Dáil Éireann díospóireacht -
Thursday, 7 Jun 2012

Vol. 767 No. 2

Leaders’ Questions

Deputy Michael McGrath

Earlier this week, John Trethowan, the head of the Credit Review Office, signalled that the pillar banks, AIB and Bank of Ireland, are in danger of missing their lending targets in 2012. He also said the banks' lending policies need to be reassessed and that they should be prepared to take on more risk. In other words, he confirmed what thousands of small business owners have been saying for some time, which is banks are not fulfilling their lending obligations. The credit squeeze is choking any prospect of an economic recovery in this country.

The latest Central Bank figures show that the mortgage arrears crisis is getting worse by the day. The arrears rate has increased by a staggering 60% over the past 12 months. The Government's record in dealing with this issue has been feeble and ineffective. Both the Tánaiste and the Taoiseach have been honest enough to acknowledge that not enough work has been done. Well they might when one looks at the follow through on the recommendations of the Keane report last September. Only one mortgage to rent transaction has been completed, not one of the 100 promised independent mortgage advisers has been appointed, no split mortgage arrangements have been put in place by the banks and the Government has delayed on a number of occasions the publication of the personal insolvency Bill. Even the Central Bank Governor has expressed frustration at the way in which the banks are dealing with this crisis.

It is the job of the Opposition to hold the Government to account for its handling of lending and mortgage arrears but it is the Government's duty to hold the banks to account for their failure to meet their responsibilities to society and to the economy.

Deputy Peter Mathews

The Deputy is right. It is the banks' fault.

Deputy Michael McGrath

On lending to business and mortgage arrears, the Government has been led on a merry-go-round by the banks so far. The economic management council last met representatives of the banks in February. On foot of the report by the Credit Review Office earlier this week and the deepening mortgage crisis as evidenced by the latest Central Bank figures, will the Tánaiste call the banks before the economic management council again, ask them the hard questions such as why they are not fulfilling their responsibilities to this country and get some answers and action to deal with these two critical issues facing the country?

Deputy Peter Mathews

The Deputy is absolutely right. The banks are appalling.

Deputy Robert Troy

What are the Government parties doing about it?

Deputy Michael McGrath

I agree with Deputy Mathews.

Deputy Peter Mathews

I thank the Deputy. Why blame the Government?

Deputy Niall Collins

The Deputy is a little misplaced on the Government benches.

Deputy Michael McGrath

There is a spare seat here for him.

Deputy Peter Mathews

I am happy here.

Deputy Niall Collins

The Deputy does not look or sound happy.

An Ceann Comhairle

We will allow the Tánaiste to answer, if the Deputies do not mind.

The Tánaiste

The economic management council will meet the banks. We plan in any event on meeting them in the near future.

I welcome the Credit Review Office report. Since the office's establishment in April 2010, 197 appeals have been received, 60% of which have been completed, and 69 of these refusals have been overturned, resulting in the banks subsequently supplying €6.9 million of credit and supporting 683 jobs in the SME sector.

Deputy Willie O’Dea

A drop in the ocean.

The Tánaiste

The Government has set lending targets for the banks - €3.5 billion in 2012 and €4 billion in 2013. Unlike the practice of the previous Government, the Government meets the banks regularly to discuss with them their progress or lack thereof in meeting those targets.

Deputy Willie O’Dea

To no effect.

The Tánaiste

The effect is that the Credit Review Office has made decisions which have overturned banking decisions in respect of the provision of credit.

Deputy Willie O’Dea

A total of 60 decisions in three years. The Tánaiste is joking. There are 200,000 small businesses out there.

Deputy Jerry Buttimer

The Deputy must have read Dan Boyle's book.

Deputy Willie O’Dea

Is that the best Deputy Buttimer can do?

An Ceann Comhairle

Deputy O'Dea's party leader entrusted Deputy McGrath to ask his question. Would he allow him to hear the reply?

The Tánaiste

In respect of mortgages, the Government intends to publish the personal insolvency legislation this month. Unlike the previous Government, the Government has brought forward a range of measures through the Keane report to address the issue of mortgage distress, which is very real and which is a priority. The legislation will contain for the first time in Irish law non-judicial debt settlement arrangements, which will be put in place and which will be of assistance to people in mortgage distress who need to negotiate new arrangements with their banks.

Deputy Michael McGrath

I would like to reiterate the Government's record in respect of the Keane report. Only one mortgage-to-rent transaction has been completed, not one of the promised 100 independent mortgage advisers has been appointed, no split mortgage arrangements have been put in place for customers and the personal insolvency Bill has been delayed time and again. That is the Government's record in respect of mortgage arrears since taking office. The reality is there has been a 60% increase in the rate of mortgage arrears in that time. These are the facts and the response to date has been wholly inadequate.

On the question of credit availability, the head of the Credit Review Office, Mr. John Trethowan, put the Government on notice earlier this week that the banks were not fulfilling their responsibilities. When one strips away the language used, Mr. Trethowan is essentially saying there is a real risk they will not meet their lending targets in 2012, that they are risk averse and not supporting indigenous business owners who have new ideas for expanding their existing operations. In other words, the banks are not fit for purpose and not meeting the needs of the economy. I welcome the Tánaiste's indication that he will meet representatives of the banks at the Economic Management Council. When will that meeting take place? What will the Government ask them to do and how does it propose to hold them to account?

The Tánaiste

That meeting will happen in the next couple of weeks. It is a meeting the Economic Management Council had planned to have with the banks. Unlike the practice of the previous Administration, the Government meets on a regular basis with the management of the banks-----

Deputy Willie O’Dea

To what effect?

The Tánaiste

-----to discuss lending to business, which is of great importance, and how the mortgage issue is being addressed. It is not correct to say the Government has not acted on the mortgage crisis.

(Interruptions).

The Tánaiste

Deputy Michael McGrath is wrong about that. First, we are producing personal insolvency legislation which is expected to be published this month. We have increased mortgage interest relief for those who bought their first home at the height of the boom and are, therefore, the most vulnerable to mortgage debt distress. We have increased the budget for mortgage interest supplement to assist those who have lost their jobs with their mortgage repayments.

Deputy Michael McGrath

That is nonsense. Mortgage interest supplement has been reduced.

The Tánaiste

In addition, the Department of the Environment, Community and Local Government and the Housing Agency have been working with the banks on the roll-out of the mortgage-to-rent initiative. It is not the case, therefore, that action has not been taken on the mortgage issue. We are acting on this problem which was neglected by the Deputy's party when it was in government.

Deputy Willie O’Dea

The position is getting steadily worse.

Deputy Mary Lou McDonald

Last Friday the Tánaiste and the Taoiseach said they sensed a new mood across the European Union following the "Yes" vote in the referendum in this state. The Taoiseach made it clear that this new mood would make a deal on our unsustainable banking debt burden a reality. No sooner were those words from his mouth than the German Finance Minister, Mr. Schäuble, said his interpretation of the "Yes" vote was that it was an endorsement of current European Union policy. There was no evidence of a new mood, rather cold water was publicly thrown on the Taoiseach's claim that a deal could be done on our banking debt.

Will the Tánaiste clarify what he meant when he spoke about this new mood? Today's newspaper headlines are dominated by the strong demands by the Spanish Government. The Government in Madrid is not behind the door in saying publicly that if its banking debt burden is not shared or some assistance provided in that respect, it may herald serious difficulties for the euro. The Taoiseach stunned this Chamber yesterday with his blank refusal to set out exactly what he was seeking from our European counterparts with this new mood. Will the Tánaiste shed some light on this? I assume the Taoiseach has at least told him what he said to Angela and what she said back to him. We would appreciate it if the Tánaiste shared that information with the House.

The Tánaiste

What the Taoiseach and I said last Thursday, after the decision of the people in the referendum was known, was that the outcome would strengthen the Government's hand in the efforts under way to renegotiate the terms of the bank debt, which is an enormous burden on the people. It is useful to reflect on what we are attempting to do. The House made a decision in September 2008, proposed by Fianna Fáil and supported by Sinn Féin-----

(Interruptions).

Deputies

And by Fine Gael.

An Ceann Comhairle

Deputies must allow the Tánaiste to answer.

The Tánaiste

That decision tied bank debt to the State and the taxpayer. This is a serious issue for the people, more serious than people playing parliamentary or party political games with it.

(Interruptions).

The Tánaiste

The taxpayer is burdened with a huge level of bank debt. The Government is seeking to alleviate that burden - to get a deal on bank debt which is in the best interests of the taxpayer - and we have made some progress in that regard. We have secured a reduction in the interest rate and an agreement on the promissory note for 2012 which is replaced by a long-term bond.

Deputy Willie O’Dea

Thanks to Greece.

The Tánaiste

We are proceeding at a number of levels with discussions on the bank debt. These discussions have taken place, first, between the Ministers for Public Expenditure and Reform and Finance, Deputies Brendan Howlin and Michael Noonan, and the troika and, second, at an official level where officials from the Irish side have been working with the European Commission and the European Central Bank on ways in which the Irish bank debt can be alleviated.

What is happening is that the Taoiseach and I have been engaged in discussions with European leaders to secure political support for a deal on Irish bank debt. There are a number of ways in which this can be done. First, there is the possibility of a Europe-wide solution to banking debt generally, which would be of benefit to Ireland. Should there be such a solution, we will obviously have to take care that it is one which suits the Irish situation. There are several variables, one of which is the situation in the Spanish banking system. It may be that a solution will be found which is translatable to Ireland. However, we must be careful not to hang our hat entirely on the Spanish situation because what may be done in Spain or what may be applicable to that country may not be directly applicable to Ireland. Therefore, we must make sure we have an arrangement that is suitable to the Irish situation. On the other hand, it is possible that a particular arrangement will be arrived at in respect of Ireland along the lines of what we have been discussing both with the troika and at a technical level with the institutions.

We are continuing our work in this regard. I intend to be in London later today for talks with the British Foreign Secretary, Mr. William Hague, which will include a discussion of this issue. I plan to travel to Paris very soon. We are continuing to have discussions at European leadership level with a view to securing the best possible outcome for the taxpayer. What is important is the result we achieve. What we are hoping to do which everybody in the House should and, I am sure, does support is to get the best possible outcome for taxpayers in order to alleviate the huge burden placed on them by the tying of bank debt to the State.

Deputy Dessie Ellis

The Government is dependent on help from Spain, just as it was helped by Greece.

Deputy Mary Lou McDonald

As the Tánaiste is well aware, the Labour Party in government has on two occasions extended the very bank guarantee against which he rails so strongly. It is time to change the record in this regard. The Tánaiste says he recognises, as we all do, the unsustainability of our bank debt and lauds the Government's achievement in securing a reduction in the interest rate, for which it has Greece to thank. The Government certainly pulled a sly one in respect of this year's promissory note payment. That did not represent a solution, or even a partial solution, to our problem. The Tánaiste now says he is hedging his bets as to whether the Spanish might pave a way for some resolution for our debt burden. That is a very unsatisfactory statement of facts from him. After the referendum, the Taoiseach and the Tánaiste engaged in a kind of telethon with their European partners. I have a suggestion as to how the conversation might have gone between the Taoiseach and the Chancellor.

An Ceann Comhairle

Sorry, Deputy, you are over time.

Deputy Mary Lou McDonald

Guten morgan, Angela. Auf wiedersehen, Enda pet. Given the gravity of the situation, which the Tánaiste acknowledged, it is completely unacceptable that he cannot give a clearcut answer to the Dáil. The Tánaiste should understand the problem. The Taoiseach has repeatedly told us he is not seeking any write-down of debt. He said that very clearly. Why can the Taoiseach and the Tánaiste not set out precisely what they are seeking in the same clearcut language? It strikes me that they are fudging the issue and that they sold the people a pig in a poke. They promised a lot in the course of their "Yes" campaign.

An Ceann Comhairle

Would it strike you to ask a supplementary question?

Deputy Mary Lou McDonald

They told us there was a new mood. It strikes me that they will fuddle along in the hope that Spain can save their blushes but that is not good enough.

The Tánaiste

It seems to me that it does not matter what I or the Taoiseach say or what outcome we achieve. No matter what it is, Sinn Féin will come into the House and play it for cheap party political advantage and cheap party political point scoring. This issue is far too serious for that. The Irish people and the Irish taxpayers have been saddled with a huge bank debt. It was a mistake to tie the bank debt to the State. What we have to do now is negotiate our way out of that. We have a clear objective which is to minimise that burden on the Irish taxpayer.

We are engaged in those negotiations. This is not something new. We have been working on this for quite some time. We are very clear that our objective is to minimise the burden on the Irish taxpayer and we are going to continue with that. We are determined to get a result on that.

The wise decision the Irish people made last Thursday against Sinn Féin's unwise advice to them-----

Deputy Shane McEntee

No advice.

The Tánaiste

-----will strengthen the hand of the Government in pursuing that. What really matters is the outcome. Sinn Féin will keep on saying we are not going to succeed. It said that in respect of the interest rate. We succeeded on the interest rate far better than it expected we would. It said-----

(Interruptions).

An Ceann Comhairle

Sorry, we cannot hear.

The Tánaiste

Frankly, Sinn Féin's sneering-----

Deputy Pearse Doherty

Frankly or Frankfurt.

The Tánaiste

Deputy Doherty is the man who thought the bank guarantee was a great idea but he knows otherwise now. Sinn Féin's sneering about what is a very real problem for the Irish people will not help the situation. We must resolve it and the Government is determined to do that. The Taoiseach, every Minister and I will do that every day until we get a result which is satisfactory for the Irish people. On the day we do that, Sinn Féin will come into the House and sneer about something else.

Deputy Thomas Pringle

As the Government peddles "extend and pretend" policies in regard to our banking debt and our economy, the game of smoke and mirrors is being pursued in respect of the much-needed mandatory register of lobbyists. It looks more like the Government is afraid that once that Pandora's box is opened, joining the dots may be an easy exercise and the protected list of vested interests could prove a riveting read.

The Department of Public Expenditure and Reform is supposed to be working on this legislation but can the Tánaiste be more specific? He should not put it on the long finger because like Pinocchio's nose, it will soon fall off if it gets any longer. On 13 March the Minister for Public Expenditure and Reform promised a White Paper within weeks with legislation to follow. Will the Tánaiste give us a date as to when we can expect to see a mandatory list of lobbyists?

The Tánaiste

This Government has committed itself to the introduction of legislation to provide for the registration of lobbyists. We saw from the reports of the Mahon and the Moriarty tribunals what happens when we have an unregulated lobbying regime, as we have had. The public is entitled to know who is lobbying on behalf of vested interests of whatever kind and who is talking to Government and Government agencies.

It is with that in mind that the Government has committed itself to the introduction of legislation on the registration of lobbyists. That legislation is being brought forward by the Minister for Public Expenditure and Reform and I will check for the Deputy as to when it is expected to be published.

Deputy Thomas Pringle

I thank the Tánaiste. It seems the long finger is certainly out in regard to this issue and that the Labour Party has gone over to the dark side on it. We need this mandatory register of lobbyists. It is not complex legislation and it should not be difficult to compile. It is more than 16 months since the Government committed to ensuring a list would be provided and yet we have seen the reports of the Moriarty and Mahon tribunals and the damage lobbyists for vested interests have done to this State in the past. The Government needs to put it on the record that it is a matter of urgency and ensure a mandatory register of lobbyists is brought forward without any further delay.

The Tánaiste

There is no delay whatever in bringing forward the legislation on the regulation of lobbyists. The legislation is being prepared in the Department of Public Expenditure and Reform and it is expected that the heads of the Bill will be ready by the end of the summer. When the heads are ready, they will go to Government and arrangements will then be made for the formal drafting of the legislation. There is no delay whatever. The legislation is being worked on.

The Government made a commitment in its programme for Government that there will be legislation to regulate the activity of lobbyists and to ensure there is a register of lobbyists and transparency for the public about lobbying activity. The work is underway and the heads of the Bill are expected to be ready by the end of the summer.