I welcome the Minister for Finance, Deputy Noonan, to the House.
Irish Bank Resolution Corporation Bill 2013: Second Stage
Question proposed: "That the Bill be now read a Second Time."
I thank all Senators for their attendance this evening. It is very late and I appreciate their attendance. As Senators are aware the Government has been engaged in detailed discussions with the European Central Bank to agree a satisfactory solution to the issue of the promissory notes for the State, the European Central Bank and the eurozone. The ECB is considering a proposal from the Government as part of the ongoing discussions. In discussions with the ECB it was envisaged that the first step would be the liquidation of the Irish Bank Resolution Corporation, IBRC, and the sale of its remaining assets to NAMA or other market purchasers.
The Bill has been in preparation for a considerable period and its presentation now was precipitated by the proposal to liquidate IBRC being made public.
This posed an immediate risk to the bank and required immediate action to secure the stability of the bank and the value of its assets of between €12 billion and €14 billion. On behalf of the State I have vested the powers of the board temporarily in an employee of KPMG, and a KPMG team is now in control of the bank on my behalf. The team moved at approximately 4 p.m. to secure the IBRC premises in Dublin, London and New York.
Questions were raised in the Dáil about the need for urgency in passing this Bill. The reason for urgency is that it is not possible to have a long-drawn-out debate, during which time the value of IBRC and its assets would be eroded, because that would cause significant additional losses for the taxpayer. Anyone who is familiar with even the smallest corner shop going into liquidation will be aware that no company can continue to trade when there is a credible belief that it will go into liquidation. The reality is that no developer would ever make a repayment on his or her loan to IBRC while the bank was in limbo. This would mean that the bank would only be losing money at the expense of the taxpayer and we would eventually have to bring in a liquidator after suffering even further loss of value. The special liquidator gives legal certainty in preventing loss of value in the bank's assets and ensuring an orderly wind-down. I do not think any Senator could give me an example of a company that announced it would be liquidating some time in the future and then did not do so until the interval had passed.
I will now turn to the subject and objectives of the Bill. Once the legislation is passed, joint special liquidators will be appointed to IBRC with immediate effect to wind up its business and operations. It is intended that the net debt owed by IBRC to the Central Bank and its associated floating charge security will be purchased by NAMA, using NAMA bonds, in a way that ensures there is no capital loss for the Central Bank. The ministerial guarantee underpinning the net debt owed to the Central Bank will also be transferred to NAMA. The deposit guarantee scheme and eligible liabilities guarantee scheme will ensure that eligible depositors, bondholders and counterparties will be repaid. There is also a derivatives guarantee in place. As is common in liquidations, all employment contracts in IBRC are immediately terminated.
As indicated, the IBRC debt to the Central Bank, which is intended to be purchased by NAMA, is secured by a floating charge over the assets of IBRC and a ministerial guarantee. Following an independent valuation process, the special liquidators will sell the assets of IBRC which are subject to the floating charge to third parties at or above their independent valuation. Failing that, the special liquidators will sell the assets to NAMA at their valuation price. The proceeds of these sales will be used to repay creditors in accordance with normal Companies Acts priorities, so that preferred creditors, including employees, are paid first and then the IBRC debt to NAMA is paid under the floating charge. To the extent that proceeds are available after repayment in full of the NAMA debt, these proceeds will be applied to remaining unsecured creditors who have not been paid under the guarantee schemes - which, for clarity, do not include the deposit guarantee scheme. These remaining unsecured creditors will include the Minister to the extent that he has paid out under guarantee schemes. Similarly, if the proceeds are not sufficient to pay IBRC's debt to NAMA, the shortfall to NAMA will be met by the existing ministerial guarantee. The remaining subsidiaries will be wound up or sold by the special liquidators to optimise value and once all of its obligations are resolved, IBRC will cease to exist.
I will now go through the sections of the proposed Bill. Section 3 sets out the purposes of the Act. Section 4 provides that the Minister will make a special liquidation order in respect of IBRC. Section 5 provides, among other matters, for the publication of the special liquidation order. Section 6 provides, among other matters, for an immediate stay on all proceedings against IBRC; that no further actions or proceedings can be issued against IBRC without the consent of the High Court; that no action or proceedings for the winding up of IBRC or the appointment of a liquidator or an examiner can be taken, issued, continued or commenced; for the removal of any liquidator or examiner appointed prior to the order; and that the order constitutes notice of termination of employment for each employee with immediate effect.
Section 7 provides for the appointment of the special liquidators. Section 8 limits the power to grant injunctive relief in certain proceedings. Section 9 provides that the Minister will issue instructions and may issue directions to the special liquidators, and requires the special liquidators to comply with such instructions and directions. If the Bill passes successfully through the Seanad and is signed by the President in the early hours of the morning, I will be issuing instructions under that section to the liquidators and I will place copies of those instructions in the Oireachtas Library for the information of Members.
Sections 10 and 11 deal with the application of certain sections of the Companies Acts and Central Bank and Credit Institutions (Resolution) Act 2011 in the context of the winding up. Section 12 provides for the sale or transfer of assets and liabilities in IBRC. Section 13 provides that the Minister may give directions in writing to NAMA in relation to the acquisition by NAMA of the debt of IBRC to the Central Bank; and the purchase of assets of IBRC from the special liquidators. Section 14 provides that the Minister shall direct the special liquidators in respect of the independent valuation of the assets of IBRC prior to sale. Section 17 provides that the Minister may issue securities.
The liquidation of IBRC does not affect other banks. The vast majority of IBRC's deposit accounts moved to AIB and Permanent TSB last year and they are unaffected by today's announcement. The deposit accounts that remain in IBRC are generally associated with a wider ongoing relationship with the bank. It is important to state that all eligible deposits up to €100,000 for an individual and €200,000 for two individuals holding a joint account in IBRC are protected by the deposit guarantee scheme in operation in the State and eligible deposits beyond this limit are guaranteed under the eligible liabilities guarantee scheme. It is critically important that deposit account holders, mortgage account holders and those indebted to IBRC understand that their situation following the liquidation should generally remain unchanged. Guaranteed deposits will be repaid under the eligible liability guarantee and deposit guarantee schemes. Mortgage account holders and other borrowers with IBRC will remain liable for their debts and should continue to make repayments. If customers of IBRC have concerns they should make contact with the operators of the relevant schemes. Contact numbers are available on the Department of Finance website.
I wish to emphasise that the reason these steps are being taken is entirely distinct from the performance or direction of the board of management of IBRC. It is simply compelling in the larger public interest to take this action now, and the Government has made its decision on that basis alone. I acknowledge, with much appreciation, the significant efforts the directors and staff of IBRC have made in the stabilisation of and maintenance of value in IBRC. I regret the abruptness with which this decision is being communicated to management and staff, but due to the scale, sensitivity and complexity of the economic issues involved, it was necessary in the public interest to keep the matter confidential until now. Unfortunately, as is common in liquidations, all employee contracts will be terminated on the winding-up of IBRC. However, it has been indicated to me that the majority of staff will, if they wish, be rehired for the purposes of the orderly liquidation on such terms and for such duration as may be determined by the special liquidators. Employees will rank, in the normal way, as preferential creditors ahead of NAMA and unsecured creditors in respect of certain amounts owing on a winding-up, including accrued wages, salaries, holiday pay, sick pay, statutory redundancy, pensions contributions and claims for damages arising from accidents. I understand this announcement will come as quite a shock to employees of IBRC and to some of those who do business with the bank. The special liquidators will be instructed to handle that as well as possible in the circumstances.
As I stated previously in the Dáil, I would have preferred to be introducing this Bill in tandem with a finalised agreement with the European Central Bank. However, I understand that the European Central Bank will continue to consider the proposals made by the Governor of the Irish Central Bank in agreement with the Irish Government in Frankfurt tomorrow. I commend this Bill to the House.
I thank the Minister for his contribution. I believe I speak for most people when I say the manner in which this Bill has been brought to the Oireachtas is wholly unacceptable. It is akin to asking people to bet on the blind. I was in the Dáil Chamber for the Minister's speech, to which I listened with great intent, and where my party colleagues outlined a number of specific queries. What the Seanad is being asked to do is to ratify the legislation outside the context of the overall deal the Minister intends to achieve, I hope, tomorrow. Fianna Fáil has always wished the Minister and the Government the best in their endeavours to secure a better deal. However, we have an issue with the way this is being done. I have previous experience of late night-early morning sittings and the outcome of such sittings in 2008 and 2010 has been discussed since. Personally, I have an issue with rushed legislation. Will the Minister clarify for how long this legislation has been prepared? I understand the Bills Office works extremely hard and that it has produced a Bill and an explanatory memorandum very quickly. However, it is important that Senators know that the Bill has been subjected to the correct checks and balances because I have no doubt it will be challenged in the courts. I hope the Minister will answer this question for us.
The Minister has been working hard to secure a better deal for the country, but, as public representatives and Members of the Oireachtas, all we know about the make-up of the proposed deal is what we hear, be it in whispers on the corridor or from the media, about how the promissory notes will be dealt with, how they will be transferred to NAMA, whether they will become a full part of the sovereign debt, the type of payments we will make and for how long we will make them. The Minister must agree that it is not ideal for us to be debating the Bill in the early hours of the morning in the absence of any detail of how it will affect the country. However, I take his word that he has, effectively, been bounced into doing this because of the leaks that occurred concerning the plans of the Government to liquidate IBRC. I welcome these plans. Any of us who has been in politics in recent years - I have only been involved since 2007 - will welcome seeing the back of IBRC or what was formerly Anglo Irish Bank. As my colleague in the Dáil, Deputy Michael McGrath, said, this is only a technical liquidation and the assets held by Anglo Irish Bank and IBRC will now be transferred to NAMA. Therefore, it is important that the Minister give us a better indication of what is on the table. I understand he cannot go into great detail, but we must know what we are signing up to before we support the legislation. It is wholly unsatisfactory that we do not know.
The Minister has expanded on the explanation he gave in the Dáil of the real risk with regard to the €12 billion to €14 billion worth of assets remaining in IBRC, which I welcome. He has mentioned that he believes no developer will ever make a repayment on a loan to IBRC while the bank is in limbo. I agree with him. However, how realisable are these assets? Would there, as suggested by some of the Minister's colleagues, have been a run on them, causing the State to lose out on their value? I ask the Minister to expand on this, if possible.
Fianna Fáil supported the Bill in the Dáil, indicating that, on balance, the Government could be trusted on this issue. However, it is important that the Minister give us some indication of what the ECB plans to accept and whether that will be announced to both Houses tomorrow? Is an announcement imminent? Many of those to whom I have been talking are very concerned about the fact that the legislation has been introduced so quickly, without a detailed explanation being given as to why this must happen. All of us welcome the liquidation of IBRC and, obviously, the staff and those who have been working in the organisation, particularly its front-line staff, will take some solace from the Minister's statement that they will be offered jobs in and transfer to NAMA.
I do not like what we are doing here. As legislators, we should have more information than what either House has received. I listened intently to the Minister in the Dáil and the contributions of other spokespersons. I acknowledge that while the Minister is engaged in detailed negotiations, he cannot tell us everything. However, I am not satisfied as to why he and the Government considered it necessary to bring forward the Bill in such a short space of time or why it was necessary to bring it to the Seanad directly after being voted on in the Dáil, without knowing what the implications will be. As I said, on balance, Fianna Fáil supported the Bill in the Dáil because it supports the Government's efforts to secure a better deal for the country. The Minister had acknowledged it previously, but the Taoiseach acknowledged for the first time in the Seanad last July that the previous Government had had no other option but to do as it did, as there were no European mechanisms in place for us to deal with the banking problem which was not purely an Irish banking problem. As Deputy Michael McGrath said in the Dáil, we have passed the European treaty, but the new mechanisms available to countries encountering banking difficulties are not available to us. As a result, we still do not know how our retrospective banking debt will be dealt with. That is the reason, following the debate in the Dáil and this debate in the Seanad, we must make a call on whether, on balance, we should agree to the passing of this legislation. However, this is wholly unsatisfactory and many of the people to whom I have spoken in the past few hours are very uneasy about it, more than likely because of their experience of late night or early morning sittings to pass legislation.
I ask the Minister to expand further on the few questions I have put to him so as to provide comfort that the Bill will stand up to legal scrutiny. Will he also outline, in as much detail as possible, the prospective deal about which we expect to hear tomorrow? I would rather hear about it in the Oireachtas than on "Morning Ireland".
I welcome the Minister at the early hour of 3.40 a.m. I agree with Senator Darragh O'Brien on one point, namely, that there is a natural suspicion of legislation introduced late at night. It is unfortunate that there is only so much information the Minister can give us, but such is the nature of negotiations.
On a human level, there are 850 people working with IBRC who face an uncertain future in the short and medium term. In this regard, I welcome the Minister's comments on their being paid their wages, salaries, holiday and sick pay, which is the minimum to be expected. It is unfortunate that under section 6(5), notice of termination of employment will have immediate effect for each employee. However, I welcome the view expressed by the Minister that, in all likelihood, many of the people concerned will be employed by NAMA or the liquidator.
It is important to touch on the reasons we are here.
We are here to come to an affordable solution - the most relevant term that has been used here - to a €48 billion liability that the State has. People can stick their heads in the sand and their backsides in the air if they want, but it does not alter the fact that the State will have to pay this bill at some stage. This is about the restructuring of the promissory note.
I would like the Minister to answer a question. He said in the Dáil Chamber that he would have liked to reach an agreement whereby the liquidation of IBRC and the decision on the promissory note could have taken place at the same time. Why is there such a yearning on the part of the European authorities to ensure IBRC is liquidated in this manner? Is there a legal reason for it? What is the exact reason for the liquidation having to occur in this way? I would like the Minister to shed some light on that, if possible.
I heard the conversation about the potential for significant risk and loss to the taxpayer. We cannot expose taxpayers to anything beyond what they have already been exposed to. This institution has cost the people of this country enough. The Minister will certainly have my full support in anything he does to ensure this institution does not cost the people of this State any more money.
It is important to refer to the achievements of those who have taken over IBRC. When legislation came before the previous Dáil and we were eventually given the figures, we were told the likely cost to the State was €34 billion. The last time representatives of IBRC made a presentation to the Joint Committee on Finance, Public Expenditure and Reform, we were told that the figure is now closer to €25 billion, in their opinion. As I said earlier, any time we are able to reduce the cost to the citizens of this country, I will applaud and support that.
During the debate on the promissory note in the other Chamber, I heard public representatives talking about the potential write-down we could get from the ECB. We might hear something similar from Senators before the end of this debate. I ask them to live in the real world of central banking, federal reserves or whatever they are called throughout the world. If money is loaned, central banks will look for it back. That is the way it works.
Those who talk about write-downs seem to ignore the fact that central banks throughout the world look for moneys to be repaid by destitute and poor countries where children die of starvation every morning. Of course they are going to look for moneys to be repaid by this country too. That is what they do. While we might feel aggrieved about it, we cannot deny that the citizens of this country are now liable for this banking difficulty. Children do not die of starvation on the streets of this country as they do in other countries from which central banks around the world are also looking for moneys.
It seems that last June's deal was not a game-changer after all.
Senator D'Arcy, without interruption.
I think it is important-----
So much for the separation of sovereign and banking debt.
I am glad my Sinn Féin colleague has interrupted me. It is good because it leads me to my next point. I have seen some ashen-faced Opposition people around the place. I call them the flat-earthers. They do not want a good deal because they want to continue to be able to say "Sure you are being screwed by the establishment of Fianna Fáil, Fine Gael and Labour". These people want a bad deal so they can keep singing their song about "You are all getting done, but we are the ones who will save you". They will not save anything. The reality is that we would have loved to have started from a different place, but we were not given that opportunity. This problem was handed over from one sovereign Government as it exited to another sovereign Government as it entered.
It is important to put some figures on the record of the House. We are due to pay €3.1 billion, or €3,100 million. Depending on whatever the outcome is, the euro rate at the moment is less than 1%. I do not know what the deal - if we are able to get a deal - will be. In the conversation that was leaked last week, it was suggested that we would not start to pay for a number of years. I am not sure what that period is. I want to put on the record what the difference in real numbers will be if we do not have to pay anything for a year, two years or five years and if the net figure for the euro rate is 1%. The difference between that 1% payment and the €3.1 billion payment is €2,790 million. Those are real numbers. That is what I call cashflow. That is the cashflow that every person in this House and the other House is talking about. That is the cashflow that allows us to alleviate the difficult choices that have been made and which the Minister may have to make in budget 2014. I support the Minister, Deputy Noonan. I was in the other Chamber on the night in September 2008 when he was the only person in either House to ask whether it was a liquidity crisis or a capitalisation crisis. We all looked around, scratched our heads and wondered what Deputy Noonan was talking about. I trust the leadership and the abilities of the Minister and of Professor Honohan. I hope a deal that helps the citizens of this country will be reached in the days to come. If that happens, we will all benefit.
Good morning, Minister. It has been said that there is no legal or moral obligation on Ireland to pay the bank debt. I am not so sure, particularly with regard to the moral obligation. I am sure that we do not know the future. None of us is absolutely certain that the acceptance or rejection of the Bill will bring us what we all hope for. As Senator Darragh O'Brien clearly articulated, we do not know all the details of the deal. I agree that it would be better if we had more time, but we do not.
I would like to ask a few questions which, if answered, will help me and my Independent colleagues to come to a final view on this legislation. Perhaps my first request should be to hear the Minister explain the meaning of the Bill in plainer English. I guess I am wondering what the final outcome for the taxpayer will be if this Bill is passed. Has the Minister calculated how much taxpayers can save? I presume significant savings will accrue if we pass this legislation. The Minister spoke forcefully when he said that one of the main purposes of the Bill is the protection of the national interest. It was heartening to hear. Can he assure the House that he is as certain as he can be that this will be the outcome of the passage of the Bill? Can he say anything more about one of the objectives of this Bill, which is to ensure we move towards finally having a complete separation of bank and sovereign debt?
I very much believe that ultimate separation is absolutely required for our recovery. While I would agree it is time to wind down IBRC with great awareness of, respect for and concern for the staff and employees - I heard the Minister attend to that in his remarks - my question, which perhaps has to do with the other side of the deal, is where the promissory note is going. I think it is being transformed and I think it is becoming a bond and going to NAMA, but where is it going? In transferring the promissory note to a longer-term bond so that it will be less costly for Ireland to pay its debt, it seems clear, at least from the debate today, that by passing the Bill, while reducing the overall interest payments and the overall amount in terms of interest, we are agreeing to absolutely no more negotiation in terms of any kind of write-down. Is it the case, as they said in the other House, that Ireland intends to pay every last cent of the €28 billion?
I have thought a lot about this in the last hour as we were waiting to start the debate. I have several questions in trying to decide to say "Yes" or "No" to the Bill. On the one hand, are we jeopardising the future of our children and youth with too much debt for at least a generation by locking ourselves into not obtaining a write-down? On the other hand, would we be jeopardising the present of our children and youth by doing something that lost the confidence of Europe and the international markets, causing our recovery to recede? I will listen carefully to the Minister's response. I want to support the Bill and I know some of my questions are shared by my Independent colleagues.
I welcome the Minister and welcome the opportunity to speak on the Bill. It was noted by some speakers that the making of legislation late at night often leads to poor legislation and poor outcomes. Of course, we forget it is not the hour on the clock that leads to the bad legislation; it is the decisions and the assumptions that underpin the necessity for such legislation in the first place that lead to poor outcomes. We could spend the entire night discussing and speculating on what might happen in Frankfurt tomorrow but this would not be helpful. It is probably best to constrain ourselves to discussing what is in the Bill before us. It is vital legislation which is a necessary first step in a sequence that will see a satisfactory outcome, we hope, to the promissory note issue.
It has been said throughout the year and even for the past two years that a deal of any nature was not achievable and could not be done. It sometimes seemed to me that some of the commentators were privately hoping we could not achieve a deal and that no deal was available or achievable. It is disappointing to hear the language in which the debate is being framed tonight. I heard one Deputy say in the other House that this was a day of humiliation for the country. I cannot see how somebody could say that. This has to be a good day for the country when we consider that two years ago we thought we were on the verge of ruin and bankruptcy and there was no way out. There is a very clear pathway out of our difficulty with the deal that has been achieved today. On Private Members' time earlier, the same Deputy had called for a unilateral non-payment of the promissory notes, knowing full well that is not achievable - it is not even legal. His colleague, who supported that Private Members' motion, later stated in the same breath that what was possible in Private Members' time using one argument was impossible in the following debate using the same argument. The level of confusion, to be charitable, in some of the commentary surrounding this deal is alarming.
Unfortunately, I fear the Opposition will try - I believe it has already tried - to frame a negative outcome in the way this will be reported and commented on tomorrow, which is unfortunate. This is despite the fact that we do not have information available to us as to the outcome of the Minister's negotiations with Frankfurt tomorrow, although I suppose facts are sometimes irrelevant when it comes to scoring political points. We know the Opposition has a job to do and we respect and acknowledge that. I am particularly glad to see that Fianna Fáil has in this House and the other House taken a particularly responsible role in holding this Government to account.
Is the Deputy sharing time?
I am not unless you want me to, a Chathaoirligh.
The liquidation of IBRC has been compared to the liquidation of a non-financial corporation and questions have been asked as to why it is necessary to bring the legislation to the Houses at this time. The liquidation of a non-financial corporate institution could take place at any time under normal circumstances, but when €12 billion of taxpayers' money is at risk, we must move carefully to put in place structures to protect the people's asset - the State's asset. The window between the close of business today and the opening of business tomorrow - perhaps it is now the opening of business today - has allowed us the opportunity to do this with the minimum of risk to the taxpayer and to the people. As the Minister said, when information came into the public domain, the Government moved swiftly to secure the assets, which were national and international, because otherwise these assets could have been vulnerable.
This is no ordinary liquidation. IBRC's banking licence will now expire, a point I will address shortly and to which the Minister might respond. Managing risk is a necessity and the decision to secure the public asset was taken in the public interest. We look forward in the coming days to the time when the second necessary step to find a satisfactory solution to the issue will become visible. We are confident the resolution the Minister is negotiating will be widely and warmly welcomed by the Irish people.
I would like the Minister comment on several issues. IBRC's consolidated balance sheet in its 2011 annual report contains an entry on the liabilities side entitled "Debt securities in issue". To assist the Minister's officials, that is on page 34 and it is accompanied by note 39 on page 93. The value of these debt securities in issue is €5.3 billion, all but €900 million of which has already matured. Are we to take it that this €900 million, which is not going to mature until 2015, might be the subject of burden sharing with the private sector? On the liabilities side, does the Minister see any liabilities that we might be able to share with the private sector here to gain further advantage to the taxpayer? There are other elements in the balance sheet which it is possible to liquidate. I will not talk about section 17 at this point; I will wait until the next Stage.
What becomes of the banking licence on foot of this liquidation? Does the existence of the banking licence have any bearing on the necessity to bring the legislation here? In other words, is the banking licence in any way an impediment to the ECB's doing business with IBRC, or is it just a technical matter? In addition, what is the status of the Minister, or how does the Minister rank, among the unsecured creditors?
I am reassured by the Minister's comments in regard to the staff of IBRC who will find themselves out of employment tomorrow. I am glad the Minister has said that many or most of them will, he understands, find employment where their undoubted experience, expertise and loyalty will be utilised by NAMA.
I welcome the legislation and I acknowledge the work of the Minister's staff in producing substantial legislation in the timeframe achieved. I will, of course, be supporting the legislation.
I welcome the Minister and assure him of my support for all he is trying to do for the country.
If there is good news tomorrow, the Minister will have our support in that but I am most unhappy about what is going on here this evening. It is scant regard for democracy. We have tried in this House to read every Bill thoroughly and table amendments, and several Ministers have complimented us on that. That is the kind of Chamber the Seanad is. It really is not good enough to bring in 59 pages of a Bill with notice of an hour or so.
I suspect our European masters are making the Minister do this, which is a shame. We should not be abolishing IBRC tonight; we should be abolishing the ECB. It has been a disaster. There is mass unemployment through Spain, Greece, Italy and Portugal. When does the ECB stop? It keeps conducting the experiment and the laboratory blows up. That should be one of the stances that Ireland should take during the Presidency. This currency has really been a shambles. It has spread debt and unemployment throughout the continent and it is about time some of those people looked in the mirror and see what they have done.
(Interruptions).
Senator Barrett, without interruption.
I worry about so many places in the Bill. The preamble states that, "Whereas in the achievement of the winding up of IBRC the common good may require permanent or temporary interference with the rights, including property rights, of persons". That theme goes right through it. I would ask whether we are worried about losing the Hall case in the Supreme Court. Why has the EU made us bring this legislation through this evening? What is the reason for this disregard for democracy and what is the reason for the disregard for the courts that features in many places in the Bill?
The explanatory memorandum says of section 11, that Part 7 of the Central Bank and Credit Institutions (Resolution) Act 2011, which makes provision for the liquidation of authorised credit institutions, shall not apply to the winding up of IBRC. One has to ask the reason for the exemption. Earlier, it says of section 9 that a special liquidator shall comply with instructions or directions so received from the Minister and shall not be liable for anything done in accordance with such instructions or directions. What is the reason for these exceptions? There are two on one page. It says of section 7 that people operating under the Act may exchange information in respect of persons believed to be depositors of IBRC notwithstanding any legal or contractual restrictions that otherwise prevent them from doing so. All of these things should be discussed, including the way rights are set aside repeatedly. When one comes to the very last section, it says that it is important to bear in mind that the provisions are not amended. They will continue to operate in their current form for other liquidations but their operation is modified for the purpose of their application to the liquidation of a body under this Act. That is done repeatedly in the Schedule. We need to debate these things in this House. Why are there extra powers for NAMA and the Minister? Why are rights, as the preamble said, set aside in this almost cavalier manner? Why is there no opportunity to have a proper debate and discussion here?
On page 19 of the Bill, it is stated: "No cause of action of any kind shall lie against a special liquidator in respect of anything done or not done in compliance with instructions issued or any direction given under this Act." Further on in the Bill, it is stated: "Part 7 of the Central Bank and Credit Institutions (Resolution) Act 2011 shall not apply to the winding up of IBRC." There are things we should be discussing here. On page 25, it is stated that enforceability may not be challenged by any person. Section 12(3)(c) states one cannot challenge it on the grounds that, in respect of IBRC, it was ultra vires. Ultra vires means beyond one's power and authority. Is it not draconian to say that one cannot challenge the law because it was beyond the authority and was ultra vires? According to my reading of that section on page 26, that is what the Minister seeks. Why are we seeking to set that aside?
The ministerial directions include credit facilities under the Minister's power of direction. There does not seem to be any control by the Oireachtas over that. The Bill states that NAMA shall have the power to employ the staff at IBRC. The problem is deeper than IBRC; it is at the ECB itself at this stage. The power of the Minister to create and issue securities, as laid out on page 34, has no reference to the Oireachtas. Will we have these midnight and early morning sessions repeatedly? There is an amazing set in the Schedule where it states on page 53 that "submitted to the Minister for Finance" is to be substituted for "filed in the court" and that all other references to "the court" are replaced by references to "the Minister for Finance". Why are the Minister's officials advising him to bypass the courts? The substitution of the Minister for the court appears repeatedly in pages and is most worrying. It is also stated in the Schedule that ", with the sanction of the court or of the committee of inspection" is deleted. The Bill amends section 238 of the Companies Act 1963 by substituting "special liquidator appointed under section 7 [of the Bill]" for "court" in each place. That occurs repeatedly on page 55. On page 56, it states that the special liquidator may apply to the court to exercise all or any of the powers which the court might exercise if IBRC were being wound up by the court. I am really concerned. There are so many sections which give the Minister extra power where laws are set aside, as the preamble says. We needed far more time to discuss this. I wish the Minister every success tomorrow but this is a bad night to be putting through this kind of legislation.
I welcome the Minister to the House and thank him for his rationale for this Bill. The nub of this matter is the provision of a satisfactory resolution or solution for this State of the promissory note issue. On that question, the necessary first step was the liquidation of IBRC by NAMA bonds. In effect, IBRC is being subsumed into NAMA. The Minister identified the risk straight away because of the leaks. I will not say his hand was forced but he moved swiftly to provide the necessary protection and put KPMG in place. I salute what he has done and I think it was a proper provision and defence mechanism for the State. These remaining assets are effectively going from one asset management agency to another in the best interests of the State. This was a necessary action that was totally in the national interest. It would have been catastrophic if we had acted otherwise considering what has happened in recent days and today in particular. In view of the sensitivity of the matter, we all accept that the detail will follow tomorrow when the ECB, hopefully, signs off on necessary arrangements that the Minister, his team and the Governor of the Central Bank have negotiated at this meeting in Frankfurt, which has been referred to.
This legislation is the most significant and momentous decision in the financial history of this State since the night of the bank guarantee, which we will not revisit. This is a problem which this Government inherited from its predecessor in office because of the commitments given. The sovereign cannot renege on what was done. There is no question of that. This country will protect its own interests, sovereignty and good name. This has been done and protected by this Minister. Tomorrow, we will know the longer-term arrangements.
The negotiations will be overseen by the Minister and I hope, please God, that the outcome to them will be signed off on. There has been speculation with regard to longer-term bonds - with durations of perhaps 30 or 40 years - being issued at or near ECB rates. If it is possible for him to do so - I accept that there might be sensitivities involved - perhaps the Minister might deal with this matter. We would appreciate it if he could outline the position on terms and rates.
Ireland has returned to the markets and we have seen what the National Treasury Management Agency, NTMA, has been able to achieve already. There are tangible signs of confidence returning, which is extremely important. I am disappointed by some of the negativity which has been apparent during this debate. I am of the view that such negativity is not helpful. The Minister referred to the protections available in respect of the staff of IBRC. Please God, many or most of them will be rehired by the special liquidators and will continue to work in the best interests of securing the assets and selling them on.
The issues with which we are dealing are very sensitive and complex and they exist on a huge scale. They have provided both the backdrop to and the necessity for the measure before the House. The Minister indicated that he would have preferred to have introduced the Bill in tandem with a finalised agreement with the ECB. The latter was not possible for reasons we do not know and that we do not need to know. We are aware that the Minister's intentions are tremendous. We are also aware that a good deal has been negotiated and we are waiting for this to be signed off on. Tomorrow, the ECB will continue to consider the proposals made by the Government and hopefully a satisfactory resolution will be achieved in that regard. I appreciate that the Minister may not be in a position to provide the House with further information during this debate but perhaps he will be able to do so either later today or on Friday.
I welcome the Minister and thank him for taking the time to come before the House. In the first instance, people will be disappointed with what appears to be transpiring in the context of the country's debt. In June, we were informed that sovereign debt would be separated from bank debt. However, the legislation indicates that this will no longer be the case. That is a concern because the ECB is going to get what it wants but we will not get what we want.
Hear, hear.
Whatever happens on foot of the enactment of this legislation or whatever deal is reached later today, what is happening is not going to be the game changer that was predicted with regard to easing the pressure on citizens in the context of the adjustment which must take place. In fact, that is a much larger issue which is connected to the dithering taking place in Europe. There is a policy of appeasement at present in respect of certain superpowers within the European landscape and where they stand politically and this is based on considerations such as the outcome of regional elections in Germany, elections in France or whether a particular development will please a particular coalition partner in a certain government. What we do in this country does not matter. We must build alliances with other small member states and force Europe to realise that, unfortunately, the ECB mission will not and cannot work any longer. Ireland's economy constitutes less than 1% of the overall economy of the eurozone and it does not matter whether inflation here is 50% or minus 50% because the ECB does not care and interest rates across the EU will remain the same. History will continue to repeat itself until the adjustment to which I refer is made.
As the prospect of Spain going over the cliff draws closer - which could involve the loss of many hundreds of billions of euro - those in Europe may finally be obliged to realise that there is going to be a need to consider debt write-downs and debt forgiveness. That is a fact. As sure as I am standing here, that to which I refer is going to happen. Despite the best efforts of the Minister and his predecessor, the late Brian Lenihan Jr., in forcing the Irish people to accept so much austerity, the reality is there is not going to be a bounce as a result of what is taking place. In the recessions of the 1980s, etc., global growth continued to take place and there were other tools at the disposal of Irish Governments in order that they might offset some of the pain. Those tools no longer exist nor will they come back into existence for several years unless Europe begins to get its act together.
I am hugely uncomfortable with the prospect of voting in favour of the legislation but I will do so. We have no choice but to accept the Minister's word that-----
Dreadful.
-----if we do not pass the Bill, this will give rise to difficulties in respect of some €15.5 billion tomorrow. That is why I will be supporting the legislation, which contains a number of draconian measures. The enabling Act comes to mind when I contemplate the kind of powers that are going to endow the Minister with plenipotentiary control and that will ensure he will not be obliged to come near the Oireachtas to seek approval for setting prices, if he so wishes, in the context of asset transfers.
I am concerned by the fact that the enforceability of what is proposed in the Bill may not be challenged. There is no doubt that if our proceedings stretched beyond 8 a.m. the queue of those wishing to challenge the constitutionality of the legislation in the context of property rights would run from here to the Four Courts. I have no doubt that the Minister has been forced into this. I do not doubt his bona fides in trying to obtain the best deal for Ireland. We will always support him in that regard because - as is the case across Europe in general - this country's level of debt is unsustainable. That is a fact and one can chalk it down. It might be 50 years before anyone will admit this but it is a fact.
Spain may well have to go under before those in Europe will admit the need to restructure the way in which we consider matters of this nature. They will have to accept that we should be looking to the European economy rather than to European inflation. They will also be obliged to accept that the reason for this is the EU has too many constituent parts, that the latter all have either higher or lower levels of inflation and that, unlike Ireland, they cannot just be cast adrift. We have the benefit of hindsight and, in that context, it is obvious that none of us would have wanted to guarantee the banks in 2008. However, the Minister, Regling and Watson and so many others have admitted that there was no other option. This was because Europe told us to take a particular course of action. I know the following because the late Brian Lenihan Jr. informed me that it was the case. On the morning of 29 September 2008 Ireland was going to burn the bondholders but by that night France and Germany were not prepared to put up with this. I know that to be a fact. We are where we are and we are trying to deal with this matter as best we can. On the night of 29 September 2008, the Irish people saved the euro. By God, they require some level of help as a result of what they did. There are so many people in Europe who are now up the creek but we are too small to matter.
The Senator has 30 seconds remaining.
I will conclude on a point with which, I am sure, many people will agree. If we consider what happened during the term of office of his predecessor, the late Brian Lenihan Jr., the period prior to the 2008 bank guarantee and the arrival of the IMF and what is taking place this week, there is no doubt that the Minister never intended to come before the House in the middle of the night in order to have this legislation passed. What is happening now must be plan B and it is a result of what, in my view, has happened consistently at critical times during Ireland's financial crisis, namely, a leak. Who leaked the information regarding the proposed liquidation of IBRC and who stands to benefit from that leak? Who at that highest level within the ECB has access to information which can be used to bury this country?
The Senator must conclude as his time is exhausted.
This is a very important and critical point.
I accept that but the Senator is eating into other Members' time.
Who has access to the information necessary to bury this country?
This is like something from a programme on TV3.
This is not a criticism of the Government. The Senator should listen to what I am saying.
It is a conspiracy theory.
I am criticising people at the highest level within the ECB, who have access to critical information and who today - through Bloomberg and other media outlets - have forced the Minister, who is doing his best, to introduce and ram through the Oireachtas this Bill, which contains the type of controls that formed part of Hitler's Enabling Act. We must ask who is leaking the information to which I refer. All I will say about this matter is that some of those who will be attending tomorrow's summit in Brussels are not playing ball. I know that, for once, the Minister is not to blame.
I welcome the Minister. I also welcome, in general, the very positive contribution of the Fianna Fáil Party and its members to the debate in both Houses. I listened to the proceedings in the Dáil and I thought Deputy Michael McGrath's contribution was incredibly thoughtful and thought-provoking.
Hear, hear.
Fianna Fáil's overall contribution has been very much the contribution of an organisation that was a partner in government. We all accept that we are not sitting here at 4.30 a.m. in order to make political points against each other. We are here because we care about this country and its future. I am prepared to give credit where it is due and to say that the contribution of Fianna Fáil to the debate has been thoughtful.
We are all sitting here in the middle of the night because we are conscious of the obligation placed on us as legislators. We are all conscious of the fact that we have been in a crisis for a number of years. We are very much aware that any movement in that crisis brings all of us Irish people closer to a recovery that we all want and in which we all believe. This should not be a party political issue. It is not about what other people did in the middle of the night or what we are doing in the middle of the night; it is about what the Irish people need, what this country needs and what we will do as legislators for the Irish people.
I have never in my life been in a position where so many people understand or care about economic definitions, promissory notes, ELAs, etc. We are all experts suddenly on the Irish economy. We are all experts on what will or will not happen to the Irish economy. We need to be honest. We are not sitting here tonight talking about legislation to disband the former Anglo Irish Bank as though we do not know what this is about because we all know. We all know this debate is about what will happen tomorrow with the promissory notes and the Irish economy. We should stop pretending that it is all about one thing when in fact it is all about something entirely different.
We have a choice. There is a deal on the table - that is the reality and the Minister, Deputy Noonan, would not be here tonight if this was not the case. We know that what we are doing here tonight is a precursor to delivering that deal. We should stop pretending it is otherwise because that is what it is.
It depends on what the deal is.
That is what this is about. We can talk about debt forgiveness. I am waiting to hear from my Sinn Féin colleagues about this. Do they know the definition of a write-down?
There may not be time to hear it.
We should talk about the definition of a write-down. When I get my mortgage in 2010 and I do not repay it until 2050 that is a write-down. It can be dressed up any way but it is still a write-down.
The Senator can dress it up all right.
I am getting sidetracked. These circumstances are not of our choosing. We do not sit here tonight because we have chosen to do so. We sit here tonight because that is the deal that is on the table now and I am prepared to embrace it. I am prepared to embrace it because it is the best deal for the Irish people. This Government promised when it came into government that it would deliver a deal for the Irish people. I am absolutely and utterly convinced that it will deliver a deal for the Irish people. We can talk as long as we like about needing more time. Of course we would like to have more time but the bottom line is-----
The Senator cannot have any more time.
-----we do not have more time-----
Please Senator.
I will finish on this point-----
Please do.
I say to the Opposition and to Fianna Fáil in particular that I have regard for what they have done tonight and I have praised them for it because I believe they have played this justly and honestly and continue to do so.
Senator Mac Conghail has five minutes.
I will not use five minutes because I will be getting hungry for my Weetabix shortly. I welcome the Minister to the House. I have to decide how I will vote and I want the Minister to help me. I have a couple of questions. I would not want Senator Paul Coghlan on my team because he has scored a couple of own goals. The headline for him would be, "The detail will follow". That is the problem and the challenge. Senator Coghlan has thrown the ball into his own net by saying that is the challenge he has, that the detail will follow.
As the Minister said earlier, do not worry about the detail.
He has inadvertently identified the problem-----
(Interruptions).
The Senator without interruption.
That is my challenge. I refer to Senator Barrett's most eloquent defence of our democracy and the most eloquent defence of the Seanad's proceedings. I share his disquiet about what I term the undignified haste of this legislation. I am not condemning this important legislation. However, we have had to convene at great haste. Even my own inarticulacy at 4.30 a.m. is a part of that problem. Senator Hayden also eloquently described the issue. We understand the issues involved but we have to come to terms with the haste and we have to try to complete the equation. My criticisms are not intended to be negative of Senator Coghlan's views but rather it is a genuine reflection on what is occurring in the Oireachtas. This is not the first time. We know the way we were treated during the passage of the Social Welfare Bill before Christmas. There is a disquieting habit creeping into this House. This is no reflection on the Minister.
I am personally delighted that IBRC will be terminated, liquidated, got rid of. That is a good news story and I am proud to be connected with it. Mar a deirtear as Gaeilge "Téigh go tigh an diabhail acu", agus buíochas le Dia nach bhfeicfidh muid arís go deo iad.
However, I am trying to make sense of the Minister's challenge. In my view we are in limbo. The Minister is asking us to take a punt on his ability to deliver. I do not underestimate his negotiating skills but we are taking a punt on the Government delivering on the promissory notes tomorrow. That is the challenge as to how I will vote. I am trying to reflect on my challenge in this vote. I think Senator Coghlan agrees with me inadvertently again.
I do not. I have confidence in the Minister and I know the Senator also has confidence in him.
What will happen to the promissory notes tomorrow? I know the Minister cannot give me the detail but for me to vote in support of the process I need to know whether I can trust the Minister and the Government to deliver the final factor in this equation whereby the liquidation of IBRC and the journey of the promissory notes will end up being more palatable for the Irish citizen.
Senator Burke is sharing time with Senator Healy Eames, with two and a half minutes each.
I will be brief. I thank the Minister for his work in dealing with a very difficult area. I have worked in the legal profession. The difference between us and economists is that there are times when immediate decisions are required rather than allowing other people to dictate how we should manage our affairs. This is one decision which we have to take here and now. I refer to section 3(b) of the Bill which provides for the winding up of IBRC in an orderly and efficient manner in the public interest. The Minister and the Government are working in the public interest in bringing forward this legislation.
I hope the Minister does not mind me raising one issue. I refer to section 14 of the Bill and the appointment of valuers. I have a concern about this provision. The person appointed will be responsible to the special liquidator but the Bill does not state that the person is answerable to the Minister. It is a case of transparency in the valuation of properties.
We are talking about substantial properties and assets in this case. Perhaps the Minister would deal with the transparency we must have on this issue, because there is public concern that there is a lack of transparency on some issues and about some of the decisions that have been taken, for example, with regard to NAMA. While I am not questioning any of the decisions, there is a need for further clarification. That is just one aspect of the Bill. There are other aspects I would like to discuss but I do not have the time. However, I ask the Minister to provide clarification on that to ensure there is full accountability to the Minister and the Government and accountability on the part of the Government to the Oireachtas.
I welcome the Minister. Our timing might be a little askew but we are obliged to be here. None of us would sign a deal without knowing the facts, but we are doing this tonight because we are trusting the Minister's judgment and infinite wisdom about what he cannot share with us tonight. That is some responsibility for the Minister to us and to the Irish people.
The Minister was handed a poisoned chalice from the outset. Of course a write down would have been preferable, but was it ever realistic? In a way, this is a Collins-de Valera moment again. Tomorrow we will try to secure a deal in which, as Senator Hayden said, we must accept that half a loaf is better than no bread. That might be a put down, but I do not believe it is. It is for today. To refer to what Senator MacSharry said, it does not mean we will not be renegotiating again, but we must always get the best deal at every juncture.
There was a meeting of ordinary citizens in Oranmore last Monday night. What they told me was that we should not pay the promissory note in March but restructure it and spread it out over a long period. Their reason was that the current unsustainable debt was too much for any generation to endure. Is that not what the Minister is doing here tonight? Can the Minister give the House an estimate of how much this deal will save the Irish people? If our current debt to GDP ratio is 120%, what are we bringing it back down to? I acknowledge the time we are saving, which is what the Irish people need now. We need time to breathe, to get back on our feet and to get a bounce.
As the Minister knows, David Hall and New Beginnings is bringing a case to the Supreme Court at 10.15 in the morning regarding the promissory note. Will the promissory note still exist, technically, by then? Finally, will the Minister address the serious issue of property rights being set aside in this Bill? It is the second highest right and I echo some of the concerns expressed by Senator Barrett. I wish the Minister well. He is flying the flag for our country in Europe.
All I can say at this hour of the morning is that I hope that poisoned chalice everybody refers to is full of Red Bull. Otherwise, we will have some difficulty getting through the next hour or so.
There have been frequent references to how inadvisable it is to have people making critical decisions in the middle of the night. For the record, our junior doctors are one group of people in this country who make critical decisions in the middle of the night. I hope this message is sinking in with people who are a little sleepy in both Houses tonight.
I hope they are not doing that on Red Bull.
No, we are dealing with another kind of bull.
As a doctor, I have patients who will get second opinions. In general, the opinions will point in roughly the same direction. There will be nuanced differences. The extraordinary thing about the world in which I have been living for the last year and a half and in dealing with economists, planners and so forth is the unbelievably, widely divergent opinions one hears. The medical equivalent of the different economics opinions we get would be somewhat similar to one doctor telling a patient they should have an operation and another doctor saying that they should become an opera singer. It is extraordinary how unbelievably diverse the opinions are.
In the middle of all this I, as an amateur, found out today that I must take part in this critical debate and cast a vote on the liquidation of IBRC. The reality is it will make no difference because we all know how the votes will go tonight. We are being told there is a need to make the deal tonight or something very bad will happen tomorrow. That something very bad will somehow involve the potential loss to the State of assets worth up to €14 billion. As a result, we are rushing this Bill and not considering it. We are giving the Minister increased powers in the middle of the night and taking away powers from the courts. We are doing a raft of things which are really only appropriately done in an emergency. In fact, in seeking a precedent for this in history, I found only one. It was what Abraham Lincoln had to do in 1861-2 when states started to secede. He basically suspended chunks of the US constitution in the middle of the night, more or less, to save the republic. Is that the level of emergency we are facing tomorrow? This is what troubles me and the Minister must clarify it.
The issue, as I understand it, is that we have been told over the past six years that the former Anglo Irish Bank, now IBRC, is basically a failed, zombie bank which is on life support and has no money or assets. Suddenly, it is some type of critical national assets reserve of €14 billion, all of which we might lose tomorrow if we do not make these decisions tonight. I am very troubled by this. I can understand how, on paper, there might be assets in IBRC which are worth €14 billion. I presume most of them are apartment blocks or houses. It is not a bunch of threepenny pieces in a bank account, whereby people can form queues tomorrow and take them out of the bank. I do not believe the assets are that movable or liquid, necessitating this level of emergency.
Furthermore, there is a big elephant in the room. It is interesting to hear the speeches tonight referring to the deal. There is no mention of a deal in the Bill or in the Minister's speech. We are discussing a Bill which will enable the Minister to liquidate IBRC. The elephant in the room is that there is clearly some type of quid pro quo involved. There is a worst case scenario if we do not pass this Bill, and it might not just be the mythical €14 billion. It might also be that we could undo our deal. Again, I am troubled by this. I believe that the potential losses tomorrow are a great deal less than €14 billion. I do not know enough about this but the arguments advanced in the Dáil tonight from Deputy Stephen Donnelly and others were that there is a real worst case scenario in the long term as a result of passing the Bill and that there is a down side to changing the nature of our debt to something which becomes non-negotiable and intrinsically sovereignised. We are being asked to play a game of chicken tonight. There might well be some level of loss tomorrow so in return we are taking some, as yet unquantifiable, risk of a major loss or, perhaps, a benefit at some stage in the future.
With respect, I do not believe the case has been made sufficiently strongly to me that we must rush this through as an emergency tonight. Consider the quality of the thoughtful analysis that Senator Barrett was able to do in a few hours today. He is sitting on my left and he is one more PhD economist than was available in the entire Department of Finance when it made the biggest mis-decision in the history of the State. I do not know how many PhD economists were in that Department today and yesterday addressing the questions at issue or analysing them as thoughtfully as my colleague has. After much thought and soul searching, I will oppose this Bill.
There are three minutes left if Senator Harte and Senator Cullinane are prepared to share time. Is that agreed? Agreed.
I will be brief. This Bill is crucial to the future of my children and future grandchildren. I regard the Minister's advice as important. People go to hospital for operations but they do not have time to think about it or to get a second opinion when it is an emergency. This is an emergency and we must deal with it. The thought of not passing this Bill tonight must be considered. The best way to explain it to the ordinary person is that if this deal goes through, as I understand it, there will be a 40 year bond.
Some 40 years ago, the average house price was £4,000 or €5,000. It was less in country areas. The average industrial wage was £1,500, so house prices were three or four times the average industrial wage. If I had been told in 1973 that I could buy a house and pay the £5,000 for it in 2013, 40 years later, I would have been a cute hoor to get the deal at that time. People try to tell the public that this is a bad deal for future generations but it is a good deal for future generations. I listened to my colleague from County Donegal, Deputy Pearse Doherty of Sinn Féin-----
We have not yet had a chance to speak.
I heard Deputy Pearse Doherty speak in the Dáil but he is not telling the people of Donegal what would happen if we do not pay. Interest rates would double and the people in Donegal, to whom he is telling fibs, would find their mortgage repayments doubled from next month or next year. The people who advise Sinn Féin in Belfast are at no risk because they are paid by Her Majesty's Government. There is no risk to them and they are being disingenuous. It is time they came into the real world.
Senator Cullinane has a minute and a half.
It is absolutely disgraceful, with respect, that the Sinn Féin Party is being given one and a half minutes to discuss a Bill as important as this. The Leader should hang his head in shame, the Minister should hang his head in shame and Senators in the House who support this situation should hang their heads in shame.
Hear, hear.
Senator Cullinane's time is up, he has wasted half of it.
We are being asked to take a decision on one of the most important Bills to come into this House in the lifetime of the Seanad. As a party, we are being given one minute and 30 seconds to state our case. It is a disgrace. Senators should be ashamed of themselves.
How long does Senator Cullinane have left?
When he came into the House, the Minister questioned whether any Senator could give an example of a company that announced it would liquidate over a medium timeframe. Can the Minister give me an example of Bills that have been rammed through the Oireachtas at 4.30 a.m. without proper scrutiny and without amendment? Can he give me an example of that? No he cannot because it is not how we do business. A number of Senators on Government benches talked about promissory notes. Senator Michael D'Arcy referred to the promissory notes as money we knew we had to pay. A Labour Senator said that a debt writedown would not be living in the real world. What about the summit last June when the Minister, the Taoiseach and the Tánaiste, Deputy Eamon Gilmore, came back and proclaimed to the people of Ireland that they had a game changer, that we had the separation of banking debt from sovereign debt?
We will have it tomorrow.
We will have it later.
What they do now is walk into this House and the Dáil and say that it was a porky pie but that they now want the people of the State to take on €31 billion of toxic bank debt.
That has nothing to do with it.
The Government is being joined by Fianna Fáil and, between them, the two parties have contributed to six austerity budgets.
Sinn Féin are flat earthers.
The two most unequal budgets have come from the Fine Gael Party and this Government. The Government will force €31 billion upon the people.
The Senator's time is up.
Not only will the debt belong to the people of this Chamber, it will also belong to our children, who will have to pay it back. The Minister has some neck to come into this House and afford my party one minute and 30 seconds on a Bill as important as this.
Senator Cullinane's time is up. He has now had two minutes and 30 seconds.
The Minister is asking families in this House and families outside the House to celebrate this sham as some sort of fantastic deal when he is asking the people of the State to take on €31 billion of debt.
I ask Senator Cullinane to resume his seat.
I hope the Leader and his Government representatives are thoroughly ashamed of themselves for the way in which they rammed through this legislation in the House.
Senator Cullinane should be thrown out.
I hope they can look the people of the State in the eye-----
Senator Cullinane has no respect for the Chair. He has no respect for anyone.
The Senator should resume his seat.
-----and say that this was the right thing to do. How can the Minister sit there and justify the lack of proper debate?
The Senator should respect the Chair.
How can the Minister justify the fact that he rammed through this legislation without giving my party, with three representatives in the House, the time it deserves? It is absolutely unacceptable. The Minister should be thoroughly ashamed of himself.
The Minister has ten minutes to reply to the debate.
I thank everyone who has contributed. There is a wide variety of views but they are all very interesting. The last speaker, Senator Cullinane, asked if there was any precedent for passing Bills as emergency legislation late at night. There has been a whole series of Offences against the State Acts, when the State was under threat from subversives-----
Come on out of that.
-----when the Dáil and the Seanad had to meet late into the night.
That is unfair.
On a point of order, on the night when we are being asked-----
I am answering Senator Cullinane's question.
On the night when we are being asked to make an important decision and when the Minister is railroading through legislation, he waltzes in here and wants us to have a discussion about the conflict yet he does not want to deal with the substance of the Bill.
This is ridiculous.
I ask the Senator to resume his seat.
That is a ridiculous thing for the Minister to do. He cannot deal with the substance of the Bill and he cannot allow for a proper debate. He wants to take us down culs-de-sac and discuss the conflict but not the Bill, which we are being asked to vote on. The Minister has some neck.
Please, Senator.
I am shocked at what the Minister said. I regard the Minister very highly but that was wrong. We are lucky to have this young man in the Seanad. What the Minister said was unfair.
The Minister without interruption. Please allow him to respond.
The Senator challenged me to come up with a precedent where the Houses of the Oireachtas sat through the night to pass emergency legislation.
I was talking about the lifetime of this Seanad.
If Senator Mary White thinks I can sit here and be abused late into the morning but not be allowed to reply to a simple question with a truthful answer, I do not think that is the way the Seanad should proceed. This is an open forum and there is an exchange of views. I am entitled to reply, especially when confirming the truth.
The Minister is digging up the past.
I know the truth hurts but that is no reason not to express the truth occasionally. This is stand-alone legislation. I do not know whether the European Central Bank will agree a deal on the promissory notes tomorrow. The ECB will discuss it tomorrow and discuss it this evening. The ECB may agree or may not and there may be no deal. This is a stand-alone item of legislation which, on its merits and unconnected to any deal, is worth putting through. What can be said in respect of any prospective deal is that, at an early stage of negotiation, the authorities in Ireland, the Central Bank of Ireland, the Government, the European Central Bank and the Commission were ad idem that an opening position on restructuring the promissory note would be the liquidation of IBRC and the assets being rolled into NAMA. One can speculate about the motivations on either side but one strong motivation was that it did not seem logical to have two bad banks in Ireland effectively doing the same work. When NAMA proved itself, and was seen to operate successfully, it is logical to check the second bad bank, which was not functioning as a commercial bank but simply winding up assets, and to put it into NAMA and let NAMA deal with the issue. That is obviously something the ECB would have liked to have done and we would also liked to have it done. The arrangements for Anglo Irish Bank and subsequently IBRC were made before the troika arrived in town and before the commercially trading pillar banks were put in place. The crisis was over a long period and if it had all happened together, it would be like Spain with one bad bank. That is the position that motivated us.
What I am telling the House is that if I had a full agreement to announce tonight, I would also be introducing this legislation and giving Members the explanations I am giving. It would have the same powers.
The reason the legislation was produced so quickly was that we knew for months that this would be the position if we were successful in negotiating a deal. Therefore, this legislation has been prepared for months. It was introduced this evening because market-sensitive information was released in a credible way. I do not know who released it. By 4 p.m., I was put in a position in which I could not deny that the Government was contemplating the liquidation of IBRC, thus putting everybody with a vested interest in a position to determine what they could take out of it tomorrow.
Senator Crown should note I am not saying that all €14 billion in assets would disappear, or anything like that, but I am sure that, in the absence of this legislation, there would be those with vested interests in the High Court, the courts in London and perhaps the courts in the United States tomorrow to stop us from acting. That would not be in the interest of the Irish taxpayer. Of course, IBRC is a non-trading bank but it does have assets. The assets are variously valued between €12 billion and €14 billion. We hope those assets can be realised for the Irish taxpayer over the years.
Senator Michael D'Arcy raised a point about the total valuations. The total package concerning IBRC amounts to approximately €40 billion. Approximately €12 billion of that – to use a low estimate – is supported by assets. The idea that we are suddenly transferring debt to the State to pay the European Central Bank reflects the position. The European Central Bank provided the money through the ELA system and the promissory note is the method in place to pay it back. One can call it what one likes but it is a State debt or liability in the final analysis. The reason we face a promissory note payment at the end of March is that the State is liable for the payments on the promissory note. The promissory note is the arrangement put in place to refund the European Central Bank for the provision of the liquidity that kept the show on the road.
With regard to the question of the transfer, there may be some theoretical explanation, but the facts are the ones I have outlined. At 4 p.m. this afternoon, it was quite clear to me that we were in a position in which the liquidation could not be denied. I am not in the business of making false denials so we had to act to protect our position.
I do not know whether we are making provision against something that would not happen but I know, based on our experience over the past couple of years, that without making such provision, people with a vested interest in assets valued between €12 billion and €14 billion would be in the High Court before we got up in the morning. There is a conflict between the interests of the Irish taxpayer and those of these people. That is what we had to stop. The first step I took was to act under the Anglo Irish Bank legislation, which allows the Minister to nominate a person to take over the powers of the board of IBRC. I did that.
Knowing that what we are doing would be part of any deal that might be struck, we have had this legislation prepared for a long time. We agreed with KPMG to nominate a particular person as liquidator, when necessary. KPMG had all its arrangements in place. I nominated as liquidator under the Anglo Irish Bank legislation the same person who will be nominated in the morning if the Bill goes through and is signed by the President. KPMG had made its plans and had staff in London, New York and Dublin ready to go immediately, as required. There were several scares in the past about information being released. On a number of occasions, I nearly had to act because we believed there was a substantial leak about the fact that we would move towards liquidation, which we would not be in a position to deny because it has been in the conversation all the time.
That is the background and why we are here tonight. I certainly would not take the responsibility of allowing this to run for several days. It is not so much that somebody might raid the assets but that there is a risk that somebody would take legal action to prevent us from protecting the interests of the Irish taxpayer. We would get into a legal situation in which the interest of the taxpayer would be down the priority list, as has often happened. That is the reason.
There is no denying that this is emergency legislation. Senator Barrett has carried out a very good analysis of what one might consider to be objectionable if one were debating normal legislation. However, we are not debating normal legislation. If Senator Barrett wants a justification for what we are doing, he should note the Long Title of the Bill on pages 3 and 4. Did he ever see such a Bill Title before? At the end, it states: "AND WHEREAS IN THE ACHIEVEMENT OF THE WINDING UP OF IBRC THE COMMON GOOD MAY REQUIRE PERMANENT OR TEMPORARY INTERFERENCE WITH THE RIGHTS, INCLUDING PROPERTY RIGHTS, OF PERSONS". When the Bill is signed by the President tomorrow, half the lawyers in town will be scrutinising it to look for gaps to determine whether they can serve their clients.
They are at it already.
They will not be acting in the interest of the Irish taxpayer. That is why the language is couched in this fashion. If the Senator wants an explanation of where we are coming from, he should just read the Long Title. He will see that a Long Title always outlines the scope of a Bill and its position.
If this were normal legislation, I would be first to the agree with Senator Barrett's analysis, but it is not; it is emergency legislation introduced for the common good. A very simple definition of the common good is "That which is best for the ordinary taxpayer". By God, the ordinary taxpayers have suffered enough. We are putting their interest ahead of any special interests. We are blocking avenues of attack against the interests of the Irish taxpayer by these measures, which people might consider to be draconian.
I do not know whether there will be a deal tomorrow. It was discussed in detail in Frankfurt this evening and it will be discussed again tomorrow. I do not know whether the negotiating parties will sign off on a deal. It would be untrue to say there is not a proposal on the table and that I do not know its details. However, I do not know whether the details will emerge tomorrow; all I can say is that if the deal is agreed, it will be a very good one for the Irish taxpayer. It will be one that I will be recommending to the Houses of the Oireachtas, and the Houses may debate its merits. However, there may not be a deal tomorrow. Despite this, it was vital for me to introduce this legislation tonight in order to protect the assets of IBRC from attack. That is basically the position.
There were a number of questions and I will try to deal with some of them. The special liquidator will appoint independent valuers – this was Senator Colm Burke's point – to value the assets of IBRC. The special liquidator is subject to the instructions and directions of the Minister. Therefore, there is a political or democratic hold.
The reason is really that, when the assets are accorded a certain value, we want them to be transferred to NAMA at that value at the least. They can be offered publicly also. Perhaps somebody wants to buy a bundle of debt. That is what is happening with deleveraging anyway. If a third party makes an offer that is above the valuation price, we will sell to that party. We are not in the business of holding but of winding down. I do not believe there will be many offers. What will happen is that there will be valuations that will have to be matched by NAMA in the transfer of assets thereto. They will be placed in a special purpose vehicle and treated the same as other NAMA assets. As their values are realised, the NAMA bonds which will have gone to the European Central Bank will be redeemed.
Many Senators spoke about the nature of the deal. I do not think there is any mystery about what we are looking for. We are looking for a deal that has long maturities at low interest rates. I think Senator Hayden made the point that we all know about mortgages. If one had to pay the mortgage over five years, it would be a far greater burden than if one had to pay it over 30 years. I bought my house I think in 1968 for something over £3,000 and 20 years later, the mortgage was well covered by one month's salary. That is what happens when one can put the date out further because one gets growth in the economy and inflation and one can service it.
The interest rate on promissory notes is very high. First of all, it was pitched at approximately 6.5% but because the Government of the day decided to take a two year interest rate holiday, when we had to deal with the holiday down on top of the interest, the actual interest rate jumped to approximately 8%. If one looks at market rates at the moment, five year money is just over 3% while nine or ten year money in Ireland is not much more than 4%. Obviously, we will be negotiating for a much lower interest rate. If one combines longer maturities with the very big rate differentials, one changes the whole situation and one can get a good deal for Ireland. That is the basis on which the negotiations are proceeding but there is no deal or agreement. We will report to Senators if we get an agreement.
I am sorry I cannot deal with all the other points made. Again, I would like to thank all the Senators. I think I have, more or less, replied to the main points in general but I did not have time to individualise them. I appreciate the comments from Senator Darragh O'Brien, from the Fianna Fáil benches and, indeed, from everybody here. There were very supportive comments from my own colleagues in the Labour Party and Fine Gael. We will keep Senators briefed but I am looking for this legislation to be passed this morning. The President is coming back from Italy and if the Bill goes through, he will sign it at approximately 6 a.m. Then I will sign a whole load of legal documents. The man from KPMG will have a change in legal status. It will be the same person but he will be the special liquidator. I will issue quite a lot of instructions to him on how to proceed and I will place those instructions in the Oireachtas Library so that Senators have full information on the mandate under which he will operate.
Question put:
The Seanad divided: Tá, 37; Níl, 6.
Tá
- Bradford, Paul.
- Brennan, Terry.
- Burke, Colm.
- Clune, Deirdre.
- Coghlan, Eamonn.
- Coghlan, Paul.
- Comiskey, Michael.
- Conway, Martin.
- Cummins, Maurice.
- D'Arcy, Jim.
- D'Arcy, Michael.
- Gilroy, John.
- Harte, Jimmy.
- Hayden, Aideen.
- Healy Eames, Fidelma.
- Higgins, Lorraine.
- Keane, Cáit.
- Landy, Denis.
- Mac Conghail, Fiach.
- MacSharry, Marc.
- Moloney, Marie.
- Mooney, Paschal.
- Moran, Mary.
- Mulcahy, Tony.
- Mullins, Michael.
- Noone, Catherine.
- O'Brien, Darragh.
- O'Donnell, Marie-Louise.
- O'Keeffe, Susan.
- O'Neill, Pat.
- O'Sullivan, Ned.
- Power, Averil.
- van Turnhout, Jillian.
- Whelan, John.
- White, Mary M.
- Wilson, Diarmuid.
- Zappone, Katherine.
Níl
- Barrett, Sean D.
- Crown, John.
- Cullinane, David.
- Heffernan, James.
- Ó Clochartaigh, Trevor.
- Reilly, Kathryn.
Tellers: Tá, Senators Paul Coghlan and Aideen Hayden; Níl, Senators David Cullinane and Trevor Ó Clochartaigh.
Question declared carried.
When is it proposed to take Committee Stage?