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Dáil Éireann debate -
Wednesday, 1 Jun 2011

Vol. 734 No. 1

Leaders’ Questions

The Taoiseach is aware that the programme for Government contains clear promises on budget matters. It declares, "We will open up the budget process to the full glare of public scrutiny in a way that restores confidence and stability". It promises to publish all of the assumptions upon which budget proposals are based.

The first test of this commitment is the handling of the jobs initiative and for the last three weeks the Opposition, the media, the pensions industry and pensioners have been seeking basic information from the Government concerning the decision to impose a €1.8 billion levy. What we have been looking for is not exceptional. We are simply looking for the analysis carried out for the Government on the impact which the levy is likely to have. Before the House implements the levy, we are entitled to know what the Government believes the impact will be on personal pensions, on the incomes of older people and on the pensions industry itself.

In a written reply last night to a question from Deputy Michael McGrath, the Minister for Finance made the remarkable admission that he had no communication whatsoever with the Pensions Board before making this decision. The Pensions Act states, as the first function of the board, that it will both monitor and supervise pensions developments, and it explicitly envisages that the Minister for Finance should seek advice from the board. The Taoiseach has repeatedly stated——

Can we have a question please?

——that this was a political decision. That is obvious but the Taoiseach has given a personal commitment to opening up the process to the full glare of public scrutiny. Is the Taoiseach happy that the legal role of the Pensions Board has been ignored in this case? Can he tell us whether an analysis was carried out on the impact of taking €1.8 billion from personal pensions?

I am not sure what Deputy Martin is looking for. He is persisting as if there is some sort of hidden volume of detailed analysis and information about the jobs initiative and its funding, which is coming through a levy on the pensions industry. We made it clear long before the election that in discussions with the pensions industry, the case was made that instead of reducing tax relief, a levy on the fund to be collected by the industry was the way to go. This levy is 0.6%, which is 60 cent in €100. It is a solidarity contribution which was based on 100% relief for building up very sizeable pension pots in the first place. It is limited in nature and time and it is designed to create an initiative to provide employment around the country. I am sure the Deputy supports that.

Committee Stage of the Finance (No. 2) Bill 2011 is taking place next week and the Deputy can ask the Minister for Finance all the questions he likes. However, he should not run away with the idea that there are volumes of secret material on this levy in the Department of Finance.

The Taoiseach could have made a telephone call to the Pensions Board.

(Interruptions).

In answer to the Deputy's first charge about basic information, that is the basic information. There will be openness, transparency and a discourse about the next budget to an extent that has never existed in any other budget in the history of the State.

That is rhetoric and is not reality. I asked a simple question. Was an analysis carried out on this measure? The Taoiseach refused to answer that question. He has consistently refused to answer the questions I have asked him on this issue.

We should ask Leo.

The Taoiseach originally promised to supply information we wanted. He then failed to reply——

I remind the Deputy that this is Leaders' Questions. You are making statements. Can we have a question?

Let the Taoiseach answer.

(Interruptions).

I cannot hear what you are saying.

You heard me all right.

I did not but I am fully in conformity with Standing Orders on Leaders' Questions.

Is this the Punch and Judy show?

I am simply saying that the Taoiseach failed to reply to a written request from me for material. Now he tells us that we can ask questions on Committee Stage but that we will receive nothing else. He informed the House yesterday, during Question Time, that he was personally involved in discussion and co-ordination of all economic matters at Cabinet. If he will not supply us with even basic information about his first major budget decision, then why should we believe him when he states that he will analyse everything and open it up to public scrutiny?

Is this a supplementary question?

It has gone on for over a minute.

How can the Taoiseach be happy with the failure to consult with the statutory body which has the duty to supervise and advise on this matter and to protect the confidence of the pensioners of this country? It only takes one telephone call. What analysis has been undertaken and will the Taoiseach please supply it to Members of the House? It is the least people are entitled to.

I know that the Deputy is not interested in the Punch and Judy stuff that he has been at for the last few weeks. I do not know whether he is opposed or in favour of a solidarity contribution, in the form of a pension levy, to create jobs. Our duty and our responsibility is to grow this economy, to create jobs and to bring about a situation where people are going to have the opportunity to go to work. That duty comes before any sectoral interest and I am sure the Deputy supports the opportunity for job creation arising from the solidarity contribution.

I do not support the Government's raid on pensions.

He prefers socialising bank debt.

So the Deputy has no regard for the people in Cork South-Central who will gain employment from the jobs initiative. I remind the Deputy that people earning as little as €80 per week pay the universal social charge that the Deputy's Government introduced as a result of the mess it made in the first place. If the Deputy thinks it is unfair that an industry pays 60 cent out of every €100 towards job creation for a four year period, then I must point out that every single sector of this society has a contribution to make and will make that contribution.

Can we get a comprehensive analysis?

If the Deputy wants telephone records about who called who, then fair enough.

I just want a regulatory impact assessment, which is obligatory in every legislative provision. Can we have the Government's assessment of the impact?

The Government of which the Deputy was a part refused to give any information about the greatest bank raid ever on the Irish people, which was the bank guarantee.

Did it do an assessment or not?

Deputies can ask the Minister for Finance all the questions they want about the details.

We cannot ask the Taoiseach.

It is simple. The Government realises that 440,000 people on the live register is far too many.

Deputies

Hear, hear.

We have decided to do something about it. We decided that the sectoral interest of the pensions industry——

A Deputy

Fianna Fáil is responsible for that.

——should make a contribution to deal with one element of the plan.

We have now exceeded the time.

That is why the levy is at 0.6%, or 60 cent out of every €100.

A 10% reduction in pension over the next four years.

That is the answer to the Deputy's question. The Government is actually doing something about it. Sectors within the pensions industry came to the party and said that this was the way to proceed, rather than reducing tax relief.

Pensioners will bear the cost of this.

I remind Deputies that during Leaders' Questions, the leader of each party asks a question for two minutes, the reply lasts for three minutes, a supplementary question lasts for one minute, and there is another one-minute reply from the Taoiseach. That is a Standing Order. I do not know about the rest of you, but with all the shouting, I cannot hear a word of what anyone is saying, although I am sitting up here.

You are better off.

I ask people to respect the Chair.

Read it out of Wikileaks.

Go raibh maith agat. Tosóidh mé i gceann nóiméid.

This morning, hundreds of thousands of people are coming to terms with the prospect of two new stealth taxes announced by the Minister for the Environment, Community and Local Government, Deputy Hogan, yesterday. Tuigeann muid go bhfuil Fine Gael agus Páirtí an Lucht Oibre ag gearradh cánacha dúbailte ar an lucht oibre. Is mór an náire dóibh é sin. Despite all the pre-election promises from its Labour Party colleagues, we now know that new water charges will be introduced, along with a new household charge. Can the Taoiseach tell the hundreds of thousands of hard-pressed families listening to him today exactly how much these two new taxes will cost them? The Minister said the purpose of the water tax was to reduce water usage, yet 40% of our water is lost because of the bad mains system. I understand the cost of the new meters will be €500 million. Would the Taoiseach agree that the best way to conserve water would be to use that €500 million to improve our water system, creating jobs in the process, and reduce the massive waste of water, without imposing two additional taxes on hard-pressed working families?

No, I cannot give the Deputy the answer to his question of how much the tax will cost families. The Minister for the Environment, Community and Local Government has signalled clearly the Government's intention to implement its programme for Government and also to comply with the conditions of the EU-IMF bailout deal, which, in its revised wording, states that the Government will prepare proposals for implementation of the recommendations of the independent assessment of the transfer of responsibility for water service provision from local authorities to a water utility, in consultation with the European Commission services, with a view to starting charges during the EU-IMF programme period. It is also stated in the programme for Government that there should be a charge for water after a generous free allowance. The Minister signalled the Government's intention for this to be implemented. The Government has not made a decision about the nature or the scale of the system. It is clearly a signal by the Minister of the Government's intention to implement the provisions of the programme for Government and comply with the conditions of the EU-IMF bailout deal, which states that such a system should be implemented during the course of the bailout programme, which operates up to 2013.

There is a pattern to the Taoiseach's replies to questions that I put. He is always clear about what measures will cost the big people in our society, but totally unclear about what they will cost ordinary people. There are people watching this who want to know, as they wake up this morning, how much the charges will cost them. I will give some figures in this regard. The Central Bank said in February that €6 billion of senior bond debt was held by Anglo Irish Bank and Irish Nationwide. A modest 50% reduction would save the State €3 billion. Would it not be better for the Government to face up to these bad banking debts than to follow the diktat of the EU and IMF and Fine Gael's own instinct on matters to do with privatisation? Would it not be better to hold senior bondholders to account? Even some of the banks have held certain junior bondholders to account. Is that not a more decent, fairer and proper way to proceed? Will the Taoiseach not consider doing that?

No decision has yet been made by the Government in this regard. It is a signal that we intend to implement the programme for Government and comply with the conditions of the EU-IMF bailout deal. There will be no charge this year. I have already signalled as a general principle that water charges would apply only after a generous free allowance had been used. Of course the Government, in making its decision, will take into account those who are in distressed economic circumstances, whether because they are on social welfare or low incomes, or because of their mortgages.

Deputies will be well warned in advance of the charge and will have an opportunity to give their views.

With regard to subordinated bondholders, this was part of the deal announced by the Government when the major decision was made about restructuring the banks. We have made that perfectly clear. The figure mentioned is of the order of €5 billion.

We took €10 billion off them.

There is nothing free in this world. As I said already, the Deputy seems to have a perception that the Government is focusing only on the lower-income sectors of society. He is aware that the Government has made a decision to reverse the cut in the minimum wage——

Tackling the JLCs.

——and he is also aware that serious changes will be implemented in respect of the medical and legal profession. Everybody in this society, from the top to the bottom, is able to make a contribution.

What about German bondholders?

Civil servants and judges.

Our job is to see that those contributions are fair and equitable and that those who are asked to contribute can meet that demand.

There is a total contradiction here.

Only one supplementary question is allowed.

The Taoiseach said no decision was made——

Sorry, Deputy.

——but the decision was announced yesterday.

And coming in as of January.

The pattern of behaviour is called decision-making by the Government.

A Deputy

It is a solo run.

Ministers say one thing——

I called on Deputy Ross, in case he did not hear me.

Thank you, a Cheann Comhairle.

Go back to Wikileaks and read some more.

It does not really matter what a Minister says any more.

Last night, the Government supported moves by Bank of Ireland, EBS and Irish Life & Permanent to burn the junior bondholders in those three financial institutions. Everybody in this House will welcome that decision. It was a fine decision and it seems to be a break with previous decisions by all Governments that in order to sort out the banking crisis, the small people, pensioners, shareholders and taxpayers should pay. I wonder if the Government would consider applying part of the solution to this problem, that is, a debt-equity swap, which incidentally was first suggested from these benches, also to senior bondholders. What should be realised by the Government, if it has courage, is that there are untouchable elements in the banks and financial institutions which have not yet been affected. There is a mass of fat still sitting in the financial institutions which can be tackled. I am thinking particularly of the senior bondholders, who, incidentally, were expecting to be burnt and are standing in wonder at the generosity of the Government.

I am thinking also of the pensions industry, about which I asked a question the other day. The pensions industry is loaded with fat. About two weeks ago the Taoiseach, very helpfully, said he would refer that matter to the Minister for Finance. It is the industry that should pay, not the pensioners putting money into pension funds. Will the Taoiseach tell me what the result has been of his referring the matter to the Minister for Finance? The Finance (No. 2) Bill still contains measures to raise money from the pensioners through the 0.6% levy. Is there now hope that we will get the money from the fat of the industry rather than those paying in who can ill afford it?

I thanked Deputy Ross for his contribution a number of weeks ago when he made this suggestion. I can tell him the Minister for Finance is in direct discussions with the pensions industry about the proposition he made. Whatever comes of those discussions will be reported to the House and to him. The suggestion was helpful.

In respect of the matter of a debt for equity swap, we need to be careful about the responses we give on something like this. A more appropriate forum might be to have a detailed discussion at the finance committee on the background, the current situation and what the consequences of a number of propositions such as this might be.

In light of the fact that pensioners are paying a huge amount to subsidise job creation and that their money has been confiscated for this reason, when these discussions conclude will the Taoiseach consider making a direct transfer, if the findings are consistent with this, from the industry to the 0.6% fund rather than from the pensioners and their contributions?

It is not a case of pensioners having money confiscated. This is a tax. It is a levy for a temporary period at a set amount in order to provide an impetus to create employment and job opportunities. I cannot give the Deputy a commitment that he asked for in his last question.

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