Dáil Éireann debate -
Thursday, 1 Mar 2012

Vol. 757 No. 3

Leaders’ Questions

Deputy Micheál Martin

The European Central Bank pumped an extra €529 billion into the EU financial system yesterday. That brings the total amount that has been invested in the three-year programme to more than €1 trillion. Up to 800 banks across Europe have taken advantage of the programme. At a macro level, this initiative of the ECB has been described as a game-changer. In reality, it has not filtered down to the real economy. Businesses up and down the country are finding it practically impossible to access loans or proper credit facilities to enable them to protect existing jobs and create new ones. The absence of credit is causing businesses to reduce their workforces. In some instances, they have to close down altogether as a consequence of the failure to get credit.

Two days ago, the Taoiseach told the House that the Government intends to meet the banks "in a couple of months" to deal with this problem. According to the Credit Review Office, credit targets are being met. Its calculations are based on credit approvals, rather than actual credit drawdowns, and take account of the restructuring of existing loans, as opposed to the provision of new credit facilities. Even though bank deposits are stabilising and the banks are getting access to critical finance from the ECB, the banks are being far too rigid and inflexible. Every Deputy in the House can cite examples of small businesses that are unable to access credit. Many companies are in dire trouble as a result of the tightening of credit across the country. In light of this critical problem - not to mention the pressure on mortgages - is it any wonder that the domestic economy is flagging? What does the Government intend to do to alleviate the shortage of credit? In particular, what will it do to get the banks operating properly in the interests of small and medium enterprises and the broader interests of the economy as a whole?

The Tánaiste

I am delighted to see the leader of Fianna Fáil here this morning. Like Deputy Martin, I welcome the provision yesterday of €529 billion by the European Central Bank for the European economy. As the Deputy said, those funds are in addition to the €450 billion that was provided by the ECB before Christmas and bring to almost €1 trillion the total amount of money the ECB has committed over recent months. It was certainly the Government's view that funding should be committed to the European economy in order to support it. That was something we had been seeking for some time. I agree with the Deputy that it is important for those funds to work their way right into the economy.

The Taoiseach and I have met the banks to discuss three issues. We met representatives of each of the groups - Ulster Bank, Bank of Ireland and AIB - just over a week ago. The first of the three issues we discussed was the need to lend to small and medium sized businesses, in particular, to ensure credit is available to businesses to allow them to support existing jobs and create new ones. We also discussed how the banks can co-operate with all aspects of the Government's employment creation strategy, particularly the action plan on jobs. The third matter we discussed was the issue of mortgage lending and mortgage arrears. In addition, we are arranging for discussions to take place with businesses and banks at local and regional level. The Minister of State, Deputy Perry, has undertaken a series of regional meetings that will bring these discussions right down to ground level. I understand that successful meetings took place in Cork and Waterford in recent times.

The Government will continue to engage with the banks. The meetings that were mentioned by the Taoiseach earlier this week are part of the Government's programme of engagement with the banks. Some of that engagement is happening on an ongoing basis at official level and some of it is happening at a political level. The Taoiseach and I are having direct meetings with the banks and the Ministers for Finance and Public Expenditure and Reform will also meet them. This is part of an engagement by Government with the banks to ensure that credit is provided for small and medium-sized businesses and that there is support for the Government's strategy, which is set out in the action plan on jobs, in order to create employment.

Deputy Micheál Martin

The Tánaiste's engagement with the banks is wholly ineffectual. The bottom line is that companies are not getting access to credit and small businesses throughout the country are complaining. We have all been given examples on a weekly basis of tightening credit, of cash flow being cut off, of a very rigid and inflexible approach being taken towards people who want to protect jobs or who want to create new jobs. The banks are looking after themselves and no one else.

The Tánaiste talks about engagement and regional meetings, yet we have had regional meetings for two to three years now and we have had all this debate. People do not want any more discussion nor do they want any more timid engagement. They want action. They want the funding that is being put into the banks by the State and the taxpayers and the massive amounts of money that has been provided by the European Central Bank to be filtered down into the real economy, onto the high street and the factory floor but this is not happening.

The Taoiseach acknowledged two days ago that many companies will not go through the Credit Review Office for fear of retribution, for fear that they will be punished by the banks if they dare complain that they are not getting fair treatment or fair access. We cannot wait for months, we cannot have another series of regional meetings where people talk politely in halls or in meeting rooms about how nice it would be to have access to credit. This is choking the economy and it is choking the sector that creates most jobs, up to 700,000 and 800,000 at the peak of the boom. It is the sector that will have to be the engine for growth and job creation in the future.

The Tánaiste

I remind Deputy Martin that unlike the previous Government, this Government is having discussions with the banks about lending to small and medium-sized businesses. In his opening question, Deputy Martin wanted to know what the Government planned to do to discuss the issue of the provision of credit to small and medium-sized businesses through the banks. The Government has already been in talks with the banks about this issue.

Deputy Micheál Martin

Just talks.

The Tánaiste

There is nothing timid about it.

Deputy Micheál Martin

The analysts say it is not happening.

The Tánaiste

Deputy Martin has raised an issue which the Government has well under control. We have published the action plan for jobs, we have set out the kind of funds that will be established in order to provide credit and start-up capital and to help business to create jobs.

Deputy Dara Calleary

Where is the credit guarantee scheme?

The Tánaiste

Clearly, the banks have a critical role. It is a condition of the recapitalisation of the banks that they are to lend to small and medium-sized businesses-----

Deputy Micheál Martin

That is not happening.

The Tánaiste

-----and that they lend to people trying to get mortgages. The Government is way ahead of Deputy Martin in this regard.

Deputy Micheál Martin

It is not about me or about the Tánaiste but the people on the factory floor.

The Tánaiste

The Deputy is asking about something that is already being done-----

(Interruptions).

The Tánaiste

-----and I can assure the Deputy that the Government will continue to do that. No stone will be left unturned so that credit is provided to small and medium-sized businesses and that the funding being provided through the European Central Bank works its way through the economy in order to create jobs.

Deputy Micheál Martin

It is not happening.

Deputy Timmy Dooley

Poor old Minister of State Perry is not convinced.

An Ceann Comhairle

I remind Deputy Dooley there is no point in asking questions if a Member is not prepared to listen to the answer.

Deputy Bernard J. Durkan

Who wants to be the leader?

(Interruptions).

Deputy Pat Rabbitte

Is Deputy Billy Kelleher running for leader?

An Ceann Comhairle

Deputy Kelleher, please cool down.

Deputy Mary Lou McDonald

The Tánaiste and the Taoiseach repeatedly tell us that they wish to restore Irish sovereignty. However, they do not seem to be having very much success. They propose a referendum to give away even more control over Ireland's economic affairs while the German Parliament discusses the Irish budgetary situation when Members of this House and the public are kept in the dark. For a second time, the finance committee of the Bundestag, has discussed sensitive documents relating to the austerity programme of the troika - the Government's external partners - before the Irish public and Members of this House or the Joint Committee on Finance, Public Expenditure and Reform, have even seen them. This is a ludicrous situation in which German parliamentarians discuss the economic situation in Ireland while we in Ireland are kept in the dark.

The substance of these documents, it seems, is also deeply troubling. The Commission's report suggests that the Irish State may require a mini budget in 2012. The European Commission appears to be recommending greater cuts and tax hikes. We in Sinn Féin have repeatedly warned that unless there is a change in the direction of Government policy, Ireland may not meet the troika targets and a mini budget may be necessary. If these reports are true, then it seems our fears will have been confirmed.

I understand the report also suggests that the Commission demanded a revised assets sale programme from the Government in December. Is this how €2 billion of a fire sale became €3 billion? Was the Tánaiste aware that the finance committee of the Bundestag would be discussing these documents? Does he propose to publish them? Is the State facing a mini budget in 2012? Did the Government cave in to a Commission demand for more State assets to be sold? Will the Tánaiste confirm that it is in fact Frankfurt's way rather than Labour's way?

The Tánaiste

Some of that sounds like the draft text for a leaflet.

(Interruptions).

The Tánaiste

I see that Deputy McDonald-----

An Ceann Comhairle

Could we settle down, please? There is a time limit on this question.

(Interruptions).

The Tánaiste

Deputy McDonald is doing a lot of reading this morning. Paper never refuses ink and neither, apparently, does Sinn Féin.

(Interruptions).

An Ceann Comhairle

Perhaps Members might like to listen to the reply please. We have an increasing number of comedians every day. I ask Members to allow the Tánaiste to reply.

Deputy Michael Ring

Deputy Doherty was not out this week.

Deputy Pearse Doherty

I want to hear if there is to be a mini budget.

An Ceann Comhairle

I ask the Tánaiste to please proceed with the reply. His time is halfway already.

The Tánaiste

The document to which Deputy McDonald referred says a number of things. It is a staff document, as I understand, prepared by some staff in the European Commission and which was leaked. However, it has a number of positive observations about this country. It says that the Irish economy is expected to have returned to growth in 2011. It states that our general Government deficit is estimated to have been well below the programme targets and that the recapitalisation of the domestic banks has been substantially completed. It observes that reflecting the strong performance under the programme, financial market confidence in Ireland has continued to improve. This document should be put in perspective, confirming as it does what the Government has been saying for some time, that this country's economy is recovering and it will recover under this Government.

Deputy Mary Lou McDonald

Does the Government have the document?

The Tánaiste

The document will be published today. I hate to disappoint the Deputy but a mini budget will not be necessary.

I am unhappy at the way in which this document was handled and how it was leaked. The matter has been raised this morning with both the German finance ministry and with the European Commission. I intend to pursue the issue. I will discuss it with our ambassador in Berlin and I will ensure that the way in which this document was handled is not repeated.

Deputy Mary Lou McDonald

The Tánaiste may wish to try to trivialise matters when they are raised in this session. He may be amused at his own jokes - his backbenchers clearly are - but I hazard a guess that-----

An Ceann Comhairle

Sorry, could we get on with a question please?

Deputy Mary Lou McDonald

-----people who are suffering from the results of his austerity will not find this a bit funny.

I am glad to hear he will pursue this matter again. He told us this the last time. Does he remember the last time the Bundestag finance committee discussed the economic circumstances of this State at length? On that occasion, he also told us he would pursue the matter vigorously. If there was ever an example of his ineffectiveness and his failure, it surely resides in the fact that we now have episode two of exactly the same scenario. Maybe that is not surprising-----

An Ceann Comhairle

Maybe we could have a question, please?

Deputy Mary Lou McDonald

-----because he is clearly very happy that Germany, perhaps France, the Commission and outside agencies and institutions would have a first view, a first opinion and a final decision-making capacity in respect of the economic governance of this State. His colleague, the Minister for Transport, Tourism and Sport, Deputy Varadkar-----

An Ceann Comhairle

Sorry, could we have a question please? Thank you.

Deputy Mary Lou McDonald

-----thinks the referendum is still undemocratic. He obviously would prefer the German parliamentarians to take decisions for us.

The Tánaiste told us there will not be a mini-budget.

An Ceann Comhairle

Deputy, could I have your question please? You are over time.

Deputy Mary Lou McDonald

He indicated that he has this document. Will he tell us how long he has had it? How was it that parliamentarians in Germany saw and debated it before any Member of this House? Will he give a serious answer rather than a trivial one because that would be extremely helpful?

The Tánaiste

I never give trivial answers. I do not trivialise what has happened to our economy or the difficulties people have in coping with the consequences of what has happened to it, including the loss of jobs. There are people in Cork this morning, for example, who are being asked for voluntary redundancies. I am acutely aware of that, as is the Government.

Deputy Martin Ferris

The Tánaiste should do something about it.

The Tánaiste

That is why our programme and strategy is to work our way to economic recovery. That cannot be done by some kind of abracadabra economics which Deputy McDonald seems to advocate from time to time. It must be done consistently and over a period of time.

She talks about people external to this country. The reality, given the state of the economy we inherited this time last year, was that nobody in the financial markets would lend to this country and we had become reliant on finance from external people - the European Commission, the ECB and the IMF. Since last year we have worked consistently to stabilise the economic situation, to get growth back into the Irish economy for the first time in four years, to pursue a trade and investment strategy in order to get jobs into this country and to pursue a jobs strategy which is set out in our action plan for jobs and in Pathways to Work.

There is no easy solution or quick fix to the Irish economy. The only solution to the Irish economy is to work our way out of the programme in which we found ourselves, which is how we will get back our economic sovereignty, and to create jobs and growth in our economy and in the European economy. That is what will work and is what the Government is concentrating on.

Deputy Pearse Doherty

The Tánaiste should answer the question. Why are they discussing a mini-budget in Germany before we have the chance to discuss it?

An Ceann Comhairle

I call Deputy Ross.

(Interruptions).

An Ceann Comhairle

Will Deputies please stop shouting? I call Deputy Ross.

Deputy Shane Ross

The Tánaiste has missed the point. The point about these embarrassing leaks which came from the Bundestag today is that the impression, and maybe the rightful impression, remains that our economic policy and the policy of austerity is dictated, decided and revealed elsewhere. It did not come here first. That is the problem. We need an assurance today that this will not happen again. It is no use getting officials to talk to each other on the telephone.

It will not help the selling of the referendum either if this impression continues to be given by the Bundestag. What will help the selling of the referendum by the Government is if the Taoiseach, who is in a unique position in Brussels today, says this referendum is an advantage to us and let us turn it into a positive. The whole Cabinet was shell-shocked by the fact there was to be a referendum but it can be turned into a positive because it is a wild card in the Taoiseach's pocket when he goes to Europe today.

He should go there and say the Irish people will respond better to a referendum if there are no more leaks from the Bundestag and if the Anglo Irish Bank promissory notes come into the equation. I heard the Tánaiste say, I think on "Prime Time" the other night, that the Anglo Irish Bank promissory notes were not linked to the referendum.

An Ceann Comhairle

A question, please. Thank you.

Deputy Shane Ross

They are and they are very strongly linked to the riddle of austerity which is being imposed on this country.

Will the Tánaiste assure this House that he will embark on a diplomatic offensive to tell those 27 countries that the Irish people would look much more benignly on this referendum, which they want to see passed, if they looked more benignly on our debt and were prepared to give us a credit write-off?

The Tánaiste

To be honest, I do not know whether Deputy Ross is for or against the referendum. He came in here when we announced we were holding it and I think he told us he was going to oppose it. Now he seems to be suggesting that he might support it in certain circumstances. Let me tell Deputy Ross something.

Deputy Pat Rabbitte

Finian, see which way the wind is blowing.

The Tánaiste

I do not know how he sees Irish diplomacy working but I will tell him how I see it working. We will not trade the constitutional rights of the Irish people with anybody or for anything. The referendum we will have is one for the Irish people to decide whether they want to ratify the treaty concluded on 30 January.

Treaty or no treaty, we will continue the discussions we had already begun with the troika in regard to the re-engineering of the promissory notes which are very onerous on the Irish people and on the Irish taxpayer. We had already commenced work on that and work is taking place with the troika which we hope will produce a positive result for Ireland. We are not linking it to any treaty. We have been engaged in that for some time and we will continue with that engagement.

The treaty which we believe is required in order to ensure stability in the euro zone, so there will be investment in Europe and Ireland to create jobs, is something we will put to the people on its own merits. We have no intention of engaging in any kind of a trade-off of the constitutional rights of the Irish people to decide on that treaty in their own time and based on their own judgment with anybody or for anything.

Deputy Shane Ross

I now understand why the Tánaiste did not make the Minister for Social Protection the Minister for Finance because she said in an interview today with the Financial Times that the European Union should cut the cost of Ireland’s bailout to help it pass the eurozone fiscal pact in a high stakes referendum. If that is not linking one with the other, I do not know what is. She went on to endorse that in stronger terms in that interview.

Let us get this straight. Do the Labour Party and the Government not understand the rightful perception among the people that the austerity, which is being imposed in this fiscal compact, is linked to the fact that it is also imposed because of the promissory notes?

If we can get money off and get a debt write-off on the promissory notes, we will also have less austerity.

Deputy Arthur Spring

We all realise that.

Deputy Shane Ross

Perhaps the Tánaiste will comment on what the Minister for Social Protection, Deputy Joan Burton, had to say to the Financial Times this morning.

The Tánaiste

The Government has a record of success in the renegotiation of the entire bailout arrangements and the deal done with the EU and the IMF. Despite the scepticism of some Members, we successfully negotiated significant reductions in the interest rate for the financial arrangements, which is worth €10 billion to the Irish people.

Deputy Brian Stanley

What about the Greeks?

The Tánaiste

We continue to be engaged in talks with the troika to explore possible ways to re-engineer the promissory notes and find a less expensive solution for the people by, for example, replacing them with other financial instruments with long maturity. The discussions are under way and we continue with that work. The Minister for Social Protection made it very clear in her interview that negotiations on the treaty and the holding of the treaty referendum are not linked. They are separate processes and we will continue with the process until we get a satisfactory outcome for the people.

With regard to the treaty, it should be ratified so there will be stability in the euro and we will get the investment in Europe, and particularly Ireland, to create jobs to bring about economic growth that will help us get out of the economic difficulty we found ourselves in and out of the EU-IMF programme, which the Government wants out of as quickly as possible.