Dáil debates

Tuesday, 24 March 2009

6:00 pm

Photo of Kieran O'DonnellKieran O'Donnell (Limerick East, Fine Gael)

I am delighted to contribute to this debate, although I find it frustrating that the Minister for Finance did not come into the House to open it.

Deputy O'Brien made a number of points with which I would like to deal. If we are to have a proper discourse on the budget, we need full information. The Government cannot simply tell us it is considering proposals which, it appears, we will not see until budget day. We have sought the provision of meaningful information by the Department and Minister for Finance. For example, what are the monthly tax projections for the remainder of the year and what is their basis? What proposals have been made by various Departments? Meaningful discussion and dialogue on the budget is a two-way street. We have, through our spokesperson, Deputy Bruton, written to the Minister requesting these details which have not been forthcoming.

A number of key factors require to be addressed in the budget, including the restoration to order of the public finances, an issue on which I will speak further. The abiding feeling among the general public in terms of the budget is fear. People are afraid of what will be contained in the budget. They have suffered cut after cut, following previous announcements by the Government. The Government, when it should have taken a proper approach in the budget announced last October, fudged it. People are fearful and finding it difficult to keep up with mortgage and car loan repayments. The Government needs to give an indication that it is in control and that there is a methodology in what it is doing. The public understands we are in great difficulty in terms of the public finances but they see no economic plan or road map from the Government. The abiding feeling among the public is fear. They are worried that further cuts will be announced. Also, the budget will have to be seen to be fair across all areas.

Fine Gael has tabled a Private Members' motion which proposes a reduction in the number of Ministers of State from 20 to eight. Leadership must be provided from the top. Also, we have proposed reform of the committee system, changes to the residency rules and across a range of areas, including the banking sector. In the past few days there have been two important announcements, including on the €1 million bonus paid to the CEO of Irish Nationwide Building Society following the introduction of the Government's guarantee scheme. I draw Members attention to paragraph 8 of the guarantee scheme which states the Minister may review and vary the terms and conditions of the scheme from time to time at no later than six monthly intervals. I take the opportunity to point out to the Minister that the first six month period will expire at the end of March and that he should use the opportunity to apply this provision to what is happening in Irish Nationwide Building Society. Paragraph 48 of the guarantee scheme states each covered institution shall submit a report to the CIROC no later than six weeks after the relevant covered institution joins the scheme, demonstrating how its remuneration policy for the year ahead will comply with the overall merits of the scheme. How did it arise that Mr. Fingleton was able to take a €1 million bonus after the scheme was introduced? The money must be repaid. The payment of this bonus sends the wrong signal to ordinary people.

We also heard today of issues relating to tax avoidance on the part of another individual. While it might be suggested the amount of money involved is not huge, that is not the point. A tax system, if it is to work, must be fair. In recent months low to middle income earners have had to pay a 1% income levy. Those working in the public sector are also paying a pension levy of between 3% and 10%. Side by side others who have made a great deal of money are not paying their taxes. There must be radical change in these areas.

In restoring financial stability we need to know what the Government is proposing to do in terms of the general deficit and how much it proposes to borrow in the current year. It has not to date stated its intentions in this regard. It has been given five years by the European Union to restore the public finances to order. With the public, we are entitled to know what it proposes to do.

Credibility must be restored to the banking sector. Currently, it is not giving credit to small business. The Government is pumping €7 billion of taxpayers' money into the two main banks, Allied Irish Bank and Bank of Ireland, which we believe cannot and will not work. The fact that the banks have toxic debts means they will require further funds in the next year. Fine Gael has brought forward a model which is gaining approval in various quarters which we believe would be tenable and viable, namely, that two new good banks be established and that the two existing banks, Allied Irish Bank and Bank of Ireland, effectively remain as currently constituted but as debt management agencies. This would allow the new banks to trade. I would support the Government in putting funds into these new banks because it would at least be investing in something viable from which funds would flow. Currently, funds are not flowing to small business.

The Government and banking sector issues are interlinked. I believe the Minister of State, Deputy Mansergh, will agree with me on the following point. Currently, Ireland is paying 2.75% above the rate paid by Germany in borrowing on the international market. The reason for this is a lack of credibility in how the Government is looking after the economy. Credibility must be restored. Implicit in this is that the Government will deal with banking sector issues. If we do not resolve these issues, it will be extremely difficult for the economy to recover from the recession. Hard decisions need to be made and proper regulation provided for to ensure CEOs such as Mr. Michael Fingleton cannot take a €1 million bonus at a time when taxpayers earning between €20,000 and €40,000 per annum are bailing out Irish Nationwide Building Society. This defies logic; it is immoral. The Government must make a stand on the matter.

Job retention and creation are vital. We must ensure the live register statistics do not continue to tumble in a downward spiral. More than 100,000 have joined the live register since last November. We must find radical ways to ensure people retain their jobs. If they can, they will be able to continue to pay their mortgages and car loans and for their children's education. Currently, approximately 1,000 a day are losing their jobs. I cannot understand the Government's lack of urgency in this regard. It has stumbled from issue to issue and from budget to budget without making the required decisions.

We must become competitive as a nation. We began to lose our competitiveness in 2003 when our exports began to fall and the Government put all it had into the construction sector. It knew this was unsustainable. The Taoiseach, when Minister for Finance, having been told by the Central Bank, the IMF and others that the economy was sound, continued to build. Most of that building was undertaken on the basis of funds borrowed abroad by the banks which we are now repaying. Most of that building was done on the basis of foreign debt — money the banks had to borrow — that we are now repaying. That money is going out of the Irish economy at the moment. When the Minister for Finance, Deputy Brian Lenihan, comes into the Chamber tomorrow night——

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