asked the Minister for Finance the total estimated cost to the Exchequer of the Central Bank strike.
Ceisteanna — Questions. Oral Answers. - Central Bank Strike.
7.
The preparation of such an estimate would involve costing or estimation of a number of direct and indirect effects. Present information does not permit the quantification of such effects. Any estimate of the overall effect would involve a considerable expenditure of official time.
Will the Minister give us details of some areas of loss as, for example, what was the loss on interest to the Central Bank as a result of the bank strike and will he tell us what was the equivalent estimate of profit to the Bank of Ireland on interest charges?
With regard to the last part of the Deputy's question, I will come to that in a later question today. It would be extremely difficult and it has not yet been possible to work out an estimate of overall cost to the Exchequer.
Will the Minister state if investors and depositors in Government bonds and securities have been paid the full amount due to them at the appropriate rates of interest as the Minister undertook would be done when the strike terminated?
I announced arrangements to provide to holders of Government paper of different kinds, including the payment of interest calculated according to a formula which I set out. Those arrangements are now in hand. Not all payments have yet been made but they are being made over a period.
Will the Minister ensure that they are paid as quickly as possible?
The Deputy need have no worries whatever. I made a public statement about the arrangements I am making to ensure these payments, and holders of Government paper need be in no doubt but that the payments will be made in the manner I set out in that public statement.
Is the Minister aware that a number of Deputies have been approached by people, even up to this week, asking when they would receive the payments due to them? It was that which prompted my question.
I am so aware. If any Member of the House is approached by people on this matter and if he contacts me or my office I will make sure that full information about the payments and their timing will be given immediately to that Deputy or to the person who approaches him.
8.
asked the Minister for Finance if, in view of the fact that exchange controls did not operate during the two month period of the Central Bank strike, he has any estimate of the continued drain on the economy through the so-called black hole during that period.
The Deputy is incorrect in stating that exchange controls did not operate during the closure of the Central Bank. The controls, which are administered largely through the commercial banks, continued to operate during that period. No difficulty is anticipated in identifying the flows under the categories of the balance of payments statement for 1984 due to be published at mid-year.
Official estimates of the balance of payments statement are not published on a sub-annual basis. I would, however, draw the Deputy's attention to the statement in the publication "Economic Background to the Budget 1985" that the balance of payments deficit for 1984 is estimated to have narrowed to about 5 per cent of GDP compared with about 6 per cent of GDP in 1983. Hence the overall effect of the external position on the economy was positive in 1984. I would also point out that the official external reserves stood at £2,101 million at end-1984, representing an increase of £86 million compared with end-1983.
Is the Minister satisfied that the level of exchange controls that operated during the bank strike was adequate? Has he any indication that there was a greater outflow of capital during the strike than was the case previously?
I am satisfied that the exchange control system operated in an adequate and completely satisfactory way during the course of the Central Bank closure.
I asked the Minister if he had any indication that there was a greater outflow of capital during the strike.
As I said in reply to the question, balance of payments statement is not published on a sub-annual basis and, therefore, I cannot give the Deputy a categoric answere regarding the outflow. However, I repeat that the operation of the exchange control system was not affected by the strike.
Surely the Minister will accept that it must have been affected because it is the exclusive function of the Central Bank to monitor, regulate and control? During the period in question, for however long it lasted, the enchange control system could not have been in operation in the same way as it was; otherwise one raises questions regarding the whole function of the Central Bank. Surely the Minister is not suggesting there was no problem in the circumstances?
I am sure the Deputy remembers that much of the detailed day-to-day administration of our exchange control system is delegated to the commercial banks who have authority to clear payments within certain specified limits for a number of different kinds of payments. Applications for permission to export funds not covered by the delegated authorities in the normal course have to be made to the Central Bank. The only change made during the period of the closure was an increase in the limits for the delegated authority already exercised by the banks. Other applications not delegated to the banks were dealt with by the management of the Central Bank.
In relation to the black hole element of the question, has the Minister any idea as to the extent of that black hole this year under the following headings: the pricing policies of the multinationals——
That seems to be a separate question.
The question specifically asked if he has any estimate of the continued drain on the economy through the so-called "black hole"?
That does not give us authority to debate the black hole at length.
Perhaps I might indicate the elements in the black hole on which the Minister might inform us, namely, the pricing policies of multinationals where they can overstate profits to maximise tax allowances here and avoid them elsewhere——
That is a separate question.
——cross-Border flows which are still continuing and money being illegally transferred out of this country. Can the Minister indicate what the extent of that continuing black hole is at this time?
I do not believe in the notion of a black hole. That is a smart journalist title for a phenomenon which has been well recognised and documentated. I do not intend to enter into a discussion of the issue except to repeat what I said in my original reply that official estimates of the balance of payments statistics are not published on a sub-annual basis. In deference to the Chair's strictures I am afraid the Deputy will have to understand that in its full complexity.
The Minister is shielding behind the protection of the Chair. Everyone knows this is still happening——
I am not saying a word about a shield, but I object to Deputies using phrases like the "black hole" in this House when they know they are talking about normal commercial flows.
(Interruptions.)
Illegal transfers are not normal commercial flows.
If the Deputy wishes we can repeat last night's debate——
I accept the Minister's reply that he cannot know for some time if there have been any changes in the capital outflow. Exchange control is one of the major functions of the Central Bank. That bank was on strike for two months. Is the Minister saying he is satisfied that the commercial banks, without any supervision from the Central Bank, operated the exchange control system without any changes, leaving no doubt in the Minister's mind that everything was in accordance with Cocker? There are no statistics available as regards capital outflow yet, so how can the Minister have confidence that everything is all right?
I have already answered that question. As I pointed out, the operation of exchange control under our legislation is delegated on a day-to-day basis by the Central Bank to the commercial banks. That continued to be the case during the period of closure of the Central Bank, except, as I pointed out, that certain limits within the commercial banks normal work were somewhat wider. The supervision of the system was carried out during the period of closure by the management of the Central Bank who stayed at their posts. For that reason I am satisfied that the exchange control system operated as normal during the period of closure of the Central Bank.
The Minister seems to be making the argument that we do not need any Central Bank staff.
9.
asked the Minister for Finance if the board of management of the Central Bank consulted with him before deciding not to accept the recommendations of the Labour Court during the recent Central Bank strike; if he advised the Central Bank that they should not implement the decision of the Labour Court; and if he will make a statement on the matter.
The Board of the Central Bank did not consult me before deciding not to accept the Labour Court recommendation for clerical and administrative staff involved in the recent Central Bank strike. The bank had previously been made aware of the Government's pay guidelines.
Apart from the general Government direction about pay guidelines, did the Minister give any specific instruction to the Central Bank prior to the Labour Court hearing.?
No.
The Minister said the bank were made aware of the Government's pay guidelines, but were they also made aware of the fact that the Government did not intend to adhere to their guidelines and that, therefore, the bank should not be bound by those guidelines?
I am tempted to ask the Deputy if he would have preferred the Central Bank to adopt the much more generous guidelines which he and some of his party colleagues indicated earlier. As I said, the bank were made aware of the Government's general pay guidelines and in the course of their submission to the Labour Court referred to the concerns they had in relation to the overall levels of pay.
Understandably the Government made the bank aware of the general pay guidelines, but did they tell the bank that they did not intend to adhere to those pay guidelines?
The Government do not discuss policy intentions with people in other agencies.
The Labour Court were made aware of the Government guidelines on pay policy but, with hindsight, is the Minister satisfied that the Central Bank in not accepting the Labour Court award, which was in accordance with their interpretation of the Government guidelines, plus their assessment of the Central Bank's position — they made £156 million profit and paid something like £7 million in wages — made the appropriate decision? Does the Minister believe the Central Bank made a grave error in this case?
I am not quite sure if I understood the Deputy's question.
What is the purpose of the Labour Court?
I do not think it is appropriate under this heading to discuss the functions of the Labour Court.
What is the Minister's view of the Central Bank's decision in refusing to accept the Labour Court award?
10.
asked the Minister for Finance if he believes that any of the commercial banks benefited financially from the recent Central Bank strike; if he has any estimate of the sums involved; and if he will make a statement on the matter.
I am not in a position to express any view on the financial consequences for commercial banks of the recent strike in the Central Bank.
Is the Minister satisfied that the Central Bank have regained control of monetary policy, the money supply and the banking system?
It is not a question of the Central Bank having gained control, they never lost it.
Can the Minister confirm that the Collector General's Account has been restored to the Central Bank and on what date?
That is a separate question. I do not have details of the specific operation to which the Deputy refers.
Was there any additional cost to the State in having the accounts of the State transferred to the Bank of Ireland? Surely, they did not provide this service for nothing?
We discussed this matter in relation to an earlier question. In the course of my reply I said I was not in a position to make any statement of what the cost to the Exchequer might have been. There could have been some costs and there could have been some benefits.
Were any arrangements entered into with the commercial banks for handling the additional business during the strike? Were any fees arranged?
No.
Were separate negotiations entered into?
No.
The business was transferred from the Central Bank to a commercial bank. I see the point the Minister is making but surely we can ascertain how much this cost the State.
As I said in reply to an earlier question, it would require a great deal of official time to carry out an estimate and I am not in a position to give an estimate of that kind. As I said, there would have been certain costs involved because banks would make their normal charges but there would have been certain gains because accruals of interest might have arisen on the funds.
The Minister said he is not prepared to answer the question of whether the Collector General's Account has been transferred back from the Bank of Ireland to the Central Bank. He maintains it is a separate question. The question in fact is, does the Minister believe that any of the commercial banks benefited financially from the Central Bank strike? If the Bank of Ireland still retain the Collector General's Account surely they are benefiting. I would ask the Minister again to confirm that it has been transferred back and if not why not, when it is now six weeks after the bank strike?
That is a separate question. I have answered the question that the Deputy put down.
We can take it, therefore, that it is still there in the Bank of Ireland, six weeks after the Central Bank strike has ended.
You may not take it that it is still there.