Dáil Éireann díospóireacht -
Wednesday, 6 May 2009

Vol. 681 No. 4

Leaders’ Questions.

Deputy Enda Kenny

Tomorrow, 7 May, marks the first anniversary of the elevation of Deputy Cowen to the rank of Taoiseach. In that time it is important that we look not only at the loss of the Lisbon treaty referendum, the death of social partnership, the three failed budgets, the lack of action on public service reform and the doubling of unemployment in 12 months to 384,000, but at the contradictions in the past 12 months. On the day he was elected as Taoiseach he stated that the fundamentals of the economy were still good and that, although we were not immune to international trends, we would do better than others. The stability and growth pact, as he will be aware, is 3%. We now have the largest deficit in the EU, running up to 11% or 12% of GDP and we are experiencing a recession that is twice as bad as that of the US or the UK. On the day that he was elected as Taoiseach he stated that reform of the public service was of the greatest urgency for him. The only reform introduced in the past 12 months has been slash and burn at the front line, where nurses are now working without contract and where a pension levy, which was unfair, has been delivered to the public service. On the day he was elected as Taoiseach he stated that throwing money at problems in the health service was not the way they should be handled and that serious reforms had to be undertaken, yet waiting lists remain unacceptably long and there has been no progress on primary care or on achieving value for the people's money.

Looking back at that 12 months, the Taoiseach either believed what he was telling us, in which case it is incompetence on his part and on the part of the Government, or misled himself and the people, in which case it is a question of denial. How does he account for the state of the country that he has led for the past 12 months? How does he account for the situation in which we find ourselves which is utterly depressing and on which he has given no reassurance whatsoever that he or his Government has the capacity to lead the people out of the mess he created?

The Taoiseach

I thank Deputy Kenny for wishing me well on my first anniversary.

Deputy Enda Kenny

The Taoiseach will not be here tomorrow.

Deputy Paul Kehoe

That is coming next.

The Taoiseach

Get your retaliation in first.

Deputy Paul Kehoe

Can the Taoiseach tell us of his achievements?

Deputy David Stanton

It is a joke.

Deputy Jim O’Keeffe

In fact, the Taoiseach might not be here much longer.

The Taoiseach

From the Government's point of view, the task we have had to undertake, in the context of the economic situation our country and others face, has meant we have had to involve ourselves in expenditure cuts totalling over €4.3 billion. That is 3% of GNP, a reduction greater than that taken by any other country in Europe. We have also had to increase taxes, a measure totalling €3.8 billion. I accept that level of adjustment of over €8 billion is an imposition on the people. It is, however, a necessary response, a balance between expenditure cuts and taxation measures, given the scale of the problems we face and the need to provide a sustainable path forward. This week the European Commission acknowledged the courageous efforts made by this Government to create a sustainable path for our public finances.

The basic point I have been making in this House for some time is that the rectification of our public finance position is an absolute prerequisite to economic recovery. The critique outlined by Deputy Kenny, in which he criticises the fact that expenditure savings had to be made and tax increases considered and implemented, flies in the face of that basic fact about recovery. He contends, as do his spokespersons, that the Government has not done enough with further expenditure savings. Yet he does not identify those further savings, in addition to ones we have already identified for this current year, which he feels are necessary or appropriate.

Deputy Kenny also seeks to contend that tax increases are not necessary to the corrective measures that have to be taken. We have outlined the plans in overall expenditure cuts and taxation measures that have to be considered for this year, for next year and the year after. We are also waiting on the Commission on Taxation to give a considered view of all the measures that the Government intends introducing in the further budgets.

The measures taken by this Government in the past 12 months have been very significant, not only in respect of the public finances but other major issues to deal with the financial crisis such as the banking crisis, etc. All of these measures are part of an overall plan to bring balance back to the public finances over a reasonable timescale. We have the agreement of the social partners in that task, as shown in the framework we agreed with them in January this year. They accept, on the basis of common analysis and the NESC report, that as a prerequisite to economic recovery we must make these changes, corrections and adjustments.

In the meantime, Deputy Kenny seeks to obtain an opportunity to exploit this for the popular mood. Of course these measures are unpopular in the short term. However, they are necessary in the longer term and in the interests of the country.

Deputy Enda Kenny

We had a different view on how to frame the recent budget. We argued for a two-third cut in spending and one-third tax increase approach. The Government, however, chose a different avenue.

Do the Taoiseach's Ministers realise the extent of anger on the streets when so much has been taken from so many? They had nothing to do with the problem that was caused by others which the Government has failed to rectify.

If the Taoiseach believed what he said a year ago, he has gone from hero to zero in 12 months. The problem is that the Taoiseach has no mandate for what he is now doing. As Taoiseach, he has not submitted himself to the people for adjudication. Before the Lisbon treaty referendum last year, I advised people to hold their fire about the Government until the local and European elections this year. The Taoiseach has said it is his way or no way. Yet, he has banjaxed the economy and robbed the people of their money. He has destroyed the hopes and careers of thousands of young people by failing to deliver confidence, trust and integrity in the country's future. He has failed to deliver a more efficient public service, health reform or rectify the public finances. Yet, he says he will do it his way when it is clearly not working.

On 5 June the people will cast their verdict on the Government in the local, European and by-elections. If the Taoiseach accepts that it his way or no way and if the people convict him and his Government, is he prepared to submit his Government to a general election? If the people reject the Government parties' candidates on 5 June, will the Taoiseach submit his Government to the people so they can have a government with a mandate to lead our nation out of the mess created by Fianna Fáil and the Greens?

Deputy Willie O’Dea

The Deputy can make whatever he wants from talking at the doors.

The Taoiseach

We are not electing a Government on 5 June; we are electing local authorities, people to the European Parliament and there are to be two by-elections. We look forward to engaging with the people in those campaigns, as many of our hundreds of candidates are already doing.

Deputy Enda Kenny

There is not much evidence of that on the ground.

Deputy Paul Kehoe

The people are engaging with Fianna Fáil all right.

The Taoiseach

Despite what the Deputy says, there are many people in the country who recognise that corrective measures must be taken and the Government has a responsibility to discharge, which they respect.

There are those like the Deputy who seek to suggest there is an easier way forward without increasing income taxes. He stated in his supplementary question that he would have provided a greater level of expenditure cuts but, again, with no specifics on them.

Deputy Willie O’Dea

Where were those cuts to be implemented? It was all about a performance budget.

Deputy Enda Kenny

Our budget was about creating 120,000 jobs.

The Taoiseach

It has been acknowledged that the changes we had to make in the tax system are progressive, in that a greater requirement has been made, rightly, on higher incomes. The Deputy has made a series of assertions claiming the Government has failed to rectify the public finances. We are in the process of rectifying them but it will be done over several years. The country would not be in a position to take the level of adjustment necessary in one year, or indeed two, without imposing far too great a hardship on our people which we would not contemplate. We have the agreement of the social partners on that timeframe.

Deputy Tom Sheahan

He is dreaming.

The Taoiseach

Some of the most advanced and developed economies in the world are also suffering from this global recession. Germany's economy will contract by over 6% this year. The people know there is a context in which this is happening. The mandate we obtained in 2007 to provide government for this country until 2012 is one we wish to discharge.

Deputy Eamon Gilmore

I join with Deputy Kenny in marking the first anniversary of the Taoiseach's elevation to office. I hope there will not be a second anniversary. I do not know how it has been for him but it has been pretty lousy for the rest of us. Almost 200,000——

Deputy Martin Cullen

It is only lousy for the Opposition.

Deputy Eamon Gilmore

Never mind the Opposition. Let us think for a second of the people we represent.

Deputy Willie Penrose

Deputy Cullen would want to stay quiet about that, particularly with €51 million hanging out of his ear with electronic voting.

Deputy Bernard J. Durkan

Deputy Cullen, the surrogate father of Fianna Fáil and electronic voting.

Deputy Thomas Byrne

There is no need to be bringing up that old one.

An Ceann Comhairle

Deputy Gilmore, without interruption.

Deputy Eamon Gilmore

Almost 200,000 people have lost their jobs since Deputy Cowen became Taoiseach. The precise number is 195,598. That is an average of 517 people losing their jobs every day since the Taoiseach's election. Many of them have lost their jobs because the companies and businesses in which they worked did not get credit from the banks. On 25 June 2008, I informed the Taoiseach that I was hearing from businesses across the country that the banks were not giving them credit facilities but instead squeezing the life out of them and putting jobs at risk.

The Taoiseach stated in response, "It is important to point out, however, that, as the Central Bank has confirmed, the Irish banking system is well capitalised and is in a healthy state in terms of its own financial situation." That was on 25 June. He then sent the Dáil on a three month holiday. The Government also went on holiday, only to return in a panic at the end of September to introduce an unconditional guarantee for the banks which did not work.

Deputy Peter Power

That is not correct.

Deputy Eamon Gilmore

This was succeeded by the nationalisation of Anglo Irish Bank.

Deputy Peter Power

It did work.

Deputy Eamon Gilmore

Wait a second. We are obviously using different yardsticks to measure what is working. The Government subsequently proceeded with the recapitalisation of the banks at a cost of €7 billion or €8.5 billion. This had to be followed up with a statement that the Government would bring in "an bord bail out" at a cost of God only knows how much more to the public purse.

In the meantime, the banks are not lending and businesses continue to be squeezed as a result of the shortage of credit. Everywhere I go, the message I repeatedly receive is that people cannot get money out of the banks. Yesterday, I was told by an auctioneer that he had a client who was willing to buy a house but while he could have got a loan for it three months ago, he cannot get the same amount now. Every business person I meet tells me he or she cannot get even the smallest facility from the very banks which the Government has bailed out with huge amounts of public money. The Central Bank's latest monthly statistics indicate that lending to business, or what it describes as "non-financial corporates", fell by €1.3 billion in March alone.

The banks keep telling us they are lending but businesses tell us they are not. What measure or ready reckoner is the Taoiseach using to determine whether they are lending? Has he a figure on the number of loans given, the amount of money lent or the overdraft facilities granted or refused? What is his measure? How is he assessing the performance of these guaranteed banks in circumstances where they publicly claim they are lending while businesses which depend on credit and provide jobs claim otherwise?

The Taoiseach

The Deputy raised a number of points. He referred to what we said on 25 June 2008 and what I have since been doing. It is true that the Labour Party has not supported any of the initiatives taken by the Government to provide stability.

Deputy Eamon Gilmore

Stick to the question I asked.

The Taoiseach

I would like to answer the question. The Deputy made certain charges against me and I would like to respond to them.

An Ceann Comhairle

He is entitled to answer.

Deputy Eamon Gilmore

He might answer the question.

An Ceann Comhairle

Deputy Gilmore is not entitled to interfere like that.

The Taoiseach

The Deputy may feel he is entitled to make a series of assertions before asking a question but that I should only answer the question and leave the assertions unanswered. I am entitled to respond to his assertions. He decided to ask a long-winded question and I will answer it as succinctly as I can within the Orders of the House.

He decried the fact that credit was not being made available to Irish customers of the banking system. The first point I want to make is that we had to stabilise the banking system. He did not support any of the measures which sought to stabilise the banking system.

Deputy Eamon Gilmore

We were right.

The Taoiseach

We have a credit problem which is worldwide and which remains to be fixed by the international financial system. If we had gone the Labour Party road, there would be no credit available to anybody because there was a real prospect that financial institutions of systemic importance would collapse without the support of this House. This support was available from some parts of the House but not from Labour Party Members. The Deputy is concerned about providing financial stability but neither he nor his party was prepared to support initiatives to bring that about.

Deputy Emmet Stagg

That is not true.

The Taoiseach

It is true. I am in mid-sentence.

An Ceann Comhairle

Deputy Gilmore was heard in silence and the Taoiseach is entitled to the same courtesy.

The Taoiseach

Not if one is Deputy Stagg.

Deputy Emmet Stagg

If he tells the whole story, we will listen.

Deputy Willie O’Dea

He would not want to tell the whole story about the Deputy.

An Ceann Comhairle

Allow the Taoiseach to finish.

The Taoiseach

To respond to some of the points made by Deputy Gilmore in his multifaceted question, he likes to portray recapitalisation as money that has been given to institutions without a return for the taxpayer. The taxpayer is getting a return on those investments.

Deputy Seán Sherlock

Preference shares.

The Taoiseach

I am sorry, Deputy Sherlock.

An Ceann Comhairle

Allow the Taoiseach to finish.

The Taoiseach

Leaders' Questions provide for Deputy Gilmore to speak on this occasion.

Deputy Seán Sherlock

We are getting a bad deal.

The Taoiseach

We are getting a good deal in terms of the warrants and the returns on that money but this was never the contention of Labour Party Members, who like to suggest that it was simply handed over without protection for the taxpayer. That is not the truth.

Deputy Seán Sherlock

Why not buy ordinary shares?

The Taoiseach

I do not interrupt when I am asked questions.

An Ceann Comhairle

I will have to ask Deputy Sherlock to leave if this continues.

The Taoiseach

I ask for respect in return. I respect his leader and perhaps he could pay some of the same to me.

An Ceann Comhairle

We cannot have that.

The Taoiseach

It is true that demand for credit is down because of the recession. It is also true that people are finding it difficult to obtain credit for viable but vulnerable businesses which are still trying to contend with the current situation. The Minister for Finance is seeking to ensure, on an ongoing basis, that good business ideas are not denied access to some level of credit, even if not the same amounts available when there was much more liquidity in the system than is the case at present. However, I do not accept Deputy Gilmore's basic contention that the Government has been doing nothing to seek to assist the situation. Every initiative we have taken has been rejected by the Deputy.

Deputy Eamon Gilmore

I will resist the temptation to engage in political argy bargy with the Taoiseach.

Deputy Willie O’Dea

That would be a first.

Deputy Willie Penrose

Are we wanted to sign the blank cheques?

Deputy Eamon Gilmore

The problem is that all over the country, good businesses are simply trying to survive. These businesses will thrive again when there is an upturn in the economy. They just need to get to that point while retaining as many staff as possible. They need help and credit. I am repeatedly hearing that the small facilities of €5,000, €10,000 or €20,000 — we are not speaking about large sums — which businesses need to keep going from one week to the next and to pay wages are unobtainable. The figures released by the Central Bank which reveal a decrease of €1.3 billion in March confirm what I am hearing.

We can have all the debate we want in this House or hurl political charges at one another but the difference between the Taoiseach and me is that he is charged with executive responsibility for running the Government and making sure credit is flowing in the economy so that businesses can continue. He has brought before us a succession of measures which have not worked because credit is not being provided. The banks are issuing press statements which claim they are lending but they are not doing so even though the State has provided an unconditional guarantee on the Taoiseach's recommendation. We were the people who advised that it should not be unconditional. The reason we differed with the Government on 30 September was because we argued that the guarantees and support provided by the State to the banking system should have been conditional on banks providing credit to business, cleaning up their act in terms of capping salaries and making the necessary reforms, some of which were made subsequently, and on the State taking equity in the banks, which was taken anyway and which may have to be increased in the future.

Deputy Thomas Byrne

We all know the problems.

Deputy Eamon Gilmore

The Taoiseach did not answer my question——

Deputy Peter Power

Does the Deputy know the answer?

Deputy Eamon Gilmore

The Members opposite are the Government. What is the Taoiseach's yardstick or measure? The banks claim they are lending but the Central Bank and businesses say they are not. How much can he tell the House about what the guaranteed banks are doing to provide credit to businesses? Today, in the middle of the week, people who need to pay wages or bills by Friday and again next week do not know where they will get the money to do so. They need to know what will happen. What is the Taoiseach saying? He has headed the Government for a year almost to the day. Why are banks not lending? Why is credit not forthcoming? Have we not done enough for them? Every worker in this country will have his or her pay packet plundered over the next month to fill the hole that must be filled because the State is bailing out the banks. We can argue forever about whether it was necessary to do it but that is the reality. Working people are paying for this. What will happen in regard to banks lending to business in order that the economy can start moving again?

The Taoiseach

I am not in the business of hurling political charges. I want to address the seriousness of the question.

Deputy Eamon Gilmore

That makes two of us.

The Taoiseach

The Deputy still makes the assertions and the populist image he wants to portray today is that the tax increases relate to the recapitalisation of the banks.

Deputy Eamon Gilmore

Here we go.

The Taoiseach

The tax increases we have brought forward are about the fact we have to redesign our taxation base because we do not have as much money coming in under other tax heads as in the past and not the banks.

Deputy Brendan Howlin

We told Fianna Fáil that 12 years ago.

The Taoiseach

Unless we broaden the base of our taxation system, including increasing income taxes and looking at other forms of taxation in the future, we will not be able to provide sustainable public services at the level the people expect. That is the reason we are involved in a change in taxation systems. For obvious reasons, the Deputy likes to popularly portray that the reason we are doing that is the issue relating to the financial system but that is not the reason.

Deputy Brendan Howlin

The Government made a bags of that anyway.

The Taoiseach

The reason we are increasing taxation is we need to increase revenue from sources like income tax and other taxes in the future to meet the expenditure needs even where the Government has made expenditure savings this year for €4.3 billion. Let us leave that aside because that is just another way of the Deputy getting his message out to the doors on that issue.

I refer to the issue he asked about regarding the financial system. There has been decreased demand because of recession. We are involved in objective analysis to see in what way we can assist business in order that banks provide more credit than is currently being provided. We are working to achieve that. The NAMA initiative is part of that proposition. It is how impaired assets are taken off the balance sheets of the banks so that we can get them back to the core franchise of doing business and providing credit for business, customers and citizens going about their ordinary business.

Deputy Eamon Gilmore

The Government has not done that.

The Taoiseach

The Deputy does not agree with that either.

Deputy Eamon Gilmore

The Government has not done that.

The Taoiseach

He does not agree with State guarantees or even recapitalisation. What credit would have been available to banks if they were not recapitalised? Not alone would credit be a problem, the solvency issue would have been a problem. This is my response to the argument the Deputy is making. In other words, he does not agree with any measure that seeks to correct the issues but he continues to complain about the fact that there are still problems, which we acknowledge and continue to work on.

Deputy Eamon Gilmore

The Taoiseach still has not answered the question. He does not have an answer.

Deputy Peter Power

The reality is the Deputy is against everything and for nothing.