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Dáil Éireann debate -
Wednesday, 10 Nov 2010

Vol. 721 No. 3

Priority Questions

Budgetary Outlook

Michael Noonan


46 Deputy Michael Noonan asked the Minister for Finance when he became aware that a budgetary adjustment of €7.5 billion in the next four budgets was insufficient to restore confidence in the bond markets; and if he will make a statement on the matter. [41891/10]

Our expenditure is well in excess of our revenues and this gap, currently being filled by borrowing, needs to be reduced to a sustainable level. This is not just to ensure we retain market confidence but also because it is sensible economic policy. The more we borrow, the higher the cost of servicing our debt and the fewer resources we have to direct elsewhere. My Department monitors continually the economic and budgetary position and data are constantly being assessed as they emerge. In this regard, I am kept fully informed of emerging trends. Based on data that became available over the summer months, in addition to second-quarter economic data published by the CSO in September, which were disappointing, a downward revision of future growth prospects was warranted.

With regard to when I became aware that a larger adjustment than that signalled at budget time last year might be necessary, this gradually became clearer as more economic data emerged. This development, coupled with the clarification on 30 September of the extent of support required for the banking sector and a further refinement of economic forecasts, led to a strengthening of the view that additional consolidation would be required if the 3% deficit target were to be achieved by 2014.

I outlined in my statement on banking in this House on 30 September that the Government's commitment to adhering to the 3% of GDP deficit reduction target by 2014 had not changed and I made it clear that we would make an additional significant consolidation effort in 2011 over and above the already announced target of €3 billion. As the Deputy is aware, towards the end of October I announced that an overall adjustment of €15 billion over the next four years is warranted to achieve the target deficit of 3% of GDP by 2014. During October, my officials briefed Opposition spokespersons on the emerging trends based on various economic and budgetary scenarios. Furthermore, my Department set out last week the up-to-date economic and budgetary position including the scale of the 2011 adjustment and the likely annual breakdown based on current assessments.

Achieving, in a fair and sensible manner, the necessary next step in the multi-annual adjustment is what Government is now focusing upon and we will publish our four-year budgetary plan later in the month.

Until approximately five weeks ago, the Minister was holding to the €7.5 billion correction. Then, like a thunder clap, it jumped to €15 billion. He is now telling us for the first time he saw the emerging trends over the summer and was coming around to forming a firm opinion when the CSO figures became available in September. Did it ever strike him that he should have shared this information with the House and public rather than making a sudden announcement as if he had only discovered the requirement over the Corn Flakes in the morning?

The reason behind the increase in the consolidation required is outlined in the information note on the economic and budgetary outlook Deputy Noonan received last week. It was published last week. The main reason is a smaller economy with lower than expected levels of nominal growth. I was certainly not prepared to suddenly announce a departure from the existing target without the most careful reflection on all the emerging economic data. I made that point clear on Question Time on the last occasion.

Does the Minister recall the infamous meeting in Galway, which I believe is in the annals of political history for reasons other than those to which I refer? On his arrival in Galway, the Minister said he believed the correction of €3 billion, bringing the figure of €7.5 billion to more than €11 billion, was a minimum. It now transpires the Minister was forming a view at that time that he would have to double the figure and did not tell anybody. He seems to be working on the basis of telling us he is sharing information with the Opposition, yet every time we take his figures at face value, they change.

We found out yesterday that a correction that was an absolute given, the €7.5 billion correction, will now have to be in the order of €15 billion.

Yes. We found out yesterday that it is no longer a given but another moveable feast. It was presented to us as an absolute certainty yesterday that the correction over four years would be €15 billion. We have been working on this information. Furthermore, there was an attempt to browbeat the Opposition into agreeing to the figure. We met the Commissioner yesterday and he said new arrangements in Europe are such that growth rates must be assessed annually and that the figure of €15 billion must be renegotiated with the Irish Government annually. It could go up or down. Our first revision will be on 29 November, which is three weeks away. The body language I noted was that the Commissioner might be marking it down on that date. How can the Minister come in here with his innocent demeanour and give us assurances when every time he does so the figures move within a couple of days?

Every time the Deputy refers to body language on the part of officials or Commissioners, I become suspicious. Body language is used here as a cover for the substitution of the Deputy's opinion. He drew an inference from the Commissioner's body language and did something similar in regard to his encounter with my officials. He inferred from their body language that they wanted a greater adjustment than €6 billion and that they wanted one of €7 billion at the time in question. The Deputy should not infer anything from body language.

As far as the forecasts are concerned, forecasts are just forecasts. The original stability and growth plan and original €7.5 billion target were agreed with the Commission. When I spoke in Galway — the Deputy referred to an interview I did when I arrived there — I made it clear the figure was a minimum figure and that it was agreed with the Commission. The figure of €6 billion is also the current figure and is agreed with the Commission as the appropriate front-loading value for next year. The figure of €15 billion is our best assessment of the central case scenario over the four-year period. We are planning on that basis and, clearly, we will discuss the plan with the Commission in due course when the Government has concluded its deliberations. Any figures the Commission intends to publish on 29 November, of course, will be consistent with the plan.

We will know the Commission's estimate of Irish growth on 29 November and we will not have to look at the runes or body language. The Minister's officials told me and my colleagues categorically that the correction they were seeking was €7 billion for 2011. That can be supported by the briefing they gave to other parties, who were briefed separately. The officials withdrew that figure afterwards under political pressure from the Government, including the Minister for Finance. I will repeat this inside and outside the House and take on any of them any day. The Minister should not have put pressure on his civil servants because we went to the Department of Finance to be briefed on the basis that the information given would not be filtered through the political side, in other words, by the Minister and his office. We found out subsequently that it was being filtered by him and his office because it was he who authorised the press statement that rebutted my figure, not the Secretary General of the Department of Finance.

These are sensitive matters.

It is not sensitive. The Minister should not stand up here and lie about my position.

My officials outlined to the Deputy three different scenarios.

That is not correct.

When it was put to him that they preferred one, he referred to body language as the basis for his conviction.

The Deputy did.

The told me categorically what was the adjustment.

That is the position. There was no political pressure exerted.

The Minister behaved disgracefully. He interfered——

The Deputy should allow the Minister to conclude.

If the Deputy speaks to my officials, he will find no such direction.

I am speaking to the Minister.

He will find no such direction.

Who authorised the press statement?

The Deputy should not shout down Members of the House.

Who authorised the press statement that rebutted my view? It was the Minister, not the Secretary General.

Please, Deputy Noonan, we do not shout down Members of the House. The Deputy should allow the Minister to reply in an orderly fashion to the question put.

The Deputy has moved his ground to a core allegation that I interfered with my officials and gave them a direction.

I did not give them a direction.

Who wrote the press statement? Who authorised it? It was the Minister.

We can return to the press statement at a later stage by way of supplementary questions if the Deputy wishes

Banks Recapitalisation

Joan Burton


47 Deputy Joan Burton asked the Minister for Finance the reason the promissory notes issued in respect of Anglo Irish Bank, Irish Nationwide and EBS carry coupon rates ranging from 4% to over 6%; if consideration was given in structuring these notes to the use of zero coupon notes; if consideration was given in structuring these notes to the use of shorter term money, rolled over at lower interest rates, as was the case with the National Assets Management Agency bonds; if he will give consideration to the use of zero coupon notes, or another interest minimising mechanism, to finance the remaining €9.1 billion to be granted to Anglo Irish Bank and Irish Nationwide by end 2010, potentially reducing the 2011 General Government Deficit by some €700 million based on the prevailing ten year sovereign bond rate on 4 November 2011; and if he will make a statement on the matter. [41829/10]

The purpose of the promissory notes issued to the institutions referred to in the Deputy's question is to enable the State to provide them with the necessary capital to meet regulatory capital requirements in a way that ensures the cash burden on the Exchequer over a period of years is manageable. The promissory note structure was designed to achieve the most efficient financing outcome for the Exchequer and corresponds to that of a conventional Government bond. Under their terms, the notes have fixed annual cash flows and a fixed redemption profile. This meets the Exchequer's objective of having certainty of cash flows. The coupon rates on the notes are set by reference to yields on government bonds at the time of issue. This feature explains the variation in the coupon rates referred to in the Deputy's question.

In order to meet their primary objective, it is essential that the notes are valued at their nominal or face value in the financial accounts of the recipient institutions. The notes must, therefore, bear interest at the appropriate market interest rate to ensure the current value of the cashflows equate to face value. Any lower coupon, set for example as suggested by the Deputy at a zero or short-term money market rate — as applies to NAMA bonds — would under the applicable accounting standards result in a fair value adjustment to the face value of the promissory notes in the financial accounts of the recipient institution. To compensate for this and to ensure the relevant institutions fully met their regulatory capital requirements, a substantial increase in the face value of the notes would have been required.

As set out in the technical note published on my Department's website on 4 November last — which accompanied the publication of the information note on the economic and budgetary outlook for the period 2011 to 2014 — the terms of the promissory notes will provide that no interest will be chargeable in 2011 and 2012. It has been confirmed with EUROSTAT that, as a result, no interest will be recorded on the promissory notes in those years, on either a cash or accrual basis. This means the general Government balance for 2011 and 2012 will be unaffected by interest payments relating to the promissory notes. A higher rate of interest will be chargeable for the remainder of the period — commencing from 2013 onwards — so that the cumulative amount of interest paid over the period of the promissory notes will remain at an average rate sufficient to allow the notes to be recorded in the institutions' balance sheets at face value, notwithstanding the zero rate of interest charged in 2011 and 2012.

When did the Minister become aware of the potential impact of these promissory notes on the general Government balance? When the Labour Party received its briefing in the Department of Finance, it was perfectly clear that the officials had not worked out what might be the implications of those notes. I have been trying to ascertain the position in this regard — through the tabling of parliamentary questions — since the Minister announced the establishment of the promissory note structure last Easter. Was the Minister aware of what might be the impact of promissory notes or was he unaware of the position in this regard? If he did know of the possible impact, did he simply choose not to inform the Dáil that they could lead to the payment of an additional €1.5 billion per year? At the end of the year there will be some €31 billion outstanding.

The international markets have lost confidence in Ireland because the facts relating to this matter have only just emerged. Promissory notes worth €9 billion are due to be issued before the end of the year. Ireland's bond rates currently stand at more than 8%. This means that the promissory notes to which I refer will be issued at a rate that will be somewhere between 6% and 8%. It is to be hoped that the rate will decrease to some degree. However, if today's rate applies, then the amount in interest we will be obliged to repay will be extremely high. The Minister and his colleagues are leaving an appalling liability in respect of these promissory notes for their successors in government.

The Deputy should pose a question.

Has the Minister considered whether the further €9 billion worth of promissory notes should be issued at the very high market rates which obtain at present or whether another mechanism might be employed? I suggested to his officials that they needed to check how the promissory notes would be treated in the context of the national accounts. Does the Minister agree that on foot of my action in this regard, his officials have at least obtained an interest holiday from EUROSTAT? The officials were not even aware of the possibility of using this mechanism prior to my visit to the Department. Does the Minister intend to issue €9 billion worth——

The Deputy has put her question.

——of further promissory notes at sky-high interest rates before the end of the year?

The Deputy asked a number of questions. In respect of my level of awareness, at all stages prior to the execution of the promissory notes this year, my Department advised me that there were difficulties in the context of EUROSTAT's treatment of this matter with regard to the capital sums that we would be obliged to pay on foot of those notes. My officials also advised me at all stages on the capital implications that would arise. In other words, it was made clear that they could lead to a substantial increase in the debt to GDP ratio for this year. Having consulted the Governor of the Central Bank, I took the view that the best course would be to ensure the maximum amount of that exposure — in terms of the capital embodied in the notes — would be taken on the general Government balance this year. This means that next year the Government — and whatever Administration is in place in 2012 — would not be saddled with any further once-off spikes in the general Government balance caused by the capital treatment of promissory notes.

It was drawn to my attention in September that there would be implications for the general Government balance in future years in respect of the interest payments to which the Deputy refers. Various solutions were explored by my officials long before she adverted to the matter. On the question of the interest rate that will apply in respect of any note which must be structured prior to the end of the year, I will examine any suggestion the Deputy may wish to put forward and my officials will consider the various options.

I thank the Minister for his reply. At least he has acknowledged that it was only in September that he discussed with his officials the matter of how the interest would be dealt with. This country is facing an incredibly difficult future as a result of the millstone of €31 billion in promissory notes relating to Anglo Irish Bank and Irish Nationwide that has been placed around our necks.

The Deputy should put a brief supplementary question. We are well over the time allocated for this question.

Does the Minister agree it is the interest relating to the promissory notes which has completely distorted the position and which is largely responsible for the increase in the savings — from €7.5 billion to €15 billion — that will be required in the next four years? Who provided the Minister with advice on the promissory note system prior to Easter? Why did he come before the House on the Tuesday prior to Easter without first fully checking the position with regard not only to the capital implications but also to those relating to interest payments? Was someone in the Department responsible for making suggestions in respect of this matter? Senior civil servants in the Department of Finance and senior officials employed by the Central Bank, the Financial Regulator and the various other institutions which are responsible to the Department are meant to provide advice to the Minister. Did they not provide that advice?

With regard to the interest, they were not in a position to advise me.

I find that outrageous.

If I might conclude without interruption, the position in this regard turns on the treatment which EUROSTAT adopts in respect of interest payments. My officials were not in a position to immediately ascertain the relevant information because EUROSTAT's precise treatment of all these matters varies and is subject to revision and final judgment by that organisation.

The Deputy's principal question related to whether these notes in some way contributed to the increase in the four-year target from €7.5 billion to €15 billion. Her assumption in this regard is simply incorrect. Let us be clear with regard to this matter. Leaving aside any interest payments which must be made on moneys borrowed in connection with banking, there has been a substantial gap between what the State spends——

The Minister should just multiply €1.5 billion by six to get the relevant figure.

May I please conclude?

The Deputy should allow the Minister to reply.

The gap between Exchequer expenses and receipts for this year is €19 billion. The €1.5 billion to which the Deputy refers is not even included in that figure. Let us place this matter in perspective. The State has been spending far more than it has been taking in.

The Minister is replying to a different question.

No, I am answering the Deputy's question. This is the one item of information she never wishes to hear. The gap to which I refer is real and the Deputy is of the view that we should try to reduce it by only €4.5 billion next year. Leaving aside any interest payments which must be made on moneys borrowed in connection with banking, it is that gap which lies at the heart of our fiscal and budgetary difficulties.

Will the Minister give us a schedule of the make-up of the €15 billion?

Fiscal Policy

Michael Noonan


48 Deputy Michael Noonan asked the Minister for Finance the discussions he has had with representatives of the European Central Bank with a view to an agreement that the bank will buy Irish bonds when the country re-enters the market in the new year; and if he will make a statement on the matter. [41892/10]

In order to give the markets time to digest the end of September statement on banking and the four year budgetary plan, the National Treasury Management Agency decided not to proceed with the planned bond auctions for October and November and has stated it will return to the bond markets in early 2011. The NTMA has achieved the target of raising €20 billion from the bond markets in 2010 and allowing for cash balances, retail debt and long-term funding carried over from last year, the Exchequer is fully funded well into the first half of 2011. This is an important point that is sometimes overlooked when people comment on Ireland's funding position.

The NTMA has advised that the European Central Bank does not participate in the NTMA's auctions and in fact the ECB does not purchase debt directly from governments but does so only, and on a limited basis, in secondary markets. There has been speculation recently about the scale of the ECB's purchases of Irish Government bonds under the emergency measures introduced in early May to stem the euro area debt crisis.

However, to put the ECB's involvement in context, the NTMA advises that while total turnover in Irish Government bonds since July has been over €50 billion; total ECB buying across all euro sovereign bonds in this period has been just €3.7 billion or so. That is an important statistic which bears repetition. The total turnover in Irish Government bonds since July has been €50 billion and the total ECB purchasing across all euro sovereign bonds has been approximately €3.7 billion. The ECB does not disclose details of the breakdown of its holdings of sovereign debt.

Irish Government bonds are bought and actively traded in the secondary markets by a broad range of investors, both domestic and international, but primarily by financial institutions including fund managers, banks, insurance companies and pension funds, as well as supranationals and central banks. Due to the nature of the international bond markets, it is not possible to classify bond holdings to the level of individual financial institutions. In addition, any such information would be considered commercially sensitive.

However, the NTMA has advised, based on figures published by the Central Bank for the period to the end of September, that it is estimated that about 84% of Ireland's bonds are held by international investors. Therefore, the question of discussions with representatives of the ECB in the circumstances outlined by the Deputy does not arise and has not arisen.

I thank the Minister for his reply. Some of the statistics, as he said, are very interesting. Could the Minister outline the strategy which he has and which I presume he has discussed with his Department and the NTMA for getting Ireland back into the bond markets in the new year?

That has been a matter of public record since September. The strategy is two-pronged. The first element of it was contained in the September announcement to bring finality and clarity to the exposure of the Irish banking sector and gave the market ample time to digest that information. The second element of the strategy is to publish the four-year fiscal plan which will contain a credible set of decisions which any Irish Government must take to meet the 3% requirement by 2014 and, as the first instalment of that strategy, to do a front-loaded correction of at least €6 billion this year. They are the two crucial elements of the strategy.

That is the background, of which we are all aware. When Christmas passes and we are in the new year and a decision is made to go back into the markets in middle to late January or early February, what is the strategy, if the Minister has one, to re-enter the markets with safety and a feeling of confidence that whatever is offered will be taken up at reasonable prices?

It is important to bear in mind that the NTMA advised me we should not hold auctions in October and November, and I agreed with that advice. It was open to us to hold these auctions. We were not shut out of the market; we decided not to make an offer to the market. Clearly, as my reply pointed out, we intend to return to the market early next year and the NTMA will of course advise me about the appropriate circumstances and the different initiatives that may be required on its part to ensure that there is participation in any such issue.

Joan Burton


49 Deputy Joan Burton asked the Minister for Finance if he has examined the terms and conditions of the European Financial Stability Facility; the rate of interest he would expect to be charged to a eurozone member state participating in the EFSF, at what maturity and on what terms and conditions; the maximum term of borrowing under the terms of the EFSF; to set out the extent of the contacts to date between executives or representatives of the EFSF since its establishment and the Minister and his officials; and if he will make a statement on the matter. [41830/10]

Ireland has not sought assistance from the European Financial Stability Facility, EFSF, and as the NTMA has repeatedly stated, Ireland is fully funded well into next year. In terms of contacts between my officials and executives or representatives of the EFSF, there have been no contacts other than those made in the context of normal EU business.

The EFSF is established as a limited liability company, a société anonyme, incorporated in Luxembourg of which the euro area member states are the shareholders. In common with other member states, our contacts with the EFSF have related to the establishment of the company, our pro rata contribution to its share capital and representation at board meetings.

I can, however, confirm for the Deputy's information that the terms and conditions generally under which the EFSF may make loans to euro area member states are set out in the EFSF framework agreement which was scheduled to the European Financial Stability Bill 2010, which has been laid before the Houses of the Oireachtas. The arrangements governing individual loans would be determined in the context of specific loan facility agreements. Under the framework agreement, it is envisaged that the EFSF may provide loans during the three year period up to 30 June 2013.

As the Deputy is aware, the Government has taken firm action over the past two years to tackle the deterioration in the public finances. Those actions are resulting in a stabilisation of the underlying general Government deficit this year. We are now preparing a four year budgetary plan which will set out the pathway to stabilising general Government debt and to bringing the deficit below 3% of GDP by the end of 2014. This is part of the wider strategy being pursued by the Government which has addressed the difficulties facing the banking system, will bring sustainability to the public finances and will see ongoing improvements in competitiveness.

Did the Minister not find it depressing or shameful that on Monday evening he was on national television giving a press conference in his Department with European Commissioner Rehn? Did he not find it depressing and humiliating for us as a country that the Opposition had to troop in yesterday to meet the very polite Mr. Rehn? It was an indication that our sovereignty as a country has, in effect, been put in severe peril by the actions of the Fianna Fáil Government. Does the Minister understand that sentiment towards Ireland is a result of the fact that the markets lack confidence because everything the Minister has said has proved to be far worse than first anticipated?

Has the Minister or any of his officials had contact with Mr. Klaus Regling? Perhaps the Minister would like to outline the contacts. Could the Minister also tell us how many members of the staff of the Commission are currently in his Department on a temporary or daily basis overseeing Irish budgetary and financial matters?

First, I have had no contact whatsoever with Mr. Klaus Regling since he was appointed to head up the facility. I of course met him when he visited Dublin earlier in the year——

What about the Minister's officials?

Can I deal with that? Can I answer the questions? I of course met Mr. Regling when he wrote with Mr. Max Watson a report on the history and causation of the current economic difficulties in Ireland last summer. I supported his appointment as a member of the financial council and we are fortunate that someone who has considerable familiarity with this country is in that position. I have had no contact with them and neither have my officials, as far as I am aware. Certainly, no contacts have been reported to me.

I cannot rule out an incidental contact, and the Deputy will appreciate that, because he now holds a position in the European structure and it may be the case that meetings take place in the ordinary course of business which have nothing to do with Ireland at which my officials are present, but there has certainly been no contact between me and Mr. Regling regarding Ireland.

I hope that is a sufficiently comprehensive answer to the Deputy's question.

In relation to the alleged presence of Commission officials in my Department, there are no Commission officials in my Department on a permanent or any other basis. They do not have offices or regular spaces in my Department. That does not exist. Incidentally, although the Deputy did not ask the question but for the record, neither are there officials from the European Central Bank in my Department. Neither the European Central Bank nor the Commission has staff permanently attached or permanently present in my Department and there is no permanent facility for their accommodation in my Department.

Did the Minister check the basement?

The old land bond lottery machine might still be in the basement but I am not aware of the presence of any European officials there.

A brief supplementary from Deputy Burton.

Of course,——

Please allow——

——just to finalise my answer and to assist the Deputy, officials from——

I advise the Minister that the time is well up and there will not be time for supplementaries.

All right, I will not try to assist further.

Does the reference to his officials include reference to the staff of the NTMA? Has the NTMA had any dealings or contact with Mr. Regling or with Mr. Regling's offices?

The European Commissioner Mr. Rehn, who is hardly interested in lying to the mere Opposition in Ireland, yesterday introduced us, and perhaps Fine Gael, to a gentleman who was on his delegation who is currently, clearly, one of the leading persons dealing with the Minister's staff in the Department of Finance on the preparation of the forthcoming budget. He was a tall gentleman with glasses, I believe, from Hungary.

Deputy Burton went on the national broadcaster yesterday and suggested that there is a Hungarian employed in the Department of Finance.

I never used the word "employed".

He happens to be a Hungarian.

The Minister is a barrister——

Please allow the Minister to reply.

Arthur Griffith would have been delighted.

He happens to be a Hungarian. He is an EU national and he is part of Commissioner Rehn's staff. He is not part of the complement of the Department of Finance.

Is it just that——

Please allow the Minister.

Let me put that on the record of the House first. Commissioner Rehn must deal with 27 member states. It is natural and understandable that he has a particular official who helps him liaise with the Irish position.

If this is——

Please allow the Minister.

Out of courtesy, he advises Deputy Burton who that official is and I hear on the national broadcaster later in the day, or in some broadcast, that this gentleman is a Hungarian who works in the Department of Finance.

I never said——

I have put the facts on the record of the House. This is the gentleman, who is an EU national, who assists the Commissioner, who his also an EU national, on Irish matters. There are officials who advise him on Slovenian matters, Slovakian matters, German matters and French matters. This is the official who helps him on Irish matters.

We need to move on.

Out of courtesy, the Commissioner pointed that out to Deputy Burton.

Tax Free Betting

Brian Hayes


50 Deputy Brian Hayes asked the Minister for Finance his views on the possible introduction of an online betting tax; if he has considered in depth the implications of such a tax for employment within this industry here; and if he will make a statement on the matter. [41906/10]

I have stated previously that it is my intention to widen, if possible, the tax base on which betting duty would be applied.

We have a situation where bets placed through one platform, namely, betting shops, are subject to 1% betting duty but bets placed through other platforms are generally not. This is because bets placed either online or over the telephone are generally with out-of-State companies and applying betting duty has been difficult. This is an uneven situation and as the Minister responsible it makes sense to explore options to even out the position.

Consequently, I asked my officials, in conjunction with the Office of the Attorney General, the Office of the Revenue Commissioners and the Department of Justice and Law Reform, to look at the scope to overcome legal and operational difficulties in this area. I have stated previously in this House that any extension of betting duty will be applied on a fair basis and should not be perceived as an attempt to threaten jobs. Also, tax changes will be in tandem with ongoing work by the Department of Justice and Law Reform on issues surrounding licensing and regulation.

Some of the leading figures in the betting sector in Ireland have publicly stated they have no problem with the extension of the betting duty once it is done in a manner that is enforceable for all and, consequently, does not disadvantage Irish-based services.

I am trying to ensure that we can put together a solution that is fair and reasonable, has a sense of balance and will not threaten jobs.

Does the Minister recognise the substantially important aspect of this question related to jobs in this country, particularly businesses in my constituency but also throughout other constituencies where real people are employed by real businesses? How can he possibly introduce an online betting tax when seven of the top ten operators in this country are not based here in terms of their servers? It is a very complex matter.

Is the Minister aware of a recent announcement by William Hill that it has decided to get out of the British market in respect of Internet betting, where it describes the challenge of competing with betting exchanges and offshore tele-betting operators, all of whom have been benefited from significant cost and tax advantages over UK bookmakers? Does he accept that if we are serious about this, we must keep people employed in this country and the introduction of an arbitrary tax could ensure that jobs are lost?

My answer makes clear that I agree with Deputy Brian Hayes that there are two very difficult issues here. One matter is the complex legal and operational matters associated with the introduction of such a duty and the other is the importance of ensuring that any such duty will not impact on jobs or employment in Ireland.

The third consideration that must be taken into account is that an Irish resident punter can place a bet at a racecourse or off-course in a main street betting shop and the entire burden of betting taxation in this country falls upon those categories, while the Internet bet is entirely exempt from any taxation contribution. That is a matter that any Minister for Finance must examine and he or she must ensure in the context of broadening the tax base that bets by Irish residents are treated in an equal manner.

Broadening the tax base is one matter but ensuring the hole is plugged because of a reduction in the receipts from excise duty on off-course betting is quite another. Does the Minister agree with the Taoiseach's comments in a speech, which, I understand, he gave at a dinner hosted by The Irish Field at the Irish Farm Centre on 13 May, where he suggested that “All forms of betting including betting offered over the Internet, other remote platforms or over the telephone should make a contribution”. Why should they make a contribution exclusively to greyhounds and to the racing industry? Why should they not be making a contribution towards other sports in the country as well?

Has the Minister departed from his statement to the select committee on 10 December 2008 when he said "in the absence of a prohibition on such activity [that is, Internet betting] it is impossible to tax it because the server can be located in any part of the world". Has he changed his position from his statement in 2008?

Yes. We have managed to advance beyond that position and we are exploring various options that would ensure that those who are resident in Ireland and place bets can be subject to the same rate of duty. On the application of the proceeds of any such duty,——

Is it likely that such a proposal——

Just to answer Deputy Brian Hayes's other question, that is a matter for the Government to consider in the context of its exploits.

A brief final supplementary, Deputy Brian Hayes.

Is it likely that a proposal will come before the House between now and Christmas?

Any proposal on the licensing regime would be brought by way of separate legislation and I understand heads of Bill must be brought to the Government in the first instance.

That concludes Priority Questions.