Comment

Accessibility is a key facilitator for meaningful inclusion and participation, as set out in the UN Convention on the Rights of Persons with Disabilities. Minister Anne Rabbitte explains why Since being appointed the Minister for Disability in July 2020, tackling barriers faced by people with disabilities in accessing employment has been one of my key priorities.  This, of course, is not a job for just one Minister, but is being managed across a number of different departments. Launched in 2015, the Comprehensive Employment Strategy for Persons with Disabilities (2015–2024) (CES) is the primary disability employment policy initiative in Ireland.  It brings together actions by government departments and agencies to address the barriers and challenges to employment of disabled people. The CES’ strategic priorities are to build skills, capacity and independence, to provide bridges and supports into work, to make work pay, to promote job retention and re-entry to work, to provide co-ordinated and seamless supports, and to engage employers. Four of the key actions progressed through the CES include: Progression of recommendations arising from the Make Work Pay Report (2017), which initially set out actions to help people with disabilities enter the labour force. The production of an online training programme to support employers in becoming “disability confident”, which encourages managers and staff to confidentially interact with disabled people. Provision of grant funding to the ‘Open Doors Initiative’, which aims to assist marginalised people who face higher barriers to employment. The funding will be used to operate the ‘Employers for Change’ information service, empowering employers with information and resources needed to hire and manage staff with disabilities. The development of an Employer Awareness Campaign, which is expected to be launched in 2023. Accessibility is a key facilitator for meaningful inclusion and participation, as set out in the United Nations Convention on the Rights of Persons with Disabilities (UNCRPD).  One way to promote accessibility in the workplace is through the concept of universal design. Universal design is about ensuring that products, services and the environment can be accessed and used by all people.  Universal design is also more sustainable design, as it ensures that products, services and environments will stand the test of time, particularly in the context of an ageing population. Embracing universal design from the outset avoids costly retrofitting. The public sector also provides crucial opportunities for people with disabilities to access employment. The Government has committed to doubling the target for employment of people with disabilities in the public service from three to six percent.  This commitment will be placed on a statutory footing with the commencement of the Assisted Decision Making Capacity (ADMC) Amendment Act 2022. As the UNCRPD itself states, disabled people have a right to the opportunity to gain a living by work freely chosen or accepted in a labour market and work environment that is open, inclusive, and accessible to persons with disabilities.  The Irish Government as a whole is committed to continuing to make progress in meeting all of our obligations to our disabled citizens. Central to this vision is ensuring that people with disabilities are supported to live the lives they want to, and are provided equal opportunity to do so.   Employment and everything that is associated with it, such as gaining independence, confidence and friendships, is a key aspect to improving the lives of people with disabilities and I look forward to continuing to make progress in this area. Anne Rabbitte, TD, is Minister of State with Responsibility for Disability

Wavering over support for Ukraine’s defence against Russia is not an option. The stakes are too high for Europe’s stability and unity, writes Judy Dempsey Russia’s war against Ukraine is approaching its tenth month. Despite Russian President Vladimir Putin’s original aim of conquering Ukraine within days after his 24 February invasion, Russian troops have been forced to withdraw from strategic areas in eastern Ukraine.  It’s too difficult to speculate how and when this war will end, but there is already a sense of war fatigue among some governments and political parties in Europe and the United States—ignoring the fact that Russia has been escalating this war over the past few months and Ukraine must continue to fight for its independence. There is even some suggestion that Ukrainian president Volodymyr Zelensky should be persuaded to negotiate with Putin.  This would be a mistake.  Understandably, several EU countries—especially the Baltic States, Poland, the Czech Republic and Slovakia—do not trust Putin’s intentions. They want Ukraine to continue regaining occupied territory and then negotiate from a position of strength. This kind of victory for Ukraine would have several outcomes for the region and the EU. A Ukrainian victory could deter Russia from spreading its military and political influence in Moldova, Georgia and Armenia. Such a victory would be a fillip to pro-European political movements in these countries.  As for Belarus, there is little chance that the political future of Alexander Lukashenka, who has imprisoned many Belarussians since their failed uprising over two years ago and repressed any kind of opposition, would survive.   A Ukrainian defeat, on the other hand, could encourage the Kremlin to extend its influence over Eastern Europe and consolidate Lukashenka’s regime which would, in the short-term, increase his grip on power. In the long term, this ‘stability’ based on repression would lead to instability.  In short, a victory by Ukraine could increase the stability of Eastern Europe. A Russian victory would lead to instability in the region. As for the EU, a return to Russia exerting its political and economic influence over Eastern Europe would have several consequences.  First, it would lead to new divisions on the European continent.  Second, as many EU countries have taken in Ukrainians, an unstable Eastern Europe would lead to new flows of refugees. Populist movements could exploit such a development.  Third, it would lead to deeper divisions inside the EU. The Central European countries would oppose any negotiations that would allow Putin to save face. Germany and France might be tempted to restore relations with the Kremlin—indeed, neither Berlin nor Paris have called unambiguously for Ukraine to win this war.  Fourth, given these differences, it is hard to see how the EU could ever agree to a strong and united foreign, security and defence policy. Russia’s war against Ukraine has exposed the level of distrust between the Central European and big EU member states. Small EU countries matter. Perhaps, for example, Ireland, Finland and Denmark, could form coalitions of the willing with the Central Europeans to maintain political, military and economic support for Ukraine.  Wavering over support for Ukraine is not an option. The stakes are too high for Europe’s stability and unity. Judy Dempsey is a Non-Resident Senior Fellow at Carnegie Europe and Editor-in-Chief of Strategic Europe

The worse the market sentiment, the better the profit opportunities and, right now, UK equities may represent “the trade of the decade”. Cormac Lucey explains why Diversity is regarded as an unambiguously good thing nowadays. Imagine the reaction you might get if you were to try to assert the contrary among your family or in your social group. But, for all that diversity is pushed and advocated, it can also sometimes be woefully lacking in our public discourse.  More than eyebrows may be raised if somebody states their support for Donald Trump or the UK’s decision to exit the European Union. But, in 2016, millions of sensible people voted for Trump and for Brexit.  Is it not odd that today their viewpoint is so universally dismissed? While being contrary is generally regarded as a negative social habit, it can pay rich dividends from an investment perspective: the worse the market sentiment is, the better the profit opportunities.  This is the credo of contrarian investing. Nathan Rothschild, a 19th-century British financier and member of the Rothschild banking family, is credited with saying that “the time to buy is when there’s blood in the streets”.  Brexit is widely regarded by “right-thinking people” as a self-inflicted wound. A June 2022 analysis by John Springford for the European Centre for Reform concluded that the UK economy had substantially underperformed post-Brexit compared to how it might have fared if the British public had not voted to leave the EU.  UK gross domestic product was 5.2 percent lower than it would have been if the UK had remained in the EU; investment was 13.7 percent lower; and goods trade was down 13.6 percent.  Since then, Boris Johnson has given way as Prime Minister to Liz Truss, and she has been replaced by Rishi Sunak. And there was that snap financial crisis triggered by Kwasi Kwarteng’s mini-budget.  The UK has seldom looked so bad.  There isn’t exactly blood running on the streets, but it is pretty bombed out as a popular investment destination. That’s one reason why Rob Arnott, Chair of Research Affiliates, has argued that UK equities represent “the trade of the decade”. He states that “UK equities offer one of the most attractive risk-return trade-offs, priced to earn a return a notch higher than emerging market equities with significantly lower volatility”.  In essence, Arnott follows the Warren Buffett dictum about the equities market: “in the short-term, the market is a popularity contest; in the long-term, it is a weighing machine”.  As investor holding periods stretch out beyond five years, realised investor returns increasingly become a function of the price paid. So, while very expensive stocks can become even more expensive over a few years, as more time passes, they will increasingly struggle to generate strong returns.  Conversely, if you buy a deeply discounted asset (such as UK value stocks today), they may not initially show a great return but, over time, they should. In fact, with an asset this deeply discounted, there’s every chance it will outperform even in the short-term.  Arnott wrote his piece in early 2021 when he argued that, among the major equity markets, UK stocks were trading in the cheapest quintile of their historical norms based on both price-to-book and price-to-five-year average cash-flow ratios and in the bottom third, based on price-to-five-year average sales ratio. His previous big call—to invest in emerging market value stocks in 2016—generated returns of 80 percent in its first two years. Since announcing this trade of the decade, UK value stocks have risen by over 20 percent while the S&P index is marginally lower than it was, and the Nasdaq has dropped by over 20 percent.  Sometimes diversity of thought isn’t so bad after all. Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland

Developments at the United Nation’s 27th climate conference will have far-reaching implications for financial professionals and businesses worldwide. Susan Rossney digs into the details COP27, the international climate summit, concluded on 20 November after two weeks of negotiations. While last year’s COP saw the International Financial Reporting Standards (IFRS) Foundation announce an International Sustainability Standards Board (ISSB), this year had less reporting-specific news.  One headline was the commitment by CDP (formerly the Carbon Disclosure Project) to incorporate ISSB’s IFRS S2 Climate-related Disclosures Standard into its global environmental disclosure platform—another step towards greater comparability and coherence of global standards and reporting. On a macro level, though, COPs have a huge importance for businesses worldwide. ‘COPs’—Conferences of the Parties—are summits attended by the nearly 200 countries which have signed the United Nations Framework Convention on Climate Change (UNFCCC).  At COPs, these countries discuss their existing efforts and future plans to deal with climate change and its effects. Any new agreements made at COP tend to be named after the host city, e.g. the ‘Paris Agreement’ (2015), the ‘Glasgow Climate Pact’ (2021). This year we have the ‘Sharm el-Sheikh Implementation Plan’, named after the Egyptian city in which it took place. This plan set up a new loss and damage fund for vulnerable countries most severely impacted by the effects of unpreventable climate change (floods, drought, desertification, and land loss due to rising sea-levels). The inclusion was a landmark moment in global climate politics as it acknowledged that the world’s richer countries—and biggest carbon emitters—are responsible to the developing world for the harm caused by global warming. How to finance this loss and damage, specifically how finance would be channelled to the developing world, was a dominant and contentious topic at COP27. The scale of the finance required is truly enormous. At least $2 trillion a year will be needed by developing countries to enable them to transition from fossil fuels, invest in renewable energy and other low-carbon technology, and cope with the impacts of extreme weather. The final figure is likely to be multiples of that. Although COPs have been criticised as political talking shops, divorced from the lived experience of most citizens and businesses, they have a considerable impact. Close to 200 countries gathering to debate a global response to climate change keeps alive an issue that affects all citizens, albeit not equally.  It restates the importance of holding global warming to the levels agreed upon at the Paris Agreement—i.e. well below 2°C and preferably 1.5°C above pre-industrial levels (we are currently at 1.1–1.2°C). What is decided at COP filters down to organisations through legislation and policy, like Europe’s ‘Fit for 55’ package, Ireland’s Climate Action Plans and sectoral targets, and through investors’ continued demands for projects that are aligned to climate targets to meet their own portfolio requirements.  Ireland will come under continued pressure from the EU to act on measures such as developing our renewable energy and tackling our carbon emissions. Changes are required across all sectors, and all businesses, including SMEs, will have to make changes. Accountants, as their trusted advisers, will need the knowledge to help businesses adapt and thrive in this new reality.   Susan Rossney is Sustainability Officer at Chartered Accountants Ireland

Irish Government finances are in surplus and Ireland’s debt-to-GDP ratio has stabilised, so why are there calls for higher taxes? asks Dr Brian Keegan It’s hard to avoid concern fatigue setting in. What with the war in Ukraine, the cost-of-living crisis, the continued Northern political stalemate, multiple dire warnings amplified at COP27 over climate change and another possible COVID-19 surge—the list of concerns seems particularly endless at the moment.   Some time ago, the commentator Marc Coleman projected that population growth—and, by implication, skills growth—would drive prosperity in Ireland. Coleman’s ideas have been given additional credence by the current situation in the UK. Chancellor Jeremy Hunt’s November budget looks towards an extended period of economic stagnation. British productivity has not grown in line with government spending in recent years. In the moribund British economy, there is a record low level of people out of work while the number of job vacancies is at a record high.   There is a straightforward, one-to-one relationship between economic growth and the growth in tax yield, which permits more government spending without further borrowing. When the growth in gross domestic product (GDP) stalls, so too do the tax figures.   In his book The Best is Yet to Come, Coleman pointed out some of the links between more workers, growth and greater resources for public services and benefits. Though the timing was unfortunate (the book was published just months before the 2008 financial crisis), Ireland is now indeed in a better place, at least economically, than it has been for many years. Government finances are in surplus and the debt-to-GDP ratio, at around 50 percent, is back under control.   Unlike the British situation where a Budget bordering on the austere was required to meet existing public spending commitments, without an intolerably high borrowing requirement, the recent Irish Budget took a cost-of-living crisis in its stride, with grant aid against soaring energy bills for households and businesses alike being met through current tax receipts. Nevertheless, a narrative has emerged that the burden of taxation in Ireland will have to increase.   Why this should be the case is not always specified. There are unquestionably problems with housing, health, and education, but it does not automatically follow that these problems arise from underinvestment. At the time of writing, close to half a billion euros set aside in 2022 for local authority housing remains unspent. This points to management or capacity problems, not funding challenges.   The much-heralded report of the Commission on Taxation and Welfare has not had a huge impact on the political debate. This may be because it presents solutions in search of a problem. As research from the Irish Fiscal Advisory Council has pointed out, “its work was not framed around any specific shortfall in funding that needed to be filled. Instead, it was guided by a broad intention to generate additional revenue”.   Even government politicians, who are rarely scathing about the output of an expert group, which the government itself commissioned, were dismissive of the recommendations. Clearly, there are some areas of the economy where additional tax funding will be required, if not immediately, in the medium-term.   Unless there is an unforeseen level of immigration of people of working age, the ratio of workers to pensioners is going in the wrong direction. Climate change management, ironically being driven more by energy security concerns than global altruism, will come with a price tag. The sustained high corporation tax take may have peaked. In Britain, the urgent need for higher taxation has been unanswerable. In Ireland, there needs to be a clear business case for any form of new or additional taxation. We have enough to be concerned about without the prospect of unnecessary taxes. Dr Brian Keegan is Director of Advocacy and Voice at Chartered Accountants Ireland

Russia’s invasion of Ukraine has created an energy crisis across the European Union. Now is the time for European governments to radically restructure their energy sectors, writes Judy Dempsey As autumn kicks in, there’s hardly a household or company in Europe that has not been affected by the huge hikes in energy prices. Now that Russia has stopped supplying gas to Germany via the Nord Stream gas pipelines, governments are rushing to buy expensive gas, attempting to fill their storage facilities ahead of the winter. The last thing they want are price-hike demonstrations and to lose support for Ukraine’s determination to defeat the Russian military. There are several lessons in these price hikes and shortages that must be learned by all EU member states, and the first is the price of dependency. Successive German governments and companies believed gas contracts with Russia were reliable and stable, but how many times did experts warn that Russia could one day use energy exports as a geopolitical instrument? By cutting off energy supplies, Russian President Vladimir Putin is punishing the European opposition to Russia’s invasion of Ukraine in the form of sanctions and curtailed weapon supplies to Kyiv. Putin’s goal hasn’t changed. He wants to divide the EU and give succour to populist movements that are often pro-Russian, anti-NATO and anti-American. That is why the West must stay the course over Ukraine. A Russian victory in Ukraine is a defeat for European security and stability. The second lesson here is how the European Commission, despite its best intentions, did not liberalise energy markets enough to ensure that energy could, like the single market, flow across the EU. The third concerns the failure to link up electricity and gas grids, from north to south—and to link the Baltic states to their western neighbours just as Russian gas transmissions had for decades been designed to flow westwards to Europe via Germany. Fourth is the issue of solidarity, always a thorny issue if you recall the absence of solidarity during the 2015 refugee crisis. With regards to the energy crisis, EU member states have been trying to find their own national responses. Yet, Germany—whose household energy prices are sky-rocketing—actually sells gas to France. Why? Because France, which uses nuclear energy as one of its main energy sources, has neglected the maintenance of its plants. Meanwhile, Denmark has a surplus of energy, but the grids to export this energy are not compatible with other EU member states. The fifth lesson is that this energy crisis should be the catalyst for pushing forward renewable energy. Yet, in a bid to get through this winter, Germany’s Social Democrat-Green-Free coalition is re-opening coal faces. While the Greens support this very ‘un-Green’ development, the party is divided over whether the remaining nuclear power stations former Chancellor Angela Merkel vowed to close by this year should be kept open. In short, Europe’s backing for reducing carbon emissions will be a challenge. In June 2021, the EU adopted a European Climate Law aimed at reaching net zero greenhouse gas emissions (GHG) across the bloc by 2050, with an intermediate target of 55 percent by 2040. This commitment will be tested unless there is massive up-front investment and political commitment to forge ahead with making renewable energy the priority. If not, Europe will be unable to break out of the dependency trap, unable to cope with another energy crisis, and unable to take another big step towards integration and embracing climate by connecting the different energy sectors. Judy Dempsey is a Non-Resident Senior Fellow at Carnegie Europe and Editor-in-Chief of Strategic Europe