Dáil debates

Wednesday, 17 June 2009

10:30 am

Photo of Enda KennyEnda Kenny (Leader of the Opposition; Opposition Spokesperson on Northern Ireland; Mayo, Fine Gael)
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The Taoiseach is aware that my party has a very different view from the Government's on the proposals to deal with the banking crisis, in particular with regard to the National Asset Management Agency or NAMA. Obviously, the confusion that surrounds this is a cause of major concern, particularly when bodies like the IMF say that the difficulty for Government is in determining the extent of the valuation of assets to be acquired. This could have disastrous consequences for taxpayers and the economy generally. Will the Taoiseach clear up this confusion? Given where the Government is in its preparations for NAMA, what is the Government's assessment of the amount of discount to be applied in respect of assets to be acquired by NAMA?

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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There is no confusion whatever on the Government's part with regard to the establishment of this agency, which is a necessary response to ensure that we have sufficient liquidity in the economy for the supply of credit to businesses both large and small. This is an arduous and complex task and it is being proceeded with as a priority. The question of valuation will be part of that process when we get NAMA up and running. There are EU guidelines on the valuation of impaired assets to which we will be working, both through the ECB and the expertise that will be employed by NAMA for that purpose. That process has just begun.

Photo of Enda KennyEnda Kenny (Leader of the Opposition; Opposition Spokesperson on Northern Ireland; Mayo, Fine Gael)
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That does not answer the question. I recognise, as does the Taoiseach, the absolute importance of having a banking system that works whereby credit can flow to small businesses, which is not happening now. We have a different view as to how that should happen. Be that as it may, bank shares are now beginning to climb and the country's credit rating is continuing to decline. This is because the banks have been saying to their shareholders that the discount will be 20%. Following discussions with the banks, J.P. Morgan is saying this morning that the amount of discount will be 20%. This has massive implications for the taxpayer. The Taoiseach is aware that land valuations and many other asset valuations have declined by 60% to 80%. There are no Green Party Members here this morning that I can see-----

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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They are outside.

Photo of Enda KennyEnda Kenny (Leader of the Opposition; Opposition Spokesperson on Northern Ireland; Mayo, Fine Gael)
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-----yet the Green Party said six weeks ago that the discount would be 40%. So if the banks are telling their shareholders the discount will be 20%, the Government does not have a view on this, the Greens are saying 40% and international financial houses, after discussions with the Irish banks, are saying 20%, is this not a case of a massive transfer from the taxpayer to bank shareholders? With bank shares beginning to climb as a consequence of those discussions, the country's credit rating is going down. We all understand the importance of having a banking system that works, but it is about time the Government cleared up that element of the confusion applying here. What is the discount to be approximately? Is it 20%, 30%, 40% or 50%? I am aware that when loans were acquired in the beginning, certain equities would have been put up by those who drew down those loans and many of those are technically bankrupt. However, we do not want a situation whereby bank shares are continuing to rise while the country's credit rating is going down. This only gives credence to the belief that what is involved here is a massive bailout of banks at taxpayers' expense. Can the Taoiseach clear up that confusion? Does the Government intend to apply a discount rate of 20%, 30%, 40% or 50% to the assets to be acquired?

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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I refute Deputy Kenny's continually irresponsible approach in suggesting that what is being done on behalf of the Irish banking system is some kind of bailout of banks.

(Interruptions).

Photo of Dinny McGinleyDinny McGinley (Donegal South West, Fine Gael)
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There has been irresponsibility for the past 20 years over there.

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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This continuous mantra of a populist message is, of course, something that he feels will give him some sort of political advantage. I do not know, but the real issue here is-----

Photo of Enda KennyEnda Kenny (Leader of the Opposition; Opposition Spokesperson on Northern Ireland; Mayo, Fine Gael)
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That is a transfer from the taxpayer to the banks.

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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The whole purpose of the Government's action is to ensure there is adequate capital in our banks thus ensuring there is sufficient confidence both domestically and internationally, so that they can get access to the funds that are necessary for them to conduct business and for Irish business to conduct its business, since that is a prerequisite of any modern economy.

Photo of Enda KennyEnda Kenny (Leader of the Opposition; Opposition Spokesperson on Northern Ireland; Mayo, Fine Gael)
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We know that.

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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As regards the question of who takes the hit in the first instance, obviously it is the owners of the loans and, indeed, the banks who take the first hit.

Photo of Frank FeighanFrank Feighan (Roscommon-South Leitrim, Fine Gael)
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Small businesses are taking the hit.

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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The continual portrayal by Deputy-----

Photo of Frank FeighanFrank Feighan (Roscommon-South Leitrim, Fine Gael)
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The terms of reference are protecting builders, but are not protecting small businesses.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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Deputy Feighan has no locus standi here whatsoever. I will have to ask him to leave in a moment if he keeps it up.

Photo of Frank FeighanFrank Feighan (Roscommon-South Leitrim, Fine Gael)
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Small businesses in this country are going to the wall. The banks are telling small businesses to close up shop. The terms of reference have to be changed.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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The Deputy is not entitled to interfere.

Photo of Frank FeighanFrank Feighan (Roscommon-South Leitrim, Fine Gael)
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What is happening in this country is outrageous.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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I will have to ask the Deputy to leave if he keeps this up.

Photo of Frank FeighanFrank Feighan (Roscommon-South Leitrim, Fine Gael)
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Every business is being thrown to the wolves. The Government is not protecting the small businesses of this country.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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I will have to ask the Deputy to leave if he keeps it up. He will have to leave. If a question is asked of the Taoiseach he must be allowed to reply. This is a democratic forum.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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If he is not replying, what can you do?

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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The continual portrayal by Deputy Kenny in the past was, of course, that there was no discounting taking place and that the book value of €90 billion was the amount to be mostly undertaken by the banks.

Photo of Enda KennyEnda Kenny (Leader of the Opposition; Opposition Spokesperson on Northern Ireland; Mayo, Fine Gael)
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The Greens are saying 40%, while the banks are saying 20%.

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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After the elections, he has a totally different point of view. That concerns the level of discount, which was the point we were making all the time. The ultimate discount depends on asset quality and many other criteria, which will be decided by NAMA in the first instance, and not by anyone outside the House.

Photo of Enda KennyEnda Kenny (Leader of the Opposition; Opposition Spokesperson on Northern Ireland; Mayo, Fine Gael)
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So the Green Party is wrong and the banks are wrong.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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Has the Taoiseach seen the speech made yesterday by the Archbishop of Dublin, Dr. Diarmuid Martin? The archbishop stated it is no longer tenable to have 92% of the primary schools in the country managed by the Catholic church. He described that situation as an almost monopoly that is an historic hangover which does not reflect the realities of today's Ireland. He went on to suggest that there should be new models for the management of primary schools that would provide for parental choice and which would reflect the diversity of life in today's Ireland.

Archbishop Martin has suggested that there should be dialogue between the State and the Catholic church on this matter. He has also suggested that there should be a national forum to discuss new models for the patronage and management of schools. Does the Taoiseach agree with the archbishop's general assessment? Will he take up the suggestion made by the archbishop for dialogue between the State and the Catholic church on the patronage and management of schools? Will he agree to establish the national forum on education and on the future patronage and management of schools advocated by the archbishop?

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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I have not had the opportunity to study what Archbishop Martin had to say yesterday, although I recall him speaking on this matter before when dealing with fast developing areas in Dublin, for example. He had much to say about that, which would be broadly welcomed. I had the opportunity to meet with Church of Ireland archbishops this week on church-State dialogue, something with which I am anxious to continue. An opportunity to meet with members of the Catholic hierarchy could include some discussion on this matter as well.

I welcome Archbishop Martin's general approach and indication of his views on these matters. Dialogue can best be conducted on the basis of mutual respect. The question of the right to denominational education remains an important part of the Catholic church's view, and the view of churches in general. That was reiterated by the minority churches and the Church of Ireland archbishops who met me this week. From reports of what Archbishop Martin had to say, he spoke about this being a deliberative and gradual process, something that needs to be examined and discussed with thoroughness. Having studied what he had to say, I will take up the opportunity what he had to say and obtain the views of the Minister concerned, and see what way I can proceed with this matter in terms of church-State dialogue.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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We have had church-State dialogue for some time. The Taoiseach will recall that his predecessor put in place a process for the holding of church-State discussions and talks of a general nature. This is not the first time that Archbishop Martin has expressed these views on the patronage and management of schools. It would appear to me that he is far ahead of the Government on this issue. For example, he was able to outline in his speech yesterday the details of ownership of schools and school properties, something which the Minister of Education and Science was unable to provide in a reply to a Dáil question tabled by Deputy Quinn a few weeks ago. He has specifically suggested a mechanism for the conduct of talks about schools, and that is the idea of a national forum on education, education management and patronage. Will the Government agree to the setting up of such a forum? It would allow for discussions to take place in a reasoned way and over a period of time between the State, the churches, the various educational interests, the various bodies that are currently patrons of schools or that wish to be patrons, and which can be open to hearing the views of the different stakeholders in the education system, such as parents, teachers and so on.

The suggestion of a national education forum by the Archbishop of Dublin is very progressive. I ask the Taoiseach to agree to it and to set it up as soon as possible.

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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As I have already stated, I will study the archbishop's speech, but I have not yet had a chance to do so. I already acknowledged in my first reply many of the things that Archbishop Martin has had to say on these issues, and I welcome them. There have been developments in the governance of our school system over time which have seen a much greater degree of parental representation and involvement in school management. This has not been a static process, as perhaps has been suggested. Various State models on patronage and school management have been brought forward, depending on different circumstances.

As chief patron of Catholic schools in the Dublin Archdiocese, the archbishop's openness to consider different governance structures has been refreshing. That openness is obviously still consistent with his aims on these matters. It is only on the basis of mutually respectful dialogue that progress will be made in this area. I emphasise once again that this is a matter than can be examined under church-State dialogue, and I will soon have an opportunity to meet with members of the Catholic hierarchy. Deputy Quinn seems to have a problem with that.

Photo of Ruairi QuinnRuairi Quinn (Dublin South East, Labour)
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The Taoiseach is kicking the issue to touch.

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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I am not kicking it to touch. What I am not doing is going straight to the Deputy's position. I am ensuring that we will proceed with these matters in an appropriate way-----

Photo of Kathleen LynchKathleen Lynch (Cork North Central, Labour)
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The Taoiseach is not proceeding.

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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Excuse me. A speech was made yesterday and I have not had the opportunity yet to read it. I do not make up policy on the basis of not having read what a person has to say.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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What is the Taoiseach's policy?

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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The Taoiseach, without interruption.

Photo of Brian CowenBrian Cowen (Taoiseach; Laois-Offaly, Fianna Fail)
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I have indicated my general disposition on these matters. I have welcomed much of what has been said, and I have said that the Government will consider this matter and proceed. I am sorry if we do not make it up on the hoof overnight.