Dáil Éireann debate -
Wednesday, 25 Feb 2009

Vol. 676 No. 2

Leaders’ Questions.

Deputy Enda Kenny

Yesterday, the Fine Gael Party put forward a series of proposals to deal with the regulatory authorities and financial institutions in a constructive fashion and spirit of bipartisanship. I was disappointed but not surprised at the reaction of the Government. Be that as it may, the reputation of the country is at rock bottom and our international credibility is in shreds. This will not change unless decisive Government action is taken, which will not be easy for anybody given a deficit of €20 billion and increasing negative growth.

This morning, the Tánaiste, who is deputy leader of the Government and a senior economics Minister, said it is important not to talk ourselves into a deeper crisis. It is equally important that we do not talk ourselves into fantasy land. I listened in some astonishment to her engage in a wilful example of self-denial about the true state of the economy. She said Ministers, including, I presume, Ministers of State, are working very hard to save every cent. She said the decision on saving €2 billion had been taken, that was it for this year and we will move on to collecting €4 billion next year. She also said the pension levy was fair, equitable and not selective, there was no need for further cutbacks this year and the public finances were under control. As Head of Government, does the Taoiseach accept that the Tánaiste was speaking on his and his Government's behalf? Does he also accept that the public finances are under control?

The Taoiseach

Bringing stability to our public finances is a huge, ongoing challenge. It is a misrepresentation of what the Tánaiste said to suggest that all our work is done either for this or future years. This is an ongoing situation which is evolving all the time. It will require continuing adjustment by Government to take whatever decisions are necessary to keep our public finances in a stable position going forward from a very difficult position.

Public finance spending, fiscal policy, bank capitalisation and maintaining monetary stability are interlinked objectives, all of which must be supported. While the Deputy would claim to be in support of a recapitalisation policy in the banking system, he could not find his way to supporting the recapitalisation programme which was brought to the House.

A Deputy

The Government refused to give us the full picture.

The Taoiseach

We have to recognise that everything is linked and interdependent. We cannot bring order to our public finances unless we continue with the fiscal consolidation strategy we have only begun. We have said clearly that the €2 billion that was required, which is consistent with the framework agreed with the social partners, was a necessary first step in terms of its benefits and the message it sent internationally.

The answer to the Deputy's question is simple. The Government brought forward measures to control spending last year and keep it within the 2008 allocations. We also brought forward an early budget to show the seriousness of our intent and raised €2 billion in 2009 terms as a result of these budgetary measures. We have brought serious control into the public finance position in terms of the rate of growth of public expenditure.

As outlined, the Government also brought forward a €2 billion programme in the first two months of this year. This is being discussed in the legislation before the House this week as a necessary first step in a range of measures designed to bring stabilisation to our public finances over the coming years. That is our position and we will have to continue to assess and take decisions in line with those measures on an ongoing basis because we know the situation is not static.

Deputy Pádraic McCormack

It clearly does not matter what the Tánaiste says.

Deputy Enda Kenny

I am not deaf. Two hours ago, I heard the Tánaiste, who is sitting beside the Taoiseach, tell the Irish people the public finances were "under control". Yesterday, I heard the Minister for Finance say there were stresses in the banking system. If the Minister for Finance is directly contradicting the Tánaiste, we are obviously not being told the full truth.

The reason the Government has not been able to fix the jobs crisis is that it has not been able to fix the banking crisis. The reason it has not been able to fix the banking crisis is that action has not been taken at Government level to repair the economy. What the world outside wants to hear is that the Government is taking decisive action and has three and five year plans to ensure people here understand the scale of the problem and people abroad appreciate that Ireland is taking action to restore financial credibility to our system.

The Tánaiste stated this morning that every Minister is spending a great deal of time in his or her Department trying to save every cent. It cost €190,000 to send the Minister for Health and Children, who is seated beside the Tánaiste, to the Superbowl, while €51 million has been spent on spin doctors in the Health Service Executive and €16,000 is spent each month on private advisers to the head of the HSE. Today it has been announced that a home for blind people in Drumcondra will be closed down. In addition, the HSE is deciding to cut €1 billion from its budget and we have not yet reached the end of February. Despite this, the Tánaiste tells us that we have reached the end of the cutbacks for this year and the pain has been taken.

The Minister for Finance says there are stresses in the banking system while the Tánaiste says the public finances are under control. I will put two suggestions to the Taoiseach. Is he prepared to instruct the National Treasury Management Agency today to call all the banks together to revise strategy in view of the stresses the Minister for Finance has spoken about and the difficulties we are having with reputational damage abroad? It is about time we faced up to the fact that what the Government has done so far has been selective, unfair and not comprehensive. The Government should scrap the budget it introduced in October——

Deputy Pádraic McCormack

It is gone already.

Deputy Enda Kenny

——and face up to introducing a new budget for 2009 to provide some credibility by putting a broad, fair and comprehensive plan in place to move our economy forward.

Deputy Bernard J. Durkan

Hear, hear.

Deputy Pádraic McCormack

That is what we want.

Deputy Enda Kenny

I make those two suggestions to the Taoiseach in a spirit of bipartisanship, if we are serious about saving our nation.

Deputies

Hear, hear.

The Taoiseach

Deputy Kenny proposes that I scrap the budget that raised €2 billion in taxes.

Deputy Pádraic McCormack

It is scrapped already.

The Taoiseach

The Deputy said we should scrap the budget, and before that he said our response was inadequate. He cannot have it every way. The bottom line is this. I want to cut through the nonsense. We have a gap in our public finances of more than €17 billion as things stand. We have indicated the scale of the adjustment that needs to be made——

Deputy Enda Kenny

And the Government is not dealing with it.

The Taoiseach

——over the next few years in regard to taxation and expenditure.

Deputy Enda Kenny

It is tinkering around.

The Taoiseach

We have begun the process by introducing savings of €2 billion. We have also indicated through the McCarthy committee, which is examining all areas of public expenditure, and the Commission on Taxation——

Deputy Enda Kenny

The Tánaiste said it was under control.

The Taoiseach

——that all aspects of taxation will need to be considered. We have agreed a framework with the social partners which outlines the areas we need to address.

(Interruptions).

Deputy Enda Kenny

Unfair.

The Taoiseach

We do not have a basis for re-engagement at the moment but we are clearly making the point that the Government must get on with governing the country. We want to see people get behind us in a national effort.

Deputy Enda Kenny

It is not fair.

The Taoiseach

What we have to do is to cut through the nonsense and face up to the fact that it is only through working together that we can implement the necessary measures.

Deputy Enda Kenny

It is an illusion — a fantasy.

The Taoiseach

We are committed to doing so and we will do so. Deputy Kenny agrees with many things in principle, yet he comes here and opposes everything in practice.

(Interruptions).

Deputy Jimmy Devins

The Deputies are speaking out of both sides of their mouths.

Deputy Denis Naughten

So much for a national Government.

Deputies

There is national Government.

Deputy Bernard J. Durkan

A Government of national destruction.

Deputy Eamon Gilmore

One of the things the Taoiseach tells us repeatedly is that the economic crisis we are experiencing is largely due to international factors which are outside the control of the Government. Some of that is true, but there are some things that are within our control. One of these is the state of our own country's industrial relations. We are now facing into a spate of strikes over the next couple of weeks. Tomorrow the Civil Public and Services Union will take strike action, closing every tax and social welfare office; indeed, our own hard-working staff here in Leinster House will be on strike.

On Saturday there will be a bus strike because the trade unions are concerned, understandably, that at a time when it is official Government policy to increase public transport, bus routes are being dropped and bus workers are being let go. An all-out bus strike is planned from next Monday. Yesterday, the Irish Congress of Trade Unions took a decision to ballot for all-out strike action on 30 March. On Saturday, 120,000 workers were on the streets ofDublin.

The anger felt by these workers is understandable when one considers that the lowest paid worker in a hospital is having his or her wages cut, while this week the Minister for Health and Children announced that the highest paid people in our health system — hospital consultants — are to get a major increase. That increase was announced on the very day the HSE announced it would cut front line services.

On top of the banking problem, the job losses and the overall problems in our country, the last thing we need now is a period of industrial unrest and strikes. However, these can be avoided. The way to do this is to talk and get agreement on issues of concern. The general secretary of ICTU was on the radio this morning saying that he was willing to talk. The Taoiseach says he will talk to the trade unions, but only after he has put the pension levy through the House. When he has done that, however, there will not be much left to talk about. The Bill he is putting through the House does not allow for any subsequent flexibility in discussions.

I suggest that the Taoiseach suspend the passage of the legislation through the Houses, have discussions with the trade unions, which they are willing to have with him, and at least make some adjustments to the pension levy to make it more fair. Everybody in this House understands there are some things that are manifestly unfair, inconsistent and anomalous in the pension levy arrangement. I ask him at least to attempt to reach agreement on those issues, change the proposal before the legislation is enacted and the door is closed on it, and avoid the strikes which are perfectly avoidable if discussions take place with the trade unions representing the workers concerned.

The Taoiseach

I do not believe industrial relations strife or strikes will contribute very much towards addressing the problems we have. They will contribute nothing, in fact. I recognise the right, in a democratic society, of any person to withdraw his or her labour or to protest; that is entirely within our democratic way of life. However, it does not add anything to the situation.

Deputy Emmet Stagg

That is what we are saying.

The Taoiseach

Regarding the question of discussions with the unions, I outlined before Christmas my preparedness to enter intense discussions during the month of January to consider a comprehensive framework for addressing the current issues, which was agreed on 28 January with the social partners. Unfortunately, we were not able to reach a consensus on the first item, which was the necessity, as I have clearly outlined, of implementing savings of €2 billion at the beginning of February in the interest of sending a clear signal to ourselves as a country and to the international community that we would take the necessary steps to start to bring some order back into our public finances, which have deteriorated considerably as a result of both domestic issues and the international crisis which is also faced by other economies.

We decided to introduce a pension levy as part of that solution on the basis that we did not believe we should proceed with any reductions in current expenditure over and above what was agreed as part of the €2 billion package. We introduced the levy because we believed that in view of the security of tenure that public service workers thankfully have, and the value of their pension provisions compared to the serious losses being encountered in other areas of the economy in terms of the decimation of pensions, this was the best way forward at this time. We took into account that more than one third of our day-to-day expenditure is being borrowed this year and a large proportion of that is the pay and pension bill. I have heard no alternative offered from the Opposition with regard to what areas of current expenditure should be cut if the pension levy is reduced.

Deputy Pádraic McCormack

We have heard lots of them. The Taoiseach is deaf.

The Taoiseach

What I have heard is agreement in principle with regard to the €2 billion but not agreement to proceed as we have outlined. I have said constantly, and I remain of the view——

A Deputy

My way.

The Taoiseach

——that the partnership process has much to contribute in the context of the economic and financial crisis that confronts us. I agree with David Begg that it would be unwise to resume formal negotiations unless there is a reasonable degree of confidence that agreement on all the central elements can be found. While I remain available for dialogue with the social partners, the basis for a resumption of formal negotiations has not been established at this time. However, I will continue to be available for dialogue. I say to everyone that the Government is seeking to address this issue, and the magnitude of the problem we face, in a fair and equitable way on the basis of this first measure, which should not be isolated from the series of measures that will have to be taken in terms of both fiscal policy and further expenditure adjustments. The State is not in receipt of the revenues it had in the past and, therefore, must make adjustments with the aim not just of trying to re-establish industrial relations harmony, but of retaining jobs as far as possible — many jobs are being lost as we speak — and regaining competitiveness so that we can export goods and services in a way which allows us to maintain jobs at home to a greater extent than was the case up to now.

Deputy Eamon Gilmore

The Taoiseach will have to make up his mind on how he is going to deal with the crisis we are now facing. He cannot say that he wants to bring everybody with him or invite the Opposition to be constructive if he swipes at us with a partisan kick whenever we try to be constructive.

Deputies

Hear, hear.

Deputy Dinny McGinley

Throw it back in our faces.

Deputy Eamon Gilmore

Similarly, he cannot say he wants to hold discussions with the social partners if, when they engage in discussions and reach agreement with him on the objective of cutting public expenditure by €2 billion, he then drops them the details after midnight without allowing time for consideration or discussions aimed at reaching agreement. He cannot have it both ways.

Trade unions are willing to talk to the Taoiseach about this issue. This morning, the general secretary of congress effectively stated unions' willingness to hold discussions, reach an agreement and find a compromise. They want to see changes in this levy but the Taoiseach is saying that he will only speak to them when the deal is done and the legislation enacting the levy has passed through the House and cannot be changed. If he takes that approach, we will end up in a situation of industrial strife.

Deputy Ruairí Quinn

Hear, hear.

Deputy Eamon Gilmore

He already had 120,000 angry people take to the streets last Saturday and a spate of strikes is planned. This country's reputation is on the line, and that is of concern to all of us. In light of all of the matters which are already damaging our reputation in the international community, the last thing we need is Ireland being closed down or various sectors going on strike.

I speak as one who has already expressed to the trade union movement the need for restraint and a cautious approach to these matters. However, the problem is that if the Taoiseach on the one hand maintains that he is open for talks and wants to reach agreement but on the other hand, he cannot resist the temptation to roll up his sleeves and show what a strong man he is, the job will not get done. His method of handling the industrial relations situation will result in strikes, industrial strife and unnecessary grief. This outcome is avoidable, however. We do not need to see strikes across the country provided he speaks honestly and fairly to the people who are willing to discuss the issues and is willing to reach agreement with them. The problem thus far is his unwillingness to engage in that way and I strongly suggest that he should change tack in order to avoid some of these strikes.

Deputies

Hear, hear.

The Taoiseach

I agree with Deputy Gilmore in one respect but disagree in another. I agree in respect of the belief I have stated clearly in this House, on the numerous occasions on which I was accused of prevarication and being unprepared to make the necessary decisions or of holding discussions that were going nowhere, that the best way of solving the crisis facing this country is for everyone to get behind a comprehensive national effort on all the issues.

Deputy Dermot Ahern

Hear, hear.

Deputy Enda Kenny

Where is it?

The Taoiseach

All the baggage has to be left outside the door.

Deputy Pádraic McCormack

Some chance.

The Taoiseach

It has to address not only——

Deputy Bernard J. Durkan

Fine words.

The Taoiseach

I have listened respectfully to what Deputies have said and I am entitled to give my answer to the House.

Deputy Pádraic McCormack

They are not behind you.

An Ceann Comhairle

Allow the Taoiseach to finish.

The Taoiseach

Excuse me Deputy McCormack, you are not involved in the conversation at the moment. I say that respectfully.

Deputy Pádraic McCormack

I am a good judge of what you are at.

The Taoiseach

I am trying to answer Deputy Gilmore because a serious point is being made. I do not want to come here and simply roll up my sleeves, as he suggested. That is not my purpose. It is a reference to a political point that was being made.

Deputy Bernard J. Durkan

Your words.

The Taoiseach

We cannot abdicate our responsibility to make decisions in a timely fashion. The criticism of those in Opposition was that we were not making decisions quickly enough. I made it clear at the outset of the discussions in January that we had to make decisions by the beginning of February and we all understood that. There was no question of people not understanding that to be the case. Pay and pension issues had to be examined and, if we could not reach agreement, that was unfortunate but the overall framework was agreed and it was understood that pay and pensions would have to be a large part of the solution.

I am not suggesting that anyone acted in bad faith. It remains my position that everyone is seeking to act in good faith but sometimes the point arrives when decisions have to be made. Everyone knows that if those decisions were not taken, the signal that would have been sent to the international investment community and the financial community was that the Government or the country was incapable of making even one of the necessary decisions.

While it was not the total picture, it was part of the solution. If we can find the basis on which new negotiations can take place, I am willing to negotiate a comprehensive framework in order to show the detail of what was agreed in broad principle regarding what is necessary. I have been fair, honest and open about that but the other issues also have to be addressed. The competitiveness of this economy has to be addressed.

Deputy Bernard J. Durkan

We have urged that for years but the Government never listened.

The Taoiseach

Our ability to compete in the new situation in which we find ourselves has to be addressed. These issues all form part of a comprehensive programme.

Deputy James Reilly

What about the banks?

An Ceann Comhairle

Let the Taoiseach finish.

The Taoiseach

If we are prepared to be radical on all fronts, we can sit down and find a solution to the problem. I agree that would be in the best interest of the country but in the meantime the Government must continue to govern and to make the necessary decisions. I do not act on the basis of not seeking co-operation and agreement but because I believe these are the best means by which we can successfully implement a strategy that will get us out of this crisis. I believe everyone is acting in good faith in that effort but any resumption of negotiations must be on the basis that everything is on the table in terms looking at every aspect of industrial and other policies for keeping jobs in this economy.

Deputy Bernard J. Durkan

Give us the information first.

Deputy James Reilly

What about the banks?

The Taoiseach

That is our position and, as David Begg said this morning, it is unwise to resume formal negotiations unless there is a reasonable degree of confidence that agreement on all essential elements can be found.

Deputy Emmet Stagg

The people do not have confidence.

Deputy Dermot Ahern

Come up with €1.4 billion.

The Taoiseach

We will remain available for dialogue. I am not opposed to social partnership but it must address all the issues and not just some of them.