Seanad Éireann debate -
Tuesday, 18 Dec 1990

Vol. 127 No. 3

Exchange Control (Continuance) Bill, 1990: Committee and Final Stages.

SECTION 1.

Mr. O'Toole

I move amendment No. 1:

In page 2, line 12, to delete "1992" and substitute "1991".

You will recall that when I was speaking on the Bill I raised the issue of why we needed this legislation at all. I listened very carefully to what the people on the far side of the House and to what the Minister said and I certainly would like to put a few points to the Minister. First, I would like to deal with the major point my esteemed colleague, Senator Mooney, raised, in his contribution, namely, the need for expatriates living in the UK to have confidence in the Irish system, etc. I would like to point out — and I would ask the Minister to verify and confirm this to Senator Mooney, — that nothing on this legislation will have any effect on non-residents who have money invested in this country. Perhaps I misunderstand the legislation. If that is the case, then I need to be informed about it. My understanding is that all those Irish people, who for altruistic reasons or otherwise, decide to invest in this country can invest or withdraw their money at any stage and this legislation does not affect that. Therefore, it was an irrelevancy, Senator Mooney, similar to much of the stuff you said earlier.

Mr. Mooney

You were the one to raise the hare.

Acting Chairman

I must ask the Senator to stick to his amendment.

Mr. O'Toole

This is precisely the amendment and this is the reason for it. I am trying to win support from the Government benches. The other issue I would like to raise — I want to demolish the arguments given for the need for the legislation so far — is this discussion on non-residential money. It is the same issue, basically, which Senator Mooney raised under another heading.

Mr. Mooney

You raised it. I responded.

Mr. O'Toole

Senator Conroy raised it in particular in his references to Hong Kong. It is my understanding that nothing in this legislation will affect those non-residents who wish to withdraw their money from the State. It is also my understanding that a lot of the money that is moving in and out at the moment is such money. I would like to understand why we need this legislation. It does not cover any of those things.

The other total irrelevancy is the Minister's reference to budget proposals. What is the relevance of budget proposals to this legislation? Is it not fair to say that all the matters which the Minister has promised to introduce in the budget can be done without having this legislation in place? Is that not a fact?

This legislation is irrelevant to the worthiest of proposals which we have all agreed upon and which the Minister says he will introduce in the budget. We welcome them and look forward to their being put into operation but they have no connection with this Bill. The only change contained in this legislation is the continuation of the older exchange control. I am unconvinced that we need this legislation. Certainly I have not heard the arguments for it.

I return to the basic point, which is that all of this is going to change in 1992. The Government's own policy is to have our changes in place before 1992. I have gone to the last possible date before 1992, to the 31 December 1991. I could not go any later than that. We will have everything in position and in place for 1992. Therefore, I say to the Minister that even though I consider this legislation unnecessary, accepting that there is a need for a smooth changeover and to allow us to move things into place, let us get it done for 1991. We have a year and two months to make whatever changes need to be made. I do not understand it.

The final point I want to make refers to one the Minister himself made in his closing speech. This confirms my view on this amendment. The Minister said that in 1987 we had a very high inflation rate and that we now have a very low inflation rate. What is the relevance of that to this legislation? The low inflation rate that we have at the moment is producing a low interest rate, which has resulted in turn in money flowing out of the country. I am not saying whether that is good or bad; I am making a statement of fact. It has no relevance to this legislation and there is nothing in the legislation to deal with that. As Senator Doyle so wisely said, it will be the European Central Bank that will be calling the shots when we come to 1992. Let us get used to playing with the big boys, let us get this legislation into place and get our act together for 1992. Let us do as the Taoiseach has asked us to do, which is to get the changes made before 1992. There is no need to wait that long. I am prepared to compromise and to say let us work it for a year instead of two years.

Mrs. Doyle

I think, by way of discussion and to extract from the Minister a rational explanation as to why we should not be phasing in full capital liberalisation slightly more quickly, I will support the amendment. When one looks to the explanatory memorandum which was circulated with the original Bill, one is reminded that the Exchange Control Act, 1954, 36 years ago, was originally given a life of four years. It was indicated quite clearly at the time that the intention was to dispense with the exchange controls. Since 1954, in phases of four years and now in two years, we have extended the life of the Exchange Control Regulations. I am concerned about going to the wire and then dropping all remaining controls because we really do not know, two years ahead, what we will be faced with in terms of the external financial climate, and what internal pressures may be upon us then.

By way of debate, I support the amendment and I look forward to a reasoning from the Minister as to why, within the next 12 months, we should not phase out the last few remaining exchange control regulations that are in place. The easier bits have been done. There is no doubt about that.

The last few moves will be more difficult and will necessitate very strict economic controls from within, in terms of our own disciplines within this country and in terms of how we run the country and the economy generally. Could the Minister please explain why we will leave it till we get right to the washer virtually to 1 January 1993, before we drop everything that is left? Would it not be better to phase out in the next 12 months, so that we are up and running and know exactly what is before us, before 1 January 1993 is upon us?

Mr. Mooney

The ingenuity of both of my distinguished colleagues on the other side to come up with reasons which are at best amusing and at worst spurious continues to impress me. I wish I had that sort of mental capacity.

Mrs. Doyle

We will take that as a compliment, Senator. I am not sure how it was meant, but thank you.

Mr. Mooney

The Minister in his Second Stage——

Mrs. Doyle

He is only time-filling, so relax. He is trying to take the bare look off the proceedings for the day.

Acting Chairman

We must keep to the rules of the House.

Mr. Mooney

With all due respect, Senator, I am not time-filling. This is very important legislation.

Acting Chairman

I am amazed at the people who are continually interrupting. They are people who should be showing good example. Yet, they are continually interrupting. Senator Mooney has the floor.

Mr. Mooney

The Minister in his speech and the explanatory memorandum state that the Government are now committed to completing the elimination of exchange controls by the end of 1992. In the meantime a continuation of the legislation is required to allow the operation of the remaining controls that have yet to be dismantled. Towards the end of his Second Stage speech the Minister said that even when full liberalisation has been achieved, "it will still be necessary to have enabling legislation to allow the re-introduction of controls in an emergency situation, for example in a severe balance of payments crisis". So where is there an elimination of the obligation on the Government or the Central Bank to continue to monitor exchange control? I do not understand what the Senators' argument is at all. The whole question of the liberalisation of exchange controls, notwithstanding the orginal motives of the Bill that it would only last for four years, centres on the fact that most of the momentum for the liberalisation of exchange controls only arose in the mid-eighties and that was within the European context and convergence. We are not alone——

Mrs. Doyle

We are talking about it——

Mr. Mooney

Let me finish please, I did not interrupt the Senator. It is not my practice to interrupt people when they are talking——

Acting Chairman

No cross fire now.

Mr. Mooney

We are not alone in attempting to ease in the exchange control regulations and attempting to liberalise our exchange controls pending 1992 and beyond. Greece and Portugal, along with Spain, have also sought and been granted a derogation from the directive which was issued in 1987 and I see absolutely nothing wrong with it. The Government are acting very responsibly in this whole area in terms of reducing what was a pillar of our entire financial and economic policy for the last 30 or more years and which was upheld and endorsed by successive administrations and not just by Fianna Fáil. I do not see what the difficulty is now. The Government are adopting a reasonably prudent and cautious attitude in an important area of our economy. This is a spurious amendment, to introduce it in 1991, and I certainly would not be in favour of it.

Mrs. Doyle

Let us hear the Minister.

Acting Chairman

I call on the Minister.

Minister of State at the Department of Finance (Mr. Daly)

I dealt with this in my opening remarks. When one is moving from a system of control to one which is unrestricted it is very advisable to do so in stages. Anyone here would recommend that. The issue between us is whether we should speed up the process and do it a year sooner than we had anticipated. We have made very sizeable advances in the efforts we have been making but four packages of relaxations have been brought forward and we have made substantial progress in dismantling the controls. We could argue here all night. On the one hand, we can argue that we remove all the controls and get into the situation as speedily as possible and then leave ourselves in the situation where we do not have any controls and have interest crises developing. Where do we find ourselves then? I would expect Senator O'Toole would be arguing on my side in this particular one. This is why I find his——

Mr. O'Toole

Surprise.

Mr. Daly

——contribution interesting because I would have expected him to say that in view of the fact that you could have unlimited outflows of capital from a country which could create enormous problem for us in a whole range of activities, including the social area, with which we are very deeply concerned. Rather than arguing for speeding up this and leaving ourselves totally unprotected, he should be arguing in support of me to keep a system in place which would enable us to take remedial action quickly and decisively in the event of such action being needed quickly to avoid a situation which would put the economy at risk. If we continue along the same lines as the Government has been going, the tight control of Government finances, careful and balanced development of our economy, it may be possible to speed up this process. I do not advise that we should leave ourselves in a totally unprotected situation in the run-up to 1992.

Mr. O'Toole

I must say I disagree with the Minister. We are, as you told us, the young Europeans. Europe is out there waiting to be grabbed up by the young Irish, who are going to rule Europe. Let us get in there and get in there quickly.

I would like to make a couple of points. Obviously, Senator Mooney would like the controls to be limited around the time of the opening of the Ballyconnell Canal so that they would not create any local problems. The Minister said in his speech:

The Community Directive also included a safeguard clause that would allow member states to reintroduce controls on certain capital movements...

That is fair enough and I thoroughly support that. I thoroughly support the safety net. I have always been in favour of that. We have a unique opportunity now. We can now experience what it is going to be like out there in the real world and we can do it a year earlier. We can learn from our experience from 31 December 1991 right through 1992 what our needs are going to be and if there is going to be need for such legislation. This will provide for us a unique learning experience.

If the Minister wants to know why I feel this way I would ask him to listen closely while I read from his Second Stage speech. I am trying to believe this. I have to take the Minister's word that he believes this. He said:

There is also, of course, a very positive side. An international perception of a control-free environment and the closer integration of the European market will enhance our attractiveness as an investment location. Provided our policies are right, we can look forward to increased capital inflows, with obvious beneficial consequences for the economy. The increase in holdings of overseas assets by Irish residents will also generate income from these assets in the years ahead. Furthermore, our business and financial communities will be able to compete more effectively in international markets, as they secure to all the risk management techniques——

That will take place in 1992. I accept that point. The Minister continued:

I cannot stress strongly enough that the most vital ingredient in our success in all of this will be the continued prudent management of the economy and of the public finances.

The Minister is getting that right, with the co-operation of the social partners. Everything is in place, but the Minister is saying to us that we will not have these benefits for two more years. What is he doing to us? If it is going to be that good out there, let us get in there quickly. Why is the Minister denying us all this wonder world that is there in front of us? If it is going to be so good for the economy, let us do it.

I do not understand what the delay is about. The Minister's speech continues:

It is essential that investors, both foreign and domestic, have good reason to be confident in our performance in this regard.

We have the lowest inflation rate in Europe. Now is the time to do it. The Minister said so himself. We have got control over the economy. We are an attractive investment. There is a world out there. This is our Utopia. Let us get in first before anybody else. There seems to me to be no reason to delay if things are going to be so good and if our economy is now under control for the first time in years. The Minister went on to say:

In a situation of easier movement of capital, we would be punished very severely for any lapses.

That is why we had better get it right. We have now an opportunity to have a year's practice so that we can make sure we get it right when everybody else joins the fray in 1992. He said:

We must, therefore, recognise that this new situation will impose new disciplines on our management of the public finances. If we meet this challenge effectively, the potential benefits in the longer term will be very great indeed.

That is what the Minister said to us. It is on that basis that I say to the Minister: if it is going to be that good and if everything is there in front of us to do, let us go for it, let us take the ball and run. It is there for us, a very short term indeed, so I would like the Minister to tell us why we need to delay all those benefits he listed out for us one after the other in his speech.

Mrs. Doyle

I ask the Minister to be frank with us this afternoon. There is a very interesting amendment put and, in the absence of rational explanation from the Minister, we would have no option but to support it. I feel the Minister could more rationally explain his point of view. Perhaps he is reticent, for whatever reason. Could it be that the reason the Minister feels we could not support an end-1991 completion of the liberalisation rather than the end-1992 he now proposes, is because he needs at least two more Finance Bills to put in place the pieces in Ireland that will to some extent protect the Exchequer from undue losses of revenue?

For example, the Minister mentions in his speech that there will be changes in the Finance Bill, 1991 in relation to the DIRT tax. How is the Minister going to retrieve retention tax from Irish depositors with money deposited in Europe? I await his explanation. I made that point in my Second Stage contribution. It is laudable as an aspiration, but in reality how will it be done? If the Minister does not do it and retention tax remains at 30 per cent, who is going to put money on deposit here when they can have it free of tax or at a much lower rate of retention tax in other European countries? We have a figure of, I think, £650 million per annum on the losses in terms of harmonisation of VAT and excise. What are we looking at in relation to harmonisation of DIRT or doing whatever else may be necessary in next year's Finance Bill, and perhaps the following year's Finance Bill, to minimise the losses to the Exchequer we are facing when exchange control regulations are lost in the retention tax area alone?

There are other areas that do not immediately come to mind. I am not an expert in this matter but that is one area where it is fairly plain to see we are going to have Exchequer losses. Could the Minister explain what else he has hidden up his sleeve for the Finance Bill, 1991, and whether he also needs a stab at the 1992 Finance Bill before we can have complete liberalisation of capital and movement of capital within Europe?

In the absence of an explanation as to why we cannot remove the last few pieces in the control regulations in this year, we will have to support the amendment. If the Minister has a rational explanation why he needs two years — we understand the Minister needs an ordered withdrawal from the regulations that are there — why leave it until we go to the wire, until literally 1 January 1993, when we really do not know what the overall economic climate will be within our outside this country? We do not know what other pressures there may be by then. We can determine to some extent what a year ahead holds, but we really do not know what two or three years down the road holds for us. Therefore, we await rational explanations from the Minister as to why one more year would not be sufficient time to dismantle the regulations that remain.

Mr. Daly

In fact, we have already moved faster than we were obliged to move. That has been evidenced from the measures we have already taken and we are really not obliged to do it until 1992. I am running with the ball, as Senator O'Toole has advised me. Certainly, we have taken measures which we believe are important to take but it is also vitally important that we have certain safeguards in place, otherwise we leave ourselves totally vulnerable——

Mrs. Doyle

What are they?

Mr. Daly

For instance, if we had unlimited outflows from the country, what do we do with them——

Mrs. Doyle

The fire brigade measures, you mentioned?

Mr. Daly

——if we do not have any provisions in place to deal with that? If it is possible to put this in a nutshell, what we want to do is keep the moneys we have in Ireland and attract in more if it is possible to do so but we must be careful in undertaking all these obligations. We do not throw the baby out with the bath water and leave ourselves in a totally helpless position without any safeguards in the events of the kind of situation I outlined in my speech this evening. It is a simple as that.

Mr. O'Toole

I raised the question, and if the Minister can outline for me the safeguards which will be introduced in 1992 which could not be introduced in 1991 in order to do what he is saying, then I will withdraw the amendment. That is a fair offer. I do not know what they are.

Mr. Mooney

On a point of clarification — and know I am only repeating what the Minister has said — the Senator wanted one item in the exchange control area which could not be introduced by the beginning of 1991. DIRT tax, specifically. It is in the Minister's speech. He referred to the fact that there will be changes in the Finance Act, 1991, in relation to DIRT tax and the collection thereof once the liberalisation regime is in place which will allow——

(Interruptions.)

Mr. Mooney

You are talking about next year. You asked for one and I have given you one. It is not included in these regulations.

(Interruptions.)

Mr. Mooney

I am being intimidated.

Acting Chairman

You will not be intimidated while I am in the Chair.

Mr. Mooney

The whole thrust of this legislation is towards an easing of exchange controls regulations moving towards 1992. I fail to understand the Senator. I have to support the Minister in this area. I believe the Senator is being totally mischievous. I see absolutely no advantage, but serious economic disadvantages for this country if this amendment is accepted.

Mr. O'Toole

The Minister said:

To counter any loss of tax revenue. ...I propose, in the 1991 Finance Bill, to extend the deposit interest retention tax to cover interests from these...

I would ask the Senator to look at the date, 1991. That is done and that is the point I am making. Let us hear what it is that can only be done in 1992. I welcomed that in my speech. I said this is the way to do it, although, as Senator Doyle quite rightly pointed out, I am not sure how effective the collection is going to be. However, I accept that it is possible, particularly within the Community, to put in place something that will ensure the collection of it. That is precisely the point. The Minister is doing that in the Finance Bill and he expects it to be in operation by next May.

The proposal I am making, through the Chair, to Senator Mooney is to take effect from 31 December 1991 after those things have taken place. Perhaps there is a misunderstanding. If the Minister can indicate to me some other changes he feels can only be put into place in 1922 which could not be put into place in 1991, then I am prepared to withdraw the amendment; but there is no sign of that. The Minister has not given me any indication of what they might be. All he has indicated to me is the great, good world that will be out there when we move in after the dismantling of the control regulations. If it is going to be that good, let us do it now. Let us go in there and reap the benefit; it is going to be better for everybody. As Senator Mooney said earlier, the poor will also benefit; because the poor will only benefit through an increased economy and the creation of more wealth that can be spread around and redistributed among the poor. If the Minister can outline for me the measures which can only be put in place in 1992 which cannot be put in place in 1991, then I will withdraw the amendment, because I am a reasonable person.

Mr. Daly

Perhaps I could add some further information to what I have already said. One of the most significant controls still in place is the restriction on the operation by residents of current and deposit accounts abroad and the removal of this restriction would add to the potential for short term speculation against the IR £, particularly at times of exchange rate pressures. It would also increase the possibility of tax evasion and consequent loss of revenue on undisclosed incomes. This is something the Senator would not like to see happening.

This is a problem which is exercising the minds of many other member states as well. We are not the only member state that has concerns about these matters. We are in the Community. Other member states are also making changes and are also considering issues like this which would cause concerns for them. We cannot be in a vulnerable position vis-á-vis the people we are competing with. These are issues for which solutions will have to be found. We are progressing satisfactorily. But we cannot leave ourselves totally in a vulnerable situation in the run up to 1992. That is why I feel the 1992 date is the most appropriate one and the one we should have. We could continue this debate all night. It is an academic and debating exercise here. If that is what Senators want, we can continue that for the whole night.

Mrs. Doyle

It is not academic and it is no debating exercise. I appreciate we have to be reasonably fair to the Minister of State. He was sent in here with his script in hand this afternoon.

Mr. Mooney

Come on, Senator, do not be insulting.

Mrs. Doyle

I am not. We have asked three times.

Mr. Mooney

The Senator should take her point and not insult the Minister.

Mrs. Doyle

Where is the last Acting Chairman? He was much more effective in protecting us vulnerable speakers when we were on our feet, particularly from those who protested that they never interrupted others.

(Interruptions.)

Acting Chairman (Mr. Foley)

Senator Doyle, without interruption, please.

Mrs. Doyle

That is very welcome.

Mr. Mooney

On a point of order, I wish to ask Senator Doyle to withdraw her inferred insult to the Minister in that he was inadequately briefed for this debate. I rise formally now; I am not interrupting.

Mrs. Honan

The Minister does not have to be over-briefed to come in here for any legislation. The Senator knows that, as a former junior Minister.

Mrs. Doyle

I empathise with the Minister's position because not only was I a former junior Minister but in the same post as the Minister, so I know exactly the position he finds himself in here.

Mrs. Honan

A different Government.

Mrs. Doyle

It is far from being an academic discussion or debating point. Both Senator O'Toole and I have each put at least twice, if not three times — I have lost count — a request that we be simply informed why we need two years to remove all remaining controls in the exchange regulation area instead of getting down to it in one year, given the enormous benefits the Minister has, quite rightly pointed out that will accrue to the country when they are removed. We want a rational explanation, which I feel is there somewhere, for an orderly withdrawal within one year rather than two years. I suspect, and I put it to the Minister, that two Finance Bills are needed to put in place whatever compensatory measures are necessary to protect an unnecessary loss to the Exchequer in different areas, such as in the retention tax area. There are probably other areas I am not aware of.

I again repeat my request to the Minister to explain to us why we will leave it until the 11th hour until we get right to the wire, to virtually the end of 1992, to drop all remaining controls when we do not know what the economic climate, both internally and externally, will be at that stage. Given that the benefits outweigh the disadvantages, according to the Minister — I am inclined to suport that view and other very learned Members of the House have contributed along those lines also — why do we not withdraw from the remaining controls by the end of 1991 rather than wait until the end of 1992? If the Minister can explain to us the reasons why it could not be done, I am reasonable and I will accept. But we have not got any explanation yet, because the 1991 Finance Bill, according to the Minister's script, is going to take care of the retention tax difficulties. Are there other issues that will have to wait for 1992 and that cannot be introduced in 1991? If there are, would the Minister explain them to us? If there are not, why do we not move towards removing all remaining controls by the end of 1991?

Mr. Daly

I have nothing further to add to what I have already said on a number of occasions. Moving from a system where we have had controls, very meaningful and essential controls, to a situation where we are going to have more, we run the risk of having a very sharp and injurious shock to the whole financial and economic system and leave ourselves in a position where we cannot take any action. We would be daft to do that.

(Interruptions.)

Mr. Daly

It is a straightforward matter. I do not think there is any question of briefing one way or the other on this matter.

(Interruptions.)

Mr. Ross

I would like to ask the Minister a very brief question. If, as I gather, the Minister does have residual powers under this Bill of altering exchange controls or loosening or tightening exchange controls as he feels is necessary, why should they not be brought in earlier rather than later? It seems to me that the loosening of exchange controls is something about which everyone in this House agrees. Therefore, it would seem that to loosen and lift exchange controls as far as possible would be beneficial. With the residual powers the Minister for Finance has he can then re-impose them if there is a panic or state of emergency in the financial market. But the basic principle should be that they ought to be lifted as soon as possible. This is what this amendment does.

Mr. O'Toole

Could I just put on record the fact that I have now asked the Minister three times to outline the changes which have to be put in place in 1992 and which cannot be put in place in 1991? I have offered to withdraw the amendment if he can list those changes. The Minister's response was, "Are we going to make this a debating matter?" I am just asking for information which the Minister has not given me. It would be a fine thing if the Minister said that he did not know what they are, or that nobody knows, that nobody had given it any thought. But the Minister cannot have it both ways. He cannot tell us, on the one hand, that it will be great if we make these changes and then, when I ask him to make them immediately, say that we cannot make them yet because we must do something else. Would he tell us what the something else is?

This Bill has only to do with short term movement. People can invest long term or medium term, but it is not affected by this Bill. Is that not a fact? So the only people we are talking about are people who are exploiting fluctuations in interest rates. Is it not a fact also that if we control the interest rates there is no longer going to be any need for the short term movement out of capital? The reality is that all we need is to tie ourselves closer to the stronger currencies of the community. We are not doing ourselves any favour by waiting for two years. I have asked the Minister to outline this. We now understand how we can control the outflow — simply by containing the interest rate, because that is the issue for the short term movement. The long term investment is related to the inflation rate, the economy and so on. We have looked at everything here. It is in a tight focus. The only thing there for us to deal with is to move into it quickly.

As the Minister rightly said, there is a recognition that certain short term capital movements of an exceptional magnitude might need to be controlled, even in a border-free Europe or in an exchange control free Europe. There would be nothing wrong with putting those controls in place over the year 1991-92 to see how they would work. It is an ideal opportunity if you think it is necessary to control it but at the end of the day the Minister has not given me the simple piece of information which I have sought. We are talking here about the short term movement that arises from exploitation of a serious magnitude of the interest rate through the quick movement of capital out of the system. That is what the Minister says is the issue. We have looked at the need for that. We have looked at where that arises, and it certainly arises in the interest rate. The interest rate is something with which you can deal by tieing ourselves closer to the strong economies of Europe. The Minister is telling us that everything is going to be well in 1992, that everything is going to be well in an exchange-free Europe. The Minister listed all the good things that are going to happen to us when we break down those controls and barriers. Everything is going to be OK. But what is the Minister saying? It is like the deferred kiss in the one act dramas of old. Now he is saying, "hang on, let us not do it yet." So while the gurus of Europe are into instant gratification, we are still playing around with the deferred kiss.

An Cathaoirleach

This is one of the Houses of the Oireachtas, not a theatre. Having listened to the debate since I came in and having listened to it on the monitor ourside, there is quite a considerable amount of repetition. If there is any sinister motive in that, we shall identify it. If there is not, there must be good reason for repetition because I do not intend to tolerate it.

Mr. O'Toole

Let me put to you the reason for the repetition. If you have listened to the monitor, a Chathaoirligh, you will have gathered that I have asked the Minister three times to outline for me those issues which he feels can only be put in place in 1992. It is fair to say that I also said that if he would list those for me I would withdraw the amendment. That is fair play. In all honesty, I think I deserve not to have to ask the question three times. I deserve to be told that I will not be answered or that there is not an answer or whatever the answer is. That is all I have asked. It is a very fair position.

An Cathaoirleach

It is also a fair position and well established in this House that the Minister replies. No matter how many times you may ask the question the Minister's reply may not change. Consequently, there is a point in time where somebody else must step in. That is my function and duty.

Mr. O'Toole

I accept that.

An Cathaoirleach

We cannot continue to have a debate here that has nothing more in it than continuous repetition. That is not a debate.

Mr. O'Toole

As long as you recognise that I did not get a reply to my answer.

Mr. Mooney

This will be my last intervention on this amendment. I want to impress upon Senator O'Toole and Senator Doyle that, irrespective of the verbal jousting, I believe the Minister in what he is saying. I believe him, as I would any Minister in Finance who comes into this House, in the context of this legislation, having outlined lucidly and analytically the reasons why this Exchange Control (Continuance) Bill is being brought before the House at this time and within the time limit specified. Irrespective of the Government — and I mean this with the greatest of respect — in the context of the amendment before us, I would believe a Minister of State at the Department of Finance, with all the expertise available to him or her, before I would, with respect, believe Senator O'Toole or Senator Doyle or even my own better judgment. In that context I must once again refer to the Minister's Second Stage speech which convinced me of the soundness of the reasons he put forward. He said that the Government were "firmly committed to completing the liberalisation process by the end of 1992 at the latest." Subsequently, he went on:

In line with the terms of that Directive [the 1987 EC Directive], the eight stronger member states had achieved full capital liberalisation by July of this year. Ireland, with Greece, Spain and Portugal, has until the end of 1992 to complete the process of dismantling its controls.

Finally, the Minister said:

In adopting a programme to liberalise exchange controls, we did not do so with our eyes closed. We knew that we would have to face certain risks. Even allowing for the strengthening of economic and social cohesion within the Community, there will be greatly increased potential for capital outflows — particularly in the short term as investors seek to diversify their portfolios.

Taking all of those together, with the greatest of respect to the Chair and to what has been contributed here, I believe that the House should accept what the Minister has put before us and that Senator O'Toole should withdraw this amendment.

Mrs. Doyle

A final contribution on this if I may. I am not quite sure exactly what Senator Mooney was inferring. I always listen with interest to any Minister, particularly Minister Daly, whom I happen to know well. It should not really be necessary for me or Senator O'Toole to say that the point we are making we make with conviction. Having seconded the amendment, I am quite happy to withdraw it also if I am in a position to get the answers. All we want to know is: what cannot be done in 1991 that can be done in 1992 in relation to the removal of the remaining elements of exchange control?

Senator Mooney implied in his contribution that he believed the Minister over and above the two of us. It was put rather disparagingly. I do not mind that, but I happen to have been a former Minister of State at the Department of Finance who steered the last debate on exchange control regulations through this House and through the Dáil, and I was in exactly the same position as Minister Daly is in here today. I do not know much about this area. I am not an expert. I depended on the excellent briefing I always got — and I am sure Minister Daly gets — from the Civil Service at the time, but I have been over this course before. It is not through persistence or trying to be argumentative that I support the amendment put by Senator O'Toole. Given the enormous benefits that are to accrue to our country from full capital liberalisation and the total removal of the exchange controls, it is a reasonable suggestion that we get on with it by the end of next year rather than waiting for two years. Apart from the reasonableness of that argument and given the benefits, I genuinely feel that leaving anything until the eleventh hour, until we actually reach the wire when we have to do it rather than when we can do it, is dangerous particularly in the economic area. We are not sure what other controls or what other aspects will impinge on the economic situation at that time.

Mr. Daly

I do not think anything has been said that I have not dealt with already. The position is, as I said already, we are moving steadily and progressively. We have taken a number of measures that we could not be bound or obliged to take until 1992. We will continue to go along those lines, but we cannot leave ourselves in a position where we would find ourselves totally unable to deal with a critical situation that might arise. It would be most inadvisable. Looking back over Senator Doyle's earlier contribution, she was making the same point herself.

Mrs. Honan

We were going grand until Senator O'Toole came in.

An Cathaoirleach

Is the amendment withdrawn?

Mr. O'Toole

No.

Question put: "That the figure proposed to be deleted stand."

The Committee divided: Tá, 27; Níl, 14.

Tá

• Bennett, Olga.
• Bohan, Eddie.
• Byrne, Sean.
• Cassidy, Donie.
• Conroy, Richard.
• Cullen, Martin.
• Dardis, John.
• Fallon, Sean.
• Farrell, Willie.
• Finneran, Michael.
• Fitzgerald, Tom.
• Foley, Denis.
• Haughey, Seán F.
• Honan, Tras.
• Hussey, Thomas.
• Keogh, Helen.
• Kiely, Rory.
• Lydon, Don.
• McGowan, Paddy.
• McKenna, Tony.
• Mooney, Paschal.
• O'Brien, Francis.
• Ó Cuív, Éamon.
• O'Donovan, Denis A.
• O'Keeffe, Batt.
• Ryan, Eoin David.
• Wright, G.V.

Níl

• Doyle, Avril.
• Harte, John.
• Hourigan, Richard V.
• Howard, Michael.
• Jackman, Mary.
• Kennedy, Patrick.
• McDonald, Charlie.
• McMahon, Larry.
• Neville, Daniel.
• Ó Foighil, Pól.
• O'Reilly, Joe.
• O'Toole, Joe.
• Ross, Shane P.N.
• Upton, Pat.

Tellers: Tá, Senators Wright and McKenna; Níl, Senators Doyle and O'Toole.

Question declared carried.

Amendment declared lost.

Section 1 agreed to.

Section 2 agreed to.

Title agreed to.

An Cathaoirleach

When is it proposed to sit again?

Mr. Fallon

Tomorrow at 10.30 a.m.

Bill reported without amendment, received for final consideration and passed.