Wednesday, 8 June 2011
Ceisteanna - Questions
Question 1: To ask the Taoiseach the reason he did not raise the issue of the interest rate on the British loan with British Prime Minister David Cameron during his recent meeting. [13625/11]
Question 2: To ask the Taoiseach if he raised the issue of British support for Ireland's efforts to acquire a lower interest rate on the EU/IMF programme of support with British Prime Minister David Cameron during his recent meeting; and if not, the reason therefor. [13626/11]
I propose to take Questions Nos. 1 and 2 together.
As I outlined in my response to questions in this House on 24 May, I met with Prime Minister Cameron in Government Buildings on the evening of Wednesday, 18 May. Our discussions focused on the complete transformation of the relationship between Britain and Ireland in recent years. The closeness of that relationship has been demonstrated by the warmth with which the Queen was received in this country. We also discussed EU issues and our shared economic difficulties.
There was no explicit discussion about the interest rate on the bilateral loan extended from Britain, nor was it intended that there should be. We did, however, discuss broader EU and international economic and political developments and the Government's approach to getting an improved deal from our external partners. I am satisfied that the UK Government understands our position and will be as supportive as it can.
We continue to negotiate with our colleagues at European level about the conditions and the extent of the improvements that might be made on the IMF-EU bailout deal.
I will make a number of comments before moving on to specific questions. In this session, only six questions are on the Order Paper because of the aggressive approach taken by the Taoiseach's office and the Department in disallowing and transferring questions. Will the Taoiseach examine the issue? For example, last week we asked the Taoiseach about his opinion on EU enlargement, which is a matter for the EU Heads of State, but the question was referred to the Department of Foreign Affairs and Trade where the Tánaiste-----
There is a deliberate policy of disallowing and transferring questions, which is reducing accountability in the House.
The two questions I have tabled relate to an important issue, one that was caught in the wider set of questions tabled last week but was not answered. I want a straight and clear answer as to why the issue identified by the Government from the outset as being its first priority has not been raised in important bilateral meetings, particularly with Prime Minister David Cameron. Last week, the Taoiseach told me he was leaving the general negotiation on the interest rate to the Minister for Finance, Deputy Noonan, because of the eurozone decision of 11 March, but the same excuse cannot be used in respect of bilateral loans.
If the British Government unilaterally moved to new terms and reduced its interest rate, does the Taoiseach not agree that the hands of other EU governments and Heads of State would be forced to act? Has the Taoiseach done anything at all to negotiate with, for example, the British to intervene with the French and the Germans in respect of a reduced interest rate? We have had enough of the Taoiseach's standard reply of recent weeks, namely, "If it comes up, I will raise it". Last week, the Taoiseach stated he would raise the matter at the European Council.
In terms of the meetings with the British Prime Minister, it is incredible that the Taoiseach has not raised the issue of the reduced interest rate or enlisted his support for Ireland's case for better terms under the EU-IMF programme, in particular the lower interest rate as agreed by the EU Heads of State as far back as last March. It is the Government's first priority, yet all of the Taoiseach's actions to date at meetings with the EU Heads of State and at bilateral meetings suggest his focus has been on photo calls and so on, with the dirty and more difficult work being handed to others while he avoids dealing with the crunch issues in the one-to-one meetings with Prime Minister Cameron and others.
Deputy Martin is wrong in his assertions. I did of course raise the question of Ireland's IMF-EU-ECB bailout deal with the British Prime Minister and told him of the changes that Ireland was making to comply with the conditions of that deal. He was favourably disposed towards Ireland and was forthright in his pronouncement that, by and large, the Treasury would be supportive of Ireland's position. He encouraged bilateral meetings between the Treasury and officials from the Department of Finance and Government. There is no big mystery.
The Government of which Deputy Martin was a member negotiated a deal with the IMF and the EU. That deal has been renegotiated in part by the current Government, which I have the honour to lead. Agreement was reached at Heads of Government level to devolve responsibility in respect of implementing the principle of an interest rate reduction to the Ministers for Finance. The Deputy is now suggesting that I take back that responsibility from the Minister for Finance and that I deal with the matter at Heads of Government level. The Heads of Government of 27 countries agreed this should happen. I have faith in the Minister for Finance being able to carry out his responsibilities in this regard.
The Deputy asked if my meeting with the British Prime Minister was specifically in relation to the bilateral loan agreement made with Ireland by Britain, Sweden and Denmark. Were that the case, he would then be asking me why I did not raise the bigger issue of the IMF-EU bailout deal, which has been our priority. We have recognition of the reduction in principle and a decision that the matter should be dealt with by the Ministers for Finance, who are pursuing it. Beyond that, we discussed the general principle of where the European Union is headed. I was supportive of the stance taken by Prime Minister Cameron in his letter, supported by a number of other leaders, about the potential of the European Union Single Market, cutting the cost for setting up business, eliminating red tape and bureaucracy and freeing up the trade inter-country so that the EU as a Union could realise its full potential based on the Single Market and be in a position to compete against other trading blocs around the world.
The relationship between Ireland and Britain and between myself and Prime Minister Cameron is strong. We will continue to pursue the issue of an interest rate reduction at EU level. There will be time at a later stage to discuss the specific issue of the bilateral loan. I might add that Britain has been forthright in saying there will be no further bilateral loans for other countries and made a specific issue of the special relationship between Ireland and Britain based on diaspora, trade and so on. There is no secret about that. That was the first meeting we had, short of the usual on the margins meetings at Council meetings and when the British Prime Minister, Mr. Cameron, came to Ireland during the Queen's visit. We will continue that.
The Taoiseach said in his formal reply that there was no explicit discussion with the British Prime Minister on the interest rate on the British loan and nor was there intended to be. I find that revelation incredible.
It would seem to me that the logical and tactically correct strategy would be to seek a reduction on the bilateral loan with Britain as this would force the hand of other EU Heads of State to do likewise on the broader EU-IMF deal. The Taoiseach has from the outset identified this matter as the Government's number one priority. On 11 March, the EU Heads of State stated that funding costs should be lowered to better take into account debt sustainability of the recipient countries. As acknowledged by the Taoiseach last week, that is what was agreed in the communique by the outgoing Government, which was followed through by the current Government. That is what I find incredible. This begs the question of whether the Taoiseach as Head of Government has taken this issue as seriously as he should I do not believe he has done so. It is no longer good enough to say this is a matter for the Ministers for Finance.
The Taoiseach confirmed this morning that almost half of the bailout funds will not now be subject to any reduction in interest rate. This was confirmed yesterday by the Minister for Finance, Deputy Noonan, who said the issue was over-hyped. It is the Taoiseach and no one else who over-hyped it and made it a red line issue going into EU Council of State meetings. We now find that at all of the bilateral meetings he had with British Prime Minister, Mr. Cameron, and others, the Taoiseach did not pursue the issue. When asked if he would raise it at EU Council level he said that if the matter was raised, he would discuss it.
Will the Taoiseach agree that he has a responsibility and obligation to set and contribute to the setting of the agenda of these EU meetings? In my view, given it has taken so long to get any meaningful follow through on the meeting of 11 March, it is time the Taoiseach asserted his position at the next EU Heads of State and raised the issue of the sustainability of the programme under which Ireland is working with the EU-IMF, in line with the conclusions arrived at the EU Heads of State meeting on 11 March.
Again, I disagree with the Deputy. When I met the Prime Minister in Downing Street, I thanked him for the bilateral loan from Britain and a number of other countries to Ireland. I did not go there specifically to seek a reduction in the interest rate on that loan. I thanked the Prime Minister for the expeditious manner in which his Government, along with Sweden and Denmark, made the bilateral loan available. We discussed the wider implications of the EU-IMF bailout deal.
I accept, as the Deputy stated, that I have particular responsibilities. The Deputy also asked if I take this matter seriously. The day after I was appointed Head of Government I attended a meeting in Brussels at which I set out in a serious fashion my priorities. I told the other leaders present that they were not in attendance as Heads of Government of 40 million, 70 million or 80 million but as equals. It is my responsibility to defend Ireland's interests in the context of the European Union. I made the point that the issue of taxation is a matter of national competence and that I would not concede on the matter of an increase in the 12.5% corporate tax rate, which, as the Deputy will be well aware, is being demanded. I accepted my responsibility and dealt with the issue in a serious manner. I am not prepared to back down from that. The IMF, OECD, European Commissioners and Ministers of Finance from other countries are in agreement with our position.
The Deputy stated that I did not take my responsibilities seriously at that first meeting. Were that the case, we would be in a different position.
I do accept and take seriously my responsibilities. As I stated previously, as the stress tests on the banks here were not completed prior to the next meeting that responsibility was given to the Ministers for Finance. That is where the negotiations are now. The Deputy will be aware that many countries, individuals and organisation outside Europe agree with Ireland's position.
I understand that in the general discussions that take place at the Heads of Government meeting one can and will contribute. I do not draw up the agenda myself. In the context of where Europe is headed, European political leaders should look at how assistance and support can be given and in this regard how schemes can be redesigned, which is a requirement of the ESM. Europe will have to look at this in the interest of assisting countries and supporting them, which is part of the solidarity principle which is central to the European Union.
I did not go to Downing Street looking for an interest rate reduction on the bilateral loan. It was the first meeting and we discussed a range of issues.
I thanked the Prime Minister for his support for Ireland. We will continue to build on those very good relationships. I expect the issue of the ESM and the progress in Europe's position will of course be central to the Heads of Government meeting this month and I expect to contribute strongly to that.
I do not have any sense of urgency from the Taoiseach in regard to this matter. I never had him chalked down as the shy, retiring, shrinking violet type, so I do not think it was this that led to his failure to raise this matter directly with the British Prime Minister. The Taoiseach said he discussed the bigger implications of the bailout deal. Did he discuss the issue of burden sharing, which is the bigger issue here? The Taoiseach is reluctant, hesitant and slow to make any sort of measurable progress on the interest rate and he refuses, as I see it, to deal with the issue of burden sharing and the core issue of the unsustainability of the debt. All the while, cutbacks bite and people suffer. The Taoiseach knows this as well as I do.
The Taoiseach last week told Irish diplomatic staff to go back to their posts internationally and tell everybody the happy news - not - that the Irish people will continue to bail out bankers, speculators and people who gambled and lost. He was not shy about setting out that message - a bad message, as far as I am concerned.
At what point, then, does the Taoiseach engage the British Prime Minister and others, not just on the interest rate but on the issue of debt sustainability and the ESM? As he and I know, Europe clearly envisages debt restructuring, burden sharing and default post 2013. The danger for us, as the Taoiseach well knows, is that by the time 2013 comes around, the damage done, not just to the economy of this State but to its society and people, will be immense.
It is already on the agenda. The Government is in court over this because we have taken a decision that there should be burden sharing with subordinated bondholders. I discussed the question of other burden sharing with Mr. Trichet and, as we have two pillar banks in AIB and Bank of Ireland, the Government decided not to have burden sharing with senior bondholders there. The ECB recognised Ireland's position and confirmed that, irrespective of downgrading or not, funding would continue to be made available. I pointed out at all the meetings I have had that Ireland was pursuing burden sharing with subordinated bondholders and there is considerable scope for further savings in that regard. As the Deputy knows, two court cases were taken, one of which has been withdrawn and I cannot give the Deputy confirmation on the second one as I am speaking here. The position in so far as Ireland is concerned is that we want to get on with meeting the conditions the country has signed up to in the IMF-EU bailout deal.
The Deputy referred to the decision of the Tánaiste and Minister for Foreign Affairs to call together all of the ambassadors and diplomats from abroad, together with trade personnel, for what was a very successful occasion. Far from the Deputy's interpretation of it, the message was very clear, namely, this country is open for business, it continues to be an attractive location for foreign direct investment, it continues to have a serious potential in terms of further exports and it will not be changing its 12.5% corporate tax rate. That clear and positive message has gone out around the world.
In respect of all of those who work for this country abroad, often in difficult circumstances, we appreciate the efforts they make and we appreciate the continuous commitment they show, beyond normal working hours, on a daily basis in giving evidence to other countries about Ireland's true position. We have been through adversity before and this is an economic challenge that we will get through. From that point of view, I differ entirely from the Deputy's interpretation of the outcome of the meeting at which she was not present.
I put it to the Taoiseach that the admission he has made that he did not raise the need for a reduction in interest on the British loan with the British Prime Minister will leave taxpayers and the citizens of this country open-mouthed and raise a serious question about the Taoiseach's competence-----
Against a background of much hyperbole about the visit of Prime Minister Cameron and the Queen solidifying a new relationship between Ireland and Britain - now best friends forever - the Taoiseach said he and the Prime Minister discussed the IMF-EU deal. Presumably, the Taoiseach told him about the difficulties and about the fact he was taking money from disabled people to pay off the bankers' debts and the interest, but he did not ask his new best friend forever to deal with the one issue he has competence over, namely, the level of interest on the loan from the British Government to the Irish Government, a loan that was of course made for the economic interest of the British establishment, not for the love of the Irish people. Nor did the Taoiseach ask the British Prime Minister to reduce this punitive level of interest-----
Given what the Taoiseach has now admitted and what was revealed yesterday by the Minister for Finance, does the Taoiseach agree that his Government is in full flight before the EU establishment, which has dictated that working people and the poor in this country will be the beasts of burden to pay off and rescue the European bankers? The Taoiseach is in full flight before them.
I do not accept the Deputy putting words in my mouth. The bilateral loan, as the Deputy knows, is part of a loan arrangement between Denmark, Sweden and Britain. From that point of view, it is clearly connected to the greater position concerning Europe. The Deputy continuously forgets to mention the fact the Government renegotiated an element of the bailout deal in that it intends to reverse the cut in the minimum wage.
He conveniently forgets to mention the fact the Government put a levy on the pension industry to bring in €450 million for each of the next four years so people in his constituency who do not have a job will be able to get off the dole and get a job or career.
I am sure the Deputy wants to see those people who are unfortunately on the live register have the opportunity to get a job and be able to contribute meaningfully to our society and country, as they want to do.
The focus here is on the achieving of the principle, which has been agreed, of a reduction in interest rates of countries in the EFSF bailout situation, which incudes Ireland. We are measuring up to those commitments and conditions. The point has been accepted and agreed by practically everybody that an interest rate reduction should be applied here but there is the principle of unanimity, which works both ways. From that point of view, the Ministers for Finance were given the responsibility, devolved from the Heads of Government, and I have every confidence in our Minister for Finance to conclude that successfully.
In light of the Taoiseach's reply to the questions, will he explain where is the consistency in his policy on this matter of the so-called bailout deals, either with the IMF-EU or with Britain, Sweden and Denmark? Prior to the election, the Taoiseach's party policy was that it was neither morally right nor economically sustainable to beggar the Irish taxpayers to enrich speculators.
-----between the loans and the answer just given by the Taoiseach, to the effect that he refuses even to raise the issue of this punitive interest rate? Why on earth would we thank the British Prime Minister, Mr. David Cameron, for imposing a punitive interest rate on the working and vulnerable people of our society in order to pay back bankers and bondholders? This is punishment imposed on Irish working people for the reckless gambling of bankers and speculators.
Originally, I stated the deal was bad both for Ireland and for Europe and, from that point of view, renegotiating elements of it would be very important. That is what has happened. I reiterate we renegotiated the conditions of the deal to some extent, in respect of the reversal in the minimum wage, no further transfers to NAMA and acceptance of a jobs initiative. I am sure the Deputy supports all these measures.
The question of interest rate reduction is obviously important and is being pursued by the Ministers for finance. I clearly stated that I did not meet the British Prime Minister in order to seek an interest rate reduction in our bilateral loan. We opted for a first meeting between two Heads of Government, during which we discussed the European question and what Ireland was doing in terms of decisions made about banks, pursuit of subordinated bond investors and our attitude towards Europe. We thanked the British Government for its support for Ireland's position. Since then that Government has pointed out it will not make bilateral loans available to other countries as it did to ours because of the connections between Ireland and Britain on an entire range of fronts.
This work is proceeding and I intend to go to the meeting later this month to articulate very clearly the progress our country has made, the challenge we face and the seriousness with which Europe should approach its responsibilities collectively, as a union. The Deputy obviously has different views on that but I intend to articulate mine very strongly and clearly on behalf of the Government and the people.
I asked the Taoiseach the reason he did not raise with the British Prime Minister the issue of the interest rate on the British loan but I do not believe I received a specific answer - nor has anybody else. I asked the question on the basis that if one believes the interest rate under the EU-IMF programme is too high, as the Taoiseach clearly does, surely he would apply the same logic to the bilateral loan with Britain where the interest rates and premiums are similar. The logical application of the Taoiseach's thinking on the EU-IMF programme as it applies to the British bilateral loan would be that it also is too high. Therefore, logically, the Taoiseach should have asked the Prime Minister for a reduction in the interest rate on the same basis we are pursuing a reduction in the interest rate with other Heads of State in the European Union. That would have had the desired impact of forcing the hands of others to move on this specific issue which goes to the heart of the sustainability of the programme all Heads of Government signed up to on 11 March.
Deputy Martin was part of an outfit that denied the IMF was in the country and part of a Government that caused a situation where greed, recklessness and lack of accountability resulted in a bailout deal being forced on this country by the IMF, the EU and the ECB because matters could not have continued as they were. They were out of control.
That bailout deal was agreed between the Government of which the Deputy was a member and the troika. The British, Swedish and Danish bilateral deals were not forced on this country in the same fashion as that in which the troika was obliged to act. My priority, therefore, clearly was, and remains, to deal with that and, in the context of the interest rate reduction, it was the only issue discussed at the meeting of the Heads of Government. The first person to speak was the Greek Prime Minister, who made a case for a 2% reduction, for a longer period, because of the challenges his country faced. Following that, there was an agreement in principle that countries in the European Financial Stability Facility, EFSF, were entitled to an interest rate reduction. I was not prepared to accept an interest rate reduction on the basis of being obliged to increase the country's corporation tax rate.
In respect of the conditions attached to the troika bailout, now renegotiated, Ireland measured up on the first assessment. We are rightly in pursuit of the principle accepted by the heads of government that there should be an interest rate reduction for the countries in the EFSF bailout situation. In that context, the IMF came to Ireland as part of that troika - with the resulting outcome. That situation was different from the bilateral loan arrangement offered by Britain, Sweden and Denmark which was not forced on the country. My priority was, and remains, to deal with the interest rate and gain improvements in the IMF-EU bailout. We spoke with the British Government and will continue to do so on a very regular basis.