Dáil Éireann debate -
Tuesday, 17 Nov 2009

Vol. 694 No. 4

Leaders’ Questions

Deputy Enda Kenny

I wish to ask the Taoiseach about the latest debacle to erupt in banking circles. I understand from comments made today by the Minister for Finance, Deputy Brian Lenihan, that yesterday evening a proposal from Allied Irish Banks was dropped into the Department of Finance. This proposal was obviously not dropped in on a whim. It was for the appointment of a person as managing director of AIB, on a salary of €633,000.

As I understand it, the State has 25% control in AIB. The Government gave it €3.5 billion in preference shares, intends to acquire the loan book for an assumed figure of €24 billion and has guaranteed all its liabilities. I understand the Cabinet discussed this matter this morning. The Taoiseach is well aware of the importance of our country's reputation, the credibility of our banking system and the integrity that goes along with that. Was there any contact between Allied Irish Banks and the Minister for Finance or his Department concerning this matter? Does the Taoiseach support the proposed appointment, given that this person is an insider, has been on the board since 2003, has been central to many of the lending practices of Allied Irish Banks and will not do anything to enhance the reputation of the Irish banking system in general? What is the Taoiseach's view, arising from this latest debacle in banking circles? Effectively, the Government has been given another major snub, following what happened with Bank of Ireland.

The Taoiseach

The Minister for Finance outlined the position regarding this matter which came into the public domain during the past 24 hours before he was in a position to consider the appointment and report to the Government today. The Government reiterated its position of 11 March when it noted the content of the first report of the covered institutions' remuneration oversight committee which looked at salaries in this area and agreed to the report being available to both Houses of the Oireachtas and the public. It also agreed the Minister for Finance would write to the financial institutions asking them to revise their remuneration plans in such a way as to respect the salary cap of €500,000 or the amount recommended by the committee, whichever should be the lesser. We simply confirmed that was our position. I am sure discussions are ongoing between the bank and the Department, arising from that communication by the Minister in respect of correspondence that came into his office last night and was in the public domain before he had an opportunity to consider it. That is where matters rest. It is important, in the interests of effective management of the bank, which is in all of our interests, that we allow the process to develop with a view to finding a resolution that is consistent with the Government position.

Deputy Enda Kenny

I am sure the Taoiseach is aware of the reaction of people, particularly the young, to the situation. This is one of the major institutions centrally involved in the financial and economic debacle in which we find ourselves. It is one of the major institutions in respect of which Mr. Trichet today referred to countries losing their reputations and credibility.

The Government effectively has 25% control of the bank and the Minister for Finance has stated that we are deeply embedded in the banking sector. Clearly, an insider is being appointed to the job. Minister after Minister has been discussing prescription charges of 50 cent and cutting child benefit and every other allowance of which one could think while Allied Irish Banks has proposed, not on a whim, to the Department of Finance that a person be appointed as the bank's managing director with a salary grossly in excess of the Government's guideline. This breaches every ethical guideline of good corporate governance and does nothing for our country's reputation or the attempt to sort out the banking situation. The Government is being told that it has no moral authority, has lost credibility, is losing integrity and that the bank will do what it likes.

The Government gave the bank €3.4 billion in taxpayers' money, guaranteed all of its liabilities, will buy its loan book for €24 billion and controls 25% of it. Everyone else is being forced to take pain on all levels, but a proposal was dropped into the Department of Finance by the bank at 7.30 p.m. and discussed by the Cabinet this morning. Now, there is neither a managing director nor credibility of Government.

Deputy Terence Flanagan

Hear, hear.

Deputy Enda Kenny

Why has this matter not been dealt with decisively by the Government in view of the State's control? Neither we nor the bank know what is occurring and the Government will not say. Surely there is someone among the Irish diaspora who is objective, external, would do the job for €500,000 and would clean up the bank within 18 months. The person proposed to be appointed was centrally involved in lending practices in an institution that was partly responsible for the current debacle.

What is this doing to the attempt to restore credibility to banking institutions and our financial credibility of which the Taoiseach and Ministers spoke in recent weeks? Does the Taoiseach support AIB's proposal on the appointment of a managing director on a salary grossly in excess of the guidelines set by the Government? He is an insider and his role as managing director is not in keeping with the best standards of good corporate governance.

Deputies

Hear, hear.

The Taoiseach

It is important for Deputy Kenny to realise that the whole purpose of the Government is to ensure that we have effective management structures. The board of the bank has brought forward the name. It is unfortunate that Deputy Kenny is engaging in a very strong personal attack. This is not a matter that I wish to deal with in that way.

Deputy Paul Kehoe

It is not a personal attack. The Taoiseach should withdraw that comment.

Deputy Michael Ring

It is a fact.

Deputy Enda Kenny

I did not attack his good name or his character.

An Ceann Comhairle

The Taoiseach without interruption.

Deputy Joan Burton

It is business, not personal.

Deputy Paul Kehoe

Do not try to twist it.

Deputy Dinny McGinley

All they want is our money, but the Government is out of money.

An Ceann Comhairle

Deputy McGinley, please.

The Taoiseach

This is not a matter that I wish to deal with——

Deputy Michael Ring

Grab NAMA and get away with it.

Deputy Richard Bruton

It was the Taoiseach's Ministers who said that these were the people who led the country into this situation.

Deputy Michael Ring

That is right.

An Ceann Comhairle

The Taoiseach without interruption.

The Taoiseach

This is not a matter that I wish to deal with in this way, as has been suggested by Deputy Kenny.

Deputy Dinny McGinley

More of the same.

Deputy Paul Kehoe

Backtracking.

The Taoiseach

The situation is that the Government has made clear the arrangements in respect of our position regarding the filling of a position of a CEO in line with the decisions that we communicated in March. That is the position. The board brought forward the name of the person it felt to be the person best qualified, given all of the choices that it had based on those who were available to do so, to run the bank. An issue came into the public domain this morning before the Minister for Finance had given proper consideration to it or been given an opportunity to consider it. He has now communicated to the bank the position that he holds, supported by the Government, and we now await developments in that respect.

Deputy Eamon Gilmore

The salary of the bank's managing director is not only in excess of the Government's guideline, but is also approximately 20 times what a county council road worker is paid and whose pay the Government is proposing to cut. This day week, every child will be home from school or parents will need to find child minders because all of the schools will be closed. People with medical appointments, many of whom have waited for them for some time, will have them cancelled because hospitals will be operating on a Christmas Day roster. People making urgent telephone calls to social welfare offices will not be answered. If there is a spate of bad weather, there will be no county council road workers to clear the roads and drains because all of the staff will be on strike.

Two weeks ago, I put it to the Taoiseach that it would be better for this country were there a national agreement. I suggested five measures that should form part of that agreement and urged the Taoiseach to engage in talks with the unions concerned so that we would not head into a period of industrial strife and conflict. We are only one week away from a national strike. What are the Taoiseach and the Government doing to avert the strike due to occur this day week, 24 November?

Deputy John Cregan

Why does Deputy Gilmore not talk to his friends in the unions about the strike?

The Taoiseach

Talks are continuing with the public sector unions regarding the whole question of public sector pay and the contribution it can make to the budgetary requirements we will face in the coming weeks ahead of 9 December. We are also in the process of indicating to them our view of where we believe the necessary efficiencies and changes have to take place in order to reform our public services in the longer term as well as in the short and medium terms. This is continuing.

A decision was taken by, as Deputy Gilmore said, the unions concerned to embark on a one-day strike on 24 November. I very much regret the fact that it appears the strike will proceed. I would ask that it not proceed for two reasons, given the impact it can have on the provision of services for those who require them and because it is not clear what it can achieve, since it would be far better to continue with the discussions that are ongoing between Government and the unions. I would ask that people would, even at this late stage, consider the position further and avoid the necessity of withdrawal from work on that date, given the impact it will have on society, and allow their representatives to continue in discussions with the Government as we seek to find a way forward.

Deputy Eamon Gilmore

The Taoiseach knows well that type of appeal is meaningless, particularly given circumstances in which overwhelming numbers in the unions concerned took the decision to take strike action. If the Taoiseach is serious about averting the strike — I hope he is, although I did not detect that from the tone of his answer — he and his Ministers need to engage directly in these talks rather than leaving them to officials. We are a week away from a strike. The Government will either make a serious attempt to avert it or it will not.

Were this a strike by unions seeking a pay increase, everyone in the House and elsewhere would tell them to negotiate or, if they could not reach agreement in negotiations, use the Labour Court, the conciliation and arbitration mechanisms or the State's other industrial relations machinery. In the current circumstances, the Government is seeking to reduce the pay bill, but the same rules should apply. The Government should negotiate or, if an agreement is not possible, use the State's industrial relations machinery to resolve issues that cannot be agreed. What should not be allowed to occur and into which the Government is sleepwalking is a strike next Tuesday. If that strike goes ahead, the Government will inevitably go down the road of conflict, industrial action and strife, which is not what the country needs. We need a period of time where people pull together, not engage in conflict. The Government has a responsibility to roll up its sleeves and try to reach agreement with the unions concerned to avert that strike.

The Taoiseach

Those are precisely the sort of sentiments that I expressed over the weekend. I agree that it is a difficult situation for any trade union representative where what is in prospect is a reduction in the overall pay bill rather than an increase being negotiated.

However, I emphasise, and remind the Deputy, that I am engaging with the public sector unions to see what policy options they claim could be available here to assist in ensuring that we make the necessary savings of the order of €1.3 billion that must come from the public sector pay bill as we seek to bring forward reductions of the order of €4 billion in total public service provision. It is an inescapable fact that public sector pay must be part of that contribution. There is no way around that.

We have engaged, and are engaging, with the public sector unions to see if there is a means of doing this that would be acceptable to all. I am interested in obtaining the reductions in the pay bill by whatever means is available to us. I would like to do that by agreement. I have made that clear from the outset, but I also have made clear that the Government has a duty to discharge here. We must discharge that duty, hopefully, with agreement. It will not be for the want of trying.

There is no question, in terms of the pejorative terms being used by the Deputy, of sleep-walking or anything else. Everyone recognises the seriousness of the situation. Everyone sees how difficult the choices are and how limited the options may be, but we are approaching this matter in good faith.