3 November 2005 Edition

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Economy news briefs

BUPA's profits

A confidential report prepared for Health Minister Mary Harney by the private sector health insurance regulator has found that profit margins for BUPA Ireland's 500,000 members were far higher than those of BUPA operations in Britain.

BUPA has a much younger member profile than the VHI and has been resisting the introduction of a risk equalisation scheme that would spread patient costs equitably across the two private insurers in the 26-County health market.

BUPA Ireland enjoyed a surplus of earnings over costs of 17.3% last year compared to a 5% profit margin in Britain.

The Irish health insurance market regulator has recommended the introduction of a risk equalisation scheme. In the meantime it seems that the customer cash cow that BUPA has built up in Ireland will be left to grow unchecked, while other private insurers are looking to enter a highly profitable market.

Huge hike in first time buyers' prices

It is nearly a year since Finance Minister Brian Cowen cut stamp duty for first-time buyers raising the threshold to the point where new purchasers could avoid 5% stamp duty with the levy only kicking in for dwellings costing more than €317,500.

The result has been not a bonus for first-time buyers but substantially increased house prices. The latest Permanent TSB survey has shown house price inflation for first time buyers of 9.4% in the first nine months of 2005 which is nearly double the 4.8% rise being paid by second buyers.

Overall prices have risen by 5.4% with the average price paid by first time buyers in Dublin growing to nearly €300,000. The average 26-County price paid by first time buyers was €242,172 in September.

With just over a month to budget day what other helpful changes has Brian Cowen planned for this year?

O2 to be sold again for huge profit

Less than ten years ago, the Irish Government, in a controversial tender process, awarded Denis O'Brien's ESAT Digifone consortium the second 26-County mobile phone licence. Within a few years O'Brien sold the business on to BT for over €1 billion earning himself tens of millions in the process.

Now O2's current owners have agreed in principle to sell the Irish network with its British and European networks for €26 billion. The net gain of any of these transactions for the Irish tax payer has been almost nothing, while Irish mobile users continue to provide more revenue per customer than any other mobile phone market.

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