Alice-Mary Higgins (Independent) | Oireachtas source

I move amendment No. 2:

In page 5, between lines 32 and 33, to insert the following: “Report on Credit Guarantees

7.(1) The Minister shall, within eight months of the commencement of this Act, prepare, in consultation with the Minister for Finance and the Minister for Public Expenditure and Reform, a report to consider:

(a) the role played by the State through credit guarantees under this Act and the Act of 2012;

(b) the risk absorbed by the State through credit guarantees under this Act and the Act of 2012; and

(c) the implications of credit guarantees for future public policy in relation to the banking sector, including options in relation to the use of Deferred Tax Assets.

(2) The report, referred to in subsection (1), shall be published within 12 months of the commencement of this Act and laid before both Houses of the Oireachtas.”.

I am proposing a report on credit guarantees. As this matter relates to both Ministers, I ask that in the eight months following the commencement of this Act, the Ministers for Finance and for Public Expenditure and Reform put together a joint report considering the role played by the State in both this and previous credit guarantees; the risk absorbed by the State under credit guarantees; and the implications of the credit guarantees and banking guarantees, which are linked to this, for future public policy relating to the banking sector, including the options for the use of the deferred tax assets.This is related. Banking is given unique supports from the State and the sector has responsibilities in respect of the role it plays in enterprise, the economy and supporting business. However, it also has a responsibility in terms of recognising the support the State has given to it. There is, as previous speakers noted, a lack of trust and an issue that trust has been eroded. The experience of businesses when they sought support from banks is part of that and trust between SMEs and the banks needs to be rebuilt.

More widely, trust between the public and the banks also needs to be rebuilt. The public made huge sacrifices in respect of the bank guarantee. As a result of the bank guaranteed they suffered a direct impact on their lives and those of their children with regard to the opportunities available to them, their education and health and in many other ways. Trust needs to be rebuilt. The public stepped up and gave support to the banks. Are the banks genuinely there to serve the common good of the State to any degree?

On the question of deferred tax assets, the Minister of State mentioned choices. There are choices. It is important to remember that tax relief is public expenditure. It is a choice, money spent in helping a sector which could be used for something else. If we give VAT relief to the hospitality sector, for example, that is a choice. It is an expenditure we decided to make because we believed there would be a collective benefit of some kind from it. Similarly, if we give a tax relief to the banks through the deferred tax assets scheme, we are making a choice in terms of money that will not then be available for a national childcare scheme, special needs assistants, direct supports for business, sectoral interventions or a new scheme through Bord Fáilte, as was mentioned. All those options are available in terms of how the State spends its money. If we choose to spend our money in basically giving a tax-free card to the banks, that is a choice. It is important to remember that. This has not always been a natural right where current profits are always written off against the past. Between 2009 and 2014, the then Minister for Finance, the late Brian Lenihan, put a reasonable measure in place. While I do not like the deferred tax assets scheme at all, the then Minister made a reasonable compromise in providing that only 50% of profits could be set against this scheme. If a bank made profits, it had to pay tax on at least 50% of its profits. It could only use tax schemes to get rid of 50% of their profits. That was a reasonable scheme. If the banks are not making profits, this approach does not hurt them and if they are making profits, they can afford to contribute.