Priority Questions

Fiscal Policy

Michael McGrath

Question:

30 Deputy Michael McGrath asked the Minister for Finance in view of his previous comments that Ireland’s debt position could become unsustainable and in view of all the economic data currently available to him, if he believes Ireland’s debt position is sustainable going forward; the growth forecasts for the next number of years on which he is basing his view; and if the National Treasury Management Agency has advised him on the matter of Ireland’s debt sustainability. [9750/11]

The State's debt burden has increased substantially over the last number of years as a result of the significant deterioration in our public finances, owing to the economic downturn and the significant level of State support provided to the banking sector. A gross general Government debt level of €148 billion or 96% of GDP, as it is estimated to have been at the end of 2010, is very high and requires our ongoing, close attention.

Both the nominal level of the debt and the debt to GDP ratio are forecast to increase further in the coming years, albeit at reducing levels as we will have to continue to borrow to fill the gap between revenue and spending. In addition, economic growth remains relatively subdued. The stability programme update, laid before the House and submitted to the European Commission last Friday, forecasts that the debt to GDP ratio will peak at 118% in 2013 before declining in the following two years to 111% by 2015. These forecasts are based on my Department's macroeconomic and fiscal forecasts and the advice of the National Treasury Management Agency regarding the debt. The stability programme update also forecasts GDP growth of 0.75% in 2011, rising to 2.5% in 2012. For the period 2013 to 2015, GDP is expected to grow by 3% per annum on average.

The trajectory for the debt ratio depends on the relationship between economic growth, the interest rates applying to the Government debt and the level of budgetary adjustment implemented by Government. However, there is no one rule that says that if one's debt is above a particular level, it is unmanageable. A key determinant in the stabilisation of the debt ratio will be the narrowing of the gap that currently exists between revenues and expenditure through further fiscal consolidation. Coupled with the implementation of policy measures that will assist in boosting economic growth, a primary surplus is forecast to emerge, that is, an excess of revenues over expenditure excluding interest expenditure. This is scheduled to happen by 2014.

A further measure which may be referenced in forming a judgment on whether a particular level of debt is sustainable is the proportion of tax revenues that must go towards servicing the debt. Based on the stability programme update projections, it is estimated that around 15% of tax revenues will be required to service the interest on the State's national debt this year. By 2015 almost 21% of our total tax revenues will be required for that purpose. This is undoubtedly a very significant level, but it is worth bearing in mind that it is well below the ratios experienced in the mid-1980s when around one third of the tax revenues generated in the State went towards servicing the interest on the national debt.

As the NTMA is the agency tasked with the management of the State's borrowing needs, I and my officials have naturally been in close contact with them regarding our debt position. The NTMA is in constant contact with market participants and their view on the market perception regarding sovereign Irish debt is a crucial input into our deliberations as it is the markets' assessment of our position which will ultimately determine the rate at which we can borrow. The agency's view is the same as ours at present, namely, that Ireland's debt position is very large and has grown rapidly in recent years but if we continue to pursue the right policies, it is sustainable. However, debt sustainability is not a black and white issue and we must do everything in our power to ensure that as much as possible the balance of the arguments reinforces this assessment. This underlines the reason we must continue to deliver on our commitment to fiscal consolidation, pursue policies that underpin growth and seek to achieve measures that alleviate the cost of our debt burden.

The stability programme update published last Friday made for sobering reading, particularly with the reduction in the growth forecast for the current year down by a full per cent to 0.8%. We all accept that growth is the key issue regarding debt sustainability but my question is whether the Department of Finance is still being overly optimistic. While it has reduced significantly the forecast for 2011, it predicts GDP growth of 2.5% for 2012, which is higher than any of the other bodies, including the domestic bodies, the ESRI and the Central Bank. The IMF and the European Commission indicate it will be 1.9% next year; we are basing our figures on 2.5%. For the following three years, 2013, 2014 and 2015, we are factoring in growth of 3% which we all hope we achieve and even out-perform but even on the figures we have factored in, as the Minister has acknowledged, the debt to GDP ratio will be 118% in 2013.

I will ask the Minister to reply to that and we will come back to the Deputy.

In regard to the NTMA's advice that if there were to be any deterioration on the figures beyond what we currently anticipate, are we——

The Deputy is correct that the level of growth in the economy is a very important component of whether the debt continues to be manageable but equally important is the size of the debt and the interest rate charged on the debt. It is a combination of three inputs.

On the growth rates projected in the stability programme update put before the Houses of the Oireachtas last Friday, the Deputy will have to remember that it is on the estimate of his Government's budget that the adjustments have been made. The previous figures were those brought before the House by my predecessor in January when the budget was introduced. A number of things have happened since. First, at that stage only €10 billion was pencilled in arising from the stress tests and that has now gone up to €24 billion. As well as that, events in North Africa have pushed up the price of oil, and interest rates internationally are tending upwards. Various factors are now coming through, therefore.

It is true to say that the Department of Finance is slightly ahead of the projections of the European Commission and the IMF but the IMF took a €35 billion injection into recapitalisation of the banks and the EU Commission took a €25 billion investment into the recapitalisation of the banks when they were working out their figures. I said previously when launching the initiative on the banks, and much to the amusement of some of our learned people in the media, that growth is not a static figure. Sometimes people talk about growth as if it was fixed and that nothing could be done about it. Obviously, Government policies influence growth as well and I suggest to the Deputy that the policies we are pursuing now will have an influence on growth going forward.

As the Minister has indicated, the projection is that by 2015 the national debt interest repayments will account for 21% of tax revenue but that tax revenue figure is based on a figure which is 27% higher than the 2011 tax revenues. If that transpires to be more optimistic than the reality, the amount of the tax revenue going in interest repayments will far exceed 21%; it could be 25% or even more. While we have to plan on the basis of the figures the Department has produced, based on experience and track record we must also prepare for a less optimistic scenario. Has the NTMA advised on that?

The Deputy is correct. All these matters are estimates and projections, and they are the best possible estimate based on the facts, but things are changing rapidly. Things are changing rapidly internationally and therefore it is not possible to predict; but to get back to the Deputy's original question on sustainability, I believe our position is now sustainable. Some people make false comparisons with Greece. The figures the Deputy has quoted seeing the debt peaking out in 2013 at 118%. The equivalent figure for Greece is157%, and that is before its more recent crisis, and it is tending upwards all the time. We are not in the same category as Greece. We are not in the same category as Portugal, and people who talk about sustainability should remember that we are going into surplus on the balance of payments and any country that has a balance of payments surplus is not insolvent when the whole figure is taken together.

We are giving the Deputy the best figures available. We will continue to give him the fullest possible information but we will also point out to him the assumptions on which they are based and as the assumptions vary, things change. For example, the fiscal figures for April, which were published yesterday evening or today, would show that the tax profile is beyond the Deputy's budget estimate for December and expenditure is below the budget estimate for expenditure. Therefore, for the first four months of the year things are better than on track and we hope that continues for the rest of the year but it does vary and we will not have any degree of certainty until we get the June figures. It will be early July, therefore, before I would be firm on figures but so far so good.

Banking Sector

Pearse Doherty

Question:

31 Deputy Pearse Doherty asked the Minister for Finance the position regarding the review being taken by the Central Bank into the remuneration policies and practices of credit institutions; if this review will be retrospective and allow for the renegotiation of existing contracts; if he has sought information on the contracts of senior management in the banks which have received Government assistance; the liability to the Exchequer if these contracts were terminated prematurely; the liability to the Exchequer if these contracts ran their course; and if he will make a statement on the matter. [9753/11]

The Central Bank of Ireland published the findings of its review of remuneration policies and practices in a number of Irish retail banks on its website on 1 December 2010. The review assessed whether banks have changed how they remunerate employees, particularly those in senior executive positions, to reflect incoming regulatory standards and the lessons of the financial crisis. In particular, it examined if banks have ended remuneration practices which fostered inappropriate risk taking or inadequate risk management.

The review found that while the majority of banks have started to reform their remuneration policies and practices, the balance of the Central Bank's findings were discouraging. For example, there is little evidence that banks have self-consciously made a link between their risk appetite and their incentive structures exposing the banks and, by extension the State, to the consequences of inappropriate risk taking; the governance and oversight of remuneration practices is poor; and in the majority of banks, procedures to determine remuneration are not clear, well documented or internally transparent. There was little evidence of consideration of risk or collaboration with risk management functions to ensure remuneration policies are aligned with long-term strategic plans.

Issues identified in the review are being followed up individually with institutions by the Central Bank. Detailed EU requirements on remuneration policies in credit institutions have come into force in Irish law since 1 January 2011 through amendments made in the capital requirements directive. These obligations are supplemented by extensive guidelines issued by the Committee of European Banking Supervisors, which is now known as the European Banking Authority, compliance with which will be closely monitored by the Central Bank of Ireland in assessing adherence with each institution's legal responsibilities. Enforcement action can be taken by the Central Bank in the case of non-compliance. These measures will address the significant issues disclosed in the Central Bank's review of remuneration policies and practices which were also highlighted as significant contributors to Ireland's banking crisis in the recent Nyberg report.

Notwithstanding these developments, recent disclosures regarding payments made to the former managing director of AIB highlight the serious weaknesses that continue to exist in relation to remuneration policies in the covered institutions.

Following a request from my Department, the National Treasury Management Agency, which has legal responsibility for managing the State's shareholder relationship with the banks, has recently written to the covered institutions requesting that they undertake a review of remuneration practice, that they have further discussion with the Department of Finance ahead of any commitment to additional redundancy payments and that the bank does not commit to further termination payments until the review is completed. An analysis of severance entitlements has also being requested.

People across the country were livid when they read in the newspapers that Colm Doherty was to receive a €3 million golden handshake. The Minister himself stated that it is his intention to replace all board directors who were appointed prior to 2008. I put a question on this earlier but the Minister did not deal with it. Has the Minister got a grip on this issue? As regards those officials whose contracts he plans to terminate prematurely, has he examined the assessment of remuneration and golden handshakes to which they will be entitled? How much will the State have to pay off under those contracts? What is the position concerning public interest directors in those banks? One of the public interest directors who was there when the package for Colm Doherty was signed up to, is a prominent member of one of the Government parties. Does the Minister agree with his colleague, the Minister for Justice and Equality, Deputy Alan Shatter, who told the recent annual meeting of the Association of Garda Sergeants and Inspectors, that bankers who caused huge losses, brought banks to the point of collapse and almost bankrupted the State, should not be rewarded? He also said that there was such a fundamental breach of contract that they should not be entitled to the rewards they are seeking. Is that the Minister for Finance's position? Does he believe that there will be no more golden handshakes?

On bankers' remuneration, we know there is a cap of €500,000 for senior bank officials. How is it then that the CEO of Anglo Irish Bank, Mike Aynsley, received €474,000 in 2010 above that cap, bringing him total earnings of €974,000? What is the Minister prepared to do about that in future?

The Deputy has put many questions together, but they are all legitimate and fair. The former CEO of AIB had been discharged by the bank and received his severance package in November 2010 in the lifetime of the previous Government, so there was nothing this Government could do about it. We have done our best to find out the full facts of how the remuneration package was built up. While I have some of the facts, I cannot assure the House that I have the full facts at the moment. For example, even though my predecessor showed the House that the cap on Mr. Doherty's salary was €500,000 at the time, there was also a separate stream of income contributing to his annual income. That arose from the fact that in his previous position in the bank he had exceeded his pension pot. The agreement made with him was that, rather than a stream of money being put into a pension fund which was already at full benefit, the stream was given to him by way of secondary income. That continued even though my predecessor assured the House that his maximum salary was €500,000 — which, of course, it was — but he was silent on the other stream of income which in effect was treated by the Revenue Commissioners as a second salary. It was taxed and PRSI was paid on it in the normal way. When it came to computing his severance package, there were obvious difficulties. I am not convinced that I have the full picture.

Another issue which arose was that the gentleman had a long and satisfactory service in the bank. As the Deputy knows, the position historically with bank employees was that they would retire at 60 years of age. When he was made CEO of the bank his contract was not time limited, so when he ceased to be CEO his expectation as a long-time bank official was that he could continue to 60 years of age. As a consequence, he had certain rights in terms of remuneration up to 60 years of age, so the package became very large.

I have announced that I want a director and management renewal programme from each of the covered institutions. I also want information about salaries, remuneration, severance packages and everything else. To be quite frank, I cannot give the Deputy assurances that there are not legal problems in restricting severance packages. When I get the information I will decide what approach to take. My position in principle, however, is that the amount of money paid to the former CEO of AIB was an absolute disgrace. It undermines any concept of social solidarity that — when we are asking the poorest people to contribute and are telling them that everybody should contribute — somebody walks away with €3.5 million.

I note the Minister did not deal with the question on Mike Aynsley and the fact that he is receiving €974,000 above the cap.

Can we have a question?

I already put that question. Does the Minister agree with his ministerial colleague, Deputy Shatter, that these bankers are in such fundamental breach of contract as not to be entitled to the rewards they are seeking? Let us forget about the previous Minister for Finance, because the current Minister is now in charge. Will he ensure that they will not get those type of golden handshakes when he replaces them, as he has stated again on the floor of the House? He has said that he will replace all directors who were appointed prior to 2008.

In general terms I share the Deputy's sentiments but I will not make a commitment to the House unless I know that, as Minister, I can legally fulfil it. I am examining various approaches. If one follows the Deputy's initial remarks to their logical conclusion, concerning those who blatantly do not fulfil their contracts, then there is an argument to be made that they should be subject to dismissal rather than reasonable retirement. I intend to explore that area also.

Departmental Officials’ Remuneration

Shane Ross

Question:

32 Deputy Shane Ross asked the Minister for Finance if he will provide the names of the most highly paid officials in his Department over the past three years; the basic salaries paid to them; the bonuses paid to them; the expenses incurred by them; the details of any bonuses not paid to top officials for which they were eligible; if officials in his Department are better paid than equivalent grades in other Departments and the reason this is so and if he will continue this practice. [9894/11]

In my Department over the past three years, the following are the highest paid officials in the Department of Finance, in addition to officials in the newly established Department of public expenditure and reform.

Grade

Current Salary

Secretary General, Department of Finance (salary on retirement — January 2010)

228,466

Secretary General, Department of Finance

228,466

Secretary General, Public Service Management Division

215,590

Secretary General, Department of public expenditure and reform

200,000

In April of 2009, the then Minister for Finance asked the Review Body on Higher Remuneration in the Public Sector to undertake a fresh review of top level public service pay, to take account of the changed budgetary and economic circumstances, the changed private sector pay environment, and to compare pay against that of other countries of comparable scale, particularly in the eurozone. The report was published in December of 2009.

Previously, the review body completed its last general review of top public service pay in September of 2007, but relevant increases recommended by that review were never implemented.

As a result of its 2009 examination of top level public service pay, the review body report of 11 December 2009 recommended reductions in pay varying from 8% to 15% generally. It also recommended that there be no increases in the pay of the higher public service groups, including any adjustments that might otherwise arise under national agreements before the end of 2012. For Secretaries General, the review group recommended a reduction of 15% for level 1 Secretaries General, that is, Secretaries General of the Departments of the Taoiseach and Finance. The Secretaries General concerned volunteered to accept a reduction of 20%. This resulted in a reduction in the salary of the Secretary General in the Department of Finance from €285,341 to €228,466 — a decrease of €56,875. This salary of €228,466 was the same as the salary for the Taoiseach.

Upon receipt of the December 2009 review body report, the Government decided to introduce a new reduced pay rate for Secretaries General, level 2, appointed after 1 July 2010 to align with the then salary of a Minister. This level applies to the Secretary General, public service management division in the Department of the Finance. This resulted in a 15% reduction in salary from €253,635 to €215,590 — a decrease of €38,045.

Additional information not given on the floor of the House

It should be noted that the Secretary General in the Department of Finance and the Secretary General, Public Service Management Division in the Department of the Finance both accepted a further voluntary reduction in their salaries, by way of a gift back to the Minister for Finance. This voluntary reduction reduces these salaries to €214,187 which is in line with other existing staff at the Secretary General, level 2, in other Departments. In order to provide an appropriate differential between levels, the Secretary General level 3 rate was also adjusted downwards for new appointees from the same date. This salary level, which applies to the grades of second secretary in the Department of Finance, was also reduced by 15% from €221,929 to €188,640 — a decrease of €33,289. The Department of public expenditure and reform is currently examining the salary levels of certain Civil Service grades.

Expenses and bonuses

In terms of expenses, it should be noted that the only expenses payable to the officials covered by the Deputy's question cover work-related travel and subsistence, or recoupment of certain other expenses on a vouched basis. The information in this regard for travel and subsistence of relevant officials in the Department of Finance and the newly established Department of public expenditure and reform, over a three year period, are as follows:

Grade

Expenses

Secretary General, Department of Finance (until retirement in January of 2010)

0

Secretary General, Department of Finance

3,056

Secretary General, Public Service Management Division

2,376

Second Secretary

1,546

Second Secretary

32,489

Second Secretary

1,422

Secretary General, Department of public expenditure and reform

N/A*Department of public expenditure and reform

Bonus payments are not applicable to these grades. (Schemes of performance-related awards applicable to the grades of Deputy Secretary and Assistant Secretary were terminated in 2009).

I am happy if the Minister does not want to read out the figures and just replies to the substantive issues I raised.

The Deputy should ask a supplementary question.

Will the Minister outline details of bonuses paid to top officials and say, in particular, if they have been paid recently? Are officials in his Department paid more than those in equivalent grades in other Departments? If so, why? Will this practice continue?

I understand that there have been Secretaries General on a finance scale, which also applied to Secretaries General of the Department of Taoiseach, and that was higher than the rate paid to other Secretaries General. However, bonuses have not been paid to these civil servants for several years. I am trying to find the reference but no bonuses have been paid.

I do not understand why officials in the Department of Finance should be paid more than anybody else in the public service. The figures the Minister read out are pretty staggering even in their reduced form. Will he comment on the fact that officials in the Department, long regarded as thecrème de la crème of the public service, are for some extraordinary reason paid more than other officials at the top level elsewhere in the public service? We need a response to that, particularly given media reports over the weekend suggesting that those who had a contrarian view to the predominant view in the Department during the property boom were silenced, their concerns were kept quiet and they were told not to raise them. Those who wished to raise them at a higher level were made to bury them and those who wanted to write articles for the newspapers had to withdraw them. We were paying these people more for results than anybody else in the public service.

A question, please.

Deputy Doherty raised the issue of Colm Doherty, the chief executive office of AIB, being paid outrageous amounts, which were obviously signed off by individuals at the highest level in the Department of Finance, who themselves are on this gravy train. Is the Minister satisfied with the continuing process whereby these people are paid more and, in turn, award more in redundancy payments to bankers? This circle has to be broken and a start must be made in the Department of Finance. What does the Minster intend to do about that at the top of the Department of which he is in charge?

The salary levels in the Department, according to the Department, reflect the grading structure of the Department, which, in turn, reflects the evolution of the Department over time. The structure of the Department represents the amalgamation of three separate Departments at various stages — finance, public service and economic planning and development. The structure also reflects the nature of the work undertaken by the Department, which is different. The system grew up over time. That is the position and it will change again as soon as the legislation comes in to put in place the Department of public expenditure and reform because we are dividing the Department. However, we are dealing with many historic issues and I am sure the Deputy will appreciate that. As long as I have been in politics, the Secretaries Generals and senior staff in the Departments of Finance and the Taoiseach have been on a higher rate of remuneration than their equivalents in other Departments.

I have one quick supplementary question.

No, I have been generous to the Deputy.

It is just one sentence. These are the people who have prime responsibility for the economic collapse and these are the people who are paid most for their actual performance. Is the Minister satisfied with that?

I do not agree that they have prime responsibility for the economic collapse. All the reports into the economic collapse apportion blame across sectors from the leading politicians to the leading bankers, developers, media commentators and civil servants. There is a fair burden of blame. I do not want to remind the Deputy of what he wrote in 2004 and 2005.

Only the socialists called it right.

Was Deputy Ross not the man who was promoting the candidacy of Sean FitzPatrick for the board of the Central Bank?

Fiscal Policy

Michael McGrath

Question:

33 Deputy Michael McGrath asked the Minister for Finance the expected cost for the remainder of 2011 and for each of 2012 and 2013 of the planned jobs initiative; and if this cost will be met by spending cuts, tax increases or a combination of both. [9751/11]

The Government is strongly committed to implementing a jobs and growth strategy. We intend announcing a jobs initiative as committed to in the programme for Government on 10 May. I anticipate that necessary legislation to give effect to the measures outlined in the jobs initiative will be published shortly thereafter.

The programme for Government sets out in broad terms the measures that will be implemented as part of this initiative. The measures are designed to lift public morale and confidence in the economy, to provide jobs, to provide suitable job placement for unemployed persons and to encourage spending by consumers.

In terms of the specific detail, officials from my own and Deputy Howlin's Department are working closely with other Departments in preparing the proposals and assessing the quantitative and qualitative impacts. As has been previously signalled, any costs arising in connection with the jobs initiative will have to be counterbalanced by the implementation of offsetting measures. This will ensure that we will continue to underpin our fiscal sustainability while also bringing forward policies to assist economic growth.

I thank the Minister for his response. As was mentioned recently, when EU and IMF officials reviewed the bailout agreement, they made it clear that any initiative would have to be revenue neutral and the Minister has referred to that. The gross costs of what is proposed are significant and I emphasise the word "gross" because we all hope the measures will be successful and that some of the gross costs will be offset by additional economic buoyancy through employment creation, which will reduce the welfare bill and increase the tax take for the State. However, the gross costs for two of the measures that have been signalled for inclusion in the jobs initiative are significant.

The Deputy should ask a question.

The reduction in the lower rate of VAT between the middle of this year and the end of the 2013 will cost approximately €850 million gross and the reduction in the lower rate of PRSI will cost more than €400 million between now and the conclusion of the EU-IMF programme in 2013. Those two measures alone, therefore, have a gross cost of €1.3 billion. Hopefully the net cost will be much less but, clearly, that has to be made up. The Taoiseach recently indicated in the House that it would be by way of adjustment to internal departmental votes, which indicates that it is all spending cuts rather than any other measures. Perhaps the Minister would comment on that.

We will outline the full programme on Tuesday next. When we criticised the budget introduced by the Government, which Deputy McGrath supported, in December, we selected two areas for severe criticism. First, we indicated that the budget did very little to promote job creation. Second, we outlined that the Government was receiving the growth figure without trying to influence it. To return to our previous discussion, it is possible through policy to change patterns of growth in an economy. Our approach will be to create jobs to build up confidence and give growth. I wish the Deputy's figures were correct but we do not have the resources to spend the kind of money to which he refers even over time.

The parliamentary question reply is from the Minister, Deputy Noonan.

We will approach it in a fiscally neutral way. Based on our more recent conversations, the agreement we have with the troika is that the span of the initiative is to become fiscally neutral by 2014. That satisfies it. We are largely talking about what was in the programme for Government. It is a readjustment of the budgetary position to focus on job creation and to try to get more growth in the economy. It is not a big Keynesian initiative. The resources are not available to drive demand in the economy by huge investment. It is just not there, so what we are trying to do is to take a situation, especially in certain sectors to see whether we can get more out of it, in terms of growth and jobs. That is the approach. It is morale boosting and confidence building rather than a huge spend for demand purposes.

Commissions of Investigation

Shane Ross

Question:

34 Deputy Shane Ross asked the Minister for Finance the process whereby the nominees as members of the expert investigation team to assist the Nyberg commission were made; the person who made the appointments; with whom did Mr. Nyberg consult on the appointments; on whose recommendation they were made; and the amount the team was paid collectively and individually. [9899/11]

On 7 July 2010, the previous Government announced its decision to establish a commission of investigation into the banking sector in Ireland, pursuant to the Commissions of Investigation Act 2004. The commission was formally established on 21 September 2010 by Government Order, and Mr. Peter Nyberg was appointed as the sole member of the commission. The commission reported on 22 March 2011 and its report was published on 19 April 2011. Under section 9 of the Commissions of Investigation Act 2004, the commission is independent in the performance of its functions. Part of this includes the methodologies of selection of the expert investigative team who assisted the commission.

Nominations for appointment and the actual appointments to the commission were a matter for the commission of investigation itself. Section 8 of the 2004 Act requires the Minister to approve the proposed appointment by a commission of investigation of persons to advise or assist it in relation to any matter within its terms of reference. In that regard, the commission wrote to the Department proposing the appointment of individuals under section 8 of the Act. These submissions noted that sanction for the appointment of senior level investigative experts and junior level investigative experts were based on proposed maximumper diem rates, having regard to a number of factors, including the nature and complexity of the work to be undertaken and the short-term nature of the work.

The amount paid to each individual varied in each case and depended on the number of days that the individual worked for the commission. It is expected, once all accounts are closed, that the aggregate figure to be paid to the sole member of the commission and those individuals engaged under section 8 of the Act will be in the region of €889,000.

Overall, there were 21 staff members working on the commission, including Mr. Peter Nyberg. Five administrative staff, seconded from my Department, assisted the commission and performed back-office support for it. The cost of these staff was borne by my Department.

I am satisfied that the commission acted in good faith at all times in its selection of staff and that the staff selected were appropriate for the performance of its function, especially in light of the time period the commission had to complete its report.

I thank the Minister but I am afraid he has not satisfactorily answered the question. If I could specifically readdress the question to him, it was how the appointments were made and how the individuals were selected. It is reasonable to ask the question about the arrival from Finland of a man to set up a 13-person commission and how he came to assemble it, particularly when one considers the composition of the commission. What worries me is that at least eight if not ten members of the commission were current or former bankers. When one is investigating the behaviour of bankers it seems entirely inappropriate that so many of those people assisting the investigator should also be ex-bankers themselves, whatever their pedigree. At least two members had a history with AIB while other members came from other banks in the Irish system. Other members of the commission were employees of the Department of Finance.

Could the Deputy ask a question please?

Is it satisfactory to the Minister that a majority of those people who were advising the commission, chosen, apparently, by Mr. Peter Nyberg, should be either bankers or former officials of the Department of Finance? Is it not correct as a result that at the very least we should know how those people were chosen? What is so unsatisfactory in the response which the Minister has given — he has been fine on the detail of the sum of €889,000 and I do not have any quarrel with that — is that we are not being told who Mr. Nyberg consulted when he decided to put so many bankers on a commission to investigate the banks.

A total of 21 staff were working on the commission, including Mr. Nyberg himself, and there were five administrative staff from the Department. When Mr. Nyberg first took up his position the Department of Finance assisted him in the initial preparatory work upon his arrival in this country. Once formally established the commission recruited staff independently in accordance with the provision of section 8 of the Commissions of Investigation Act 2004. He wished to ensure that the people who assisted him had appropriate experience to address the issues in the terms of the reference which required people with expertise in banking, finance and accounting rather than lay practitioners of goodwill. The selection criteria included solid, practical, professional experience in banking, lending and credit, credit and risk management, asset liability management, general governance supervision, property market issues and accounting expertise. That kind of expertise arose from the terms of reference of the commission, which was voted through in the House.

One might ask why the commission did not use a competitive tendering process. Mr. Nyberg himself decided not to pursue that route. The reasons given were the specialist subject matter of the investigation and the functions to be performed by the individuals retained, the qualification and expertise required and the short timeframe. Given that he was obliged to report within six months Mr. Nyberg did not wish to spend time in a competitive tender when he could decide himself whom he wanted to assist him in his investigation.

I do not know about Mr. Nyberg's familiarity with the country. I do not know whether he had business and banking contacts prior to his arrival. I met him on the day he presented his draft report to me. He seemed to me to be a very stable kind of man who would be a person of good judgment. That is my only experience of him. He was very interesting in his analysis of what happened. A lot of people said he should have named names but if he did so the work being carried out by the Director of Public Prosecutions, the Garda Commissioner and Mr. Paul Appleby might not have been able to proceed. He stayed away completely from names lest he prejudice any parallel investigation that was being conducted.

I seek a "Yes" or "No" response from the Minister. His reply confirms my worst suspicions that it was the Department of Finance, again, which gave Mr. Nyberg the initial advice, which brings me back to my initial question, on the appointment of people from the Department of Finance, again, to sit with him on the commission and bankers. The Minister was not in office at the time. Does he not find that somewhat alarming, that it is the same insiders once again sitting in judgment on other insiders?

I do not know whether there is any basis to the Deputy's allegation and have seen absolutely nothing to suggest what he says is correct. It is reasonable when a detailed investigation of banking files is being conducted that one should send in people who understand lending, risk and banking files. If I was sent in, I would not find my way around the files and would have no idea of what was going on and if gardaí were sent in, they would take a different line of investigation. It takes a thief to catch a thief. Therefore, we should send in a banker if we want to investigate bankers.