Dáil debates
Tuesday, 27 January 2009
Leaders' Questions
3:00 pm
Enda Kenny (Mayo, Fine Gael)
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It is 40 days since the House last met. In that time the Government and the Taoiseach have wandered through an economic desert bereft of ideas, decisions, direction and, dare I say it, the courage to govern. In that period we were told that it was necessary to cut €2 billion from public spending. The Government went on holidays, sent papers to, and held meetings with, the social partners and borrowed €55 million a day to keep the nation going. The Government's indecision has damaged our international standing and made us the butt of international jokes while the cost of money spirals to a dangerous level; people are frightened out of their wits at the loss of, and inability to protect, jobs, and because the Government is offering neither leadership nor direction on its plan, strategy or the decisions it intends to take to move the economy forward with the confidence and trust to which people can respond.
The time for talk is over and it is time for decisions. When does the Taoiseach intend to announce his decisions on public finances, job protection, and restoring the confidence and trust that will give people some semblance of a direction to follow and a structure to discuss?
Brian Cowen (Laois-Offaly, Fianna Fail)
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I reject the Deputy's contentions. The Government does have direction and has taken decisions as a result of the end of year Exchequer returns which saw a deterioration in the public finances beyond those provided for in the budget. The Government decided to submit a five year stabilisation plan to the European Commission which requires savings of €2 billion this year, €4 billion for the following two years, €3.5 billion the year after that and €3 billion in year five, until 2013. It has made a commitment to the Commission to reduce the general Government deficit to less than 3% as required under the Stability and Growth Pact at that time.
I undertook before Christmas to use January to work with social partners to ensure that people fully understand the scale of the problem, that this will require a national effort, that people must buy into the requirements of the situation to meet the real political, economic and social challenges facing the country. That is being finalised this week and weekend. I said I would do that because I believe it is the way forward. It involves providing leadership, to ensure that we are all committed to achieving those savings of €2 billion. The Government has been working to identify these savings. Unlike the Deputy, we have stated clearly that all areas of expenditure must come into play in achieving those savings of €2 billion and that the ability to identify in terms of pay or pay-related, pension and non-pay issues is the best means by which we can minimise the impact on those who require services which is funded by the non-pay side of the budget. Those are the types of approach we have made and discussions we have held. The discussions continue and progress is being made. We will know by the end of the week whether we can come to an agreement on a framework for a pact that will bring stabilisation, that will be based on social solidarity, and that will allow us to take the opportunity for reform that this recession provides for us.
As Taoiseach, I am acutely aware that people are losing their jobs and that more will lose jobs. I am acutely aware of the fact that this open economy is not immune from the international developments which have taken place. I am acutely aware of the Government's responsibility to bring forward a macro-economic plan on our public finances that meets with our obligations as members of the eurozone, and to bring forward at the same time micro-initiatives on all the issues the Deputy mentioned to deal with the savings of €2 billion that must be identified. We are prepared to do this. We are actively engaged in it and we are finalising it at the moment.
The proposals put forward by the Deputy and his party during the Dáil recess would be totally inadequate and would go in the opposite direction. The proposals put forward, such as a freeze in the increments for public pay and a contribution made by those earning over €100,000, would bring forward a maximum of about €330 million if it was provided for in full. He also spoke about the need to increase capital spending by €1 billion, all of which would make us worse off by €700 million.
We are going in the other direction. We are looking at all areas of current and capital expenditure. We have identified the €20 billion that is needed for pay and pension costs, the €20 billion in social welfare and social security costs, and the €15 billion in non-pay costs on the current side. We are identifying all areas of expenditure and engaging with the social partners in order to solve this problem and provide the €2 billion in savings in a way that will minimise its impact on ordinary working people and those people who require the delivery of State services.
Enda Kenny (Mayo, Fine Gael)
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The Taoiseach tempts me to get involved in the narrow confines of party politics. He is the person who brought in the budget last October that attacked the vulnerable, the voiceless and the defenceless. He is the person who put thousands of the elderly on the streets when he tried to take away their medical cards. He is the person who attempted to take away the allowance for intellectually challenged young people at home. He is the person whose Minister for Social and Family Affairs stated recently that the carer's allowance should be halved.
Mary HanafinEnda Kenny (Mayo, Fine Gael)
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He is the person whose Government has attacked the vulnerable and the defenceless time and again. When I proposed six years ago that if the Government was going to pay for benchmarking, the very least it should do is look at the possibilities of public service reform and the cost of that. Benchmarking is now costing €2 billion per annum. I was here in the 1980s when tax rates were 60%, interest rates were 20% and inflation was 16%, and all Fianna Fáil did from these benches was scoff and not give any credit or assistance in the national interest to the Government of the day.
Noel Dempsey (Meath West, Fianna Fail)
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That was the end of the Fine Gael Party and Labour Party coalition.
Enda Kenny (Mayo, Fine Gael)
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We were the first party to put forward the view that it was necessary to freeze the national pay deal. We put forward the view that there should be a recapitalisation programme for the banks. If the Taoiseach is interested in constructive suggestions, then I will give him some. His members have been talking out of the side of their mouths about national consensus and a national Government. We have an interest in the way this country moves. We have an interest in protecting the country and in seeing that confidence is restored to our economy. I have some suggestions that do not represent all the answers to the Government's problems, but if the Taoiseach is looking for consensus, will he support a reversal of the outrageous VAT increase that has cost jobs all over the country and led to an outflow to Northern Ireland? Is he prepared to abolish PRSI for employers who take on new employees in 2009? Is he prepared to give a tax exemption for companies that involve themselves in research and new product development? Is he prepared to freeze Government charges and rates, so that some confidence will be restored to small businesses and small enterprises?
I do not make these suggestions purely from a partisan party point of view, but as constructive suggestions in the interest of retaining and creating jobs. If the Taoiseach wants consensus and support, I have just given him four suggestions today. I will return to the banks at another time. These suggestions would help the Government to put some semblance of economic sanity to the floundering it has been at for the last six weeks.
Brian Cowen (Laois-Offaly, Fianna Fail)
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On the one hand, the Deputy asks me whether I will take on his suggestions, and I will take any constructive suggestions because this is a national effort. However, I will not take the criticism that the Government is floundering around what it wants to do. The Government is determined——
Michael Creed (Cork North West, Fine Gael)
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Where is the effort?
Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy can make his remarks and snigger later. The Government is determined to pull everyone behind this national effort. It will not be done without engaging with those who have a stake in this society. I remind people that when we faced a difficult situation in 1987, we pulled together even though not everyone agreed that was the approach. I believe in this approach.
Michael Creed (Cork North West, Fine Gael)
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Can the Taoiseach tell us what the approach is?
Brian Cowen (Laois-Offaly, Fianna Fail)
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I will answer the question put by the Deputy's leader. When he becomes leader, he can ask the questions. I believe in this approach as a problem solving approach. The first and immediate objective, as set out by the Government, in terms of its obligations internally and in terms of maximising internal confidence, bringing internal confidence to our own country and ensuring that there is external confidence in how we run our affairs——
Brendan HowlinBrian Cowen (Laois-Offaly, Fianna Fail)
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——is to bring forward savings of €2 billion in the immediate term. We will do that. We will do it on the basis of the social partnership approach in which we are engaged. We will use the course of this month to achieve that common approach. I believe that progress is being made. I cannot say tonight that we have agreement on those issues, but I believe that the process of engagement is the best method by which we can bring the country behind us to face up to the real situation out there at the moment.
In making that case, it is often portrayed as an attempt by the Government to abdicate its responsibility. That is far from the case. It is the Government's responsibility, in the interests of a successful implementation of such a consolidation programme, to have people behind us and to speak to those people who represent legitimate stakeholders in society, such as employers, employees, trade unions, farmers and the voluntary pillar——-
Brian Cowen (Laois-Offaly, Fianna Fail)
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We tell them first of all that the Government will discharge its responsibility and will do so in as inclusive a way as is possible for us to do so.
Paul Kehoe (Wexford, Fine Gael)
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Why does the Taoiseach not do that in here?
Brian Cowen (Laois-Offaly, Fianna Fail)
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I make no apologies to anyone for doing that. When the Government makes its decisions in the coming days, we will report to this House the decisions we have taken. We can debate them here if we so wish. I have no problem with democratic accountability, but as long as I am running this Government, I will run it as I see fit and as I believe, based on my philosophy.
Tom Sheahan (Kerry South, Fine Gael)
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The Taoiseach's philosophy got us where we are now.
Brian Cowen (Laois-Offaly, Fianna Fail)
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If Deputy Kenny has another way of suggesting how to run the country, that is a matter for him and I respect him for it. However, I will run the country on the basis of how I see it.
Paul Kehoe (Wexford, Fine Gael)
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The Taoiseach should put a motion before the House.
Tom Sheahan (Kerry South, Fine Gael)
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The Taoiseach's philosophy has got us where we are.
Brian Cowen (Laois-Offaly, Fianna Fail)
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This is a huge challenge facing the country. We will discharge our responsibilities and we are going about that in the right way. As we proceed with these measures, we will gain and maximise the support for the actions that we must take.
Paul Kehoe (Wexford, Fine Gael)
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The Taoiseach should put a motion before the House tomorrow, and we can debate it.
Thomas Byrne (Meath East, Fianna Fail)
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The Deputy should stop lecturing us all. People are losing their jobs.
John O'Donoghue (Kerry South, Ceann Comhairle)
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I call on Deputy Gilmore, without interruption.
Eamon Gilmore (Dún Laoghaire, Labour)
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I remind the Taoiseach that the elected representatives of all the people are in this House, and that the Taoiseach is not free to run the Government as he sees fit. He is free to run the Government in accordance with the authority he derives from this House, as long as he is accountable and responds to this House for his actions.
Eamon Gilmore (Dún Laoghaire, Labour)
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Can I ask him specifically about job losses, which represent the most important aspect of this country's economic problems? I will list some of the big job losses that have been announced since 1 January last — 1,900 at Dell; 290 at Dublin Bus; 300 at Kostal; 120 at Amann; 400 at Superquinn; 320 at Bus Éireann; 180 at Cigna; 145 at Britvic; 220 at Galmoy Mines; 750 at Ulster Bank and First Active; and 1,000 in local authorities. Many more people have lost their jobs in shops, restaurants, architects' practices, solicitors' practices and building sites.
Some 154,000 people were on the live register 18 months ago, on the day of the 2007 general election. That number has doubled since then and is predicted by some commentators to increase to 420,000 by the end of this year. Can the Taoiseach give the House details of the total cost to the Exchequer, taking social welfare payments, secondary benefits and lost tax revenue into account, of the addition to the live register of 120,000 people over the past year? Similarly, can he give the House an estimate of the additional cost to the Exchequer of an increase in unemployment to 420,000 by the end of this year?
Brian Cowen (Laois-Offaly, Fianna Fail)
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I assure the Deputy, in response to his introductory remarks, that I am not suggesting I run this House other than by the authority of the Dáil. When I was arguing my case in response to Deputy Kenny, I made the point that I have a responsibility to do this job as I believe it should be done, for as long as I hold it. That is a prerequisite for, and the prerogative of, anybody who holds this position. It was in that sense, and in no other sense, that I said what I had to say. I am as committed a democrat as anyone else. I am a part of the democratic life of this country, just like anyone else. I have had the privilege and honour of representing my constituency for many years as a result. We do not part the waves on that particular point.
I will have to get more details before I can respond fully to Deputy Gilmore. However, I can tell him that it is estimated that for every 100,000 people who are unemployed, revenues of approximately €1 billion need to be devoted to the social welfare Vote alone.
Dinny McGinley (Donegal South West, Fine Gael)
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Will there be another budget?
Dinny McGinley (Donegal South West, Fine Gael)
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It is a fair question.
John O'Donoghue (Kerry South, Ceann Comhairle)
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It is not a fair question to ask during Leaders' Questions.
Noel Dempsey (Meath West, Fianna Fail)
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Fine Gael has another leader.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The task we face is made more difficult by the fact that social costs are increasing and revenues are decreasing. It is clear that if we are to bridge the gap, or reduce the deficit that has grown, expenditure savings and taxation changes will be required in the years ahead. We will need to strike a balance to protect as many jobs as possible, while putting in place the basis on which services can be provided in the future. A combination of measures will be required over the medium and long terms. The report of the Commission on Taxation, which will be published later this year, represents a timely opportunity to undertake a systemic review of all aspects of our taxation system in the context of the new challenges we face, such as the fact that we will not be returning to the large rates of economic growth we saw in the past.
Like the rest of the western and developed world, Ireland needs to adapt to the profound changes that are occurring in the context of the current financial and economic crisis and the global recession in which we are all enveloped. Choices will have to be made by the Government as we proceed. If we are to meet the clear challenge of upholding the principle of social solidarity, as I believe we should seek to do, the burden of adjustment will have to be equitably borne by everybody. That means those who have a greater capacity to carry that burden will have to do so. A political judgment will have to be made, one that is not perfect and will never meet with unanimity. Given the fluid situation we are in, the scale of the challenge is such that we cannot suggest with any certainty that any constituency or cohort of people can be immune from the impact of the adjustment that has to be made. However, we will work on the basis of trying to stabilise the public finances and provide social solidarity. We will use this opportunity to try to reform a range of areas. It is clear that the status quo does not represent a model for maintaining the level of services our people are entitled to expect, even in these difficult times.
We will bring certain proposals to the people in the aftermath of the current discussions, which I hope will prove successful. It is properly the right of this House to debate these issues on an ongoing basis. It is important — week in, week out; month, in month out; and year in, year out — to engage in an ongoing effort to ensure that the steps back we have to take now do not involve more than a temporary adjustment. When the economic recession ends and there is an upturn in the global economy, we will need to be able to play to our strengths. We will have to work on short-term initiatives while dealing with the long-term structural problems we face. Our tax base decreased by 15% in the last financial year and it may decrease further this year.
We need to be proactive in helping the newly unemployed to focus on getting back into employment as soon as possible. It is planned to increase the number of places provided each year under the jobsearch and employment support services from 78,000 to 147,000. It is also planned to increase the number of places in FÁS short training courses for the newly unemployed from 27,000 to 78,000. A further 400 subsidised jobs will be offered to redundant apprentices. FÁS has established a training fund to respond speedily to the retraining needs of low-skilled workers and redundant craft workers.
Enterprise Ireland needs to continue to assist start-up companies and identify growth areas in markets where problems are being encountered at present. Not only do we have to contend with the global downturn and the financial crisis that is enveloping the developed world, but we also have to deal with problems on the currency side, such as the depreciation of over 30% in the value of sterling compared to the euro over recent months, which is placing a great burden on our exporting community, including many companies in the indigenous sector.
Michael Creed (Cork North West, Fine Gael)
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What is the Taoiseach doing about these problems?
Brian Cowen (Laois-Offaly, Fianna Fail)
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I refer, for example, to companies in labour-intensive sectors such as the food sector. If we had to contend with just one of these serious challenges, that would be enough difficulty for us, but we must deal with many challenges contemporaneously, and we must deal with them.
Jim O'Keeffe (Cork South West, Fine Gael)
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What is the Government doing about the main problem, which is the legacy of the last ten years?
Brian Cowen (Laois-Offaly, Fianna Fail)
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I have set out the facts we face and the size of the challenge we must confront. We will deal with the problems we face by working together as part of a national effort to confront them.
Eamon Gilmore (Dún Laoghaire, Labour)
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That was an amazing reply. We have been told that the Taoiseach and the Government have been preoccupied over recent weeks with the state of the public finances. We have heard about all kinds of meetings, such as day-long and two-day Cabinet meetings, at which the state of the public finances has been considered. I asked the Taoiseach two simple questions, but he was unable to reply to either of them. The Government is examining the public finances at a time when the biggest economic problem we face is the loss of jobs. In such economic circumstances, I am utterly astonished that the Taoiseach — the Head of Government — did not give the House a ballpark figure for the total cost to the Exchequer of rising unemployment.
John CurranNoel Dempsey (Meath West, Fianna Fail)
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The Deputy was not listening.
Eamon Gilmore (Dún Laoghaire, Labour)
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He did. He gave me a figure that was drawn up on the back of an envelope.
Micheál Martin (Cork South Central, Fianna Fail)
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It is the same thing.
Willie O'Dea (Limerick East, Fianna Fail)
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It was a ballpark figure.
Jim O'Keeffe (Cork South West, Fine Gael)
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He got the Minister, Deputy Smith, to help him.
Eamon Gilmore (Dún Laoghaire, Labour)
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We will follow it. I heard the Taoiseach say that for every 100,000 people who are unemployed, social welfare payments of approximately €1 billion need to be made. That figure increases to €1.2 billion when one considers that 120,000 people have lost their jobs under this Administration so far. When one factors in secondary benefits and the loss of tax revenue, it seems we are talking about a ballpark figure of between €2 billion and €2.5 billion. That figure will double if an additional 120,000 people lose their jobs over the course of the next year. That big gap is causing the problem in the public finances. That is where moneys are being lost. When people lose their jobs, problems arise in the public finances. The Taoiseach has not been able to tell the House with any accuracy what the extent of that problem is, or what are the future projections in respect of it. He has not said anything about putting people back to work. The Taoiseach has spoken in general terms, in response to Deputy Kenny, about a macro-economic plan, micro initiatives and a national effort. However, we have seen none of this. A debate on the economy will begin in the House tomorrow morning but the Government has produced no plan, no strategy and no proposals. The Taoiseach told us his big idea was to have discussions with the social partners. I am all in favour of this and have been suggesting since last October that such discussions take place. The Taoiseach convened a meeting of the social partners last Friday. No Minister attended that meeting and the Taoiseach had no proposals for the social partners. Apparently, the Taoiseach has today given them some type of framework document which contains no specifics.
The public understands that we are in an economic crisis, that many people are losing their jobs and that measures must be taken to address the problem. The difficulty we have is that the Taoiseach, as Head of Government, even after a six-week break to enable him to do it——
Eamon Gilmore (Dún Laoghaire, Labour)
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——has still not brought forward the proposals and cannot even give the House basic information as to the cost of job losses and unemployment in the economy.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I can. The purpose of Deputy Gilmore's statement is to rubbish the efforts of the Government——
Brian Cowen (Laois-Offaly, Fianna Fail)
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——to provide, first, a stable framework on which to deal with and proceed with this issue.
Eamon Gilmore (Dún Laoghaire, Labour)
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I cannot rubbish something I have not seen.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Exactly. Deputy Gilmore has rubbished the proposal without seeing it.
Eamon Gilmore (Dún Laoghaire, Labour)
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No, I have rubbished the Government for not producing it.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The point is that we brought forward, before Christmas, a framework for economic renewal which sets out many action points in a range of areas in terms of the provision of jobs and investment opportunities, continued research and development and so on, namely, the strengths we have built up over the years and which should not be dismissed, even in the context of a recession. We have set out those action points and they will be acted upon in the coming weeks and months as we implement our policies.
However, in order to be successful in implementing any plan, we must bring some stability to the public finance position. We have set out a plan that will bring about an adjustment of some €16.5 billion between taxation measures and expenditure cuts in the next five years.
Eamon Gilmore (Dún Laoghaire, Labour)
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The Government has not done so.
Brian Cowen (Laois-Offaly, Fianna Fail)
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We have set out that plan and have forwarded it to the European Commission. We are beginning step one in regard to 2009 by finalising our arrangements during the coming week and bringing to the House those savings of €2 billion. That is what we intend to do. Thereafter, we will work with the social partners on an ongoing basis on the basis of an agreed framework for action as to how we deal with the problems that will arise as the recession perhaps continues, prolongs and deepens. That is what we have to do and what we are doing. To suggest we are not doing that is not to acknowledge the facts as they are.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The evidence is that the framework for economic renewal sets out our economic policy priorities, which were provided before Christmas. We said then that if we are to achieve those objectives we must restore order to our public finances. We begin on that road this week. We are involving the social partners during the course of this month in order to achieve broad agreement on the approach we intend to take. We are looking at all areas of expenditure in a way in which the Opposition was not prepared to do——
Brian Cowen (Laois-Offaly, Fianna Fail)
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——so that we can minimise the impact on ordinary people as we proceed with this adjustment.
Noel Dempsey (Meath West, Fianna Fail)
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Opposition Members are speaking out of both sides of their mouths.