Dáil debates
Tuesday, 7 December 2010
Leaders' Questions
2:30 pm
Enda Kenny (Mayo, Fine Gael)
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No Members from the junior Government party are present today. I was intrigued to hear the recent contribution of the Minister for the Environment, Heritage and Local Government when he described this place as an asylum and said one gets chewed up inside by the scale of the decisions to be made and has sleepless nights, whether one is in negative equity or not. I was equally astounded to hear his contribution on a recent radio programme regarding the way in which the Government arrived at its decision on the bank guarantee that was signed off on 29 September 2008. The Minister for Finance and members of the Government have made it clear, on more than one occasion, that this all erupted when the banks were in discussion with the Taoiseach, the Minister for Finance and some civil servants in the Department late on the Monday night and that because of the scale of the immediate crisis, it was necessary to make the decision about the bank guarantee in the way it was made. That is what the public, the House and everyone else were expected to believe. However, the Minister, Deputy Gormley, has given a very different version, saying there was a meeting of the Cabinet on the Sunday at which the details of the scheme were raised by the Minister for Finance at the conclusion of the meeting and a clear signal was given that there was an impending crisis and that something would have to be done about it. He made it clear on that radio programme that this was discussed -----
Séamus Kirk (Louth, Ceann Comhairle)
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The Deputy needs to put a question soon.
Enda Kenny (Mayo, Fine Gael)
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The Ceann Comhairle is at it again. I am nearly finished.
Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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It is the dying kick.
Enda Kenny (Mayo, Fine Gael)
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My point is that the Minister, Deputy Gormley, gave a very clear impression that this matter was discussed in some detail on the Sunday before the Monday meeting at which the Taoiseach and the Minister for Finance made their decision. An incorporeal meeting was held and when the Minister for the Environment, Heritage and Local Government, Deputy Gormley, was contacted, he was about to drift off to sleep, even though he said he was having sleepless nights.
On this budget day and in view of the fact that this decision and the manner and consequences of it have effectively put the next generation in hock, what is the truth of the matter? Was it discussed, decided upon and agreed on the Sunday? Were the Taoiseach and the Minister for Finance given authorisation that if some other element arose on the Monday, they could make the decision they made or was it all done by the incorporeal meeting on Monday 29 September 2008? This is what I wish to know.
Brian Cowen (Laois-Offaly, Fianna Fail)
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All these matters have been laid out in the report by Professor Honohan. He set out the whole situation. The Secretary General of the Department of Finance has been speaking to the Committee of Public Accounts and the Joint Committee on Economic and Regulatory Affairs outlining the work of the Department of Finance right up to the point-----
Pat Rabbitte (Dublin South West, Labour)
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He did not tell us anything about what Deputy Gormley said.
Brian Cowen (Laois-Offaly, Fianna Fail)
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If I am given the opportunity to reply I am sure I can clarify the matter. The Secretary General set out in detail the role of the Department of Finance. The only issue that arises in addition to what has been said already is regarding the fact there was a Cabinet meeting on Sunday and which has been well reported. There was a Cabinet meeting relating to preparations for the supplementary budget we were bringing forward in early October 2008. That is what the meeting was about. At the end of the meeting, the Minister for Finance gave an update that there were still liquidity issues with regard to our banking system and that it needed to be monitored and that if the situation deteriorated further we would have to return to the issue. However, there was no detailed discussion about options or anything like that at this meeting; it was simply the Minister for Finance updating the Cabinet as to the state of the play. On Monday, the situation deteriorated further to the extent that when business closed there was a need for meetings which took place as have been outlined.
Séamus Kirk (Louth, Ceann Comhairle)
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Deputy Kenny for a final supplementary question.
Enda Kenny (Mayo, Fine Gael)
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Either the Minister, Deputy Gormley, has been misinterpreted here or he is not being upfront with all the facts, to put it that way. The Honohan report did not report on the facts of the Cabinet meeting in the way that the Taoiseach is now speaking. The Honohan report said that 75% of this situation was due to our own fault, the Taoiseach's fault. The Minister, Deputy Gormley, said:
The Sunday we had a Cabinet meeting and we had gone through it in quite a bit of detail, as I said. So all the Cabinet Ministers were at home the night the guarantee was given. It was simply a courtesy call to me because what is required under those situations is that you have, what is known as an incorporeal meeting that is done by telephone....You couldn't just make a decision on the spur of the moment, you would have to have discussed it for days in advance. Of course not, no. You just can't do it like that. Everybody had to be involved in what is the best thing to do in the circumstances so that is incorrect. It wasn't the spur of the moment decision or anything like that.
Séamus Kirk (Louth, Ceann Comhairle)
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We do not encourage Members to read quotations in the House.
Enda Kenny (Mayo, Fine Gael)
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The Minister for Finance when he was speaking on 20 January 2009, said, "It was a carefully considered decision arrived at by the Government after consideration of all the factors at a full meeting of the Cabinet". The full meeting of the Cabinet took place on the Sunday and an incorporeal meeting of whatever Ministers were available by telephone was held on the Monday night. We need to get this absolutely clear. The Minister for the Environment, Heritage and Local Government, who is propping up the Government, has a very different view of how this was arrived at from what the Taoiseach is telling us here or what the Minister for Finance has told us.
Séamus Kirk (Louth, Ceann Comhairle)
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Could we have a question please? We are under severe time constraints today, as the Deputy is well aware.
Enda Kenny (Mayo, Fine Gael)
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The other fundamental matter is this. On the debate in the House on the bank guarantee, Deputy Noonan asked the Minister for Finance whether this was a matter of liquidity or solvency and he was told it was a matter of liquidity. The Government did not tell the truth to the people. Was the Minister, Deputy Gormley, suffering from lack of sleep when he gave his recollection of what happened? Was the Minister for Finance right when he said that this was decided at a full meeting of the Cabinet, which took place on the Sunday, or was it decided by the incorporeal meeting on the Monday? I would like to know that before we proceed into what will be the last budget to be presented by this Government.
Brian Cowen (Laois-Offaly, Fianna Fail)
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As I have outlined to Deputy Kenny, there were no decisions taken whatever on Sunday. The incorporeal meeting that was held on the Monday night-Tuesday morning was the meeting that took the decision. It was not taken on the spur of the moment, as he knows. There was considerable discussion during that night-time and early morning as to what the best options were in the circumstances. I do not accept for a moment Deputy's contention. There is no question of anyone telling untruths whatsoever or not telling the truth about solvency and liquidity.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The issue was based on the knowledge that was available to our Government and the expert advice we received at the time confirmed that an overall guarantee was what was required. It has been confirmed by Professor Honohan in his report that an extensive guarantee was required, given that if there was not a guarantee to the system, the whole financial stability of the State and the banking system was at risk, and indeed would have had an implosion within days. Those are the facts.
Brian Cowen (Laois-Offaly, Fianna Fail)
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That does not relate as some suggest to new debt or other debt; it was existing guarantees on existing debt. The only issue that arose subsequently was this question of subordinated debt and, as I say, we made the decision on all that based on the best interests of the country as we saw it. It related in value terms to approximately 3.3% of the total debts of the banks. The point is that, as he has confirmed, the issue was on Sunday there was a Cabinet meeting relating to the budget with, at the end of that meeting, an updating and briefing by the Minister for Finance. As I say, the Secretary General of the Department of Finance has outlined to committees of this House the technical and contingency work that was being done by the Department of Finance in respect of the difficulties that were arising. A very serious deterioration took place on Monday requiring detailed discussions after markets closed and an ultimate decision taken by incorporeal meeting that morning.
Eamon Gilmore (Dún Laoghaire, Labour)
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The version of the Minister, Deputy Gormley, of how the decision was taken, which is now contradicted by the Taoiseach, demonstrates the dysfunctional way in which the Government made the decision on the blanket bank guarantee. It is probably no surprise, therefore, given the uncertainty about how the decision was made that the wrong decision was made. There is now no doubt but that the decision to provide the kind of blanket guarantee that was included in that decision was a wrong decision, as was the Government's strategy on NAMA and the Government's neglect of jobs in the past three years which has us in the situation where for the 18th successive month the number of people out of work is more than 400,000. It is that succession of mismanagement, mistakes and bad judgment that has us here today, facing what has been described by many as the worst budget the country has ever faced and which is to be announced in approximately an hour.
I and the Labour Party are concerned that another bad decision by Government to take €6 billion out of the economy, to adjust the budget by €6 billion, is a dangerous strategy for the country. It will damage our prospects for recovery-----
Séamus Kirk (Louth, Ceann Comhairle)
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Has the Deputy a question?
Eamon Gilmore (Dún Laoghaire, Labour)
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I am coming to my question. It will halt growth and put jobs at risk. Does the Taoiseach have any concerns at all that removing €6 billion poses a danger to the prospects for this country's economy recovery and growth?
Brian Cowen (Laois-Offaly, Fianna Fail)
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First, to deal with the assertions made by Deputy Gormley in the preface to the remarks made regarding the previous question asked by Deputy Kenny or, I should say, Deputy Gilmore.
Brian Cowen (Laois-Offaly, Fianna Fail)
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If the Deputy is the good guy, we are in bigger trouble than I thought we were in.
James Bannon (Longford-Westmeath, Fine Gael)
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The Taoiseach is in the departure lounge.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Do not take from my response to that comment.
In regard to the previous issue raised by Deputy Kenny, the Minister, Deputy Gormley, confirmed to an inquiry from a newspaper yesterday evening that the Minister for Finance at the end of that meeting on the Sunday briefed colleagues on problems experienced by the Irish banks in the context of international developments, the preparations and arrangements that were being made in the Department which have been spoken of in detail by the Secretary of the Department to various committees of the House, that the situation was being closely monitored and that the focus was on banking system stability. He also confirmed that while no formal decision was taken arising from the briefing, some Government action would have to be taken if the situation deteriorated. The fact of the matter is that no decision was made on the Sunday. It is not being contended by the Minister, Deputy Gormley, that one was made and any suggestion to the contrary by Deputy Kenny is not well founded, based on the Minister's clarification and confirmation of the situation for fear of any there being any misinformation or misunderstanding.
The main question Deputy Gilmore asked relates to his view that a correction of €4.5 billion is the best way forward and to whether the proposed €6 billion correction will create any difficulty. I heard the Deputy's finance spokesperson say this morning that the reason we are having this budget of a correction of €6 billion is because we have put €6 billion into the banks or something to that effect. There is this constant effort to associate the need for a correction with the need to repair our banking system. I reiterate that the fact is that if we never had a banking crisis, we would still have a situation to address in regard to our public finances where there is a gap of more than €18.8 billion, almost €19 billion, this year which has to be closed.
Brian Cowen (Laois-Offaly, Fianna Fail)
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That issue arises as a result of the economic and financial crisis that is affecting every country, including this one, which has its own particular problems. It is also clear that it is the view of the Labour Party that it does not wish to adhere to the terms and conditions upon which money will be available to this country after July to provide for the services, about which we are all speaking and want to protect to the greatest extent possible in the current circumstances. It is basically saying that it would not abide by those and that it would put at risk the ability and the necessity of those funds, more than €50 billion over the next three years, to provide the necessary time and space for this economy, which we have stabilised this year. I reiterate that the budgetary targets we set ourselves last year in a difficult situation have been adhered to, as will be outlined by the Minister in his remarks today. Our revenues are up €0.5 billion more than the €31 million we projected, our expenditure is under control based on what we said we would spend during the year and that, having stabilised the situation, we now have the prospects of growth. It was also contended by the Deputy that there would be 50,000 or 60,000 more people unemployed than there currently are as a result of the policies we have been pursuing. That is not correct.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Thankfully, we still have a situation where the prospects for growth next year will help us if we make the correction, as set out in the programme that has been agreed with the European institutions and the IMF, and proceed with it. We can bring unemployment down under 10% in the next few years. If we proceed on another tack, that of the Labour Party's point of view, which is not to proceed with the correction to the extent we suggest, it will not breathe confidence into the economy. Instead, it will do the opposite. The important point to make about the Labour Party's proposals is that it suggests we would have an adjustment of €4.5 billion next year, €2.5 billion of which would be raised through taxes, €900 billion on programme expenditure cuts, €400 million on reductions in public sector pay and €1.3 billion on capital programme cuts-----
Ruairi Quinn (Dublin South East, Labour)
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I am glad the Taoiseach is addressing the real budget.
Brian Cowen (Laois-Offaly, Fianna Fail)
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-----and €1.3 billion in cuts in the capital programme. What is being suggested by the Labour Party and the difficult decisions to be made in terms of broadening the tax base both at the top and bottom as we proceed with the budgetary policy to be outlined by the Minister this afternoon-----
Brian Cowen (Laois-Offaly, Fianna Fail)
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The level of impact on working families from the Labour Party's proposal would be almost double - although not quite double - what we are suggesting because of the size of the tax brackets proposed.
Ruairi Quinn (Dublin South East, Labour)
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How would the Taoiseach know? He has got everything wrong up to now.
Thomas Byrne (Meath East, Fianna Fail)
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They would be banjaxed from the Labour Party's actions.
Séamus Kirk (Louth, Ceann Comhairle)
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Deputy Gilmore has a final supplementary question.
Emmet Stagg (Kildare North, Labour)
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They are fairly banjaxed after Fianna Fáil anyway.
Séamus Kirk (Louth, Ceann Comhairle)
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Deputy Gilmore, without interruption.
Eamon Gilmore (Dún Laoghaire, Labour)
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If the Taoiseach and the Government paid as much attention to what the Labour Party had to say over the past three years as it appears to be doing now, we would not be in the hole and the mess that we are in now.
Eamon Gilmore (Dún Laoghaire, Labour)
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If it had paid attention to what we had to say about employment at a much earlier stage of this crisis, the Government would not be in a position where the numbers out of work have risen from 154,000 at the time of the last election to 425,000 now. As for the 50,000 that the Government thinks have disappeared, they have disappeared to Australia, America and anywhere but here in order to get a fresh start. If the Government listened to the Labour Party about what has happened to the banks - if it had listened on 29 September 2008-----
Noel Dempsey (Meath West, Fianna Fail)
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There would be no banks.
Brian Cowen (Laois-Offaly, Fianna Fail)
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We would not be having this discussion.
Eamon Gilmore (Dún Laoghaire, Labour)
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The State would not be tied to a declining banking system.
Noel Dempsey (Meath West, Fianna Fail)
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Nonsense. They would have gone down the tubes.
Brendan Howlin (Wexford, Labour)
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The Government ran out of money.
Eamon Gilmore (Dún Laoghaire, Labour)
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There is an attempt to say that if we did not have the banking crisis-----
Séamus Kirk (Louth, Ceann Comhairle)
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We have limited time for Leaders' Questions and we are into the budget debate already.
Eamon Gilmore (Dún Laoghaire, Labour)
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-----there would be a manageable position. It would be a much more manageable problem with regard to the public finances.
Brendan Howlin (Wexford, Labour)
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The Government failed in that.
Eamon Gilmore (Dún Laoghaire, Labour)
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As the Taoiseach knows well, the €85 billion deal that was concluded - a bad deal - with the EU and IMF-----
Séamus Kirk (Louth, Ceann Comhairle)
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Could we have a question to conclude Leaders' Questions?
Eamon Gilmore (Dún Laoghaire, Labour)
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-----is tied hand and foot to the banks. That has us in this position.
Noel Dempsey (Meath West, Fianna Fail)
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Answer the question on tax.
Eamon Gilmore (Dún Laoghaire, Labour)
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The question I asked the Taoiseach, which he avoided completely, relates to this. I am concerned, along with many independent commentators, that a €6 billion adjustment in the budget to be announced later this afternoon will damage the prospects for growth, recovery and jobs in the Irish economy. My question did not require the Taoiseach to send back Labour Party policies-----
Brian Cowen (Laois-Offaly, Fianna Fail)
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I will answer the Deputy's questions.
Eamon Gilmore (Dún Laoghaire, Labour)
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My question is if the Taoiseach has any concerns that a €6 billion adjustment will damage growth-----
Eamon Gilmore (Dún Laoghaire, Labour)
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-----and prospects for jobs.
Séamus Kirk (Louth, Ceann Comhairle)
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Could we hear Deputy Gilmore without interruption?
Eamon Gilmore (Dún Laoghaire, Labour)
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We will have more people taking flights to Australia.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy complimented me on the scrutiny I gave to Labour Party policies as he enunciated them last week. I assure the Deputy I will be taking a very keen interest in all of his policy positions as the people get an opportunity-----
Pat Rabbitte (Dublin South West, Labour)
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He will have plenty of time to read our plans.
Brian Cowen (Laois-Offaly, Fianna Fail)
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-----to see just how much is behind what the party has to say. If I go back to the party's banking policy, it is clear.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Professor Honohan has far more expertise in this area than the Deputy or me, and the Deputy might agree on that from time to time. Had we adopted the Labour policy on the banks on 29 September 2008-----
Brian Cowen (Laois-Offaly, Fianna Fail)
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-----we would not have an economy to be discussing here.
Liz McManus (Wicklow, Labour)
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He is not answering the question.
Séamus Kirk (Louth, Ceann Comhairle)
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The Taoiseach should be allowed to contribute without interruption.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The banks would have imploded without that guarantee. That is a fact. However the Labour Party tries to twist and turn its way around that basic conclusion put forward by Professor Honohan, it cannot get away from that fundamental problem.
Brendan Howlin (Wexford, Labour)
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What does that have to do with the issue?
Brian Cowen (Laois-Offaly, Fianna Fail)
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The present point relates to the concerns we have. Of course we can all have concerns. I would have very serious concerns if I listened to the Labour Party, if in government, suggesting that it would not be prepared to make these decisions. That would prove it is not fit for Government in the circumstances in which we find ourselves.
Ruairi Quinn (Dublin South East, Labour)
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The Taoiseach should not go there.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I have gone there and I have answered the question.
Brian Cowen (Laois-Offaly, Fianna Fail)
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If the cut should be €4.5 billion, the Deputy should confirm on what basis the €50 billion now available from EU funds would be made available?
Seán Sherlock (Cork East, Labour)
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Is the Taoiseach asking that question of the next Taoiseach?
Seán Sherlock (Cork East, Labour)
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Is the Taoiseach asking the next Taoiseach that question?
Brian Cowen (Laois-Offaly, Fianna Fail)
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I am asking if the Labour Party has the responsibility for this.
Brian Cowen (Laois-Offaly, Fianna Fail)
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If it does not stick to the terms and conditions of the agreements, how does it expect to obtain the country's part of the agreement? The Deputy also said he is worried about the impact of these cuts. Every correction and every euro taken out of the economy-----
Ciarán Lynch (Cork South Central, Labour)
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To bail out the banks.
Brian Cowen (Laois-Offaly, Fianna Fail)
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-----to get a sustainable basis upon which we can have a tax and expenditure programme into the future has a dampening effect when it is taken out.
Brian Cowen (Laois-Offaly, Fianna Fail)
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If we do not continue with the corrections that Deputy Gilmore has opposed since 2008 and which now number €15 billion so far, between tax and expenditure, and will amount to another €15 billion between now and 2014. If we had listened to the Deputy and not gone ahead with the correction, the rate of correction would be even greater.
Brendan Howlin (Wexford, Labour)
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Would the International Monetary Fund be here?
Brian Cowen (Laois-Offaly, Fianna Fail)
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The level of dislocation in the public services would be even greater had we listened to Deputy Gilmore for the past three years when he refused to make a decision that would face up to the problems the country would have to contend with, regardless of which Government is in power.
Brian Cowen (Laois-Offaly, Fianna Fail)
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That is something Deputy Gilmore will have to consider.
Emmet Stagg (Kildare North, Labour)
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Who got us into this mess?
Brian Cowen (Laois-Offaly, Fianna Fail)
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I wish to make a third point in answer to the specific question Deputy Stagg's leader has made - Deputy Gilmore makes it far more eloquently than Deputy Stagg - regarding his concerns about the dampening effects on growth for 2011. One can look at a number of scenarios in this regard. The OECD claims growth in the Irish economy next year will be 1.6%, whereas the IMF and European Union predict growth of around 1% but state there will be an increased rate of growth, over and above the average 2.7%, in the following year. Reuters does a compendium of forecasts where it brings together and blends the views of about ten of the leading forecasters on the Irish economy. This collective wisdom of a group of people who comment on the economy was released last week and suggests growth next year will be 1.6%.
Eamon Gilmore (Dún Laoghaire, Labour)
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What is the Government's view?
Brian Cowen (Laois-Offaly, Fianna Fail)
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The Minister will outline in his Budget Statement what he regards as the relevant rate of growth for next year based on all of these assessments. It is well within the very considerable amount of documentation and commentary available on the prospects for the economy next year. The answer to Deputy Gilmore's question is very simple. If he wants to be in Government and get a mandate to run this country, he should be prepared to take decisions that will get the country back on the road to recovery.
Brendan Howlin (Wexford, Labour)
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The people will make the decision.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Deputy Gilmore should not come in here suggesting that an adjustment of €4.5 billion by the Labour Party is equivalent to a €6 billion adjustment by the Government. He should not come in here and suggest he can charge €2.5 billion of tax on working families throughout this country as part of his solution for next year. That would be the biggest killer of jobs of any package and one that we would reject and refute.
Jim O'Keeffe (Cork South West, Fine Gael)
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This reminds me of Custer's last stand and we all know what happened to him.