Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

Cuirim fáilte roimh an Aire agus roimh an mBille seo. Is é an rud atá os ár gcomhair i ndáiríre ná ceithre Bhille ach iad go léir i mBille amháin. Chomh maith leis sin, fógraíodh ar maidin go bhfuil Bille eile le cur ina measc. Ciallaíonn sé seo go mbeidh thart ar chúig Bhille i mBille amháin. An é seo an dóigh is fearr le reachtaíocht a thabhairt os comhair Thithe an Oireachtais? An seo an dóigh is fearr dúinn chun plé agus mionscrúdú a dhéanamh ar na hábhair seo uilig, go háirithe agus an tAire ag rá go mbeidh leasú eile ann ar Chéim an Choiste? Cuireann sé seo imní orm mar ní rabhamar in ann réamh-scrúdú a dhéanamh ar an leasú sin agus níl sé le feiceáil againn fós agus muid ar an Dara Chéim den reachtaíocht.

What we have before us is really four bills in one, and I will address each element of the Bill in turn, but if these issues are so necessary we need to question why they could not have been taken in turn by the House to allow for greater scrutiny in their own right. I note the fact some of these measures were supposed to be taken in individual pieces of legislation. While, as Deputy McGrath said, the measures are technical and there do not seem to be any major issues with what is in the legislation, the fact the Minister has signalled another change on Committee Stage does not lead to proper practice and scrutiny of issues. In this case, the issues are tax and tax disclosure to relevant authorities. This means we have missed two key stages, namely, pre-legislative scrutiny and Second Stage because we do not know what the Committee Stage amendment will contain, bar the 100 words the Minister has mentioned on Second Stage. I appreciate that sometimes issues come to the Minister's attention which need to be dealt with in a speedy manner and if it were not incorporated in a miscellaneous provisions Bill, which is the purpose of such legislation, it could be long fingered for months or years given the demands on time for legislation. I just want to make the point it is not best practice and it should be avoided at all costs. Perhaps the Minister will elaborate on why this has suddenly come about when he responds to the Second Stage debate or on Committee Stage.

Well over half a decade has passed since the banking crisis that struck globally had such a catastrophic impact on this country. A recent ECB study showed how the resulting years have lead to a drop in wealth, which was greater in Ireland than any other eurozone country, including Greece. We were told that Europe needed to act and that new banking laws and regimes would swiftly follow, but what we have seen develop was not swift. Here we are today, in October 2015, still debating that new regime. What we have seen over recent years is a very definitive watering down of the concept of a banking union designed to break the link between sovereign and banking debt. When the final vote in the European Parliament was taken, my party did not support what had become a very diluted proposal. The new banking union does not break enough from the past. The logic that some banks are too big to fail is still inherent in the system. The taxpayer has not ended up sheltered from another catastrophe. After years of negotiations, EU leaders have come up very short of expectations.

The issue at hand today is accepting that we should wait eight further years for an EU-wide resolution system. Until then, so called national compartments within the fund will be the first port of call, then the bail out happens and then the State itself is tapped. Does this sound like the break between the sovereign and the banks which was promised? Even after eight years, the State is still in line before the ESM is called upon. We all recall that much was made of the existence of the ESM by the Government. It was, we were told, the reason we had to accept the austerity treaty rules. It was also to be the life saver and great avenger, which the then Tánaiste, Deputy Gilmore, and the Taoiseach, Deputy Kenny, told us could be used to get our money back in the spirit of these new times. We do not hear much about either of these uses of the ESM nowadays and, as this legislation shows, even in its primary purpose as a recapitalisation tool it is not designed to be ever called upon.

It is now ten months since the option of applying for that retrospective recapitalisation became available. Since then there has been nothing from the Minister. The excellent recent report from the Comptroller and Auditor General shows up the spin the Government and banks have been engaged in over recent years to try to minimise the actual losses and suffering the Irish people went through because of the banking crisis. It puts the net cost of the banking crisis as of the end of the year at €43 billion. It also talks about the interest accrued by the State which is paid annually as a result of the banking crisis. The Minister would have us believe we are moving towards somehow breaking even. It is in the power of the Government to apply for the retrospective recapitalisation of the pillar banks. As Deputy McGrath said, this option has been open to it since November last year. It is incredible and inexplicable that it has not yet applied. It stands out as one of the greatest failures of the many failures of the Government, which has claimed a game changer and a seismic shift but has failed miserably and totally on Ireland's banking debt. The toxic Anglo debt has been pushed out onto children's shoulders and the pillar banking debt will be paid by the people, but here we are being asked to say okay to a new system that will allow it all to happen again, perhaps with less impact, but the call on the State is still built into the system. The idea of a banking union which separates banking and sovereign debt has been thrown away along with the legitimate demand of the Irish people for justice on our debt. That debt still hangs like a huge shadow over our economic future and will do so even using the most optimistic forecasts. The mandate the Government received almost five years ago was to stand up for Ireland and this mandate has been squandered.

The second part of the Bill is to put in place a transitional regime for the deposit guarantee scheme. Currently, the deposit protection account holds €370 million, which is available for any calls under the deposit guarantee scheme. The plan is to hand €200 million of this money back to the banks and other financial institutions. The remaining €170 million will form the basis of a new legacy fund. This sum will cover the contributions of the financial institutions for the first two years. Rather than some sort of new insurance policy for many banks, this change will be, in the short term, a financial return. I note the issue of the ECB monetary financing prohibition is raised. The ECB has consistently raised concerns about the promissory note trick and its compliance with the monetary financing rules. It is more than likely that extra pressure will be placed on the Central Bank to dispose of the Anglo bonds sooner rather than later as a result. I question why only €170 million of the €370 million is being placed in the legacy fund and I will deal with this on Committee Stage.

It is important the Minister listens to the legitimate calls about the credit union sector, not only regarding the levies to be placed on them and the rate but also the cap on deposits. I am on the record as repeatedly stating the Central Bank fails to understand the importance and origins of the credit union sector and needs to understand in a better way the democratic and not-for-profit role of the organisation. On this note, I welcome the newly appointed Governor of the Central Bank, Professor Philip Lane. I wish him every success and I hope he comes down hard on the individual banks and the institutions which need to have a firm stick taken to them.

The Bill allows for the continuance of regulation on small insurance companies and those that are winding down. When I saw the Bill originally in its own right in the legislative programme last year I was hopeful it was an antidote to the situation regarding Setanta Insurance. I was disappointed to hear this is not the case. Why do we not have legislation to deal with the situation in which tens of thousands of Setanta Insurance customers now find themselves? Last week, the Joint Oireachtas Committee on Finance, Public Expenditure and Reform received an update from the Department of Finance telling us the Motor Insurers Bureau of Ireland, MIBI, was appealing the High Court ruling that it was liable for third party claims at Setanta. This was only the latest twist in this story. Initially, the Minister for Finance told me the MIBI would be liable. After concerns were raised by the MIBI, the Minister and the Minister for Transport, Tourism and Sport sought legal advice from the Attorney General. We are told the Attorney General gave unambiguous advice that the insurance compensation fund, and not the MIBI, was liable. The practical effect of this advice would be to limit the payments some claimants would receive and that the State would pay out from the insurance compensation fund directly. The Law Society stepped in and rightly challenged this decision to the High Court, which has backed its case and found the MIBI, contrary to the Attorney General's advice and the view of the Department of Finance and the Department of Transport, Tourism and Sport, is indeed responsible.

Now, as an appeal is pending and a stay is awarded, the claimants are back in the limbo they have been in for many months now. Some of these individuals are very sick and some may have shortened life expectancy, waiting for their claims to be paid. Not a penny has been paid because of this legal wrangle. What advice or reassurance can the Minister give to those

customers and what is there in the Solvency Il Directive to prevent another case similar to that of Setanta tomorrow?

The final element of this Bill is the amendment to the National Treasury Management Agency (Amendment) Act. It is clear that this amendment has only one purpose, which is to make it easier to sell AlB. This year the State received €280 million in dividends from its shares in AIB and €160 million in interest on its contingent convertible, CoCo, shares. We will receive another €160 million from these CoCo shares next year, plus the redemption capital of €1.6 billion. The Minister has stated he will not sell the ordinary shares in AIB before the election, and I welcome that. A strategic, coherent vision of how to use our banking assets is missing, however, and it seems the only vague vision is to sell back to private investors what cost the public billions of euro.

I recently received a response to a freedom of information request to the Department of Finance focusing on the Minister's meetings with the banks last month on the issue of the standard variable rates that they charge. For each of the other banks, the agenda was straightforward. The two items were standard variable rates and mortgage arrears. However, the agenda for the meeting with AIB was far more detailed and examined many issues, including lending to agriculture. There were ten- or 12-line items, compared with two-line items for all the other institutions. This is not reflective of the type of relationship the Minister likes to portray of a strictly hands-off role as owner of the bank. There is clearly a different approach from the Department of Finance with AIB when compared with Bank of Ireland, Permanent TSB and other institutions that we have either recapitalised or regulated. I welcome that, but it is important to note there is a different relationship. The Minister is clearly acting more in the role of a director or manager, which is good. AlB is a valuable State asset and it its right that democratic influence can be brought to bear on it. I hope it marks the beginning of a more realistic way of using the influence bought, at much cost to the Irish people, at that bank.

I was disappointed that the chief executive officer and chief financial officer of Bank of Ireland were unavailable to meet the Minister last month. I know he met a delegation from the bank but I hope he followed up with Mr. Boucher personally when he returned to these shores. It is clear that his bank has been the most reluctant to move in the standard variable rates issue.

With regard to AIB, it is potentially the biggest sale of a State asset encountered in this country. Many people rightly see AIB as a debt or burden and the Irish people took that on at much cost to themselves, our society and our economy. The bank has a value today and, as Deputy Michael McGrath mentioned, it is in the region of €13 billion. This is about more than the nominal value, as it has worth as the engine which can drive forward economic activity. As the Minister discussed with representatives of AIB some weeks ago, this can be through lending to the agricultural sector, small businesses in different sectors, and the elderly. We will not have such influence with the KBCs of this world or any other foreign bank where we do not have a shareholding.

There is a serious need for a real, calm and logical discussion of what can be done with one of the biggest assets that this State holds. Do we sell it to private investors so we can write down our debt? That is likely to happen with any income we receive from a portion of the sale of AIB. It was pointed out to the banking inquiry by a director of AIB, who served in a senior position at the National Treasury Management Agency, that this would be foolish because we can borrow so cheaply in the international markets; the amount of revenue we receive from AIB on an annual basis would exceed the cost of servicing that debt into the future. All of those issues must be considered, and we must see what is in the best interests of the State and its finances and what policy can be pursued to deal with all issues of lending to the productive sector and ensuring that finance is available for house building, particularly social housing, and other matters related to the banking sector.

I welcome the Minister's indication that he will not sell the AIB shares prior to the election, but we need more than that. There must be a committee structure - similar to the finance committee - that will take in experts, listen to opinions and consider all the options for the assets we now hold within our banks. That is to see what is the best use for them. Having experts within the banking sector writing a report for the Minister on a pro bonobasis is not good enough, and this process must be democratised. It must be inclusive and shared with all parties in this House, as well as Independents, who have very strong views on the matter. We must be able to examine the evidence, consider the different opinions and create a path for what to do in the next number of years with regard to assets, particularly in AIB and Bank of Ireland.

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