Santa McCreevy

Pounds for the rich - pennies for the people

``The Minister For Finance could choose to be Santa Clause or Judge Dredd'' - Charlie McCreevy. For an hour yesterday the 26 Counties tuned in to the McCreevy budget show. It started well but after a few minutes of swaggering and point scoring it became clear that McCreevy cannot escape from his accounting background.

He promised much, gave little, creating an illusion of balance but in the end merely perpetuated existing inequalities for a year.

The most disappointing part of this budget was that McCreevy missed out on an opportunity to move towards removing the inequities of our tax and social welfare system.

He spurned the recommendations of the Combat Poverty Agency. Their research showed that the best possible way to help the low paid financially was to increase personal tax allowances by £1000 for a single person.

McCreevy upped the allowance by only £250, decreasing taxes on the 26% and 48% band by 2%. This will help many workers but makes sure the top earners get a disproportionate benefit of the tax cuts.

McCreevy matched the cuts in top rate of income tax by slashing capital gains tax in half to 20%. This was the one element of the 26 County tax regime that remotely approaches the need for a wealth tax and McCreevy has reduced it. Corporation tax which is already lower than income tax has been cut by 4% to 32%

It makes the £3 increase in unemployment benefit paltry. There were some positive elements of McCreevy's budget particularly the improvement in allowances for widows, carers and disabled people and the £3,000 tax allowance for long-term unemployed people returning to work.

This though was small beer. McCreevy claims he has delivered substantial tax reform. He has not. Instead the very lucky bag of of ``spending to win votes'' which he promised would not happen was duly delivered. Sadly McCreevy did play Santa but only to the rich and the wealthy who yet again will walk away laughing.

Anatomy of a corporate sell out

750 jobs cut at Avonmore-Waterford

 
Twenty four jobs will be cut in Kilmeaden, 27 in Dundalk, 35 in Clonmel, 130 in Dungarvan and 214 jobs will be lost in Rathfarnham, home to Dublin city's last remaining dairy. This was the startling news that shocked workers last week at the newly merged Avonmore Waterford Group (AWG), the fourth largest dairy company in Europe and fourth largest cheese producer in the world. The job losses in Ireland were matched by cuts of 550 jobs at AWG's British plants.

These cuts were not the actions of management trying to stave off closure. This was just an Irish multinational ``optimising competitiveness'' by dumping its Irish workers one day and planning more foreign acquisitions the next.

How did this happen? How was AWG allowed to spurn the very workers whose efforts have turned it into such a huge international company in the first place? The background to this latest episode of corporate profiteering begins last March.
     
These redundancies sound the death knell for the co-operative principle in Irish business.

March

Avonmore's 1996 results were announced on 3 March. Profits at £36.5 million were up 14% on 1995. The dairy, meat and agri-trading company was planning acquisitions in the US and Britain of more than £150 million. Two weeks later Waterford Foods announced that profits for 1996 would be £5 million less than 1995 but still a healthy £19.8 million. Average payments to Waterford's five executive directors was £198,000 each.

April


Avonmore announced plans to make a giant food company through a £600 million merger with Waterford. They predicted the merger could save the new company up to £200 million a year through the elimination of milk collection and overlapping businesses. For Waterford to accept the merger they needed the approval of 75% of co-op shareholders who owned two thirds of the company.

The day after the merger was first proposed Avonmore upped their offer to the Waterford farmer shareholders offering them free shares and milk price improvements totalling £40 million. The Irish Farmers Association (IFA) welcomed the merger.

An Avonmore spokesperson claimed that the merger would be ``in the best interests of the shareholders and the milk suppliers'' and that there was ``a consensus at government and industry level. Unions at the two companies registered their reservations to the proposed deal.

May


Waterford reject the Avonmore offer. Avonmore proceed with their planned £54.2 million purchase of British cooked meats company, Beni. On 26 May Avonmore make an improved offer for Waterford, with shareholders getting even more money and higher milk prices. The Waterford management approve the offer. The new merger would be worth around £6,500 to each farmer. In total they stood to get £115 million in cash and shares.

Some farmers are opposing the deal. John Cashman a Waterford co-op director opposing the merger commented that ``they're taking our property - the co-op property - and they're converting it back into plc property in order to bribe us to hand over control''. He also added that he believed they could get a deal ``totally undreamt of'' by farmer shareholders.

June


Trade unions representing workers at Avonmore and Waterford are promised there will be no compulsory redundancies if the merger is approved by shareholders.

July


The Leinster Milk Producers (LMP) group endorsed the merger. On 11 July shareholders at Waterford voted 83% in favour of the merger, while Avonmore shareholders voted 98% in favour. By the end of the month a Sunday newspaper revealed that plans have been drawn up to shed up to 700 jobs at the new food giant.

August


Enterprise, Trade and Employment minister PD leader Mary Harney approves the merger. ``The merged entity will create a truly global player on a scale which will benefit the national interest as well as the shareholders of the new company'' she said.

October


Unions seek meeting with Avonmore Waterford Group (AWG) management to clarify rationalisation plans for the 13,000 strong workforce.

November


AWG announce 1300 redundancies, 750 in Ireland. Chairperson John Duggan said that management had to ensure that the group was positioned to ensure competitive advantage in the interests of its shareholders.

Net Result


The net result of all the Avonmore Waterford merger is this. Nothing changes for the top level management who proposed the deal, except perhaps the possibility of higher executive salaries.

The farmers who approved the deal have lost control of the new company to the financial institutions who will plan the company's future strategies. They are though enjoying in the short-term a multi-million bonanza with the payout they have got from Avonmore.

In the long-term their future is no more secure than that of the workers who in 1998 will be made redundant. Is this sequence of events really in the national interest?

Why is there silence from the Dublin Government on the negative consequences of the merger? Why did the farmers who benefited from the merger not insist that their fellow workers would not be discarded by management?

The answer is that throughout this merger there was no real national interest only the relentless pursuit of self interest leaving those who were weakest - the AWG workers paying the costs for the benefits of others. The AWG lay offs shows clearly that Irish corporate capitalists are no different from their multinational brethern. These redundancies sound the death knell for the co-operative principle in Irish business. From now on the creed of the carpetbagger is the only voice in Irish corporate culture.