(Limerick East): Perhaps the Minister would give us the benefit of his wisdom and outline the timetable, as he sees it, for introducing various sections of this Bill when it becomes an Act.
Central Bank Bill, 1988: Committee Stage.
Section 1 agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."
There is no set timetable. The other Parts, provision and sections of the Bill, except where otherwise stated, come into effect on such dates as the Minister may, by order provide. This is to allow for a period of time for the bank and those firms subject to the new provisions to make the necessary preparations and changes, for example, the deposit protection account provisions would need new administrative arrangements to be put in place. There is no specific timetable.
(Limerick East): I understand the general thrust of the section and the reason it is framed in this manner but I would like the Minister to give us a general indication of the sequence for introducing various sections of this Bill when passed. Would all the sections come into effect after six months, 12 months or two years?
They will come into effect as soon as possible after each firm puts their own house in order.
Question put and agreed to.
SECTION 3.
Amendment No. 1. I observe that amendments Nos. 94 and 98 are related and I suggest, therefore, that we discuss amendments Nos. 1, 94 and 98 together by agreement. Is that satisfactory? Agreed.
I move amendment No. 1:
In page 8, subsection (1), line 23, after "Central Bank" to insert "of Ireland".
Amendment agreed to.
Section 3, as amended, agreed to.
Sections 4 to 6, inclusive, agreed to.
NEW SECTION.
I move amendment No. 2:
In page 9, before section 7, to insert the following new section:
"7.—Whenever it is proposed to make a regulation or order under this Act, a draft of each such order or regulation shall be laid before each House of the Oireachtas, and the order or regulation shall not come into effect, until a motion approving of the draft has been passed by each such House.".
The Workers' Party have proposed a similar amendment to other Bills. The Bill states that the draft of every such regulation and order made under this Bill shall be laid before each House of the Oireachtas. According to the Bill it would be regarded as having been passed by each House of the Oireachtas unless an order annulling it has been introduced and passed by each House. The purpose of this amendment is to reverse that process and to require a positive decision to be made in each case, in other words, every regulation or order made by the Minister would have to be laid before each House of the Oireachtas and a positive decision would be required before it could come into effect. A positive decision would be required to be made by the House in each case.
The present position is that regulations or orders can slip through if Members are not vigilant enough. One needs to be very vigilant to be aware of all the regulations and orders laid before the House. Under the provisions of this legislation, if an order annulling it is not brought in, it automatically becomes part of the legislation.
Regulations can slip through without the notice of the House in such cases, so where a positive motion is required to pass it, it becomes a decision of the House in each case. As was pointed out, the effect of my amendment would be to remove section 7 and replace it by the amendment I have put down, that the order or regulation shall not come into effect until a motion approving it has been passed by each House of the Oireachtas. Therefore I am proposing that amendment.
Section 7 is a general provision relating to the laying before the House of the Oireachtas of any orders made under Part II of this Bill. In general an order made must be laid before each House within 21 days of its making and is subject to annulment by resolution of the House. The amendment put down by Deputy Mac Giolla would, in effect, mean the deletion of section 7 of the Bill. This amendment would require that both Houses of the Oireachtas would have to positively adopt any orders or regulations made under this Part of the Bill. This is proposed because it could cause undue delay in making orders and regulations. Since the Dáil and Seanad break for some months each year, this would effectively freeze the Minister's power to alter certain matters.
Some of the orders and regulations covered are minor. For example, section 21 (3) (b) allows the Minister for Finance to make regulations amending statutes which mention the legal tender note fund. That fund is being abolished as it is no longer considered necessary. This is an administrative provision and the necessity for a positive resolution in both Houses on such a provision would seem to me extreme.
In certain cases the orders and regulations made by the Minister are appropriate to his role in having overall responsibility for the financial system. Consequently, he should be in a position to decide under section 22 (2) the level of the appropriations the Central Bank makes to its reserves. This is a long standing provision first used in the Central Bank Act, 1942 and is a matter appropriate for the Minister for Finance. In addition it is proper for a Minister for Finance to amend under section 68 (2) the deposit protection account, to change the percentage paid to the deposit protection account under section 51 (2) or to change the definition of eligible deposits under section 58 (1) (b) (vi).
The Minister says that since both Houses of the Oireachtas may not be sitting for three months of the year my amendment would prevent the Minister from making necessary regulations in that period. This is extraordinary. As I understand it, even under the section in the Bill the Minister cannot do that. Whatever order he makes can be annulled in the 21 day period. If the Minister thinks the Bill as it stands is allowing the Minister to slip through regulations with no reference to the House in the three months in which the House is not sitting, then it is time for Deputies to sit up and take notice and ask where the democracy is in this and what democratic rights we have. We think we have some rights but obviously we have not when the Minister can fire out regulations in this three months period when we are not sitting, regulations all becoming legally binding, with the attitude, "we are all on holidays, this is the time to do it". It seems to be letting the cat out of the bag and making it absolutely necessary that the amendment I am proposing here be accepted, in other words that ministerial regulations do not become legislation unless approved by the House. In the normal course of events there will be no problem under the Bill. When the Bill is passed the Minister may make regulations. It will be a formality bringing them before the House, having agreed them and that is it. There should be no problem but the House must have the opportunity of agreeing. The Minister has clearly made known now that the purpose of section 7 as it is in the Bill is that he can just introduce regulations without having any authority from the House. That worries me very much.
If the Deputy had listened he would have realised that I was not saying what he tries to interpret me as saying. This type of provision is in Acts all over the place. It is not a question of me trying to use the closure of the Dáil.
The Minister——
If the Deputy wants to listen correctly let him do so but if he does not, let him not misunderstand what I am saying. This type of provision is in Acts all over the place. It comes before the Dáil to be there to be annulled if the Dáil so wishes. The provision is there. It is necessary to the proper running of the Central Bank by the Minister for Finance in making regulations. This is not something new I am springing on the House but if the Deputy wants to misinterpret it as that I cannot help it.
(Limerick East): There are obviously two ways of dealing with regulations which are laid before the House. One is to allow the House the power of veto which in effect is what the Minister's proposal is. The second is to require the House to approve the motion positively after debate, which is what Deputy Mac Giolla requires.
It is more usual in the regulatory powers which derive from a whole Bill like this that it be done in the manner the Minister proposes. On the other hand, I can see merit in what Deputy Mac Giolla is saying, and if on certain sections of the Bill it is thought the power of regulation requires positive approval in the House it might be better if this type of amendment proposed by Deputy Mac Giolla would apply to particular sections. I am thinking of a couple of sections in this Bill where that might apply, but the general rule should be as the Minister has proposed. However, there is a case that certain things should not be done by regulation without debate which derives from certain sections of this Bill. I will be accepting the Minister's draft here but I may bring in amendments on Report Stage to cover certain sections of the Bill so that they would be debated here in the House. As the Minister has rightly pointed out, many of the regulations deal with routine matters and there is no need for an affirmative motion, but on other sections it is worth coming back to the issue again.
I agree with Deputy Noonan. There is merit in what he says. The vast majority, 90 per cent or maybe more, of the regulations would be of a routine, regulatory nature, but in certain areas amendments such as I propose would be necessary. I felt that as the Bill stands the vast majority of the regulations could just go through agreed each time. On the understanding that Deputy Noonan is having a look at this and that maybe on Report Stage we will come to specific areas, I agree to withdraw the amendment.
Amendment, by leave, withdrawn.
Section 7 agreed to.
SECTION 8.
We come now to amendment No. 3. I observe that amendments Nos. 4 and 5 are related. I am suggesting, therefore, that we discuss amendments Nos. 3, 4 and 5 together.
(Limerick East): I move amendment No. 3:
In page 9, paragraph (a), line 34, to delete "£1,000" and substitute "£1,500".
The Bill provides that fines up to a maximum of "£1,000" could be imposed by a court if certain transgressions under this Bill were proved. I am suggesting we should increase the maximum from £1,000 to £1,500. Not that there is anything special about the figures of £1,000 or £1,500, but we are not, in the Bill, deciding the level of penalty, we are deciding the maximum of any penalty which might be imposed by a court. The last Central Bank Act, which is quoted extensively in the text of this Bill, is the Central Bank Act, 1971. That is 18 years ago. I suggest what we put in today in terms of maximum penalties will quickly move out of date in the normal course of inflation.
It is unlikely that in the short or even medium term a further Central Bank Bill will come before the House. In terms of imposing penalties which are maxima rather than actual, I want to give the Minister the opportunity to comment against the background of what I have said and ask him to consider whether a higher ceiling would be more appropriate to allow more discretion to the courts. I believe they will have discretion immediately up to £1,000 which is sufficient, but as the years roll by these penalties will become completely out of date and will not be amended in any other legislation.
I sympathise with what Deputy Noonan is saying. These are penalties on summary conviction without trial and there is the constitutional argument that it is a minor offence and the penalty imposed must be commensurate with its minor nature. In all the Bills passed since I have been elected to this House, the sum of £1,000 has been conceived of as the upper limit of the penalty of a monetary kind which can be imposed by the court on summary conviction. It is all a matter of degree and there is a presumption of constitutionality. Whether the High Court or the Supreme Court would knock down a Bill because it specified fines of £1,500 rather than £1,000 is very problematical. We should not lightly exceed the established criteria as to what is a minor penalty. In this section and the next we are dealing with cases where an alternative penalty is provided on conviction on indictment. People who are to have serious punishments inflicted on them should be given the right of trial by jury.
I suggest that the Minister should talk to his colleague, the Minister for Justice, about remedying the problem raised by Deputy Noonan by providing a uniform system of summary penalties which could be varied by order of this House from time to time. This would obviate the necessity of going through this routine of trying to fix penalties in a given year which over the passage of time become absurd. Recently the Minister for Justice introduced legislation which set down a uniform trade-off rate between terms of imprisonment in default of payment of fines and the level of fines themselves. This House, instead of going through this contortion, should simply be able to provide for a summary penalty and there should be another statute which provides what the summary penalty is under any Act at any given time. There should be a uniform power of sentencing. It would make life much easier for the Judiciary in the District Court in that they would know that in any summary case, subject to whatever exceptions this House would choose to make, the penalties would be of a certain amount. They would know that such penalties would be constitutional.
I would be against raising the amount to £1,500 on the basis that over time it will become the same as £1,000. We cannot really indulge in inflation accounting. If the High Court has to consider this penalty tomorrow, it cannot consider the point that it may be 18 years before there is another Central Bank Act. That will not be accepted as a legal argument. It will be struck down if it is more than minor.
I have listened with interest to what the Deputies have said. This figure was arrived at in consultation with the Attorney General and for many of the reasons Deputy McDowell has just mentioned. I suggest to both Deputies that I should have discussions with the Attorney General and the Minister for Justice and we can come back to it on Report Stage. The £1,000 has been inserted because it is a fine on summary conviction in the District Court. The going rate was about £1,000 in the sixties and it is now about £1,000. Deputy Noonan has a reasonable point in that by the time we have another Central Bank Bill a fine of £1,000 could be well out of date. I am prepared to consider the suggestions and talk to the Attorney General and the Minister for Justice to see if there is an appropriate way to meet the wishes of both Deputies. I do not have any hang-ups on £1,000 as against £1,500, apart from the reasons I have stated.
(Limerick East): What the Minister and Deputy McDowell have said is very reasonable. I am putting this forward simply to raise the issue once more. I appreciate that a certain level of penalty is appropriate for a summary conviction and that if one exceeds that level it might be struck down as unconstitutional. If I remember correctly, in the Bankruptcy Bill as presented last year the penalties on summary conviction were £500. The Minister for Justice accepted a series of amendments which raised all the penalties to £1,000. Similar type offences in the financial area were also in that Bill. When we are legislating for penalties we are almost into “top of the head” predictions of inflation or what is appropriate. I think the penalty on summary conviction was £100 until only a few years ago. Regulations do not work unless sanctions can be applied and if sanctions over the passage of time become absurd then there are no regulations which can effectively be implemented.
Deputy McDowell's suggestion is a very good one. We could provide here simply that a summary penalty will apply and there could be another Act under which by regulation the Minister for Justice could update all penalties on a summary nature. There is certainly a problem and I am simply proposing to increase the fines as the easiest way to initiate a debate. I accept the Minister's assurances and I am prepared to withdraw my amendments.
Amendment, by leave, withdrawn.
Amendment No. 4 not moved.
Section 8 agreed to.
Amendment No. 5 not moved.
Section 9 agreed to.
SECTION 10.
I move amendment No. 6:
In page 11, line 38, after "Bank" to insert "and a statement made by the person conducting such prosecution, that the prosecution has been commenced with the authority of the Bank shall be sufficient evidence that the prosecution was so commenced".
This is simply to overcome a practical difficulty which occurs on occasions when prosecutions are instituted by people other than the DPP. Under the Prosecution of Offences Act, 1974, the fact that the DPP has ordered a prosecution can be stated by the barrister or solicitor appearing for him or the garda conducting the prosecution in court. That is sufficient proof of that fact. In cases involving the Revenue Commissioners sometimes one has to produce a certificate of a minute of an order by the Revenue Commissioners to the effect that there is authority for the case to be commenced. The amendment is designed to provide that whoever is conducting the prosecution for the Central Bank is in the same position as somebody under the 1974 Act acting for the DPP. If he says to the court that the Central Bank have directed that this prosecution be brought, that is sufficient evidence. It is not necessary to produce a certificate, a minute or any evidence that the Central Bank, or the board of the Central Bank, have decided to institute the proceedings.
I have listened to what the Deputy has said but I cannot understand why he is putting forward the amendment. No such provision was sought by the Attorney General's Office. The section is standard and any change, therefore, would need to be reflected in the provisions in other statutes. Consequently, if the Deputy is prepared not to insist at this stage on the amendment, we can examine the views he has put forward, in consultation with the Attorney General's Office. If advised by the Attorney General's Office, we can bring forward an amendment on Report Stage.
Amendment, by leave, withdrawn.
Section 10 agreed to.
NEW SECTION.
I move amendment No. 7:
In page 11, before section 11, to insert the following new section:
"11.—Where an offence under the Central Bank Acts, 1942 to 1989, is committed by a body corporate or by a person purporting to act on behalf of a body corporate or an unincorporated body of persons and is proved to have been so committed with the consent or approval of, or to have been facilitated by any wilful neglect on the part of, another person (being a director, manager, secretary, member of any committee of management or other controlling authority of such body or official of such body) that other person shall, as well as the body corporate or the person so purporting to act, be guilty of an offence and shall be liable to be proceeded against and punished accordingly.".
This is a technical drafting amendment suggested by the draftsman to align the terms of section 11 with similar provisions in other Acts. No substantive change is involved. Section 11 in the Bill speaks of a director, manager, secretary and so on being liable in certain cases to the same punishment as the body corporate of which they are the responsible officials. In fact, section 11 refers not only to offences committed by a corporate body but also to offences committed by an unincorporated body. It is technically incorrect to word section 11 as it is now drafted, and the revised section 11 corrects this defect.
(Limerick East): Will the Minister expand on what, in his opinion, are the obligations now of directors, managers, secretaries and members of the committee of management where they are carrying out instructions as employees or as agents of a particular body corporate?
I should like to tell the Deputy that the provision is the same as that in the 1971 Act.
(Limerick East): Is this merely a statement of the provisions of the earlier Act or is a new obligation on employees being introduced?
The principle is the same; there are no new obligations on employees.
It occurs to me that Deputy Noonan has raised a reasonable point. Supposing the committee of an unincorporated body are told by the manager that he or she proposes doing "X" or "Y" and they approve of that on a vote, will they commit an offence? As I see it, they will, because it can be proven that the offence has been committed with the consent or approval of any of those members of the committee. In my view, the word "knowingly" should be added. To say to a layperson who is a member of the board that he or she is guilty of an offence even though they do not know the law and have followed what the managing director proposed doing, seems a little draconian. In my view, it will be necessary to state that the person knew it was an offence. Members of the House give assent to propositions even though their minds do not go with the act, but to find them all guilty, as they are in public, is not being fair in terms of a criminal offence.
(Limerick East): Where a committee make a decision, are the individuals who make up the membership of the committee personally liable or will the corporation be liable in those circumstances? Will the Minister attempt to outline where corporate responsibility ends and personal responsibility commences?
I do not think an individual will be prosecuted unless he or she is found to be culpable. Deputy McDowell's interpretation is strictly correct and we will have a look at his suggestion that we should insert the word "knowingly".
The Minister may suggest another word such as "negligently".
The phrase "wilful neglect" is included.
I accept that that phrase is included. The section states:
... or to have been facilitated by any wilful neglect on the part of, another person...
The phrase "wilful neglect" does not seem to apply to consent or approval. It may be that the Attorney General will advise the Minister that unless there is a guilty knowledge on the part of a person, the prosecution should not be brought but I would like it stitched into the record that that is what we are providing for. If the legal advice available is that some guilty knowledge has to be imputed to a person before that person can be prosecuted, that is fine, but I would be worried about creating a strict liability, that a member of a committee or a council would commit an offence without having the remotest idea of what was going on, without knowing that the Central Bank Act exists let alone that that person was contravening it.
I should point out that there is no change from the wording included in the 1971 Act. I will check this out with the Attorney General's Office but, as we know it, the intention is that we would not prosecute unless there was knowledge.
(Limerick East): There may not be any change in the wording but the Bill seeks to extend the powers of the Central Bank and, consequently, extend the responsibility of licence holders. Therefore, the possibility of committing offences under the Bill is being increased dramatically even though the same formulation of words applies. It is clear from the amendment we accepted that the phrase “wilful neglect” will cover culpability on the part of any officer or employee of the company. It is not clear that consent or approval implies culpability of any sort. I would like that point clarified by the Minister on Report Stage.
We will have the matter clarified for Report Stage.
Amendment agreed to.
Section 11 deleted.
Section 12 agreed to.
NEW SECTION.
Amendment No. 8 is in the name of the Minister and as amendment No. 46 is consequential, I suggest that we debate the two amendments together.
I move amendment No. 8:
In page 12, before section 13, to insert the following new section:
"13.—(1) The Minister may, after consulting the Bank, by regulation prescribe the fee to be paid to the Bank by any person supervised by it under any enactment and different fees may be prescribed for different classes of persons.
(2) Regulations under this section may provide for such incidental or related matters as are, in the opinion of the Minister, necessary to give effect to such fees.
(3) In this section `person' includes a financial futures and options exchange within the meaning assigned to it for the purposes of Chapter VIII.".
Section 13 is new and empowers the Minister by regulation to permit the bank to charge fees for supervision. This is important given the extended areas of supervision being undertaken by the bank under the Bill and the Building Societies Bill. It is only reasonable that financial institutions which are supervised by the bank should contribute to the cost of supervision. The Minister will have the determining role in setting such fees and will listen to representations from interested bodies before a fee is specified. That should allay concerns that excessive fees will be charged.
Subsection (1) is self-explanatory and subsection (2) is a catch-all provision to cover incidental matters such as, how, when and to whom the fees shall be paid. Subsection (3) is a declaratory provision to clarify that "person" includes a future exchange under Chapter VII of the Bill. Amendment No. 46 is consequential and seeks to delete paragraphs (c) and (d) in section 30. Those paragraphs relate to the powers of the bank of charge a fee for the granting of a licence. These provisions are no longer needed if the more general powers in the new section 13 are accepted.
I am not happy at all about this section because it is too vague. I am fully in favour of people who absorb public resources being required to pay the cost of the additional burden they put on the community. I am quite happy with the principle that in general terms the cost of supervision should be borne by the financial services sector generally and the individual component parts of it but this section goes very far. In order to prevent it becoming like taxation there should be some yardstick in regard to this power of the Minister to impose fees on various institutions. Section 30 of the Bill as originally brought in requires people who get licences to pay such fees as the Minister may from time to time prescribe. This is different. It means that every year a levy can be put on an institution for the supervision it gets during the year. Every year a moneybroker, perhaps, will have to pay a fee for the supervision in respect of the moneybroking operation. Every year building societies will have to pay fees, and the structure of the fees is something this House does not know. We do not know, whether small societies and big societies will have different levels of fees or if there will be a single capitation fee for being a society at all. The upshot of it all is that we are giving the Minister power to give the Central Bank a fee collecting function without any statement that the fee has to be equivalent to the cost of providing the supervision. That would be a most straightforward proposition. If the Minister put in something to the effect that the Minister may determine a fee which in his opinion reflects the cost of supervising that institution, that would be one thing, but I am wary of giving the Minister a power to tax by a back-door method under the general label of just imposing a fee on an institution. Look at planning applications. People are now paying large sums of money based on square footage to planning authorities as fees, and they are indistinguishable from stamp duty on the sale of buildings in their effect. Very serious charges are now paid by people who want to build houses or offices or whatever. If the Minister proposes to charge fees by order or by regulation, I would prefer that this House would be asked to concur on the levels which are laid down. This is one of the exceptions Deputy Noonan spoke about earlier. I would not be happy if the Minister could double or treble the fee for a building society just on his own view of the revenue requirements of the Central Bank.
The other thing that worries me is that the Central Bank is a highly profitable institution, and not by virtue of the deployment of its own initial capital; it has these people's money and deposits, makes money from them and uses that money to finance itself, and the cost of supervision is paid out of that. Now we will have a separate layer. In addition to taking people's money and putting it on deposit, it is going to charge for that privilege as well on some other notional basis. I am not happy that that is a proper amendment to make in the circumstances.
I am also unhappy about the wording of subsection (2) of the proposed section. I do not know what the phrase "necessary to give effect to such fees" actually means. Are those regulations to do with payment, manner of payment, time of payment, obligations to pay? What is to happen if people do not pay the fees? This section has a cobbled together look about it. I would much prefer to see the Minister come in on Report Stage with a worked out basis for an amendment to the Act which specified what kind of fees he is going to charge. For instance, why should a licensed bank pay a fee to the Central Bank for being supervised, when at the same time the bank has many tens of millions of pounds belonging to it by way of deposit on which it is taking the interest? Is the interest on compulsory deposits not a much more sensible way of paying for the cost of supervision? I am quite convinced that if we give a power of that kind, within three to five years we will be hearing all the chairmen of the associated banks saying that they are being hammered quietly by little orders doubling and trebling the fees which nobody ever hears about. The other thing we must bear in mind is that the Central Bank determine their own staff size, determine what degree of supervision and the intensity of supervision they are going to give under this Act. To give them the right to decide the level of supervision and its quality and then to say they can collect it seems wrong in principle. The Central Bank who are making such huge profits should be quite happy to deal with their surplus income on deposits rather than try to get money in through the back door in this way.
(Limerick East): I have listened to Deputy McDowell with interest. The first question is whether there should be a fee at all. If people are being regulated it seems a bit harsh to charge them for it.
The second issue is if we are to have a fee what kind of control will be on the Minister and his successors when he consults the bank and could increase fees on an annual basis along the lines that Deputy McDowell suggests?
There are two possibilities. First, the section could be amended to ensure that the totality of the fees is proportionate to the economic cost of the supervision. However, this might not work. That is the kind of general procedure which governs the fees in land registry, and the fees that apply in land registry are, in their totality, in excess of the cost of providing the service. There is revenue accruing to the State now from the imposition of fees on land registry because a very wide interpretation of economic cost has been applied on land registry to take in things like the capital cost of the offices in which the people who operate land registry are housed. By taking a very wide view of cost it was possible to put land registry fees up very significantly. I would suggest they are now sailing very close to the wind on the relationship between economic cost of the service and level of fees, and I am not too sure that the same would not apply here. Who is to say anyway how many employees of the Central Bank are involved in regulation? Who is to say how many salaries would be appropriately set off against the cost of regulation here? Who is to say what equipment would be used, what travelling expenses might arise, what legal fees might arise in the final analysis? It is certainly not an exact science to seek to regulate the level of fees by relating them to an economic cost of a service in circumstances where the institution involved in imposing the fees are involved in a multiplicity of other activities also. It seems to me that an amendment along the lines Deputy Mac Giolla proposed as appropriate to the whole Act might be appropriate to this section, so that the House would be the final regulator of fees. That would allay the fears we might have on this section.
I would have no objection to the amendment that Deputy Noonan was talking about. Generally speaking, I cannot see any reason for an objection to the Central Bank charging fees for what can be quite a costly operation. As anybody in the accountancy area, knows, the cost of an investigation in the banking area can be very expensive. Certainly if the Central Bank were to supervise, monitor and control the operations of Allied Irish Banks in the ICI affair, which apparently they did not do and I do not know why, it would be a very costly exercise indeed and I see no reason the Central Bank should not charge Allied Irish Banks a fee for that.
Deputy McDowell's argument is an extraordinary one, that the Central Bank are getting money from the other banks and making a huge profit and therefore they should not charge a fee for anything. What about the commercial banks? They are using everybody's money. They charge huge rates of interest and make enormous profits. If you have a current account, while that account is in the black you will not get one penny interest on that money but if it goes into the red the bank will charge you interest on the amount you are indebted. Furthermore, after using your current account money without giving you any interest on it — the bank are making money from the interest — they charge you a fee for their services.
I see nothing whatsoever wrong in the Central Bank charging a fee for what can be a very costly service in regulating the financial affairs of banks and other financial institutions who very much need financial regulation. That has been proved in the past few years in the insurance and the banking area. Quite a lot of shady dealing is going on and if the Central Bank are not in a position to regulate that and to charge fees for it the shady dealing will increase at an enormous rate. That is what central banks are all about and in my view they do not do enough of that kind of work. I would have no objection to the Minister, following consultation with the bank, bringing regulations before the House for approval. I see nothing wrong with this section or with the fact that the banks should charge for the cost of their investigations into the banking area.
I do not want to get into an ideological argument with Deputy Mac Giolla. I totally agree with him that what happens in the ordinary banks in relation to current accounts is quite unacceptable. I note that in Britain people are now getting interest on their current accounts. That is as a result of competition between banks, which apparently is absent in this jurisdiction. The point I am making is that the Central Bank is a statutory body which has supervisory functions which are effectively policemen's functions. We are now getting to the position that the police in the financial world are being given the right to charge people for their investigations. The fees to be paid by persons supervised are to be either flat fees for people of different classes such as building societies of certain sizes or banks with certain amounts or fees which reflect the actual bother that any individual bank causes and the amount of supervision it requires.
If they are flat fees the inevitable result will be that the well behaved bank will end up subsidising the supervision of the badly behaved bank. If Deputy Mac Giolla's example was taken, for example, the Bank of Ireland would end up paying the cost of an extensive investigation of the particular incident he referred to. That seems to be an extraordinary proposition.
I fully accept the proposition and I do not cavil with it for one minute. As Deputy Mac Giolla has said, those who cause the burden of supervising them should in some way pay for that. I fully accept that but if the structural fees are to reflect the actual cost of supervision in respect of any individual bank, what would happen if an extensive investigation of a supervisory kind is commenced in relation to one institution and it transpires at the end of that period that there was no need for it? Who will bear the cost of that supervisory activity — the innocent party that was supervised or the whole banking industry? The Central Bank have a huge income — I am not saying they are unique in this — arising from their management of other people's money. They have a huge surplus every year and I do not believe the principle is correct that they should then start charging everybody else for the policemen's work they do. It is equivalent to charging householders for a neighbourhood watch scheme or whatever.
That is coming in.
I can see no reason for having this section in its present, totally wide form. If it contained a Deputy Mac Giolla clause stating that the regulation was to be approved by this House, I would have no difficulty with it. At least then I would know I was not just passing a tax measure disguised as a fee structure. If the Minister indicates he is willing to do that I would be happy but I do not see why a whole sector should pay an institution which is highly profitable for the added pleasure of being policed by that institution.
It is reasonable that financial institutions which are supervised by the Central Bank should contribute to the cost of that supervision. That principle has been already established and accepted in the area of supervision of insurance companies and I do not see anything wrong with it. As Deputy McDowell has said, it is a question of how to arrive at the cost. At the end of the day the Minister of the day, in consultation with the banks concerned and the Central Bank, will have to make a reasoned judgment and that is fair and reasonable. I have listened to the arguments about trying to approach the matter in a different manner and to what Deputy Noonan said about the Land Registry office. I think that is a fair and reasonable way to proceed.
Has the Minister any idea what would be a fee for the Bank of Ireland?
I do not.
Would it be £1 million, £50,000 or £3,000?
I do not think you would get away with £1 million too easily.
(Limerick East): We have been debating this on the basis that the licence holder will pay a fee to the Central Bank and the matter stops there. Whatever about having a Deputy Mac Giolla amendment we could have a Reynolds law, a Noonan law or a McDowell law which would suggest that the speed at which particular fees are passed from institutions back to their customers is proportionate to the size of the fee. They would move back very quickly. Ultimately it is the account holder in the commercial banks or the building societies who would have to pick up the tab at the end of the day. There could be circumstances in tight budgetary situations where, when the cutting had been done, Ministers would be asked to look at charges. That has happened before and I am sure it will happen again.
In looking at the charges, the Minister for Finance in his own Department might have the choice between not computerising the office or increasing charges. The Minister will say that this will not accrue to the Department of Finance or to the Exchequer, that it will be money which will go to the Central Bank, but it will come back down the line when surplus profits are sent back to the Exchequer. Effectively it is money for the Exchequer that one is talking about. There should be some control other than the Minister simply having the power to regulate.
If we had some more information about the nature of the fee I might be able to accept the section as it stands. I have been very interested in the points made by Deputy McDowell about whether it would be a flat fee proportionate to the size of institutions or one which would vary dependent on the amount of supervisory control required. The Minister should express a view on that at least before we agree the section.
I have listened carefully to what Deputy Noonan has said. I do not disagree in principle with what he says, that one does not give a blank cheque to everybody to charge what they like, that ultimately it is the consumer who pays. That is the reality in every walk of life today. No matter where one adds a charge it finds its way back to the consumer. I do not think there is disagreement with the principle of recouping supervisory costs. It is a question of determining how to put a ceiling on them, so that they do not run wild or constitute the giving of a blank cheque. I do not have a clear view how we can ensure come control over that but I will have a look at it between now and Report Stage.
I do not think the way to proceed is to insert some criterion in the Bill but I will examine some way of reflecting the concerns expressed in the House so that there is not a blank cheque given to the Central Bank enabling them to charge what they like. Taking into account the wider operations of the Central Bank, taking in building societies and so on, I do not think there is disagreement with the principle of charging a supervisory fee. It is a question of ascertaining whether we can control that fee in a manner better than is provided for in the section at present.
Amendment agreed to.
SECTION 13.
We come to amendment No. 9 in the names of Deputies De Rossa, Mac Giolla, Sherlock and McCartan. I observe that amendments No. 10, 11, 12 and 13 are related. I am suggesting, therefore, that we discuss amendments Nos. 9, 10, 11, 12 and 13 together. Is that satisfactory? Agreed.
(Limerick East): I take it that, even though we discuss them together, they will be put separately?
Absolutely.
I move amendment No. 9:
In page 12, subsection (1) (a), to delete lines 36 to 40 and substitute the following:
"(b) such number of other Directors (not exceeding nine, of whom two shall be elected by the staff of the Bank, and not including at any time more than two service Directors) as the Minister shall from time to time determine.';".
Our amendment agrees with the number of directors being nine as against eight but specifies that two should be elected by the staff of the bank, in other words, that worker/directors be elected in the same way as is done in other State companies. For some reason the financial world is regarded as highly sensitive as far as personnel are concerned it being held that certain groups of people only are entitled to be privy to the type of information that would be available to them as directors of, say, the Central Bank. Of course it is all right for certain groups of people in the commercial world to be privy to the type of information available to them as directors of the Central Bank; it is expected that they will be involved in the financial world, in stockbroking, banking insurance business and so on but for some reason or other it would appear that they are entitled to serve on the board of the Central Bank and have that information available to them, and them only.
The question of conflict of interests — which has been such a major political issue in recent weeks — is never taken into consideration vis-á-vis directorships of the Central Bank. We should remember that we are dealing with the Central Bank, the supervisory authority of banks, whose mandate is now being extended to other financial institutions. Yet the directors of the Central Bank can be directors of commercial banks being supervised by the former, thereby ensuring they can oversee their supervision in that area. Nobody has seen any conflict of interest in that arrangement over the past 50 years. I contend there is a major conflict of interest.
The overriding argument advanced in the appointment of worker directors of various companies is that workers should not be entitled to know what is taking place at the top. Yet where such worker directors have been appointed they have proved to be highly responsible and have contributed to a co-ordinated approach on the part of staff and management to the overall business, thereby bringing about better industrial relations in the operations concerned. In no case have the commercial interests of a company been affected by the worker directors. Therefore that argument has been killed vis-á-vis other companies. To advance that argument in the case of the Central Bank—contending that worker directors would not be appropriate there—is without any substance whatsoever. This is certainly the case when one examines the type of directors who have served on the board of the Central Bank, whose commercial and personal interests are all vested in other banking areas, who are privy to information to which they should not be privy since they are being supervised in those other operations by the Central Bank.
Any argument the Minister may advance in regard to this amendment should be one of more substance than merely saying it is not appropriate that worker directors serve on the boards of financial institutions, which is the type of inference that has prevailed in the past, that for some reason that type of information should not be available to ordinary working people.
The Workers' Party suggestion is that two board members of the Central Bank be members of the staff. Given that the role of the Central Bank is to reflect the financial business community and the bank's central role in the financial system, the curtailing of the powers of selection of an appropriately qualified board by the Minister for Finance is not acceptable. The Minister for Finance should be able to select the board as he sees fit.
The amendment proposed by the same Deputies on section 14 should prevent a director of any financial body supervised by the Central Bank serving on the board of the Central Bank. Indeed it could be argued that it would be hard to select a board of sufficient expertise if all directors of financial institutions were automatically forbidden to be members of the board of the Central Bank. I might remind Deputies that the directors of the Central Bank are subject to an oath of secrecy. Under the provisions of section 13 the two posts reserved for directors from the banks will be abolished.
Therefore, I cannot accept this amendment.
At present there is an obligation on the Minister to appoint banking directors. While the provisions of the Bill remove that obligation they certainly do not remove the power of the Minister to have banking directors, or directors of other banks, serve on the board of the Central Bank. As I understand it, the provisions of the Bill do not prevent any Minister from having directors of other banks serve on the board of the Central Bank.
I agree the provisions remove the obligation that obtained heretofore, that the Minister had to appoint banking directors. I see nothing wrong with banking directors serving on the board if it means that these directors know their banking and have expertise and knowledge of banking. There is nothing wrong with banking directors being on the board of the Central Bank. However, if they come from the commercial banks they certainly should not continue in positions of management or directorships of the commercial banks when they are appointed to the board of the Central Bank. I do not think the Minister's last comment is relevant at all. There is nothing in the Bill stopping the Minister from appointing directors of banks to the board of the Central Bank. Indeed, I have a later amendment to section 14 covering that point. In fact, it is very important to have the expertise of the staff of the Central Bank available to the board of the Central Bank. The Minister seems to imply that the worker directors appointed by the staff will not be people of expertise; in fact they will be people of the highest expertise in that area. They would also be very aware of what staff and management in other financial institutions are doing and how they operate. The amount of information in regard to operations available to staff in all the financial institutions, banks, building societies, insurance companies etc. is amazing. There is a huge mine of expertise and knowledge lying around in those areas. Therefore, it would not be true for the Minister to say that the appointment of worker directors to the board of the Central Bank would reduce the expertise available. I would not accept that argument.
Nor do I say so.
I understood that the Minister's argument was that ——
I would not cast any reflection on the expertise of the staff of the Central Bank.
The Minister may not have said so directly but I understood from his comments that it was necessary to ensure that the Minister had available the highest level of expertise when appointing directors to the board of the Central Bank and this seemed to indicate to me that worker directors would reduce the expertise. I am simply making the point that the appointment of worker directors would not reduce the expertise available at the top.
Question, "That the words proposed to be deleted stand," put and declared carried.
Amendment declared lost.
I move amendment No. 10:
In page 12, subsection (1) (a), lines 39 and 40, after "determine" to insert "and at least three of the Directors appointed hereunder shall be persons who in the opinion of the Minister are qualified for appointment, inter alia, because of their experience and knowledge of the practice of commercial banking”.
The amendment put down in my name is similar to amendment No. 11 put down in Deputy Noonan's name. All I want to achieve is that there be some basic requirement on the Minister for Finance to appoint a minority percentage of the board of the Central Bank from those who, by virtue of their experience and knowledge of the practices of commercial banking, were in the opinion of the Minister qualified for appointment. That does not mean that they would have to be a director of a bank, a bank employee could be just as eligible for appointment. The idea is that some specified section of the board should be composed of people who have knowledge and experience of commercial banking. I would be worried about getting rid of the banking directors. Apparently nobody laments their departure as a class. I think it was wrong that they were there as of right but on the other hand it would be better to provide that some minimum fraction of the board of directors would have to have experience by virtue of their knowledge and experience of practice in commercial banking.
(Limerick East): The intention of my amendment is exactly the same as that of Deputy McDowell's, even though I have drafted mine differently. The net point is that the Minister would be required to appoint two directors with commercial banking experience. They need not be directors of commercial banks, indeed they could be employees or former employees of banks. I think this is a reasonable request and there are no profound arguments other than that that one can put forward.
The terms of section 13 abolish the provision that directors of banks be appointed to the board as of right. The reason is that it is necessary to reflect the future role of the Central Bank as supervisor to many diverse institutions. The Deputy's amendment seeks to give the banks more weight on the board by reserving posts for those with banking experience. To give any special provision to banking is not justified. If the amendments were accepted, the case could be made that the Minister should also have regard to persons with experience of building societies or financial exchanges. I believe the best course is to leave the Minister for Finance the option to select the board as he thinks appropriate. In the course of the Second Stage debate, I assure the Deputies that while the requirement to have two bank directors on the board was being abolished, the Minister would have the option of appointing directors with banking experience. However, the aim of the Bill is to leave the Minister with a free hand in the futre, given the Central Bank's new and expanding role. I think that is reasonable.
With new and wider territories opening up, to try to give any special area to bank directors or bankers as against those in financial institutions and other financial houses that the Central Bank will deal with, could give the wrong impression. I am more inclined to leave it open to the Minister of the day to appoint whom he wishes and this does not exclude putting people with the proper experience on the board.
(Limerick East): It is not the intention of my amendment to give an inside track to people who represent or would represent the commercial banks on the board of the Central Bank, my concern is that at least two people would have direct, appropriate expertise in commercial banking, which for the foreseeable future will still dominate the financial institutions. I think it is appropriate that a specification such as this should be in the Bill.
It seems to me that if we examine other financial institutions, which in the future will become licence holders, and indeed building societies will become licence holders, we will find that many of their personnel have commercial banking experience. The amendment is not necessarily skewed towards the commercial banks. The amount of expertise available in the country is not that great. The talent pool in any small country is limited enough and I think there should be a requirement as to expertise in the Bill.
The question of the appointment of directors to the board of the Central Bank is a very important area of the Bill. I certainly have no objection whatsoever to what the Deputies have in mind, although Deputy Noonan may be a little too specific. It is certainly important to have people with experience of commercial banks, financial institutions, building societies, insurance companies and so on on the board of the Central Bank. I am sure the Minister is aware of the needs for the board although there is no obligation any more on the Minister.
It is good to have directors from the commercial banks. The commercial banks have always had representatives on the board of the Central Bank. It seemed extraordinary to me and to members of the general public that people could hold both directorships. If the Minister appoints a person with expertise in the commercial banking area, a person who might hold a directorship in a commercial bank, that person when appointed to the Central Bank should break all ties with the commercial bank. It is important to have their expertise but there must be no conflict of interest.
The appointee is now a public servant not just a commercial banking person following up his interests in the Central Bank. The appointee will hold the major Government supervisory role in the major financial institution of the State, an institution which is gaining enormous importance in relation to the structures of companies, the commercial banks, insurance companies, finance houses and so on. The Central Bank have controlling interests in relation to everything from the distribution of trade to manufacturing and so on. The Central Bank play a vital role in the economy and the Government must know what is happening. I have no objection to employing the expertise available for the Central Bank, but they should not retain their interests in other commercial areas.
The Minister is aware of the need for expertise on the board of the Central Bank and over the years there has been evidence that Ministers have put people from the financial services area on to the board of the Central Bank. Even when this obligation on the Minister is removed, the Minister will include representatives from the commercial banking area, the building societies, the insurance companies, the farmers and industry on the board. A farmer representative has always been on the board of the Central Bank. Farming, industry and finance will continue to be represented on the board. The Government of the day will choose industrialists and so on to pursue Government interests. I am sure the current Minister will do no different.
(Limerick East): It is not too easy to leave it as it was.
In view of the great coming together of the social partners on the Programme for National Recovery will the Minister consider including a representative of the Irish Congress of Trade Unions on the board of the Central Bank along with the farmer, the industrialist, the commercial banker, the insurance man and the building society man? The Government should continue including the social partners as they have done over the last couple of years and should put a representative of ICTU on the board of the Central Bank.
The Minister can appoint to the board of the Central Bank whoever he thinks fit and appropriate for the position. I do not want to tie the hands of any future Minister for Finance who might decide that in certain circumstances he was not going to have a banking director on the board. We are taking away the right they must have two directors on the board. We are leaving it wide open because of the new areas that will come under their wing. To try and proportion that board for banking people is tying the Minister's hands. We have one Governor and eight bank directors. We are talking about building societies, futures exchanges, trustee savings banks, commercial banks and so on. I am more inclined to give the Minister of the day freedom to choose who he thinks is best fitted for the job.
I am not pressing my amendment.
Amendment, by leave, withdrawn.
Amendment No. 11 not moved.
(Limerick East): I move amendment No. 12.
In page 13, lines 30 to 41, to delete subsection (3), and substitute the following:
"(3) Any person who immediately before the coming into operation of this section was a banking Director will continue to hold office until his term of office expires.".
This is an amendment to the section which deals with existing banking directors when this Bill becomes law. The procedure envisaged by the Minister would allow an existing banking director to continue in office for three months, and at the end of three months his term of office would expire. Will the Minister tell us what period of office remains to banking directors?
One has until 1990 and another until 1991.
(Limerick East): It seems to me that the change could take place at the end of the period of office quite reasonably and that there is no necessity to take people off the board by law three months after the passage of the Bill. Section 2, Part I and chapter VII of Part II will come into operation on the passing of the Bill and as the Minister already pointed out, other sections of the Bill will come into effect when the Minister and the bank are ready to bring them in. The way we are proceeding, this Bill will come before the House sometime after Easter rather than before Easter, and then it will proceed to the Seanad. I presume it will be law sometime before the summer recess.
Hopefully.
(Limerick East): Then an indeterminate period of time will go by before the regulations envisaged by the Minister in other sections of the Bill will be ready for promulgation. If you add three months to that, the director whose period of office expires in 1990 will be up against his retirement date. I wonder if there is any need for this section which involves a three months mechanism? Why not allow the Minister to make the appointment when the period of office of the two banking directors expires in 1990 and 1991 respectively?
I take the point made by the Deputy. I hope the Bill will be through all Stages in this House and through the Seanad before the summer recess. In relation to the new and expanded role, we would like not to have to wait two years to have the Bill enacted and to have it operating on a neutral basis in an era of netrality. Whatever about the first director who will be retiring in 1990 — I am not setting out in the Bill to take these two people deliberately off the board — waiting until 1991 is too long to wait to get the new activity going.
(Limerick East): With respect, as I understand the legislation, there is absolutely no need to wait. The Minister can, by regulation, bring in sections of the Bill when he and the Central Bank are ready. The supervisory role can be done by the directors of the bank whom the Minister thinks are appropriate. If they happen to be for the time being banking directors that will not inhibit the operation of the Bill in any way in its initial stages.
I will have a look at it between now and Report Stage.
Amendment, by leave, withdrawn.
Section 13 agreed to.
NEW SECTION.
Acting Chairman
I understand that amendment No. 13 has already been discussed.
I move amendment No. 13:
In page 13, before section 14, to insert the following new section:
"14. —The Principal Act is amended by the insertion after subsection (3) of section 5 of the following:
‘(4) No person who is a director of a bank or financial business, licensed or supervised by the Bank, shall be appointed a Director of the Bank.'.".
The amendment may not be worded very well but the point I am making, and I said it already when speaking on the previous section is, that a person appointed as a director of the bank should not continue to hold a post of director of a bank or financial business, licensed or supervised by the Central Bank. What I have said in the amendment is that no person who is a director of a bank or financial business, licensed or supervised by the bank, shall be appointed a director of the bank. The intention is that when appointed they would cease to be directors of the other bank. The point I am making is that no person who is a director of a bank or a financial business, and continues to be a director of a bank or a financial business, should be appointed a director of the Central Bank.
The way in which the amendment is worded would seem to debar anybody who is a director of any financial body supervised by the bank from being a director of the Central Bank. It could be argued very easily that it would be very difficult to select a board for the Central Bank with sufficient expertise if all directors of financial institutions were automatically forbidden to be members of the Central Bank board.
I agree with the Minister and I agree that the amendment is not worded very well. Would the Minister agree that when a person of expertise, who is a director of a bank or a financial business, is appointed to the Central Bank that person, in order to avoid conflict of interest, should resign their position in the bank or financial institution in which he held a directorship? That is the point I would like to bring out. My amendment would probably exclude appointment of any person who holds a directorship or such position. What I have in mind is that they would relinquish the other position if the Minister appointed them to the Central Bank so that there would not be a conflict of interest.
In certain situations it could be unfair to a person to force them to resign from the directorship of a bank to become a director of the Central Bank. I would also remind the Deputy once anybody is appointed a director of the Central Bank they are governed by the oath of secrecy in that regard. That should answer the Deputy's question about conflict of interest. Certainly I could visualise cases where it would be unreasonable to ask somebody to resign as a director of a commercial bank if he was appointed a director of the Central Bank.
I do not want to have a long debate on the subject but I see a major conflict of interest arising in this case. The conflict of interest has been increasing in recent years. Because of the extent of the financial institutions' involvement in the whole economy there is a need for more supervision as the Central Bank Bill indicates. The Minister recognises the need for more supervision down along the line through all sorts of financial institutions and that the conflict of interest can be very great. In the normal course of events there is no problem, but where a major conflict of interest occurs, if large sums of money are involved, oaths of secrecy can mean very little. I am sure the Minister can understand that where rogues exist oaths of secrecy mean very little to them. We have had some operations in the financial area of a suspect nature, to say the least. The Central Bank is there to ensure that that does not occur. If there can be a conflict of interest in the political world between political and commercial interests, I am sure the Minister can see that there can be conflicts of interest in the industrial, commercial and financial world as well. An oath of secrecy where hundreds of thousands or some millions of pounds are involved would be very little security for the State or for the Central Bank.
I have a high regard for the oath of secrecy Deputy Mac Giolla took.
(Limerick East): You have not got the experience.
That may be so. I would also remind him that there is a five year jail sentence for an indictable offence under this section.
Would the Minister agree that if he were in the business of private currency production he might find himself, in a conflict of interest if he was on the board of the Central Bank and if he was asked to supervise Sandyford as well?
Amendment, by leave, withdrawn.
(Limerick East): I move amendment No. 14:
In page 14, subsection (3) (a), line 4, to delete "or competitive".
This is an amendment to section 14 (3) (a) which states:
... every appointment under subsection (2) of an officer or servant of the Bank shall be made by competition (including a qualifying or competitive test in Irish) to be conducted according to regulations to be made by the Board and the Board may, in relation to any such competition, impose such conditions of entry, limitations, and safeguards as it thinks proper.
I have absolutely no objection to the general thrust of subsection (3) (a). The board should have control over the qualifications of those who enter the service of the bank but it is, to say the least, a little peculiar that the only specific qualification referred to is a qualification in the Irish language. The Central Bank have many functions but there are other qualifications which are far more relevant to employees of the bank than qualifications in the Irish language.
I know that in certain parts of the public service there are still requirements for one to have an ability to conduct business in Irish. That is appropriate. However, there are other parts of the public service where the qualifying provision in the Irish language has been removed as a requirement for entry — I think that is the situation and perhaps the Minister might throw some light on this. For the life of me I cannot understand why, all things being equal, a competitive test in Irish should be a deciding factor. I would accept that a qualifying test in Irish is appropriate but it is difficult to understand why it is considered necessary in the bank to line prospective employees up to compete against each other in Irish. My amendment proposes to take out the competitive element in regard to Irish and to leave in the qualifying element.
On the face of it one might envisage a situation where people who apply for positions in the Central Bank would have to do a test in oral Irish and they would compete against each other in oral Irish, but within the text of the subsection it would be possible for the board of the bank to decide that nobody was eligible unless they had got an honours Irish in their leaving certificate. That is being done in certain parts of the public sector.
In local authorities, for example, certain subjects are given weightings over other subjects. Perhaps it is appropriate that this should be done, but it seems peculiar, to say the least, to have a competitive element in a test on one's ability to conduct business in the Irish language in the context of the Central Bank Bill. I should like the Minister to throw more light on this provision before I decide what to do with my amendment.
When I saw this subsection I meant to put down an amendment to take out the words in brackets. It is worth reminding ourselves that this provision arises out of an amendment made by the Central Bank Act, 1942, to the provisions in section 31 of the Currency Act, 1927. It was only in 1942 that this competitive test first came into being. Section 16 of the 1942 Act required the bank, for the first time, to appoint every position by competition, including a qualifying or competitive test in Irish. I believe this is a grossly dishonest piece of legislation to re-enact in the late eighties. We live in a very different world from the world which was there in 1927. In 1927 this Oireachtas was much more tuned into the Irish language and two years later it required, rather ridiculously, that every lawyer had to start taking exams in Irish. That has been more honoured in the breach than in the observance in that only a tiny minority of lawyers are capable of conducting cases through the medium of Irish.
This provision in relation to the Central Bank has to be looked at seriously because it purports to be serious on its face. It requires that every position the bank appoints shall be by competition, unless they decide that it should not be done by competition and that — and this is the frightening aspect — it shall include a test in Irish. If an EC national comes here to university at the age of 18 or 19, has no opportunity to study Irish, and cannot be expected to know Irish, and even if his parents are Irish citizens who have lived abroad for a long time, I cannot see how it is fair, right or honest to say that person is ineligible for appointment to the Central Bank, if he is the best person for the job. I do not think there is any legitimate reason in 1989 to say to a person in those circumstances "You are ineligible for appointment unless we got through some dishonest manoeuvre and pretend you have passed an exam in Irish."
I do not know why Irish language qualifications would be necessary to check coinage in Sandyford or to be in charge of internal supplies in the building in Dame Street. Maybe it is desirable, but it is about time that we as a reasonable, honest legislature faced up to the fact that it would be entirely unfair to say to a 19 year old person or a 23 year old graduate "You cannot get a job in the Central Bank because you are incapable of speaking a word in Irish".
Paragraph (b) of subsection (3) says:
Paragraph (a) shall not apply to appointment to a position in respect of which appointment by competition is, in the opinion of the Board, unsuitable.
That does not get around the situation at all because the appointment might be one for which it would be perfectly proper to hold a competition, such as a senior economist, and it might be one in which a knowledge of Irish was the least relevant qualification one could think of. To disqualify people who are prefectly competent, who are nationals of this country or of an EC country and who for some good reason have no Irish, from holding a job in which the use of Irish will be zero, is simply dishonest. It is about time we faced up to the fact that this is dishonest and that it is wrong in 1989 to include a qualifying or competitive test in Irish in that paragraph. This means that if there is a competition it is mandatory to include a qualifying test in Irish.
(Limerick East): Or a competitive test, which is even worse.
This is wrong because there are plenty of positions in the Central Bank for which Irish is completely irrelevant and it is about time we faced up to that fact.
I also think that this provision will be knocked on the head at some stage by the European Commission on the basis that a qualifying test of this kind is discriminatory. Even though Irish is recognised as one of the European languages, to say in the case of an institution the size of the Central Bank that all positions, but for an exceptional few, must be competitive and that all entrants must have a qualification in Irish or must compete — which I suppose is slightly less likely — in competence in the Irish language, is simply not sustainable in this day and age. I ask the Minister to agree that this section should be changed by removing that provision on Report Stage.
If the board of the Central Bank want at any given time to run a competition which includes Irish and they seriously think in their judgment that a particular position requires a competence in Irish, we should let them say so and run the competition themselves. To require them to do so even when the competition is for posts that have nothing to do with Irish is simple, downright dishonesty. That is the kind of thing that gets the Irish language a bad name. At one stage I was quite fluent in Irish and still retain an interest in and liking for that language. I and people like me become extremely annoyed at hypocrisy of this kind, that to be an economist of some kind, one must have a qualification in Irish.
One does not need that qualification to get into the Dáil; let us be clear about that. One does not have to know even a word of the language and there are many here who could not pass many examinations in Irish. For us to start telling a serious minded institution that their employees must have a qualification in Irish is utter rubbish. The Minister should agree that in the age in which we live and with the kind of institution we are trying to set up, it is just a little obeisance to something which was all right in the days of wet turf and sugarless tea during the emergency, for the then Prime Minister, Mr. de Valera, to bring in, as a gesture to national culture. Now it is simple, downright dishonesty. Let us not pretend any longer; there are but very few positions in the Central Bank which require a knowledge of Irish. Let us not pretend that every competition run must, as a matter of law, have an Irish language competence element to it. Above all, as Deputy Noonan points out, there is the absurdity of having competitions among people to speak Irish when they will certainly find no need for competitive competence in that language, whatever about minimum competence for a tiny minority. I oppose the section if it is proceeded with without some indication from the Minister that he will make that deletion.
I do not have to retrace the origin of this provision, which was put in in 1942. I have no doubt that there are positions in the Central Bank where Irish is relevant.
A minority.
That may well be. The Irish language is recognised by the European Commission. There is no evidence at all to suggest that this provision has hampered the recruitment of staff to the bank. It is not considered that the change suggested may have any significant effect on the bank's recruitment. There are many non-nationals working in the bank.
Can any of these speak Irish?
I do not know. I am being honest.
Well, then, they should not have been appointed.
I know that there are non-nationals employed by the bank. I would ask the two Deputies to give me an opportunity to discuss this matter with the Central Bank to see exactly what I can come forward with between now and Report Stage.
May I suggest that the Minister does not discuss it with his colleagues in Government?
I shall discuss the matter with the bank to see the relevance. No doubt, they would need some employees with fluency in Irish. I want to have an opportunity for discussion with them, to see what the application of it is before I can say yeah or nay here.
(Limerick East): That approach being adopted by the Minister is very reasonable. If the small piece in brackets on lines 3 and 4 of subsection (3) (a) were removed, under the rest of the subsection the Central Bank would still have the power to run a competition which would require a qualifying test in Irish, as they saw fit.
That is right.
(Limerick East): We should leave it to the good sense of the Central Bank, rather than try to force it on them on each and every occasion by Statute. I shall withdraw the amendment.
Amendment, by leave, withdrawn.
Section 14 agreed to.
SECTION 15.
Amendment No. 15. Amendment No. 16 is an alternative. Amendments Nos. 17, 18 and 20 are related and amendment No. 19 is an alternative to amendment No. 17. Therefore, amendments Nos. 15, 16, 17, 18, 19 and 20 may be discussed together.
I shall withdraw amendment No. 16 if amendment No. 15 is agreed to.
I move amendment No. 15:
In page 15, lines 8 to 16, to delete subsection (1), and substitute the following:
"(1) A person, who at the commencement of this section is, or at any time thereafter is appointed, Governor or a Director, officer or servant of the Bank or who is employed by the Bank in any other capacity, shall not disclose, during his term of office or employment or at any time thereafter, any information concerning—
(a) the business of any person or body (whether corporate or unincorporate) which came to his knowledge by virtue of his office or employment, or
(b) the Bank's activities in respect of the protection of the integrity of the currency or the control of credit,
unless such disclosure is to enable the Bank to carry out its functions under the Central Bank Acts, 1942 to 1989, or under any enactment amending those Acts.".
Section 15 makes it a criminal offence for any member or former member of the staff of the bank, including the Governor and the board, to disclose any information relating to the business of the bank or the business of any other person, except in certain specified circumstances. This section is aimed at preserving the confidentiality of the bank's operations in sensitive areas such as monetary policy or the safeguarding of currency, decisions on changes in interest or exchange rates and of information on private concerns such as banks obtained by the staff and the bank in the exercise of their functions.
On Second Stage debate, the point was made that in relation to the business of the bank the provisions of section 15 were drawn too widely, that it could have the effect of prohibiting the bank or its staff from disclosing matters of genuine public interest, either to the public generally or to the Oireachtas in particular. I have examined these points and am prepared to amend the existing prohibition on disclosure so that it no longer relates to the business with the bank in general but to those aspects which it is desired to protect, such as the operation of monetary and credit policy and the issue of currency and coinage. The amendments being proposed to section 15 distinguish clearly between confidentiality of information obtained by the bank in relation to third parties and information concerning the bank's own activities and the protection of the currency and control of credit. Three new exemptions from the secrecy requirements are provided for in section 15 (2). These allow for information to be given in relation to the activities of the bank where the bank consents, where the information is not harmful to the operation of the bank in monetary exchange rate or currency matters or where the information on the bank is required to be given in a report which must be laid before the Oireachtas. This latter exemption will also allow the bank to reply to questions from the Oireachtas on matters covered by the report.
Amendment No. 20 reads:
In page 16, between lines 13 and 14, to insert the following subsection:
"(5) In any proceedings for an offence under this section, it shall not be necessary to prove that the provisions of subsection (2) do not apply and the onus of proving that any of those provisions do apply shall be on the person seeking to avail himself thereof.".
I am also proposing a new subsection (5) which replaces the onus of proof in a prosecution on the person seeking to use the relief of the exemptions under subsection (2). I consider that this is a reasonable course to follow. If the onus were placed otherwise, an offender might well consider that the prosecution would be hampered in pursuing him since, in order to show prejudice or harm, it might be necessary to release further information which would be prejudicial to the bank's operations in financial markets or the affairs of third parties. I do not believe that the authorities will abuse this provision. The prosecution for an offence under this section would be taken only after culpable behaviour has created harm to the legitimate activities of the bank or the interests of third parties. I ask the House to accept these amendments to section No. 15.
I welcome what the Minister has said. Certainly, it is a more than adequate response to what I said on Second Stage and I thank the Minister for it. In fact, he goes further than I imagined he would have gone in limiting the secrecy obligation which is put on employees, officers and directors of the bank. That is very sensible.
However, I am left with the question of my amendment No. 17. I did not know, when I was putting it down, how topical that amendment would be. It appears that there are people — and I shall not comment any more controversially than that — being asked by committees of the House to speak to them but they say they cannot comply with the request because the Official Secrets Act prevents them from doing so. It would be a great pity if, at some future stage, people should say that the provisions of the Central Bank prevent them from discussing a matter with a committee of this House. It is desirable that this House should, at some stage, establish a committee to interact with the Central Bank. The Central Bank are being transformed by this and other measures that the Government are currently putting through the Oireachtas into a huge institution with colossal powers. The Oireachtas is bound, in the next ten to 20 years, to find itself ever more concerned than it has been in the past with establishing some form of relationship with the Central Bank which does not involve any compromise of independence but does require the bank on occasions to explain themselves, and their policy or to justify some particular measure that the bank may or may not be taking in relation to credit generally or to the various institutions, including building societies and other agencies.
It is worth while reiterating that the Central Bank are effectively immune from parliamentary scrutiny because the Minister and his predecessors have taken the view that the Central Bank are not accountable to parliament. Therefore, apart from answering questions regarding their specific duties in relation to the Central Bank, successive Ministers for Finance have refused to answer questions in this House in respect of policies pursued by the Central Bank. The House is confined to receiving an annual report from the Central Bank as to what they have done and three quarterly bulletins outlining the bank's policy.
There is no occasion on which the Oireachtas is given the opportunity to talk to the directors of the Central Bank, to put another view to them and to inquire why they are pursuing any particular line. I believe a committee will be established in future by the Oireachtas to deal with financial services generally and the Central Bank in particular. In that context any question which a committee of this House puts to a person in the Central Bank arising out of that person's duty — even on the narrowed down area to which this section will apply if the Minister's amendment is accepted — should mean that the person is in a position to say that he or she will answer the question if they must but that they will not commit a criminal offence. That arose in the context of a Dáil committee yesterday in totally different circumstances where somebody said they could not answer the question because they felt inhibited by criminal law from so doing.
I did not realise, needless to say, that that would happen when I put down the amendment but it is one instance of making provision for the bank to be made amenable to a committee of this House. If this was not done, if the Central Bank board could say to their staff that they must not disclose certain material in public, the board would effectively be able to prevent their staff from giving evidence to a committee of the Oireachtas which was supposed to be interacting with the bank at some future date. That is wrong in principle because this House should not be in the position where things said in it or in a committee room could amount to a criminal offence. It is an invidious position where the board of the bank could prohibit their employees from coming to give evidence before such a committee or that the employees could say they would like to help but cannot because the criminal law prevents them from doing so.
I ask, therefore, that my amendment be inserted in subsection (2). This House should preserve its own right to know and should never have to go through what it has in the last 48 hours where a member of the public service told a committee that if he told them what they wanted to know it could amount to a criminal offence. A public servant should not be in the position of being tugged at in public by the House to say something and being worried about whether such evidence would amount to a breach of the criminal law.
I cannot see how it will do any harm — it will do a lot of good — to establish a provision in the Bill that the prohibition on secrecy does not apply. It does not apply when a court orders someone to make a statement in a special criminal proceedings, although I know it does not apply to civil proceedings. The provision should apply to a committee of this House who are entitled to call on a member of the Central Bank staff with a view to examining him in relation to bank policies.
(Limerick East): I dwelt at some length on the issues raised by these amendments in my contribution on Second Stage and I should like to thank the Minister for responding in a major way to the concerns expressed then by Deputy McDowell and myself.
Section 15 (1) as amended is far more tightly drawn and far more acceptable than the original draft. There is no doubt that employees of the Central Bank have to observe rules of secrecy. The bank, in the exercise of certain of their functions, have to do so in a confidential manner, the onus of confidentiality quite clearly has to extend to the staff and that must be enforced by law. However, there is no need for any and all information by the bank being covered by secrecy provisions as was envisaged in the original draft. I welcome the changes the Minister made which now confine the issue of the confidentiality and non-disclosure of information by employees to those areas of Central Bank activity for which it is appropriate. I do not have any problem in regard to that.
The second issue that arises is the cross-fertilisation between confidentiality of Central Bank activities and the independence of the Central Bank as the Minister sees them and the rights of the Oireachtas in respect of the public interest. The section as originally drafted, while it imposes under sanction rules of confidentiality on the employees and officers of the bank, also provides for a series of exceptions where it would not be illegal to disclose information. There is a series of them from line 19 to line 49 where, in various circumstances, or at the request of various institutions, disclosures can be made without anybody being in breach of any law.
My amendment has the same intention as Deputy McDowell's, it seeks to also make an exception of any committee of the Houses of the Oireachtas so that the series of exceptions in subsection (2) and controlled by the first line of that subsection — the provision as to non-disclosure contained in subsection (1) shall not apply to any disclosure — will also apply.
The rights of any committee of the Houses of the Oireachtas to inquire into the Central Bank or their workings is an issue for another day. I am not attempting to outline the circumstances in which the Committee on Public Accounts, for example, or a new committee along the lines suggested by Deputy McDowell could lay down parameters in respect of any new committee. All I am saying is that there should be an enabling provision here to make it legal for officers and employees of the bank to disclose information where appropriate under law to a committee of either House of the Oireachtas. Then we may have the balance between the independence of the Central Bank as an institution, the confidentiality of the bank in the operation of their function and the extension of that confidentiality to the agents, servants and employees of the bank. The rights of this House must also be taken into account because that is where all authority in a democracy ultimately rests. There must be a balance between an independent Oireachtas and an independent bank and I suggest that the balance is not one of standing off.
I fully take the point made by Deputy McDowell. It is not in accordance with the way this House should operate or in accordance with the principles of democracy, or how they should operate in the context that somebody who is willing to give evidence before a committee of this House feels inhibited from doing so because he is afraid that the sanctions of criminal law might apply. That is the difficulty which should be addressed. I appreciate that the Minister has gone a long distance here. I compliment him on taking on board in a very significant way what was said on Second Stage.
This is no petty amendment nor is it a technical one. Rather it is a major amendment and I thank the Minister for taking it on board. I would now like him to examine the second issue which is what should be the relationship between an independent confidential bank and this House where both would have their rights and obligations and to see how we might get the balance right.
With your indulgence, a Cheann Comhairle, I would like to diverge for a few moments though this is relevent. In the first days of 1993 we will see the completion of the internal market. All of us in this House have heard speeches on the completion of the internal market but beyond that it appears to be the intention of many sovereign governments in Europe, in particular the government of the Federal Republic of Germany, to move very quickly in the setting up of a European central bank. I can see such a bank becoming a fifth institution of the Community taking its place alongside the Council of Ministers, the Commission, the Parliament and the Court. Regardless of the way in which this would evolve we would have some kind of representation but because it would be led from the front by the German government, advised by the Bundesbank, and with the German economy continuing to be the strongest economy in Europe throughout the nineties, many of the attitudes adopted by the Bundesbank would also be adopted by any European central bank which emerges. In the final analysis when the internal market is completed the strongest economy in Europe will dictate economic policy in Europe. A European central bank regardless of what kind of representation we may have would establish monetary policy in Europe. Once this has been conceded to a central institution fiscal policy too, will be conceded shortly afterwards.
If we were to think of what the position might be in the mid-nineties, I believe we are looking at a far more profound loss of sovereignty than anything we have seen heretofore, certainly a greater loss of sovereignty in respect of our economic, monetary and fiscal policies than we agreed to on our entry to the market in 1973. In those circumstances and against that background the checks and balances we put in place in respect of the relationship between this House and our Central Bank could quite easily apply in respect of the relationship between this House and a European central bank on the one hand or in respect of the relationship between a European central bank in which we would have some kind of representation and the Council of Ministers and the Commission. Therefore, there are wider issues involved here. I am not going to get involved in the rhetoric of the purple patch but this is relevant.
It is the experience of this House that we only address issues such as this once in any generation. Unlike the position in respect of the Finance Bill we will not see another Central Bank Bill next year or the following year. As well as addressing the immediate issue it would also be well worth looking at what the position may be in the mid-nineties against the background of what I have said. I ask the Minister to bear what I have said in mind and to evaluate it to see if there is any merit in that kind of projection when he comes to examine what the relationship should be between this House and the Central Bank.
I am not going to press the amendment today but I would like to get a response from the Minister to see where we can bring it forward between now and Report Stage. Again, I compliment the Minister for the extent to which he has moved already.
These amendments seek to make it clear that the bank would be able to give information to a committee of the Oireachtas. If the Government amendments are accepted there would be no impediment to the bank giving information about their own activities to any person, including a Dáil committee. However, as drafted, the amendments would allow the bank to disclose information, not only concerning their own activities but also those of third parties, to a Dáil committee. The bank's supervisory function depends strongly, as Deputies will appreciate, on secrecy and this could not be diminished. Deputies did not probably intend this to be the effect but to accept the amendments could damage the confidence of the supervised institutions in the bank's secrecy provision and raise a fear that some information about their activities might become public. The Government amendments should ease the Deputies' fears about the capacity of the bank to discuss their affairs. I have listened attentively to what the Deputies have said and we will take it on board between now and Report Stage. If the Deputies would like to comment further I would be interested in hearing what they have to say.
I accept what the Minister has said in that such a danger exists. Quite frankly, I had not thought of it but I believe that we are proposing the creation of an institution which would be totally independent in its functions. While not wanting to be too controversial, when we take a look at the position in respect of some semi-State bodies we will see that Ministers are not always necessarily in charge of the bodies which are supposedly under their tutelage. I am sure the Minister's colleague, Deputy O'Kennedy, would appreciate that policy is not always dictated by a Minister. How is policy arrived at in an independent institution and where is it asked from time to time to justify the policy it is pursuing? Let us suppose that the policy it is pursuing is perceived by Members of this House, acting responsibly, to be wrong in some area. I do not know what that area might be or what the extent of its supervisory or regulatory functions are in relation to banking, building societies and so on, but let us suppose this House arrived at the view that there was a fundamental error in the policy being pursued by the Central Bank, in those circumstances, rather than compromise the independence of the bank by using the ultimate sanction of dismissing the directors or sending them directives or a letter from the Minister stating that this is what they should do as the Houses of the Oireachtas also believe that that is what they should do, a committee of the House should be set up to deal with areas such as financial services.
Such a committee is going to come into existence at some stage because we are proposing the creation of such a powerful institution with such wide powers that somebody at some stage is going to want to call it to account for what it may have done. Let us take a look at the position in England. If a select committee of the House of Commons could not inquire into the policy being pursued by the Bank of England or the policy being pursued by the various financial regulatory agencies in Britain that would seriously compromise parliamentary sovereignty there. We are now proposing the creation of what I would call a serious Central Bank with much wider powers than it merely being the bankers' bank. It would be an arm of the State and would control credit, banking, insurance and the building societies and would have huge powers.
This House should bear in mind that in creating such an enormous institution with such far-reaching powers which these series of Acts would give it we should not confuse independence with total autonomy. Independence and autonomy are not the same thing. One can be independent in the way that universities are independent but this does not mean that they cannot be called upon by this House to explain the policy decisions taken by them. I believe that in the future these Houses will establish a select committee whose function will be to take seriously what is stated each year in, for instance, the Central Bank report.
I have tabled amendments, which I do not want to refer to now, about the quality of information given to the public and to this House by the Central Bank. No number of reports or unilateral statements made by Members of this House or by the board of directors suffices for a relationship of mutual involvement which there should be between Parliament and an institution as powerful as the one we are creating by this series of Acts.
The Minister says that under his amendment there is nothing to prevent the bank disclosing this kind of information to a committee. If employees of the bank knew there was something substantially wrong, say, about the supervisory quality of the decisions implemented by the board of the bank, they could be told by the board of directors to keep quiet. Unless they get permission from the board of directors it is a criminal offence for them to come before a committee of this House and disclose information of this limited kind. The directors of the bank would effectively have a veto over what evidence a committee could receive. That is what I am worried about.
I go along with the Minister's statement about the desirability of maintaining confidentiality, but what I am driving at is that it is not right that a committee of this House, should be told by an employee of the bank that he declines to appear before the committee on the basis of potential criminal liability. The committee should have the right to say: "We want to know what you did in relation to the supervision of an institution that went bust. We want to know what you personally did and we do not want your board of directors to give you immunity from questioning by simply saying they do not consent to the information being made available to the Oireachtas."
I am prepared to discuss it when we come to it later in the Bill.
(Limerick East): I want to come back to the Minister's original reply about my amendment. He said it would be paramount that licence holders would not only realise that the Central Bank act in a confidential manner but that there was no possibility of the confidentiality being breached by a committee of the House. There is still a major difficulty in that respect. I can envisage an institution which was supervised by the Central Bank going bust and it becomes a matter into which a committee of this House is inquiring. In those circumstances the confidential information about the regulatory process is what would be required by a committee of this House in evaluating that situation. There is a difficulty getting the kind of balance we desire.
The principle we want is the right of the Oireachtas in certain circumstances to get that information without those it is examining being afraid of outside sanction under the criminal law. I do not know how you are going to construct the framework in which that is possible, but I am very clear on the principle. This House should be in a position, either meeting in plenary session or through one of its committees, to establish the facts of any situation within the remit of this House. That should apply to the workings of the Central Bank or any other institution.
By this legislation we are creating a very serious Central Bank, a major institution. We think quite frequently of transfer of sovereignty from national governments to institutions in Brussels. It is possible to transfer control and sovereignty also to institutions within one's own state. A Central Bank along the lines of this bank with all the powers accruing to it will be a serious policy maker across the whole area of monetary policy. There should be checks and balances, and they do not appear to be there at the moment.
I know the principle the Deputy is trying to establish. I think he appreciates we have come a long way since Second Stage. We will look at this to see if we can strike a balance. I do not think any contributors want to do damage, and there is a problem. It is a question of seeing whether we can go further. I will come back to it on Report Stage.
Amendment agreed to.
Amendments Nos. 16 and 17 not moved.
I move amendment No. 18:
In page 15, subsection (2), lines 44 to 49, to delete paragraph (g), and substitute the following:
"(g) made for the purpose of complying with any requirement under the Central Bank Acts, 1942 to 1989, or any other enactment, that a report, statement or other document be laid before a House of the Oireachtas,
and the provisions as to non-disclosure contained in paragraphs (a) and (b) of subsection (1) shall not apply to any disclosure—
(i) in the case of the said paragraph (a), which, in the opinion of the Bank, is necessary for the protection of depositors of money with any person carrying on the business of banking or any business to which section 7 (4) (a) (ii) of the Act of 1971 (as amended by this Act) or regulations under section 25 relate or to safeguard the interests of the Bank.
(ii) in the case of the said paragraph (b), made with the consent of the Bank or where the disclosure is not prejudicial to—
(I) the operations of the Bank in any financial market, or
(II) to the issue by the Bank of legal tender, or
(III) the integrity of the currency.".
Amendment agreed to.
Amendment No. 19 not moved.
I move amendment No. 20:
In page 16, between lines 13 and 14, to insert the following subsection:
"(5) In any proceedings for an offence under this section, it shall not be necessary to prove that the provisions of subsection (2) do not apply and the onus of proving that any of those provisions do apply shall be on the person seeking to avail himself thereof.".
Amendment agreed to.
Section 15, as amended, agreed to.
Section 16 agreed to.
SECTION 17.
Amendments Nos. 21 and 22 are to be taken together by agreement.
(Limerick East): Agreed.
I move amendment No. 21:
In page 16, subsection (1), line 33, to delete "or of any other enactment".
Section 17 proposes to allow the bank to dispose of documents and other records after six years. This time period is standard in relation to companies generally and is provided for in the Companies Acts. Concern was expressed in the House that section 17 as drafted would allow the bank to destroy documents of historical or clerical importance, such as those covered by the National Archives Act, 1986. This was raised by Deputy Noonan and Deputy FitzGerald on Second Stage. The Central Bank does not at present come under the 1986 Act, unlike the Registrar of Building Societies whose functions are to be assumed by the bank under the Building Societies Bill. The bank can, however, be brought within the terms of the 1986 Act by an order approved by both Houses.
The purpose of section 17 is to reduce the storage problems of the bank in retaining Government stock transfer documents and other clerical forms and material. It is not meant as a licence for the bank to destroy archival documents, minutes of the board of the bank, etc. Notwithstanding that the bank is not subject to the National Archives Act, I propose to amend section 17 to meet the concerns expressed by the House in this regard. The proposed amendment deletes the phrase "or of any other enactment" from the present text of section 17. This is the phrase to which Deputies drew attention in the House.
(Limerick East): Does the Minister want to comment on my amendment?
The proposed amendment No. 22 is encompassed in a larger ministerial amendment which will render Deputy Noonan's amendment unnecessary.
(Limerick East): The Minister's amendment meets the concerns I expressed on Second Stage. I understand why the section is in the Bill. Obviously there would be storage problems in any large institution which generates a great deal of paper. Secondly, the six year rule is the rule in the Companies Act and would seem to be the appropriate term also for the Central Bank Bill. My concern was that documents of a historic nature which would be protected under the National Archives Act if it were extended to the Central Bank could be destroyed under the terms of this provision. The Minister has met my concern.
Amendment agreed to.
Amendment No. 22 not moved.
Acting Chairman
We go on to amendment No. 23. Amendments Nos. 24 and 25 are related. That means amendments Nos. 23, 24 and 25 will be taken together by agreement.
I move amendment No. 23:
In page 16, subsection (2), line 40, after "document" to insert "or other record".
Section 17 (1) allows the bank to destroy certain documents or other records after six years. Section 17 (2) provides that the document referred to in subsection (1) may be kept otherwise than in legible form, for example, on computer disc. Subsection (3) provides that a copy of reproduction of any document kept or formerly kept by the bank can be received in evidence in court. To be consistent with subsection (1), references in subsections (2) and (3) should be to documents and other records and not just to documents. These amendments put the position to rights.
Amendment agreed to.
I move amendment No. 24:
In page 16, subsection (3), line 44, after "document" to insert "or other record".
Amendment agreed to.
I move amendment No. 25:
In page 16, subsection (3), line 46, after "document" to insert "or other record".
Amendment agreed to.
Section 17, as amended, agreed to.
SECTION 18.
Acting Chairman
Amendment No. 26 in the name of Deputy McDowell. Amendments Nos. 27 and 28 are related. These amendments may be taken together, by agreement.
I move amendment No. 26:
In page 17, subsection (1), line 2, to delete "6 months" and substitute "3 months".
The purpose of these amendments is to reduce from six months to three months the period during which the bank are required to prepare their accounts for transmission to the Comptroller and Auditor General. We are always very generous with the time limits we prescribe and Parkinson's law always applies. Things like the Revenue Commissioners' report are hopelessly in arrears. This measure proposes to give the bank half a year to get their accounts together. No private company would be allowed by the Stock Exchange to fiddle around for half a year before getting their act together. I do not see why an institution which lectures such companies and moralises about them should be given a little holiday of this kind. If they have to meet a three month deadline, they will do so. If they are told it is six months they certainly will not do it within three months but rather when it suits them. The Comptroller and Auditor General's audited accounts of the Central Bank have become so divorced in terms of time that they cannot be included in the annual report of the bank and appear completely separately. Three months is a perfectly adequate time for the bank to get their act together. If they are capable of regulating and supervising the standards of others, they should be able to get their own act together and get their accounts ready within three months of the end of the financial year.
I am proposing in amendment No. 28 that the Comptroller and Auditor General should be given a deadline for carrying out his function. I propose to do this by the addition of a subsection. The Comptroller and Auditor General is obliged, as the section stands, to audit, certify and report upon every statement of accounts transmitted to him by the Central Bank under this section, but there is no limit on the time he can take for his activities. I fully appreciate that in certain circumstances the exigencies of auditing mean that one cannot fix a strict time limit since it may be necessary to investigate some matter in a manner which is extraordinary and unusual. Nevertheless I do not believe there is anything wrong in saying to the Comptroller and Auditor General that he is expected to finish his work within three months of receiving the material from the bank. If he cannot finish it within three months, let him say whether it is due to shortages of staff or to a particularly knotty audit. It is wrong that the Comptroller and Auditor General operates without any time constraints. No auditor in a private company would be allowed to bring in his report whenever it suited him, depending on his workload in other areas. Any company would demand that the audited accounts would be available by a specified date. I have not attempted to put a strict limit on the time within which the Comptroller and Auditor General has to carry out his functions. I have suggested that we should provide that, in so far as is practicable, he should do his work within three months of receiving the statement of accounts. Where he is unable to carry out his function within that period, he should do so as soon as practicable thereafter and append to his report a statement giving the reasons which prevented him from completing the work within the specified time. That puts the onus on the Comptroller and Auditor General to have the final accounts completed so that within six months of the end of any given year the fully audited accounts of the Central Bank will be available to the Oireachtas. That is a reasonable time-span to lay down as a requirement of an institution which lectures and moralises about how others should run their affairs.
I am not happy about the last part of section 18 (1) which refers to the form of accounts which the Central Bank are to give to the Comptroller and Auditor General. I do not accept that the form of the accounts should be decided upon on a consultative basis between the Minister and the bank. There should be a requirement that there be a specific form. If things are to be left out, that should be done by regulation and this House should be given some opportunity, even if only by challenging a statutory instrument at a later stage, to say that a better or different form of accounts is required. It is wrong simply to allow the Minister to change the form of the accounts on an open-ended basis without having to come to this House. Section 18 (1) proposes an informal process of consultation as to the form of accounts. That is a mistake.
I want the bank forced to make their report to the Comptroller and Auditor General within three months. I want some time target of a reasonable kind given to the Comptroller and Auditor General. There is no reason the Central Bank's accounts should not be forwarded within three months and audited within a further three months. Since there are potential reasons that that might not be possible in every case, amendment No. 28 is designed to take into account special circumstances which might prevent auditing within the specified period. Amendment No. 27 is merely designed to require that the form of accounts be not simply informally agreed but put before this House from time to time for approval.
The Deputy wishes to have the accounts published within three months of the year end rather than the present six months. He also wishes to give the Minister power to decide the type of accounts without consulting the Central Bank. Finally he wishes to impose a requirement on the Comptroller and Auditor General to audit the accounts within three months. These amendments are opposed because any delay by the Central Bank is presenting their accounts is due in the main to auditing constraints. The amendment, taken with the Deputy's third suggestion, would allow the bank three months to submit their accounts to the Comptroller and Auditor General, who would be given three months to audit the accounts. The final accounts would not be ready until six months after the year end. As things stand, the bank publish their audited accounts in June or earlier each year.
Previously, they were able to do so earlier in the year.
The Deputy's amendments would not mean that the accounts would be published any earlier. In my view the present system should be allowed stand. In relation to the Deputy's second suggestion, that the Minister unilaterally prescribe the form of accounts, I should like to state that the tradition and the requirement has been for the bank to be consulted since it is their accounts that are to be published. Some account must be taken of their suggestions since the bank are not just a commercial organisation but have wider responsibilities in the financial markets. The form of accounts would need amendment after the passage of the Bill and the Deputy's suggestions on Second Stage concerning the need for more information on staff deployment and so on can be taken into account in that review. The form of accounts will be revised and I have no strong feeling whether I should do that by regulation, if that is what the House wants me to do. I will look at this issue between now and Report Stage.
The accounts are being issued in June of each year, as I understand it.
About June.
If necessary that date could be brought back to March?
It may be that I am misinterpreting what the Deputy is saying but he appears to be giving them three months to prepare their accounts and the Comptroller and Auditor General three months more to check them. The point I am making is that that would still bring the date up to June.
I appreciate that but the Comptroller and Auditor General is not obliged to have his audit by the end of June and, as far as I understand it, he does not attempt to do so. I may be wrong in that.
Like everybody else, they have to get into the queue with the Comptroller and Auditor General.
I am suggesting that the queue be speeded up. The section is proposing that the accounts be in such form as shall be approved of, from time to time, by the Minister after consulting with the bank. That seems to suggest that the Minister has the right to say, "These are the accounts and I am stating what the accounts are". I am not against consulting with the bank but I am suggesting that the Minister should have a right to prescribe, by statutory regulation, the form that the account should take. He should have power to say to the bank, "It is not a matter of you coming up with a set of accounts and my approving their form; I am saying what form they should take and you produce whatever I say". The Minister may consult with the bank as much as he likes but I am suggesting the proper way to deal with this matter. It is not right to have the Minister faced with formal accounts for approval, after consulting with the bank. I should like to ask the Minister to give consideration between now and Report Stage as to whether he can bring the time back to three months.
Amendment, by leave, withdrawn.
Amendment Nos. 27 and 28, inclusive, not moved.
Section 18 agreed to.
SECTION 19.
Acting Chairman
Amendments Nos. 29 and 30 in the name of Deputy McDowell are related and may, by agreement, be taken together.
Amendment No. 29 not moved.
I move amendment `1No. 30:
In page 17, between lines 21 and 22, to insert the following subsection:
"(3) The report of the Bank's proceedings under this section shall include:
(i) a statement concerning the national economy,
(ii) a statement concerning monetary developments,
(iii) separate statements summarising the activities of the Bank in relation to every function conferred on it by statute,
(iv) other notable events at, or concerning, the bank,
(v) a detailed statement concerning the deployment of staff and any changes in numbers and general remuneration of staff,
(vi) a statement concerning the cost of carrying out the functions of the Bank by function,
(vii) a statement concerning the way in which the Bank has carried out its functions under section 14 of this Act,
(viii) a statement showing how the Bank's surplus was derived and detailing the separate sources of revenues of the Bank,
(ix) a statement indicating changes in the Bank's reserves and setting out the policy considerations which justify the level of reserves for the time being,
(x) such other matters as the Minister may specify for inclusion in the Annual Report of the Bank."
It is about time we told the Central Bank what we want them to tell us and not leave it to their discretion or their good judgment as to what they put in their annual report. As I pointed out on Second Stage, there was a time — it stopped about three or four years ago; I am not clear about that because I did not go back too far in the annual reports — when the House was informed by the Central Bank each year what they were doing with their staff, how they were deployed and what their duties were. The bank gave up doing that for some reason. The information slipped out of the annual report and I do not know why. It may be that it was too much bother to include it in the report.
If the Minister can specify by regulation what is to be in the annual report so be it, but I suggest to him that at least we should have the customary statements about the national economy and monetary developments and separate statements summarising the activities of the bank in relation to every function conferred on them by the State. I am suggesting that they should be required to report separately in relation to money markets, the international financial service centre, banking, building societies, and so on. I am also suggesting that the report should include other notable events at or concerning the bank.
In subsection (3) (v) I am suggesting a detailed statement concerning the deployment of staff and any changes in numbers and general remuneration of staff. I want that information so that we can judge if the bank are operating efficiently. I would like to know if staff wages have gone up or down and the wages policy the bank are following in any given year. Like any member of the public, I am entitled to know the policy the bank are following on that front.
I am also seeking a statement concerning the functions of the bank under section 14. I want the bank to state the buildings they own, the buildings they have invested in, the leaseholds they have acquired or sold, what they are spending on maintaining places like Sandyford and what they are spending on cleaning and heating their premises in Dame Street. The public are entitled to that information from an institution of this kind which appears to be immune from any examination. If the bank are to be accountable to the same extent that the bodies under them are to be regulated, then the House is entitled to get that information so that we can judge if we are getting value for money.
Subsection (3) (viii) is equally important. It suggests that the bank should provide a statement showing how the bank's surplus was derived and details of the separate sources of revenue of the bank. I want to know how much money was made by appreciation of capital assets of the bank, and whether the money came from surpluses on deposits or from currency gains. In subsection (3) (x) I am seeking a statement indicating changes in the bank's reserves and setting out the policy considerations which justify the level of reserves for the time being. I do not believe the bank have been asked in public to account for the level of reserves kept by them.
On Second Stage the Minister said he thought the present policy in relation to reserves was proper but I do not know how the level of reserves is fixed. If there is an excessive level of reserves being kept, they could be returned to the Exchequer and used towards the liquidation of the indebtedness. I would like to hear a statement of policy in relation to those matters.
In my subsection (3) (x) I am suggesting that the Minister should be entitled to specify other matters which he requires to be included in the annual report of the bank. It is not good enough to say to an institution, "You must report to us every year", without telling them what they must report on and in what detail. Unfortunately, in the past there has been a tendency on the part of the Central Bank to do the minimum of reporting on some areas where it suited them not to give information that would be of public interest and to leave us with no information by which we can decide whether the bank is being efficiently or inefficiently run, whether they are being wasteful or not. That is the problem with the annual report of the bank. If one looked at it for hours on end one would not be able to derive from it any indication as to whether they are running better or worse in any given year. All we are given are aggregate sums for income and expenditure and, within them, we are left in the dark as to how the management of the Central Bank by their board of directors is operating. This is simply a matter of accountability.
The Central Bank are being given the role of supervising others and we are entitled to objective and clear-minded reporting so that we can judge whether we are getting value for money from them.
At present the bank publish an annual report covering almost all the areas referred to, chapters on the national economy monetary developments and so on. They do not publish details of their market operations where they gain most of their surplus income. To do as the Deputy requests could require publishing sensitive information about the bank's activities in the markets. The bank are prepared to expand the contents of their reports and they could and do publish their report within three to four months of year end. I can assure the House that the comments made will be taken fully into account.
The report will be expanded to give details of staff deployment and other information. The items left out in recent years will be restored and included in this year's report. With regard to the suggested subsection (3) (x) I do not think it would be acceptable to the House, or anybody, to give the Minister for Finance power to tell the Central Bank what to say in their annual report because the Minister might want them to say what the Government might like them to say. That would be dangerous.
I did not mean it that way.
Some of the details the Deputy is seeking are included in the annual report in the normal way. The Deputy has asked for a statement showing how the bank's surplus was derived but that would amount to telling people how the bank made money out of their activities.
Progress reported; Committee to sit again.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.