Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank Senator Higgins for the different issues that she has raised. It is important to know the banks we are referring to and the role that they play within our economy. I am as conscious as everybody else in this House of the cost and the considerable harm that was done to our economy and our country some years ago as a result of the behaviour of our banks. However, we need those same banks to provide new lending and investment to Irish small and medium-sized enterprises. This will allow the latter to employ people and to contribute to growth within our economy that will, in turn, pay the taxes that we need for our public services. At a time when we are so aware of the need to build more homes, in addition to the vital role that the State has to play in funding the delivery of those homes, we also need a banking system that is capable of providing new lending and investing in companies that are capable of building homes.

The reason I am against the proposal for the report proposed by Senator Higgins is that what she suggesting that we tax our banks separately and in a different way from how we tax other firms within the economy. These banks employ 20,000 people and hold more than €220 billion in deposits, much of which is deposits from Irish people.

Where I differ from the Senator is that while I am conscious of the considerable harm that the collapse of the banking sector did to our economy 15 years ago, the harm that is still there and the impact it had on people's lives, what kind of signal would it send out if we said that three banks that are registered in Ireland, that have nearly all of their employment located in Ireland, that most of the deposits in which are being managed on behalf of Irish households and businesses, and on which we are nearly entirely reliant for the lending that we will need to build more homes through our private sector, will be taxed differently from any other employer or business? I certainly believe that is not a signal we should send out.

I am also confident that were we to send out such a signal, it would materially affect the value of the State shareholding in AIB and Permanent TSB. That, in turn, would cost us. At a time when I want Irish banks to be stronger - we have already seen the consequences of what happens if banks become weaker in our economy and decide to close branches and even to leave - I believe that kind of weakening of the value of the remaining banks that we have would be injurious to their value, to their ability to grow in the future, and even to their ability to employ and invest in the future.

On the point relating to the change in bank pay that the Government accepted two weeks ago, I make the case again to the Seanad regarding where we stand at present. Let us say you have somebody who is superb at cybersecurity or excellent at meeting the regulatory requirements that the Central Bank places on a bank. Such individuals can earn salaries that are way in excess of the salaries that anybody in this House earns. Those salary levels are determined by the market. They are not determined by the regulator. They are certainly not determined by the Government.

We have many large employers within our economy, including many large international banks and financial service providers that are not subject to that pay policy.If somebody has a particular skill and can do an important role within a bank, would that person not want that bank, which, by and large, holds Irish deposits and is a very big employer within our economy, to be able to offer terms comparable with those offered by the vast majority of banks that are in our economy that are not subjected to a pay cap and which employ far fewer people? Bearing in mind that even if the Senator agrees with my general point, which she probably will not, I have only made that change for a bank in which the State no longer has a single share. The question then becomes whether we believe it is appropriate that the Government sets salaries in a bank in which we no longer have a single share and from which we have regained €2 billion more than we had to invest in it at the time of the global financial crisis. I believe we should not do so. While that was a difficult decision and I appreciate the sensitivity and debate around it, I still believe it was the right one to make.