Joint Committee on Finance, Public Expenditure and Reform debate -
Wednesday, 22 May 2013

Strategy Statement 2011-2014 and IFSC Clearing House Group: Discussion with Department of the Taoiseach

Chairman

The next item concerns the Department of the Taoiseach Strategy Statement 2011-2014 and the Irish Financial Services Centre Clearing House Group. I welcome Mr. Martin Fraser, Secretary General at the Department of the Taoiseach, who is accompanied by Mr. John Shaw, Ms Pauline Kiernan and Ms Michelle McKiernan. Mr. Fraser will make some opening remarks which will be followed by a question and answer session. I remind members, witnesses and those in the public Gallery that all mobile phones must be switched off.

I advise witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If witnesses are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

Mr. Martin Fraser

I welcome the invitation to brief the committee on the Department of the Taoiseach’s strategy statement and the work of the IFSC Clearing House Group. I have circulated to members a copy of the Department’s strategy statement, as well as the annual report for 2012.

Chairman

That was only circulated to select committee members so I will ask the clerk to issue it to the full committee.

Mr. Martin Fraser

In addition, members will have received detailed briefing material on the Department’s work programme when the Taoiseach appeared before the committee earlier this month to discuss the Department’s 2013 Estimates.

The strategy statement reflects our new responsibilities, structure, priorities and a new approach to how we do our business. It states that our purpose is to help the Taoiseach and the Government to resolve the current economic crisis, implement the programme for Government and to build a fairer society and a better future for Ireland and all her citizens. As civil servants, we are committed to providing an excellent service for the Government and the other institutions of State – which of course includes the Oireachtas – as well as for the public as citizens and users of public services. We do that work based on the principles of integrity, impartiality, effectiveness, equity and accountability.

The Department’s strategy statement, with the Taoiseach’s approval, sets out eight priorities for the period to 2014. These are headed by the most important, namely, jobs and economic growth, and also include: Europe; the programme for Government; service, which is intended to capture the various services provided by the Department to the Taoiseach, the Government and the public in general; reform; trust; fairness; and peace, which would refer mainly to Northern Ireland matters. It also sets out a number of horizontal themes, including developing our internal capacity and skills, a stronger focus on implementation, a greater emphasis on strategic thinking and forward planning, and changing the culture and rebuilding trust.

The strategy statement also emphasises that the Department's role requires strong working relationships with other Departments and agencies, and with stakeholders outside the public service. The annual report, which was approved by the Government yesterday and published, highlights the core activities of the Department during 2012. It emphasises the work of the Cabinet committee system, which is central to our role, reflecting the Government's commitment that the Department act as a Cabinet office. The annual report also gives an overview of developments in each of the eight strategic priority areas. This includes the exceptional responsibilities associated with Ireland’s current Presidency of the European Union, which continues to be a key area of work within the Department. Whereas there is much important work to be completed, it is fair to say that Ireland is viewed as running a very effective Presidency so far.

Of course, notwithstanding the wide range of work undertaken by the Department and across the Government, there are strategic priorities where we are not happy with the current position. We should never be happy if there can be improvements, and creating jobs and economic growth is the most important issue and we remain most concerned about it. Tackling the unemployment crisis is our first priority and it remains our biggest challenge. Unfortunately, given the unprecedented scale of the economic crisis, there is much work to be done on this and on other fronts.

I know one aspect of the Department’s work that is of interest to the committee is the IFSC Clearing House Group. I chair the Clearing House Group, which meets four of five times a year, and I have provided a briefing note on the work of the group and on the importance of the international financial services industry to Ireland. As chair, I have sought to emphasise a number of issues, including: the protection and creation of jobs through the implementation of the Government’s strategy for the industry published in 2011, if I remember correctly; transparency, notably through the publication of the minutes of the group for the first time since its establishment in 1987, as well as the publication of my diary; and the need for credible, responsible, proportionate and independent regulation, which is a very important part of how the industry must operate. I can elaborate on any of these issues for the members of the committee.

The strategy statement and annual report outline a significant amount of work undertaken across a very wide range of responsibilities by what is a relatively small organisation with fewer than 200 people by the end of the year. I would like to take this opportunity to thank all of the staff of the Department for all of the work and I am happy to take questions from the committee.

Deputy Sean Fleming

Mr. Fraser and his colleagues are welcome. My questions will be divided into two sections. I have a few questions on the annual report and some on the strategy statement. Page 5 of the annual report deals with core functions so will Mr. Fraser indicate how supporting the Government and secretariat has changed in the core functions since the new Government took office and how is it different from long-standing core functions? What fundamental changes are there in the Department as listed by the core functions for 2012?

Chairman

We can deal with IFSC Clearing House Group issues at the same time if the Deputy so wishes.

Deputy Sean Fleming

That is fine. There are a number of Cabinet committees, including those dealing with economic management, economic recovery, economic infrastructure, European affairs, health, mortgage arrears, public sector reform, social policy, climate change, Irish and the Gaeltacht, and children's rights. Does the Taoiseach attend all of those or who chairs such committees? Will Mr. Fraser provide a flavour of how those committees work and how often they meet? Does that occur on a quarterly basis? Who attends the meetings and what officials are there in addition to Ministers? Who chairs the meetings if the Taoiseach is absent? Do they involve line Ministers? I presume Ministers would chair meetings on those topics in their own line Departments in any event.

Mr. Martin Fraser

The Deputy mentioned core functions and changes since the new Government took office. Most of the core functions are unaltered because our core function is to provide a private office and protocol service to Cabinet secretariat, as well as maintaining relations with Áras an Uachtaráin. This is the work of institutions of State, taking in the Oireachtas and Whip's Office. They are the same under all governments and they are effectively described as constitutional functions. That may be the best approximation of what they are.

Every time the Government or Taoiseach changes, there are different emphases and sometimes there are big changes.

If the Deputy looks at the list on page 5, the first three are standing functions which we will always have. The office of the Tánaiste is a small office with two or three staff from within our existing resources. It is in the Taoiseach's Department. Previously it was an office of the Tánaiste which was separate. This is a very small office. The Tánaiste's special advisers are also physically located in Government Buildings, although they assign somebody to the Department of Foreign Affairs and Trade. The Government Press Office has always been part of our duties.

The next point is all the Taoiseach's duties, and we help him. Those duties are as they always were, except that the European Council load is much bigger now because the Department of the Taoiseach has full responsibility for EU affairs. The EU division of the Government is now in our Department rather than the Department of Foreign Affairs and Trade. That brings with it an enhanced capacity to support a Taoiseach of the day at the European Council and also a wider range of responsibilities at lower levels of administration and general co-ordination of EU matters.

Each Government sets up its own Cabinet committees and each Government chooses its own topics and way of doing business, but the secretariat's work or the toolkit is the same.

The programme for Government office is a new initiative. Again, that is a small group of two or three people who are charged with monitoring implementation of the programme for Government. They brief the Taoiseach and talk to Departments to try to get things done and iron out any problems. They also help to draft the annual reports. The Government has published two such reports during this Administration.

The next point, briefing advice for the Taoiseach, is obviously part of our core functions. The next point is the Constitutional Convention which was established by the Government under our Department. We were very much involved in setting that up. A couple of staff from our Department have been transferred to it. It is an independent organisation chaired by Tom Arnold. In fact, one of the staff from the Oireachtas is there as well. There are three or four staff, which is a small number, but it is a quite effective body.

With regard to the reference to the abolition of the Seanad, during this Administration the Department has been responsible for the fiscal treaty referendum and it is now responsible for the Seanad referendum. It comes under our overall responsibility as a Department, as opposed to the wider Government.

The EU function has changed as I outlined. It is bigger and we are more centrally involved in all aspects of EU policy.

The last point is corporate affairs, which is a standard service that all Departments have. There have been some additions and some subtractions. The big change was that public service reform was transferred in its entirety to the Department of Public Expenditure and Reform. While we have some involvement in most aspects of Government, we are not as directly involved in the public service reform agenda or in the industrial relations agenda as we would have been in the past. Obviously we work with our colleagues in the Department of Public Expenditure and Reform, but they have the main responsibility there. That has taken a great deal of work out of the Department and over 20 people left on foot of that change. Social partnership, as it was known, is no longer done in the way it was previously. That is also a big change.

That is a summary of the changes.

Deputy Sean Fleming

Will the witness comment briefly on the committees and how they generally operate?

Mr. Martin Fraser

The Taoiseach chairs them almost all the time. I cannot remember any occasion in this Administration when the Taoiseach did not chair them. We have evolved to a situation where we try to hold them all consecutively on one or two days if possible, just to help manage his time. As the names suggest, they deal with various areas which are cross-departmental where the Taoiseach has a particular interest. It might be a standing issue such as European affairs, it might be something in which we are trying to carry out serious reforms, such as health, or it might be a topic that we wish to put a focus on, such as mortgage arrears. The management council has the standing of a Cabinet committee as well. This is all on the record of the House and the Taoiseach answers questions about them. The Taoiseach chairs them and they are attended by relevant Ministers, who are appointed to the committees by the Government, and by officials.

Deputy Sean Fleming

My last question on the strategy statement for 2011 to 2014 relates to page 21, which refers to the programme for Government commitments for the Department of the Taoiseach. If there is no time to answer the question today, the witness might send a note to the committee. Page 21 refers to a plan to reduce the number of committees. I presume that is a reference to Oireachtas committees. Is the witness aware that the Houses of the Oireachtas (Inquiries, Privilege and Procedures) Bill, which will be debated on Second Stage this afternoon in the House, provides for at least four or five new Oireachtas committees? How does that gel with reducing the number of committees?

Second, there is a reference to the role of the Ceann Comhairle in deciding whether a Minister has failed to provide reasonable information in response to a question. What is the current position on achieving that objective? What is the position with legislation on Cabinet confidentiality? The programme refers to having a committee week once in every four weeks in the Dáil to deal with committee activity. There is also reference to regulatory impact assessments for EU directives. Is that happening in all cases?

Finally, the programme refers to rationalising the regulators. Only last week we were establishing a new regulator for the national lottery, which was not necessary until now. How many new regulators have been established since the Government took office, notwithstanding the commitment to rationalise the number of regulators?

Mr. Martin Fraser

A number of the points the Deputy raises relate to the Chief Whip's office. If I may be delicate about it, they are political matters and they will be dealt with in that way. I have a briefing note but I can revert to the Deputy with the details. The number of committees reduced from 25 to 16 when the new committees were established. Members of the Oireachtas will know more about developments since then than I do. The other Bill is before the House and there are often suggestions for new committees, but I can only set out the facts as I understand them. That is mainly dealt with through the Chief Whip's office and the political system.

I understand the Ceann Comhairle's role was dealt with under Standing Orders in July 2011. Again, I am using a briefing note on this. I do not have the same knowledge of the House that Members have.

With regard to the rationalisation of the number of regulators, the Department has done some work on regulation. We have been involved in a consultation for a report on regulation and how it might operate in the country. I believe the report is out for consultation at present and might even be nearly complete. It has been publicised. The idea is that there would be a Government statement on regulation. That is our contribution. From time to time policy initiatives come about or changes are made which require more regulators. These decisions are made by the Government in each case. It is not that we have a type of fatwa or an ability to stop new regulators being created, it is just a policy matter for the Government.

Deputy Sean Fleming

With regard to the regulatory impact assessments, RIAs, prepared for Ministers on all EU directives, is there somebody somewhere dealing with that? The witness said European Affairs is under the Department of the Taoiseach now. Perhaps he will be able to send the committee a progress report on the number of directives that have been issued in the last two years and how many RIAs were prepared in respect of those and how many were not. The witness might not have that information with him but he can forward it to the committee.

Mr. Martin Fraser

I will get that for the Deputy. While I mentioned some of the administrative work of the EU division, a great deal of that is liaising with EU scrutiny committees and ensuring material is given to the Oireachtas. However, I will have to check the detail for the Deputy.

Chairman

I concur with Deputy Fleming's comments on the committees. It was an error at the start of the Administration to configure the committees in the way chosen. Prior to chairing this committee I chaired the environment committee which, in its initial manifestation, had transport, arts, sport and tourism under its remit. It was dealing with three Ministers and six Ministers of State at the same time. That leads to a very congested situation, particularly with the type of very welcome reforms that are now taking place in committee procedure, such as pre-legislative scrutiny. The workload of committees has increased as part of the reform agenda, but the over-compressing of multiple portfolios into single committees was an error. The error was adjusted because transport was removed from the environment committee six or seven months later. We need to be mindful that reform and reduction are not necessarily the same thing. Sometimes we reduce things to a level that leads to slowing down the programme of reform.

Deputy Peter Mathews

I thank Mr. Fraser and his colleagues for attending this meeting. We are reviewing two documents, the annual report and the strategy statement. I refer to page 6 of the strategy report on the programme for Government which then refers to pages 21 to 25.

I am curious to know the answer. Where does the setting up of the expert group to report to the Government on the X case legislation fall into it? I do not see it in the strategy statement or the annual report, yet the Government decided to follow a certain course in late 2012 on the recommendation of the expert group. I thought that came within the remit of the Department of the Taoiseach because the Taoiseach has a close interest in the deliberations. However, it does not appear anywhere in the strategy statement or the annual report.

Mr. Martin Fraser

The appendix that appears in all strategy statements contains programme for Government commitments relevant to the Department rather than the Government as a whole. In the case of the Department of Social Protection or the Department of Transport, Tourism and Sport, there is another set of commitments. It was one of the initiatives we took to try to ensure every part of the Government's programme was the responsibility of someone.

The Deputy referred to the expert group on the A, B and C v. Ireland----

Deputy Peter Mathews

I refer to the legislation that we have been told is necessary. Surely that comes under either strategy or annual report. The expert group reported towards the end of 2012 and hearings started in January, but the document is silent on all of this.

Mr. Martin Fraser

It was the responsibility of the Department of Health and the Minister for Health. The expert group was set up under the Department of Health-----

Deputy Peter Mathews

Does it not feed into the Department of the Taoiseach?

Mr. Martin Fraser

The expert group reported to the Minister and the Minister brought a report to the Government before Christmas. The Government made a decision on a direction which it referred to the committee. The matter came back from the committee and was considered by the Government. We have some involvement because we provide the Government secretariat. We did not have much involvement in the Department as it was dealt with mainly in the Department of Health. The matter came back to the Government and it made its decision. It is important for the Government but not necessarily for the Department.

Deputy Peter Mathews

The perception from annual reports and strategy statements is that there was no communication between the Department of Health and the Department of the Taoiseach. Where did the conversation take place?

Mr. Martin Fraser

I am sure there were plenty of conversations between the Department of Health and the Department of the Taoiseach on the matter. I am not trying to avoid the question. The matter was dealt with by the Department of Health and the Minister for Health in the first instance.

Deputy Peter Mathews

To be fair to Mr. Fraser, he does not know. That is the answer to my question.

Deputy Brian Stanley

I thank Mr. Fraser and his colleagues for attending. It is useful to ask questions, particularly on economic matters. I refer to how Ministers present figures. Questions have been raised about this matter. We have questions about the accuracy of the figures and whether they present the whole picture. It is important that the Government does so.

With regard to the recent announcements on the targets for job creation and growth, there was an announcement of 12,800 net full-time jobs lost, but the good news was that they had been replaced with 14,000 jobs. However, they were part-time jobs. Many of the people concerned are on the live register as they are working fewer than three days a week. Perhaps that issue might be addressed. The officials working with the Taoiseach and other Ministers present the figures and it is important that they are presented accurately. Some of the 14,000 people concerned will be working for a fraction of the pay of the workers who lost jobs are included in the figure of 12,800 net full-time lost.

The second question concerns priority H and helping to maintain and build the peace process and build new relationships on this island and the island of England, Scotland and Wales in pursuit of implementation of all aspects of the St. Andrews Agreement. As part of the agreement, a stimulus package was announced and Britain gave a commitment to implement it. How many times has the Taoiseach raised the issue with British officials or Ministers?

Mr. Martin Fraser

There are a number of statistics. The one I look at is the number on the live register, which is over 400,000 people. This is way too high and there are people behind the statistics. I would not argue with anyone saying there are major problems for people without jobs. People can quote statistics in all sorts of ways, but that is the central fact.

Deputy Brian Stanley

Surely it is important to say X number of part-time jobs have been created. However, we should not create an illusion. There is a big difference between part-time and full-time jobs because a part-time job may involve working eight hours a week. In the interests of accuracy, we should deal with the reality. We cannot fool people into thinking these are like for like jobs when they are not. We should present figures accurately and state the number of part-time jobs created.

Mr. Martin Fraser

We will look into that aspect. There is nothing about the jobs data that is in any way encouraging. There are some improvements, but it is a major problem.

The Deputy asked about the stimulus package under the St. Andrews Agreement. We talk to the British Government all the time about these matters. Unfortunately, owing to our crisis, the contribution from the South has had to be scaled back, particularly for the road to the north west. I hope the project will go ahead and that we still have some money on the table. The latest development is that the British Government has been talking to the Northern Ireland Executive in Belfast which has primary responsibility for dealing with British Government. The British Government has been talking to the Northern Ireland Executive about various incentives and economic packages it can use to help the Northern Ireland economy. We encourage this and any help at British or European level. The Government secured the next PEACE programme for Northern Ireland because we fought very hard in Brussels last year. We talk to the British Government all the time and have a huge interest in ensuring Northern Ireland is prosperous and that the Northern Ireland Executive gets whatever help it can get. It has its own responsibilities and must carry them out. It is an ongoing conversation. The British Government must make its own decisions on its economic circumstances.

Deputy Brian Stanley

The reason I am pressing the point is that the St. Andrews Agreement makes the Irish Government a key partner. It is important that we emphasise and press the point to ensure there is full implementation.

With regard to the Clearing House Group, there is a target of 10,000 net new jobs in the financial services sector mentioned in the briefing document we received. Paragraph 10 refers to Capita doubling its workforce by 800. Will Mr. Fraser confirm that most, if not all, of the jobs will be replacement jobs for the IBRC workers? Will former IBRC workers be employed? There was major concern about the position of the workers when Anglo Irish Bank was wound down which occurred through no fault of their own. Are most of them former Anglo Irish Bank workers? If they are former Anglo Irish Bank workers moving to a new company, their conditions of employment will not be guaranteed. Is that correct?

Mr. Martin Fraser

I understand the Deputy's question, but I do not know the answer, as I do not deal with individual companies. I was not aware of the background to the Capita announcement which I read in the newspapers. I saw reports that the jobs would go to former IBRC workers. Staff in the banks are losing their jobs. Therefore, to the extent that we can create employment in the financial services centre to enable the people concerned to find new work, it is good. On the specific point made, it is not something I know anything about.

Deputy Brian Stanley

How many net new jobs have been created in the financial services sector since 2011?

Mr. Martin Fraser

I do not have a number for the Deputy. I would say it is probably pretty flat and that there have been some gains, which have been mentioned, and there have been some losses. My sense is it is pretty flat. I do not think that is actually a bad performance by the sector given the scale of the carnage internationally and the problems in our own economy but I would say it is flat and certainly much of the work we are doing is to try to get new jobs and find new ways to create jobs in this sector and in other sectors. I do not have a precise number but I will try to get it for the Deputy. My sense of it would be that it is flat.

Deputy Kevin Humphreys

I welcome the officials and thank the Taoiseach and his Department for taking on board some of my suggestions on the need for increased transparency in the IFSC Clearing House Group, especially publishing the minutes. That has added to the transparency. I also called for a number of other measures, including provision of documentation, list of attendees and presentations at sub-groups, as that is where the real business occurs. I will return to that later.

I will concentrate on the Clearing House Group because it has been of interest to me since becoming a Member of the House. We are all aware of the discussions taking place about multinationals and their tax strategies in Ireland. It appears that the proposals which come forward from the industry through the clearing house group are largely adopted in the Finance Bill. Mr. Harry McGee wrote last October that 21 measures were adopted in the Finance Bill 2012. How many proposals were put forward by this group? Was it just the 21 or were there more proposals which were rejected? I know the 21 proposals which were accepted were not accepted in their totality and some were adapted but, by and large, the 21 proposals were accepted and included in the Finance Bill. How many proposals did the Clearing House Group propose?

Mr. Martin Fraser

I am afraid the Clearing House Group gets more credit than it deserves for some of these things. The Clearing House Group did not propose or adopt any measures per se. The group I chair, for which the Deputy has the minutes, discusses these things. They are mainly dealt with bilaterally with the Department of Finance, as are all other pre-budget submissions from all sectors. The financial services members certainly would have been talking to the Department of Finance. One can see from the minutes of the Clearing House Group that there was some conversation but it is not that we adopt or do not adopt proposals. They go to the Department of Finance and they are dealt with by it.

Deputy Kevin Humphreys

By and large, those 21 measures in the Finance Bill appear in the minutes of the Clearing House Group. The minutes are quite light. One does not get the meat of the discussion.

Mr. Martin Fraser

The meetings are quite light, at times. I understand the point the Deputy raised. If he looks at the minutes, he will see that after the Finance Bill is published, or enacted, the Department of Finance goes through the various measures that have been adopted. The bulk of them are adopted, although not all of them. The Department of Finance will oppose some of them and will adjust others. The Minister for Finance, the Department of Finance and the Government have to decide what goes into the Finance Bill.

This is a very competitive international industry and regulation is always changing. Countries change their regulations all the time. I do not have a number for the Deputy but it is not correct to imagine that proposals come to the clearing house group, we tick the boxes and give them to the Department of Finance which implements them. That is not the process. The Department of Finance deals with these things, as it does with all other proposals for tax changes.

Deputy Kevin Humphreys

There is a concern. Not every group would meet at such a high level of Government. When one goes through the minutes, one sees, by and large, that what is discussed works its way into the Finance Bill. That does not really happen anywhere else. That is why I have a concern. It seems there is a very high level access.

This committee discussed the financial transaction tax at approximately three meetings. If one looks at the minutes, there were approximately 13 meetings between October 2011 and May 2012 on the same subject with the group and the sub-groups. By and large, the Department's position was that of the Clearing House Group. I questioned the ESRI report which supports it. If one goes back over the questions I asked on the ESRI, it does not stand up. People were using the ESRI report as justification.

Was there more information at those 13 meetings which strengthened the case that there should not be a financial transaction tax? I am open to persuasion on whether it is a good or a bad thing but when one sees there were 13 meetings between October 2011 and May 2012, one can see the concern I have as a Member of Parliament.

Mr. Martin Fraser

I fully appreciate the Deputy's concern. There is no denying that there is a very high level of access. The group has been in place since 1987 and it has, by and large, been very successful. Successive Governments have agreed with the group's existence and Governments, including this Government, have had strategies for developing this sector which includes this Clearing House Group which I chair ex officio. I also chair the National Economic and Social Council which gets less coverage.

Deputy Kevin Humphreys

I think we will stick with the clearing house group.

Mr. Martin Fraser

To be fair, the National Economic and Social Council deals with a whole range of other issues around social policy, poverty, the vulnerable, who is being affected by the crisis and issues which are very important to people. It members are drawn from the community and voluntary pillar, the Society of St. Vincent de Paul and other areas. I probably spend more time at those meetings than at meetings of the Clearing House Group. As civil servants, we do whatever work we are asked to do.

In terms of the financial transaction tax, there is no doubt that the Irish financial services industry does not want one, nor do I think any financial services industry wants one. The real issue for Ireland is that if there was not one, in particular in London or any other place with which we have to compete, then there is a very great likelihood we would lose many important jobs in Dublin and other areas to London.

Deputy Kevin Humphreys

We have not had access to those 13 meetings and the cases made against the financial transaction tax. We have only seen the ESRI report. Mr. Fraser is asking me to accept in good faith what happened at those 13 meetings and that a very strong argument was made against it. The ESRI report does not make that strong a case. Is Mr. Fraser confirming those 13 meetings took place?

Mr. Martin Fraser

I do not know to which 13 meetings the Deputy is referring.

Deputy Kevin Humphreys

A question was asked by the Financial Times under freedom of information.

Mr. Martin Fraser

I am sorry Deputy, I do not-----

Chairman

Are these 13 meetings of the group?

Deputy Kevin Humphreys

There were 13 meetings relating to the financial transaction tax which took place in the Department.

Mr. Martin Fraser

Not in the Department of the Taoiseach - I would not have thought. We do not deal with the financial transaction tax. The Department of Finance deals with it.

Deputy Kevin Humphreys

There were 13 meetings at a high level in Government in regard to that. Perhaps Mr. Fraser will clarify that is factually correct because it has been printed.

Mr. Martin Fraser

I do not doubt there were 13 meetings at Government level on the financial transaction tax.

Deputy Kevin Humphreys

Mr. Fraser is not aware of them.

Mr. Martin Fraser

The financial transaction tax may relate to the Clearing House Group which meets four or five times per year but I do not know specifically what meetings the Deputy is talking about. What I can say is that the Government adopted a position on the financial transaction tax which was very clear. As I said, it was informed by an assessment by the Government and the Department of Finance on where Ireland's best position lies. It is very clear the industry would be against a financial transaction tax. I cannot confirm or deny this because I do not know precisely what the Deputy is putting to me.

Deputy Kevin Humphreys

That is fair enough. Perhaps Mr. Fraser will clarify it.

Deputy Joe Higgins

To be helpful, the quote was that the Clearing House Group and its sub-groups discussed financial transaction tax at 13 meetings in Government Buildings between October 2011 and May 2012.

Mr. Martin Fraser

I am sure there were 13 meetings between the Clearing House Group and the sub-groups. We used to provide a secretariat to the sub-groups but we do not anymore. We just provide it to the Clearing House Group.

I do not doubt that there were 13 meetings of the Clearing House Group and the working groups and I would not be at all surprised if the financial transaction tax was raised at most of them. That would make sense.

Deputy Kevin Humphreys

Mr. Fraser should be able to see the concern about the imbalance of information that is being presented, especially to a finance committee. However, I know that I am under time constraints so I will move on.

Chairman

The Deputy will be allowed back in again later.

Deputy Kevin Humphreys

I thank Deputy Higgins for obtaining that information, which I could not get.

Are the current subgroups dealing with asset management, banking, treasury funds, insurance and pension funds? Are those subgroups still in existence?

Mr. Martin Fraser

I have never been to any of those meetings and we no longer provide a secretariat to the subgroups but I believe that is still the composition of the subgroups.

Deputy Kevin Humphreys

If one looks at the minutes for the meeting in January 2012-----

Chairman

Excuse me for interrupting, Deputy Humphreys, but can I check something? If the Taoiseach's office is not providing secretariat support to these subgroups, does that mean the office is then blind to what is happening at those meetings?

Mr. Martin Fraser

I think we probably have people at the meetings but-----

Chairman

Who represents the Taoiseach's office at the meetings?

Mr. Martin Fraser

Officials from the economics division. We used to-----

Chairman

Are they providing a written report on the proceedings to the Taoiseach's office?

Mr. Martin Fraser

The previous system was that we used to provide a secretariat-----

Chairman

I am asking if there is a written report. A total of 13 meetings have taken place and I want to know if a written report on each of those meetings has been provided to the Taoiseach's office.

Mr. Martin Fraser

We used to do the minutes but now we have officials in attendance. One must bear in mind that-----

Chairman

I know officials are in attendance. To date, 13 meetings have been held by a group which informs taxation policy in this country. Let us park the value judgment on whether a financial transaction tax is an appropriate taxation measure and simply deal with the question of whether the meetings are recorded. Is a report provided to the parent office, namely, the Taoiseach's office, on those meetings?

Mr. Martin Fraser

Those meetings are attended by-----

Chairman

Mr. Fraser has already explained that to me.

Mr. Martin Fraser

I have not finished my sentence yet. The issues that this committee is interested in, primarily, are financial policy and taxation policy and issues in the finance Bill. Those meetings are attended by a number of officials but I have not got the full attendance list here because, frankly, it is not a very big part of what we do. The meetings are attended by, among others, representatives from the Department of Finance and the main engagement on these matters is with that Department. It is quite possible that there are officials from the Taoiseach's office who write notes. In fact, I am sure there are. If they go to meetings, they should take notes. However, the main engagement would be with the Department of Finance and the process is through the finance Bill process.

Chairman

Okay, so-----

Mr. Martin Fraser

I do not want to interrupt, Chairman, but it is important for this committee to understand that we are not in charge of the financial services industry or of financial and taxation policy and so-----

Chairman

I accept all of that, but the Government is facilitating a series of meetings. The attendees are not meeting independently but as part of a structure. If the officials are not line-managed into the Taoiseach's office, I am assuming, from Mr. Fraser's response, that they are line-managed into the Department of Finance. That being the case, is there a written report to Government, either to the Department of the Taoiseach or the Department of Finance, on those meetings?

Mr. Martin Fraser

I am sure there is, Chairman, but I will have to check and confirm that.

Chairman

I ask Mr. Fraser to do that and revert to this committee on the matter.

Mr. Martin Fraser

I will, of course.

Deputy Kevin Humphreys

I want to bring Mr. Fraser back to the Clearing House Group meeting on 17 January, which is the last meeting for which there are published minutes. In the context of my original concerns about minutes, documentation and presentations and taking on board the remarks of people like Mr. Michael Somers and Mr. John Bruton concerning heavy financial regulations and their effect, I ask Mr. Fraser to comment on item No. 4 on the agenda of the meeting of the Central Bank industry subgroup on 27 November 2012, where industry made a presentation on enforcement. We got into trouble here because of a lack of regulation and for that reason, transparency is very important. That is why I wanted to see such presentations being published, particularly if they have the potential to influence regulation. We all know the problems that a lack of regulation caused. While the need to publish the minutes has been accepted today, we really need a lot more than that. We also need to see the associated documentation and presentations from those meetings. Transparency is vital so that it is clear that regulatory or taxation policy is not being overly influenced by any particular sector. I ask Mr. Fraser to ensure that this committee is provided with the presentations from the meeting that took place on 27 November, 2012. The issue is out there in the ether, with Mr. Michael Somers and Mr. John Bruton addressing it, of late. It appears that a number of industrial heavy weights attended the January meeting. Can this information be supplied to the committee?

Mr. Martin Fraser

I will come back to Deputy Humphreys on the issue of the presentations. I must explain something because it may seem that I do not want to take responsibility for this but it is actually quite important that-----

Deputy Kevin Humphreys

Mr. Fraser actually chaired that meeting - not the subgroup but the main meeting.

Mr. Martin Fraser

No, I am trying to explain. I did not chair it. It is very important for the country, given what has happened to our economy, that everybody does his or her job properly and appropriately. The last thing this country needs is the Department of the Taoiseach taking some sort of over-arching role in regard to taxation policy, regulation or other areas. I wish to stress to the committee that it is entirely normal for any industry to liaise with line Departments. The agrifood industry does it in the context of Food Harvest 2020, the financial services industry liaises with the Department of Finance and other industries do so with other Departments. It is entirely normal. I must be clear about the fact that the Department of Finance must be in charge of budgetary and taxation policy. It is that Department which deals with the industry. It is even more important to stress that the regulator must be independent, given what happened in the past. The regulator must be independent. I do not speak to the regulator about the IFSC. I do not encourage the industry to pressurise the regulator at the Clearing House Group. Item No. 4 on the set of minutes to which Deputy Humphreys refers is related to a meeting between the Central Bank and the industry. The Department of the Taoiseach was not represented at that meeting and that is entirely appropriate. Indeed, it is actually very important.

The regulator has set out what he referred to as his prism or his approach to regulation and his strategy statement. He engages with the industry, as all regulators do with all relevant industries. We do not get involved in that process. That is a bilateral engagement between the industry and the Central Bank. Therefore, the reference in the minutes is precisely that. I did not chair that meeting. Indeed, I would not chair it.

Deputy Kevin Humphreys

I did not mean to say that Mr. Fraser chaired the subgroup-----

Mr. Martin Fraser

I would not chair any meeting where the industry was attempting to present to the regulator. That is a matter for the Central Bank and the industry, on a bilateral basis. It is very important that there is no confusion on this point. It is up to the regulator to regulate.

Deputy Kevin Humphreys

Yes, but a subgroup of the industry made a presentation to the Central Bank. The subgroup is part of the Clearing House Group. That is what I am saying. That is why we need to see the detail of the presentations and the documentation. If we are to have some form of oversight, we need to see what the subgroup is submitting to the Central Bank. It is a subgroup of the IFSC Clearing House Group.

Mr. Martin Fraser

I do not want to sound pedantic but it is a subgroup of the industry meeting, bilaterally, with the Central Bank. I will find out for the Deputy and will revert to him as soon as possible.

Deputy Kevin Humphreys

Yes, but if it is a subgroup then why ---

Chairman

I will allow Deputy Humphreys back in later but we must move on. I ask Mr. Fraser to clarify something. In the briefing document supplied to the committee today on the IFSC Clearing House Group, paragraph 4 states that industry members of the Clearing House Group are appointed by an agreed nominating process which is co-ordinated between the Department and the IFSC. I ask Mr. Fraser to clarify to which Department that refers. Is it the Department of Finance or the Department of the Taoiseach?

Mr. Martin Fraser

The Department of the Taoiseach.

Chairman

That brings us back to Deputy Humphrey's initial question. If the appointment process involves the Department of the Taoiseach, the reporting mechanism should be back to that Department. Is that correct?

Mr. Martin Fraser

If the Chairman is asking about the precise point raised by Deputy Humphreys, I do not believe that would be appropriate. It is a matter for the regulator to deal with the industry.

Deputy Kevin Humphreys

There is a misunderstanding of the Chairman's point.

Chairman

My point is that we inherited the appointment of public interest directors to the boards of the banks without a mechanism for reporting back to the Oireachtas being put in place. In a similar way in this instance the Office of the Taoiseach is making an appointment without having in place a mechanism for the person to report back to the Office of the Taoiseach. Is that what Mr. Fraser is saying?

Mr. Martin Fraser

No, I am not saying that at all. The Clearing House Group comprises representatives from the public sector and the private sector. The private sector people are appointed by FSI, which is essentially the industry part of IBEC and a number of chairs of groups, such as the chief executive of the stock exchange, who by tradition have been on it. The phrase "co-ordinator" is not an appointment but just that the secretariat to the Clearing House Group deals with who is on the group. The private sector effectively come up with their own people and we come up with ours.

Chairman

I assume there are minutes of each and every one of these meeting, regardless of whom the secretariat is providing and those minutes are, we are unsure this afternoon, going to the Departments of the Taoiseach or Finance and Public Expenditure and Reform. Are we sure that minutes from these meetings are going to a Department?

Mr. Martin Fraser

There are officials at these meeting.

Chairman

I am not asking Mr. Fraser whether officials attend, because we are back to the point of earlier discussion. Is there a report of these meetings going to a Department?

Mr. Martin Fraser

At any meeting at which there is an official, there must be a report. I would have to check the precise issue.

Chairman

Will Mr. Fraser come back to us in due course?:

Mr. Martin Fraser

I will of course.

Deputy Joe Higgins

I accept that as a public servant Mr. Fraser does not make the policy but there is extreme concern among some Deputies who represent working class people about the IFSC Clearing House Group operation.

One cannot describe it, as Mr. Fraser did, as normal industry-Government meetings and relationships. This is an unprecedented structured access by the biggest hitters in the financial markets system in the Europe to the highest levels of the Government, chaired by the Irish Prime Minister. Deputy Boyd Barrett in particular and I have raised this directly with the Taoiseach on many occasions in the past two years - the people who have this unprecedented inner corridor to the very heart power in this State, include representatives from Allied Irish Banks, Bank of Ireland, Citigroup, Zurich, IBEC, PricewaterhouseCoopers and so on. In the briefing material the Department has provided, the point is made that membership of the Clearing House Group includes senior public sector and industry representatives. There are a number of specialised working groups in the areas of banking and treasury, insurance, pension funds, asset management. These are chaired by industry representatives who also sit on the Clearing House Group for the duration of their tenure as Chairs of the particular groups.

Let me put it to Mr. Fraser that this is the kind of inside track that lobbyists in other industries could only hallucinate about. This is corporate government as far as the financial service, the big banks and the major financial institutions. The irony is that the very forces whose activities crashed the financial system five years ago as a result of their unbridled speculation and profiteering are now being given the responsibility for clearing up the mess, sitting in the lap of the Government or vice versa . Mr. Fraser cannot say anything other than these private institutions have unprecedented influence on Government policy.

I am asking Mr. Fraser making a note of one or two of these points because I have limited time and he can reply to them in sequence.

The minutes provide no transparency in any sense. It is slightly helpful to know what was discussed but it really does not tell the full story is in any sense, the issue is the access and the immediate availability at the very heart of Government by these massively powerful industry players in the financial market system, which I contend in reality is a dictatorship over the European Union.

At the January meeting of the IFSC Clearing House Group, the issue of REITs, real estate investment trusts was raised, the Secretary General of the Department of Finance and Public Expenditure went so far as to suggest that to parallel the IFSC, they might establish a real estate services group type of set up along the same lines. What discussions are going on in regard to this? The suggestion of a global centre of excellence for property - and a company was mentioned, Annaly Capital, a United States real estate speculator - coming in and being a major player in this country. I have seen a suggestion elsewhere that this is an excellent time to come into the "Irish market", and similar to NAMA, take over properties at a haircut price which was subsidised by the taxpayer and now there is a proposal that these people come in and buy up property at the lowest rate and make a massive killing when the property appreciates at the expense of the people. Is it proposed that companies can buy mortgage portfolios in this country, which would be an issue of great concern to ordinary people?

Mr. Martin Fraser

As the Deputy suggested, I noted the points he raised.

Government policy is to try to create jobs in this industry and it wants the Clearing House Group as part of that. As he rightly stated I am a public servant so I must do my work with integrity. I have published the minutes in a bid to help. I do my best in that regard. I am very aware of the history of what has gone on which is the reason I am very strong on the point of independent regulation.

On the specific issue of property raised by the Deputy, this suggestion was made and got a brief mention in the minutes under any other business. I am not aware of any developments in that but the Departments of Finance and Public Expenditure and Reform considered it and I think there was something in the Finance Bill about REITs, however I must confess that I am not au fait with the detail. The Clearing House Group has not done anything to advance that since it was mentioned at that meeting.

Deputy Joe Higgins

In regard to transparency then, the minutes give a very cursory glance at what has transpired. Does Mr. Fraser accept if there is to be real transparency, he would have to have the submissions and representations made by the financial industry players on this group in regard to critical issues like financial transaction tax and other issues that they would see as impacting on their profits?

Mr. Martin Fraser

I chair the Clearing House Group and I have published the papers in connection with it. Deputy Kevin Humphreys asked me about some sub-groups and I will certainly check that out.

The vast bulk of the material about which the Deputy is talking goes to the Department of Finance because it is part of the budget and finance Bill process. I will come back to the committee to see whether I can help on some of these matters. The more transparency there is about them the better. I have been transparent in what I can be transparent about.

Deputy Joe Higgins

As a public servant, does Mr. Fraser see what we see? There is a huge disequilibrium. In his opening statement he cites the passing of the property tax legislation as one of the Department's achievements. It is mentioned in one of the Department's documents on the implementation of the programme for Government. Mr. Fraser has also said the Department is committed to building "a fairer society". That is one of its key issues. The property tax is causing huge grief for hundreds of thousands of households that have already been massively hit and simply cannot afford it. If they pay it, it will impose a massive burden on them. I will not, however, get into the ongoing battle against it. It has been introduced as a direct result of the crash of financial services that led to the crash in the real economy. The people are paying for this, but the players who were centrally involved in causing the crash have unprecedented access to the Government. The taxpayer has no such access. As a public servant, does Mr. Fraser agree that this is an unfair disequilibrium in a supposedly democratic society?

Mr. Martin Fraser

All I can say is that the Government's policy is to try to create jobs in this industry. For many years the Clearing House Group has been very successful in creating jobs. I now chair it and do my best to work on the issue of job creation, to have as much transparency as possible and to ensure the regulator is allowed to do his job appropriately.

The Deputy referred to the property tax. We try to carry out Government policy as effectively as we can. It is not the case that we regard something as an achievement, or do not regard it as such. We carry out Government policy as faithfully as we can. Obviously, a property tax is being pursued as a matter of policy. Fairness is very important and is in our strategy statement. We could have a strategy statement that did not contain it. The country is in a very difficult position and it is important that we have fairness in our strategy statement. We can look to it as something that is written down when we are doing our jobs. We just have to implement the policy as best we can.

Deputy Liam Twomey

For the sake of balance, Mr. Fraser might also discuss what the social policy group does. As he said, the Clearing House Group is the subject of a great deal of public discussion. Perhaps he might say a few words on the social policy group which is the other group he chairs. It would be of interest to the committee.

We have seen a significant attack on Ireland Inc. in the past couple of weeks. I refer to what happened at a Westminster committee with reference to Google and what happened at a US Senate committee hearing with reference to Apple. The impression is being created that Ireland is some sort of tax haven for large multinational corporations. Some people in the United States and the United Kingdom are trying to say large corporations such as Google and Apple are working through Ireland to defraud the taxpayer in these countries of massive amounts of tax. It is important that Mr. Fraser give the committee some response or make some points in that regard. It seems that Google paid just €3 million in corporation tax in Ireland. It has been suggested that if it was paying corporation tax on what some regard as its profits, it would have to pay more than €1 billion.

I will explain what has actually happened. This should be the course of the discussion at US Senate and Westminster committees. Many countries have bilateral tax agreements with each other. There are bilateral agreements between the United Kingdom, the United States, Ireland and a host of other countries across the world. Those concerned about what is going on in Google or Apple do not mention these agreements which relate purely to what we do in Ireland. There is a need for Mr. Fraser to make a statement in that regard. We are being seen as the bad boys with regard to corporation tax, but that is not true. Many of the issues involved relate to the bilateral tax agreements all countries have with each other. If we had an opportunity to drill into this issue - I will not do so now - we would see that some of the historical approaches to taxes in the United States, for instance, have contributed to the situation where multinationals are seen as avoiding what is considered by some to be their fair share. I would like Mr. Fraser to comment on this. This is the place for such a comment to be made because this committee deals with these issues.

The approach being taken by the Department of the Taoiseach and the Taoiseach in setting and implementing priorities is very important. All too often, programmes for Government have been written year after year before taking on the same life as the policy documents written by the Department of Health that I used to see - they gather dust in the corner of someone's office. When priorities are set, it is important that people are made to implement them. One of the big problems I noted in the course of the Celtic tiger was that many did not realise that their good salaries meant they had responsibilities to the people who were paying those salaries. One of these responsibilities was to implement priorities, which is what is being done now. I commend the different approach to government now being adopted. It is about being responsible and accountable. There is far greater transparency, regardless of the impression given today that there is some kind of conspiracy. I actually think there is much greater transparency in government at this time.

Mr. Martin Fraser

I have mentioned the National Economic and Social Council as an example of another group that I chair. I chair it because it is my job to do so. The council meets every month for two or three hours and Mr. Shaw is the deputy chair. Between us, we go to every meeting. There is a wide variety of people at every meeting and it has done a lot of work. Its most recent report which relates to the people who have suffered most in our society as a result of the economic crash was published a week or two ago. It is a very interesting report on the vulnerable people in society who have suffered the most. The council makes a useful contribution. Much of the work it did last year related to human services, disability, end-of-life care, home care for older people and residential care, etc. It does a great deal of work and we are involved in all kinds of things. As I said to Deputy Joe Higgins, we have tried to place an emphasis on fairness and social policy. The country is about more than money - it is about people and services. It is about looking after people.

I cannot add to what the Taoiseach, the Tánaiste and other members of the Government have said about the current controversy. This is not a tax haven. There is transparency. We have a statute-based tax system and have international agreements with approximately 60 countries. We do not accept the criticism made. Members of the committee are wise enough to know that all kinds of things are going wrong internationally and many people are looking after themselves and we are caught in the crossfire. As the Taoiseach said, this is not a tax haven.

Deputy Liam Twomey

It was important for that to be stated at this committee. We have raised our concerns. The manner in which this criticism has been made in recent days has been unfair. It is far from the truth.

Chairman

I might reframe the very interesting question raised by Deputy Liam Twomey. I will ask the same question in a different context on foot of Mr. Fraser's reply. What is his response to the suggestion that the current dynamic has no regard to the actual effective corporation tax rate in Ireland? I refer to what is happening globally, what we are hearing from America and what we have heard in the House of Commons. I watched the proceedings at the House of Commons. What is happening globally would happen, regardless of whether this country's corporation tax rate was 2.5% or 52.5%.

Notwithstanding how the Irish system operates, multinational companies behave as they do because they must operate in an international context. Does Mr. Fraser agree with this or does he hold a contrary view?

Mr. Martin Fraser

I do not have a contrary view. This is a very large topic, but there is no doubt that there are major domestic interests at play in other countries. There are also significant interests with multinational companies.

Chairman

Our corporation tax rate is not the issue, but it is being confused with the current debate on the way in which international transactions are conducted. The United States has failed to keep abreast of international taxation law and has not addressed intellectual copyright taxes in its jurisdiction. Some of those who have been complaining in the US Senate belong to a political party which is known to give massive tax breaks to international corporations. As such, their actions call to mind the expression of the pot calling the kettle black. As a politician, I have the luxury of being able to make such statements, but I do not expect Mr. Fraser, a civil servant, to comment.

Deputy Joe Higgins

The point is that the law in this country and the governing ethos of this and previous Governments facilitate giant corporations such as Apple to be registered in such a way that they can play the game internationally and hide away tens of billions of euro which has been earned God knows where. According to agencies that deal with the poorest people on earth, whether in Africa, Asia or Latin America, multinational companies are active in poor countries but do not declare taxes in them, preferring to declare them elsewhere where they pay much less. They are robbing the poorest of the poor. Irrespective of what the Government tries to state, these companies are being facilitated by the laws and arrangements in place in the State.

Deputy Liam Twomey

Most of the problem is in Bermuda.

Deputy Joe Higgins

There is a new triangle consisting of Bermuda, Ireland and Amsterdam.

Chairman

The Deputy is correct that there is a triangle in this room and I am at the top if it. Members must speak through the Chair.

Deputy Joe Higgins

Dublin is one point on the triangle, Amsterdam is another and Bermuda is the third. That is the triangle and the Government cannot escape by claiming the issue is not our corporation tax regime.

Deputy Kevin Humphreys

I will return to the agenda. I concur with Deputy Liam Twomey that Ireland is not a tax haven as we have clear laws and regulations in place. As Members of the Oireachtas, our role is to challenge at every opportunity and ensure rigour and transparency are applied. That is what the joint committee is doing today. There is a certain perception about the way in which the Irish Financial Services Centre Clearing House Group operates and it is useful to examine it in the cold light of day. Everybody welcomes the number of jobs being created in this area and we hope employment numbers in it will increase. The announcement last week that an additional 800 jobs would be created in my constituency of Dublin South East was very welcome. I thank Mr. Fraser for any role he may have played in securing these jobs.

I view my role in this House as one of trying to fix the mistakes of the past and ensuring they are never repeated. I am not questioning Mr. Fraser's integrity in saying the joint committee should question him at regular intervals. Are the minutes of meetings of the subgroups or documentation from such meetings submitted to the committee chaired by Mr. Fraser or the relevant Departments? It is important that a light is shone on this issue. The Oireachtas, specifically the joint committee, should have a role to play in this regard.

We heard in October that the Government intended to review the nature of the Irish Financial Services Centre Clearing House Group. Did any such review take place?

Mr. Martin Fraser

I know exactly why the Deputy has asked these questions and I am happy to answer them. I believe he suggested we publish the minutes and our decision to do so recognises that his concerns in this matter are entirely legitimate. I do not see the minutes as they are not transmitted to the Clearing House Group at the top of a pyramid, as it were. I do not know-----

Deputy Kevin Humphreys

That is the normal way such matters are dealt with. I have chaired many meetings of subgroups and they submit their minutes to the committee proper.

Mr. Martin Fraser

I do not see the minutes routinely. I receive an agenda, but I do not often receive many papers or minutes of previous meetings. The minutes have not been transmitted to the Clearing House Group recently, but I will check the position for the Deputy as the subgroups must have minutes of their meetings. I will also revert to the committee on the issue of the papers from the subgroups and transparency around that issue. I do not remember seeing the minutes routinely, although I see a great deal of paper in my job. I will revert to the Deputy as I understand the point he is making.

On the review reported in the newspapers, no formal decision was taken to carry out such a review and there was no such review. The newspaper reports may have been generated as a result of the Department's decision to publish the minutes and a sense in the industry that things were slightly different. We will try to do some work over the summer in focusing on the job creation aspect of the industry. Given that the Clearing House Group has been around in its current form since 1987, it may be that slightly fresher approaches are available which would emphasise the job creation and economic development aspects of the sector. The new Secretary General of the Department of Finance is keen to work with us on focusing on that end of things. We aim to start work over the summer to refresh how this is done. I understand the next meeting of the Clearing House Group will be held in September. As I stated, the purpose of the group should be to emphasise job creation.

Deputy Liam Twomey

I did not wish to ambush Mr. Fraser on the issue of corporation tax as I am aware that he cannot discuss policy issues that may arise. The joint committee may wish to discuss the matter at a later date.

Chairman

I will draw proceedings to a close at 4 p.m. as I am due to chair another meeting at 4.30 p.m.

Deputy Richard Boyd Barrett

As other speakers noted, Mr. Fraser cannot discuss some of the issues that must be addressed. For this reason, we need to have before us Ministers and representatives of the large corporate players which are at the centre of the growing controversy around Ireland's purported status as a tax haven. Many of us believe this country is a tax haven and this view is widely held outside the country. I ask Mr. Fraser to respond to my questions in so far as he is able to do so, given the constraints within which he operates. Has the Clearing House Group discussed the allegations being made about Ireland being a tax haven or honey pot for corporate tax dodgers and speculators who view this country as the ideal place to avoid paying tax, make a fortune and make little or no contribution to the tax revenues of the State? Is it discussing the country's corporation tax regime, given that this issue is being widely discussed elsewhere in Europe and the United States? The only reference to this issue that I see in the minutes is a number of reiterations on the part of the Government that it will not, under any circumstances, consider reviewing the country's 12.5% corporation tax rate. Is that the extent of discussion of this matter?

Hedge fund managers, bankers, corporate consultants and large accountancy firms are represented in the Clearing House Group.

Are they commenting on and making proposals and recommendations on corporate tax policy and policy on the financial transaction tax and other tax issues relating to or that would impact on their sector? To what extent are these things being discussed either at the main group meeting or at the subgroup meetings? Ordinary people looking at it could easily draw the conclusion – I certainly draw the conclusion – that the reason corporate tax and the financial transaction tax is a red line issue for this Government, when almost nothing else is, is because of the incredibly unprecedented unique relationship that these bankers, hedge fund managers and corporate interests have with the highest political office in the land. That is the perception. Can Mr. Fraser tell us whether these issues are being discussed at length at the Clearing House Group meetings or the subgroup meetings?

Mr. Martin Fraser

The minutes to which Deputy Boyd Barrett referred are accurate. Generally speaking, the conversation in so far as the official side is concerned serves to say what Government policy is. There is not much conversation back and forth about it. I stated earlier that the private sector side of the financial services industry - it does not represent all of industry - has its views. It is not generally discussed at any great length at the Clearing House Group. The Deputy can see as much in the minutes.

Deputy Boyd Barrett has made a number of remarks which I cannot really comment on. They represent a view that the Deputy holds. The Government policy is to stick to the 12.5% corporation tax rate and this has been the policy of successive Governments. As I stated earlier, we try to run a transparent statute-based tax system in the country. The Government decides the tax rates and that is the policy.

Deputy Richard Boyd Barrett

Is Mr. Fraser saying that the only discussion relating to these matters involves some representative of the Department of the Taoiseach saying we are not for moving on the 12.5% rate or we are not for introducing the financial transaction tax? Is he saying that is all that is said, that there is no further discussion about corporate tax and there are no opinions given by the representatives of the private sector about these matters in the run-up to the drawing up of budgets, for example?

Mr. Martin Fraser

The Department of Finance rather than the Department of the Taoiseach would speak on that topic. As I stated earlier, as with all budgets, all parts of society approach the Department of Finance and I imagine this part of society has a view in that regard. In so far as the policy is not to change the 12.5% rate and not to introduce a financial transaction tax, there is not much conversation about it.

Deputy Richard Boyd Barrett

It defies credibility that these hedge fund managers, bankers and financiers attend these meetings, that they have subgroups dealing with the areas of banking, tax and so on, and that they have nothing whatsoever to say about these matters in the run-up to budgets. Is that what Mr. Fraser is saying to us?

Mr. Martin Fraser

I am not sure I like the phrase "defies credibility". If Deputy Boyd Barrett is questioning whether what I just said is the truth, it is the truth. I presume the reason they do not raise it much is because they support the policy.

Deputy Richard Boyd Barrett

In the aftermath of the financial crash that hit this country and the global economy, is there any discussion about the morality of some of the activities that go on at the International Financial Services Centre?

Chairman

I must ask you to temper your language because you are making a judgment with regard to the morality of meetings. You can ask freely with regard to decision-making processes and so on but I must ask you to temper your language. Standing Orders have a particular reference in this regard. You are casting aspersions on people who are not before the committee this afternoon.

Deputy Richard Boyd Barrett

I am asking whether they discuss the morality of it.

Chairman

Then re-contextualise what you are saying, Deputy.

Deputy Richard Boyd Barrett

I am saying there are many people who question the morality of some of the activities that go on in places like the Irish Financial Services Centre, including shadow banking, derivatives, futures and, essentially, financial speculation, given the role that they had in destabilising the global economy and indeed the role they continue to play in maintaining a high level of instability in the global economy. Is there any discussion about the need to regulate more tightly a sector which has done considerable damage to the international economy; which could potentially do further damage; and which could specifically make the Irish economy vulnerable to further shocks to the international financial system? If the Government strategy is to grow this sector, as Mr. Fraser maintains, is there any concern that putting so many eggs in the basket of expanding financial services could actually make the Irish economy rather vulnerable to further international financial shocks, or, for that matter, changes in corporate tax policy in places such as the United States?

Mr. Martin Fraser

It is Government policy to try to develop the sector and other sectors. The best answer to Deputy Boyd Barrett's question goes back to what I said earlier about the importance of appropriate regulation, the particular importance of the independence of the regulator and the fact that the regulator no longer has a duty - he used to have it under law - to promote the industry. That no longer exists. The regulator is independent. As I stated earlier, I and people working with me do not attempt to influence the regulator. We let him do his job and I believe that is our best defence against these things as well as ensuring that we have proper regulation.

Deputy Richard Boyd Barrett

Does Mr. Fraser not believe it would be appropriate to have people in the Clearing House Group who might have an eye to the dangers involved in this sector?

Mr. Martin Fraser

The Clearing House Group does not make all the policy for the sector. The policy is made in a couple of Departments. It is not as if the Clearing House Group is all-powerful. It is important that people in the Department of Finance, the Department of the Taoiseach, the Department of Jobs, Enterprise and Innovation, the Central Bank and the Financial Regulator are mindful of these things, and I believe we are.

Deputy Richard Boyd Barrett

I am beginning to wonder what the private sector representatives say at these meetings. The minutes seem to suggest they say virtually nothing.

Mr. Martin Fraser

The minutes are published. That is what happens at the meetings.

Deputy Richard Boyd Barrett

I refer to a point that was made earlier. It would appear from what Mr. Fraser has said that all the real discussions are being moved off to the side to these subgroups. Mr. Fraser does not seem to know as much about them and he is unsure whether there are written reports. He said he believes there are written reports but he is unsure.

Mr. Martin Fraser

I am sure there are written reports. I will clarify that. I cannot know something that I do not know, so I will have to find out. The subgroups deal with individual sectors. I am sure they are going through the stuff on those issues too but, as I said to Deputy Humphreys, I will come back to Deputy Boyd Barrett on what matters are discussed.

The industry view on all these matters is clear and Deputy Boyd Barrett can see that in the minutes. There are not long conversations about these things. I will come back to Deputy Boyd Barrett on the subgroups but the Government policy is clear as well. I appreciate that the Deputy does not agree with the Government's policy but my job is to implement the Government policy.

Deputy Richard Boyd Barrett

I have one final question. Mr. Fraser has accepted that the Clearing House Group represents high-level access for the financial services sector or the corporate sector to the Government. The statement of strategy for the Department declares that some of the Department's priorities and the Government's stated priorities are fairness, transparency and so on. Has there been any discussion within the Department about the fairness of giving this high level of access to the Department of the Taoiseach to the financial services industry but not a similar high level of access to, for example, the representatives of the disabled, the unemployed, low and middle-income workers or distressed mortgage holders?

Chairman

If you want Mr. Fraser to respond, stop talking.

Deputy Richard Boyd Barrett

Is there no discussion around the need for such access?

Chairman

Stop talking if you want a response.

Mr. Martin Fraser

Deputy Boyd Barrett may have been in the Dáil when I mentioned this earlier. We have a range of engagements with other groups as well. I remarked that I chair the National Economic and Social Council, which has many representatives, including representatives from the Irish National Organisation of the Unemployed, the Society of St. Vincent de Paul and the trade union movement. We try to have as many contacts with as many people as we can. I understand this particular group is controversial but, as I have said, it is long established. It is Government policy that this group helps to promote an important industry and I do that to the best of my ability. While cognisant of the concerns, I try to be as transparent as possible by publishing the minutes. I have ensured that the regulator is independent. As I have said, the Government's view is that this is an important industry and that this is how we would like to work to help it develop.

Chairman

It is now 4 p.m. and I will bring the meeting to a conclusion. I thank Mr. Fraser and his officials for coming before us this afternoon. Several matters arose about which Mr. Fraser said he would correspond with us and I would appreciate receiving that correspondence when Mr. Fraser has the opportunity to follow up on those matters.

That concludes this public session. We dealt with other business in private session.

The joint committee adjourned at 4 p.m. until 3.30 p.m. on Wednesday, 29 May 2013.