The image of Irish society that this paints is disturbing.  Are we living in a country where the ‘audacity’ of the public sector mobilising any sort of union power to assert their grievances is met with veiled threats, but where an obscenely inept bank which has guzzled tax-payers’ money to the extent of state ownership is allowed to give its staff pay raises while the same Government steps politely aside?  Responding to appeal by Eamon Gilmore to halt this salary bump, Brian Cowen suggested that “The board have my and the Government’s confidence”.

But what, pray tell, has inspired this ‘confidence’? Is it that the bank operates in the loosely defined ‘private sector’ and, like NAMA, can be trusted to make its own decisions with regard the mechanics of its operations?  Meanwhile, because Passport Services operate in the realm of the ‘public sector’ they must toe the line or face dissolution and privatisation.  Within the current climate of bail-outs and cut-backs just what actually defines the line between ‘public’ and ‘private’ sectors?  As suggested here recently, the Government’s position is disingenuous: on the one hand extolling the benefits of free market neoliberalism and on the other correcting any free market mistakes with tax revenue.  Perhaps if Passport Services was to be outsourced, the unit would then be in a position to dictate its own rates of pay, resist cut-backs, and siphon Government spending.  The inverse logic of this boggles the brain. The horror, the horror.

Cian O’ Callaghan

 

Invisible ideology and the political middle-ground of Irish neoliberalism

In Tuesday’s Irish Times, writing about the recent announcement of the closure of Postbank, Fintan O’ Toole suggests that the Irish Government has a “strange definition of ‘systemic importance’”.  Contrasting the apathy with which the impending closure of Postbank (jointly owned by An Post and BNP Paribas) has been met, with the €30 billion of taxpayers’ money pumped into embalming Anglo’s corpse, he writes:

Let’s consider this proposition. Postbank has deposits of €450 million and 170,000 customers. It has 70,000 savings and 35,000 current accounts, 90,000 insurance policy holders and 10,000 credit-card customers. It does what banks used to do – provide financial services for ordinary people in their own communities.

 

Battersea Power Station: what prospect for one jewel of NAMA’s crown?

One of the aims of this blog has been to animate the geographies of the NAMA portfolio.  There has been a lot of discussion here recently about the Ghost Estates that will be brought into NAMA.  Of course, such property parcels do not comprise the entirety of the NAMA book, and in terms of ‘market potential’ some sites will no doubt hold more hope than others.  One of the sites being heralded as a potential ‘winner’ is the Battersea Power Station site in London, at the heart of the well-connected Nine Elms area along the Thames River, a prime (re-)development site in a city which horizontal expansion is highly constrained by strict planning regulations that protect London’s so-called ‘greenbelt’.  The site is currently owned by REO, a firm majority owned by Irish company Treasury Holdings (who coincidently are also NAMA’s landlord).  REO bought the 40-acre site in 2006 for £400 million (€532 million), using loans from a variety of banks, of which Bank of Ireland forms the majority share, with plans to develop the site into seven million square feet of mixed-use residential, retail and office space.  As such, this emblem of British industrial heritage has found its way into the auspices of NAMA, serving as indication of the reach of Irish capital into international markets, and of the relational production of urban landscapes in the post-industrial period.

The Battersea Power Station started producing electricity in 1937 and progressively ceased its activities during the 1970s and 1980s.  Since then, the future of the site has been the object of much quarrel and struggle between near-by residents, the local authorities, developers and various people and groups with an interest in preserving the power station and its surroundings for its cultural value.  From the 1980s onwards a campaign has been in place to try to save the building as part of British national heritage.  Seen as an important cultural icon in London, the power station was used on the cover art for the 1977 Pink Floyd album Animals, in addition to albums by a number of other groups, and as an emblem of Twentieth Century industrialism, it has taken its place within the vocabulary of popular culture.  Over the years a number of development plans have commenced for the site, including an early plan to turn it into a theme park around Britain’s industrial history.  Current owners REO hired architect Rafael Viñoly to draw up an ambitious master plan for the site, the biggest ever seen in London.  Central to this plan was the division of the site into ‘character areas’ each with different functions, to utilise part of the power station to produce energy through biomass and waste, and to develop the “first zero carbon office space in Central London”.  Having been refused planning permission on the first go-around, a scaled back application is currently in the consultation phase.

As previously highlighted here 21% of the NAMA portfolio is made up from properties in the UK.   Of this, the Battersea site is certainly one of the most significant.  Speaking of the site’s induction into NAMA, Treasury managing director John Bruder was resolutely positive:

“The good, the bad and the ugly will be going in…There is no shame in being a Nama client no matter how good or how modest your property development loan is, once it is over €5 million…. Essentially Nama will be the only game in town for a period of time. The Irish banks had too much property development loans on their books – they will soon have no development loans.”

NAMA, for its part, will presumably be only too happy to have an iconic development such as this in a portfolio that must contain much in the line of hyper-inflated (and deflated) farmland.  The Battersea site is not devoid of its own set of problems, however.  Since late last year REO have been looking for a partner to invest with them in the site.  While the London market will recover quicker then most, it is likely that investor confidence is still likely to be waning.  The existing infrastructure (mainly made of steel) requires very significant investments to refurbish it owing to damages caused by 20 years of both flooding and vandalism following the removal of large chunks of the roof in the late 1980s when the British industrial history theme park redevelopment project started and quickly came to halt.  Furthermore, the developers face opposition from a strong community group who seek alternative actions for the site.  As a commentator in the Londonist recently stated, after the first REO application was refused:

“Over 25 years since it breathed its last fumes into the London fog, Battersea Power Station remains a blot in the copybook of countless developers and architects, and as yet another scheme is run through and rejected, the building’s gradual decomposition will continue. Perhaps it should be this way, a symbol of the flaws and fallacies of our developmental strategies.”

At the moment, despite its prime location in Central London, Battersea looks much more like an emblem of urban degeneration rather than regeneration.  This is not to say that REO’s plans for the site will never come to fruition.  However, as one of the jewels in the crown of NAMA’s property portfolio, perhaps the Battersea Power Station site is still a long way from realising substantial returns for the Irish taxpayer.

Delphine Ancien and Cian O’ Callaghan

 

CAB suffering from the effects of the property crash

The Irish property crash has been all-pervasive and the ripples of its effects are being felt in some unusual corners.  One of these recesses is the Criminal Assets Bureau (CAB), who recently published their annual report for 2008.  Although the report suggests that CAB has continued to be an effective mechanism against organised crime, it also notes that

“During the year the Bureau noted a significant downturn both in the value of real property and motor vehicles which were subject to its orders.  The Bureau proposes to consult with the Department of Finance to consider whether alternative methods of disposing of such assets may be of more benefit to the state”

This consultation has borne fruit in the form of a proposed expansion of the range of powers available to CAB. 

 

NAMA staff exempt from public-sector pay cut

If we didn’t already have our suspicions about the state creating divisions between different sectors of the labour force, the Department of Finance has announced that NAMA staff will be exempt from the public-sector pay-cut due to come into effect today.  The rationale for this exemption, as reported in the Irish Examiner, is that the National Treasury Management Agency (through which NAMA has been established) has always set its own pay rates “ in order to compete with the private sector for high-calibre employees”.  The Department of Finance is quoted as saying;

“The NTMA has been excluded from the scope of the act because it has, since its inception, acted independently with regard to the setting of rates of pay for staff with a view to ensuring its ability to employ and retain the staff necessary to perform its tasks”

What this rather circular argument does is to reinforce the perception that those working in banking and finance are worth more to the country than groups such as nurses or Gardaí.  It is also a bit of a slap in the face to those who have taken pay cuts so that NAMA can be set up, when the agency’s staff will not be obliged to take a comparable hit.  All of this does not bode well for the prospect of major political and social change in Ireland in 2010.  The NTMA did suggest, however, that it would facilitate any staff that wished to take a voluntary pay-cut.  Perhaps the NAMA office will be swept by a wave of social consciousness and good will, brought on by New Year resolutions, and we will see a swift uptake on this option.  Here’s to 2010. Happy New Year!

Cian O’ Callaghan