Brendan Smith (Cavan-Monaghan, Fianna Fail)
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89. To ask the Tánaiste and Minister for Foreign Affairs and Trade the action he has taken in response to the demand by Germany’s Social Democratic Party that Ireland raise its corporation tax rate; if he has raised this issue with his foreign affairs counterpart in Germany; and if he will make a statement on the matter. [48973/13]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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There has been considerable coverage of the decision by Germany's Social Democratic Party, SDP, to place Ireland's corporation tax rate and its opposition to an EU financial transaction tax on the agenda of discussions being held in Berlin on the formation of a new coalition government. Corporation tax is a national competence and cannot be decided at EU level. This competence was clearly reaffirmed in both the Lisbon treaty and the fiscal treaty. The Tánaiste should deliver a clear message to the SPD that its posturing on the future of Ireland's corporation tax regime is unacceptable and should stop. He should reiterate in very strong terms that there will be no change in this regard.

Lucinda Creighton (Dublin South East, Independent)
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108. To ask the Tánaiste and Minister for Foreign Affairs and Trade the exact number of meetings he has had, either in person or by telephone, with Peer Steinbrueck, Martin Schulz and Olaf Scholz of the Social Democratic Party, SPD, of Germany in the past 12 months; if he is concerned that the positions they are adopting on behalf of the SPD in German coalition negotiations are hurting Ireland's interests in allowing the European Stability Mechanism, ESM, to directly recapitalise banks in the future or retrospectively; and if he will make a statement on the matter. [48971/13]

Eamon Gilmore (Dún Laoghaire, Labour)
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I propose to take Questions Nos. 89 and 108 together.

Since assuming office, the Government has engaged extensively and continuously with governments and key political actors across the EU and beyond. This is very much the case with Germany and its political leadership on all sides. My Department and our embassy in Berlin, in particular, maintain ongoing and regular contacts, including with the SPD. In conjunction with official contacts I have had with the outgoing German Administration, I and colleagues maintain regular personal contact with the SPD, including through our parties' shared membership of the Progressive Alliance of Socialists and Democrats in the European Parliament.

Group members regularly meet ahead of Council meetings in Brussels. As the House is aware, I also worked very closely with SPD member and President of the European Parliament Martin Schulz, MEP, during Ireland’s Presidency earlier this year. In addition, I met Peer Steinbrück, a former German Finance Minister and the party’s candidate for Chancellor in the recent German elections, in Dublin in February.

I spoke very recently with the SPD leader, Sigmar Gabriel, to discuss post-election political developments in Germany, update him on developments in the Irish economy and underline the importance of fully concluding the banking union, including with regard to the role of the ESM. I stressed that the success of Ireland’s recovery efforts and our forthcoming exit from the EU-IMF programme were very important for both Ireland and the EU as a whole.

German coalition negotiations are ongoing and indications are that a new government may be formed in mid-December, at which point its exact policy programme will be known. The SPD party has included sustainable growth in the European Union and a focus on youth unemployment among its top policy priorities in these negotiations, something that is consistent with Ireland’s priorities.

The Government’s position on key policies such as our corporation tax rate has not changed and will not change, a position of which the entire political system in Germany is well aware. We will continue to emphasise the need to deliver on EU-wide commitments on stabilising its banking system and ensuring sustainable recovery, including in Ireland.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I thank the Tánaiste for his reply. He stated there would be no change to our corporate taxation rate, which has been the policy of successive Governments and a necessary part of our economic and industrial policies. Is he not concerned that two senior figures in the SPD - namely, the party's budget spokesperson and general secretary - have described our corporation tax rate as too low? While the Tánaiste referred to a number of issues he raised with senior members of the SPD, he did not indicate whether he specifically raised the issue of corporation tax or reiterated the strong message that the Irish corporation tax rate will not change and that taxation is a matter of national rather than European Union competence.

Eamon Gilmore (Dún Laoghaire, Labour)
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I have made it very clear in all of the discussions I have had with colleagues in the SPD that our rate of corporation tax stands and will not be changed by the Government, that our corporation tax rate has been a long-term part of our industrial strategy and that corporation tax is a matter of national competence. I spoke with the leader of the SPD, on a party-to-party basis, about the discussions that are taking place on the formation of a new government in Germany and wished him well in those discussions. The ten-point priority list that has been presented by the SPD as part of the discussions does not include a specific reference to Ireland's rate of corporation tax.

Lucinda Creighton (Dublin South East, Independent)
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I thank the Minister for his initial response. The concern in this regard is that a strategic and structured diplomatic offensive appears to be lacking in response to alarming statements that have emerged from Berlin in recent weeks and months. As the Tánaiste is aware, Chancellor Merkel and the Taoiseach made a clear statement some months ago in which the Chancellor reiterated her view that Ireland is a special case, enjoys special status and is distinct from the other programme countries. This is critical as we pursue our agenda of ensuring debt sustainability.

Mr. Joachim Poß, the SPD finance spokesman, made the following statement in the past two months: "The SPD's position is very clear: we do not support direct ESM aid for banks." If the SPD does not support direct ESM recapitalisation for banks, the chances of retrospective bank recapitalisation are even slimmer. Throughout the negotiations, the party has repeatedly and consistently, rather than in a few vague statements, raised the prospect of forcing the introduction of a financial transaction tax and a common consolidated corporate tax base, CCCTB, which would be an assault on our corporate tax regime.

Ireland has been mentioned repeatedly. It is small solace that the Tánaiste met Mr. Peer Steinbrück in February last in Dublin. We need to see a much more comprehensive and strategic approach.

Eamon Gilmore (Dún Laoghaire, Labour)
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We will not re-fight the German election here in the Chamber.

Lucinda Creighton (Dublin South East, Independent)
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That is not the point.

Eamon Gilmore (Dún Laoghaire, Labour)
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The position is that the political parties in Germany, including the SPD, know our position on corporation tax, banking union and the ESM. I am satisfied from the discussions that I have had on a party-to-party basis with the leadership of the SPD that it is supportive of Ireland and that if the negotiations for the formation of a new government in Germany are successful, if anything, our position as a country in our relations with Germany will be enhanced. I say this because the new coalition arrangement, if it is a coalition of Chancellor Merkel's party and the SPD, will reflect the political composition of the Government here and will enable us to have political contact with both of the parties in government, and that would be very much to our advantage.

Michael Kitt (Galway East, Fianna Fail)
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Deputy Creighton wants to ask another question. I must ask the Members who tabled the questions. Deputy Clare Daly wants to come in, as do Deputies Wallace and Mathews. I will call them in due course.

Lucinda Creighton (Dublin South East, Independent)
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I suppose there is an additional element to this. I am not convinced by the Tánaiste's response that, simply because of the political composition of government reflecting the political composition in this country, it will somehow miraculously turn out to be a better arrangement for us given the commitments that were made clearly by the previous German Government and the contradictory statements which have been repeatedly made by the SPD.

Since I put down this parliamentary question, there has been a further development. Last week the Government deliberately put out the line that the SPD was demanding a hike in corporate tax in exchange for a precautionary credit line and this has fed into the narrative over the past number of days as to why the Government did not seek a precautionary credit line. Mr. Derek Scally, in The Irish Times last week, put paid to that notion and made it clear that such is not the case. No approach was made to the future German Government on the question of a credit line and no negotiations were opened. It would be helpful if the Tánaiste could clarify to the House that there was no risk to our corporate tax rate on the basis of a credit line. In fact, Mr. Scally, in his article last week, quoted senior sources in government and senior sources in the socialist party in Germany stating that they were quite concerned that we had not sought a precautionary credit line.

Eamon Gilmore (Dún Laoghaire, Labour)
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The Government made a decision last week to exit the bailout without seeking a precautionary credit line. We did so because we believe that the time was right to make that decision. A precautionary credit line would last probably for a year. The State is fully funded for well beyond a year. The issue of what would happen this time next year would arise. The response to the Government decision, by the institutions, by other member states, including Germany, and by the markets, confirms clearly that the correct decision was made.

In the middle of negotiations for the formation of a government, in Germany or anywhere else, of course, there will always be issues that will be speculated on. The SPD has set down its priorities in terms of those negotiations. They have ten priorities that all relate to domestic German issues. As it happens, they are largely issues with which the Irish Labour Party and the Irish Government would find significant degree of comfort.

Clare Daly (Dublin North, Socialist Party)
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The Tánaiste will be aware that Ireland has one of the lowest corporation tax rates in Europe. In fact, our effective tax rate is even lower. Does he see a certain irony in the fact that he, as somebody who claims to be a socialist, would staunchly defend that low rate yet he does not show any shame in attacking elderly citizens, etc.? Should he be agreeing with his socialist colleagues in Europe that Ireland's corporation tax is far too low and companies could pay substantially more than they do?

Mick Wallace (Wexford, Independent)
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I understand the Europeans told us we should cut medical cards for pensioners. It would be strange if they could not tell us how to handle our taxes. Does the Tánaiste agree that, with some healthy thinking in Europe, the Europeans are eventually going to realise low corporation tax rates represent a race to the bottom and are unsustainable in the long term?

Eamon Gilmore (Dún Laoghaire, Labour)
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Deputy Clare Daly is absolutely wrong on the issue of corporation tax. Our 12.5% rate is one of the measures we have in place to attract investment into the country and create jobs. I would have thought the creation of employment was one of the first priorities for any socialist, no matter where he or she might be on the political spectrum. In regard to the idea that if we increase corporation tax we will somehow raise more revenue, we might in theory, but how many jobs would we drive out of the country? How many more people would end up out of work and how many potential jobs would we keep from being created through lack of investment? Let us be clear: our rate of corporation tax has been established for quite some time. It is 12.5%, transparent and based on statute.

Peter Mathews (Dublin South, Independent)
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That is not the effective rate.

Eamon Gilmore (Dún Laoghaire, Labour)
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The Deputy is wrong.

Finian McGrath (Dublin North Central, Independent)
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Go on, Deputy Mathews, give him some welly.

Eamon Gilmore (Dún Laoghaire, Labour)
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The effective rate of taxation is close to the headline rate. It is one of the features of the economy which is successful in attracting overseas companies to invest here to create employment and grow the economy. The Government will stand over the rate of corporation tax. We do not intend to change it and will not be subject to outside influence or persuasion from anywhere.

Lucinda Creighton (Dublin South East, Independent)
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Unless it needs emergency funding.

Peter Mathews (Dublin South, Independent)
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In the light of the discussion thus far, I ask the Tánaiste to remember several issues and place them high on the agenda in negotiations with the European Union and Germany. Ireland's needs come first and should be articulated robustly. Creditors should be told the €28 billion in long-term bonds that replaced the pro-notes is misplaced and odious. Arrangements should be put in place to eliminate the bonds. Wolfgang Schäuble has stated everything in Ireland is fine. That seems to echo what was said last week when a stand-by line of credit was not considered necessary. Even the strongest companies in the world of free markets and capitalism organise stand-by lines of credit not just with one bank but with syndicated banks. We definitely need a stand-by line of credit. In March 2011 the prudential capital assessment review of the banks indicated further capitalisation. That was carried out in July 2011 and €16 billion of the National Pensions Reserve Fund disappeared. We have €20 billion in cash and do not know what is around the corner. The way we will create jobs in the economy is by strengthening underlying growth through a rebalancing of the combination of taxation and cuts in order to distribute income and restart the economy.

Eamon Gilmore (Dún Laoghaire, Labour)
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Why do some Members of the House keep clutching at every second-hand, dúirt bean liom, statement made by somebody somewhere to do us down?

Lucinda Creighton (Dublin South East, Independent)
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It is because the information is not forthcoming.

Timmy Dooley (Clare, Fianna Fail)
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The Taoiseach was an expert at it in the past.

Eamon Gilmore (Dún Laoghaire, Labour)
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The fact of the matter is that the Government decided last week, rightly, to exit the programme without recourse to a precautionary line of credit.

Lucinda Creighton (Dublin South East, Independent)
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The NTMA has been very silent on the issue.

Eamon Gilmore (Dún Laoghaire, Labour)
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It is disappointing that some Members, instead of supporting and welcoming that decision as an opportunity for the country to recover, are grasping at every possible opportunity to do it down.

Lucinda Creighton (Dublin South East, Independent)
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The Tánaiste sounds like Bertie Ahern.

Peter Mathews (Dublin South, Independent)
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What is wrong with having a safety net?

Eamon Gilmore (Dún Laoghaire, Labour)
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We made a decision.

Lucinda Creighton (Dublin South East, Independent)
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As Members of Parliament, we are entitled to express our concerns.

Eamon Gilmore (Dún Laoghaire, Labour)
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It was the right decision. It will ensure the country will recover. On employment creation, we have established a good track record of creating 3,000 new jobs per month which we obviously need to increase. We want to see more people back at work and a reduction in the rate of unemployment. We are going to do this. It is disappointing that some Members-----

Lucinda Creighton (Dublin South East, Independent)
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The Government is taking a gamble in cutting us off from funding.

Eamon Gilmore (Dún Laoghaire, Labour)
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We are not cut off. Stop making it up.

Lucinda Creighton (Dublin South East, Independent)
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I am not making it up.

Eamon Gilmore (Dún Laoghaire, Labour)
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The Deputy is making it up.

Timmy Dooley (Clare, Fianna Fail)
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That is an outrageous statement about a former colleague who stood by the Tánaiste in difficult times.