Friday, July 26, 2013

26/7/2013: Forfas Report 2012: A Handy Guide to 'Egg-Face' Collision

Ireland has been described as a 'Knowledge Economy", a science and R&D intensive economy, and island of Scholars (yes, while ago we also allegedly had saints). We have enough science development policy 'platforms' to fill TCD's Long Room. And we do spend some dish on funding science.

One of the organisations, responsible for shaping policy and assessing effectiveness of all of these and other 'platforms' is Forfas - a state body in charge of economic policy supports. You can read all the glorious descriptions of what Forfas does here:

And this week, RTE reported the following nice stats about this beacon of knowledge and research (full article here:

  • "The pension scheme at State enterprise body Forfas has a net deficit of almost €1.2 billion" (to be more precise: €1,187,674,000 - up 22% from €972,389,000 in 2011). Note: "Forfas administers the pensions of a number of agencies including Forfas, Enterprise Ireland, IDA Ireland, Science Foundation Ireland and the predecessors of those agencies."
  • "The report also states that 78% of last year's €51.4m Oireachtas grant to Forfas went to pay pensions - with just 22% spent on policy activities, corporate and shared services."
  • "The cost of payments to pensioners rose from by over 23% from €35.3m in 2011 to just under €43.5m last year."
  • But wait, there's more: "'non-effective expenditure' of €1.4m relating to rents for unoccupied office space.

On top of the figures highlighted in the RTE article, here are the actual breakdowns from the annual report:

  • EUR79.052mln was total income received by Forfas from all sources in 2012, down on EUR79.229mln in 2011.
  • Pensions spending was EUR61.372mln in 2012 or 77.63% of total income. In 2011 the same was EUR60.424 or 76.27%.

So: EUR43.5m on pensions, EUR1.4m on wasted rent, our of EUR51.4m grant means that Forfas has managed to spend ca EUR44.9m from EUR51.4m on… err… being a well-housed pension administrator. Less than 12.65% of the organisation grant went to fund its activities.

Seriously, folks, this does not give one much confidence in getting 'value for money'…

Updated: A comment from a senior science body head in Ireland: "I was gobsmacked to see this figure. I wonder how much of the country's so-called €500m 'science' budget goes on pensions? This is not to begrudge retired public servants their entitlements, but we should be transparent about what we spend on science & what we spend on other things."


Anonymous said...

I'm absolutely speechless about those numbers. How can any minister in this govt not address this? It's hard not to be cynical and fall back on the impression that they're all feeding in the same trough.

How can we not be cynical?

Anonymous said...

fingers in ears. I don't want to hear this.
you won't be thanked for exposing horrible truths like these.

Brian O' Hanlon said...

On the knowledge economy: well, anything would be a vast improvement on where we were, when property was up and when the Celtic Tiger was roaring. I think, Bill Cosby sums up best what the boom was all about - in the statement, this toilet bowl understands me.

Because that's exactly how I remember a lot of us growing up as Irish men and women, and we wasted a tonne of time and energy doing that, when we ought to have been looking around us, and questioning the bigger picture of how the states spends money.

What is the answer of the state though in 2013? To patronize us even more, by telling us we need to go back to gatherings and all of what that entails. It's like the Roman idea, the bread and circus for the mob. Keep them distracted.

Anonymous said...

This craziness needs to be addressed by organisations like Irish Universities Association and the Royal Irish Society. Throwing tax payers' money into pigeon holes isn't enough, we need smart spending and value for money.

Brian O' Hanlon said...

On July 31 2013, the US Bureau of Econmic Analysis will release, for the first time, GDP figures categorizing research and development as fixed investment. It will joint software in a new category called intellectual property products.

Write Jacques Bughin and James Manyika, at McKinsey & Company.

Brian O' Hanlon said...

A great reference to read btw, is John Howkins's book from the early 2000s, The Creative Economy, in which it outlines the 'problems' that many working in 'creative' types of occupations face,... when viewed by the system.

That is, either from a point of view of a private company, looking to invest in their own R&D spending (a 'liability'), or buy in that R&D (viewed as an 'asset' by traditional accounting techniques). I.e. The difficulty therefore, for many who try to present internal business plans, with R&D in their mix, . . . and probably an indication of why so many tech start ups just decided to throw out all rule books, and do it differently. I.e. 'East coast', versus 'West coast' United States approaches, . . . venture capital for instance, was started in the east, but really took root for real, in the valley in 1960s onwards.

Chris Horn's blog is an excellent up-to-date source of commentary on all things to do with VC. As far as I know, his most recent venture into cloud computing is now funded via a San Francisco based outfit, as opposed to doing finance deals back here on home turf.

Anyhow, there are many, many examples around. In his blog entry, about his address to the Fast 50 Deloitte conference, Horn explained how the model of doing the deal with the remote host, in United States, sort of fell apart for an early Irish software startup.

But the other thing that John Howkins's book brings up, is the individual creative person having to re-invest so much of their income back into improving their product and their own skillset (think of for instance, a group such as U2, making their shows better and more elaborate).

This again, is such a different 'model' of a worker from how the accounting system would have viewed 'human beings',... people as units that don't re-invest alot into themselves, but instead, they either show up for work and get paid, or don't. That is a lot of the problem with modern characterisations of job, versus job-less-ness and so forth.

E.g. The traditional accounting system, would view the music artist for instance, as being non-productive for large amounts of time,... except for that summer a while back, when they got a job flipping burgers to pay rent. The system only sort of registers the artists, at these odd times, when the fall back into the regular system. It's like the idea, that a guy sitting in traffic, burning gasoline while going nowhere, is viewed as being productive through the lens of GDP calculations. Versus the artist who spends six months writing their new album, as contributing nothing.

Howkins runs down through a lot of these things in the book. And as a centre for a vast amount of intellectual capital creation nowadays, Ireland needs to get ahead of this, or at least stay on a par with lastest US bureau of economic analysis, I would suggest.