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Dáil Éireann debate -
Wednesday, 12 Jan 2011

Vol. 726 No. 1

Priority Questions

I call a quorum.

The House cannot begin without a quorum and there is a quorum present.

We will now move to questions nominated for priority, commencing with Priority Question No. 64 in the name of Deputy Burton. I do not have the groupings. Does the Minister propose to group questions?

That is a matter for the Chair.

We are dealing with Priority Question No. 64 exclusively. I cannot call Priority Question No. 63 because the——

The spokesperson is not present. I have no problem if the Minister has no problem.

The spokesperson is not present so we are on the second question.

Yes. Very good.

Priority Question No. 64.

Banking Sector

Joan Burton

Question:

64 Deputy Joan Burton asked the Minister for Finance the current state of affairs at Allied Irish Banks; the implications of State ownership for members of the bank’s board of directors; if he proposes to allow to continue in office those directors who remain in place since before the introduction of the original blanket bank guarantee in 2008; the position in relation to the proposed sell off of good assets by Allied Irish Banks to a new or expanded National Assets Management Agency vehicle, in view of comments recently attributed to the head of Financial Regulation, Mathew Elderfield; if he will estimate the likely capital requirements of AIB once the revised PCAR analysis has been carried out in early 2011; when he expects that these new capital requirements will have to be met; to the extent that the State will be meeting these capital requirements, the mechanism he intends to use to achieve this; and if he will make a statement on the matter. [1444/11]

The board strength of AIB prior to the introduction of the Government guarantee in September 2008 was 15. Only three of those who were in place at that time still remain, all three having joined the board in 2007. Prior to the recent State investment in the bank, the then managing director and executive chairman stepped down from their positions on the board in October and November 2010, respectively. Since September 2008, there have been six new appointees to the board, including the now interim executive chairman in October 2010 and the deputy chairman. One of the principal objectives of the new interim executive chairman will be to assist the group in its search for a long-term non-executive chairman and a group chief executive.

I have indicated previously that a wholesale change of board personnel at all of the covered institutions was neither desirable nor practicable. Our actions to date have been consistent with that policy of progressive replacements, which will continue. I have encouraged AIB and the other institutions to make progressive changes both in terms of new appointees and retirements which have resulted in substantial changes in the composition of their boards. In addition, the Central Bank issued new corporate governance rules for banks and insurers that are to apply with effect from 1 January 2011 and designed to ensure that proper oversight exists to avoid or minimise the risk of a future crisis. Section 48 of the Credit Institutions (Stabilisation) Act 2010 deals with the duties of directors of relevant institutions and requires them to take the public interest into account.

In December 2010, AIB received a net capital injection of €3.7 billion from the National Pensions Reserve Fund, NPRF, as part of its revised capital requirement of €9.8 billion which must be raised by the end of February. The remaining €6.1 billion capital requirement is expected to be met through a combination of fresh capital from the State, the execution of a liability management exercise in respect of existing subordinated debtholders and other capital generative measures by the bank.

The Central Bank is in the process of conducting a revised PCAR exercise regarding AIB. At this stage, it is premature to speculate on the outcome of this analysis. As to the extent to which the exercise identifies additional capital requirements for the bank, the most appropriate method by which this capital will be provided will be decided at the time in consultation between my advisers, the Central Bank and board of directors of AIB.

As part of the agreement with the EU, the IMF and the European Central Bank, the State has agreed to adopt deleveraging measures and implement restructuring of the banking sector. To this end, target funding ratios for 2013 will be established for each of the banks, non-core assets will be identified and an adjustment path to these targets based on specified non-public annual benchmarks will be set.

The 2011 PCAR is being conducted with the assistance of various external advisers, as announced on 6 January. The metrics and various possible structures are being examined and will be included as part of the process scheduled for completion by 31 March. It is expected that the capital requirements will be met shortly after completion of the exercise, but a definitive date has not been set.

I am aware of the comments made by the Financial Regulator last week that restructuring of our banks could involve sales of good assets by the banks. However, I must point out that the analysis of all the options that could be used in a restructuring exercise is still ongoing. Proposals arising from such an analysis would of course need to be considered by the Government before they could be adopted.

I thank the Minister for his reply. Before Christmas, he mentioned a figure of €6.4 billion as regards extra money for AIB. Others have suggested the figure will be almost €10 billion. Will he clarify what he now expects the figure to be? What is the State's net loss to date on its so-called investments in AIB? When the Minister introduced the bank guarantee, we were spun a story to the effect that such an investment in the banks would yield good returns. In fact, it has undermined the State disastrously, as the guarantee linked the debt of this and other covered institutions with that of the State. Does the Minister agree this is why the IMF came in to take over the country before Christmas?

How much are the further injections into AIB? Do they amount to €6.4 billion, bringing the total to almost €10 billion? What does the Minister intend to do with the cash balances of the NTMA? Will he take those balances and place them directly into the bank or will he use a mechanism for transferring support to the bank along the lines of promissory notes?

As the answer makes clear, in December AIB received a net capital injection of €3.7 billion from the National Pensions Reserve Fund as part of its revised capital requirement of €9.8 billion, which must be raised by the end of February 2011. That is part of the revised capital requirement. The €3.7 billion was in any event a requirement since last March under the original requirement set by the regulator. Under the higher capital ratio now set in the EU-IMF-ECB agreement, the revised figure is €9.8 billion, of which €3.7 billion from the National Pensions Reserve Fund is part. The remaining €6.1 billion capital requirement, the difference between €3.7 billion and €9.8 billion, which will be outstanding until February, is expected to be met through a combination of fresh capital from the State; the execution of liability management exercises for existing subordinated bond holders and other capital generative measures that bank has ongoing.

I am trying to deal with all of the Deputy's questions.

I want Deputy Burton to be able to ask a brief supplementary question, we are already over time on this question.

How much extra cash must the taxpayer put into this bank through the NTMA mechanism from its remaining cash balances? What figure does the Minister expect? He talks about an asset management exercise, which means the selling down of assets through a credit enhancement process, where the State would guarantee maximum losses for the buyers of those assets. Will the Minister specify how much he expects the asset management exercise to generate? Could he specify what other asset sales will take place and outline how much the State has lost on the investment in AIB so far?

Credit enhancement measures are separate from meeting the capital requirement; they do not arise as part of the answer to the Deputy's question. They are separate initiatives.

They do arise because they have an effect upon who buys what assets.

I am trying to answer the question.

I want to disagree with the Minister because if he thinks that, he is wrong.

I will endeavour to answer the Deputy's question and she can issue any statement she likes afterwards but I am entitled to answer the questions she asked. To date I have only been able to give partially complete answers because of a lack of time.

The Deputy pertinently asked how much actual cash will be required for the proportion of the total capitalisation. It is not possible to fix a precise cash figure because, as I indicated in my initial reply, it is proposed to conduct a liability management exercise with subordinated bondholders. When those subordinated bondholders take whatever pain is inflicted upon them, it will have a material bearing on the amount of cash involved. In addition, the amount of cash is further reduced by the fact that part of the capitalisation is being executed through the conversion of the existing preference shares to ordinary share status. Clearly the investment in the existing preference shares has already been made and those shares will be converted to ordinary risk capital as part of this publicly owned institution.

So there are no figures?

I will give Deputy Burton as many figures as possible at this stage.

I will call Question No. 67 next and apologise for discommoding the Minister.

Question No. 67 can be grouped with the initial question tabled by Deputy Noonan, I think.

It is a matter for the Minister to decide.

It deals with Commissioner Barnier's views.

Damien English

Question:

67 Deputy Damien English asked the Minister for Finance the input he has had into the endeavour of the International Market Commissioner, Michael Barnier, to assess sentiment on a proposal that, in future, bond investors would share the burden of any bank collapse; and if he will make a statement on the matter. [1443/11]

As the Deputy is aware, the European Commission has the right of initiation for legislative proposals within the European Union legal framework. In that context, I welcome the Commission's consultation document, Technical Details of a Possible EU Framework for Bank Recovery and Resolution, published 6 January 2011, which includes an annex examining the issue of debt write-down as an additional resolution tool. The Commission is seeking stakeholders' views on possible mechanisms to write down the debt of a failing bank or to convert it to equity, as a means of restoring the institution's capital position and suggests that this tool would be for cases where the standard resolution tools are not suitable options or other tools would not be sufficient to achieve the objectives of a resolution. My Department will be responding to these issues on my behalf as part of its overall response to the Commission's proposal. It should be noted that this work is still at an early stage, as there is not a clear international consensus as to the specifics of how such bail-in tools would work in practice.

The Basel Committee on Banking Supervision, issued for consultation on 19 August 2010, is a proposal to ensure that all regulatory capital instruments are able to absorb losses in the event that the issuing bank reaches the point of non-viability. The consultation period is complete but the committee has not yet issued its assessment of the comments received.

In terms of my input to the Commission's proposal, it is the case that the crisis management has been the subject of detailed discussion by European Finance Ministers over the past number of years. I welcome the broad direction of the approach taken by the Commission and I have discussed the general direction of Commission policy on this matter with Commissioner Barnier.

In June 2009, the Economics and Finance Council, ECOFIN, called on the Commission to bring forward appropriate proposals to develop a comprehensive cross-border framework to strengthen the EU financial crisis management systems. Extensive discussions have taken place at ECOFIN of the Commission's work in this area including its communication and public consultation on an EU framework for cross-border crisis management in the banking sector which was published on 20 October 2009, its communication on bank resolution funds which was published on 25 May 2010 and its communication on a new EU framework for crisis management in the financial sector which was published on 20 October 2010. As well as these discussions at ministerial level, my Department also participates in the Commission's expert group established to assist the Commission in its development of legislative proposals for a framework for EU crisis management. I look forward to continuing my engagement with the Commission and other member states in the development of EU policy in this area.

I will conclude by making two further points. Future resolution mechanisms will only apply to a future insolvency or failing bank or distressed institution. They will not have application to the problems we in Ireland have already had to face and any proposals by the Commission have to be judged in that context.

Second, the general debate illustrates the fundamental truth of the proposition that if we are to make progress on this issue with regard to our current institutions — we endeavoured to make some progress during the recent EU-IMF discussions — it can only be made on a multilateral European basis.

This question is being taken as a stand-alone question and I will revert to Deputy Noonan's question subsequently.

The Minister has until March to make his submission. Will this be discussed by the Joint Committee on Finance and the Public Service and will the Opposition have a say? Our view is slightly different from the Minister's, unless he has changed his way of how he does business. Up to now the Minister does not seem to want to go after the bondholders. This is a discussion paper about a fairer way of dealing with bank debts, not just the taxpayer taking the burden which has been the Minister's policy to date. Can I take it that the Minister might not necessarily agree with the Commission that bondholders should take on more debt-sharing in the future? We think they should. Will there be an opportunity to discuss this at the finance committee and will the Minister take advice on it? Will the Opposition have an opportunity to give its views to the Commission or will it just be the views of Ministers? This needs to be properly thought out and hopefully it will not be needed in the future, but it might be. If it had been in place, taxpayers would have been saved a lot of money.

Will the Minister be recommending that in future the bondholders will take more of a hit and the taxpayers a lesser hit? This is not his current policy and I ask him to clarify the position.

Any statements I have made to date on this subject have been in the context of the——

Sorry, policies, actions, statements, whatever phrase the Deputy prefers——

They are very different.

——have been made in a context in which we have had to deal with actual distressed institutions. I have in no way prejudged in any statement what future policy should be in this matter. As I indicated in my reply, I am supportive of the Commission's approach. I would welcome a discussion by the Joint Committee on Finance and the Public Service and would be pleased to take its views into account when formulating a position on this issue.

I thank the Minister for his willingness to discuss the issue but he was specifically asked for his views on dealing with the debts of banks. Will he recommend that in future bondholders will take a bigger hit than was the case under Government policy to date? I accept he will argue that he was unable to do this previously, although we think differently.

Yes, and in enunciating policy in recent years I have made it clear that Europe does not have legislation equivalent to that introduced in the United States in response to the savings and loans crisis. That has created a very different context for the domestic debate on bondholders and the degree to which they should contribute to the resolution of difficulties in institutions which are extremely distressed.

That is the Minister's view.

Many of the arguments used in this jurisdiction were derived from sources in the United States, where an entirely different legal context applies. If the Deputy is asking me whether we should move towards the legal context of the United States, I think we should be open and positive about doing so but I would express the reservation that any proposals have to be judged in terms of the impact they will have on the capacity of institutions to raise funds.

We will now revert to Question No. 63. I apologise for chopping and changing and hope it does not disrupt Members.

EU-IMF Programme of Financial Support

Michael Noonan

Question:

63 Deputy Michael Noonan asked the Minister for Finance his understanding of his commitment in the EU/IMF Programme of Financial Support for Ireland actions to be completed by end Q3 2011 that he will consider an appropriate adjustment, including to the overall public service wage bill to compensate for potential shortfalls in the projected savings arising from administrative efficiencies and public service number reductions; and if he will make a statement on the matter. [1441/11]

As I stated in the Budget Statement, the policies set out in the joint programme of assistance closely reflect our national recovery plan. The programme sets out key points where the Government will assess the delivery of its current policies as set out in the plan to ensure they are achieving the savings and adjustments necessary to help restore the country's budgetary position, building on the significant savings already achieved over the last two years. The Government proposes to meet its target for further reductions in the cost of delivery of public services through planned reductions in the number of public servants and through greater efficiencies in the way public services are delivered. The savings targets for 2011 are set out in the budget Estimates and now form part of the allocation for each Department and agency over the coming year. These savings targets are based on an overall reduction of public service numbers to 301,000 by the end of 2011 and other savings to be realised through a range of efficiencies and reform measures, including those set out in the Croke Park agreement. The agreement will allow the necessary changes to working practices to be made to enable priority services to the public to be sustained in a period of reduced resources.

The EU-IMF programme of financial support for Ireland states that by the end of the third quarter of 2011, the Government will consider an appropriate adjustment, including in the overall Public Service wage bill, to compensate for potential shortfalls in the projected savings arising from administrative efficiencies and public service number reductions. Prior to that, and in accordance with a commitment under the Croke Park agreement, the first annual review of the position concerning public service pay and the sustainable savings arising from the implementation of the agreement will be undertaken. That review will be based on the same quarterly data on the public service wage bill and the number of employees as will be provided on a quarterly basis under the joint arrangement. There is therefore a synergy between the plan and the agreement. The reviews under the agreement will demonstrate clearly whether it is delivering savings in the costs of public service delivery, primarily through reductions in public service numbers, with the related changes in working practices necessary to ensure that priority public services can continue to be sustained or improved. In the event that the necessary sustainable savings are not being achieved, the Government is of the view that further cost saving measures will be necessary to achieve those reductions. A number of options would be available to the Government in those circumstances to reduce the cost of the overall pay bill.

In that regard the main commitments the Government gave under the agreement, namely those on pay rates, job security and superannuation entitlements, do not apply to any public servant which is represented by a union or association that has not accepted the agreement. Any union or association in that position should now give careful consideration as to whether it is best representing the interests of its members in adopting that approach.

If the savings envisaged under the Croke Park agreement in the public pay bill are not achieved, then the Minister will have straight pay cuts, if he happens to be still around at the end of quarter three. Does he agree that the fact this is written into the memorandum of understanding is evidence that neither the IMF nor the European Union institutions believe the targets under the Croke Park agreement? If he is still in office, does he envisage raising this issue when the review of the Croke Park agreement takes place in early March?

I do not accept what Deputy Noonan indicated or inferred because this particular procedure was inserted in the national recovery plan prior to any agreement with the EU and the IMF. The position under the national recovery plan is that we will seek to reduce the cost of the public service payroll through reductions in the numbers and a very clear schedule of numbers is outlined there. Were those savings not to be secured in accordance with the Book of Estimates published for this year, then the ultimate option of other methods to reduce the cost of the public service payroll would be resorted to. That was made clear in the national recovery plan and I made it clear on many occasions before and after the agreement that it must deliver the necessary savings. Whatever government is in office at the time will have to take measures to ensure costs are contained accordingly. I have every confidence this Government will be in a position to deliver the necessary savings through the primary route identified in the Estimates this year.

I agree the Minister signalled this in the national recovery plan but the wording I used, and the question I posed today, is not taken from the national recovery plan but directly from the memorandum of understanding with the IMF and the EU institutions. It states very bluntly that if he does not achieve the targets envisaged under the Croke Park agreement, he will have to cut public service pay. Has the Minister worked out the process, procedure and legal base for possible future cuts in public service pay or is that something he has put on the back burner until there is a change in government?

As Deputy Noonan is aware, the officials from the IMF, EU and ECB were very impressed with the national recovery plan. They viewed it as a very impressive document, unlike the Deputy——

Hence the interest rate.

——and decided to endorse the agreement. One of the features of the agreement is that to ensure there is delivery on public service reform, there must be some mechanism to ensure the savings are procured in any event. That is in the national recovery plan and it is confirmed in the EU-IMF agreement.

It is not the only measure in the agreement which ensures budgetary discipline on the part of future Governments. There are many other provisions, for example, the cash limiting of Government departmental allocations on the non-pay side, the appraisal of projects on the investment project side, the restrictions of Supplementary Estimates and the requirement to bring savings forward to future years and not to reallocate them. All of these measures will ensure a path of strict budgetary discipline is followed by whatever Government is elected by the people. Indeed, the measures adopted in the EU-IMF agreement, and confirming what is in the plan, ensure that a path of strict fiscal control will be exercised by any future Government.

State Banking Sector

Michael Noonan

Question:

65 Deputy Michael Noonan asked the Minister for Finance if he will explain the statement by the EU Commission that Anglo Irish Bank will receive a guarantee covering certain off balance sheet liabilities in addition to the payments to recapitalise the bank; the duration and estimated cost of this guarantee; and if he will make a statement on the matter. [1442/11]

I refer Deputy Noonan to my reply of 7 December 2010 concerning this matter. In November 2010, following a request from Anglo Irish Bank, the State provided a guarantee to the bank's derivative, repo and clearing type counterparties. These counterparties did not have the benefit of support under any other existing guarantee arrangements.

As with all banks, Anglo Irish Bank is exposed to a number of risks and uncertainties in the normal course of its business activities. I would stress that these exposures relate solely to normal activities of the bank. The bank's balance sheet exposure to these risks, taken together with the risk mitigation provided by derivatives, are managed within risk limits which are approved by the bank's board of directors.

Anglo Irish Bank indicated in late 2010 to the authorities that owing to the bank's financial position and recent rating actions, unguaranteed counterparties required the provision of such a guarantee if they were to continue transacting with the bank. The bank has committed to entering only into arrangements which are to manage balance sheet risks and the bank does not take positions outside the limits approved by the board of directors.

The bank has committed to keeping the NTMA regularly informed of the potential exposures arising under the guarantee and the NTMA monitors these exposures to ensure that any risk to the Exchequer is minimised.

The State has incurred no cost arising from this guarantee. The guarantee is a continuing guarantee and can be terminated by the Minister on 90 days' notice.

The European Commission's approval was necessary under state aid rules since the institution was benefiting from a guarantee and hence the reference by the Commission to this matter in its approval of the injection of capital to the bank in December 2010.

What is the cash value of these additional liabilities which are being covered by the guarantee and which were brought to the public's attention on the EU website when the Government had to proceed in camera in court to put extra capital into one of the banks?

I will need to write to the Deputy on that matter and I undertake to do so. Giving a precise cash value on a guarantee, which is a contingent exposure, is a very difficult exercise, as I am sure the Deputy is aware, and would require evaluation, but I am sure an approximate figure can be given. As the Deputy knows, this bank is wholly owned by the taxpayer and we have a duty to ensure the bank can continue in the ordinary course of its business to transact the amount of business it is permitted to transact.

Would it not be reasonable to ask the potential liability the Government is covering with this guarantee? For the Minister to offer to write to me does not give me a good answer. The public in general were unaware that there were additional liabilities the Government was covering in December. This was brought to the attention of the public on the EU website and it was repeated on the Anglo Irish Bank website. I will put the question again: the Minister is the man who issued the guarantee and so what was the quantum he was guaranteeing?

The guarantees is for certain derivatives, repo and clearing-type counterparties. As noted previously, the bank is committed to entering only into arrangements which are to manage balance sheet risks and the bank has confirmed that it does not take positions outside the limits approved by the board of directors, and the bank keeps the NTMA informed. The vast majority of the derivatives are covered by collateral support agreements, which require the posting of collateral in the event that the derivative is out of money — in other words, if it becomes a liability. The collateral is netted against the State's exposure in the event that the guarantee is called. The guarantee has not been called. The Deputy asked me to give the House an estimation of what it would cost and I said it was not possible to give such an estimation. The Deputy sought a market value cost of the guarantee which I could not give him. In terms of the maximum net exposure were all the derivatives to arise as a liability, assuming the guarantee was called, it would be less than €10 million.

The other exposures relate to collateral valuation movements for repos, intraday balances on clearing accounts — these accounts are cleared to nil each day — and a backstop facility for the bank's commercial to paper programme. To take an exemplary week, the total maximum net exposure to these transactions during the week ended on 31 March 2010 was €600 million. That would have been the total exposure were there a call on any of those that week. Those are the figures I can give the Deputy. However, I cannot give a market price for the guarantee, which he asked me originally, although I outlined the reasons it was difficult to do so. We could attempt the exercise and provide him with the information if he wishes.

Job Losses

Joan Burton

Question:

66 Deputy Joan Burton asked the Minister for Finance his views on the elevated level of business closures and job losses in 2010 particularly in the retail and domestic services sectors, the continuation of these trends into 2011, and their likely impact on economic growth and on the public finances; if he will set out the expectations for employment trends, business closures and economic growth underpinning his budget day forecasts; and if he will make a statement on the matter. [1445/11]

The challenging economic climate that has existed in Ireland and the broader international economy over the past three years or so has led to difficult trading conditions for many firms and significant job losses, most notably in the construction and retail sectors. This is in part due to the rebalancing of the Irish economy away from unsustainable growth dominated by construction in recent years. It should also be noted that, even during periods of sustained economic growth, there are always businesses closing and new businesses opening.

On a more positive note, after experiencing two years of significant falling output, it is now clear that growth returned during the latter part of last year and, for 2010 as a whole, GDP is expected to have stabilised. The strength of the corporate sector is also reflected in the performance of corporation tax receipts in 2010 which were marginally up on the 2009 level and almost a quarter greater than expected. The Government has been actively attempting to improve the business environment in Ireland and to foster the development of new and existing companies. Labour cost competitiveness has been improved as a result of the demonstration effect of the public service wage bill, the air travel tax has been cut, the commitment to retaining the 12.5% corporation tax rate has been reinforced and the business expansion scheme has been revamped.

Clearly, economic growth is essential if we are to have real improvements in living standards and get employment growing again. In this regard, growth will be achieved through an export-led recovery, driven initially by the mainly capital intensive manufacturing side but also by the more labour intensive services sector. As exports grow, domestic activity will gradually expand. Encouragingly, exports in the third quarter of 2010, as shown in the national accounts, grew by 12.9% for goods and 13.6% for services. Data released today by Bord Bia show that food and drink exports expanded by 11% in 2010 exemplifying the broad nature of the recovery. It is a recovery that is not confined to the multinational sector, but has taken place within indigenous exporting as well.

Indicators of activity, such as the Quarterly National Accounts and the Quarterly National Household Survey and soft data from sources such as the Purchasing Managers' Indices, indicate that economic growth patterns are in line with those contained in the budget. These indicators support my Department's forecasts that economic growth is expected to be 1.7% in GDP terms and 1% in GNP terms in 2011. My Department expects that this growth will be mainly driven by exports, with domestic activity continuing to contract, albeit at a much slower pace. The unemployment rate, which has shown signs of moderation in the final quarter of 2010, is expected to fall marginally to 13.2% this year.

The 2011 budget day growth forecasts take account of the impact of the consolidation in the public finances of €6 billion that was necessary to achieve a general Government deficit of 9.4% of GDP this year. In 2010, the Government stabilised the public finances and this year we will start to see the reduction in the deficit ratio, which is essential to meet the 2014 target.

I thank the Minister for his reply. Does he understand the levels of fear and despair in towns, cities and villages all over Ireland for businesses that are in very serious trouble, particularly in the retail sector, the hotel and licence trade, and businesses dealing with tourism? Does he know how many such businesses went to the wall in 2010, and how many are likely to go to the wall in 2011? Has the Government any proposals to assist such businesses?

Many of the retail businesses are closing. We heard the unfortunate story of the collapse of the bookie's business of a former Member of this House, Mr. Ivan Yates. That business was typical of many. The rents that businesses are paying on shops and the lease costs are such that they are not capable of being met under the current deterioration in trade. For the past two and a half years the Labour Party has asked the Government to change the upward-only rent review rule on existing leases so that businesses can renegotiate with their landlord a lower rent plus a profit share if profits return. There are many workable models in other European countries. Has the Minister any intention in the remaining months of the Government of doing anything to help the struggling businesses, many of which are dying, in every town, village and city in this country?

A report last week by corporate restructuring specialists Kavanagh Fennell showed that more than 1,500 firms went into liquidation, receivership or examinership last year. A large proportion of these firms were in the construction sector and other related sectors. This is in part due to the rebalancing of the Irish economy away from unsustainable growth dominated by construction in recent years. On a more encouraging note, the business information firm and risk assessment agency Vision-net states that 14,015 companies were incorporated in Ireland last year, which was an increase of 5% over 2009.

The national recovery plan provides a blueprint for Ireland's return to sustainable economic growth. It identifies areas of activity which will provide increased employment opportunities as Ireland's economic recovery takes place. The plan sets out a range of specific actions and supports designed to improve competitiveness across all sectors of the economy, including the small and medium enterprise sector. There are measures to cut costs to business, the removal of barriers to employment creation and a range of sector-specific actions to increase exports and domestic demand. The specific issue raised by Deputy Burton is a matter for the Minister for Justice and Law Reform.

The Minister for Finance has a responsibility for the general economy. Businesses are being killed by problems relating to leasing rents and costs and the impossibility of breaking those clauses unless the business goes into liquidation and has a capacity, perhaps on a more reduced scale, to start elsewhere.

Does the Deputy have a question?

The Minister did not mention that the other day tourism was reported as being back to 1998 levels. Does the Minister or his Government have any proposals in this regard? Not everybody will be a fourth level postgraduate worker in a multinational company doing information technology. We want people back working in shops, hotels and other tourism areas. Has the Government any proposals, such as graduate employment placement or business guarantee loan schemes? The Labour Party has made such proposals for two and half years in order to get business and people working again.

Many of these schemes can be availed of by the tourism sector and I agree with the Deputy that the sector can see growth if the Government makes decisions. For example, the Government made a decision on the minimum wage which was bitterly opposed by the Deputy's party. That was primarily sought by the tourism sector. The recently announced budget involved a substantial reduction in the air travel tax, which is a cost the Exchequer will have to bear in order to ensure greater access of tourists to Ireland. I agree that tourism sector is very important and the Government is taking a number of initiatives in that regard.

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