Vol. 410 No. 3
11 Tomás Mac Giolla asked the Minister for Finance if he will outlined the revenue expected to accrue to the Exchequer from next month's flotation of Irish Life; the purposes for which it is intended to use this money; and if he will make a statement on the matter.
An offer for sale of shares in the company is to be published tomorrow and will be widely available on Friday. The setting of the share price for inclusion in that document is a complicated process involving the Minister as vendor, the company, their respective financial advisers and the underwriters to the offer. It will not be possible to disclose the offer price for the shares before publication of this document. In the light of these considerations the Deputy will appreciate that I am not in a position at this stage to disclose the expected revenue from the flotation of Irish Life plc.
The proceeds of the flotation will accrue to the Exchequer in accordance with section 2 of the Insurance Act, 1990. As I indicated to the House when that legislation was under consideration last year, and again in my Budget Statement earlier this year, the proceeds of the sale will be used to ease the burden of the national debt and of debt servicing costs.
Will the Minister advise the House why he thinks there is an unprecedented profit forecast this year of some £100 million in Irish Life? Why should this figure emerge in the year we are preparing for privatisation? Is the Minister ruling out absolutely the use of the moneys that will accrue to the Exchequer, irrespective of how much? Is he ruling out the use of those moneys to compensate for the Government's disastrous miscalculation on the budgetary figures and the over-run we already know about half way through this year?
I reject totally "disastrous calculations". Calculations and projections at budget time are a matter of projecting what you think is going to happen from the best available information at the time. That is exactly what the people in the Department of Finance took on board.
No other moneys were agreed in this House at that time.
If you cry wolf often enough, as the Deputy has done for four years, inevitably you will get it right. All I can say is, enjoy it, because it will be very short lived.
There was nobody in this House or elsewhere who said that emigration would be down to 1,000 as the figures show.
(Limerick East): What figures?
Nobody said we would have an increase in the three months unemployment figures to the extent we had.
There was.
Nobody said, including the motor industry, that there would be such a flop in sales.
We told you that but you were not listening.
We took reductions in all those areas.
(Limerick East): We told you that.
In relation to growth — the Deputies do not want to listen to the reality, I know they want to hype it up, that is their business, but they are not doing the national interest any service.
We are dealing with the flotation from Irish Life at the moment.
"Flotation" is the word, a Cheann Comhairle.
Deputies will be interested to know that this evening, probably about now, the OECD report is coming out which confirms the growth rates that we took in the budget, and that is four months later.
Does it concern the Minister that he made a lot of errors.
I told the Deputy that the errors are in the unemployment figures, the sales of cars and the drop in property.
Is the Minister ruling out growth rates?
The growth rate of 2.25 per cent of output growth, GDP, forecast in the budget will still be confirmed by the OECD today, although I believe that is optimistic at this stage and I have said so already.
(Limerick East): It is the Department of Finance who make the submission to the OECD.
I have said that for months. If the Deputy wishes he can sit down and look at the EC and the World Bank forecasts.
The Minister has got it all wrong.
I will go back on the records and tell Deputy Noonan that this time last year and the year before he was saying the same thing.
The Minister has got it all wrong.
Order, please.
For a party that got it wrong for four and a half years——
Deputies, Minister, either Question Time proceeds now in an orderly fashion or it does not proceed at all. The Minister is in possession.
(Limerick East): The Minister never answered Deputy Rabbitte's question.
The local elections are over.
Deputy Finucane, I must ask you to desist from any further interruption. The Minister is in possession.
I have two questions: I did not get an answer to either of them.
For the umpteenth time, the proceeds of Irish Life — and may I say it slowly and I will spell the words if Deputies do not understand them because Deputy Quinn has a problem in understanding them, Deputy Noonan has a problem in interpreting what will happen the proceeds of Irish Life, and I am not so sure about Deputy Rabbitte, as I did not hear him speak in public about it.
My understanding is always crystal clear. If the Minister tells me I will hold him to it.
I hope the Deputy's understanding is as clear as mine that Government's accountancy practices do not allow the revenue from the sale of Irish Life, or any other such Irish company which is a capital asset, to be used for current expenditure. Is that understood? For the last time, let me say it cannot be brought into the current budget deficit, it cannot be used in any shape form to reduce the current expenses or current deficit; the only effect it will have on the current budget deficit is that it will ease the servicing of the amount that will come off the borrowing and the national debt on that side. Is everybody crystal clear on what will happen the proceeds of Irish Life?
(Limerick East): Is it not going to be used by the Minister to substitute for borrowing or is the Minister telling us that the finance management authority will go out and borrow the equivalent of the proceeds of Irish Life and then take back the proceeds of Irish Life to cancel out that debt? Is the Minister telling us that that is going to happen?
I have a problem. The Deputy is confused. I cannot sort him out.
(Limerick East): Is it not crystal clear now and crystal clear since budget day that the Minister is going to use the proceeds of privatisation to offset the over-run on the Exchequer borrowing requirement this year? Is it not also clear that at the end of the year the Minister will show two figures for EBR: one with the Irish Life money included and one without the Irish Life money? Do not mind this jiggery pokery talk about financial practices. We know what the Minister is doing——
Let us have finality to this question.
That is the Deputy's problem. He will never be able to take a seat in the Department of Finance if he is so confused and his thinking so woolly as it is at the moment. There is only one thing that can be done with receipts coming in from capital sales and that is to apply them on the capital side of the budget.
(Limerick East): The Minister is back in dreamland again.
If the Deputy does not understand that, I am sorry for his troubles. If the Deputy is trying to suggest that it can be treated in any other way, it cannot be treated in any other way. It is not my choice as to what I do with it. The practices are there for it to be determined.
A final brief and relevant question from Deputy Rabbitte.
(Limerick East): The capital side of the budget is shown in the EBR.
The EBR concerns both——
In terms of being permitted to use the proceeds only on the capital side, may I ask the Minister if he can envisage a situation where the proceeds can be used for the purposes of industrial investment, whether, for example, they can be used for the capital requirements of a company such as Aer Lingus or, indeed, any other major employer in the State sector that is strapped for finance and to whom the Government have said no more capital will be made available? Could it be used for that purpose?
First of all, the accountancy practices of the Comptroller and Auditor General decide what way money coming in is treated. It is enshrined in the Constitution that all Government receipts go in to the Exchequer. After that it is a matter for Government to decide how they want to spend any portion of that. There is no shortcircuiting. It cannot be taken and £50 million given to the IDA or anybody else. When the receipts come in the Government then decide how it will be spent. That is all enshrined in the Constitution. It is not open to any Government or any Minister for Finance to change that situation.
(Limerick East): I want to make it absolutely clear that we understand the Minister's position on the sale of Irish Life, that the proceeds will not be used to reduce the current budget deficit because they cannot be so used but they will be used on the capital side to reduce the Exchequer borrowing requirement.
Perhaps the Deputy would suggest some way of taking money into the Exchequer without reflecting it in a budgetary figure.
(Limerick East): It is going to be used to reduce the borrowing requirement. That is what he will do.
I made it abundantly clear at budget time that the proceeds of Irish Life would be dealt with in the only way it is possible to deal with them.
(Limerick East): Nobody ever said the Minister would use it on the current side.
That is not my choice, the Government's choice or anybody else's choice. If Deputy Noonan fails to understand that, I am sorry for his trouble.
(Limerick East): I know what the Minister is doing.
Question No. 13, please.
The Deputy has now changed the whole Fine Gael policy on privatisation and turned it on its head. The Deputy should make up his mind.
Deputy Noonan should allow Question Time to proceed in an orderly fashion.
(Limerick East): The Minister should resign because he is misleading the House.
I know how to add, not like these guys.
