I welcome the call by the Tánaiste and the Taoiseach on the banks to cut interest rates in line with the cut to the ECB rate. It is fair to say, however, that without actions words do not do much for us.
Leaders’ Questions
A Deputy
There were 14 years of it.
The banks' refusal to pass on the reduction to both domestic and business borrowers is absolutely scandalous, given the hardship that will be caused.
It has been brought to my attention that banks are using a small-print clause in contracts in the case of businesses which borrowed at rates linked with the Eurobor rates. They are now changing and increasing the rates to cost-of-fund reference rates and using the small-print clause results in a severe extra cost to businesses.
Will emergency legislation be introduced in the House next week to give the Financial Regulator the power to force the banks to pass on the ECB interest rate reduction and honour the rates offered to business customers and accepted by them in good faith? Will the Government replace forthwith all public interest directors who are now not acting in the public interest? Will it seek an immediate emergency general meeting of the guaranteed banks to remove the remaining directors? Will it inform the guaranteed banks that if they do not conform on this issue, the cost of the guarantee will be increased next year by the amount they are not passing on in reduced rates associated with the ECB interest rate reduction? Will it inform them that the extra funding will be used to provide financial assistance for those in difficulty with mortgages or business loans owing to the reckless policies followed by them? Will it inform them, particularly AIB, 94% of which I understand is owned by the State, that all senior staff must conform with public service norms in their salaries?
It is time the Government walked the walk rather than just talked the talk. I would appreciate it if I could receive specific answers to the very direct questions I have asked rather than the usual Labour Party revisionist history lessons to which I seem to be treated each week.
(Interruptions).
Order, please.
The party supported the bondholders last night.
When it comes to revisionism——
The Tánaiste is good at it.
——there was a fair bit in the question. Fianna Fáil is hardly in a position to lecture the Government on taking firm action against the banks.
It took firm action all right; it brought in the IMF.
Let me deal with the issue. I welcome Deputy Ó Cuív's support for the strong stand the Government has taken on the decision made by some of the financial institutions not to pass on the interest rate reduction to their customers. Yesterday the Government had already arranged a meeting with Bank of Ireland, Ulster Bank and Allied Irish Banks to discuss with them the issue of lending to small and medium-sized businesses which has been of concern both to Members and the Government. The meeting, between the Government's Economic Management Council and the banks, afforded us the opportunity to raise with the banks their intentions with regard to the interest rate reduction. The representatives of the three banks who attended the meeting yesterday told us it was not their intention to pass on the reduction to their borrowers. We made the Government's view very clear to them, namely, that the interest rate reduction made by the ECB should be passed on. People with mortgages need the reduction. The ECB did not reduce interest rates in order that the banks could pocket the money; it did so with a view to having the reduction passed on to borrowers and to release more money into the economy. We made that position very clear to the banks. We also made it clear to them that, in the event that they did not comply with our request, the Government would consider legislating appropriately.
Following our meeting with the banks, the Taoiseach made direct contact with the Financial Regulator and conveyed what the banks had stated. He discussed with the regulator the additional powers he might require to deal with these circumstances. We have asked the regulator to give his assessment. When we receive that assessment, the Government will take whatever decisions are necessary to ensure borrowers will not be treated in the manner proposed by the banks yesterday. We expect to receive the assessment of the regulator quickly. In the meantime, the banks concerned should reconsider the position they outlined to us yesterday. The position of the Government on the matter is very clear. The interest rate reduction should be passed on to customers. This is what we believe the ECB intended. Members and the public would want the banks to pass on the reduction.
Will the Tánaiste confirm that, irrespective of the advice the Government receives from the Financial Regulator, it is its intention to ensure the interest rate cut is passed on to customers and that it will be backdated to the date it came into force and that whatever steps need to be taken, along the lines I have outlined to him, be it legislation or removing directors, will be taken to ensure the interest rate reduction is passed on? As he rightly said, this was done by the ECB to help customers, not the banks.
My second question is on a matter the Tánaiste did not address. Is it his intention to instruct the State-owned banks that they cannot pay more than public service wage rates?
Yes, it is the view of the Government that the interest rate reduction should be passed on to customers and we are going to take this one step at a time. As the Deputy said, it is about taking action, not words, and the Government is acting on the matter. We had a meeting yesterday with the banks concerned, at which we told them what our objective and intention were — we believe this was also the ECB's objective — that the interest rate reduction should be passed on to customers.
Will or should?
Should, of course.
Is the Government going to force the issue?
That is step number two. If the banks do not reconsider their position, as expressed to us yesterday at the meeting of the Economic Management Council, on the basis of the assessment we receive from the Financial Regulator, we will take action, as appropriate.
When?
What power does the Financial Regulator have?
We made it clear to the banks yesterday that the Government was contemplating introducing legislation in this regard. There is a period of time within which the banks can reflect on what we said to them yesterday and reconsider the position they have adopted. I hope they will take the opportunity to do this. If they do not, we will have the assessment of the Financial Regulator and will take action.
What timescale does the Tánaiste have in mind?
On the same issue, last evening the Tánaiste's colleague in government, the Minister of State, Deputy Brian Hayes, described as "pathetic" the response of bank executives to the Government's request that the banks pass on the recent ECB interest rate reduction to all mortgage holders.
A Deputy
Well said, Brian.
He is right, of course, but the reality for most people watching is that the word "pathetic" more properly applies to the situation where the Tánaiste, the Taoiseach, the Minister for Finance and the Minister for Public Expenditure and Reform were all in a room with representatives of AIB and Bank of Ireland which, to all intents and purposes, are in public ownership, as well as of Ulster Bank, and, in response to their polite request that the banks pass on the recent interest rate reduction, they were told, "No." There is an absolute responsibility on the Government to stand up to the banking institutions.
In his reply to the last questioner the Tánaiste said the Government would consider introducing legislation and that the Government was awaiting the assessment of the Financial Regulator of what he might deem appropriate at this time. There is a requirement for the Tánaiste to be fully honest with the House and the people. Has he not already received an indication from the Financial Regulator and the Governor of the Central Bank of what their assessment is and does he agree that what we are awaiting is an unfolding enactment? The reality is that he knows exactly where they stand on this matter and, despite all the jumping up and down, irrespective of what the Financial Regulator might recommend, the Government will have to take the decision to stand up and confront the banks to protect the interests of ordinary mortgage holders into the future. Has he already received an indication from the Financial Regulator and the Governor of the Central Bank on this matter? Has he, with his colleagues in the Cabinet, already made a decision to proceed with legislation to compel the banks to act in this respect — it would not be a voluntary act. They should not only be compelled to pass on the most recent interest rate reduction but all future interest rate cuts. Will the Tánaiste come clean with the House on the matter?
The Government has been very firm with the banks on this issue. The Deputy was not present at the meeting yesterday which he has portrayed as a polite conversation. The Government was very clear with the banks about its wish and determination that the interest rate reduction be passed on to customers. We made it very clear to them that if that did not happen, the question of introducing legislation was one the Government would consider. We have asked the Financial Regulator for his assessment of what is required. I think the Deputy will agree that it would be prudent to await that assessment from the Financial Regulator and to base whatever decision we make on legislation on it, but let us be clear: the Government is very determined in this regard. The interest rate reduction announced by the ECB must be passed on to customers. This was set out in very clear terms by the Government yesterday. No one leaving the room was in any doubt that there was no ambiguity about the Government's intention and determination that mortgage holders and those borrowing from the banks should benefit from the reduction in the interest rate.
Has the Tánaiste received an indication, orally or otherwise, of the view of the Financial Regulator and the Governor of the Central Bank on this matter? Will their assessment be the final determinant as to whether the Government proceeds with legislation, or will it act as the duly elected and accountable representatives of the people in their interests, irrespective of the position adopted by the Financial Regulator and the Governor of the Central Bank who might for their own reasons have a view that introducing legislation is not the way they would wish to proceed? The only way we can guarantee and protect the interests of the ordinary people is by the Government legislating to compel the banks to pass on not only the most recent interest rate reduction but also all future cuts, as a matter of course. Will the Tánaiste give an assurance to the House that the Ministers named who engaged with bank representatives yesterday will act in the interests of the people in the first instance and not be deflected from their declared intent by any side interests on the part of people in positions of responsibility, namely, in the Central Bank?
The Deputy may be absolutely assured that the Government will act in the interests of the people, in particular in this case the interests of those who have borrowed from banks and to whom the banks are saying they will not pass on the reduction in the interest rate. We have made our position very clear to the banks. One can communicate with them; one does not necessarily have to pull on a balaclava to communicate with them.
I can assure the Tánaiste that I communicated with them on a daily basis for 12 sad years of my life.
(Interruptions).
You did not have to print the money.
Order, please.
We have made it very clear——
(Interruptions).
Please allow the Tánaiste to conclude.
The Government has made its position very clear to the banks which I hope will reconsider the position they outlined to us yesterday. They know, as we do and everybody else knows, that when the ECB reduced the interest rate, the intention was that it would be passed on to customers and that the money would not be pocketed by the banks. We are considering whether we should legislate to deal with the matter. I think Deputy Ó Caoláin will agree that it would be prudent to take the advice of the Financial Regulator who is independent.
The Tánaiste has already received it.
The Deputy has said that a few times, but we have not received it. Immediately after the banks had told us yesterday that they did not intend to pass on the interest rate reduction, the Taoiseach made contact with the Financial Regulator by telephone——
What did he say?
——and asked him for his assessment of the situation and told him what happened.
What did the regulator have to say?
When we get the assessment we will have the considered position of the Financial Regulator. I assure Deputies that the Government is acting on this matter and will continue to act on it.
The Government is subjected to humiliation by the banks and the response of the Taoiseach is to make a telephone call to another banker to see what he should do.
I wish to call a different humiliation to the Tánaiste's attention, however. Last Friday, a foreign state, Israel, jailed 14 Irish citizens who were snatched from international waters while bringing humanitarian aid to Gaza. The Tánaiste and Minister for Foreign Affairs and Trade has not uttered a single word of protest in public in response to this outrage.
This morning, by agreement with the Irish embassy in Tel Aviv, seven of those citizens were to be put on a British Airways flight. They were brought to the airport and driven around before Israeli security forces prevented them from boarding their aircraft and brought them back to prison, where they are now being held incommunicado. For the past six days, citizens of this State, including an MEP, councillors and others of equal merit, have been kept in an Israeli jail and subjected to continuous harassment, strip searches, disorientation techniques and humiliation.
The staff of the Irish embassy have worked hard but, while they have done their job, the Tánaiste, as Minister for Foreign Affairs and Trade of this State, has not acted as he should to condemn this action and demand the immediate release of these citizens. I ask him to summon the Israeli ambassador as soon as he leaves this Chamber to give him one hour to reveal the details on the release and safe sending home of our citizens. If he does not, I ask the Tánaiste to expel him. At least we can thereby make it clear to the world that we and people internationally will not stand for what Israel has done in continuing to imprison the people of Gaza and in acting in this illegal high-handed way, like pirates.
Deputies
Hear, hear.
Immediately following the arrest of the 14 Irish people on the MV Saoirse I arranged to have officials from the Irish embassy meet them when their boat was brought ashore at Ashdod. They have been visited every day of their detention. They had an opportunity to be deported on Saturday, provided they signed a waiver against appealing the deportation order, but they declined to do so. I understand fully why they declined this opportunity and I respect their right to make this decision. Every day the officials in the Irish embassy in Tel Aviv have worked with the 14 Irish people and we have made it clear, both directly to the Israeli embassy in Dublin and to the Israel Ministry of Foreign Affairs, that we wish to have them released as quickly as possible.
Deputy Higgins asked me to meet the Israeli ambassador but I have already done so. I met the ambassador yesterday and conveyed my dissatisfaction at the length of time it is taking to have the 14 people returned to this country.
Why were they arrested? They were hijacked in international waters.
Deputy Ferris would know all about that.
Deputy Ferris knows a bit about hijacking on the high seas.
A Deputy
All aboard.
Order, please.
I have already conveyed to the Israeli ambassador my views on their arrest and the length of time it is taking to have them returned. Yesterday he informed me that it was the intention to put seven of the 14 on a flight this morning and the remaining seven on a flight tomorrow morning. I understand that when those who were to take this morning's flight turned up at the airport, the airline was unwilling to board all seven of them. That is the information I have been given and I have asked the officials of our embassy to check it. As we speak, the embassy is working to secure alternative flight arrangements for the seven and to ensure all 14 are back in this country as quickly as possible.
I reiterate that the public sector workers in the embassy are doing their job but the Tánaiste has not done his job.
Who is directing them to do their job? Does he think they are acting on their own?
The Tánaiste gives the impression these 14 citizens could have been out of Israel in a matter of hours if they had signed an innocuous document. They were asked to sign a document stating they had illegally entered Israel. They could not sign that statement because it would be a lie.
I acknowledged that.
It was a lie. Do I have to reiterate that they were taken from international waters? Lest we forget, they were coming to the assistance of the people of Gaza, who are incarcerated in the biggest open air prison in the world——
Deputies
Hear, hear.
——and suffering the most disgusting and humiliating conditions of impoverishment, humiliation and child malnutrition while the European Union looks the other way most of the time.
The Deputy has gone over time. I ask him to conclude.
I will conclude. The least that the Tánaiste could do is stand up for what he said he believed in over the past 30 years, namely, the rights of the Palestinian people, instead of defending the indefensible.
We are standing up, unlike Deputy Higgins.
We will not take a lecture from him.
Deputy Costello is sitting on the fence as usual.
Deputies should speak through the chair.
Support the Palestinians and quit messing around. The Labour Party is in power now.
Order for the speaker, please.
It is not a funny matter comrades.
(Interruptions).
Please allow Deputy Higgins to conclude.
The Tánaiste stated that he met the Israeli ambassador yesterday. Will he call him in this morning to ask him why the State of Israel saw fit to humiliate the Irish Government by its treatment of our citizens this morning? The idea that British Airways would refuse to board seven Irish citizens is utterly derisory.
Thank you, Deputy.
I demand that the ambassador be called in today.
The Deputy said that.
More importantly, we want our citizens back here and we want an international statement in opposition to this outrage.
Deputy Higgins is so preoccupied with using every opportunity and excuse to have a cut at the Government that he ignores the facts.
The Minister, Deputy Alan Shatter, should be here.
Leave him at home.
The first fact is that every day since the 14 people were arrested I have been working to get them out of prison and have them returned directly here. That has involved me working directly on the issue and through our officials.
Second, Deputy Higgins asked me to call in the Israeli ambassador. I am way ahead of the Deputy on this, as I have already spoken to the Israeli ambassador.
Third——
(Interruptions).
Deputy Higgins must resume his seat.
I could not hear the Tánaiste because of the mob over there.
Order, please.
The Deputy would hear him if he wanted to hear him.
Hearing and seeing are not Deputy Higgins's forte.
The Tánaiste is not too good at it himself.
Deputy Higgins used the term "humiliation". The Government has not been humiliated. It has taken a proud independent position on the issue in Palestine. I heard no words of support from the Deputy when I stood in the United Nations building and declared that this country would support Palestinian statehood. I heard no words of support from the Deputy when this country and the Government decided last week to support and vote for Palestine's membership of UNESCO.
There is none so blind as those who will not see.
The Government has made its views very clear about what is happening in Palestine and Gaza. My officials and I have worked and will continue to work every day to have the 14 people released and returned home as quickly as possible.
I call on the Tánaiste to outline the Order of Business.
When will our citizens be back if the Tánaiste is way ahead of the game?
The Deputy must resume his seat.
When will our people be home?
When the aeroplane lands.
Deputy Higgins must resume his seat.