Leaders’ Questions

First, I should congratulate the new British Prime Minister, David Cameron, and his deputy, Nick Clegg, on forming a government in Britain and I wish them the best of luck in their onerous duties. I pay tribute to the departed Prime Minister, Gordon Brown, particularly for his interest in Northern Ireland and for the work he did there.

For years, Deputy Bruton, in particular, has pointed out the lack of clarity, discussion and debate about the way we prepare budgets in Ireland and that the entire system is a charade where government does its business internally, the budget is presented and there is little analysis or discussion beforehand and no prioritisation of the allocation of money. It is a failure of the House over the years because of Government control that budgets are presented in the nonsensical way they have been presented for many years.

I note that this morning the Minister for Finance gave instructions to Ministers to find within their Departments contributions that will amount to €3 billion of cuts in the economy for presentation in the budget later this year. I also note reports that the European Commission is to publish legislation, which will essentially mean foreign ministers for finance will have first sight of the Irish budget before it is discussed in the House. This would amount to handing over sovereignty and the running of our country to somebody else. Does the Taoiseach agree with this proposition that is being put forward? Has he signed up to this? Is he of a mind to continue in the traditional way where no discussion takes place on the budget beforehand? Is he also of a mind to sign up to a proposal like this, which would be contrary to the Lisbon treaty that many people fought hard for and which would amount essentially to the handing over of sovereignty of the Irish State and the running of Irish affairs to peer groups, depending on their political whim, within the Council at any time?

I wish the former British Prime Minister, Gordon Brown, well. As I said in my statement yesterday evening, he was a good friend of Ireland who showed a strong commitment to the implementation of the agreements of which both his government and ours were co-guarantors and I wish him and his wife and family well for the future. I thank him for his excellent work in many respects. In our dealings with him, we found him to be an excellent colleague to work with. I wish Mr. Cameron and Mr. Clegg well in the formation of a new government and I look forward to meeting the British Prime Minister in due course to build on the good relationships that successive governments have been able to establish between the Irish and British Administrations in recent times in the hope that we can continue to co-operate and work together on items of common interest.

With regard to the matter raised by Deputy Kenny, today's media comments on the EU proposals to improve budgetary policy co-ordination are not based on published EU documents. I do not want to comment further on the specifics of articles in the press. Ireland has laid out a multiannual plan with budgetary targets for the coming years. The plan is to reduce the general government balance to below 3% of GDP by 2014 and it has been welcomed and approved by the EU Commission. Much has been achieved on the public finances as a result of decisive Government action since this issue first arose. We have stabilised the deficit with decisive actions. It would have ballooned to 20% of GDP had we not taken the actions we took since coming into office. Fiscal discipline is an important factor in bringing growth and, ultimately, jobs back into the economy and the prospect of a net increase in job creation is based on us continuing with the multiannual plan that has been implemented.

Last year, Fine Gael suggested the cut should have been of the order of €5.4 billion originally and it should be €3.5 billion for 2011. I note from its latest statement that it is suggesting the cut should be just €2 billion for next year.

Who had all the information for the past ten years?

An Taoiseach, without interruption, please.

We cannot have backsliding in regard to this matter.

The Government had ten to 12 years to address it.

An Taoiseach, without interruption, please.

We have to maintain our credibility at home and abroad and the Government will take the decisive action that is necessary.

The Government had ten years. It was a disgrace.

This is like the Muppets.

That is the reply of a desperate man who is throwing bait that he expects somebody to rise to but I will not do that. The Taoiseach, Deputy Cowen, was Minister for Finance and he is now Head of Government. He has brought our country to an excessive deficit position through gross mismanagement of our economy and a complete inability to have the courage to debate issues in the House, particularly in regard to the presentation of budgets as they affect the running of our country and impact on ordinary people every day.

Article 136 of the Lisbon treaty sets out clearly that in certain circumstances the Council may adopt procedures on the surveillance of budgetary issues in any country within the eurozone. The Commission's proposal is quite opaque and it means the political whim, colour or bias of the Council at any time could influence what is being talked about here. I want an assurance from Deputy Cowen as Head of Government and Taoiseach of this country that in no circumstances will the Government hand over sovereignty of the running of our economy to anybody else who might have a different view. For example, other countries might well be jealous of our low rate of corporation tax which we have all agreed we would maintain and which is directly related to a specific element within the Lisbon treaty. I do not want a situation where others would look at the Irish budgetary preparation before it is ever discussed by Oireachtas na hÉireann and that they would say, for instance, that we would have to make changes in public pay or corporation tax, or adjust matters that might not be to our liking. I seek confirmation from the Taoiseach that, first, he is not going to sign up to something that will hand over our authority to bureaucrats elsewhere and that he is clear about the retention of sovereignty and control over our own economic affairs.

Last year, Fine Gael put forward the view that we should set up an independent fiscal advisory council in the Oireachtas where the Government would discuss the preparations for the budget——

A question please, Deputy.

——priorities for that budget, where moneys might be shifted from one Vote to another depending on agreement on those priorities and leave us in control of our own economic affairs, determining what our budget should be and deciding what should be the impact on people. Can I take it that the Taoiseach does not agree with proposals that would diminish the extent and strength of our sovereignty and our ability to control our own economic affairs? If the Government had managed the economy properly in recent years, we would not be in this mess in the first place.

Deputies

Hear, hear.

I refer the Deputy once again to the fact that if the Leader of the Opposition is concerned about the need for this country to retain control and manage its own affairs——

——then he should avoid flip-flopping on his basic economic policies about changing what level of adjustment needs to be made to deal with the structural deficit that exists in this country.

We do not need a lecture from the Taoiseach.

This is the man——

This is the man who wanted the property bubble to continue.

Will Deputies please allow the Taoiseach to continue to speak without interruption?

Those are the realities that have to be faced. We are committed to taking the necessary action on the difficult choices. Work is already under way——

The Taoiseach should answer the question he was asked. He should not head off on a tangent.

One speaker at a time please.

In answering the question I was asked, I am entitled to set out the inconsistency of Deputy Kenny's position which flip-flops every couple of months.

The Taoiseach would know about that.

Does the Taoiseach ever answer the question?

Deputy's Kenny's indication in December was that there should be savings of €3.5 billion this year and now he is talking about €2 billion. We will stick to the plans——

He is a ventriloquist.

——that we have agreed. On the question that has been asked by the Leader of the Opposition about economic sovereignty, the maintenance of credibility at home and abroad and to avoid situations that have happened elsewhere, the moves we have made have ensured that we have avoided that prospect. We intend to continue to effect recovery, bring growth into the economy——

You created the mess in the first place.

——and to provide net job creation in 2011.

You caused the mess.

So much for the Minister, Deputy Noel Dempsey, whining about——

I call Deputy Eamon Gilmore. He should be allowed to speak without interruption please.

Is Deputy Shatter the new leader of his party?

He is destroying——

Deputy Shatter, please.

Dáil reform has fallen into a pothole.

Could we have Deputy Eamon Gilmore without interruption?

First, I join the Taoiseach and Deputy Kenny in paying tribute to Gordon Brown and thanking him for the work, in particular, that he has done in regard to this country and Northern Ireland. I wish Mr. Cameron and Mr. Clegg well as they embark on the leadership of the Government of Britain. Relations between Britain and Ireland greatly improved under the outgoing Labour Government, especially in terms of matters relating to Northern Ireland. It is important that there is a good working relationship between the Government and the British Government. I hope that will continue under the new regime.

We have been talking about the deficit. I wish to refer to the one thing that has contributed, and is contributing most, to the deficit in this country, namely, the continuing story of Anglo Irish Bank. That is the black hole that Fianna Fáil helped to dig and into which €22 billion of taxpayers' money will now have to be put, adding to our national debt. I wish to ask the Taoiseach about an article inThe Sunday Times which refers to a set of confidential, internal minutes from a meeting at Anglo Irish Bank dated 18 February 2009 between Anglo Irish Bank and the Central Bank. Reference is made to the fact that the Department of Finance told the then chairman of Anglo Irish Bank not to be too negative in a letter to shareholders relating to the bank’s 2008 annual report which was published after the bank was nationalised in early 2009. According to the article, the then chairman, Mr. O’Connor, was also told by the Department of Finance that he should not refer to emergency funding. It is indicated in the article that Mr. O’Connor was anxious that the chairman’s statement should tell it as it is. The article, astonishingly, states that the Department of Finance drafted a less negative version of the chairman’s statement.

The Taoiseach will recall that, when we heard some weeks ago that Anglo Irish Bank had increased the salaries of some of its staff, both Deputy Kenny and I asked him about that in the House. He told us there was nothing he could do about it because it was all a matter for Anglo Irish Bank and its board and that the Government would not or could not intervene or interfere in the matter. Yet, according to the article, there was a direct interference by Government, through the Department of Finance in which, in effect, the Government was encouraging the chairman of the board of the bank to doctor the information being released to the public and not to share with the bank's shareholders — there is some responsibility on the boards of banks to inform shareholders, as they were in 2008 — the real state of the bank's finances. According to the article, the Government was directing the bank to put a gloss on the information being issued as part of the 2008 annual report, and it even went so far as to draft a less negative letter to go with the report.

A question, please.

I thank the Ceann Comhairle for reminding me.

My question to the Taoiseach is, first, whether he can confirm that the Department of Finance did in fact draft a less negative letter to go with the annual report of the bank in 2008. Second, can he justify why the Government was encouraging and directing that bank to, in effect, issue false information about the state of its finances and its requirement for additional funding?

I am afraid that to ascribe that sort of motivation to the Department's comments is a conspiracy theory too far. The chairman's statement is a matter for the chairman of the bank.

No matter who writes it.

The draft chairman's statement and the draft accounts for the year ended September 2008 were referred to the Department of Finance for comment and the Department provided a view.

The chairman's statement was finalised to reflect the chairman's considered views and published with the annual report. The chairman's statement was his own and reflected his views.

The Taoiseach has convinced me.

The Taoiseach's new strategy.

This is no small matter. We are now told that it will cost €22 billion——

Yes, and more, to put this bank right. The cost of winding it up would cost huge amounts of money.

It is a zombie.

While the Government had intended that somehow the cost would be at arm's length from the State's own finances and budgets, that cannot now be the case due to what we heard from EUROSTAT. Therefore this is a very major issue. The Minister for Finance only told this House the full extent of the requirement for finance of this bank in April this year. What was the state of the Government's information about the requirement from Anglo Irish Bank for additional funding in February 2009 when the Government directed the bank to doctor the information that was being issued to the public? That is the first question.

The Taoiseach has not addressed the second question, but made it sound as if the bank just sent in the draft statement from the chairman for observation. According to this article, the Department of Finance redrafted the statement. It drafted what it calls a "less negative version". Is that true or not, because it seems to be a serious matter? If there was a gloss put on the information that was put out, this is serious, but it is doubly serious if that was done at the instigation of Government through the Department of Finance.

Can the Taoiseach square these developments with the relationship framework, which I understand the European Union requires to have established between the State and Anglo Irish Bank as a condition for approving the arrangements arrived at for that bank? A reply was given to Deputy Burton by the Minister for Finance only a couple of days ago, in which he stated that in the interests of facilitating compliance with EU state aid and competition policy, the relationship framework recognises the separation of Anglo Irish Bank from the Minister and limits intervention by the Minister in the conduct of the bank's day to day commercial activities.

What does the Taoiseach believe the European Commission is going to think of this report inThe Sunday Times, which he has not denied, that states the Government had a hands-on approach in writing what in fact turns out to be a false statement on the financial position of the bank?

I am saying to Deputy Gilmore that I do not accept the motivation he is ascribing to the Department of Finance is correct at all.

An unfortunate little arrangement.

I have stated——

We are not talking about that.

Deputy Gilmore has just made certain points about "doctoring" and all the rest of it. There is no question of that. I just made the point that where it is a nationalised bank, the chairman's statement and the draft accounts are referred to the Department of Finance for comment, which is the norm, and they were commented on.

They were and they provided a view. The paramount concern——

(Interruptions).

The Taoiseach, without interruptions, please.

——of the Department of Finance and indeed, the Government, at the time of this statement was to do everything possible to protect the stability of the entire banking system. at a time of great fragility. In the context of spring 2009, it was important that any statement relating to the liquidity situation in any bank, particularly a nationalised bank where the taxpayer was directly exposed, should have taken into account the potential impact on the broader financial system and ultimately on the entire economy.

(Interruptions).

That is the simple motivation of the Department of Finance in any of these matters. Any questions the Deputy wishes to refer to the Department of Finance may be referred to it, but I want to make clear that the portrayal, as he puts it, in terms of ascribing such a motivation to the Department——

I am not here to comment on articles, but rather to give the facts of the situation as they are. The facts are as I have outlined, and any suggestion to the contrary is not the case, whatsoever.