Dáil debates
Wednesday, 29 September 2010
Leaders' Questions
2:30 pm
Enda Kenny (Mayo, Fine Gael)
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Two years ago, the Taoiseach and the Minister for Finance met in Government Buildings and colluded with bankers to introduce a policy for a bank bailout that has proven to be the most catastrophic act in the history of the State. We now have 455,000 on the live register, a deficit of €20 billion, €3 billion or more in cut backs in the budget in a few weeks, a national debt of €87 billion, over 200,000 people losing their jobs in two years, with 2,500 people who face being cut off from their electricity supply. Once again emigrants are heading for foreign shores and there are 200,000 people in negative equity, many of whom have lost their jobs in the last two years. There is no clarity from Government about how this will be sorted out. There is despair, confusion and fear as a result of the uncertainty surrounding Government action.
The Taoiseach is aware the Governor of the Central Bank said that, even with hindsight, the policy adopted by the Government was wrong. The Taoiseach has said on more than one occasion that he accepts responsibility for all his actions in politics. In view of the fact that the policy he has followed has crushed the spirit of many of the people, on this first day back in the Dáil, is he prepared to apologise to the Irish people for his actions, actions that have placed an unprecedented economic burden on their shoulders and those of the next generation?
Brian Cowen (Laois-Offaly, Fianna Fail)
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The guiding principles the Government has always adopted in all interventions, from the State guarantee onwards, have been to provide a financial system that will service industry, business and households and that will safeguard the lifeblood of the economy. It is unfortunate that Deputy Kenny continues to portray the motivation of the Government as being anything than that.
The Deputy then goes on to misrepresent the report issued by the Governor of the Central Bank on the necessity for the guarantee, a guarantee that was supported by his party at the time. Our banking system was on the——
Séamus Kirk (Louth, Ceann Comhairle)
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The Taoiseach without interruption please.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The Governor of the Central Bank said in a report on the banking crisis that an extensive guarantee needed to be put in place otherwise our banks would have run out of money within a matter of days and would have had to close their doors. He went on to paint the appalling consequences of not supporting the banking system. He said the closure of all or a large part of the banking system would have entailed a catastrophic, immediate and sustained economy-wide disruption involving very significant, albeit extremely difficult to quantify, social costs, reflecting in particular the fundamental function of the payments system in a modern economy. These costs would have been broadly based in terms of income, employment and the destruction of the value of economic assets, and would have been on top of the recessionary downturn which had actually occurred.
Let us stop peddling the myth that the guarantee was a misguided intervention. It was supported, as I said, by the vast majority of this House, including the Deputy's party, and it is thanks to that decision that we have a banking system today. We are in the process of restructuring that banking system and I believe that to continually portray that decision as anything other than being motivated by what was in the national interest — in fact it was confirmed by the Governor as being necessary regardless of what people might think of the situation — is not correct as it was a necessary decision which we now have to continue to deal with.
Bernard Durkan (Kildare North, Fine Gael)
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It was a bottomless pit.
Séamus Kirk (Louth, Ceann Comhairle)
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Deputy Kenny may ask a supplementary question.
Enda Kenny (Mayo, Fine Gael)
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It is another example of a member of Fianna Fáil never apologising. When the Minister for Finance rang me on the morning of the fateful decision he asked me what Fine Gael's view would be on supporting the banking system. I said the party will always support a banking system because it is the lifeblood of our economy. I would like to know the conditions.
The Taoiseach knew in advance, from Merrill Lynch whom he paid dearly and the former Secretary General of the Department of Finance, that in certain circumstances Anglo Irish Bank was insolvent, yet he went ahead and made the decision to have a blanket guarantee. The Taoiseach misled the public because he knew, as did the Minister for Finance, the real truth of the matter. I do not know whether we will get that in the banking inquiry which will take place.
On 16 January 2009, in reference to Anglo Irish Bank, the Taoiseach said it was in good stead and was solvent. We were told by the Minister for Finance that this would be the cheapest bank rescue plan in the world. We were told that the Irish taxpayer would not be exposed. We were then told it would cost €2 billion, €4 billion, €10 billion, €16 billion, €24 billion and now it is a higher figure. Does the Taoiseach not understand that on the streets and in the homes of this country what the Taoiseach has done, with his Government, has crushed the spirit of the people despite their willingness to work and create initiative? The Government has crushed their spirit because it has no plan or clear agenda and it does not know where it is headed.
In light of what has happened and what is about to happen, can I take from the Taoiseach that in respect of Anglo Irish Bank, whose unfinished building stands as an iconic failure to a cancer in Irish economics on the docks, the figure he will announce tomorrow on behalf of the Government will be the last time that he will come before this House to look for Irish taxpayers' money to get it and other banks off the backs of the Irish taxpayers? Can the Taoiseach tell them this will be the last time he will come here looking for their money to bail them out?
He started with a policy of no cost to the Irish taxpayer and has ended up with an unknown quantity of possibly €30 billion or higher.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Again I have to say to Deputy Kenny that unfortunately he does not have any policy on this matter at all. He has said recently that Anglo Irish Bank should have——
Séamus Kirk (Louth, Ceann Comhairle)
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The Taoiseach without interruption please.
Brian Cowen (Laois-Offaly, Fianna Fail)
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There have been certain assertions made by Deputy Kenny with which I disagree.
Bernard Durkan (Kildare North, Fine Gael)
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What about your position?
Enda Kenny (Mayo, Fine Gael)
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It was in good stead and solvent.
Brian Cowen (Laois-Offaly, Fianna Fail)
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First of all I stand over the decision the Government made on the State guarantee. I believe it was the right decision and there is objective evidence in reports since which confirm it was the right decision. The Deputy's position in recent times has been that——-
Bernard Durkan (Kildare North, Fine Gael)
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What about your position?
Séamus Kirk (Louth, Ceann Comhairle)
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Deputy Durkan please. The Taoiseach is in possession.
Brian Cowen (Laois-Offaly, Fianna Fail)
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A suggestion has been made as part of the posturing that it should have been allowed to fail and I want to go back to what Professor Honohan's report says on that. It says the systemic importance of Anglo Irish Bank at that time cannot be seriously disputed. He goes on to argue that the interconnectedness of Anglo Irish Bank vis-À-vis the Irish banking system meant that: "A disorderly failure of Anglo would have had a devastating effect on the remainder of the Irish banks". Those are the objective facts as decided upon by Professor Honohan in regard to that matter. The Financial Regulator, who is the person with the statutory authority and duty in this matter, will come forward with a figure which he, to the best of his ability, has been able to gauge at this point, as to what the overall position will be in regard to that particular bank. It will be reported on that basis.
Bernard Durkan (Kildare North, Fine Gael)
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What is the sum total?
4:00 pm
Eamon Gilmore (Dún Laoghaire, Labour)
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Deputy Kenny has quite rightly described the decision to give the blanket guarantee to the banks two years ago today as the worst decision that was ever made. It was, of course, a decision to write a blank cheque for the banks and later today the Government will come into the House and ask us to extend that guarantee and, in effect, write another blank cheque. The problem is that we do not yet know what was the size of the blank cheque that was written the last time.
The Taoiseach told us on the day of the guarantee exactly two years ago that it was not going to cost the taxpayers anything. Within three months the Minister for Finance was telling us that €1.5 billion had to be found for Anglo Irish Bank. On 15 January 2009 he announced the nationalisation of Anglo Irish Bank. On 29 May 2009 he announced a further €2.5 billion for Anglo Irish Bank. On 30 March 2010 another €8.3 billion was allocated for Anglo Irish Bank. There was another €10 billion after that. By 10 August this year the total figure had reached €24 billion for Anglo Irish Bank. On 8 September he told us that he did not know the final figure yet but that we would eventually be told it in September or October by the Financial Regulator. I understand that we are to be told that figure tomorrow, the day after this House is asked to extend the guarantee. We are being asked to write another blank cheque this evening and tomorrow we will find out the details of the last blank cheque which will be filled in.
I have two questions for the Taoiseach. Does he know the final figure for Anglo Irish Bank which will be announced tomorrow? If he does know it, will he tell us now what it is?
Brian Cowen (Laois-Offaly, Fianna Fail)
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That figure is not yet available to us from the Financial Regulator. It is being conducted at the moment and work is being finalised on it. As soon as the figure is communicated to us it will be provided.
On the question of the guarantee raised by Deputy Gilmore, the Labour Party alone in this House voted against the guarantee. It has since sought to rewrite history to suggest that it merely objected to the extent of the guarantee. The truth is it opposed the guarantee in principle tooth and nail. Had it been in government the vista painted by the Governor of the Central Bank would now be our reality. What is being portrayed by both Deputy Kenny and Deputy Gilmore in their questions, which suggests that this is the worst decision ever made, is not borne out by the report from the Governor of the Central Bank in whom I presume they repose confidence——
Séamus Kirk (Louth, Ceann Comhairle)
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The Taoiseach, without interruption please.
Brian Cowen (Laois-Offaly, Fianna Fail)
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——and on whose recommendation we are extending the guarantee to the end of December. If it is a question that the parties opposite do not accept the recommendation or have confidence in the Governor of the Central Bank they should say so——
Brian Cowen (Laois-Offaly, Fianna Fail)
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——because that is the basis upon which it is being extended here.
Bernard Durkan (Kildare North, Fine Gael)
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The Taoiseach has to make that decision.
Eamon Gilmore (Dún Laoghaire, Labour)
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It is extraordinary that the Taoiseach tells us that he does not know the figure that will be announced tomorrow and that it has not been finalised yet. Is that the way the financial affairs of the country are being run? Is the Taoiseach seriously telling us that the Government has made a decision to come in here and ask for another extension on the guarantee without knowing where we are in terms of the cost of the last one and, in particular, where we are in regard to the Anglo Irish Bank figure? A columnist in one of the newspapers this morning said that the first thing one does in a crisis is face up to the reality.
Noel Dempsey (Meath West, Fianna Fail)
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It would be a change for the Deputy to face up to the reality.
Eamon Gilmore (Dún Laoghaire, Labour)
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One of the problems we have as a country is that this incremental additional cost for Anglo Irish Bank, the drip-feed of information and the message that the Government does not know. Is the message going out to the markets that the head of the Government does not know the bottom line for Anglo Irish Bank and does not yet know a figure that will be announced tomorrow? In that situation he will be in here at 11.55 p.m., before the guarantee expires, to ask for an extension without knowing one of the most critical pieces of information that the taxpayer, the public and, I would have thought, the Taoiseach needed to know before he decided to come in here and put a proposal to the Dáil that it be extended. That is not credible.
We have an economic difficulty in terms of the perception of this country internationally, the lack of confidence that, unfortunately, this country has been experiencing in recent times and the way in which that is reflected in terms of the cost——
Eamon Gilmore (Dún Laoghaire, Labour)
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——of borrowing for the country, and the Taoiseach is adding to it by communicating the message that he does not know. That is not credible.
Noel Dempsey (Meath West, Fianna Fail)
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Some of it caused by the Deputy's irresponsible comments.
Brian Cowen (Laois-Offaly, Fianna Fail)
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No. I am not adding to the uncertainty. It is for the purposes of bringing certainty to the situation that we said that by the end of this month we would have a figure from the Financial Regulator. The Financial Regulator acts independently of me, as does the Central Bank. It is not a question of a nod and a wink to the Taoiseach of the day. It is a question of awaiting the considered judgment of the Financial Regulator and the Central Bank, which we will have imminently.
To come back to the point, the reason we are seeking to do this is to provide greater certainty for ourselves and for markets which may factor that into their equation in terms of supporting us on sovereign debt markets. That is what we are doing, and we are seeking to achieve that in an independent way through the Financial Regulator who, I presume everybody will accept, has a credibility built up in this area and is the best possible position we could put at this point.
To take the Standard & Poor's position, it was suggesting the figure would be up to €35 billion. I am not saying it is €35 billion but I do not know. That has not been communicated by the Financial Regulator yet but suppose it was——
Joan Burton (Dublin West, Labour)
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What did the Taoiseach discuss in Government?
Brian Cowen (Laois-Offaly, Fianna Fail)
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——€30 billion, for the purpose of a discussion because the people are entitled to know——
Joan Burton (Dublin West, Labour)
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What did the Government talk about?
Brian Cowen (Laois-Offaly, Fianna Fail)
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Is the Deputy going to interrupt me now when I seek to answer the question?
Joan Burton (Dublin West, Labour)
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What did the Government talk about?
Brian Cowen (Laois-Offaly, Fianna Fail)
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Is it that I am supposed to sit down after the Deputy's leader said we are just to leave it at that?
Brian Cowen (Laois-Offaly, Fianna Fail)
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Thank you. The Deputy should show a bit of respect for the office.
Séamus Kirk (Louth, Ceann Comhairle)
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Deputies, the Taoiseach is in possession.
Brian Cowen (Laois-Offaly, Fianna Fail)
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If it were of the order of €30 billion, for example——
Seán Barrett (Dún Laoghaire, Fine Gael)
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Did they give the Taoiseach an idea?
Séamus Kirk (Louth, Ceann Comhairle)
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Could we allow the Taoiseach speak without interruption?
Brian Cowen (Laois-Offaly, Fianna Fail)
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Are we going to have a serious discussion or not? If it was of that order, the interest that would arise, taking the average this year and last year of 5%, would mean a payment of €1.5 billion every year. The figure of €30 billion would be added to the national debt and as the Deputy is aware, the question of paying interest on the national debt and then paring down the national debt arises in regard to growth that comes into the economy over time, as happened in the past ten years during good times, when we saw our national debt-GDP ratio go down from €60 billion to €28 billion even though the volume payment of debt was around the same figure. Our economy grew, therefore, and out of that we were able to reduce the percentage of our debt as a percentage of our GNP.
If we look at the bank position and the reason the Governor would be suggesting this is a manageable situation, and I agree with him, it is on the basis of a €1.5 billion payment to be made annually. Our current deficit, in terms of spending and revenue, is €18.5 billion.
In the first instance we have to look at improving our public finances over a period that will deal with the current deficit of approximately €18.5 billion but in respect of explaining to the public the impact this has in terms of taxpayers' exposure and what it would cost, if it were a figure of €30 billion it would involve something in the region of €1.5 billion per annum.
Seán Barrett (Dún Laoghaire, Fine Gael)
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We do not have the revenue from stamp duty. That is gone.