Leaders’ Questions

Based on the figures in the four year plan produced last year, the Taoiseach made a number of very clear and specific promises to the people. Before, during and after the general election, he stated there would be no further cuts to welfare rates and pensions and no increases in income tax. The programme for Government states: "The new Government will...maintain the current rates of income tax together with bands and credits." However, the Minister for Finance, Deputy Michael Noonan, stated in early June: "I am not going to rule out any tax initiative or any tax increase or any tax reduction". Seven days later, marking the Government's 100th day in office, the Taoiseach categorically ruled this out by stating there would not be any income tax increase in the budget. The Tánaiste, Deputy Eamon Gilmore, went further and stated the Government would maintain social welfare rates. The Minister for Finance now says the public finances are "better than on track". No more money is available than there was when the Taoiseach specifically promised there would be no more cuts in welfare rates or increases in income tax. When the Taoiseach launched his programme for Government he made a commitment to be open and truthful with the people as we tackle these challenges in the coming years. Is the Taoiseach in a position today to give a clear commitment that there will be no cuts in the rates of social welfare or pensions, and no increases in income tax next year?

Deputy Martin was not very full in his contribution. In his remarks about what the Minister for Finance said, the Deputy conveniently forgot to say that in the same sentence the Minister also referred to what is stated very clearly in the programme for Government, namely, that it is the intention of the Government to implement the programme.

The Deputy's Government committed via the memorandum of understanding, MOU, to an extra €215 million in income tax for each of the coming three years. This must be renegotiated with the troika by the Ministers for Finance and Public Expenditure and Reform in the same way as a number of other matters have already been renegotiated to the advantage of taxpayers and the people in general.

This is the programme for Government. The Minister for Finance referred Deputy Martin to the programme for Government in the contribution to which the latter alluded. It is our intention to implement the programme in full. From that point of view and in the context of income tax, this matter must be renegotiated with the troika as a result of the commitment to come up with €250 million for each of the next three years. The Minister for Social Protection has, on a number of occasions, referred to the Government's interest in keeping headline rates for social welfare intact. She has also made it perfectly clear that in cases where recipients of social welfare payments who refuse adequate and appropriate offers of retraining, upskilling or employment, their rates of payment can be reduced. The latter has already occurred and everyone who is unfortunate enough to be unemployed is aware of the position in this regard.

The Taoiseach was well aware of the four year plan relating to the EU-IMF agreement when he made his specific commitment. That has nothing to do with it. The EU and the IMF are fundamentally concerned about the global or bottom-line figures. Since he entered office, the Taoiseach has been trumpeting his capacity to make choices and change certain aspects of the agreement. His response is noteworthy by the lack of clarity and by the absence of a commitment in respect of the specific points I raised.

That is like Fianna Fáil's strategy for the presidential election.

What we are doing is as plain as a pikestaff.

Is the Taoiseach going to maintain the commitment to the effect that the Government will not cut social welfare rates? Is the Taoiseach holding to the very specific commitment he made that the Government will not increase income tax? These are commitments the Taoiseach made.

A Deputy

Where has Deputy Ó Cuív gone?

It was he and no one else who gave those solemn commitments in full knowledge of all the facts. He also gave commitments in respect of third level fees, special needs education, child benefit, pensions and a range of other issues in full knowledge of what was expected under the four year plan and the agreement with the EU and the IMF. The Minister for Social Protection, Deputy Burton, did not give the commitments the Taoiseach outlined in any of the statements she has made.

Obviously, Deputy Martin was not too clued in when he and his colleagues signed on for a number of things while in power. I refer to the guarantee relating to the banks and the previous Government signing on to commit the Irish taxpayer to a further €250 million in income tax payments every year for the next three years.

The previous Government also signed on with regard to a matter in respect of which the Ministers for Finance and Public Expenditure and Reform and I, as Head of Government, have been involved in trying to renegotiate. As a result of what we have done, it is clear that there will be a saving of significant proportion to the Irish people of the order of €900 million per year.

That has nothing to do with this matter. What is the Government going to do——

That for which the previous Government, in its panic and desperation, signed on——

The Taoiseach should answer the question I asked.

We are cleaning up the mess the Deputy and his party left behind.

——now forms part of our work in the context of the matters in respect of which we must renegotiate. One aspect of what we are doing is renegotiating the element relating to income tax to which the Deputy's party signed up when in government.

The Taoiseach knew about that before he entered office. He should answer the question I asked.

Deputy Martin should answer the question. How did the commitment in question come into existence?

The Fine Gael and Labour parties have a programme for Government and it is our intention to implement it in full.

A further lack of clarity from the Taoiseach. Another broken promise.

There is no clarity from those on the Fianna Fáil benches, that is for sure. It was they who got us into this position.

(Interruptions).

Deputy Buttimer should continue to canvass on behalf of Mr. Pat Cox.

Una duce, una voce. Bring back Charlie.

I thank Deputy Buttimer. The usual suspects are making noise again.

If we could haveuna voce that would be helpful.

Where is the Government, Deputy Buttimer?

Where is Deputy Finian McGrath's part of the Opposition?

I wish to ask the Taoiseach about reports which emerged this morning regarding the entitlement of county managers of local authorities to payments of €74,000 on retirement. I understand these payments come from the same severance under which the Government gifted €713,000 to Mr. Dermot McCarthy. I do not need to inform the Taoiseach that the people are suffering real hardship, not just in respect of the outworking of the policies of the previous Administration but also at the hands of his Government. I want him to give a guarantee to the people and this House that he will end the practice of making these outrageous payments. I also want him to explain to the House how it is that an outgoing Secretary General has walked away with such a bonanza and how it might be that, on his watch, managers in local authorities are set to do likewise.

The Taoiseach is aware of the position with regard to the unemployment figures. He is also aware that certain children have returned to school without being able to secure the services of special needs assistants and that there are people on hospital trolleys. However, his Administration, which was supposed to be about change and a new beginning, is standing over the outrage to which I refer. Will the Taoiseach explain how it is that Mr. McCarthy walked away with that cash and how it is that he proposes to reward the managers of local authorities in a similar fashion under the same scheme?

The terms of reference for the appointment of and the severance package relating to the person to whom the Deputy refers, namely, the former Secretary General at the Department of the Taoiseach who was also Secretary General to the Government, were set by the previous Administration. My term of office began this year. We have made a number of very significant changes already. The Minister for Public Expenditure and Reform is committed to reviewing the terms of appointments for persons appointed to senior positions within the public service. I give the Deputy a commitment in that regard. As already stated, the Government has honoured the package put in place for the former Secretary General at my Department which was put in place by the previous Administration. As the Deputy is aware, the Government is also committed to the introduction of a single pension facility. Information relating to that matter will be published shortly and that information will contain further details of very significant reforms in this area.

There the Taoiseach goes again. It happens on his watch but he is not accountable for it. He knows as well as I that under the pensions legislation it is at the discretion of Government to sign off on added years of service. He knows full well that had he wished to stop that payment to the outgoing Secretary General, he could have done so. The position is the same with regard to the outrageous payments to county and city managers to which I refer. The only conclusion at which we can arrive is that despite the rhetoric from him and his colleagues in Fine Gael and the Labour Party with regard to reform and change, they are, in fact, not serious about these matters. They will hammer clerical officers and ordinary working people. However, like their predecessors, they are unable and unwilling to go after those in the upper echelons of the public and civil service. They have made that abundantly clear. Shame on the Taoiseach and the Government — particularly as they are cooking up massive cutbacks that will hurt ordinary people — for being so coy and duplicitous in respect of the those in the upper echelons of the public and civil service. The Taoiseach should make a commitment to the House that no county or city manager will walk away with a payment of €74,000. He should not sell us that it is Fianna Fáil's fault. The Taoiseach is in charge now.

The Deputy still does not recognise the court.

It appears the Deputy is still being affected by the comfort she enjoyed during her party's recent meetings in the Shelbourne Hotel. She conveniently forgot to state that the Government changed the terms of reference in respect of the minimum wage and that, even with the constraints of the financial conditions imposed upon it——

The Taoiseach should answer the question I asked in respect of pensions.

——it reduced the level of PRSI relating to employers in order that they might retain their employees. She seems to forget that the Government reduced the level of VAT which applies to the hospitality sector and thereby provided a direct stimulus which had a positive effect for so many people on the lower end of the salary scale.

The Government paid Mr. Dermot McCarthy over €700,000.

The Deputy and her party colleges conveniently forgot all of those matters when, during their recent meetings, they looked out upon the sublimity of St. Stephen's Green.

What about private pensions?

The Taoiseach conveniently forgot about the working class when he was signing cheques for €700,000.

(Interruptions).

I can confirm that the Minister for Public Expenditure and Reform will review the structures and conditions——

——that apply to the types of appointments that have been mentioned.

I repeat that the conditions that apply to the person who has been mentioned were put in place by the previous Government. Commitments were given to that person upon his appointment for that purpose.

Commitments were given to lots of people, not least by the Taoiseach and his party. He can renege on them.

I reject completely the assertion that members of the Government suddenly no longer have the interests of the lower paid, the unemployed or those who are struggling at heart. We very much have those interests at heart. We will prove that as we continue to make changes to the disastrous situation into which this country was led by previous Governments.

The Government will not do that until it has looked after the rich.

That fact will not go away, no more than the facts relating to Deputy Ó Snodaigh's party in many other areas will go away.

That is all the Taoiseach has got.

Mr. Squeaky Clean.

It is not much. What about the Taoiseach's partners in government?

Take it easy now, lads.

God help the people in the North if they were counting on you guys.

I call Deputy Higgins.

The united Ireland party abandoned them.

Joe has to make an announcement.

Tell us what happened on your watch.

What happened on your own watch?

How many banks were robbed on your watch?

The Minister should have a look at the people sitting next to him and their records.

What about Michael Collins's record?

I ask the Deputies to allow Deputy Higgins to speak.

We are being encouraged by the Minister.

You do not need any encouragement.

They are getting used to being parliamentarians, a Cheann Comhairle.

I want to raise a decision of the Government for which the Taoiseach cannot blame Fianna Fáil, despite that party's responsibility for the origins of this crisis. Last Saturday, the Government abjectly capitulated to the European Central Bank when the Minister for Finance indicated in Poland that the full €3.5 billion that was gambled in Anglo Irish Bank by the holders of unsecured bonds would now be paid. Just three months ago, the same Minister made world headlines when he said in Washington that the Government would burn the bondholders. He said "we don't think the Irish taxpayer should redeem what has become speculative investment". Six weeks from tomorrow, the first €1 billion will be paid to speculators in Anglo Irish Bank. Will he explain why this breathtaking betrayal of the Irish people is taking place when sharks in the financial markets are being protected and rewarded? Why is the Government prepared to continue the disastrous policy of austerity that is affecting our people? It is preparing to savage the incomes of low and middle income workers, introduce a new household tax, withdraw the current provision of special needs assistants and cut fuel and electricity allowances from pensioners and the poorest people. While it has no compunction in hitting ordinary people, it is bottling it when it comes to tackling banking speculators. What is responsible for this change in policy? Why did the Government make the promises that it is now failing to live up to? Why did it raise people's expectations in this way before letting them down? I will compare the Government's actions in sporting terms to the actions of the heroic Stephen Cluxton last Sunday.

What team was the Deputy shouting for?

It is as if, rather than kicking his county into history after a brave run forward, he suddenly turned and booted the ball into the faces of his team mates and into his own goal. Rather than going to speculators, this €3.5 billion of the funds of our people should be going into investment and services. I ask the Taoiseach to explain why that is not happening.

What about the budget deficit?

If Stephen Cluxton were able to kick the ball 160 m, he would be an even better person than——

——Deputy Higgins gives him credit for. Fair play to the Dubs for what they did. The Government committed to making this situation more tolerable for the Irish people and the Irish taxpayer. The discussions between the Government and its counterparts about how it can be made more tolerable, particularly at finance ministry level, have brought about final decisions in regard to a number of matters. Deputy Higgins is aware — he does not want to recognise it — that savings of approximately €9 billion will be made over the average period of seven and a half years that was originally envisaged for these loans. As the Deputy knows, that is the equivalent of approximately 5.7% of the current forecasted level of GDP for 2011. The saving comprises €4.9 billion on the EFSM funding, €3.5 billion on the EFSF funding and €0.57 billion on the UK bilateral loans. This is a significant saving. The Minister for Finance spoke directly to Mr. Trichet, the Commissioners and all his colleagues. They regard the decisions taken by Ireland, and the position to which Ireland is moving, as very significant in light of the difficulties being experienced by the eurozone countries. The real situation, which the Minister said he would reflect on, is that when burden-sharing of the kind mentioned by Deputy Higgins was referenced in the Greek case, contagion began to spread immediately to other countries. The Minister for Finance said he would reflect on his discussions with Mr. Trichet. He made it clear that another argument would be followed in respect of the promissory note. When the previous Government signed up to that note, it committed to pay some €30 billion over the next ten years, or €3 billion per year. It is obvious that if maturities and interest rates were to be applied in that context, further significant savings could be made by the Irish taxpayer and the Irish people. The Minister for Finance has said he will reflect on this following his discussions with Mr. Trichet and others. These are matters to be negotiated and agreed.

The Taoiseach did not answer the question. The Minister for Finance was very vocal in Washington. He said he would burn the Anglo gamblers. According to the schedule I have, some €3.5 billion is to be paid to them over the next seven or eight months. A total of €21.5 billion is to be paid to all the other holders of unsecured and unguaranteed bonds, for which the Irish people have no responsibility. The Taoiseach needs to deal with that issue, rather than using figures to show that disastrously high interest rates, which should never have been imposed by our so-called partners, are being brought down. The incredible explanation given by the Minister and the ECB was that what he had said about burning the bondholders — those are my words, but that was the idea — was not the way forward if we were to try to encourage the markets. When the Taoiseach refers to "contagion", he means that the sharks in the market would go to Italy and Spain and raise their interest rates. The Government and the ECB are running in front of these unelected and unaccounted players in the financial markets. They are sacrificing the livelihoods, jobs and welfare of our people. I ask the Taoiseach to have some bottle. There is no responsibility on an Irish Government to repay these tens of billions of euro. He should stop it now. The money should be invested in public infrastructure and used to create the tens of thousands of jobs needed by our people.

What about the budget deficit?

This disastrous policy of austerity should be ended.

The Deputy should get real.

The updated NTMA estimates, which reflect last week's announcements and decisions by the Minister for Finance, refer to a reduction of approximately 2.6% in the EFSF rate and a reduction of just under 3% — 2.925%, in fact — in the EFSM rate. Therefore, the annual interest saving under the EFSF will be €450 million and the savings under the EFSM will be €650 million. There will also be a saving of approximately €100 million in respect of the bilateral loans. If the entire €45 billion is drawn down, approximately €1.2 billion will be saved each year, for as long as the amount remains outstanding, as a result of these changes. In addition, the cost of the IMF loans will reduce as a result of recent and forthcoming increases in Ireland's IMF quota. The NTMA has calculated that the overall benefit of this interest rate reduction will be some €1.9 billion, of which some €30 million will arise in 2012 and is included in the overall estimate of €900 milllion in interest savings next year which even Deputy Joe Higgins will admit are very substantial. Based on the estimates for the changes to the EU and IMF elements of the loans, the overall savings, based on the inital lifespan of the programme, which will be extended, would be over €10 billion. For 2012, the changes to the EU and bilateral loans, combined with the impact of the IMF quota changes, amount to some €900 million. The average maturity date of the loans will be extended. This will have the effect, as pointed out by Commissioner Rehn on Friday, of improving our debt sustainability and also the liquidity for Ireland.

The Minister for Finance, Deputy Noonan, has pointed out that Ireland will have a pre-paid margin of €600 million in the EFSF returned in 2016. While it is important to note that this return will be been factored into the interest savings figures once the funding under the programme is drawn down, it gives rise to an upfront capital receipt of €600 million capital in 2016 directly to the Exchequer.

The Taoiseach should answer the question.