Dáil Éireann díospóireacht -
Wednesday, 18 Nov 2009

Vol. 695 No. 1

Leaders’ Questions.

Deputy Enda Kenny

I welcome Ms Quinn to Ireland. Before putting my question to the Taoiseach, I wish to say that my thoughts this morning are with the families of the four young women who died last night and with all the victims of last night's horrific car crash on the Mayo-Galway border. Go ndéana Dia trócaire orthu.

I listened carefully to the debate yesterday evening on the pre-budget position. It is obvious there is a fundamental difference between Government and Opposition parties in the approach to the forthcoming budget. It appears, given the scale of the financial disaster facing us, that the Government is consumed with book-keeping and cutback measures. Having travelled the country extensively, the clear message from businesses who continue to pay wages and struggle to remain in existence in competitive circumstances is that they want a break and assistance, where possible, to allow them continue with their commitment to keep our economy moving.

In the run-in to yesterday's debate, Minister after Minister stated that they would listen constructively to and take on board suggestions from Opposition parties. My comments this morning are in that light. The Fine Gael Party, having met directly with more than 1,200 to 1,500 business people yesterday put forward, through its spokesperson on finance, Deputy Bruton, the proposition to introduce a tax cut on employment. This tax cut would be funded in the manner outlined, namely, €900 million by way of a 20% cut at the lower rate and a 50% cut at the higher rate, which would affect 175,000 businesses and 1.7 million employees.

The Taoiseach has repeatedly stated, as is his right, that he will do things his way, an approach which, it has been confirmed by Ministers, will result in the loss of a further 72,000 jobs next year. Fine Gael's constructive suggestion is made in the interests of easing the crushing burden on employers, of making it easier for employers to retain employees and of ensuring those on the minimum wage and in receipt of low income remain outside the PRSI net. The proposal has been costed. In the spirit of what Ministers have been saying for the past three weeks, will the Taoiseach accept this proposal and implement it in the budget on 9 December?

The Taoiseach

As Deputy Kenny stated, this matter was debated yesterday. Obviously, we will assess constructive proposals from any party in the House in respect of these matters. I do not wish to dismiss or guarantee the Deputy that Fine Gael's proposal will feature in the taxation proposals from the Minister for Finance who will make the decisions in this regard, bring them before Cabinet following which they will be outlined to the Dáil on 9 December.

We all recognise, in the context of the debate in terms of protection of employment, the need to avoid increasing marginal rates of tax if we want to maintain employment and to create further employment for the future. The pre-budget outlook for 2010 outlines that while we hope for growth in the second half of next year the prospect of rising unemployment remains until growth returns to the economy. We must do all we can to assist employers and are doing so in a range of ways.

From our point of view, this is not simply a book-keeping exercise. It is about repositioning the country to be more competitive for the future. It is recognised by all sides of the House that corrections of the order of €4 billion are necessary. I agree the economic debate is not simply about that but, in the context in which we can move forward if we are to effect economic recovery, part of the pillar of that recovery is to restore order to the public finances. Being more competitive is obviously another issue. The Minister for Finance will assess all that was said in the debate, which was in the main constructive, and see what emerges.

Deputy Enda Kenny

I hope the Taoiseach can go beyond that and examine carefully what is a well thought-out, well costed serious proposition to ease the burden on employers and to allow the creation of up to 30,000 extra jobs in the coming years. I call this "tax-cut employment". As Deputy Bruton pointed out yesterday, it would be funded by the introduction of a carbon tax, a windfall tax on the rip-off charges levied by power generators, which are estimated at €200 million, and the PRSI ceiling, which would still leave the €352 weekly exemption available to those who are lower paid or on a minimum wage. This would still leave the Government with €200 million extra for deficit reduction or other employment expenditure.

I cannot repeat this strongly enough. The members of Cabinet are focused entirely on reaching the demands set by the Minister for Finance in their Departments and they are coming under pressure in this regard on a daily basis. However, far removed from the Cabinet room, as we speak, there are employers looking at their books and people who are concerned that they might not have jobs after Christmas. This proposal, which equates to a permanent tax cut on employment, should show employers that money saved in this way could make a massive difference in protecting employment while allowing them to invest for future job creation. It affects 1.7 million workers and 175,000 businesses. Whether they are in Donegal, Cork, Dublin or Wexford, all employers that pay out cheques at the weekend, whatever the rate of PRSI, will find this of benefit.

This is something the Government can do on 9 December. It can send out the message that not only is it listening to constructive suggestions from Opposition parties, but it is prepared to implement them. We made suggestions previously in respect of freezing of rates, reductions in Government charges and the creation of 100,000 jobs through the Coveney plan for an economic recovery authority, but they were all rejected by Government.

This is a serious, costed proposal. We are prepared to make our people available to Government to spell out clearly how this can work. The message can go out in advance of the budget. We are to lose another 72,000 jobs next year; that is almost a full crowd at Croke Park. Is the Taoiseach prepared to accept the constructive suggestion put forward by Fine Gael in the interests of so many workers and 175,000 businesses?

Deputy Pádraic McCormack

He might.

The Taoiseach

This Government is committed not simply to a book-keeping exercise, as the Deputy suggests, but to making sure the economy returns to growth as quickly as possible. Part of this is a correction in the public finances.

With regard to taxation policy, this Government has always been committed to ensuring that we maximise the prospects for employment and allowing people to retain the greatest possible level of disposable income consistent with the provision of public services in a cost-effective and efficient way. We have set out five action areas for this. We must meet the short-term challenge of securing the enterprise economy and restoring competitiveness, which is the context in which the Fine Gael proposal is being made; we must build the ideas economy, because education and innovation have been shown to be key drivers of the economy. It is not just a question of the products and services we produce but how we produce them; we must enhance the environment and secure energy supplies. Productivity is enhanced by lowering carbon inputs in production; we must invest in critical infrastructure to enhance productivity; and we must make public service governance and regulation more efficient and effective.

Trying to increase productivity across all sectors of the economy is the best means by which we can restore growth, incomes and standards of living in due course. It would be wrong to suggest, given the scale of the problems we face, that it is possible to do so without making the immediate short-term correction we are talking about. I was glad to see in yesterday's debate that whatever about the details, the scale of the required correction — €4 billion — is agreed in the House. However, we must also concentrate on the other €52 billion or €54 billion in capital and current spending to show what we are doing for the economy and for the provision of public services.

Deputy Eamon Gilmore

The Taoiseach will recall that when the Government introduced the bank guarantee at the end of September 2008, he and the Minister for Finance assured us it would not cost taxpayers anything. Since then we have had to pay €4 billion to Anglo Irish Bank and €7 billion to AIB and Bank of Ireland; on top of this we have the NAMA legislation. Now that the banks have got the money and the NAMA legislation in their back pockets——

Deputy Pádraic McCormack

Take the money and run.

Deputy Eamon Gilmore

——the old guard is back to its old ways. It is trying to call the shots. This week we saw that AIB wants to appoint the same person as chairman and chief executive — that is, an executive chairman — to appoint a managing director internally, and to exceed the cap on salaries. The Taoiseach said to Deputy Kenny yesterday that the Government intends to insist on compliance with the cap, which I was glad to hear. However, one newspaper reported this morning that the Minister for Finance went to Cabinet seeking approval for the salary sought by the bank — that is, €633,000. Is this the case? Will the Government allow AIB to appoint the same person as chairman and chief executive, and what level of pay will be approved for that post? Will the Government allow AIB to appoint a managing director internally? Can the Taoiseach tell the House how many executives in the guaranteed banks are paid more than €500,000, which is the salary cap the Government wants to apply?

The Taoiseach

I do not have the figure sought by the Deputy in his last question; that is a matter to be taken up with the Minister for Finance in a parliamentary question. The cap we introduced was in respect of the appointment of new personnel to the position of CEO or other senior positions. There was no proposal from the Minister for Finance in which the Government was asked to approve a salary greater than the cap that was fixed.

The appointments of Dan O'Connor as executive chairman, Colm Doherty as group managing director and Dr. Michael Somers as deputy chairman will proceed. Mr. Doherty will be responsible for the day-to-day running of the group and he has agreed to take up his new role for a salary of €500,000.

Deputy Paul Connaughton

That was good of him. Will he be able to live on it?

Deputy Eamon Gilmore

I am surprised the Taoiseach does not have more information about whether top people in the banks are paid more than the salary cap. After all, we are now funding and guaranteeing the banks and taking bad loans from them. We are doing everything for them and one would expect the Taoiseach to know whether these people are paying themselves more than the Government wants.

Deputy Dinny McGinley

It is none of our business.

Deputy Eamon Gilmore

For example, the annual report of one bank shows that all bar one of the executive directors are on salaries in excess of the cap and, on top of that, remuneration other than salary is also paid to these people. As a matter of information, can the Taoiseach tell us whether the cap applies just to salary or to the total remuneration package?

Deputy Pádraic McCormack

Under the counter.

Deputy Eamon Gilmore

The banks are still calling the shots. The old guard is still in place. If one looks at the boards of directors of the banks, for example, apart from the public interest directors, the directors who are there now were there at the time the collapse happened and the guarantee had to be introduced. In Allied Irish Banks, ten of the ten who are there now were there then. In Bank of Ireland the figure is 11 of 13. We have seen little or no change at the top boards of the banks and they are still calling the shots.

The test as to whether they are calling the shots is not on the salary. The test is whether the Taoiseach will allow this bank to appoint an executive chairman. All we know about corporate governance is that the same person should not be chairman and chief executive. The Grant Thornton report referred specifically to this point about the banks when it reported earlier this year. Allied Irish Banks proposes to do precisely that and appoint an executive chairman. Is the Taoiseach going to permit that? That is the test.

Will the Taoiseach permit these appointments to be made? Who is calling the shots here? Is it the old guard which was there when the problem started and contributed to it? Or will the Taoiseach and the Minister for Finance, on behalf of the taxpayer, who is now funding and guaranteeing this operation and taking the bad debts from the bank, call the shots? This is the test.

The Taoiseach

Deputy Gilmore would know an awful lot more about the old guard than I would.

Deputy Eamon Gilmore

The Taoiseach knows a lot about it himself.

Deputy Bernard J. Durkan

He brings up the rear guard.

(Interruptions).

A Deputy

Answer the question.

The Taoiseach

I will answer the question. Regarding the arrangements put in place at Allied Irish Banks, with the agreement of the Minister for Finance, Mr. Dan O'Connor, currently non-executive chairman, is to take on the role of executive chairman on a temporary basis in order to oversee the bank's work on the completion of the key task of capital raising, the implementation of NAMA and the EU re-structuring plan. Mr. Colm Doherty, formerly the managing director of AIB capital markets has been appointed AIB group managing director and will take up his new role with immediate effect.

Deputy Kathleen Lynch

So he got a promotion.

The Taoiseach

Mr. Doherty will be responsible for the day to day running of the bank and has agreed to take up his new role for a salary of €500,000.

Deputy Bernard J. Durkan

Shucks.

The Taoiseach

In addition, the AIB group chief executive, Mr. Eugene Sheehy, is to retire on 30 November.

Deputy Kathleen Lynch

Did he get a golden handshake? Or a gold watch?

The Taoiseach

These appointments are part of a wider series of management changes with the emphasis on attracting new external talent. This will deliver the vital combination of internal and external experience and perspective necessary to ensure——

Deputy Joan Burton

What is external?

The Taoiseach

——that AIB's culture, structure and management team is ideally equipped to lead the bank through this critical period.

Deputy Pádraic McCormack

Is that the bank's statement?

The Taoiseach

These include Dr. Michael Somers, the chief executive of the National Treasury Management Agency, who will be appointed to the AIB board as deputy chairman. He will also chair the AIB board risk committee. Dr. Somers will take up his new post on completion of the regulatory——

Deputy Joan Burton

Is that the bank's proposal?

Deputy Eamon Gilmore

That is the bank's press release.

An Ceann Comhairle

The Taoiseach, without interruption.

The Taoiseach

Mr. David Pritchard, currently AIB deputy chairman, is to step down from that post. The board wishes to express its thanks to him. He will retain the role of senior independent director.

(Interruptions).

The Taoiseach

The key executive functions of group finance director and group chief——

An Ceann Comhairle

The Taoiseach, without interruptions.

The Taoiseach

I am bringing to the attention of the House——

(Interruptions).

An Ceann Comhairle

I ask Deputies to restrain themselves.

The Taoiseach

——what is going on here. Decisions have been taken, internal and external appointments will be made. Deputies seem not to want to hear what decisions have been made. The roles of group finance director and group chief risk officer will be filled by external appointment. All of this is happening on the basis that the Government is insisting the bank proceeds in this manner. We have the agreement of the bank that such will be the case.

Deputy Joan Burton

No.

The Taoiseach

We proceed in this way. What is most important, apart from all of this, is the fact we need to restructure our banking system. We are also ensuring the guarantee is paid for on an ongoing basis.

Deputy James Reilly

Times change, people do not.