Dáil Éireann debate -
Thursday, 8 Dec 2011

Vol. 749 No. 2

Leaders’ Questions

Deputy Éamon Ó Cuív

Beidh cruinniú mullaigh ann don Aontas Eorpach amárach. An EU summit will take place tomorrow. As Minister for Foreign Affairs and Trade is the Tánaiste concerned that EU policy is being proposed by Ms Merkel and Mr. Sarkozy instead of by the Commission? What they propose will not deal with the current crisis but is driven by a federalist agenda. Fianna Fáil has stated time and again that the only solution to the European problem is the ECB becoming a lender of last resort with burden sharing across all member states. The problems we face are not only that borrowers borrowed recklessly but that the banks in the core of Europe lent recklessly also. The crisis was caused by a failure to regulate European and world banks and unrestricted free market policies.

Will the Taoiseach table counter-proposals to the "Merkozy" — Merkel and Sarkozy — proposals to the Commission? Has he at least discussed the issue with President Van Rompuy? Has he discussed the issue with other peripheral states? Will the Tánaiste confirm the proposals on tax harmonisation which will affect our ability to design our own tax policies will be rejected out of hand? Will the Taoiseach tell his European counterparts that the proposed "Merkozy" treaty change is not the best option and might prove unacceptable to many countries? It would happen too slowly and would not be as effective as the ECB adopting a proactive policy in dealing with the crisis.

The Tánaiste

The European Council meeting which will take place this evening and tomorrow is, as Deputy Ó Cuív stated, a hugely important meeting to address the difficulties we have seen over a period of time in the eurozone. It is important to state that the formal proposals before the meeting are those developed by the President of the European Council, Mr. Van Rompuy, which he was asked to do in October. He has tabled a set of proposals for consideration by the European Council tomorrow.

Separately, the leaders of Germany and France have put together a set of proposals and obviously they will be considered. The first thing we must understand is that the European Council is a council of 27 member states; it is not a Council of two member states, one member state or a small number of states. Agreement must be reached across the 27 member states.

The approach being taken by Ireland to these discussions is that we must address the very real difficulties with the euro and in the eurozone. It has been our belief for quite some time that these issues need to be addressed now rather than having a prolonged period of treaty negotiations. As we know, treaty negotiations can sometimes take a very long period and we have made it clear that we believe it is possible to reach solutions and a resolution of these issues in the existing treaty framework which includes strengthening the ESM and an enhanced role for the ECB.

With regard to the role of the Commission, it has been Ireland's view for quite some time that the Commission must remain central to the way in which the European Union operates. This is what maintains the community approach to dealing with issues. Ireland has tabled a set of observations on the proposals made by President Van Rompuy which reflect our approach to dealing with the euro situation and which also reflect our desire that this country's national interest is protected fully in these discussions. They have been set out in a letter which the Taoiseach has sent to President Van Rompuy.

Our view on tax harmonisation is well known and consistent. We are not agreeable to changing our corporate tax rate. The European Commission tabled proposals on the CCCTB some time ago and we are willing to discuss these. Other member states which initially had been quite enthusiastic about changes in respect of the CCCTB now appear less enthusiastic about it.

Deputy Éamon Ó Cuív

I am reassured that the Tánaiste realises the method of operation of the European Union is by the 27 member states and proposals by the Commission. I hope the Taoiseach will make it absolutely clear, in public, that it is unacceptable that two countries should try to dictate European policy. It is contrary to the whole spirit of the European treaties.

The Tánaiste spoke about a letter that the Taoiseach has sent to the European Union. Since the letter sent by Merkel and Sarkozy has been made public, is the Tánaiste willing to make that letter publicly available? The letter should be made available so we know exactly what the Taoiseach is saying.

A Deputy

And doing.

Deputy Éamon Ó Cuív

As regards tax harmonisation, every time people mention CCCTB, I am reminded of the old nursery rhyme "The spider and the fly". We know what happened to the fly when he got into the web.

An Ceann Comhairle

The Deputy's time is up, like the fly.

Deputy Éamon Ó Cuív

As far as we are concerned, Europe's acquiescence to the CCCTB proposal is buying the proposition that was put to the fly in the famous nursery rhyme.

The Tánaiste

I want to make it absolutely clear that as far as this Government is concerned there is, and will be, no dictation of policy by either one member state or a small number of them concerning issues that have to be decided at the European Council. This is a European Union of 27 member states and the decisions have to be arrived at on a collective basis. There is a very difficult situation and it is our view as a Government that that needs to be addressed urgently. The instability and market uncertainty about the euro and the concerns there have been about the single currency over a period of time need to be addressed quickly. There are two aspects to addressing that. One is related to the kind of firewall that is put in place to ensure the protection of the euro. Second, there are issues relating to governance within the European Union that have to be addressed.

There is a Private Members' debate on this issue, which is commencing after the Order of Business. In my contribution, I will be setting out the Government's position more fully, including the approach we are taking to the meetings today and tomorrow.

Deputy Pearse Doherty

This week the Tánaiste's Government and party delivered a devastating budget which has hit the poorest hardest. Once again, we are seeing a Government that is protecting the high earners. We have seen how the Government looks after its own, with party hacks being appointed as special advisers in high positions. Pay caps are being breached because the Tánaiste tells us that these people are worth it, yet nothing is being done for those on the dole. We have seen the treatment the Government has dished out to those on disability allowance, lone parents and people in community nursing homes.

Today, the European Central Bank's governing council meets and it is widely expected that it will cut interest rates once again. This will be welcome news at least for the 100,000 people with distressed mortgages who, along with many more, have been abandoned by this Government.

Last month, we had the pathetic display of the Government jumping up and down about the refusal of the Bank of Ireland and Ulster Bank to pass on the ECB interest rate cut to hard-pressed mortgage holders. Ultimately, however, after some bluster, the Government simply did nothing. It is completely and utterly unacceptable that banks which have received billions of euro from taxpayers should refuse to pass on ECB interest rate cuts, as we saw in recent months. These banks have been bailed out by the taxpayer and there are public interest directors on their boards, so what concrete steps will the Government take to ensure the expected ECB cut is passed on to every single mortgage holder?

The Tánaiste

It is a pity that Deputy Doherty insists on spoiling by naked aggression what would otherwise be very good and valid issues that he raises. He says, for example, that this Government has done nothing in the budget for those on the dole, but we have protected the level of social welfare payments to those on jobseeker's allowance and basic social welfare payment rates.

Deputy Pearse Doherty

No.

A Deputy

Some €27 million has been cut.

The Tánaiste

Secondly, we have included in the budget proposals a whole range of measures which are designed to get people back to work, get business moving again and get our economy to grow again.

Deputy Peadar Tóibín

Do all the Tánaiste's party members agree? Some of them have left.

The Tánaiste

When Deputy Doherty says, for example, that we have abandoned people in mortgage difficulties, he flies in the face of the truth. The reality is that in the budget we have increased the level of mortgage interest relief for people who bought at the height of the boom. The Minister for Finance made it clear that the measures contained in the Keane report will be implemented. There will be an implementation programme for those.

The Deputy is quite right that when the last ECB interest rate reduction was introduced, the Government did call in the banks and spoke to them. Allied Irish Bank followed the Government's request to reduce the interest rate in line with the ECB. Most of the other financial institutions did likewise, but two of them did not. I hope that on this occasion they will do so. I understand that one of those financial institutions is today launching a new mortgage product designed to help people in mortgage difficulties. I want to be absolutely clear, however, that this Government is not only concerned about the issues and difficulties that people with mortgages are facing, we have also taken action on it and continue to do so.

Deputy Pearse Doherty

I could spend all day correcting the Tánaiste on the points he has made.

An Ceann Comhairle

This is a supplementary question, Deputy.

Deputy Pearse Doherty

This is the question. For example, the mortgage interest supplement has been deferred and payments have been cut by €22.5 million. Part-time workers will now not be eligible for the same type of social welfare benefits as previously. The Tánaiste says he hopes banks will pass on the ECB's interest rate cut, but thousands of people hope the Government will do something about it. It is in the Tánaiste's power to act decisively. He should tell them that €20.7 billion has been pumped into the banks since this time last year.

An Ceann Comhairle

A question please, Deputy.

Deputy Pearse Doherty

The Tánaiste should tell mortgage holders that he will introduce legislation to force the banks to pass on the ECB interest rate cut that is expected to be announced today. That is what people wanted when they elected a Government. They asked it to act on behalf of their interests, not the banks'. It is nonsense for Ministers to say it is pathetic that banks do not pass on the ECB's interest rates. The Tánaiste is in power. He has the power to cut social welfare rates, child benefit and one parent family rates. He also has the power to instruct banks to pass on this rate, so he should act on behalf of the public interest.

The Tánaiste

This is the first Government that brought in the banks and addressed with them, face to face, the issue of passing on interest rate reductions.

Deputy Pearse Doherty

And they faced you down.

The Tánaiste

These were the same banks that Deputy Doherty, in fulsome language, was so happy to guarantee a mere three years ago. I want to be absolutely clear that this Government is dealing with the issue of mortgage difficulties. We have increased the level of mortgage interest relief for people who bought at the height of the boom. We have established a working group to deal with the issue of mortgage difficulties. That group's report was debated in the House and its recommendations are to be implemented, as the Minister for Finance indicated in his budget speech. A plan will be introduced to that effect. When the last decrease in interest rates occurred, the Government called in the banks and, if necessary, we will do so again.

Deputy Pearse Doherty

And they will face you down again.

The Tánaiste

Deputy Doherty need be in no doubt that this Government will act decisively, forcefully and effectively with the banks——

Deputy Sandra McLellan

When?

The Tánaiste

——and anybody else in the interests of those who hold mortgages and are having difficulty in repaying them.

Deputy Finian McGrath

Since the election, the Tánaiste has always said that jobs were a key priority for this Government. I am glad the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, is here for this discussion. We all accept it is a key priority. This morning there was again talk of getting people back to work. In the past few days Technical Group Members, for example, have come to the House to make suggestions on job creation, the tax issue and the provision of supports for small businesses.

On job creation and, more importantly, job retention, in the budget why did the Government cut 66.6% from community employment schemes? It is a significant cut for many voluntary and community groups. How can the Tánaiste say to them that it amounts to sharing the pain when high earners are getting increases of €30,000 or €40,000 per year? How can he say this to people participating in community employment schemes, including people with disabilities and workers in drugs services? Is he aware that this is a direct attack on the 22,474 people involved in these schemes, including some in the disability sector, which provide a very valuable service? In the past 24 hours people have seen what has happened to the disability allowance and there will be further cuts to the community employment scheme. It is not a cut of 10% or 20% but 66%. Will the Tánaiste reverse it?

The Tánaiste

We all agree that community employment scheme projects do great work in local communities and provide great opportunities for people to gain work experience.

Deputy Joan Collins

Why are they being cut?

The Tánaiste

The Government is committed to the continuation of community employment schemes. The total amount being spent by the Department of Social Protection on employment support programmes, including community employment schemes, is not being reduced, rather it is being increased. The total spend by the Department on employment support programmes will be €977 million in 2012. It will be €882 million this year. Within the increased budget there will be reforms in the way some of the money will be spent. There are different circumstances applying to community employment schemes. For some, the sponsors are statutory bodies which have separate education and training budgets. In respect of other schemes, there is access to differing levels of funds from different sources. Within this framework there is a review taking place of the total package to ensure the best value for money is being obtained.

We should be clear about one issue. The Government is not closing down any community employment scheme or reducing payments to community employment scheme participants. The overall amount provided for employment support programmes is being increased, within which there will be certain reforms by the Department of Social Protection.

Deputy Finian McGrath

I accept the point about closing down facilities, but I did not mention this in the series of questions posed. I spoke about the cut of 66.6% in funding for many community employment schemes. Does the Tánaiste accept that this cut will result in a loss of services for those on low wages, the unemployed, people with disabilities and older persons? This is not part of our imagination. Does the Tánaiste accept what the Northside Centre for the Unemployed in Coolock indicated yesterday in stating it was "appalled at the proposed savage budget cuts to the funding for community employment projects by way of a 66.6% cut for training and materials"? The centre provides an excellent service on the northside of Dublin. Does the Tánaiste accept that this cut will have the effect of community employment projects being unable to afford to provide basic work health and safety training for participants, which is mandatory under health and safety legislation? This is even before we get to progression-based training which participants need to undertake to move into mainstream employment. The community employment scheme acts as an active labour market programme. Will it be able to function without the funds necessary to provide access to quality training for participants?

The Tánaiste

I do not accept the Deputy's contention that the changes being made in respect of training payments for community employment schemes will result in a loss of services. I do not accept that there will be a loss of places on such schemes. The reverse is the case. As I noted, the overall package of employment supports, including community employment schemes, is being increased.

Deputy Finian McGrath

Why then are those involved writing to us? Is the problem in our imagination?

The Tánaiste

In addition, the jobs budget in May provided for over 20,000 new training and education places, while the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, announced a €20 million labour market activation fund to create a further additional 6,500 places for the long-term unemployed.

The Department of Social Protection will seek to minimise the effects of the changes on those affected. It will examine the income and expenditure of schemes with reference to their capacity to absorb some of these costs, particularly in the case of statutory organisations which, in many cases, have separate training and education budgets. Additionally, there are community and voluntary sponsoring organisations which receive funding from a multiplicity of State agencies. These will be examined with reference to their ability to continue programmes with reduced funding from the Department. There are a number of schemes which, through activities supported under the community employment scheme, generate significant income. These will also be included in the review.

The Department of Social Protection will work closely with the Department of Education and Skills with a view to providing training for community employment scheme participants. As the Deputy knows, FÁS community employment and labour placement aspects are now to be located in the Department of Social Protection. There is a revised and reformed approach to the way in which labour activation measures, including the training and education aspect, will be managed. The change announced in the budget must be considered in that context.