Richard Curran: 'Student rent hikes make universities appear like Rupert Rigsby'

No. This time they are our State-funded universities, who have decided to rip off students by hiking rents at a time of a major housing and rental crisis. The main reason behind the rent increases, which at UCC amounted to over 11pc, is because they can.

Rental markets that are not controlled operate on the basis that landlords charge what the market will bear, i.e. what they can.

Just in case you were under the mistaken belief that the residential rental property market is regulated through things like rent pressure zones, well you would be mistaken.

Purpose-built student accommodation was not included in rent pressure zones and recent hikes come just ahead of a new cap being placed on increases. But even in parts of the country designated as rent pressure zones, two in five tenants have had increases above 4pc since they were introduced.

In the case of big universities, they can argue they are competing in a rental market and they would be foolish to simply offer cut-price accommodation to hard-pressed students. Why it would be foolish is unclear.

They may also argue that rental income, as with student academic fees, has become a very important source of funding in the absence of a new State funding model, and what they suggest is a totally inadequate level of investment by the State in third-level education. They may be right about the lack of investment. They may even be right about the lack of a sustainable future funding model at third-level. Yet the figures are interesting. UCC has the highest rent hikes for next year. Its total rental income in 2017 was €10m, or about 7pc of what it took from academic fees that year.

And take UCD. In the year to September 2017, it took in €27.5m in rental income from residences on campus. This figure was up from €22.3m in 2016. Throw in another €1.4m in other rental income, and UCD collected as a landlord €29m in the year to September 2017. That is equal to more than 13pc of what it took in from student academic fees. Over at Trinity College, the rental and residences income total in the year to September 2018 was €20.1m, up from €18.7m the previous year. In the case of Trinity College residences, rental income was equivalent to 13.4pc of what it took in academic fees.

So universities might argue they are not so much acting greedily, but trying to plug a State funding gap by charging high rents.

But what about how money is spent by universities in this crisis-hit third-level sector? One of the problems with the housing crisis is that inevitably, the younger generation end up paying a lot now, while an older generation enjoy benefits that are simply no longer available to the next generation.

So while UCD took in €29m in rent in 2017, the current service cost of its pension schemes was €69.8m. When you subtract the contributions to pensions made by staff, the net pension service cost came to an enormous €44.5m, or over 20pc of what the university charged students in academic fees.

This is a staggering figure, if the annual cost to the State of funding pensions is equivalent to one in every five euro collected in academic fees. Down in Cork, UCC paid out €27.2m in pension benefits in 2017 to retired employees. This was one fifth of what it took in from students in academic fees.

Of course, the universities can argue these are legacy defined benefit pension schemes over which current management has no control. Perhaps, but it puts their rental hikes on young people at the start of their educational and working lives into context.

Consumers win in the short term in cut-throat world of cheap beef

As farmers blockade beef processing plants around the country, the ramifications are starting to move along the food chain, as it were. Beef processors are worried they will lose important retail contracts and may have to start letting staff go.

The whole situation is an unfortunate, sorry mess. Farmers say they are not getting a fair price for their beef.

Processors say they work in a low-margin business and they are at the mercy of highly competitive retail giants.

Farmers don't really believe the processors. Who is telling the truth?

Beef farming, by and large, is not profitable for many of its participants. It is a tough business which can prove very lucrative if companies are large, nimble, innovative and are prepared to be dictated to by large retail chains.

The multiples often use the sale of cheap beef as a loss-leader to attract people into the stores. How can you determine who is making all of the money from the beef industry?

None of the three largest beef processors in Ireland (ABP, Dawn and Kepak) publish accounts. They are all unlimited liability businesses, mainly owned through investment holding companies on the Isle of Man and Jersey.

Of the three largest retail giants in the Irish market (SuperValu, Dunnes Stores and Tesco), only SuperValu publishes accounts. Neither Aldi nor Lidl publish detailed accounts for their Irish operations either.

Dunnes Stores is owned by an unlimited liability company and Tesco Ireland is actually owned by a Luxembourg partnership and a Dutch-registered company. Tesco's ultimate parent group does publish accounts as a plc. But you won't find anything meaningful about profits from the sale of meat in Ireland.

Farm income surveys do show that many beef farm operations in Ireland are unprofitable. That may be about to get a lot worse because of Brexit, the Mercosur trade deal and the climate change-inspired drive away from meat. Even the UN is now encouraging people to eat less meat.

Aldi was selling a Father's Day 18oz steak in its UK stores this year for just £7.99 (€8.70). It was just a promotion, but beef is not really a branded product and so the retailers ultimately call the shots. Perhaps the real problem here is that beef is simply undervalued and sold too cheaply.

Consumers are the big winners in all of this. But surely this isn't sustainable if the people who produce the product continue to be the big losers.

Size matters in the profitability of private healthcare clinics

Speaking of beef barons, Larry Goodman looks set to expand one of his other business empires beyond meat. Goodman has been linked with buying out the shareholding in the Hermitage Medical Clinic owned by Sean Mulryan.

Goodman is already a substantial shareholder in the Hermitage. He is also a major shareholder in the Blackrock Clinic and the Galway Clinic.

He is clearly a big believer in the long-term profitability of private medicine, given our ageing population and the obvious failings in the public health system.

Yet, of the three, Blackrock is the only one that has really delivered consistent stellar profitability. Between 2010 and 2016, it racked up profits of €90m. Profits at the Galway Clinic fell in 2017, by 44pc to €5.15m.

Accounts for Torcross Ltd, the parent group of the Hermitage clinic, show that at the end of 2017, it had outstanding debt of €77m, including loans from shareholders of €39.2m. The shareholder loans don't even pay any interest.

The accounts said it faced challenges generating the returns required to pay down its significant outstanding debt.

These include inflation pressures in people costs and the medical supply chain, and pricing pressures with health insurers. Pre-tax profits were down from €4.5m to €2.6m in 2017.

One of the issues highlighted in the accounts is the fees paid by health insurers. Insurers are playing it a bit tougher with private hospitals on what they pay.

Perhaps Goodman sees a clear advantage in collective bargaining by controlling three of the biggest private hospitals in the country.