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Water charges? “Too ambitious”, they say? And those changes being contemplated… Too little too late… October 24, 2014

Posted by WorldbyStorm in Economy, Irish Politics, The Left.
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hot on the heels of the news that the Tanaiste thought “the timeline for the set-up of Irish Water is “certainly too ambitious”” – which raises the question where has she been for the last three years, now we are told that:

The Government is preparing an additional package of “comprehensive” changes to the water charging system, to be announced in the coming weeks, in an effort to blunt the political damage to Fine Gael and Labour.

And:

While changes for parents of dependent children still living in the home are in play, sources stressed no details or measures have been finalised. However, any changes are likely to focus on the €102 rate for additional adults rather than any additional tax or welfare proposals.

It’s little enough and nowhere near satisfactory when the clear demand is abolition of the charges and the raising of revenue/funding of water through general taxation. But it does point to the simple fact that the government is clearly deeply concerned by the ongoing campaign(s) against the charges, after all, weren’t some budgetary measures meant to ameliorate the damage to them too?

I think evidence that they simply don’t get the depth of anger and opposition to the charges is evident in the following too:

With the Government set to cap water bills at a fixed rate in order to provide certainty – with speculation the freeze could be in place until late 2016, when the majority of meters have been installed – TDs and Senators have raised the issue of families with adult children living at home.

Until late 2016 they say, and then there’d be another government and charges would presumably creep up and…amazing stuff.

Still, let’s note one other thing, for anyone who says that campaigns don’t have any effect… here’s clear evidence to the contrary.

Ah… that’s tax relief… October 23, 2014

Posted by WorldbyStorm in Economy, Irish Politics.
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From the IT this evening…

The Government is to relax the rules governing a special tax incentive scheme to attract foreign executives into Ireland after just 31 individuals availed of the scheme last year.

And:

Under the original rules, an employee was able to make a claim to have 30 per cent of their income between €75,000 and €500,000 disregarded for income tax purposes.
However, after a low take-up rate in its first two years of operation, Mr Noonan plans to remove the €500,000 cap, making it significantly more lucrative for highly paid individuals to work here. The scheme is also to be extended until at least the end of 2017.

There’s nothing like the Finance Bill, is there?

Meanwhile, what’s this from the pensions ‘industry’? October 23, 2014

Posted by WorldbyStorm in Economy, Irish Politics.
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EWI was first off the mark early yesterday on the following:

**** from the private pensions industry on Ráidió a hAon this morning, purring in a ‘business segment’ about how much public subsidy they get, and advocating (of course) slashing the state and public pensions, and forcing autoenroll of the citizenry into their grasp!

It is pretty shameless. At a conference of the Irish Association of Pension Funds there was all sorts of alarmist stuff.

Irish workers cannot be sure of receiving a State pension in retirement in future generations,

And why is that? According to them:

The cost of existing hidden state pension liabilities are estimated by the Pensions Authority to be €440 billion – more than double the €203 billion national debt estimate for the end of this year, a figure that already amounts to 111 per cent of GDP and requires significant reduction under European budgetary rules.

And their solution?

Just a thought. According to them…

A study of 25 state pension systems by the Australian Centre for Financial Studies and Mercer finds that Ireland’s State pension is among the best in the world in terms of adequacy.

And yet, as I know from my own experience when people have tried to sell me private pension plans the line is that the state pension is simply insufficient for the lifestyle I am supposedly eager to enjoy. There may be some truth in that – not as respect of said lifestyle but the broader issue. Note this view from outside the insurance industry bubble.

But all this sits oddly with the idea that the state pension is adequate because the talk is rarely if ever about boosting the state pension to a significantly higher level, instead it’s all about commercial pensions taking up the slack in some way.

There’s also the question as to how much credence should be placed in studies by commercial pension providers given the fairly obvious potential for conflict of interests.

The study cited above is the ‘Melbourne Mercer Global Pension Index’ and comes from the Australian Centre for Financial Studies and Mercer.

Some might not find that problematic. Some might no.

It’s interesting to note the assumptions built into the ‘Mercer Global Pension Index’. If we go here we can see that it takes a profoundly, well, political line on pensions…

• Some governments have increased pension ages over the longer term.
• The labour force participation rate of 55-64 year olds in most countries has steadily increased.

There are those of us who would consider the first far from an ‘improvement’. But note too the use of the term ‘reform’ throughout. ‘Reform’ in what sense and to whose benefit?

Useful also to look at the ACFS’s ‘corporate partners’ who are apparently ‘like-minded organisations’. That would ANZ, National Australia Bank, Mutual Limited. Amongst others.

Does all this invalidate the ACFS or Mercer? No, but it does mean that any suggestions from that quarter should be considered very carefully indeed. None of this is revealed in the article on the piece in the IT. It’s not even a consideration. The data is simply taken as read – ‘Australia and the Netherlands are seen as having the next best state pension provision’…etc, etc.

Meanwhile, here’s a stark warning from the private pensions industry.

Warning: If you invest in these products you may lose some or all of the money you invest.

Hmmm… sustainability they say?

Meanwhile, another day another scare story…

Trust in the Irish pension system is at an all-time low, the head of the industry lobby said yesterday, warning that the Government should not rush to introduce any form of mandatory pension saving.

This last, by the way, flies in the face of the Mercer advice – though before we applaud Mercer’s progressive credentials let’s remember what auto-enrolment actually means as against strengthening state pensions through general taxation.

Addressing the IAPF annual benefits conference, Rachael Ingle, chairwoman of the Irish Association of Pension Funds (IAPF), said the industry wanted to conduct research on how big an issue inadequate pension coverage in the State is “before we compel all the people of Ireland to save for retirement at a time when they are all cash strapped”.
“There is a huge amount of work to be done before any type of auto-enrolment solution is introduced in Ireland,” she said, saying any system would need to involve affordable and meaningful contribution rates.

This, is also, of course from the broad commercial area that gave us this highly politicised gem back in the 2000s in the Irish Insurance Federation’s submission to the then Green Paper on Pensions:

And what did the Irish Insurance Federation say:

* We do not support the idea of mandatory pensions. The introduction of fully mandatory pensions would create more problems than it would solve. There would be a high degree of complexity involved and it would be very difficult if not impossible to design a regime which would be appropriate for all participants. In our opinion the better option is a reasonable basic State pension and voluntary provision on top of this.

* Why not mandatory? Because:
o Enhancing the “Pillar 1” State pension, as recommended, would go a long way towards providing an adequate retirement income for low- to middle-income earners; this in turn reinforces the idea that any additional pension provision – while it should be promoted and incentivised by the State – should remain voluntary;
o It represents an abdication of personal responsibility and it weakens the link between effort and reward;
o It removes personal choice;
o It enshrines the principle that citizens must be taken care of by the State from ‘Cradle to Grave’ and increases ‘Big Government’;
o It creates a dilemma regarding who should manage funds and may result in a lack of individual savers’ control over the management of their retirement funds.

A commentator writes about pensions… October 23, 2014

Posted by WorldbyStorm in Economy, Irish Politics.
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A certain E. Harris, as noted in the SISSOTW, was in fine form at the weekend, but I do think it’s worth teasing out very slightly further some of the implications of what he is saying.

As I said, I am no longer a republican socialist. But I still retain the sharp sense of social justice that brought me into the Workers Party – and out of it again. Reflecting on the Budget I was struck by the blatant bias of its class politics.

So far, so good I guess (all things considered)…

The Budget boosts those who already have too much.

Indeed, though it is here that it begins to slide off the rails…

The only big group to come through the recession in comparative comfort was spared any cuts. I refer to the well-padded public sector.
The NYU findings mean I have no hope of changing the cold hearts of the Labour Party, Sinn Fein, Joe Higgins, or other protectors of the public sector. But as some of them are brazen enough to posture as socialists, let me ask them two simple questions.

And he continues:

How can you condone a system in which public servants, on average, are paid eight euros an hour more than workers in the private sector? How can you condone a system which sees private sector workers with no pensions taxed to pay the pensions of public sector workers?

Now I too feel there are issues here. I think that there’s a problem but let’s see what his view of the problem, or even a partial solution is.

In any fair society, the first priority would be closing these gaps. Far from doing so, the Budget favours propping up the status quo. And the most striking symbol of selfish class politics was giving a fiver to rich and poor children alike.

But it is implicit in his thinking, as expressed to this point, that the priority would not be raising the general state pension so that those private sector workers without pensions would enjoy a better pension provision than hitherto, but instead lowering public sector pensions (his thoughts on child benefit are interesting too, though tangential to this discussion, not for him the evidence that universal benefits are more effective in reaching those who need them than means tested benefits).

But by how much? He does not say. Fully, so there is no disparity? How does that benefit those who are forced, like so many of us, to depend upon a state pension which is, as the private pensions industry is always quick to point out, inadequate? Some of the way, if so how much or how little?

Indeed his bona fides on this issue would be considerably more credible if he at least made some effort in regard to demonstrating how he intended that private sector workers without pensions would be better off rather than it simply being business as usual.

But to do that would, of necessity, require taking on a business sector of which a large part is entirely comfortable giving no pension provision at all to those who work within it. I’ve problems with the public sector pensions system (though some have been addressed) but one could hardly complain that, whatever those problems, the principle of employers taking some regard for those who work for them was ignored. By contrast what of the – what is it, over half of – private sector workers with no pension provision provided by their employers.

And clearly his time in the WP somehow didn’t quite stretch to the concept of levelling up as distinct from levelling down.

It’s also remarkable how fully he has internalised a belief system, and this from a man who once cleaved to the notion of the state as a directly progressive force in generating economic activity, that ‘civil servants create no jobs’. Of course it’s also a nonsense. States can and do generate economic activity, civil and public sector workers in a multitude of roles are central to this, whether in the NRA, or health or education or local authorities or whatever. Indeed it’s something of a big lie to suggest otherwise, as well as being on a purely analytical level risible.

One other point. He waxes lyrical about the following.

Most Irish jobs are created by self-employed Irish people. They could hardly do so if they did not earn over €70,000 a year – the salary of many a civil servant who create no jobs at all. This small group also pays the most taxes.
Fine Gael backbenchers have failed to protect this tiny but productive group. Just as they have failed to see fair play between the public and private sector. This may please the Labour Party but Fine Gael will have to pay the butcher’s bill at the next General Election.

Now, as it happens I’ve no antagonism at all to those who are self-employed. I’ve argued before that the lack of social protections that has typified the approach of the state towards them (albeit with some amelioration in recent times) has been simply wrong. But is he right to place his trust in the idea that they are the main engine of job creation?

A look at this from Michael Taft raises some significant questions about that proposition.

Michael’s conclusion is that:

The fastest growing sectors are construction and the public sector sectors of public administration and education which, again, doesn’t indicate a broad-based growth. It is worth noting that the majority of sectors suffered a decline. Two notes: these are seasonally adjusted and exclude the not-stated category – so the total of the above sectors don’t add up to the total. And the agriculture sector – which experienced the biggest volatility during the CSO revision – may retain its volatility for a while.

Last year he notes:

The low-paid hospitality sector could have made up 50 percent of the net gains while in the first half of this year most sectors declined

It’s worth noting that construction, public administration etc, and low-paid hospitality sectors are not generally the sole preserve of the self-employed (actually there’s a broader question as to what is defined as the self-employed in his definition of the term – does he mean sole traders, or those in partnership or limited companies? And if so is his definition so broad as to be unwieldy, i.e. all those who have companies and employ others or those who are actually sole traders? Or could it be he simply means business men and women?).

And this has some interesting points too… not least:

The reason why the rise in one-person self-employment is not an indicator of good news, is that during a brutal recession, it is likely involuntary.

Sick kids and sick workers… October 23, 2014

Posted by WorldbyStorm in Economy.
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There’s a report here from the Guardian about guidelines in Wales for parents of children about when they should send their children to school or not.
But it goes well beyond the issue of children and sickness. Let’s quote the geniuses who decided a blanket proscription in relation to the following:

A health guide, Miss School, Miss Out, approved by Public Health Wales, gives parents a table that lists illnesses alongside recommended time off.
For conjunctivitis, glandular fever and tonsillitis, the recommended time off school is – surprisingly – none. For chickenpox, it is five days from the start of the rash, and for shingles the advice is “keep home only if rash is weeping and cannot be covered” (although it suggests your child stays away from vulnerable children and pregnant women). If your child has head lice or threadworm, they should go to school.

I’ve had some of those as an adult, others as a child and the severity of same was such that I’d be very leery about not taking bed rest both for my sake and arguably as importantly that of others I would work or have studied with. But the giveaway line is, I think, this…

The guide asks parents to think about whether they would take a day off work if they had the same condition. It also asks if the child has a condition that can be passed on to other children (the answer in the case of most childhood illnesses being yes). If the answer to either question is yes, the guidance is to ring a national helpline for advice (0845 46 47 in Wales; 111 in England and Scotland), or visit a GP.

Most of us would apply precisely the same approach in relation to health in work or out of it. Bottom line is whether one is ill, not whether one is second guessing bosses or whatever. Of course not all work places are equal. I once heard a bunch of self described ‘socialists’ arguing that sick days should be taken out of holidays, that was the culture in the company where one of them work, and a process of socialisation (as it were) had made that the norm, despite the sheer inequity of it. Other workplaces are more flexible.

But I think the Welsh example is fed from myths about the private sector (and attitudes to sickness within it) and an almost punitive attitude in regard to work…that it must be done whatever the cost. The sheer stupidity of that is obvious. Ironically the Mayo Clinic in the US has more enlightened guidelines, as for example in relation to conjunctivitis… “children should stay away until their eyes are no longer runny and gummed up”.

Children or anyone.

A government called hope? October 22, 2014

Posted by WorldbyStorm in Economy, Irish Politics.
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A fascinating insight into the thinking of the government is offered by Pat Rabbitte in his weekly column in the SBP. Noting that on the campaign trail in the constituency that dare not be named he was interrogated by people about the Irish Fiscal Advisory Council he notes that one very good question was put his way, why is it that when growth is 2% or 5% the IFAC’s advice is always the same, that is to further deepen expenditure cuts and so forth.

He’s sanguine about the Budget:

Therefore, in Budget 2015, I think the government has demonstrated sound judgment. To completely ignore the groundswell for some alleviation of the burden on ordinary people would not have been sustainable. No survey of attitudes, however scientific, compares to an election or a by-election. Allowing for our national talent for exaggeration, the bald truth is that a very great many families have taken as much as they can bear.
True, the alleviation is modest. And it is a strategy not without risk. But it will go some small way to reinstate hope that things are getting better.

There you have it, hope…

But to add to some straws in the wind we’ve already seen, some intriguing stuff here…

There still remain issues that will test the resolve of government. The construction of a refurbished network to conserve and supply quality water to households and businesses is one such challenge. The acute housing shortage, particularly in Dublin, is another challenge. It was critical that the budget would help create an improved environment that facilitates government delivering on such important issues. Up to now the government has been losing the public debate on both water and housing, and no government can surrender to the “don’t pay” water campaign and retain credibility.

And yet, and yet, Rabbitte knows as well as you or I that the government has – at most – fifteen or so months to go. No great task to push the water charge to the margins in one way or another and hand it over to their successor (less so, of course, for FG than the LP given that the former is more likely to be in government come what may). And this would, surely, only be an extension of the strategy that Rabbitte himself so wholeheartedly bought into in relation to election promises not that long back, would it not?

He’s yet another who seems to believe it is the structural composition of Irish Water that enrages citizens rather than the charges themselves. For example:

Everyone in government knew a new utility with a capacity to borrow off the state’s balance sheet could not be established without outside contractors. The experience in Britain bears this out. However, ever since these contractors were described by the company as “consultants” the government has been playing catch-up. Notwithstanding the asset created or the sophistication of the systems put in place or the number of jobs created, words like “consultants” and “bonus” are contaminated.

This is a remarkably expedient analysis, and I can’t help but think that it does the government and its cheerleaders no good at all. Indeed, it must make for quite some effort of will to misinterpret what is obvious to any of us outside Leinster House what the dynamic powering opposition to those charges actually is.
And what of those sixteen months?

Water aside, the conduct of budget making on this occasion augurs well for the longevity of this government. The tension that existed between the two parties in the previous three budgets was noticeably absent. On this occasion there was no solo or even competitive leaking. What emerged late in the day was clearly authorised. Previous criticism of the Economic Management Council has been replaced by a recognition of the inherent sagacity behind its creation. A year is a long time in politics, but the smart money now must be on this government bringing in another and better budget in October 2015.

That’s another oddity? Does Rabbitte think that longevity alone, i.e. more or less completing its full term is a mark of success? Hard not to believe that he does. And is this the slender strand of hope that the LP looks to to secure its fortunes? That a better budget in 2015 will do the trick for the subsequent, and all to soon to arrive election?

It would appear so. I’m always leery about projections into the future, but given the government has had an awful couple of weeks, that the support for the opposition in all its myriad forms has held constant across years now I wonder just how much this is the political equivalent of whistling past the graveyard?

This being Rabbitte there’s the customary lash against the opposition… the implicitly ‘non-serious’ opposition:

This would be more likely than not to benefit government, provide serious parliamentary opponents with a route to test their proposals and expose those interested in opposition only for the sake of opposition. It should be tried.

Well, we’ve seen a ‘serious’ party go into government and we’ve seen the outcome. The trashing of pre-election promises, the buckling – almost the welcoming – of the orthodoxy… small wonder that many many seek to place their trust in other quarters.

A small antidote to this is provided by, of all people – though not uncharacteristically – Cliff Taylor, now apparently writing in the Irish Times who suggests ‘another and better budget in October 2015’ is unlikely to be much cop…

The Government can’t buy the next general election. It hasn’t got the money. Though, of course, it still can’t help itself trying – just a bit anyway.
At best it might be able to afford to trim income tax next October by something similar to this year and add a bit more to spending.

Though his definition of ‘hike’ and mine are obviously a little different…

The budget was a strange mix between old-style populism and these new-era realities. The hike in child benefit and the tax relief on water charges harked back to earlier times. The troika – opponents of universal benefits such as child benefit and supporters of the water charge – won’t like either of these. And they are right.

And what of the actual impact of the Budgetary measures?

In overall terms the ESRI analysis later in the week told the story. When you counted in water charges the overall impact on people’s incomes was small, between 0.5 per cent and 1 per cent at most. The message that the days of big cutbacks are over may affect people’s psychology but the extra cash in our pockets won’t go too far.


May, being the operative word in the above sentence. And here’s another thought:

The budget itself involved a €1 billion spend, but when you subtract the water charges bill and other costs such as university fees the net boost was only a few hundred million.

And I’d tend to agree with his closing thought:

As demands grow on the Government in the year ahead – for higher pay, more spending on services, more tax cuts and so on – this is what Ministers need to remember. The Government can’t buy the next election. So why even try?

Oh, but they’ll try to make it seem like a giveaway in twelve months time. For all the good it does them.

The end of austerity and the reception the Budget was given… October 21, 2014

Posted by WorldbyStorm in Economy, Irish Politics.
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Pat Leahy and Michael Brennan, again in a long piece on the Budget in the SBP, note one basic point – for all the talk about the ‘end of austerity’ (a nonsense given that expenditure cuts aren’t being made up) and a ‘give-away’ budget, there’s this:

The picture wasn’t all rosy. Even before the budget was announced, government backbenchers knew what the opposition’s attack would be.
“They will say that all the tax cuts are being taken away in water charges,” said one Fine Gael TD.
And they did. Fianna Fáil, Sinn Féin and independents all highlighted the impact of water charges on voters’ pockets. They had to, because nothing in the budget seemed to be upsetting voters. Fine Gael and Labour TDs reported that the phones in their offices were eerily silent after budget day, with no deluge of emails either. One Fine Gael TD said there had been no reaction at all compared to the “venom” after the previous three budgets. A Labour TD also noted the difference, recalling how one voter shouted, “Shame on you” at him outside the local school, on the day after the respite care grant cut in Budget 2013. They all have similar tales.

I’ve heard similar tales of a quiet response to the Budget.

I think FG and LP would be making a very very serious error to believe that that indicates acceptance, as distinct from quiescence. And that’s no minor distinction. Hitherto we have seen how political anger has been manifested at the polling booth. That anger remains, as the proximate cases remain. Those water charges aren’t going away. Far from it. Nor is the cumulative effect of year after year of expenditure cutting budgets. And the marginal changes in taxation rates are indeed ‘taken away in water charges’.

The end of the age of austerity and the end of the left-wing independents and SF? They wish. October 21, 2014

Posted by WorldbyStorm in Economy, Irish Politics.
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Pat Leahy and Michael Brennan, again writing in the SBP have the following provocative little suggestion:

The truth is that Fianna Fáil and Sinn Féin were horrified by the budget – just as Fine Gael and Labour used to be horrified by the Fianna Fáil giveaway budgets of the Showtime era.

And this as well…

Higgins had been an isolated figure on the backbenches after Clare Daly quit the party two years ago. But he is now flanked by Murphy and by Coppinger, who won the Dublin West by-election in May.
What about the prospects of getting Daly back? Murphy said he would like to see a new movement of the left. “It could be a broad party which encompasses different strands of the left, which includes potentially the likes of Clare Daly or Joan Collins or Richard Boyd Barrett,” he said.
We’ll see. If the age of austerity is over, then the age of anti-austerity – so politically profitable for Sinn Féin and the left-wing independents – might also be over.

Hmmm… Cliff Taylor had some thoughts on this in the Irish Times this week. More on that in the next day or so…

But Elaine Byrne in the same edition of the SBP writing about the lack of appetite for reform at this point, as against earlier in the life of the government, had this thought:

The rejection of the Oireachtas inquiries and Seanad referendums was a message in neon lights that the electorate did not trust this government with more power. The anti-establishment shift in voting patterns was corroborated in the recent by-elections.
The combined Fine Gael-Labour vote fell by 46.8 per cent in Dublin South-West and 25 per cent in Roscommon-South Leitrim when compared to their 2011 vote. The local elections saw Fine Gael’s vote drop by 12 per cent and Labour plummeting to a third of the vote it achieved in the 2011 general election. The Sunday Business Post/Red C Poll for September revealed that coalition support is down almost 20 points from the inauguration of the democratic revolution.

The next poll will be useful to assess the impact, if any, of the Budget, but with those water charges still in train it would require quite some degree of optimism to think things are changing substantially on foot of it.

Smart-alecky… October 20, 2014

Posted by WorldbyStorm in Economy, Irish Politics.
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…this colour piece here by from the Irish Times really captures the tone of some of Leader’s Questions in the Dáil over the last week or two between Joan Burton and others, including Mary Lou McDonald. I think this last in relation to some of the back and forth over the water charges is spot on:

Sinn Féin deputy leader Mary Lou McDonald produced a copy of a letter Wicklow County Council sent to households on its rental accommodation scheme telling tenants that a failure to pay their water charges could result in their eviction.

And:

Joan, however, jumped right in.
She said Wicklow County Council was controlled by the Opposition. Warming to her theme, the Tánaiste suggested that when Mary Lou got time in her busy schedule “you might pick up the telephone and make a call to your own public representatives” and have a conversation with the management.
“I am shocked that they would permit a letter to issue like that,” she added.
“It’s a management issue,” shouted Sinn Féin’s Dessie Ellis. “They don’t have influence.”

And:

Funnily enough outside the Dáil Joan later clarified that she had asked her officials to contact Wicklow County Council to verify the facts of the letter.
In the Dáil bearpit she may have scored points against Sinn Féin but as to scoring votes … that’s another matter entirely.

Flat screen tv’s and smart phones… October 20, 2014

Posted by WorldbyStorm in Economy.
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The Now Show on BBC Radio is probably an acquired taste, but this I liked from a recent enough show.

The papers still talk about people having a ‘flat-screen tv’ as if it’s a thing of unimaginable opulence found only in the pads of millionaires whereas in fact it’s actually been impossible to buy anything except a flat scree tv for at least five years…

True that. And not a million miles from these shores someone made a similarly uninformed crack about mobiles… didn’t they?

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