Thursday, 14 January 2016
Last month we asked the Tánaiste the about the dramatic 30% increase in car insurance and the fact it was putting motorists under severe financial pressure. On top of the latest rise, Insurance Ireland is predicting a further 25% rise in 2016. People paying a premium of €450 can expect their bill to increase to €600. The Government responded at that time that there were many reasons for the rise in insurance costs, including rulings on the equalisation of charges for male and female drivers, the amalgamation of the insurance industry and increased payouts. Equalisation did not necessarily contribute to increased premia and is all but a red herring. While the other reasons given may have contributed to increased costs, they do not warrant a possible 55% increase in insurance premia over a two-year period.
The insurance industry seems to be getting out of control and no one, it appears, is representing the consumer. When the Motor Insurance Advisory Board, MIAB, was in place, the insurance industry only increased insurance rates by 40% over an 11-year period. It had a role in keeping costs down and protecting consumers. Today, the report of the rating agency Standard & Poor's slates the Central Bank over insurance failures. It asks whether the Central Bank has the ability to regulate the sector at all.
In December, the Government did not rule out the reinstatement of the MIAB. Given the rise in insurance premia in the motor industry and for homes and flooded areas that already have flood relief schemes in place, is the Tánaiste satisfied the insurance industry is being properly regulated? Does she believe an insurance advisory board should be established to rein in these costs and ensure all consumers and home and business owners at least have the opportunity to insure their cars and properties at reasonable prices?
As the Deputy is probably aware, earlier this week I, the Taoiseach and other Ministers, including my colleague, the Minister of State, Deputy Kevin Humphreys, met representatives of the insurance industry in Ireland to discuss insurance for those who have been unfortunate enough to have been affected by the recent flooding. As part of the discussion, the insurance industry set out its financial issues as it sees them. There were some short contributions on the cost of other insurance in Ireland.
In a previous discussion on this matter, I expressed my concern about the fact that people are being threatened with significant increases in insurance costs. The insurance industry discussed the significant cost of claims in Ireland. Reference was made to something people will know from the media, namely, the very high level of whiplash type claims. I understand they are a factor in the financial issues faced by the sector. Barely a week goes by without there being extensive reports on such cases throughout the country. That was a problem that affected Ireland in a particular way more than a decade ago. It seemed to have trailed off, but according to those who attended the meeting to which I referred, it is now a very significant problem for the industry.
The Deputy's main point concerned the better regulation of insurance in Ireland. As I said to him during a previous discussion, it is something on which I have an open mind. In the case of flooding, the discussions dealt with the fact the industry must address situations where significant State funding has been provided for the newer type of demountable flooding defences. However, this does not count for policyholders who seek reinsurance.
As I said to the Deputy during the previous debate, I have an open mind in respect of this. He is correct in saying that the Central Bank is now the overall regulator of the insurance industry, in particular from a financial point of view. That is necessary. I remind the House of an insurance company that was based in Malta. It offered extraordinarily cheap premia, in particular in Ireland. It then fell into financial difficulties and the motorists who had been insured with it, many of whom, the Deputy will recall, were young, had to seek other cover in an emergency. It is an issue to which we will have to return with the insurance industry.
We have established the dialogue of last Monday, during which the industry raised its problems with additional claims. One person said there is almost a cottage industry in whiplash claims in Ireland at the moment. As a society, we had dealt with that problem a decade ago, but it has come back to some extent. I anticipate that we will meet the insurance industry again within the next week. I will take up at that meeting some of the issues the Deputy has raised.
I thank the Tánaiste. I note her comment that she has an open mind on our suggestion. I hope and expect that she will exercise some action to elaborate on that open mind at Cabinet. The bottom line is that there are many criticisms of the regulation of the insurance industry, something on which the Government must act swiftly.
It is important that all political parties learn from the past in terms of the insurance sector. Insurance costs are out of control and the Government is merely meeting the industry to have frank discussions. There is no point telling us about the causes. People do not want to hear about the causes because they are well aware of them.
People want action. Car insurance costs will increase by 55% this year if things are allowed to continue. That is not normal and it is most definitely not acceptable.
There is no point in relying on data emanating from the insurance industry because there is no transparency in the industry. We are expected to take its word, without questioning the regulation of the industry. The days of relying on self-regulation of the industry are gone.
The response that the Tánaiste and the Minister for Finance, Deputy Noonan, are reviewing the situation will not wash. The Tánaiste, as we have stated previously, has had ample time to consider our recommendation. An advisory board will address this issue, as the MIAB did in the past. Many Government backbenchers agree with this proposal. They want the Tánaiste to take ownership of this situation and show leadership as the Government comes to an end. Will the Tánaiste answer the call that is made on us as public representatives by those whom we have the privilege to represent, and ensure there are no questions to be asked about those who have regulatory authority in this area?
We cannot stand idly by when serious questions are being asked about regulation in the sector. It is time the board was put in place. The Tánaiste should not rely on the industry to give her the information, which means it can continue at pace to increase costs and insurance premiums in the manner in which it has been doing. All the good the Tánaiste claims to have exercised in the recent budget is wiped out at the stroke of a pen by the likes of this sector.
We have the examples of PMPA and Quinn Insurance, and the more recent example of the company registered in Malta. In all of these cases, ultimately because of a lack of proper financial regulation, people effectively offered policyholders an apparently better deal, which then boomeranged when the particular institutions failed key financial tests. In the Deputy's appropriate and proper concern for policyholders facing significant increases, he should not throw out the baby with the bath water.
-----with subsequent financial failure. Nobody who is a policyholder and who pays for insurance wants to see any insurance company failing, because in this country when that happens, and under the EU model, we, the policyholders and people who pay for insurance in Ireland generally, will end up paying for it.
There is merit in what the Deputy has said. The Government has begun a very intense and detailed dialogue with the insurance industry on these matters. As the Deputy said, the Minister for Finance has written to the insurance industry. The protection of the broader interests of policyholders by the provision of insurance in Ireland is critical. Based on the conversations we have had to date, there are certain things we can do. For instance, we can look to address the surge in claims and the level of claims for whiplash because they are driving up prices for every motorist and every family which has a car. To suggest, rather disingenuously and dishonestly, that we should do this overnight simply for the purposes of electioneering-----
We must have proper prudential financial regulation of the sector. Remember in the cases of Quinn Insurance and PMPA, the general body of Irish insurance payers ended up paying very long-term levies for insurance policies. I am sure Fianna Fáil does not want to see a return to this. It happened three times on Fianna Fáil's watch.
Throughout the State, hundreds of thousands of parents struggle with the crisis in the child care system. Parents, and particularly mothers, are being blocked from returning to work. Working families are being financially crippled because of the lack of affordable and accessible child care. The National Women's Council of Ireland rightly argues this is one of the biggest obstacles to women's equal participation in society.
The average cost of child care throughout the State is €310 per week per child, and in Dublin it is even higher. One survey conducted last year found that having two children in child care in many parts of Dublin would cost a family €27,000 per year. Almost half the workforce earns less than this. How could any parent on the median income afford child care at these prices? How could any parent on social welfare seeking part-time work afford this? At these prices, child care workers, nurses, special needs assistants and retail workers could not afford child care. I could go on.
In its 2011 election manifesto, the Tánaiste's party promised to develop a comprehensive national preschool service if elected to government. It broke that promise, just like it broke its promise to protect child benefit and not to cut one-parent family payment until the Tánaiste introduced what she called a Scandinavian-style child care system. Does the Tánaiste have something against parents? Why has she broken every single promise she made on the issue of child care since 2011? Why does she now, in banner headlines this morning, insult people with more promises that she will surely break?
The means test and the assessment for family income supplement have been eased significantly. The incomes of lone parents and the parents described by the Deputy working part-time have been very significantly increased over the past year-----
-----and will be further increased this year through a significant expansion of the family income supplement to bring up the earnings of such a family significantly.
With regard to child care, we have had a very detailed examination over the past year, spearheaded by a number of our Deputies who have taken a particular interest in this subject, such as Deputies Arthur Spring and Ciara Conway, to address what is a very pressing issue for society of how we expand resources for families, specifically with regard to child care. I am happy to say that we have proposed over the life of the next Government to improve, as we have been doing over the life of this Government, in very difficult straitened financial circumstances in the first three years, to set out to improve incomes for families, tax reductions for families and, specifically, to improve the provision of child care.
Furthermore, for families on low income we have community-based child care, with which Deputy McDonald may not be familiar, but which is an extremely important facility-----
-----for families on low incomes getting community-based child care throughout the country. Not only this, but we are improving regulation, standards and the qualification levels of the people who work in child care. All of this is designed to achieve a much improved provision of child care in this country.
I am happy to say that next September we will have the introduction of the first child care paternity leave for men, introduced on a modest scale as resources allow for two weeks, and we hope over the life of the next Government to improve and expand this. We also hope, as I said in the course of the budget debate, to expand the further provision of paid parental care in the first year of the life of the child. On child care, notwithstanding that we inherited an extremely difficult financial situation, and notwithstanding that we now have the economy coming into recovery, we devoted in the budget resources not just to older people and pensioners, but we have specifically devoted additional resources to education and child care.
With the greatest of respect to the Tánaiste, I must question her judgment if she is proud of the record of the Labour Party, whatever about Fine Gael, in the Government in respect of child care.
We expected what we have got from Fine Gael. The Fine Gael Party is the Fine Gael Party. There are different expectations for the Labour Party, however, and they have been shattered. I remind the Tánaiste that she cut child benefit.
The Tánaiste and her party promised repeatedly not to cut lone parent payments until a Scandinavian-style child care system was in place. They did not give a damn about that promise. In fact, the Labour Party in government has broken every single promise it made. The decisions and actions taken by the Labour Party and Fine Gael, of which the Tánaiste is so proud, have hurt families and children and continue to hurt them.
To add insult to injury, the Tánaiste this morning announced an uncosted back-of-the-envelope election gimmick in an attempt to curry favour with the very families her party has failed over the past five years. The Labour Party's banner-headline initiative is not properly costed. Will the Tánaiste tell us where the costings for the proposal are and their source? Is she prepared to put them on the record of the Dáil for scrutiny, not just by parliamentarians but by the public? In all fairness, how could anybody believe anything the Tánaiste has to say on pretty much any subject but, in particular, on the issue of child care when, time and again, she brazenly broke the promises her party made? Yet she stands up and says to the public she is proud of that record.
Will Deputy McDonald tell me why anybody would believe Sinn Féin when Gerry Adams does not even know whether he is the leader of the IRA but does know Slab Murphy is a good republican? Just tell me that, Deputy.
Let me tell you, Deputy, the moral integrity of people has a great deal to do with child care and the question of whose care our children should be put in. Gerry Adams is a man who cannot even fess up in regard to what happened with certain murders, but Deputy McDonald is asking us to trust her party. The answer is, "No, we do not."
However, let us come back to the issue at hand. The provision of additional child care support for families in Ireland is a crucial political issue and one that will be addressed, I expect, in the forthcoming election by all political parties. The Labour Party has had an extensive period of consultation on the matter, with meetings throughout the country over the past year. Deputies opposite might not have attended them; their party has rallies, as we know. We have had detailed and very well attended meetings right around the country to discuss our child care proposals. We met different sections of the public, people who work in child care and people who are experts in the area. We have also talked extensively to parents.
What parents want, and it will take a considerable period of time to do it, is to have a child care system that is well regulated. The Minister for Education and Skills, Deputy Jan O'Sullivan, has focused on that over the past two years because the big concern for parents is the quality of regulation. In addition, I have provided for a second successive increase in child benefit. Deputies opposite can sneer at that, but their Minister in the North presides over a weekly child benefit rate of €20.70. In fact, for families in Northern Ireland who earn over a certain level, there is no child benefit at all. That is what Sinn Féin has achieved after ten years in government in the North.
We have also extended SNA preschool support, as asked for by parents, to children with special needs. That is a real breakthrough in terms of preschool policy development in Ireland. Deputy McDonald should be gracious enough to acknowledge it.
The Sinn Féin Minister in the North, Mr. John O'Dowd, said recently that those wanting to enter the teaching profession should give "very, very careful consideration" to their choice. Prospective teachers should be aware, he said, that they "may not be able to achieve a post within teaching in this society". The society he refers to is Northern Ireland. This year, we are hiring 2,400 teachers and SNAs and providing for additional child care resources through child benefit. Sinn Féin in the North is like an empty vessel, with people being advised not even to enter the profession.
A Leas-Cheann Comhairle, I asked the Tánaiste a question in respect of costings and the source of those costings in respect of her announcement today. I can only surmise that there are no costings and no credible source for any costings.
They will be published in detail and will be available for any level of scrutiny. We will publish a full, costed manifesto, unlike the fantasy manifestos of some I could name and which we have seen in the past. Our proposals will be available for experts to examine as they wish.
In today's Irish Examiner, Daniel McConnell reports on a new EU study showing that this Government is putting the recovery at risk by political budgeting. The report states that recent fiscal policy decisions are influenced by the current political context, which is the upcoming election and the disgraceful auction politics we are seeing from the Government. The report points out that while the Government erodes the tax base, State investment will remain well below the euro area average and, in fact, is being revised down by the Government. This means that investment in infrastructure needed to support business will not happen. Investment in public services such as health care and education will not happen.
The report is a damning indictment of the Government's pre-election politics, which is straight out of the Fianna Fáil playbook. What is worse is that the Government parties are only warming up. The Fine Gael-Labour Party election promise to eliminate USC will cut the revenue base annually by €4 billion to €5 billion. This, of course, is to be paid for by what the report describes as "strong but generally volatile corporate taxes". This is just like Fianna Fáil's tax-cutting measures, which were based on unexpected stamp duty revenues, but what the Government is proposing is even worse than that. When the recession hit in 2008, households - or most of them, anyway - were able to cut back. Businesses and voluntary groups were able to cut back and the State was able to borrow. None of those conditions holds today. The report states:
External risks are increasingly tilted to the downside as the slowdown in China and other emerging markets could affect global trade more widely. The high levels of private and public debt continue to make Ireland vulnerable to potential increases in interest rates and other shocks.
Given that the Government is eroding the tax base and the safety nets have all been used up, when the next economic shock hits from China or elsewhere as it will at some point we will be much more vulnerable than we were in 2008.
The economy may be growing, but all of that is being put at risk by this Government's carry-on. One cannot use unexpected revenues to lock in permanent tax cuts and one cannot properly invest in enterprise, public services and infrastructure if one wipes billions of euro off the revenue base, but that is exactly what the Government is telling the Irish people it wants to do in the next Dáil. How can the Tánaiste be so irresponsible with Ireland's finances and Ireland's future? How can she so blindly repeat Fianna Fáil's mistakes, which she decried and which led to the crash in 2008?
A number of comments in the executive summary may have escaped the Deputy's notice, so I would like to draw them to the attention of the House.
Ireland's economic rebound is remarkably strong, underpinned by an ongoing successful macroeconomic adjustment and the supportive external environment. Economic growth is projected to moderate towards more sustainable rates in the medium term and Ireland is on track to correct its excessive deficit.
All such reports have issues to raise and want to look forward to risks in the future, which is reasonable and prudential. I have no issue with that and we have those conversations with the review group on an ongoing basis. There is no problem with that. However, these comments in the executive summary recognise that Ireland has achieved a remarkable turnaround and it is the job of the Government to ensure the recovery that has been made to date is not only sustained but grown and that it extends to every single part of the country, so that every family and individual benefits.
Deputy Donnelly is an economist and a consultant; he knows the story on this. We exceeded every single target set for 2015. Is there something wrong with that or can he not recognise success when he sees it? Yesterday I launched the next phase of the Pathways to Work programme, which has overseen a fall in unemployment in Ireland from 15.2% at the height of the crisis to 8.8% now.
-----passion and my mission to get them back to work. We have had remarkable success. That is our objective.
The Deputy worked in a previous life with the IMF or the World Bank on debt. When we came into office, the debt level of this country was 123% of GDP.
I know the Deputy is a policy wonk in this area, so let me say that they are the gross debt levels. They do not take into account the cash balances we have as a country and the interest the State has in the banks, which have already begun to realise cash to the Exchequer and will do so again in the future.
If we were to do the calculation in that way, our net debt level is heading below 80%. What is wrong with that? Can the Deputy not celebrate the fact that people are businesses are going back to work, that USC is coming down for people on incomes of between €25,000 and €70,000 and it is capped at that level? What is irresponsible about that?
A small number of people were telling the Government at that time that it was eroding the tax base, destabilising the country and setting us up for a fall. At that time, the Government asked what was not to celebrate, given the remarkable employment level and growing economy. At that time, the debt-to-GDP level was below 25%. Exactly that kind of discourse is going on here: "Do not worry about it". Then, as now, international organisations wrote reports like this and stated clearly to the State and the Government that it needed to be careful about what it was doing.
However, they continued to erode the tax base and they stopped investing. The time they did it most was just before an election. All those things are happening right now. The difference is that there is no safety net. When Fianna Fáil did it, there were safety nets in place. We could borrow, people could cut back and businesses could cut back.
As the Tánaiste seems keen to quote the report, let me quote what it says about these unexpected corporate tax bonuses:
This surge is mostly explained by some multinationals re-domiciling patents to Ireland. Investment is driven by aircraft-leasing and cross-border transfers of intellectual property by a few multinationals.
That is the kind of stuff the Government is using to knock billions out of the Revenue base. The Tánaiste rightly said this is about people. On Monday night in Wicklow I met a mother with a young son who has a range of special needs. He is nine years of age and he has a handful of words. That kid could achieve a lot in his life. The last time he was given access to a speech therapist was two years ago. The last time he had access to an occupational therapist was five years ago.
Does the Tánaiste want to cut USC for absolutely no benefit whatsoever in terms of job creation or economic growth or does she want a country that offers opportunity and dignity and where mothers and fathers do not have to deal with that?
Do we want a country where businesses can be invested in, where broadband can be invested in properly, and where the infrastructure required to drive growth and jobs for young people can happen? The Tánaiste is not doing that. She is ignoring the reports, just like the last Government. She is pointing to the good news, which is welcome, and ignoring the risks. She should not be eroding the tax base in a high-growth economy. Just like in 2006-----
The executive summary of the report acknowledges the core reason, namely, that we had more than 15% of people unemployed in this country as a result of a property bubble which I warned against on numerous occasions - Deputy Donnelly is right in that respect - and which I would warn against if it were to happen again.
It was a property bubble as opposed to the recovery here which is a jobs-led recovery in which unemployment has fallen from 15.2% to 8.8% this month.
The consequence is that tax revenues, PRSI and USC have grown very significantly. In a balanced budget there has to be scope for some tax reductions. Deputy Donnelly stated earlier that there should have been no reduction in USC. We gave a reduction in USC to benefit the lowest paid at work in Irish society-----
-----so as to ensure that work always pays and we then provided further relief, in terms of reducing the USC rate of 7% to 5.5% for individuals earning between €25,000 and €70,000, and it was capped at that point so that very high earners only got the same benefit as an earner on €70,000.
Let me tell the Deputy about Ireland's current capacity to borrow. Ireland ended up inviting the men in suits from the Merrion Hotel across the road here to take control of the country's finances-----
That is the difference between now and when the country lost its economic sovereignty. Of course, there are matters we must fix. I have just stated we have an ambitious target to reduce the debt even further this year.
-----he would know that what they have recommended, which recipe Deputy Donnelly seems to be following, is actually to use all additional funds to pay down debt, to give no relief to workers-----
We have a balanced budget that is aiming at getting people back to work. We have a balanced budget that is aiming at getting more businesses back on their feet employing more people and we have a balanced budget which has an ambitious programme in my view, not yet big enough, of capital investment and significant additional investment-----