Dáil debates
Tuesday, 24 May 2011
Leaders' Questions.
3:00 pm
Micheál Martin (Cork South Central, Fianna Fail)
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It is now two weeks since the Taoiseach promised, in the House, to make available all background material concerning the €1.8 billion pension levy. Unlike practice for the last decade, the Minister for Finance announced a major revenue proposal without publishing any background papers. I challenged the Taoiseach on this and he said he would have no difficulty in providing any information. I immediately wrote to him seeking this information but none has been supplied to me.
This matters because this week the House will vote on this levy. Almost every day a new piece of information is emerging on its potential impact. At the weekend a report was published stating it could have a severe impact on defined benefit schemes. Last week the International Monetary Fund expressed its concerns about unintended consequences. There is huge concern, therefore, about the impact of the pension levy. The people have a right to examine the information on which the Government relied when it made this decision and decided to introduce the levy. The programme for Government committed to providing more information before budget votes, but, in fact, the Government is providing less. Will the Taoiseach tell us in a straightforward way whether the Government carried out a full assessment of the likely impact of the levy and whether it has considered the analysis which suggests it will reduce pensions provision by far more than the €1.8 billion suggested?
Enda Kenny (Mayo, Fine Gael)
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The pensions industry proposed that a pension levy of 0.5% should be introduced as against a reduction in tax relief. The Government decided on a levy of 0.6% on the pensions industry which forms a major part of the jobs initiative announced within the constraints of the IMF-EU deal to stimulate a measure of confidence and growth in the indigenous economy. I am not sure what information the Deputy is seeking or whether he has a list of specific questions he wants answered in respect of elements of the pensions industry. I will try to supply the detailed information if he sends me a list of questions.
Budget 2011 increased the annual notional distribution from 3% to 5%, which means that in respect of, for example, approved retirement funds, ARFs, where a pensioner takes nothing from an ARF, he or she ends up paying income tax and the universal social charge on 5% of the capital value. This means that at least €2,400 must be paid in tax on a sum of €100,000 in an ARF. By comparison, the levy being applied to private pension funds is only 0.6% and is a temporary change, unlike the position on ARFs, as the Minister for Finance made perfectly clear in his announcement on the jobs initiative.
The pensions industry has projected forward that in the full lifetime of a pension fund there would be an impact in respect of a levy such as this. However, this levy will be in place for a four year period, is temporary in nature and being used following an initiative taken by the pensions industry in order that, instead of reducing tax relief, a charge or levy will be applied in this way. Obviously, as Deputy Shane Ross pointed out, there are charges in the management of the pension funds that could be reduced as a consequence of the introduction of the levy, which would have a significant impact. I have undertaken, arising from Deputy Ross' question two weeks ago, to have the Minister for Finance follow up on his constructive comments.
Micheál Martin (Cork South Central, Fianna Fail)
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The Taoiseach did not answer the question I asked. I am seeking information on the advice the Minister received, including internally in the Department of Finance, as well as from the Pensions Board and a variety of other sources, normally supplied in making a major decision of this kind. All of the background material provided in the consideration of the issue leading up to the decision should be published.
Pat Rabbitte (Dublin South West, Labour)
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The background is the bank guarantee.
Micheál Martin (Cork South Central, Fianna Fail)
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The net effect of the jobs stimulus will be, as the Taoiseach knows, the deflation of the economy by approximately €200 million, the difference between the revenue that will be raised by the levy and the smaller amount provided in tax reductions. Unless the Government publishes the full details of the cost-benefit analysis carried out before the announcement of the jobs initiative, serious questions will be asked about its impact.
Jerry Buttimer (Cork South Central, Fine Gael)
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Like the Deputy's party did.
Emmet Stagg (Kildare North, Labour)
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They were good at it when they were in government.
Micheál Martin (Cork South Central, Fianna Fail)
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We can all now see what the primary purpose of this initiative was, namely, public relations. Unfortunately, however, this public relations exercise can have a significant and lasting negative impact. That is what I am trying to get at. We are entitled to have the information, particularly on how it will undermine private pensions provision into the future.
Jerry Buttimer (Cork South Central, Fine Gael)
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After 13 years of Fianna Fáil rule.
Micheál Martin (Cork South Central, Fianna Fail)
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Will the Taoiseach accept-----
Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Can we have silence, please?
Micheál Martin (Cork South Central, Fianna Fail)
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On a final point, will the Taoiseach accept that there is a wide range of genuine domestic and international concerns and criticisms among commentators who are raising questions about the levy and that it should not be forced through the House until a proper review of its impact has been prepared and published for Members?
Pat Rabbitte (Dublin South West, Labour)
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When did the Deputy first hear about the cost-benefit analysis?
Micheál Martin (Cork South Central, Fianna Fail)
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When I see the Taoiseach acting as if he wants to be Taoiseach.
Enda Kenny (Mayo, Fine Gael)
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I assume that as leader of his party and one who might still want to be on this side of the House, had he thought of it himself or been approached by the pensions industry, the Deputy would certainly have considered it. Let us think of the circumstances in which he left the country.
Micheál Martin (Cork South Central, Fianna Fail)
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I am asking the question to seek information on the advice provided. The Taoiseach should answer that question.
Enda Kenny (Mayo, Fine Gael)
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The Deputy is talking about it being a public relations exercise. I made it perfectly clear-----
Micheál Martin (Cork South Central, Fianna Fail)
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This was a decision taken by the Taoiseach and continued by him.
Timmy Dooley (Clare, Fianna Fail)
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The rhetoric is over now that he has left College Green.
Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Will the Deputies, please, allow the Taoiseach to reply?
Enda Kenny (Mayo, Fine Gael)
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We stand by the decision made. It was made in the interests of creating employment, growing the economy and providing a sense of confidence in the indigenous economy at a time when there are over 440,000 on the live register. If Deputy Micheál Martin expects us to sit by and do nothing, to sit idly by-----
Micheál Martin (Cork South Central, Fianna Fail)
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That is not-----
Enda Kenny (Mayo, Fine Gael)
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If he wants information on the detail of what the Minister for Finance considered, he should table a question to him or raise the matter on the Adjournment.
Micheál Martin (Cork South Central, Fianna Fail)
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Come off it. The Taoiseach said he would supply the detail of the advice provided.
Timmy Dooley (Clare, Fianna Fail)
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The Taoiseach said things had changed and that there would be transparency.
Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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We will move on to the next question.
Enda Kenny (Mayo, Fine Gael)
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Surely, the Deputy does not expect me to have at my disposal here the detailed information made available.
Micheál Martin (Cork South Central, Fianna Fail)
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I do. There was a memorandum. I expect him to provide that advice and publish it.
Enda Kenny (Mayo, Fine Gael)
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If he wants that detail, the Deputy should ask the Minister for Finance.
Micheál Martin (Cork South Central, Fianna Fail)
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I am asking the Taoiseach, the head of the Government, the man who talks all the time about transparency.
Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Will the Deputy cool down?
Enda Kenny (Mayo, Fine Gael)
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I am the head of the Government. If Deputy Micheál Martin wishes, he can ask the Minister for Finance who will answer the question.
Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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I call Deputy Gerry Adams.
Micheál Martin (Cork South Central, Fianna Fail)
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The programme for Government spoke about transparency.
Gerry Adams (Louth, Sinn Fein)
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Last week older people and their families were alarmed when it was announced that funding for the fair deal nursing home care scheme was running out. It was reported that the allocation for 2011 was exhausted and that the HSE had suspended the approval of-----
Pat Rabbitte (Dublin South West, Labour)
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Deputy Micheál Martin's party spent it before the last election.
Timmy Dooley (Clare, Fianna Fail)
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Another deal with the Minister, Deputy Pat Rabbitte's friends in the union.
Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Can we have silence, please, for Deputy Gerry Adams?
Gerry Adams (Louth, Sinn Fein)
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Tá a lán daoine iontach buartha faoin ábhar seo.
Alan Shatter (Dublin South, Fine Gael)
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This is Fianna Fáil's funny money.
Gerry Adams (Louth, Sinn Fein)
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The Minister for Health and Children has stated new applications will be dealt with, which is to be welcomed, and that the problem was that the HSE had used the €100 million for other purposes. For its part, the HSE has stated the total budget available to it for providing long-term residential care has always been and will continue to be used exclusively for the care of older people resident in nursing homes. It is seeking clarity on the Minister's statement and there is a report that it has not begun to process new applications. There is, therefore, a contradictory and confused picture. Mar a dúirt mé lenár gcara, tá seo ag cur a lán brú ar dhaoine agus tá a lán acu iontach buartha faoi seo. Tá gá le freagraí soiléire ag na daoine sin. Does the Taoiseach agree that it is extremely worrying that €100 million could be used for purposes for which it had not been allocated? Just as important, if the money is spent, how will it be replaced and does this mean there will be cutbacks in other areas of the health care system?
Enda Kenny (Mayo, Fine Gael)
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The Minister for Health and Children is obviously concerned about this matter and how it could have arisen so early in the year. My understanding is that €100 million of the €1 billion allocated for the fair deal scheme was spent on other items. The Minister has commissioned an inquiry in order to determine within two weeks what exactly happened. All the money is for the care of elderly people but it must come from different subheads. The Minister is entitled to find out what happened in the first instance, report to the House and indicate how he intends to continue funding for this essential deal.
Gerry Adams (Louth, Sinn Fein)
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That is fair enough and the Minister should be given time to do that. However, Age Action Ireland stated it was inundated with distraught people. Only last week we extolled the virtue of a society that looks after elderly people and allows them to make a contribution.
The Minister also stated, and I agree with him, that many people would go home from hospital rather than go into care if appropriate home care packages were available. Are they available? My understanding is they are not and, therefore, this most vulnerable section of our society, when ill and infirm, is being put through greater difficulties than are necessary.
Enda Kenny (Mayo, Fine Gael)
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By the end of March this year 22,600 people were in receipt of long-term residential care support, in public, private and voluntary institutions. More than 11,000 were in the nursing home support scheme, the fair deal, which is the subject of the question. As the Minister pointed out, applications for approval under the fair deal scheme will continue to be processed and accepted but this is a budget cap scheme and the Minister has a responsibility to find out where the money has gone and for what reasons decisions were taken to divert it from the particular focus of attention and care for elderly people. The Minister also seeks to ensure that only agreed costs are met from the long-term residential facility. I expect this will be the subject of further questioning in the House.
In answer to the Deputy, the commitment in the programme for Government to review the fair deal will be carried out. The Cabinet is anxious to have the Minister conclude his two-week analysis of the situation. I understand the concerns elderly people may have but this money is all for the care of the elderly and comes from different subheads. The Minister has a duty to find out what happened and deal with the situation by allocating moneys from different subheads. He will report to the House accordingly.
Shane Ross (Dublin South, Independent)
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In the light of the immensely successful visits to this country by President Obama and the Queen of England and the re-establishment of very close links between friends, for which welcome and successful visits I congratulate the Taoiseach and the Government, I wonder if the Taoiseach might approach Europe with a greater degree of self-confidence, a quality that has not been evident in negotiations with Europe since the Government came to power. I ask this specifically because I read the statement today by the Minister of State, Deputy Lucinda Creighton, that the Government would back a European, specifically Ms Christine Lagarde, for the top position, now vacant, in the IMF.
I wonder why we would be inclined to do that. As the Taoiseach knows, Ms Christine Lagarde has taken a position that Ireland's corporate tax should rise and that we should not get a reduction in our interest rate. If we support the French Finance Minister, who has not been helpful, rather has been unhelpful in regard to our position with the IMF, we will support the movement into a position of power in a benign lender, the IMF, of a person who is aggressive against Ireland - as are most of the European powers who protect European banks. Our agenda and that of Europe on this monetary issue are at odds. If we support someone who is so hawkish against us we will corner ourselves.
Would the Taoiseach consider opposing the nomination of the French Finance Minister for the head position in the IMF, specifically because of her record, which is so hostile to Ireland?
Enda Kenny (Mayo, Fine Gael)
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The Government has not made a decision to support any person for the vacant position in the IMF. This matter has not been concluded or yet decided. It is an important, global position and the IMF has had an understanding attitude in regard to the challenge this country faces and has been forthright about it. Its spokesman in respect of the bailout given to Ireland, Mr. Chopra, has been, as one would say in Irish, "flaitiúil" about his language in this regard.
The decision on whether the appointee to the position of head of the IMF will come from Europe or elsewhere has not been made yet. It is fair to say that the French Minister for Finance articulates whatever the French Government's position may be. That is not to say that were she to be appointed to the IMF she would continue French Government policy. IMF policy may be very different to that of individual governments. It is a little early, therefore, to say who is in line for the position although the Minister, Ms Lagarde, has been mentioned as a strong runner. However, no decision has yet been made in so far as other blocs that will vote or give approval in this respect are still unclear.
Shane Ross (Dublin South, Independent)
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I understand the Taoiseach's reply. Perhaps the Minister will change her mind when she changes her job. People often do that.
Bernard Durkan (Kildare North, Fine Gael)
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They do it over there too.
Timmy Dooley (Clare, Fianna Fail)
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Mr. Rabbitte and Mr. Bruton.
Paschal Donohoe (Dublin Central, Fine Gael)
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Are you interested, Shane?
Peter Mathews (Dublin South, Fine Gael)
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What have you in mind, Shane?
Shane Ross (Dublin South, Independent)
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Before he makes a decision, will the Taoiseach ask Madame Lagarde what her position is, and will be, on corporate tax and the reduction of our interest rate before he decides what the position of the Government will be on her candidature?
Enda Kenny (Mayo, Fine Gael)
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The Deputy is right about people changing their views when they change jobs. I knew this would come around some time. I recall that, on 28 March 2004, Deputy Ross stated that Michael Fingleton's Irish Nationwide published what he termed a "cracking set" of figures.
Enda Kenny (Mayo, Fine Gael)
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If he recalls, he followed that by saying, "All Fingleton's figures are spectacular. Pre-tax profits are up 20% and gross lending rose by 72%". The Deputy followed that with, "I should have bought into Nationwide. Anyone who has a spare €20 grand might still have time to carpet bag". That is just a gentle reminder.
Alan Shatter (Dublin South, Fine Gael)
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We will now get an apology.
Enda Kenny (Mayo, Fine Gael)
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In any event, as Minister for Finance, Deputy Noonan is in constant contact and has negotiating rights derived from EU leaders. He is in contact on a regular basis with the Minister, Ms Christine Lagarde. In the event she becomes the nominee or the person appointed to the IMF, her views in respect of Ireland's position on corporate tax, which, by the way, is not changing, will be discussed between her and the Minister for Finance.