Dáil Éireann debate -
Thursday, 17 Nov 2011

Vol. 747 No. 1

Topical Issue Debate

Regulatory Bodies

Deputy Michael McCarthy

I appreciate that this issue has been selected for debate. I bring to the attention of the Minister of State, Deputy Brian Hayes, an alarming situation regarding NAMA which came to light recently, namely, its practice of paying the country's most indebted developers enormous sums of money on an annual basis. This is unacceptable at a time when the country is effectively in receivership and we should be building up confidence in our State institutions.

At a recent meeting of the Committee of Public Accounts, I asked the chairman of NAMA how many developers are being paid by the agency on an annual basis and what is the maximum salary ceiling for developers engaged with the NAMA process. I was informed that two separate developers are being paid €200,000 per annum by the agency and that between 110 and 120 other developers are in receipt of between €70,000 and €100,000 per annum. In addition some of them may be on commission.

In effect, this means that two of the country's most indebted developers are being paid almost as much as the Taoiseach, receiving five times the average industrial wage. NAMA was created as a result of the mismanagement of the economy but this brings the entire process into disrepute as we approach a very difficult budget. How can we expect the public to have any confidence in a system which generously rewards developers to such an extent, given what they have done to this country?

In the case of the two developers on the maximum salary of €200,000, their remuneration is at the level of the cap on public sector pay. It is reasonable to assume that if that cap had not been introduced by this Government under the aegis of the Minister for Public Expenditure and Reform, Deputy Howlin, these developers might have been earning in excess of that sum.

The chairman of NAMA argued that the agency was reluctant to pay this sum but the decision was made by the board to arrive at that conclusion. I do not accept that and believe that no reasonable, thinking person would share that view. In this context, I call on the Minister for Finance to review the NAMA legislation in order that he, rather than the board of NAMA, would have power to set the payment rate for developers.

Following the revelation by the chairman of NAMA at the Committee of Public Accounts, I wrote to NAMA with a number of questions seeking clarity. First, I asked the names of the developers who are in receipt of €200,000 and the names of their respective companies. Second, I asked for a list of the property portfolios they had in their possession prior to being taken over by NAMA. Third, I asked the extent of each developer's liabilities engaged by the NAMA process; and fourth, the extent of the repayment of those liabilities to date.

In response I was told the information I sought in regard to individual debtors was not available because data protection law and constraints imposed on it by the NAMA legislation would not allow that to be the case. I was also informed that a change in the law would be required to enable NAMA to disclose this information. As I understand it, essentially NAMA is a commercial organisation which operates in the open market. This brings its own difficulties and sensitivities. It is of the utmost importance, however, that the agency be subjected to even more rigorous parliamentary scrutiny in the interests of transparency and accountability.

This very week, under the Freedom of Information Act this House released information to journalists who had sought figures in regard to expenditure on constituency offices by Members. Rightly, that information was made available. Contrast that transparency and the absolute lack of it in this case. There is a huge difference. I call the Minister for Finance to review the section of the NAMA Act which prohibits the agency from disclosing information about individual debtors. This is about transparency and accountability.

Minister of State at the Department of Public Expenditure and Reform (Deputy Brian Hayes)

I thank Deputy McCarthy for raising this very important matter. As the Minister for Finance, Deputy Noonan, stated in the Seanad some time ago, he does not propose to change the NAMA legislation at this stage.

NAMA has advised that in agreeing business plans with debtors, it normally looks for a reduction of 50% to 75% in overall costs and that any remuneration paid to debtors comes from this much reduced budget. I am very much aware of the concerns about the remuneration packages that certain NAMA debtors are being allowed to take from the overheads figure agreed by NAMA. However, unpalatable as this may seem, I can accept the assurances from NAMA there really is no better alternative if we wish to ensure the maximum return is made to the Irish taxpayer. In recent weeks, the chairman of NAMA has made this point to both the Committee on Finance and Public Expenditure and the Committee of Public Accounts.

The chairman further stated he would love to be able to tell Deputies that the agency could refuse to deal with all 850 developers, throw them out and get someone else to run the businesses. However, he made it clear that while this would be a very popular decision, it would not make commercial sense because, regardless of what they had done, the developers were the people in place who knew their own businesses.

NAMA has informed me that, in general, employing an external asset manager to manage the assets would cost significantly more than the cost of retaining the original debtor. The chief executive officer of NAMA recently stated that the cost of an external manager would range in the region of 1.5% of the asset value per annum. He pointed out that on an asset of €100 million value, one could pay €150,000 to a private sector individual to manage it but one might be able to get a debtor to do it for €60,000 or €70,000. According to NAMA, the majority of debtor remuneration packages fall into the €70,000 to €100,000 range, including all benefits-in-kind. However, in the two cases the Deputy alluded to, the debtors' remuneration package authorised by NAMA as part of the budget for overheads is €200,000. I am aware that €200,000 is an extraordinary amount of money for most of us. The lower figure of €75,000 is an amount that many people would love to earn. However, the figures are driven by the need to maximise value for the taxpayer.

I am informed by NAMA that these packages generate a much better return to the taxpayer than the option of enforcement and the employment of asset managers for considerably large portfolios of assets. Several billion euro of taxpayers' money could be at stake. NAMA is required to get the best return by having the person it believes is best placed to help it to achieve its returns. In many of these cases, the alternative would be to pay exorbitant rates of up to €180 per hour to receivers who could take a long time to work out the assets. Using this figure, a 40-hour week would amount to over €7,000 in fees per week. NAMA assures me that it drives as hard a bargain as it possibly can, or as is practical, on behalf of the taxpayer with developers whose loans it controls. The reality is that if developers do not have an incentive to work with NAMA, they are most unlikely to engage with NAMA and the agency will be forced to foreclose through the appointment of receivers. In that case the return to NAMA, and as a consequence the taxpayer, would likely be significantly reduced. The fact that NAMA has had to take enforcement action in 91 cases shows that many developers consider NAMA's terms and conditions to be too onerous. It also shows that NAMA is not soft on developers and is looking to impose tough conditions. NAMA has assured the Minister for Finance that it will continue to make decisions about working with developers or taking enforcement actions on a case-by-case basis, in line with its commercial mandate. The objective of the incentive is to get the debtor working, not so much for himself but for the taxpayer and for NAMA. Although this is difficult to accept — I appreciate the Deputy's remarks in that respect — in the view of NAMA it is the most appropriate means of achieving its objectives as an organisation at this time.

Deputy Michael McCarthy

I thank the Minister of State for his reply. I am giving this matter the attention I feel it deserves. We are talking about an organ of the State. There is a moral requirement on NAMA to act in the interests of the taxpayer. The revelation that NAMA is paying huge sums of money to developers makes it difficult for ordinary people who think reasonably to accept or have any faith in the NAMA process. Like everybody else in this House, I understand the mess this Government has inherited. There is a huge sense of irony — it is almost an injustice — in the fact that some of those who got us into this mess are being paid so much money. When I asked at a meeting of the Committee of Public Accounts why this is happening, I was told the people in question managed multi-billion euro property portfolios. Surely the portfolios in question were mismanaged. It is difficult for ordinary working people to be expected to shoulder the pain that next month's budget will inevitably inflict on them when this kind of thing is going on. I ask, in the interests of fairness, that we keep this matter under constant review. It is almost unthinkable that our national Parliament has no jurisdiction over the ability of a board of an organ of the State to make decisions on salary levels. I urge the Minister and the Government to keep this matter under review. I will revisit it in the new year. I thank the Minister of State for his response.

Deputy Brian Hayes

I thank the Deputy for his constructive suggestions about keeping this matter under review. I have been informed by the Minister for Finance and the Government generally that this matter is being kept under constant review. Many Deputies, including Deputy McCarthy's colleague, Deputy Costello, have rightly put on the record of this House the necessity to have greater parliamentary engagement or scrutiny of the operation of NAMA. The chairman of NAMA and other officials from that body have been before the relevant committees of this House. The Government will consider any proposal which would make that process of scrutiny more comprehensive. We can work on that within the terms of the existing legislation or outside those terms. The Government intends to examine this matter again to determine whether greater parliamentary scrutiny is possible. Such engagement is needed to ensure people understand the reasons this is happening. In this case, it is the lesser of two evils. The view is that it is cheaper in the long run to use these people as part of the system and pay them for this purpose. I am sure the Deputy is aware that if there is some movement in the property market, the taxpayer will make some returns on these assets. We are open to considering the possibility of greater parliamentary scrutiny of the task and operation of NAMA. If Deputy McCarthy or any other Deputy would like to put concrete proposals to the Government, they will be entertained and their proposals examined in the most constructive way possible.

Payments to Bondholders

Deputy Mick Wallace

I commend Deputy McCarthy for raising the previous matter. I wish I was at the mercy of NAMA rather than the ACC.

Deputy Ruairí Quinn

That says it all.

Deputy Mick Wallace

I would like to speak about the banking crisis and the latest reports from Europe. The French and the Spanish are paying more for their bonds today than they were yesterday. The sooner we acknowledge that things will not continue as they have been, the better it will be for ourselves. If the reports are true, I commend the Taoiseach for challenging Mrs. Merkel yesterday. If the Germans do not agree that the ECB should become a lender of last resort, there is no doubt that we will be staring the end of the euro as we know it in the face. It will be difficult to sustain it in its present manner. Very few economists of any stature in Europe see a bright future for it. It seems that if we do not accept the German model, we will end up in the second zone of Europe — that is the best case scenario — or else we will see the break-up of the EU. The Government seriously needs to think about the €1.25 billion we are supposed to give to more unsecured bondholders on 25 January next. The goalposts are moving in Europe every day. The Government does not need me to tell it what it could do with that money. It would be manna from heaven for Irish society at this stage of the game. Many areas are screaming out for assistance. That €1.25 billion would go a long way towards alleviating some of the misery that is being inflicted on many of the more vulnerable people in our society.

The European project was originally based on the idea of Europe as a family of nations. That is really not the case anymore. It is not feasible for us to think we can be like Germany. Our costs will always be higher than those of the Germans. There are 80 million of them. It is hard for us to match them for productivity. I do not see how we can play in the same league. Initially, the whole notion underpinning the eurozone was that the bigger countries would carry the weaker ones with them. That is not really happening anymore. There is a lack of real labour market mobility. Europe's mechanisms for shifting resources from rich parts of the eurozone to poor parts of it are inadequate. The high cost we are paying for that is the economic failure that has transpired. The youth unemployment rate in Spain is 50% and in Greece is 40%. We have our own difficulties, with 450,000 people unemployed. That figure is probably going to increase. I will conclude by quoting from an article by Larry Elliott in last Monday's The Guardian, which summed it up very nicely:

So much political capital has been invested in the euro project that it is perfectly understandable that policy makers have been desperately trying to buy time until they can piece together a fiscal union to buttress monetary union. There are a number of problems with this idea: it would take time Europe doesn't have to organise; it would involve the weaker countries being dictated to by the strong in an even more direct way than they are at present; it would involve not just years but decades of austerity, and it would mean ignoring the seemingly obvious conclusion that monetary union is — and always was — rotten economics.

Larry Elliott is a serious economic commentator.

Deputy Brian Hayes

I wish to state clearly that there is nothing to suggest from yesterday's meeting between the Taoiseach and Chancellor Merkel, or from any statement or utterance made by Chancellor Merkel, that she is unreceptive to the plight of Europe's smaller nations. She, along with the European Heads of State, is working to resolve the crisis in the eurozone. I would draw a distinction between Anglo Irish Bank and Irish Nationwide Building Society, now named IRBC, and the other covered institutions. No consideration is being given to burden sharing with senior bondholders in any of the other covered institutions.

In regard to the repayment of unguaranteed unsecured senior debt, it has always been the Minister's position that, given the significant cost of IBRC to the State and the taxpayer, there should be a sharing of the burden of debt with bondholders. To avoid such repayments, the most logical option would have been to put the bank into administration. This option was available to the previous Administration but instead, it put the taxpayer on the line for the liabilities of Anglo Irish Bank.

If we were to suspend payments to creditors in Anglo Irish Bank, this would have a significant impact on both the bank and, ultimately, the State because it is a totally guaranteed and a nationalised bank. This senior debt, unsecured as it is, is an obligation of the bank. If the bank does not meet such obligations, it would lead to a default and following that, most likely, insolvency. Insolvency would result in a significant increase in the cost to the State to resolve Anglo Irish Bank, or IBRC as it is now known.

After the Minister's recent meeting with the previous European Central Bank President, Mr. Trichet, and Commissioner Rehn, our European partners expressed strong reservations about burden sharing with senior bondholders in IBRC. Mr. Trichet voiced his opinion that he was against such actions for two reasons. First, private sector involvement carries very significant contagion risk and may be inconsistent with encouraging private investors to return to markets. Second, he said Ireland had done particularly well over the summer. He mentioned the narrowing of bond spreads and he said he felt that anything to do with senior debt burden sharing might knock the confidence of the market in the absolute commitment of the Government to once again take its place in normally functioning markets and, as a result, bond yields could widen again and we might lose the ground we had gained over the past number of months.

Mr. Trichet's views were echoed by Commissioner Rehn. The positive international commentary on Ireland has been created by the Government's successful renegotiation of the memorandum of understanding, the introduction of the jobs initiative, the sizeable reduction of the interest rate on the EU-IMF programme and the reduction in the cost of the banks to the taxpayer.

The value of support, present and future, we receive from our European partners far outweighs any short-term gain from imposing burden sharing on these bonds in the face of European opposition to such a move. For example, €110 billion of funding is provided by the ECB and the Central Bank of Ireland to the Irish banks at a cost below which they could borrow in the market. This is in addition to the €85 billion set out in the programme with the troika.

Nonetheless, as the Minister and the Government have made it perfectly clear, we still have unfinished business with our partners to find the most cost-effective way of resolving IBRC over the long term. The Government's aim is to ensure that the overall cost of resolving the bank's debt and the costs of resolving the difficulties in the banking sector generally are kept to a minimum.

Discussions have commenced with the relevant authorities at a technical level but, as yet, there is no indication of a successful outcome. The Minister will consider the future repayment of maturing bonds in the bank in this context and in terms of what is best for the overall position of the State.

I draw to Deputy Wallace's attention and that of all Members the motion approved by this House last week and to indicate that nothing has changed in the meantime to alter our position and that of this House. Among other things, the motion acknowledged that the Government should not act unilaterally in regard to the repayment of unguaranteed senior debt and should have regard to the views of our partners who are providing the requisite funding for the financial institutions; acknowledged that the Government is working with our partners in the EU and IMF to address the situation and is actively involved in discussions with a view to reducing the overall cost to the State; and affirmed that the approach being pursued by the Government is, given the situation with which it has been presented with by the former Administration, the optimum approach which will produce the best medium to long-term outcome for the State and the Irish taxpayer.

Deputy Mick Wallace

I accept the Government is in a very difficult place.

Deputy Ruairí Quinn

The country is in a very difficult place.

Deputy Mick Wallace

Yes, it is and it is getting even more difficult. I do not accept we have turned any corners. From my experience of the domestic economy, things are getting more rather than less difficult. People have less money in their pockets when they walk through the doors of most retail units in this country.

I understand we have become financially very dependent on the ECB and the EU because we agreed to bail out the banks, lock, stock and barrel. I am not saying it is all this Government's responsibility but I do not believe what is happening is very fair.

We are prepared to borrow crazy money to rescue the financial institutions but we will not even conceive of the idea of borrowing crazy money to invest. I understand it is very difficult given that we are already borrowing too much and that we are in a very difficult place. However, I do not accept that things will continue as they are and that it is fair for us to part with €1.25 billion. The Minister said it would upset the apple cart but I do not accept that he would be throwing the baby out with the bath water. I do not believe Europe will pull the plug if we refuse to pay unsecured bondholders in order to take a little bit better care of the less privileged in our society who are suffering dearly.

This would not be a draconian measure. This country has obeyed so many of the rules and adhered to the obligations of Europe that it would not be so draconian for us to withhold this money. It is legally possible.

Deputy Brian Hayes

The best way to ensure some security for the most marginalised in this society is if we can meet the bills of our social protection system. If one forgets all about the bank debt and Anglo Irish Bank for a moment, the fundamental issue is that, every month, there is a €1.3 billion deficit between what we spend and what we take in.

Deputy Mick Wallace

I understand that.

Deputy Brian Hayes

The only way we can resolve that issue is if we get our public finances into a sustainable position. The way to do that and to get through these difficult years is to work with those international partners who are providing €85 billion so that we can get through this difficult period because we are not in the markets. The ECB is keeping the Irish bank afloat to the tune of €110 billion.

Deputy Wallace knows this and I put it to him that it is not just the responsibility of this Government to get us through this appalling mess, which we will get through, but it is the responsibility of every Member of this House to be realistic and to be honest with the public about the scale of the challenges we face and how we will get to that better place. I am sure the Deputy appreciates that the only way we can get to that better place is by taking a step-by-step approach to those negotiations.

The Government can point to some success. Does it need to do more? Of course it does. Much is being done in bilaterally, quietly and distinctly but nonetheless winning the argument. The only way for this country to show to our international funders that there is a future for it is to ensure we make that progress. I look for the Deputy's support and that of the Government in attempting to do that because it is the only way we will get to a better place.

Schools Building Projects

Deputy Jim Daly

Ba mhaith liom buíochas a ghabháil leis an Cheann Comhairle as ucht an deis seo a thabhairt dom an cheist seo a ardú. I thank the Minister for Education and Skills, Deputy Quinn, for coming into the House to address this matter. It is not just appreciated by myself but the people I represent that he is engaging with us on this level.

Like other towns across the country, the population of the greater Clonakilty area has grown over the past decade. Similarly, it will face challenges in acquiring the necessary infrastructure to meet the educational needs of future generations. Clonakilty Community College was designed and built to accommodate 400 students but now has over 600 students enrolled. The school has a shortage of science laboratories and a critical lack of other facilities which would lend themselves to good teaching practices. Along with the health and safety implications of this aspect of overcrowding, the school relies on an old vocational building at the other end of the town to accommodate overflow classes which means students must traverse the very busy town centre to get to classes at the different sites in all sorts of weather. This also poses difficulties to school management when timetabling classes.

An extension to the college has been promised for the past ten years. Just ahead of the 2002 general election, the appointment of a design team for an extension to the college was announced with great fanfare by then Minister for Agriculture, Food and Forestry, Joe Walsh. The promise was repeated again before the 2007 general election with the same ministerial letter confirming the appointment of a design team doing the rounds. As of yet, however, nothing has materialised.

While the extension is on a list of schools building projects for progression in 2011, I have not been able to ascertain any real movement from the Department. Will the Minister give some political assistance to progress this important project? Being a realist, I accept the Department has a limited capital works budget of €440 million for next year while the Minister has 180 individual requests on his desk for schools building projects. However, Clonakilty Community College, its students, their parents and staff deserve better after a decade of false promises and disappointment.

Will the Minister engage with his officials to progress this overdue extension to accommodate future generations of students in the greater Clonakilty area? Five similar projects in County Cork have been devolved to Cork County Vocational Education Committee already this year, all of which are progressing satisfactorily. Will the Minister consider such a move in this case to facilitate it moving on to the design stage?

Minister for Education and Skills (Deputy Ruairí Quinn)

I thank the Deputy for raising the matter as it provides me with the opportunity to outline to the House the Government's strategy for capital investment in education projects and to clarify the current position of the application for major capital funding from Clonakilty Community College. Unfortunately, the culture of promises for schools building projects is corrupted. Pledges going back to the 2002 general election and reiterated in 2007 have confused many communities. One of my objectives is to provide absolute clarity on all projects in early January 2012. If there is bad news, so be it. We need clarity rather than obfuscation which only misleads people and generates hopes which are later dashed.

The Department of Education and Skills forecasts an increase of over 25,000 post-primary pupils by the start of the 2018 school year. This cohort will continue to grow until 2024 at least. In the first quarter of this year 19,950 babies were born, the highest number of births since the quarterly series began in 1960. The demographic challenge is enormous. To meet the needs of our growing population of school-going children, the delivery of new schools together with extension projects will be the main focus for capital investment in the coming years. We must ensure every child born this morning will be looking into a schoolyard, not into a field, several years from now.

Clonakilty Community College applied for major capital funding for an extension. The application was assessed and assigned a band 2.4 rating. Under the Department's assessment process, a project is assigned a band rating under published prioritisation criteria for large scale building projects. These criteria were devised following consultation with the education partners. A building project moves through the system commensurate with the band rating assigned to it. There are four band ratings overall, of which band 1 is the highest and band 4 the lowest.

The school's extension project was included in the announcement by the then Minister for Education and Skills January 2011 — we knew what we were heading into then — which stated, "where briefs will be formulated in 2011 and the process of appointing a design team will commence". This is the third time the college has been told a design team would be appointed.

In this regard, it is intended to review with the school the long-term pupil enrolment. The plans for the school also envisage the provision of accommodation for an all-Irish unit. The next step will involve a site visit by the Department's technical staff which is envisaged to take place in the coming weeks. The Deputy may update me on this when he responds. Following the visit, a schedule of accommodation for the school will be drawn up. When this process has been completed, the appointment of a design team can commence.

We have no choice but to respond as a matter of urgency to the increasing cohort of school-going children. Without making any commitment on this matter, I can only see this project advancing if Deputy Jim Daly's community can demonstrate a long-term pupil enrolment in the area.

Deputy Jim Daly

I appreciate the Minister's response and forthright attitude to dealing with it up front. I will take on the challenge of engaging with departmental officials and the Minister to prove the college's case. I acknowledge the efforts of the college's parents' association which lobbied extensively for this building project. It has been bitterly disappointed in the past. I am not proud as a politician of how the parents' hopes have been dashed. It is no wonder politicians have a bad name. I also commend the school's management, current and former principal and the staff who have put much time and effort into getting this project progressed.

A site visit has not yet taken place. I will get back to the Minister and his officials about the demographics for this project and continue to engage constructively to progress it.

Deputy Ruairí Quinn

Regarding the Deputy's other question about VEC involvement in the project, due to the sheer scale of the task of delivery on school building projects, the Department has requested VEC assistance to accelerate delivery on the ground. It should not be taken that this will happen in this case. However, it must be recognised the VECs are performing excellent work in this area. The Taoiseach has commented previously on the role of the old Army barracks in Monaghan town. The way forward for the Deputy's community, and the school to which he is clearly attached, is through the mechanism of population growth. That will be the overriding criteria.

Army Barracks

Deputy James Bannon

I thank the Ceann Comhairle for affording me time to raise this important topical issue, namely, the need for the Minister for Justice and Equality to provide a detailed breakdown of the projected savings to his Department arising from the announcement of the closure of Columb Barracks, Mullingar, County Westmeath, which will be difficult to rationalise in light of the loss to the local economy, the disruption to Army personnel and their families and the elimination of an integral part of the culture and heritage of the town of Mullingar.

To make any sense of the closure of Columb Barracks, Mullingar it is necessary to be fully informed of the thinking behind it. I am aware that two issues have driven this decision — financial savings and the need to redeploy Army personnel. I ask the Minister, Deputy Shatter, if he can provide a detailed breakdown of the projected savings to be realised. It is necessary to equate those with the potential economic losses to the town of Mullingar and the devastation that will be caused to Army personnel and their wives, families and friends.

It is important to remember that the barracks has been an integral part of the community of Mullingar since 1814. The heritage and cultural aspects of such closures tend to be overlooked in the rush for financial savings but they are a vital part of the equation, and in many ways they are the key. As the barracks in Mullingar is listed as a historical site it cannot be sold on and will be left lying idle and allowed to fall into disrepair if an alternative use is not found.

I am very concerned about the provisions of such an alternative use for Columb Barracks. In this respect, the Minister has assured me that he is committed to expediting such a provision and I have every confidence in his word as he has already done his best to make provision in regard to Connolly Barracks, Longford. In fact, he more than met his commitment in terms of seeking an urgent reappraisal of the value of that site which would be very suitable as an educational facility or campus.

In terms of Columb Barracks, I am not convinced that the case of a financial saving has been proven. Not only is the demand for building land at an all-time low, but the site cannot be sold and therefore I presume the cost effectiveness of the decision relates solely to overheads such as salaries, maintenance etc.

While closing the barracks as an operational defence unit may be projected to make some savings the question is whether that will be enough overall to justify tearing the heart out of a rural town and impacting on the economic profile both in the short and long term. It has been argued that the personnel from the barracks will more than likely remain in the area but that can neither be guaranteed nor is it a complete justification.

That brings me to another point that is worrying me about the closure not only of Columb Barracks but of the 14 barracks that have closed throughout the country since 1998. The fact that the latest closures should be enforced before the publication of the Green Paper on the Defence Forces is of concern to me and to the people of Mullingar.

The Minister has assured this House that he believes the current strength of the Defence Forces should be maintained. That is reassuring given that some people are assuming the closure of these barracks will lead to a reduction in personnel. It is my belief that there could be a small increase in numbers and I would be grateful for clarification on that from the Minister.

Minister for Defence (Deputy Alan Shatter)

I thank Deputy Bannon who I know is very concerned about this particular issue. As the House is aware, on Tuesday, 15 November the Government approved a proposal from me to proceed with a further phase of consolidation of Defence Forces personnel into fewer locations with the closure of four barracks, Clonmel, Mullingar, Cavan and Castlebar. It is proposed to have the personnel transferred and the barracks closed no later than Friday, 30 March next.

The consolidation of the Defence Forces formations into a smaller number of locations is a key objective in the ongoing defence modernisation programme in order to maximise the effectiveness of the Defence Forces and has been recommended in many reports over the past number of years.

In these difficult times the closures will enhance the flexibility available to the Defence Forces in the use of their resources, both human and financial. I am especially concerned to protect the strength of the Defence Forces being also mindful of the difficult economic situation facing the country. The numbers are currently just below 9,500 and I am anxious to ensure that Defence Forces numbers are maintained at approximately 9,500 both this year and in future years.

While the major objectives of the closures is to release as many personnel as possible for operational duties, annual savings in respect of utilities, security duty allowances and maintenance will also arise. This will amount to approximately €1.3 million per annum in respect of the four closures.

In addition to the cost of utilities each barracks requires a security detail and additional further personnel are tied up on purely administrative duties connected to the management of the particular barracks. Because maintaining barrack security requires around the clock cover, a much larger pool of personnel is required. Therefore, several hundred additional man years will become available for operational duties. At a minimum, the value of this efficiency gain will comfortably exceed €5 million per year.

In recent weeks, as the Deputy is aware, I have met with individual Members of the Oireachtas and a delegation from Mullingar as well as delegations from Clonmel and Cavan. I have reflected carefully and at length on the sincere and genuine concerns raised by the delegation who put forward very strongly held views as to why the barracks in Mullingar and the other two barracks should be retained. I wish to acknowledge the sincerity and courtesy with which these views were conveyed.

It is appreciated and understood that the consolidation proposals may result in a level of hardship on some personnel and both staff of the Department and the military authorities will take into account the personal circumstances of those stationed at the locations concerned including Mullingar. Generally speaking, people will be expected to transfer with their unit to the new location. However, requests for transfers to units in other locations will be examined on a case-by-case basis having regard to the availability of vacancies.

The military authorities have agreed to provide a transport service between Mullingar and Athlone if required. This will be for an initial period to allow the transfer to be effected. Briefings will be held in all barracks including Mullingar. The purpose of these briefings is to give precise details of the change of station allowance scheme and to address any concerns that may arise. Essentially, this scheme provides for the payment of certain allowances to personnel who are permanently transferred to a new station and who meet certain conditions.

Arising from the Government decision I have asked my Department to enter into discussions with other Departments, local authorities and State agencies regarding the possible purchase of the properties to benefit the local community as a whole but with particular emphasis on job creation measures.

As I stated earlier, I am conscious of the hardship this decision may impose on some personnel and their families and I can assure the House that it was not a decision that was taken lightly. However, because of the appalling economic legacy inherited by this Government from its predecessor difficult decisions have to be taken affecting all areas of society. The current proposals are in the best interests of the Defence Forces and that must be my priority. Maintaining the numbers in the Defence Forces to ensure they can maximise their capabilities to the benefit of the community in both domestic and international duties is central.

There is no question of the barracks being left idle and let fall into disrepair. As Deputy Bannon knows, since becoming Minister I have been actively engaged in seeking a means of dealing with Connolly Barracks, Longford, which has been revalued. As a consequence of an engagement between my Department and the local council I am optimistic that in the not too distant future arrangements will be made to the benefit of all with regard to that barracks.

The legacy of barracks in this country does not derive from any strategic decision ever made by our Defence Forces. They derive from the view of the British authorities when we were a colony as to where barracks should be located to keep down the rebellious Irish. We will have 14 barracks in the country when the four barracks in question are closed. I hope these decisions will be to the benefit of the Defence Forces and to the community generally.

Deputy James Bannon

I thank the Minister for his reply. I emphasise, however, that I am not convinced that the case for savings has been proved. I have been informed today by a number of Army wives of a disturbing development in the matter concerning Columb Barracks. It has been brought to my attention that troops from Mullingar are being moved into the old FCA quarters in Athlone, which is a condemned building. It has been further claimed that troops will have to collect their weapons in Athlone and bring them under escort to rented premises in Mullingar for training purposes. This journey will be undertaken twice per day. Surely this is ludicrous in terms of cost and efficiency. Is the information provided to me true? There is great anger and frustration among people in Mullingar and the wider community about the closure of Mullingar barracks which has been an integral part of the community since 1814. I am as disappointed as everyone else about what has taken place.

Deputy Alan Shatter

As Deputy Bannon knows, no one will lose his or her job as a consequence of these changes. The jobs will be retained and I hope and believe the families concerned will continue to reside in Mullingar. The Mullingar economy should continue to benefit from the income received by the troops in Mullingar from the work they do in the Defence Forces. I know the Deputy and his constituency colleague, Deputy McFadden, have been very concerned about these developments. I assure them I will do what I can to work with colleagues in the House and the local community, through the Department of Defence, to ensure matters are dealt with in a manner that is ultimately to the benefit of the community and a value is realised from the premises to the benefit of the Defence Forces, as has happened in the past, so that moneys can be reinvested in the Defence Forces to the benefit of all of those who currently serve in Mullingar.

I am unaware of the issues the Deputy raised and will ensure I obtain information to respond to him on them. I will write to the Deputy in that regard. I look forward to working with him and his colleague, Deputy McFadden, in seeking to identify appropriate uses for the barracks and, I hope, appropriate purchasers for the site so that it becomes a dynamic centre of activity to the benefit of the local community.