Ship of Fools (19 page)

Most remarkably, Slattery also chaired, from 2002 to 2005, the bankers' lobby group Financial Services Ireland (FSI). In that role, he was at the forefront of the fight against nasty regulators like William Slattery in his previous incarnation. At the annual dinner of FSI in the opulent Four Seasons Hotel in Ballsbridge in 2003, he complained to his fellow bankers that ‘I regret to say that there is a palpable sense of unease within the financial sector in Ireland about what is becoming an over-regulated business environment. There has been a dramatic increase in the regulation of our economy in recent years. In public debate in Ireland, more regulation is regarded as good, and, increasingly, regulation is regarded as a panacea for all sorts of public policy issues . . . I believe that the sheer extent and complexity of regulation in recent years has damaged the competitiveness of the economy. I believe that the expectations of politicians, the media and the public, regarding the beneficial impact of regulation, are exaggerated.'

With such antipathy to regulation even from the former regulator of the IFSC, it is not surprising that Irish-based financial companies played a large part in the global banking crisis that unfolded in 2007 and 2008. Bear Stearns, one of the biggest institutions to collapse in the credit crunch, had two investment funds and six debt securities listed on the Irish Stock Exchange, and it operated three subsidiaries in the IFSC, through a holding company, Bear Stearns Ireland Ltd.

Jim Stewart identified nineteen funds caught up in the subprime crisis and located at the IFSC. Four German banks with funds quoted in Dublin were caught up in the crisis -
Bayern LB, IKB Bank, Sachsen LB and West LB. IKB Bank took losses of €2 billion from an off-balance-sheet conduit called Rhineland Plc with funds quoted in Dublin. The German government had to bail it out to the tune of €7.8 billion. Sachsen bank required emergency funding of €17.3 billion because of ‘liquidity difficulties' with its Dublin-based subprime funds, with the cute local names of Ormond Quay and Georges Quay. As early as 2004, the German financial regulator had warned its Irish counterpart that these funds were engaging in risky and murky investment practices, including on the US subprime market, but the Irish essentially disavowed all responsibility for monitoring them.

Depfa Bank, with Maurice O'Connell on its board, nearly caused its very own catastrophe for the Irish taxpayer. It was, as we have seen, officially an Irish bank, with its global HQ in Dublin. In theory, it was an ultra-safe institution, lending money to public sector clients in the developed world. In practice, it was funding much of this long-term lending with short-term borrowing on the money markets. When those markets dried up after the collapse of Lehman Brothers in September 2008, Depfa teetered towards collapse. It was pure luck (for the Irish) that Depfa had been taken over in September 2007 by the German commercial property lender Hypo Real Estate. Depfa's implosion triggered the collapse of Hypo, ultimately costing the German taxpayer over €100 billion in guarantees and credit lines. If Hypo had not taken over Depfa twelve months before the collapse, the problem would have belonged exclusively to little old Ireland. The havoc that the Bermuda of Europe had created for the rest of the continent would have been wreaked on Depfa's island home.

‘Zero or very close to it'

- report on the progress of MediaLab Ireland

 

 

 

The first mass-market personal computer was introduced by IBM in 1981. The Apple Mac came along in 1984, followed by Microsoft Windows in 1985. That same year, the first widely sold laptop was launched by Toshiba. The World Wide Web arrived in 1989 and the first web browser in 1993. The first mobile phone with internet connectivity was launched by Nokia in 1996. Yahoo! was founded in 1995 and Google in 1998. Developments of some significance - email, social networking, YouTube, Twitter - flowed from these innovations.

These changes were of some importance in the little world of information technology. They were also of some consequence for Ireland. The country became the premier location worldwide for US investment in information technology. By 2006, Intel had 5,000 employees in Ireland; Dell 4,300; IBM 3,500; Hewlett Packard 2,500; and Microsoft 1,200. By the mid- 2000s, Ireland was the world's leading exporter of computer software and a third of all personal computers sold in Europe were manufactured in the Republic.

Yet, as far as the Irish educational system was concerned, none of this had really happened. In 1980, an optional computer studies module was included in the Leaving Certificate mathematics syllabus. It was ‘intended that this would be a
first step in the development of computer studies in the post-primary curriculum'. Another optional course for junior cycle students was introduced in 1985. And that was that. As a Department of Education report acknowledged in 2008, ‘neither of the computer studies courses has been revised since their introduction, nor has there been any further development of computer studies courses, as such, as part of the curriculum in either the junior or the senior cycle.'

As far as the Irish educational curriculum was concerned, it was still 1980. Computers were huge, mysterious, overheated machines with flashing lights held in vast rooms where boffins in white coats fed them with punch cards and ticker tape. Spooky
Doctor Who
-type music played in the background, barely drowning out the clicks and whirrs. Internet cafes,
Second Life, Halo 3
and illegal downloads were science fiction. It was an educational variant on
Life on Mars
without the car chases or the postmodern irony.

Nowhere was the smugness, indolence and incompetence of Irish governments more obvious than in the yawning chasm between the rhetoric of a high-tech, cutting edge, innovative society and the reality its education system scarcely bothered to acknowledge. The rhetoric was fine: as early as 1999, the government's Information Society Action Plan declared that ‘If we are to maintain and build on our economic success of recent years, and ensure that all of society can participate in the Information Society, it is vital that Ireland becomes both an early mover and a global player in the Information Society. Failure to take action could mean that much of the strong economic performance of recent years could be lost.' There was, in the abstract, a consensus that Irish prosperity could not be sustained unless the presence of so many world-class IT companies was used to create a culture in
which technological and scientific innovation did not have to be imported.

That knowledge of what had to happen failed to compute. Free-market ideology, the property craze and the stubborn attachment of middle-class aspirations to essentially nineteenth-century patterns combined to ensure that there was no transformation.

In April 2002, the Taoiseach, Bertie Ahern, signed the preface to a report published by his department called the New Connections Action Plan. He told the nation that the impact of IT on governance was ‘bringing about the single most dynamic shift in the public policy environment in the history of the state'. He told us that ‘The development of e-government is also central to shaping how we evolve as an information society . . . Given its key infrastructural significance, progress with e-government is increasingly seen internationally as . . . a key determinant of national competitiveness.'

‘Key', ‘central', ‘single most dynamic' - this is the language of absolute priorities. A marker was being set down: judge us by how we deal with this stuff. If you actually read the report that followed, however, you would have felt immediately uneasy. It was awash with the kind of jargon and management-speak that is the infallible sign of a chancer: ‘there is growing acceptance of the need for a greater internal e-government focus on streamlining background processes, facilitating cross-organisational collaboration, continuing to develop an organisational culture with a user-centric focus, and achieving the full benefits from the substantial investments in technology across the public service. ' People who know what they're doing don't take refuge in this kind of babble.

And, of course, Bertie and his mandarins were bluffing.
Setting up a special cabinet committee on the information society, boasting about our ‘global leadership position' in high-tech industry and putting e- before every noun that had the misfortune to crawl across a screen were just masks for cluelessness.

Here is a brief summary of just some of the big IT projects sponsored by the government in the Celtic Tiger years.

MediaLab Europe was established by Bertie Ahern as a ‘flagship project'. It got €35 million of public money and the state also leased it, for a nominal rent, property that had cost €22.5 million. After four years, an outside review found that its progress towards meeting its objectives of cutting edge high-tech innovation ‘appeared to be zero or very close to it'. It was liquidated in 2005.

The Department of Social and Family Affairs set up a computerised Client Identity Service (CIS) in 2000 to manage the PPS number registration system. It didn't recognise ‘foreign' names so anyone foolish to have one could be allocated a PPS number that was already in use. Fraudulently obtained PPS numbers could not be deleted, flagged or rendered unusable. More than one PPS number could be allocated to the same person on the same day.

The HRMS computer system installed in the prison service in 2004 was so useless that it was completely abandoned a few months later, though not until after €340,000 had been spent on software licences and €175,000 on consultants.

In 2002, the Department of the Environment ordered 6,315 electronic voting machines at a cost of €51 million. They were tried out in a few constituencies, but proved to be dangerously insecure. Simply keeping them in storage cost close to €1 million a year, until they were finally scrapped in 2009. Not even Florida would take them.

The introduction of penalty points for dangerous driving in October 2002 saved lives. But the positive effect gradually faded as it became clear to drivers that the Garda did not have a computer system that could handle the work. Ireland's ‘global leadership position' in IT meant that the police were keeping the records by writing them down in ledgers like Dickensian clerks.

The Garda PULSE computer system, which cost €61 million, was so bad that in many cases gardaí again reverted to writing charge sheets by hand.

In public health administration, use of both the Personnel, Payroll and Related Systems (PPARS) scheme, which has cost €180 million so far in spite of an initial budget of €8.8 million, and the FISP financial information system, which had cost at least €30 million, had to be suspended in 2006, since neither of them could do the job it was supposed to do.

A computerised integrated ticketing system for Dublin's various modes of public transport was first announced by the government in November 2000. At the time of writing, the most optimistic expectations were that it might happen at the end of 2009.

As for e-government, a 2008 report by the Comptroller and Auditor General found that although an estimated €420 million (not including the very considerable cost of internal staff) had been spent on developing online services between 2000 and 2005, Ireland had completely failed to become a world leader in the field: ‘While Ireland has some on-line transaction services that compare favourably with what has been achieved elsewhere, an EU-wide benchmark survey indicates that it has achieved the highest level of on-line service in only ten of 22 key public services for individual and business users . . . Overall, Ireland's position is around the
average for EU member states and some states are delivering a significantly higher level of on-line service.' For an economy that needed to be at the cutting edge, being average was a significant failure.

All of this points to an obvious conclusion - that almost no one in government, and relatively few in the civil service, had any real understanding of information technology. When it came to discussing either IT or science in general, ministers could generally do no more than parrot the gobbledygook they had been fed by consultants and advisers. When in December 2008, Mary Coughlan, Minister for Enterprise, set up an EFG on the implementation of the SSTI (that is, an Enterprise Feedback Group on the government's Strategy for Science, Technology and Innovation), it was not easy to be optimistic about the government's plan ‘for Ireland to become a world-class knowledge economy by 2013'.

The bullshit factor was most evident in two areas - broadband and education.

Broadband was one of the very few areas in which the government had a very clear goal, to be achieved within a very specific time-frame. In March 2002, Bertie Ahern's New Connections document stated that ‘Government wants to see the widespread availability of open-access, affordable, always-on broadband infrastructure and services for businesses and citizens throughout the state within three years . . . We wish to see Ireland within the top decile of OECD countries for broadband connectivity within three years.' This could hardly have been clearer - by March 2005, Ireland would be one of the top ten countries in the developed world. Broadband would be reasonably cheap and it would be available throughout the state. Ireland would also become the first European country to have
video-quality broadband speeds (5 Mbps or higher) widely available.

This was a fairly tough task to achieve in three years, but getting it done was both necessary and possible. It was an absolute necessity because otherwise all the talk about being on the leading edge of global technology was just so much waffle. It was possible because other small, geographically peripheral countries like Finland, Iceland, Denmark and South Korea were managing it. Indeed, it was precisely small, peripheral countries that had most to gain.