Dáil Éireann debate -
Tuesday, 16 Nov 2004

Vol. 592 No. 3

Leaders’ Questions.

Mr. Kenny

I learned this afternoon that the three top executives in Aer Lingus have indicated their intention to resign with effect from 1 May 2005. This shock announcement comes one day after the news that the Government's chief executive designate for the Health Service Executive will not take up the position. The three Aer Lingus managers, in association with their workforce, have done a remarkable job in Aer Lingus in recent years, turning it from a loss-making doomed airline to a profitable low cost carrier. Their departure will be a serious blow to the national airline and its credibility and will cause major concern to its staff and customers.

The Government has received the Goldman Sachs report with which a Cabinet sub-committee is dealing. Will the Taoiseach tell the House whether the dithering and confusion that appears to exist among Government circles about the future of Aer Lingus has contributed greatly to this shock announcement of the departure of the chief executive and his two partners, all three of whom were concerned with a proposal for a buy-out of Aer Lingus? Does he consider that the six-month deferral of their resignation has implications for the airline? Has he considered that an alternative carrier may have approached these three executives to bring their experience to it?

The Taoiseach

I heard yesterday evening that the chief executive, chief operations officer and chief financial officer of Aer Lingus were about to tender their resignations and so the Minister met them this morning. I wish to express my gratitude for the work they have done over the past three years, as I have done two or three weeks in a row. Their work has proved we have a profitable successful airline today, despite the difficulties we know exist in the aviation industry and that could exist for Aer Lingus in future years. All airlines are suffering.

The Minister for Transport will meet the acting chairman, Mr. John Sharman, on Thursday to clarify how quickly the board can move in appointing replacements. Today's developments will not deflect the Government from any of the measures that need to be implemented in Aer Lingus at operational or strategic level. On the operational level, it will be a matter for the board and management to work through the implementation of the business plan by direct engagement with the staff representatives and, where appropriate, with the assistance of the staff industrial relations machinery. I have been clear on this in recent weeks. The Government's obligation is to deal with the several thousand people who work in the Aer Lingus complex. We must protect our interests. I have not supported some of the initiatives brought forward. I assume what I said about the MBO and some of the other issues did not find favour with everybody but I hope that was not a factor in all of this. My view on the MBO has not changed. It should be clear to all that in the airline business, in particular, companies must be continually prepared to adapt to the rapid changes that are now a standard feature of the commercial aviation environment.

Turning to the strategic matters that are the concern of the Government as shareholder and policy maker, the Minister and I have already had a number of discussions in recent weeks to bring clarity to the Government's medium and long-term intentions on the future ownership of Aer Lingus. We know we have to make changes. Management knows that, as do the board, staff and the travelling public. People have seen what is happening with Sabena, Alitalia and many other airlines around the world.

As far as I am concerned, today's events will not deflect the Government from giving its early attention to the ownership issue and to the strategic concerns that arise from that issue. The Minister for Transport and I are aware that, increasingly, the commercial opportunities for Aer Lingus in terms of services between Ireland and the US is an important element of the overall strategic future of the airline. We have been working on a review of the bilateral aviation agreement between Ireland and the US to address this issue. We must seek to secure the best outcome for Aer Lingus, the tourism sector and the Shannon region.

Mr. Kenny

It is time the Taoiseach came clean on all of this. We need a far greater level of truth, openness and clarity from him. Is it not a fact that the entire leadership of Aer Lingus is now leaving? Does this not amount to a serious vote of no confidence in his Government's handling of the future of Aer Lingus, its workers and customers?

When did the Minister for Transport last meet the three executives in question? Did Mr. Willie Walsh and his partners express any dissent or concern to the Minister for Transport and what was the nature, form and extent of that dissent? Did the Minister for Transport attempt to dissuade the three leaders of Aer Lingus from leaving at this time? Will the Minister for Transport give a full and clear statement to this House about the atrocious and appalling conduct of the Government in handling this business?

The Taoiseach said this will not dissuade or deflect the Government from dealing with this matter at an early date. What in the name of heaven does he mean? This issue has been outstanding for the past 18 months and nothing but clouds of confusion, rumour, innuendo and allegations are coming from Members of the Government. An announcement has been made that the leadership of Aer Lingus is leaving which the Taoiseach said will not dissuade or deflect him from dealing with the matter at an early date. Will the Taoiseach give the House the answers to the questions I have asked so that everybody might know exactly where we stand?

The Taoiseach

I reject outright what Deputy Kenny said. This has probably been Aer Lingus's best ever year. Following its reform programme, its profits this year will be extraordinarily good. We have been working to try and assist Aer Lingus through the aviation difficulties in which it found itself, with the trade union movement and management, including the chief executive, chief operations officer and chief financial officer, and we have been successful in that regard. I accept it is a difficult climate for the aviation industry. The company had to reduce its staff and cost base, open new routes and make fundamental changes to its structures. The company received the approval and support of Government for all of those things and it has achieved an excellent profit.

Deputy Kenny is correct to state that three senior executives are leaving but it was not due to a lack of decision. When Deputies Kenny and Rabbitte asked me in this House about the MBO I said I was not in favour of it. I said I did not think it was good for the health of Aer Lingus. I did not think three members of senior management should be in a position to become wealthy overnight from a State company. I said that, but I did not say it to offend them or so that they would walk away. They came afterwards and said they would not have done it that way and they did not mean to say that. That does not matter. I was opposed to it and if it were today I would be opposed to it as well. Aer Lingus is a State company with a large staff. This is an island where we need to think carefully about our aviation policy.

Mr. F. McGrath

We said that, months ago.

The Taoiseach

It is not just a question of privatisation and finding a strategic partner. I praised Aer Lingus management and workers in a reply to Deputy Sargent last week. It is not an easy issue. I accept there will be difficulties down the road.

I cannot answer Deputy Kenny's question about what these gentlemen are going to do. I thank them for their contribution. Two of them came from the ranks and have done a good job. I am sure there are other such people still in the ranks. We know we have to make decisions. We are aware there are difficulties in world aviation. We accept the Shannon stop-over is an issue. We have to come to final decisions on these matters.

Mr. Kenny

Is the Taoiseach not suggesting——

An Ceann Comhairle

Deputy Kenny should allow the Taoiseach to speak.

The Taoiseach

It is not just a case of Government policy, we also have to take into account EU aviation policy and the position of the United States. We will address the issue as quickly as possible.

The Minister had a detailed discussion with the three executives today and he also had discussions with them on a number of occasions in recent weeks.

Mr. Rabbitte

I want to ask comrade Taoiseach now that he has come out as a socialist how this will affect the ordinary lives of our citizens? Nothing has stretched credulity so much since the press conferences in Baghdad of "comical Ali". Will the Taoiseach say what this will mean in practice for ordinary people? How will it change the lives of ordinary people now that a true socialist leads the Government?

Mr. S. Ryan

He always was.

Mr. Rabbitte

Will it mean that the millionaires who pay no tax——

An Ceann Comhairle

Allow Deputy Rabbitte to speak without interruption, please.

Mr. Rabbitte

——will have to pay a fair tax? Does it mean that he will undo the cuts of €58 million from the most vulnerable people on the margins of society in the social welfare package? Does it mean he will restore the RAPID programme that was designed to transfer resources to the most disadvantaged areas of the country? Does it mean that a woman fleeing domestic violence will now qualify for the rent supplement? People will want to know if his calculated, cynical announcement at the weekend will mean a change of direction in the Government policies he has pursued for seven and a half years?

Does it mean that people who cannot afford a mortgage will now have a chance of getting a local authority house? Up to now these people had to make do with a total of 315 houses built under the new social provisions of the planning legislation. Will the Taoiseach indicate to the House if people on very low incomes, for example, will qualify for medical cards as a result of this change of Government direction?

Does the Taoiseach have many soul brothers and sisters in the Cabinet to assist him in this change of direction?

Mr. Durkan

The Taoiseach would look well beside a picture of Che Guevara.

The Taoiseach

The core of centre left political ideology is the desire to spread more wealth equally.

(Interruptions).

Mr. Durkan

He is more serious than Che Guevara.

An Ceann Comhairle

Allow the Taoiseach to speak without interruption, please.

The Taoiseach

Since we returned to office in 1997, Fianna Fáil's record——

Mr. Hogan

The Taoiseach is reading too much.

The Taoiseach

——is that of the most left-wing Government the country has ever seen.

An Ceann Comhairle

The Taoiseach should be allowed to speak. He is entitled to exactly the same courtesy as Deputy Rabbitte received. If the Deputy does not wish to listen the Chair will deal with him.

(Interruptions).

The Taoiseach

It is all right, a Cheann Comhairle. The Ceann Comhairle should not get upset. I am quite enjoying the fact that the Labour Party has not been so upset for 20 years. There is no arguing with my party's clear achievements in ensuring that economic prosperity is more equitably spread throughout our communities. This Government has done much more than any other on pensions and social welfare, tackling unemployment and disadvantage, investing in health and education and committing resources to marginalised communities and the disability sector. The Government has done more than any comprised of the Labour Party or Democratic Left for that matter. Deputy Rabbitte referred to a number of these issues earlier.

The Government has made no cutbacks in social welfare this year, rather it spent more than €100 million extra. Deputy Rabbitte criticised the Government's record on tackling unemployment even though The Economist reports this week that Ireland comes out best of more than 100 countries in respect of unemployment and taxation. Most centre left, left or “commie” parties in Europe would be very pleased to have our economic statistics and when they meet Deputy Rabbitte to talk about the socialist republic, they ask him how we do it.

Deputy Rabbitte criticised the Government for doing nothing for people with disabilities, yet it is spending €2.5 billion. When Deputy Rabbitte's party last held the Finance portfolio, its gave just €500,000 in the budget.

A Deputy

Shame.

The Taoiseach

Deputy Rabbitte criticised the Government's record of creating a fair and equitable tax system, yet the most recent data from the OECD shows that in 2003 Ireland had the lowest tax wedge in the European Union and one of the lowest in the OECD for a single person on the average production wage.

Mr. Hogan

Where did the Taoiseach read that?

The Taoiseach

Deputy Rabbitte stated that the tax system ignores the low paid, yet of the 1.8 million people in the work force, more than 620,000 are exempt from income tax. Where a number of years ago, one quarter of workers were exempt from income tax, the figure is now one third.

In the past seven years, the Government has reduced the standard and higher rates of income tax by six percentage points. When the Labour Party had the opportunity it reduced rates by just 1%. The Government has introduced a fairer system of credits, increased their value substantially and widened the standard band. We have doubled the tax exemption limits to €15,500 for single people and to €31,000 for married people. The average industrial worker, in whom Deputy Rabbitte purports to be interested, earns €10,000 more than in 1997, but pays approximately €250 less in tax. The Government has also introduced one of the lowest rates for people on the minimum wage. Some 30% of the population holds a medical card and the Government is seeking to expand that figure.

Mr. S. Ryan

The Taoiseach should not talk about medical cards.

Ms McManus

The Government's record is a disgrace.

The Taoiseach

Whether it is targeted support packages for disadvantaged children, assistance for disadvantaged areas or resources invested under the RAPID scheme in Ballymun and other areas in which it was needed, the Government has invested huge resources. Those are the facts, which Deputy Rabbitte cannot deny.

Mr. Rabbitte

If Mr. McCreevy was listening in the Berlemont building to the revelation that all this time he was the Minister for Finance of a socialist Government, he would be twirling on a spit. How can the Taoiseach rhyme off such statistics when the Government sucked the average industrial earner, to whom he referred, into paying tax at the top or marginal rate for the first time in the history of the State? For the first time, people earning €258 and with three children cannot get a medical card. The Government has taken 101,000 medical cards out of the system in contradiction of a programme for Government pledge to enhance it by 200,000, not counting the impact of the people over 70 years to whom the Government extended the scheme.

There are 315 social and affordable houses. The Government has structured the tax system in such a way that shelters and tax incentives are available to people even where there is no economic merit to the continuation of a particular scheme. Very high rollers in our society can organise their tax affairs in such a fashion that they quite legitimately have no tax liability. According to the most recent figures, 11 millionaires have no tax liability at all while, at the same time, the average industrial earner or someone on 90% of the national minimum wage is liable to pay tax. The Government cut €58 million from the most vulnerable in our society and pulled the plug on the election promise of fast tracking €2 billion to urban areas in which poverty is clustered as soon as the election was over. How can the Taoiseach reconcile that with his calculatedly cynical attempt to re-brand and re-position the most right wing Government this State has seen since its foundation?

The Taoiseach

The social welfare budget was increased by €640 million, which is an enormous increase. Approximately 13,000 people will be catered for by the social and affordable housing scheme, which is higher than any figure since 1986. These are facts.

Mr. Gilmore

That is rubbish.

Mr. S. Ryan

That is not the truth.

An Ceann Comhairle

This is Deputy Rabbitte's question. If Deputies Gilmore and Seán Ryan are not happy with that, they will have to sort it out.

The Taoiseach

The income tax burden for the average household has fallen from 30% in 1996 to 18% today. Deputy Rabbitte referred to the average industrial wage which is up €10,000, even with all the increases, a person on the average wage today will pay €300 less than they would have been.

Mr. Gormley

What about stealth taxes?

The Taoiseach

The reason more people do not require medical cards is that they are working.

Mr. S. Ryan

Are people not getting sick?

Mr. D. Ahern

The Opposition was satisfied for such people to be on the dole.

Ms McManus

The Taoiseach should tell the truth.

The Taoiseach

It is because they are working. We no longer have 17% unemployment. We are not all unemployed as when the Labour Party was in control of these issues and pursued tax and spend policies. The great social philosophy of the Labour Party left people unemployed or emigrating and with high taxes. The country was goosed but we are away from those policies now. Deputy Seán Ryan knows in his heart that the real workers' party in this country is Fianna Fáil. Why does he not admit it?

Mr. S. Ryan

Is that what the electorate told the Taoiseach in the June election?

Mr. Rabbitte

They were in the tent at the Galway Races.

The Taoiseach

We have the highest minimum wage. I had to fight and wait for several years to see the Labour Party out of Government in order to see a minimum wage, which is now the highest in Europe. All these figures show that while everything is not done, the old circumstances of high unemployment, low wages and high taxes are not with us anymore, for which I thank God.

Caoimhghín Ó Caoláin

Will the Taoiseach inform the House why the newly appointed head of the Health Services Executive has decided not to take up his position?

Ms Burton

He must be afraid of a red Government.

Caoimhghín Ó Caoláin

Does the Taoiseach agree that this very late decision is worrying and what messages does it send out? Is the Taoiseach aware of the great disaffection and disgruntlement in the IMPACT trade union, which represents some 25,000 health service workers and is advising its members not to participate in briefings organised by the new Health Service Executive? Does he agree this is a worrying indicator of a failure to properly involve, consult and engage with one of the key elements within the overall configuration of workers within the health services? Does he agree that this is a result of the failure to properly explain to and engage with the union and its membership and that people feel they have been left in the dark?

Will the Taoiseach explain to the House why, a short time before the changeover from what remains of the health board structures to the new Health Services Executive, we are looking at absolute chaos? Why has the Government so mis-managed this proposed transition? Is the Taoiseach also aware that people with disabilities have expressed concern? While they have been engaged in a liaison role with the existing health structures, they are in the dark as to how they are to relate to the new health structure when it is established. This is a further example of the same approach with regard to the IMPACT union.

Will the Taoiseach explain why the Minister for Health and Children has deemed it necessary to reappoint the existing chief executive officers of the outgoing health boards for a further six months?

An Ceann Comhairle

The Deputy's time has concluded.

Caoimhghín Ó Caoláin

Does all this not indicate that we will face weeks and possibly months — God knows how long — of bureaucratic chaos in the course of this transition? Energy will be spent on this that would have been better employed in ensuring there is delivery of critical services at the coalface of the health service, in terms of the appointment of more nurses, seriously tackling the crisis in the accident and emergency sector and making more beds available.

An Ceann Comhairle

The Deputy must give way to the Taoiseach. He has gone a minute over his time.

The Taoiseach

The Government regrets that Professor Aidan Halligan will not take up the job of leading the new Health Service Executive. We respect the reasons he has given for his decision. Professor Halligan made his decision clear to Kevin Kelly, the chairman of the interim HSE last week. Mr. Kelly kept the Tánaiste informed on all aspects of the transition to the new HSE. There will be no loss of momentum in the reform programme. Interviews for the second tier of management are completed and announcements about that level of senior management will be made. Professor Halligan has opted to stay in the health service in Britain. It is his decision and I respect it.

We have worked on the legislation giving effect to the reform programme over the past three years. We have worked through all the agencies, including IMPACT and the other unions. They are clear about the structure; it has long been outlined to them. Nobody will lose their position or have their conditions changed. That was made clear from the outset.

Obviously, in the reform of a health service there will be changes, including in the structures. The health boards are gone and the legislation has been passed. We must reform the health service. This is a small country and 100,000 people work in the service. We spend €11 billion per year on the service so obviously there will be changes and reforms along the way. We will have to deal with those issues as we proceed. I hope the trade union leaders will engage with the changes and the restructuring. There is no need to attempt to ratchet up concerns or fears among ordinary staff members who are doing a good job and most of whom are unlikely to experience change in any significant manner.

It will be the Government's job to put the Health Service Executive in place, resource it and, as the Deputy said, try to provide a better service in a more meaningful way. That is what is necessary and it is set out in the programme. The programme is being followed and it is clear from the Brennan report, the Prospectus report and other initiatives what the Government is endeavouring to do.

Caoimhghín Ó Caoláin

The Taoiseach indicated that Professor Halligan advised Kevin Kelly of the circumstances surrounding his decision. My question was whether the Taoiseach would advise the House of his understanding of those reasons. He clearly failed to do that. Will the Taoiseach outline his understanding of the reasons that Professor Halligan took this decision at such a late hour?

Furthermore, the Taoiseach said that nobody would lose his or her position. However, with regard to the IMPACT trade union and those with disabilities who have voiced their concerns, nobody seems to know what is before them. This House, too, remains in the dark about this. The recent statement from the Tánaiste, which was relayed by the Progressive Democrats, indicates that she might want to increase private sector involvement in the health services. How does that affect the Taoiseach, given that he is such an exponent of republican and socialist ideals? Does he believe the further privatisation of the health services is the way forward, in view of the problems we currently face?

An Ceann Comhairle

The Deputy's time has concluded.

Caoimhghín Ó Caoláin

Is the Tánaiste's interest in moving in that direction not underlined by her recent visit to New York to inform herself about the New York experience?

An Ceann Comhairle

The Deputy cannot continue to ignore the Standing Order. The Standing Order applies to the Deputy in the same way as to other Members.

Caoimhghín Ó Caoláin

Will the Taoiseach answer the questions I posed?

The Taoiseach

I did not speak to Professor Halligan so I cannot give precise details. The Government had been in negotiation with him during the summer about conditions, moving and related issues. We had finalised a very satisfactory package. It was well known that Professor Halligan was probably coming here, although it was generally expected in the medical business in the UK that he would have got the top job there. He had agreed and signed up but, on reflection, he decided to stay in the UK for family reasons. That is his purpose. I wish him well in the top job in the UK, which he will probably get.

With regard to the Health Service Executive, we have laid down in the reforms over recent years what we are seeking to do. It has been clearly set out. There was an enormous round of discussions based on the Prospectus, Brennan and other consultants' reports and now we will implement them. Of course, change creates problems and difficulties but with the goodwill of everybody we will have a better service that will help individual patients. That is the purpose of the reforms.