Seanad Éireann debate -
Tuesday, 19 Nov 2013

Vol. 227 No. 10

Adjournment Debate

Banking Sector

Senator Thomas Byrne

The purpose of this Adjournment matter is to get some clarification from the Government on the proposed role of the KfW bank, a German bank which the Taoiseach mentioned in his speech announcing that the Government would not seek a so-called backstop financial arrangement upon leaving the agreement with the troika and the Commission. KfW is a public interest bank with various roles in Germany and beyond. The Taoiseach gave scant detail when he said that it would be of assistance to the Irish economy, including granting finance to small and medium enterprises, SMEs. This led one commentator to speculate wildly that it could be a backstop for the Irish Government and its sovereign debt requirements. It is accepted that will not happen but the lack of detail has allowed that type of speculation to grow. I want confirmation that this will not happen because the person who made the allegation in one of the national newspapers could well have read the Taoiseach's speech as giving that role to KfW.

We want to know several things about KfW. Is it applying for a banking licence in Ireland? Will it operate on the high-street insofar as there are high street banking services for SMEs? Has the Government drawn up a memorandum of understanding with the German Government? KfW is mainly owned by the federal government and partly by the states in Germany. Does the Minister for Finance have a memorandum of understanding with the bank or with its chairperson who is the German Minister for Finance? What is the expected level of credit that KfW will make available for Irish business and will it lend directly into business in Ireland or will it provide finance to the banks to then provide finance to business? Is there any guarantee that the finance will come out of the banking system? We have had bad experiences over the past few years in that regard and in regard to lending targets. Will KfW compete with the banks or will it fund them?

When the Labour Party proposed a strategic investment bank in the last Dáil - it is in the programme for Government - KfW was mentioned as an example of what could happen in Ireland. Will this bank complement the proposal in the programme for Government for a strategic investment bank or is it in fact the strategic investment bank? I look forward to the Minister of State's reply.

Minister of State at the Department of the Environment, Community and Local Government (Deputy Jan O'Sullivan)

I am taking this Adjournment matter on behalf of my colleague, the Minister for Finance, Deputy Michael Noonan.

The Taoiseach mentioned in the Dáil last week when announcing Ireland's completion of the programme, that he had held discussions with Chancellor Merkel on Germany's offers to help. The discussions included a specific focus on finding ways to reinforce Ireland's economic recovery by improving funding mechanisms for the real economy, including access to finance for Irish SMEs. In that context, the German Government has asked KfW, the German development bank, to work with the German and Irish authorities swiftly, in order to deliver on this initiative at the earliest possible date.

Officials of the Department of Finance have already exchanged working papers on this subject with KfW and the German Ministry of Finance. On Monday of this week a productive consultation was held with the German embassy in Dublin. This helped pave the way for discussions between the Department of Finance officials and officials of the German Ministry which were held in Berlin this morning. Further work on this will continue with KfW and other key stakeholders over the coming weeks both here and in Germany.

The Minister for Finance is keen to see the establishment of a healthy and balanced relationship. As the Department of Finance is trying to ensure any initiative that comes out of this process is as effective as it can be, it will discuss approaches that meet the strategic objectives of both States and ultimately facilitate lending to the real economy, in particular to SMEs in Ireland. This relationship may take the form of a memorandum of understanding or a contract or indeed we may formalise that relationship in some more appropriate fashion. That is not yet decided.

KfW's model in Germany is to lend through commercial banks. In the case of its agreement with Spain it provided a loan to ICO, the Spanish state investment bank which then lent the funding on to the commercial banks in Spain. In the Portuguese instance there is not currently an established state investment institution and so KfW is assisting the Portuguese authorities in establishing an appropriate organisation and structure for facilitating lending to SMEs. All appropriate options will be considered in the course of the discussions with KfW for the Irish case.

KfW holds a banking licence in Germany and under the rules of the European Union can passport into Ireland if this is deemed necessary without a requirement to obtain an Irish banking licence. I should note that KfW's import export, IPEX, bank notified the Central Bank of its intention to passport into Ireland in January 2008. This, however, is not related to the recent announcement, rather it is part of ensuring that KfW can fulfil its mandate as an import support for German businesses.

Additionally, the Government has decided to establish the Ireland strategic investment fund, ISIF, which will absorb the National Pensions Reserve Fund, NPRF. Using the ISIF, the Department of Finance will maximise our resources to enhance growth in the Irish economy and improve key infrastructure to maintain Ireland's attractiveness as a place to do business and to create employment. Officials of the Department of Finance are preparing the necessary legislation which the Minister anticipates will be enacted early next year. Already, in the lifetime of this Government, the NPRF has established funds that support strategic projects and a number that support SME financing.

Further assessment of the need to create a strategic investment bank over and above the contribution expected from the ISIF will be informed by the requirements of the economy once the Government's key immediate objectives for the repair of the banking system have been completed. The Department of Finance has not set targets for any strategic investment bank as its role has yet to be fully defined, and due to state aid considerations, its potential market is likely to be somewhat prescribed. Experience in other countries suggests that any lending facilitated by a state investment institution like KfW or an Irish state investment bank is generally complementary to lending already taking place in an economy and can in fact assist commercial banks with access to cheaper credit lines such as from the European Investment Bank.

Commercial Rates Issues

Senator Lorraine Higgins

I thank the Minister of State for coming to the House. I am worried about a matter arising from the Local Government Bill 2013, the potential for rates to apply to unused or closed commercial premises and units. Will the Minister for the Environment, Community and Local Government devolve responsibility to local authorities to make the decision on the potential for application of rates on these closed buildings? High rates are the single biggest reason that many shop units lie empty in towns. My home town, Athenry in County Galway, has been hit especially hard with up to 30 vacant units. There are also many vacant in Gort, Loughrea, Portumna and Tuam as a consequence of this business cost. There is no doubt that rates deter people from going into business and this needs to be examined. I have always thought it unfair to ask the business people of each county to shoulder the main responsibility for funding local authorities. With the advent of the local property tax this must be reconsidered.

For the purposes of this evening's debate, however, I want to focus on the proposal to charge rates on closed commercial properties. Members of the Opposition have recently said the Government will apply a 50% rate on commercial properties that are closed. Despite these utterances a cross-party delegation from Galway met the senior Minister in the Department, which was under Fianna Fáil and Independents at the time, who was in favour of levying a 50% charge on closed commercial premises. I have reservations about this.

Galway city is no doubt very different from Galway county. There is a demand for commercial properties in Galway city, not least because of the footfall, the number of tourists visiting and population figures. On the other hand, my constituency of Galway East is like many other rural constituencies throughout Ireland where there are a plethora of shop units and other commercial units vacant and no demand for them. However, this proposal would disadvantage them further.

On that basis, I appeal to the Minister of State and the Department to ensure local authorities have discretion to make a decision on the application of rates on closed commercial properties. Local authorities are best placed to decide this, given they are most familiar with the particular circumstances of county towns. For example, it would be ludicrous to charge rates on vacant premises in places like Athenry, Loughrea, Portumna and Gort in County Galway which, as I said, have a large number of units vacant due to the lack of demand for them. The local authorities would surely recognise this. I do not believe it makes sense to allow a Dublin bureaucrat to make the rules when a local authority would have a much better idea as to how to adequately fund itself, while applying fair rates in a way that can be done by taking into consideration the particular circumstances of that town.

If we stick to the goal of the Local Government Bill, which is to give more power to the local authorities and to the people, by letting the local authorities decide how to charge rates and whether they should apply rates on these buildings in these circumstances, this would help businesses and, therefore, the overall economy, as well as local government. Our programme for Government called for reform to put people first and I believe we need to do everything to ensure we are always doing this. To be fair, the Department of the Environment, Community and Local Government does just that. Nonetheless, by devolving this responsibility with regard to rates on closed premises to local authorities, we would be putting the people first.

Deputy Jan O'Sullivan

I am taking this debate on behalf of my colleague, the Minister, Deputy Phil Hogan. I will convey the Senator's views to him.

The Local Government Act 1946 provides that where a property in a county council or urban local authority area is unoccupied on the date of the making of the rate, the owner becomes liable for payment of rates. However, the owner is entitled to a 100% refund if the property is vacant for specified purposes. These are: where the premises are unoccupied for the purpose of the execution of additions, alterations or repairs; where the owner is bona fide unable to obtain a suitable tenant at a reasonable rent; and where the premises are vacant pending redevelopment. A small number of urban local authorities have historically had separate legal provision enabling a refund of 50% of rates on vacant properties. While the same criteria for refunds apply, 50% of the rates paid is refundable to the owner of vacant premises in the cities of Dublin, Limerick and Cork. These legislative provisions are as follows: section 71 of the Local Government (Dublin) Act 1930; section 29 of the Limerick City Management Act 1934; and section 20 of the Cork City Management (Amendment) Act 1941. The majority of local authorities are currently subject to the provisions of the 1946 Act and the 100% refund regime.

Section 31(b) of the Local Government Bill 2013 seeks to amend the Local Government Act 1946 by reducing the 100% refund regime to 50% for all local authorities, effectively reducing the refund rate to the same level as currently pertains in Dublin, Limerick and Cork cities. The Minister for the Environment, Community and Local Government's intention, in standardising the level of vacancy refunds in this way, is to provide an additional incentive to commercial property owners to let commercial property and to reduce the incidence of vacancies, particularly in urban centres, thereby bringing commercial properties back into productive use. From a local authority perspective, vacant commercial properties are also beneficiaries of local authority services such as pavement improvement, street cleaning, street lighting and so on. It is only fair that owners of vacant properties should make a contribution, though less than those occupied, to the cost of providing these services.

The Minister, in introducing the Bill on Second Stage in the Dáil last month, indicated that he is fully conscious of the difficult economic environment in which many businesses and property owners continue to operate. He further indicated there are numerous factors to be considered when proposing an amendment to rates legislation, including its effect on business sentiment and its impact on local government finances. The Minister intends that this provision should not be interpreted as a further cost on business and gave a commitment to the House to revert to this matter again as the Bill makes its way through the Oireachtas to ensure there are no unintended consequences in how the provision would work in practice. There will, of course, also be an opportunity for the issue to be discussed when the Bill comes before this House for debate next month. I am sure the points raised by Senator Higgins will be considered by the Minister in the immediate future and when the Bill comes to the House.

Senator Lorraine Higgins

I thank the Minister of State for her response. I would make the observation that Dublin, Cork and Limerick are very different places from towns like Athenry, Loughrea and Gort. As Dublin, Cork and Limerick have demand for commercial units, it is arguably fair to apply a 50% rates bill on unoccupied commercial premises. It is very different in rural areas where supply exceeds demand. That is the difficulty in east Galway, which is why I brought this matter before the House. I appeal to the Department and the Minister's better judgment so as not to further burden those who own such properties and who are already struggling in this economic recession. I ask that they take a commonsense approach and perhaps devolve some power to the local authority, which would be more au fait with how these towns are operating in terms of getting tenants into or being able to sell these commercial units. It is welcome that the Bill is back before the House later this month, when I intend to make a submission on the matter. I am glad to note that the Minister of State will carry my submission back to the senior Minister in the Department.

Water and Sewerage Schemes Status

Senator Marie Moloney

I thank the Minister of State for coming to the House to take this matter. It is my second time tabling the same Adjournment matter as I also dealt with this in February last and I am now seeking an update. The Minister, Deputy Phil Hogan, will be very au fait with this issue and he ducks every time he sees me in the corridor because he knows well what I am going to ask him about it.

For the information of the Minister of State, Kilcummin sewerage scheme was approved, went to tender, had a contractor appointed and had funding made available, but it was then pulled due to a problem with the contractor. The people of Kilcummin feel absolutely frustrated at this stage. They are being pushed from post to pillar and from Billy to Jack, as they say, and we seem to be getting nowhere. If one speaks to the council, it is a matter for the Department; if one speaks to the Department, it is the council's problem.

To be fair to the Minister, he said at the end of the debate in February: "If they reach agreement, we are in a position to look at the funding." It is not a matter of funding for this scheme, or at least that is what I am being told. A briefing note from the Minister's office in June 2013 stated that Kerry County Council had commissioned a further technical report which is expected to be forwarded to the Department in July 2013. At an area meeting of Kerry County Council during the week, the councillors were advised that the report was with the Department. Nobody seems to get a clear answer, so I hope the Minister of State is here to give me a clear answer and outline the current position. Is it with the Department or the council, and what is the hold-up? It is a never-ending saga for the people of Kilcummin. I will wait for the Minister of State's reply before I comment further.

Deputy Jan O'Sullivan

I hope to update the Senator, although I am not sure it will be a final solution. I am taking the matter on behalf of my colleague, the Minister, Deputy Phil Hogan.

The Kilcummin sewerage scheme is included in my Department's water services investment programme 2010-13 as a scheme to advance through planning during the life of the programme. As the Senator will be aware, Kerry County Council awarded a contract for the combined Kilcummin-Barraduff sewerage scheme in 2007. Work commenced on this contract in April 2007. However, the contractor at the time was also engaged in construction work on another sewerage scheme, the Milltown sewerage scheme. As a result, progress on the Kilcummin-Barraduff contract was slow. In July 2007 the council suspended the contract in accordance with the terms that were set out in it. The contractor agreed to withdraw from the Kilcummin portion of the contract and resumed work in Barraduff. As a consequence of the problems, no work was carried out on the Kilcummin scheme.

Kerry County Council submitted a revised proposal for the Kilcummin sewerage scheme to my Department in December 2009.

In view of the high unit costs associated with providing the scheme, the council was requested by my Department in May 2010 to review its scope. The council submitted a further proposal to the Department in June 2012. Concerns persisted regarding the unit costs of the scheme and, following discussions with the Department, it was decided that the council would submit further information to enable the Department to make a decision on the matter. That submission is awaited.

The Minister is conscious of the impacts the discharges from Kilcummin are having on the local environment and on Lough Leane and is keen to have the problem resolved. Therefore, when Kerry County Council submits the additional information, it will be dealt with without delay. I am sure the Senator will hold us to this. The council, meanwhile, has been moving ahead with the improvement of water services infrastructure in the county. It has completed ten schemes or contracts in this regard, including sewerage schemes for Firies, Milltown, Farranfore, Rathmore and Barraduff, and water supply schemes or contracts in Listowel, Cahersiveen, Ardfert and at Scart reservoir, which is part of the central regional water supply scheme. It has also completed the combined Waterville water and sewerage scheme. The council expects to go to tender shortly on the Ardfert sewerage scheme and to award the contract for wastewater treatment plants for the Ballylongford and Tarbert sewerage schemes. In addition, the council is also pressing ahead with its water conservation programme throughout the county, which was identified as a key priority under my Department's water services investment programme.

From 1 January 2014, Irish Water will be responsible for the delivery of water services capital infrastructure. That body is engaging with each local authority to assess priorities and is preparing a capital investment plan for 2014-2015. This plan will provide for the transition of relevant projects currently included in the water services investment programme.

I realise this is not the definitive answer the Senator was seeking, but I hope it will provide some clarity. To reiterate, the Minister has said there will be no delay in making a decision on the matter raised.

Senator Marie Moloney

I thank the Minister of State for her reply although, as she acknowledged, it is not exactly what I wanted to hear. She clarified one particular issue, however, namely, that the report is still not with the Department, notwithstanding the assurances we received locally that it had been sent. Somewhere along the line, it seems to have fallen through the cracks.

The Minister of State's reply was disappointing in that it echoed, almost word for word, the response I received in February this year. The only substantive difference is the indication that the report is not with the Department. I will have to go back to Kerry County Council to try to discover the true story. It is claiming the report is with the Department. Somebody, it seems, is telling porkies.

Deputy Jan O'Sullivan

To clarify, the council did send in a submission, but the Department sought, and is awaiting, further information.

Senator Marie Moloney

As of last Wednesday, the council claimed the report was with the Department. Was the further information requested after that date?

Deputy Jan O'Sullivan

I am simply highlighting what is set out in the reply, namely, that the council has been asked to submit further information to enable my Department to proceed.

Senator Marie Moloney

In other words, the submission remains to be finalised by the council.

Deputy Jan O'Sullivan

That is correct.

Direct Provision System

Senator Martin Conway

I welcome the Minister of State, Deputy Jan O'Sullivan. I am not a wholehearted advocate of the direct provision system as a means of housing people who are seeking asylum in this country, many of whom are in a distressed state. I have been to two of these centres and was not at all impressed with what I saw. We have responsibilities and duties as a State to respect and protect people who come here seeking asylum and to ensure regard is had to their sense of integrity, belonging and decency.

What I saw in the two centres I visited was people putting their best foot forward. The visits were arranged, with the centre management aware well in advance of our attendance. I suspect we might have seen many different things if we had arrived unannounced. Other public representatives who have visited direct provision centres over the years have told me they were met with aggression when they sought to speak to residents alone and hear their concerns.

As a country, millions of our people have emigrated over many decades. Some were treated extremely well and have prospered and enriched the countries to which they migrated. Others were not so lucky and were treated very badly. We have all heard the stories of the signs in the windows of business premises proclaiming "No dogs, no Irish". Are we as a society prepared to stand over a system where people who come to our country to seek refuge are not properly respected but are instead made to feel humiliated, isolated and degraded? That is what is happening in this country at this time. It is a national scandal. Coming generations will look back in shame at how we treated people in this situation.

An all-party Seanad committee has been establish to examine the system of direct provision, make some waves and, at the very least, give the people concerned a voice. Various non-governmental organisations are doing good work in this area, but they have essentially been voiceless in so far as their efforts do not seem to have attracted the type of popular support for which one would have hoped. I acknowledge the efforts of my friend and colleague, Senator Jillian van Turnhout, in this area. She is a member of the Seanad all-party committee, as are Senator Trevor Ó Clochartaigh and others.

As a start in terms of tackling this issue - it is nothing more than a start - I am calling for a provision whereby elected Members of the Oireachtas would be able to knock on the door of any of the 30 plus centres, present their identification and be able to gain access to speak to residents and examine the facilities. A model in this regard is the well established prison visiting committee system in all prisons. Some of these committees work well, while others do not. Committee members can turn up, with their identification, and gain access to the facilities at any time of the day or night. I propose that any new contract that is issued to providers of direct provision services - I understand these matters come within the remit of the Reception and Integration Agency - should include a provision whereby any Member of the Oireachtas, with proper identification, would be facilitated to perform random inspections of the premises and to speak in confidence to residents and hear their concerns.

As I said, our treatment of asylum seekers is an issue on which future generations will look back and be very ashamed. I am not sure of the Minister of State's view on this matter, but I know she is a compassionate person. It is a pity the Minister for Justice and Equality, Deputy Alan Shatter, is not here to respond. He had a great deal to say on this issue when he was in opposition. I would like to see him implement some of the proposals he put forward when he was on the other side of the House. It is amazing how people who go into government seem to end up allowing advisers to mute their instincts and beliefs. Sometimes in politics, as in life, hard decisions have to be made and leadership must be shown. Sometimes one must throw caution to the wind and tell officials how it is to be done. There is an imperative to do the right thing. As a first small step in this regard, Oireachtas Members, on the basis of their mandate from the people, should be able to present at direct provision centres - which, after all, are funded by the taxpayer - perform an inspection and thereafter report back to Parliament as they see fit.

Deputy Jan O'Sullivan

I am responding on behalf of the Minister for Justice and Equality, Deputy Alan Shatter. The Minister acknowledges that the Senator was part of a delegation which visited centres in Galway in October, which visits were well facilitated by the people concerned.

Senator Martin Conway

They had prior notice.

An Cathaoirleach

The Minister of State to continue, without interruption

Deputy Jan O'Sullivan

The Minister has concerns about the Senator's proposal that all Members of the Oireachtas would have unrestricted access to any one of the 34 asylum accommodation centres under contract to the Reception and Integration Agency.

The Minister is conscious of the need to balance the right sought in this Adjournment motion with the rights of residents and the need for proper management of the centres. He is concerned that unrestricted access might not be appropriate for a number of reasons, not least the rights of asylum seekers resident in these centres to their privacy and the obligations placed on the service providers. The centres are privately run, operating under contract to RIA. Those contracts provide for unannounced visits in circumstances where these are both necessary and appropriate. An example of such a circumstance would be where access to the centre is needed by RIA officials and by private independent inspectors under contract to RIA for the purpose of carrying out inspections. Of course, all centres are equally subject to unannounced inspections by other State bodies, for example, environmental health officers and fire safety inspectors have a right to inspect RIA accommodation centres without notice. All completed inspections carried out in RIA centres after 1 October 2013 will be published on RIA's website, ria.gov.ie.

Of necessity, unannounced visits would have to take account of RIA's child protection policies which require, inter alia, the need for prior vetting. The Minister would be concerned that if Members were being accompanied by other interested parties, such as media or non-governmental organisations, NGOs, this requirement would have to be complied with. Of course, these centres are publicly funded, but so are many other facilities to which access rights for Members of the Oireachtas would never be sought or contemplated. These are people's homes and their privacy must be respected.

While the Minister has no doubt of the bona fides behind what is proposed in this Adjournment matter, he does not believe it would be appropriate to accede to it. However, he is happy to deal with requests for visits in the same way as they have been dealt with to date, and he will continue to seek to facilitate any requests that are made to him, consistent with the need to meet other demands on RIA and on individual centres.

The Senator made his case very strongly. Unfortunately, the Minister could not attend to hear it but I will convey the sentiments the Senator has expressed. The point about privacy is valid, but perhaps there are other ways of meeting the residents without having to invade their privacy.

Senator Martin Conway

I assure the Minister of State that I am not shooting the messenger. However, I believe the Minister has made the wrong decision on this. There is nothing as powerful as transparency. Of course appropriate protocols would have to be put in place to which people who participated in such visits would have to adhere, and of course there are child protection criteria. Any Oireachtas Member with a keen interest in this issue would take significant cognisance of child protection and whatever vetting is necessary. I would not envisage a scenario where an Oireachtas Member would show up at a centre and show his or her identification at 2 a.m. That would be totally inappropriate. It would also be inappropriate for a Member of the Oireachtas to turn up with a journalist. The Member would probably be accompanied by another Member of the Oireachtas.

There is a significant issue of transparency involved. Many people and NGOs do not believe these centres are run to the highest possible standard. Simple things can be done to make life a great deal easier. Reputable journalists such as Carl O'Brien have written extensively about this issue. We cannot bury our heads in the sand and pretend it does not arise.

I am disappointed with the reply, but I will continue to advocate, with my colleagues on the working group. We will meet to discuss this reply and an appropriate response will be made in due course.

An Cathaoirleach

I understand the Senator intended to share time with Senator Jillian van Turnhout.

Senator Jillian van Turnhout

I support Senator Martin Conway. I believe there is a middle ground and a protocol could be put in place. While RIA has been very good at accommodating visits, it has taken several months to organise them. There should be a facilitated process whereby we could organise them without delay, at the very least.

Deputy Jan O'Sullivan

I will convey to the Minister the views expressed by both Senators, including the suggestion there might be a middle ground and a way of establishing protocols that would facilitate what they seek.

The Seanad adjourned at 7.45 p.m. until 10.30 a.m. on Wednesday, 20 November 2013.