Dáil Éireann debate -
Wednesday, 15 Apr 2015

Vol. 874 No. 1

Leaders' Questions

Deputy Micheál Martin

I am sure the Taoiseach will agree that for many families the most significant financial outlay is their monthly mortgage payment. It has a huge impact and can create enormous pressure in their lives. We have a situation where over 300,000 households are on standard variable rate mortgages which clearly are exorbitant and exerting enormous pressure on their capacity to sustain their lives from a financial perspective. It is very clear that the rates being charged are far in excess of the cost of bank funds. A typical €200,000 standard variable rate mortgage holder, for example, is paying €6,000 more per year than a borrower with a tracker mortgage. I am sure the Taoiseach will agree that this is simply unsustainable. Given that there is a figure of approximately €40 billion for standard variable rate mortgages, a 1% reduction in interest rates would equate to a benefit of an estimated €400 million to households across the country. Even a 0.5% reduction would equate to a benefit of around €200 million which would provide enormous relief for the families concerned. It would put issues such as the property tax and water rates in the ha'penny place in terms of the actual financial impact on such families who are the most hard-pressed in the country. It is very difficult to justify the high rates charged for standard variable rate mortgages when one looks at the cost of funds. AIB is charging a rate of 4.15%, while Bank of Ireland and permanent tsb are charging 4.5%, but the cost of funds is 1.64%, 1.15% and 1.74%, respectively. The variation is huge and in stark contrast with the rates in other eurozone countries. Customers in Ireland on the standard variable rate are paying up to 2% more than their counterparts in the eurozone. Banks which operate in both the Republic of Ireland and the North are charging their customers here on such mortgages 2% more than in Northern Ireland.

We raised this issue in a debate during Private Members' time over two weeks ago when our finance spokesperson, Deputy Michael McGrath, pressed the Minister strongly in what was a comprehensive and constructive presentation by our party, particularly in terms of providing solutions to the problem. However, the Government has not stepped up to the plate and there has been very little engagement on the issue. Essentially, the Government has given the banks free reign in how they operate and impact on customers. Has the Taoiseach met the banks specifically on this issue? Has the Economic Management Council raised it with the banks? From what we can see, it has not met the banks since 2012. What is the Government proposing to do to alleviate the enormous, unacceptable and unfair pressures on families?

The Taoiseach

I agree with the Deputy that their mortgage outlay is one of the principal issues they have to deal with every month. I also fully understand, from direct contact with so many people, the numbers who struggle to meet their mortgage repayments. Obviously, this is part of the legacy of the economic crisis of a number of years ago.

The Deputy asked if I had met the banks specifically on the issue. I have not. He is aware that the Government is not in a position to direct what interest rates should be; nor does it want to become the director of what they should be. However, it is not happy with the current position, given the emerging evidence that the reduction in the interest rates at which banks borrow money from their lenders has not been passed on to consumers. The Deputy will be aware of many of the reasons behind this.

On the one hand, the Government has been dealing with cases of mortgage distress and mortgage arrears which are causing difficulties for many and committed to bringing forward a range of measures to attempt in the next short period to deal with mortgages in long-term distress. The Minister for Finance met the Governor of the Central Bank to discuss the question of higher interest rates being charged on variable rate mortgages in Ireland. Both he and the Governor noted the lending charges to banks and the rates being charged to mortgage holders and the Central Bank has undertaken to do further work on the scale of what is involved and the justification of the banks for the higher rates being charged to Irish mortgage holders in comparison to their counterparts in the eurozone. That work will continue and, obviously, the Minister and the Government will monitor the position very closely.

I do not want to do anything that would interfere with the process or the principle of people being able to acquire mortgages at competitive interest rates in a situation where the banks have been normalised. The capacity to obtain a mortgage at a competitive interest rate has been a fundamental part of home acquisition and home ownership, to which people in Ireland legitimately aspire. The Deputy is quite right to raise the matter and it is one on which the Government is focused. There is, obviously, a requirement for it not to become the director of mortgage interest rate levels. That said, it has made its views very clearly known to the Governor of the Central Bank through the Minister for Finance.

Deputy Micheál Martin

That is the Government's line when it suits it, but in November 2011 the Minister for Finance, Deputy Michael Noonan, made much of the fact that he had persuaded AIB to reduce its rates by 0.25% following a cut by the ECB. When it suited, the Government sought to claim credit for putting pressure on a bank to reduce its interest rates. In addition, the last meeting between the Governor of the Central Bank and the Minister for Finance was routine, as I understand it, although during the debate during Private Members' time it was played up by the Fine Gael press office as a major initiative. In essence, both the Governor and the Minister "noted" that the variable rates charged in Ireland were higher than in other eurozone countries, which is hardly earth shattering to note. They then said research would continue. People observing this would say there is no justification, by any objective measurement, for standard variable rate customers having to pay such punitive interest rates in comparison with others. When average families look at what is happening with the banks, they see a clear truism emerging. Big companies and corporate entities are being given massive discounts on their loans, amounting to hundreds of millions of euro in some cases. Despite the recapitalisation of the banks and the substantial funds that have been made available to them, we read today about the vetoing of so many mortgage arrears settlement proposals under the personal insolvency regime. That, coupled with the position on standard variable rate mortgages, illustrates there is absolutely nothing for ordinary families. Nothing whatsoever has been done for them in the past few years.

They watch as others get €100 million per company in write downs or restructures and are asking a very basic question-----

Deputy Finian McGrath

It is a terrible injustice.

Deputy Micheál Martin

-----namely, who is intervening on behalf of the average customers of the banks, particularly those which are owned by the State. It appears to the ordinary punter that no one is intervening. The Government is certainly not doing so. Hence the need for the latter and the Irish Economic Management Council to, at a very minimum, meet representatives from the banks and put that fundamental issue to them.

Deputy Peter Mathews

Hear, hear.

The Taoiseach

Deputy Martin knows full well the situation that arose when these banks collapsed. He is also aware of the reasons for their collapse. He is further aware that the banks were restructured and that they were then recapitalised by the Irish taxpayer, not for their benefit but for that of their customers. I stated a couple of weeks ago that I am not happy with the situation whereby banks have not passed on to mortgage holders the lower interest rates from which they have benefited. AIB has passed on variable interest rate reductions to all its customers but other banks have not done so. The Minister for Finance and the Governor of the Central Bank met to review the position and the latter has undertaken to carry out further work in respect of this matter.

The statement of Government priorities recognises that promoting and encouraging competition among banks would be in the interests of the people. The Government established the Strategic Banking Corporation of Ireland and the credit guarantee scheme and it also amended section 149 of the Consumer Credit Act.

Deputy Micheál Martin

I apologise for interrupting but did the Taoiseach state that AIB has passed on variable interest rate reductions to all its customers? It has not done so.

The Taoiseach

Yes, I stated that AIB had passed on reductions to all its variable standard rate customers. However, there is no impediment to further work being done in respect of this matter. I am not happy with the position.

Deputy Micheál Martin

It did not pass them on to those on the standard variable rate.

An Ceann Comhairle

We are over time.

Deputy Mattie McGrath

The Government is past its time.

The Taoiseach

As already stated, I am not happy with regard to the fact that the banks have not passed on the lower interest rates from which they have benefited. There is room for more work to be done. That is why we have taken the actions to which I refer and why the Minister met directly with the Governor of the Central Bank. The Government is not in a position to direct the interest rates which should obtain. Clearly, the banks have a moral duty to pass on the lower interest rates from which they benefit.

Deputy Micheál Martin

What did AIB pass on?

The Taoiseach

It is not fair, just or equitable that Irish consumers are being charged higher interest on variable rate mortgages than their counterparts elsewhere in the eurozone.

Deputy Peter Mathews

If that is the case, the Government should do something about it.

Deputy Mattie McGrath

The Taoiseach is at the wheel.

The Taoiseach

That is why the Government and the Governor of the Central Bank are focused directly-----

Deputy Barry Cowen

Focused on what?

The Taoiseach

-----on carrying out further work in this area.

Deputy Barry Cowen

The Government is not focused, it is like Bambi in the headlights.

Deputy Finian McGrath

Paddy wants to know why the Government is doing nothing.

Deputy Micheál Martin

AIB did not pass anything on. Perhaps the Taoiseach will correct the record.

Deputy Gerry Adams

The Taoiseach states that it is not fair, just or equitable yet he does nothing. He knows as well as I that there are different ways to govern. One way is to build a citizen-centred, rights-based society with equality for citizens and a right to public services. The other involves an approach whereby it is everyone for himself or herself, where there is little sense of social solidarity and where there are no legal rights or social protections for citizens. This is the vision that Fine Gael and, shamefully, the Labour Party now embrace. Hardly a month passes without further evidence of the Government's destruction of public services and its policy of privatisation in the areas of health, water services and public transport. The Government's plan to privatise bus routes is set to fatally undermine Bus Éireann and Dublin Bus. It is clear the Taoiseach either does not understand or chooses to ignore the fact that in order to ensure an economic recovery which is fair and which leaves no family or part of our island behind, investment in public transport is crucial.

Bus Éireann and Dublin Bus have struggled to maintain vital services but they have actually managed to increase passenger numbers and revenue despite Government cuts. Now, however, those opposite are going to force these public companies to compete with private operators. Buses will in future run as a means of generating profits for shareholders and not as a public service. Those who will suffer will be ordinary workers, students, elderly citizens and families. Privatisation will inevitably drive down the wages of bus workers and will have an adverse impact on their terms and conditions. Will the Taoiseach acknowledge that profit cannot be perceived as the decisive factor in terms of whether the economy of and services on offer in rural Ireland decline further? Will he reverse the decision the Government has taken to privatise bus services?

The Taoiseach

I do not accept Deputy Adams's assertion to the effect that the Government has decided to privatise Bus Éireann or Dublin Bus. Nothing could be further from the truth. The position is that the Government - in the context of an economy that is rising - wants consumers and those who use buses to have access to the very best level of service that can be made available.

Deputy Dessie Ellis

It is privatising-----

The Taoiseach

As Deputy Adams is well aware, the National Transport Authority, NTA, has a statutory responsibility to judge how best to balance both the direct award and the tendered public service obligation, PSO, services that are socially necessary and that relate to non-commercial bus routes. In late 2013 the NTA, in the aftermath of a wide-ranging consultation process, decided that 10% of the existing PSO bus market should be tendered for. The Deputy will have heard the Minister for Transport, Tourism and Sport very cogently reassure workers with regard to their conditions and their rights in respect of this matter. The NTA was proceeding with the public procurement process while also participating in the process facilitated by Labour Relations Council, LRC, in the context of addressing CIE employee concerns on the implications of this element of the market being opened until a trade union withdrawal on 30 March last. Hence, there has been quite an amount of intensive engagement on employee issues. It is the Government's view that the discussions at the LRC would allow employee concerns to be addressed very satisfactorily. The Minister is extremely clear about that.

As the Deputy is also well aware, introducing competitive tendering in respect of a small segment of the overall number of available bus routes will save the taxpayer money, encourage cost competitiveness and enhance service quality.

Deputy Peadar Tóibín

It will also send the service abroad.

The Taoiseach

Dublin Bus is perfectly entitled to tender in respect of the 10% of routes to which I refer in addition to those on which it already provides services.

Deputy Dessie Ellis

In Waterford, 100% of services will be privatised.

Deputy Finian McGrath

Will the Taoiseach support those who go on strike?

The Taoiseach

International experience indicates that competitive tendering is beneficial in the context of the provision of subsidised PSO bus services. Bus Éireann and Dublin Bus will both be able to submit bids during the tendering process when it commences in the middle of this year. The two companies in question were paid in excess of €90 million in PSO supports by the taxpayer last year - this amount was over and above passenger fare incomes - in respect of the provision of public bus services.

Deputy Thomas P. Broughan

So what?

The Taoiseach

A further €90 million was provided to cover the cost of the purchase of new buses and the upgrading of the fleet. The NTA has a legal responsibility in respect of this matter and it set down a 10% requirement in respect of services which are to be tendered for. Dublin Bus and Bus Éireann can tender to provide services on the routes involved. The taxpayer has paid €180 million in order to support this process and improve the quality and quantity of the companies' bus fleets.

Deputy Gerry Adams

The Taoiseach stated that the Minister cogently spelled out the Government's position. The bus workers cogently informed the Minister that they are going on strike. They do not appear to have been at all humoured by what he had to say. The Taoiseach indicated that there will not be any privatisation, that the market will be opened and that there will be competitive tendering. Given that words are what words mean, there is going to be a 10% privatisation of bus routes. In the Taoiseach's words, there will be competitive tendering for these routes and the market will be opened. He is aware that his Government has made life consistently more difficult for rural communities and the people who live in them. Local post offices and Garda stations have been closed-----

Deputy Patrick O'Donovan

What about the PSNI in the North?

Deputy Gerry Adams

-----and the cost of private motoring has increased. The Government is now cutting transport programmes.

Deputy Ray Butler

What about the hospital closures in the North?

Deputy Gerry Adams

It is clear, from what the Minister so cogently spelled out, that 100% of bus services in Waterford city will be privatised.

How long will it take the Government to do the same in Dublin? That is clearly the intention across the State. I will not repeat my opening remarks but it is clear that the private model will not serve the interests of citizens or communities. Will the Taoiseach accept that investing in transport on this island, North and South, is fundamental to the future of the island economy and will he stop the privatisation of public transport routes and the undermining of successful public transport companies? If they were not successful they would not be sold off.

The Taoiseach

I do not accept the Deputy's assertion. He deliberately chose to misinterpret what I have said, and what the Minister has very cogently explained. As the Deputy noted, however, these things happen. The bus routes are not being privatised. What is being opened is 10% of the market for competitive tendering.

Deputy Dessie Ellis

It is the same thing. It is privatisation.

The Taoiseach

Bus Éireann and Dublin Bus are entitled to tender for that 10% and to win those tenders. I cannot predict the outcome of a competitive tendering process. Last year the taxpayer provided €90 million over and above the income derived from bus services -----

Deputy Róisín Shortall

That is low by European standards.

The Taoiseach

----- and a further €90 million in respect of new buses for the fleet. The Minister has given a clear outline in respect of the workers and their rights and conditions. These issues have been subjected to intensive discussion. The strike should be called off. One of the objectives of the Labour Relations Commission negotiations was to enable the vast majority of employees to remain with Dublin Bus and Bus Éireann. In addition, employees who transfer will retain their terms, conditions and pension benefits. This was clarified and agreed by the Minister publicly.

Deputy Gerry Adams

No, they will not.

The Taoiseach

The competitive tendering process for 10% of the routes will open in mid-year. Dublin Bus and Bus Éireann will compete for those tenders and they may win them because they are already supported by the taxpayer and they have up-to-date fleets. I commend the workers in Bus Éireann and Dublin Bus on what they have done in difficult times. This year is the first time since 2008 that the level of public service obligation subsidy for bus and rail services was maintained at the same level as the previous year. That was not possible in previous years because of the economic situation. I hope the issues can be resolved.

Deputy Clare Daly

I do not think the workers or passengers will take solace from the Taoiseach's "no privatisation" comments given the number of broken promises he has already stood over.

On the last day the Dáil met, Deputy Wallace tried to jolt the Taoiseach's memory regarding his inaction on problems with senior gardaí in the Athlone area. Little did we know that at the very same time representatives of the Department of Justice and Equality were in the process of contacting the family of Fr. Niall Molloy, thereby giving them less than one hour's notice that the Minister for Justice and Equality was about to publish the outcome of the McGinn report into their uncle's murder. For four months she sat on a report that, let us remember, was a paper review of a Garda review of a Garda investigation. The Minister later acknowledged that the report identified unanswered questions and serious shortcomings in the investigation but concluded that it was too long ago and we will never find out the truth. Of course, she did not admit that the report's terms of reference were preordained to have that outcome. Mr. McGinn himself indicated that his task was not to establish the truth, or even venture an opinion about the truth; it was simply to identify issues of public importance or concern that might warrant further investigation. In other words, the truth is out there somewhere but we are not going to bother getting to it.

In fairness to Mr. McGinn, he raised a number of issues, such as the fact that the Garda failed to identify and interview witnesses and neighbours; the fact that a statement was not taken from the solicitor whom Niall Molloy consulted shortly before his death in regard to his financial problems with the Flynns; the lack of forensic analysis of blood and fingerprint samples taken at the scene of the crime; and, critically, the important fact that the opinion of Professor Michael Farrell, the expert neuropathologist to whom John Harbison deferred, was not sought. Dr. Farrell's opinion confirmed that Niall Molloy took between three and six hours to die. In other words, as Mr. McGinn indicated, the account given by Richard and Therese Flynn was not accurate. Mr. McGinn went on to note that the review did not say how it happened. Such information could only be ascertained by an independent commission of investigation, as recommended by the serious crime review.

I presume the Taoiseach is aware this is only one of more than 300 historic cases of Garda malpractice currently being considered by the independent review mechanism and that the Minister has already teed matters up so that a large percentage of these cases are unlikely to result in action. Can we now take it that the review is nothing more than a fig leaf to divert attention from serious allegations of Garda malpractice? It is a bit of a stunt, like replacing the previous Minister for Justice and Equality and Garda Commissioner. The people who submitted these cases can expect to be re-victimised and re-violated. Does the Taoiseach really think that the Molloy family, or Cynthia Owen, who was raped and impregnated at the age of 11 years and her child murdered, are going to leave matters at that? If he is serious about Garda reform, he will have to deal with the past before he can deal with the future.

The Taoiseach

The 300 cases to which Deputy Clare Daly referred involve issues that were brought to my attention in the House or to the attention of the Minister for Justice and Equality by the Deputy, Deputy Wallace and members of the public. The vast majority of these cases have been assessed by an independent legal team. She may have information because she appears to know the outcome of the examination of these cases. The Minister has confirmed that she will shortly commence writing to the members of the families concerned in regard to the report of the legal team once it has assessed all of these cases. Fr. Molloy is deceased and nothing we say in this House will bring him back. The Government considered and accepted the McGinn report in the last several weeks, after it was presented to the Minister. She has confirmed that she will commence the process of informing the families about the cases referred to her Department and my Department, in respect of which a legal team was appointed to analyse the issues arising. Many of them have been considered at various levels over the years. I do not know the details of the responses that will issue in respect of these cases because I have not seen the report of the legal team.

Deputy Clare Daly

The information to which I have access is contained in the Official Report of the Dáil. I presume that if the Minister for Justice and Equality was in contact with the Taoiseach, she would have told him what she has stated on the public record, namely, that because of the passage of time and other issues she expects no action to be taken in a majority of cases. It is not good enough for the Taoiseach to say Fr. Molloy is dead. His family know that but they have been devastated by the outcome of this report. They cannot figure out how the Government can correctly pardon somebody who was hanged in 1941 based on a re-examination of that case while expecting us to believe it cannot re-examine Fr. Niall Molloy's case, which occurred in 1985, even though eight out of 11 witnesses present in the room are still alive and forensic evidence which was never examined is presumably still available. I do not think the Taoiseach realises the seriousness of these cases. He has not addressed the bigger picture of dealing with the past before we can deal with the future. I am somewhat worried about his memory at this stage. He has had trouble recalling certain events. Perhaps he remembers one of the cases he referred to the review panel.

An Ceann Comhairle

The Deputy is over her time.

Deputy Clare Daly

This is a question regarding a person who contacted the Taoiseach last year and told him he had information on gardaí being present in a room when a civilian was shot by gardaí and being ordered by his superiors to say he was not present. The Taoiseach passed this case on to the review panel. I ask him to consider the fact that in the past few months not one person from the review panel has contacted the person concerned to ask him what murder it was, who was murdered and who was there. How, in God's name, can a review panel recommend anything if this is the type of shoddy investigation that is ongoing? How can it deal with the case of Shane Touhey who was murdered in February 2002 when it does not consider information submitted? Will the Taoiseach be honest and admit that the investigation is a joke and not independent at all?

The Taoiseach

The position is that we compiled approximately 300 cases from various sources. Many of them were dealt with through elements of the legal process over many years. In order to assess these cases and because of the serious nature of many, a legal panel was set up and given the responsibility to go through all of the files. This process is not being conducted by an individual Member of this House. There are 300 cases involved. It is not for me to say why any member of the family of anybody the Deputy mentioned has not been contacted by the legal team, but I am quite sure that will happen. The team has not yet concluded its work on all 300 cases. In cases where it has concluded and presented its findings, the Minister will commence writing to the families involved shortly. She has already made it clear that she is quite happy to meet members of the family of the late Fr. Molloy, if they so wish. Perhaps my memory is not as faulty as the Deputy imagines it is.