Alex White finance Archives

‘The more one reads these banking reports, the more serious and shocking they become’

16th June 2010

I welcome the publication last week of the two reports into the banking system. We will have the opportunity to debate them in the Senate later but there is so much to discuss and so much material in these reports, it will not be possible for us to deal with them in one debate and it will be an issue to which we will have to return in the coming days, weeks and months.

There is much talk in the Houses today about confidence in political leaders and so on. The most important issue of confidence in Ireland today is the confidence people have in their future in the country - the confidence citizens have that this country can genuinely turn itself, or be turned, around - and that there will be a future for their children. Yesterday we saw further reports on unemployment figures which show Ireland is now 3% above the EU average.

Notwithstanding Professor Honohan was not asked to look at Government policy, contained within his report is a devastating critique of Government policy in the period under review. I accept he dealt with banking management, the prudential system and the regulatory regime but there is a devastating critique of Government policy. The more one reads these reports, the more serious and shocking they become. They contain a devastating critique of economic policy, budgetary policy and macro-economic policy over the period in question. When historians come to write the history of the past 20 years, these reports will be central documents on which they will rely, in particular Professor Honohan’s report.

I was somewhat sceptical, as we in this House have become, in regard to whether the process proposed by the Government was the correct one. Professor Honohan should be congratulated on the clarity and depth of the analysis he gave. However, we now need clear terms of reference in order that the Houses of the Oireachtas and, through them, the people can be involved in a really rigorous, open and transparent examination and analysis of what has occurred and why this country and economy have arrived at this shocking state of affairs.

11 years after Labour Bill on Whistleblower Protection, we still wait

3rd June 2010

One of the most frustrating things about debates on transparency and the need for new legislation and measures to deal with whistleblowing and related matters is the extent to which people give the impression that there has only been a recent discovery or realisation of the necessity for such measures. Senator Dan Boyle hopes there will not be another general election before something is done about this, but there have already been two general elections and we are well into the third Oireachtas since this issue was raised for public debate in 1999 by Deputy Pat Rabbitte who published a Bill that year to deal with this issue.

It is fully 11 years since this matter was first raised for public debate. It is simply not good enough for anyone, be they a Minister, supporter of the Government or otherwise, to imply that these matters are now coming forward for public consideration and concern and must be addressed in the light of what has happened recently. We knew about these issues many years ago. There is little use in people saying that now we have seen the dreadful things that have occurred which we never thought would happen - the subtext being that they never thought there would be a problem - but on which we have been proven wrong, we must do something about it. It is simply not good enough to give the people that excuse.

The Minister of State referred to the conclusion of the Company Law Review Group. Bluntly, the company law review group is wrong. When we are considering its report and when we are pointing out, as the Minister of State did, the fact that this group of eminent individuals came to this conclusion, we should bluntly state that the conclusion was wrong. Had these matters been considered in the depth and with the realism with which they should have been considered, the group would have come to a different conclusion. Mr. Paul Appleby and Mr. Michael Halpenny, the representative of the ICTU, were the two lone members of the group who maintained the view that it was necessary to bring forward a report that proposed robust whistleblower protection and legislation. When considering the balance sheet of what has occurred, I believe the best way for the Minister of State to view that group’s report is to conclude that it was wrong. We must do something different from what it recommended.

Greek crisis shows need to reform elements of EU mechanisms

21st May 2010

Some two weeks ago when the Euro loan facility was first introduced, it was suggested it was a godsend that the Government could lend to Greece at a higher rate than the rate it would have to borrow the money. I was glad this argument did not feature in the Dáil. I was beginning to wonder if that were the case, why were we not borrowing money from the international markets to lend to countries in difficulty all the time and, accordingly, solving many of our own problems. I am glad this argument was abandoned, as no one in his or her right mind would argue this is some process in which we want to be involved.

This loan facility is about showing solidarity among members of the eurozone. It is not the solidarity we had in mind when we joined the euro or the European Union. None of us expected solidarity would require us to dig deep in our own pockets for others. However, that is what has occurred. This solidarity is predicated mainly on a sense of “There but for the grace of God go we”. There is a certain vested interest in this solidarity, as we might face the same fate as the Greeks in the future.

This so-called bailout for Greece could be transformative for the entire eurozone. However, we should rise above that particular level of discussion and argument, true and all as it may be, and start to contemplate and consider the real transformation this will likely bring, ultimately, to the whole nature of the European project, to the eurozone and to the mechanisms that have been deployed to date through the Stability and Growth Pact and elsewhere. It appears as if the Stability and Growth Pact is finished as a real mechanism or as a mechanism with credibility in any sense or one which can be restored to any level of credibility. A more complex set of measures must be agreed and imposed throughout the eurozone to achieve the type of convergence and economic co-operation or cohabitation among different economies within what is, essentially, a single currency, but also a unified economic system. There is no doubt that the mechanisms put in place at the beginning have been found wanting and that they appear to have collapsed. A meeting tomorrow of the ECOFIN Ministers takes place today to examine the implications for the future of what has occurred and to begin to ask questions about what new mechanisms should be put in place. This must be considered. It should lead to a broader political debate in this country as well regarding what we can expect in future.

Last week, there was a skirmish about sovereignty. People got very excited on the Government side at the point made by the leader of the Fine Gael Party to the effect that there was a threat to Irish sovereignty in respect of several instruments such as corporation tax. We must see beyond a reactive debate when someone makes such a remark. We must all understand there is no question but that the character of the relationship between an individual country and the eurozone will change and there will be a great political battle about this in the coming years.

Ministers need to withstand “fierce pressure” from developers

18th May 2010

It is interesting to note that last week the Taoiseach - to the extent that he did so, I welcome it - appeared to move from the narrative of “we are where we are” and made an attempt to recognise the significant contribution he himself and Governments of which he had been a member had made to the situation at which we had arrived, where we were close to the verge of bankruptcy.

In order that we are clear on what I am saying, I merely refer to his contribution and role, as people get carried away by what they believe are exaggerated criticisms of the Taoiseach; I am not saying he was entirely responsible. He played a significant role, for which he must answer. I, therefore, would like to know when the Honohan report will be published and whether we can have a debate on it in the Seanad.

We should include in that debate the remarkable statement made last week by the Taoiseach’s immediate predecessor, Deputy Bertie Ahern. It was truly remarkable, but it did not receive much attention. When talking about tax incentives, he agreed that they should have been got rid of much sooner. He went on to state, “there were always fierce pressures … there was endless pressure to extend them.” He stated the pressure had come from developers, the owners of sites, areas that had not seen development, community councils, politicians and civic society. That is an extraordinary statement that should be subject to scrutiny.

When we talk about having debates about politicians and the noble profession of politics, as I believe it is, we also must look at the responsibilities of a Government and politicians in government. The people are entitled to expect more of a Taoiseach or Minister that, when he or she is put under pressure, whether it be “fierce pressure” or “endless pressure”, by developers or the owners of sites, he or she will withstand it, when it is appropriate to do so. We need developers and builders and while I am prepared to accept and have no difficulty in accepting that they are perfectly entitled to meet Ministers, officially and formally, I expect more of Ministers, that they will not roll over and do the bidding of such individuals when they seek to apply pressure, whether it be “fierce pressure” or “endless pressure”, which words are not mine but those of the former Taoiseach.

Public Representatives need to be careful not to politicise pay deal

13th May 2010

There was a debate on the Croke Park Pay Deal in the Seanad this afternoon. This was my contribution.

I listened carefully to what Senator Martin Brady said. I have rarely heard a more balanced and fair-minded treatment of the current situation in regard to industrial relations and the Croke Park deal throughout any of the debate in recent weeks. What he said is right and fair. It evinces an experience he clearly has had, as I have had over quite a number of years as a trade unionist and as someone who worked within trade unions and understands the complexity of the situation. People are faced with a proposal which possibly could be characterised as trying to make a decision between something that is deeply unpalatable on the one hand or catastrophic on the other hand. People are trying to make a decision based on two options that are presented to them, neither of which is palatable and neither of which they wish to take. However, there are being asked to take one or other option and that is what they will do.

I endorse what my party leader, Deputy Gilmore, said, on the publication of this agreement - when he welcomed and commended Mr. Mulvey on the work he had done and the parties who took part in the negotiations - that it will need to be considered by trade union members in a calm and rational way - as Senator Brady has said - taking into consideration all factors, including the need for public service reform, for which I agree there is a pressing need, the state of the national finances, the level of unemployment and conditions in the private sector. They are grave issues which must be taken into account and I have no doubt they will be by the many thousands of people who will vote on this agreement in the coming weeks.

My party was mentioned on a few occasions during the course of this debate, which is not entirely unexpected and perhaps not entirely unrelated to a certain recent opinion poll about which many people seem to be very excited. A question that arises is what is the role of public representatives in circumstances where a deal or a draft agreement such as this is being voted on. I am not aware in all my years of observing public affairs and trade union affairs of Opposition parties ever endorsing an agreement or a draft agreement or being asked to do so. What is behind this, far from being an attempt to pull back from politicising is in truth a lamentable attempt to politicise what is happening. People should be very careful and should pull back from doing so.

In this context I will refer to Jack O’Connor. He has been praised and it has been said that he is doing a very difficult job and so on. This is a man people were very happy to demonise up to a few weeks ago, and are now happy praise as someone who is at the heart of what needs to happen and people are being encouraged to go with what Jack O’Connor recommends. I have enormous respect for Jack O’Connor - he is somebody I know well.

What do we seek to achieve or what do we believe we can achieve in this debate? Is it that we believe that by taking a particular position we can encourage or change people’s minds as to how they will vote? I do not accept that people seriously believe that what is said in this Chamber, for which I have great respect, this afternoon or what is said by political leaders will be in any way decisive as to how people will vote on this agreement. People have to take into account what their union executives say, whether it is the CPSU or otherwise. They have to make a decision based on their and their family’s future and the situation they face on practical level every day.

It is noteworthy that people say that we should look to what Jack O’Connor is saying, and that he is the person on whose judgment we should be relying; I would have thought there would be a premium on his judgment in terms of how this deal can be got across the line. What individual in this country has the best judgment as to what is required in order to get this deal across the line? I believe it is Mr. O’Connor and Mr. Begg. What do they say in relation to public representatives and political parties on this issue? What Jack O’Connor in particular said is that he has appealed to politicians in all parties to refrain from commenting on the proposed Croke Park agreement in order to allow trade union members time to focus on the intrinsic merit, or otherwise, of the proposals during the balloting period. I will not be told, anymore than anybody else here will be, what to say or not to say or whether to speak or not to speak by Jack O’Connor but it is interesting that this is the person who people are now lauding as being the man who will get this deal across the line.

The Minister of State’s speech today was quite calm, he did not oversell, overtalk and over-extend himself. That is exactly the tone that should be adopted. I agree with very much of what is the agreement. It is a framework which presents a necessary agenda for public service reform. The Minister is correct in saying that it will go a long way towards ensuring the engagement of public service workers in their future, which is what we want to see happening. As I have stated previously in this House, one cannot impose change on people in terms of getting their co-operation. One can cut staff and move people around by stealth but at the end of the day if one wants a working professional loyal public service, the only way to achieve this is to allow people themselves to negotiate on all the issues of flexibility and change required, which I accept are required.

The best way forward in the circumstances is to allow the experienced trade union leaders and their members to carefully reflect on what is at stake. I do not believe it is a matter on which political parties should call for a vote one way or the other, although we have been called on to comment and have done so. Let us hope that we now have a real opportunity for public service reform, contrary to the dreadful crisis before Christmas when that attempt appeared to blow up in everybody’s face.

Our sovereignty is being wrested from us as we take 3rd place in the OECD unemployment league table

11th May 2010

At the time the bank guarantee was provided in September 2008 the Minister for Finance said in this House that a compelling argument in favour of the Government’s actions was that it would protect our economic sovereignty. In truth, our economic sovereignty and room for manoeuvre have been steadily eroded since.

In a radio interview yesterday the Taoiseach was asked about the Government’s budget strategy for next year. He said the Government had received no formal or informal indication from anybody in the European Commission that a particular course of action “would be expected of us”. Is it all about what the European Commission “expects” of Ireland?

A Government has a greater role than simply carrying out the instructions of the European Commission. I believe in the European project and pooling sovereignty in the greater interests of the Irish people and people all across Europe. However, I do not believe in our sovereignty being wrested from us, which is essentially what has happened. By our own actions, inactions and policy failures in the past ten years, especially regarding the banks, we have greatly limited the economic independence of this country.

I accept it is not peculiar to Ireland. A major debate is coming in Europe in the next few years about what level of economic independence any member state will have. The hand of the Irish Government and people will be very considerably weakened as a result of what has happened in recent years. All the debates about tax harmonisation, and about what economic independence this country has, will change radically in the coming years. It will be extremely difficult for this country to maintain any serious level of economic independence. I really regret the Taoiseach appears to be almost exhibiting a defeatist attitude towards this.

When he describes economic and budgetary policy, he talks about what is “expected of us” by the European Commission instead of taking a strong, robust and independent line on job creation and the development of the economy, thereby coming across in a positive way, as the Opposition has, with actual proposals as to how we, as a sovereign Irish Government, could turn around the economy. It is lamentable that he is not doing that, particularly on the day when we have been informed that Ireland has the third highest unemployment rate in the OECD.

The question of Ministerial Pensions

6th May 2010

The issue of Ministerial Pensions has been lingering for the past 10 days with a number of those in receipt of such a pension while still a sitting Member forgoing their payments. This included all such Labour TDs. On Wednesday, Fine Gael brought forward a motion in the Seanad calling for the abolition of such payments. You can read the full debate by clicking here, while my own speech is below.

I will start with a question to the Minister of State relating to the summary he gave of the Attorney General’s legal advice. The Attorney General said pensions were earned but deferred income, to which the person concerned had a property right. I cannot disagree with this; it defines what is a pension. Therefore, there was a constitutional impediment to removing pensions, particularly from just one group of people. We will not be privy to further detail of the Attorney General’s advice, which is a pity.

The Minister of State also pointed out that the Government had already made a decision that pensions would not be paid to sitting ex-Ministers with effect from the next Dáil. If one applies the advice relating to the decision the Government has made regarding the next Dáil, current serving Ministers are earning deferred income in the same way as occurs generally. The Minister of State and his colleagues, therefore, are earning deferred income. How can this be taken from them, albeit from the next Dáil, if we accept the Attorney General’s advice that there is a constitutional impediment to so doing? The income the Minister of State and members of the Cabinet are earning is earned income. How can the advice apply to the current position but not to the future position? Surely the same legal issue arises in respect of doing it for Ministers who are currently serving and who will be fortunate enough to be elected - if any are, although perhaps that is a cheap shot - to the next Dáil. It does not add up that it will be all right to do it then but not to do it now.

The difficulty in this debate is that there is confusion. I sympathise with some of the points made by Senator MacSharry and others. There is confusion as to whether the wish to remove pension payments from serving Members of the Oireachtas amounts to a financial emergency measure, like the others of which we are aware, or a reopening of the issue of whether, in principle, we ever thought it was right that a pension should be paid to former Ministers who were still Members of the Oireachtas. Furthermore, we are not discussing whether we are talking about it as a principle or as a financial emergency measure in the context of this debate, which is a pity.

We need evidence that we have ‘turned a corner’

29th April 2010

On Tuesday evening, the Seanad held a debate on banking. You can read what the Minister of State, Martin Mansergh said by clicking here. Following contributions from both government and opposition sides, I rose to speak…

I listened carefully to the speakers on the government side who started their speeches by telling us how they are satisfied or pleased that matters are starting to turn around and the position is changing. The phrase from the Minister for Finance, Deputy Brian Lenihan, in the budget was that we were “turning the corner”. All these phrases are used. I waited to hear examples of concrete achievement.

The claim is that action is beginning to bear fruit but no example is ever given. The only instance I have heard repeated is what the Minister for Finance said on radio yesterday morning about the people who Richie Boucher met when he went to Europe last week being very happy with us. The people Mr. Boucher had dinner with in Europe, or wherever he was, appear to be happy, and the Minister for Finance said he was perplexed that everybody abroad seemed to be happy but nobody in Ireland is happy. That is because the people in Ireland are facing the brunt of what is occurring.

The Minister has spoken about finance ministers and other colleagues in European governments being supportive of what the Irish Government is doing. Forgive me if I am wrong but I do not think I have ever seen a minister in the European Union criticising a colleague from another country. What is this business about with people getting a pat on their back when they go abroad? They seem to think that is the approval rating needed. Of course, there is only one approval test and set of criteria by which we can meaningfully assess anything the Government is doing. That is the kind of delivery that some of the government speakers, when they come to their senses, would apply to the debate; it concerns when there will be real lending available to businesses and people in the Irish economy. There is no evidence that it has happened yet. I am sure if the Minister could find a morsel of evidence for it he would tell us about it all the time. There is no evidence.

I want to respond to some of the Minister of State’s comments. It is almost laughable for him to come to this House speaking about the “honest and full disclosure by the Government and its agencies of the appalling mess within our banks”. I cannot believe the term “honest and full disclosure by the Government”. I did not know whether to laugh or cry when I heard him saying that. What disclosure has occurred, whether honest or full?

Education should be based on ability rather than wealth

28th April 2010

Yesterday there was a report on third level education which gave information that might have been obtained under freedom of information legislation. I ask the Leader to arrange a debate as soon as possible on the important question of funding third level education. Apparently, the Higher Education Authority is of the view that there will be a requirement for more than €4 billion - a familiar figure has been given to the banks and other places in recent times. However, this €4 billion is to meet a most important requirement in order that we can invest in our third level education system and, ultimately, the future of the country.

I am not sure whether the publication of this report - I do not know if the information was obtained or leaked - is intended to soften up public opinion in regard to the reintroduction of university fees. However, it should form one important element of the discussion we should have in the House. The reintroduction of fees would be a mistake. The Opposition is always being accused of being negative, including during yesterday’s debate on banking. However, one thing we have managed to do in the past 15 years, as a country and society, is maintain a progressive level of funding and a progressive approach to third level education, for which people are not charged. We regard it as a public, not a private good to be parcelled up and sold to the highest bidder. People are educated based on their ability, rather than on the wealth of their parents.

I am often struck by those who say it is mainly wealthy people or those who have money who are able to avail of free fees. However, whenever the issue of equality in the taxation system is raised, perhaps by taxing more than we do those with greater wealth, the very same individuals recoil from such a suggestion. That is the real contradiction. If we want to have equality, the single, best and most progressive instrument we can use, in terms of income and generally, is the taxation system. We should maintain our free third and second level education systems at the points of delivery to young people. If we cannot educate and give them an opportunity for the future, we will not achieve anything in this country.

Lack of information on banks starving intelligent debate

21st April 2010

Given there is no public element to the inquiries into the banking system which we are told are taking place, perhaps a progress report in terms of what precisely is happening in those examinations could be made to the Houses so that we can get some sense or insight into what if anything is happening. There is a need for public information so that there can be proper public debate on these issues. We simply do not have that information. I heard last week an independent economist, Dr. Alan Barrett of the Economic and Social Research Institute, ESRI, say, when asked his view in terms of the comparative approach of allowing Anglo Irish Bank to be wound down or for the bailout to continue, that he could not give an answer in that regard because he did not have available to him the basic information that would allow him to give an intelligent response or any response.

When I hear Members the Government parties say that this is the only way forward and is the correct thing to do, I cannot assess that. I and no other member of the public can assess whether what we are being told is simply a spin because this is what the Government is doing and is the course on which it has set itself. We should be able to assess and understand independently what precisely is going on so that we can compare the two different scenarios. It is taxpayers’ money and the public interests that are being dealt with here and as such we should be given more information, even basic information, on what is going on. We have no information in this regard.

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Category: finance