European Stability Mechanism (Amendment) Bill 2014: Committee and Remaining Stages

Section 1 agreed to.

NEW SECTION

Senator Kathryn Reilly

I move amendment No. 1:

In page 3, between lines 18 and 19, to insert the following:

"2. Following the passing of this Act the Minister for Finance shall each month report to the Houses of the Oireachtas on progress made on the direct retroactive recapitalisation of the capital injected by the State in the Irish banking system as per the Direct Recapitalisation Instrument.".

I welcome the Minister, Deputy Michael Noonan. This amendment does not seek to tie the Minister to any timeframe in which to apply for retroactive capitalisation on banking debt, but it does oblige him to report to the Houses of the Oireachtas each month on progress in that regard. Given the large sums of money involved, it is important that there be a requirement for regular reporting on this issue. Without tying his hands, the provision places an onus on the Minister to progress the issue and ensure both the Dáil and the Seanad are kept abreast of that progress. Given the potential benefits arising from these measures, this is an apt provision.

Minister for Finance (Deputy Michael Noonan)

I thank the Senator for her amendment, but I do not propose to accept it. As with the amendments put forward by her party colleagues in the Dáil, this proposal seeks to dictate a certain course of action. In addition, it seeks to place a restriction on the Minister's discretion in terms of any application for retroactive recapitalisation. In the case of this amendment, the restriction relates to an obligation on the Minister to present a monthly report on progress made in regard to any application. This would limit flexibility on my part and would place us at a disadvantage in terms of our negotiating position.

As I have outlined on several occasions during the passage of this Bill - most recently, earlier in the week in this House - seeking a retroactive capitalisation is only one of a number of possible options available for recovering the money the State invested when ensuring the banks did not collapse. The best way to ensure the taxpayer gains the maximum possible return on the money that went towards preventing the collapse of the State's banking system is by being in a position to consider all the options open to us for pursuing such a return.

While not ruling out the possibility of Ireland making an application for retroactive direct recapitalisation of the pillar banks at some point, it is potentially not the only option available to us. It must be stressed again that the determining factor will be which option will achieve the maximum return for the taxpayer.

Senator Kathryn Reilly

Will the Minister elaborate on how accepting the amendment will disadvantage our negotiating position?

Deputy Michael Noonan

As I said in the other House, in Europe a strategic approach is the best result. In this context, it is preferable to seek the option of retroactive recapitalisation and keep it in on the table rather than risk refusal with an early application. I will, therefore, continue to pursue a strategy which keeps the maximum number of options on the table. Monthly reporting on the issue would suggest not applying is a failure on my part when it is not. I want to keep it as an option and pursue it at the most advantageous time. If any party wants to find out the status of an application, it can obtain that information with a parliamentary question in any month where there is a doubt whether I have applied. The proposed measure, therefore, is not necessary.

Amendment put.