Category: finance

How many more climbdowns are likely?

22nd October 2008

Can the Leader indicate how many more changes, reversals or climbdowns are likely to result from the Budget Statement the Minister for Finance made in the other House last week? Does he agree that our community and society is a laughing stock, internationally and domestically, because the budget, which is the major economic statement of the year, has degenerated into such a shambles over recent days? I agree that this is a question of candour, honesty and clarity. When will the Taoiseach look the Irish people straight in the eyes and tell them, in a clear, honest and candid manner, what precisely is happening to this country’s economy? Why are we getting a drip feed of information, for example in the statements which are made in this House?

I would like to mention the most shocking - I use the word advisedly - experience I have had since I was elected to this House. Last week, the Leader, reasonably, ordered a debate on unemployment in this Chamber. When the Minister of State came in to the House, his so-called statement did not contain a single new proposal to deal with what looks like the greatest crisis this country has faced for many years.

I do not mean that there were very few new proposals in it, but that there was not even one. The point has previously been made that the budget contained no proposals on how to deal with the scandal of unemployment that is about to return to this country. If we are to have serious debate in this House, that kind of treatment of the Seanad is disgraceful and should never be repeated.

There is an issue of confidence in the Government and particularly the Taoiseach. The Taoiseach is an able and experienced man, but is not levelling with the Irish public. Scrappy interviews in the second part of the 9 o’clock news on television, early morning press conferences and rushes out to RTE are not the way to engage with the Irish people in this sort of situation. We need serious engagement and while I accept that we in the Opposition also have a responsibility, the principal responsibility rests with the Government and particularly with the Taoiseach.

Down the road there will have to be a political reckoning for what has happened in recent months regarding when the Taoiseach, and his predecessor, knew what was coming down the line, what he knew and when he knew it. All those issues will have to be reckoned with in due course. For now, we urgently need leadership, honesty and candour from the Government, and we are not getting it regarding the banks and the economic situation. We need Goodbody Stockbrokers to tell us there will have to be a second budget some time early in 2009. We are not being told what the situation is. It is the same approach that was, unfortunately, taken by the Government on the Lisbon treaty referendum.

One cannot treat the Irish people in this way. They are angry, frustrated and concerned, and have a right to be so. They demand, and are entitled to, a straightforward approach and account for itself by the Government, and they are not getting it.

[polldaddy poll=1028966]

Levy most dishonest tax increase ever seen

15th October 2008

Labour leader in the Seanad, Senator Alex White, described the announcement in the Budget of the new levy on income tax as the most “dishonest tax increase ever seen”.

Speaking during the Order of Business, Senator White said: “The levy represents the crudest, most regressive and most dishonest tax increase ever seen.

“It is a tax increase, yet the Government dares not speak its name.

“Recently, the Minister for the Environment, John Gormley, appeared to advocate higher taxes for the higher paid, the rich and the super rich, with which I agreed. He stated that he would try to achieve such in Government, in which respect I would have supported him. Regrettably, he did not achieve it.

“Let us face up to the taxation system and the dishonesty and unfairness therein. The Government appears to want to have it both ways.  The Government is telling us to leave the debate on tax to the Commission on Taxation next year. But it then introduces an aggressive tax, undermining any suggestion of equity,” said Senator White.

Senator White added that the Government appeared to have embraced the notion of performance-related pay.

“Members of the Government have taken 10 per cent cuts, presumably based on their performances in recent months. I hope that they will revert to the House in the coming months regarding proposals on the inevitable further cuts in pay that they will need to take. The ultimate cut that they should take is not 10 per cent or 20 per cent. Rather, it is 100 per cent.”

Budget lacks vision on childcare

15th October 2008

Yesterday’s Budget was yet another disappointing example of the Government’s lack of vision and innovation on childcare.

Proposals by the National Economic and Social Forum, which were supported by my party, set out a universal system of early child care, which would cost less than the combination of funds currently dedicated to child care through the early child care supplement and the subvention scheme.

And yet, yesterday the Minister for Finance put more pressure on parents and childcare providers by reducing by almost a quarter the allocation for the National Investment Programme.

That programme provides grants for childcare providers, helping them set up new businesses and maintaining existing ones. Although providers want to maintain the cost of childcare at a manageable level for the average parent, this cut will only heap more pressure on providers and parents.

The Government is reneging on its own promise to stimulating childcare places and jobs in the sector.

It is yet another example of this Government’s lack of ambition and innovation to help the youngest and most vulnerable in our society.

At these pressing economic times, children should never be first to be targeted.

We could be innovative and adopt a child care system that would require less investment while achieving something real and substantial for our children.

We need to bring such thinking to bear on the budget in the coming days. I hope we will do that and discharge our responsibility as a Parliament in doing so.

At present there is no Irish guarantee

8th October 2008

I support and agree with concerns about the delay in bringing forward the scheme which the Minister for Finance said would come before both Houses. We have seen what happened this morning in the UK. I do not believe it is accurate to say that the UK Government has copied the Irish Government. That is not true. The UK Government has taken preference shares in the banks it has proposed to assist and it has included a requirement that any bank wishing to participate in the scheme must sign up to an agreement on executive pay and dividends. There are many other differences between the UK Government’s proposal and what has been done here.

The Financial Regulator has said there is no difficulty with the capitalisation of the Irish banks. However, we have been asked to accept other statements from and about the banks in recent months which have proven not to be true. I note a nuance in the comments of the Minister for Finance this morning. He says he does not believe there is a difficulty with under-capitalisation. However, the Minister for Finance rather ominously stated that things are changing by the day. Therefore, it is not at all clear that there is not a difficulty with under-capitalisation in the Irish banks. What is the current position in Ireland with respect to the guarantee?

There is no guarantee is the answer.

The Minister for Finance and the Government announced an intention to provide a guarantee, which was a plan for the future, but there is no guarantee for today. This is a serious situation of which I do not make light as a topic for debate. However, the seriousness of the situation is increased with a further delay in the presentation of the scheme.

The delay also raised the question of what we were doing here last week in the overnight session. What was the point of it? We passed enabling legislation which has not been acted upon. Therefore, apart from the amendments to the competition legislation which, although important are marginal, the content of the legislation, the scheme and the guarantee are meaningless because nothing has been carried out. What were we doing here overnight last week? I do not have any difficulty with making myself available, nor do my colleagues. However, the sum total of our efforts add to nothing as nothing has changed. Our job is not to provide an overnight supporters’ rally for the work of the Government or the Minister for Finance. We are legislators and we are constitutionally required to scrutinise proposed legislation. The scheme was supposed to be brought before the Houses. Unless and until this happens there is no Irish guarantee; it simply does not exist yet. This is a reflection of the seriousness of the matter.

The Government’s intentions are becoming less, rather than more, clear with each day. The Minister for Finance has now indicated, perhaps correctly - I do not claim he has no basis for the comments, but it shows how unclear the position is - the possibility of a limit on the amount of deposits banks can take on. The developments in the UK this morning will have implications for foreign owned banks operating in Ireland. That may have implications for our scheme and there is the wider EU context. The situation is sliding by the day. All of the talk and congratulation we indulged in last week for being first into the breech now rings hollow. It looks like we are now one of the last into the breech in completing a proper scheme to put before the Houses and implement a guarantee. At present there is no Irish guarantee.

More :: I raised these issues in the Seanad and they were featured on RTE’s Oireachtas Report. Click here to view the programme (from 6min 10secs onwards).

Some humility is called for from the banking community

7th October 2008

Today’s Order of Business focused on the continuing story of the financial situation and the news that came from Aer Lingus last night. Here’s an edited transcript of what I said:

Some humility is called for from the banking community and especially its leaders. We have all suffered from sleep deprivation in recent days given the onerous task which was before us. However, I had to rub my eyes when I heard that one of the individuals concerned made a series of demands regarding what the Government should do with universal child benefits, which he believed should be attacked, State pensions, and that medical cards for the over 70s should be abolished. This proposal comes from one of the people who were saved and whose bank was in some difficulty last week. If this person has trouble with his day job, which appeared to be the case last week, perhaps he could have a future in the entertainment industry as a comedian of some sort?

For this person to suggest to the Government that it should consider such cuts when he has been the beneficiary of such largesse, the extent of which we do not yet know, seems extraordinary.

Today the Irish Congress of Trade Unions sponsors a very important event, called the world day for decent work, which I wish to comment on briefly. Such days come and go and frequently they do not mean much, but this is important. The notion and principle of regulation have been dirty words for two decades. However, they are suddenly back in vogue in certain quarters because of the banking crisis. Aer Lingus announced today its intention to chop off whole sections of its operation, replacing reasonably well paid jobs with what inevitably will be lower paid jobs.

In those circumstances, it is timely that we should draw attention to the fact that approximately 200,000 people in this country earn less than €10 an hour. That is the reality of what an army of low paid and low skilled employees are facing. I call for a debate on unemployment but we must look to see what we are talking about in that regard. It is not just a notional issue. These are real people who face real challenges in terms of living their lives on low pay and without much hope being offered to them by the Government. We should have that debate.

Everybody is now coming around to the view held by those on these benches that regulation is something that should be examined again.

Time for the Oireachtas to scrutinise the financial mechanisms

1st October 2008

It is completely misleading for anybody to give the impression that the package proposed in the legislation currently before the Dáil does not come at a cost to the State and the Exchequer. The extent to which that was suggested, implied or, I believe, stated by the Taoiseach yesterday was that no money is changing hands. On the face of it, that is true, but it is only half or a very small part of the picture. First, there is the obvious cost associated with a risk, namely, if this guarantee is called upon at some point in the future. The guarantee would not be given or would not count for anything unless there was a prospect or a possibility at least that it would be called upon at some point in the future. That is a cost or at least a contingent cost or liability.

A second cost is that there is a real risk that the ability of the Irish State to borrow and the interest rates that would be charged to the State on foot of those borrowings will be affected by this. There is a real risk that will occur. That takes the matter into the political arena. It was always a political question but it makes it a highly political question for us and a huge issue in terms of the democratic dimension for these Houses because it affects the ability of the State and the Exchequer to expend money on public services, including health. The Minister for Health and Children said yesterday that the likelihood of increases in expenditure on health would be negligible in the coming period. There is a not even a potential but a very real and likely cost to the State.

This brings me back to the point I raised yesterday, which relates to these Houses and the effect or involvement we should have in this regard into the future. We want more detail from the Minister for Finance as to how he will exercise the powers he will take and the extent of the scrutiny that will be brought to bear on the banks, but what about the scrutiny that the Houses of the Oireachtas should be involved in regard to these matters? I mentioned the issue yesterday in regard to the Joint Committee on Finance and Public Service and that perhaps we should consider having a more dedicated committee or facility for the Houses to examine the question of the banks. The Joint Committee on Finance and Public Service dealt with this issue and I took the opportunity last night to check back on the debate on the matter in July.

I suggest that people examine the transcript because on any reading of it, one would not describe what occurred as a debate. It appeared, from what was stated, that there was no problem at all. The representatives of the various banks stated that there were no issues arising, that there few loans at 100% and that there were no concerns. That was the tenor and level of the debate that took place in July.

What happened in the interim? We are aware of what occurred in the United States but what gave rise to the so-called catastrophe into which we were facing? The Houses should be involved in considering what took place during the past three months. The role of the Financial Regulator should be examined. What about the role of the Central Bank and Financial Services Authority of Ireland? There are already suggestions in the United States that there should be criminal investigations in respect of what occurred on Wall Street. I am not stating that something similar should happen here but there should be a role for the Houses in scrutinising what took place during the past three months that led us to the position that obtained from Monday night into early Tuesday morning.

For the past six to 12 months, people in pubs and restaurants throughout the city have been discussing the possibility of a major bank collapsing. We were informed yesterday that this almost happened. There is a complete disconnect between these Houses, the Members of which are the democratic representatives of the people, and what is happening in the real world.

In that context, I reiterate that we should put in place a mechanism that would allow the Members of both Houses to scrutinise what is happening in the banks, examine the extent to which the new facility being afforded to them will be applied and consider the sensible proposals put forward by Opposition spokespersons in respect of what will be the payback to the taxpayer in light of the real cost that arises on foot of this proposal.

More :: Click here to read the Credit Institutions (Financial Support) Bill 2008

“Irish taxpayer is potentially being turned into a sucker thanks to Lenihan’s ‘succour'”

30th September 2008

In terms of this morning’s news from the Minister for Finance, it is not entirely clear whether we have a decision or a proposal. We were told this morning the justification for the decision is to avert a catastrophe and the word “catastrophe” was used quite liberally. It is a big word, particularly when until recently we were told Irish banks did not have liquidity problems and there were no fundamental difficulties with their position. However, the word “catastrophe” has now been used.

Politicians on all sides have a responsibility to hold back and wait to hear the rationale for the proposal being brought forward and to debate it carefully. However, the public is entitled to have spelled out to it what momentous catastrophe would happen if this decision was not made. We are entitled to be told that and not have to guess at it. We should be told precisely what was likely to happen and the consequences of this decision not being made.

What are those consequences? I do not refer to general issues and suggestions that we should look to what is happening in the United States or that if we do not act the sky may fall in. I want more detail because the Irish people are entitled to be told the precise nature of the so-called catastrophe - that is not my word - which we are seeking to avert. We can then compare the action that is proposed with the consequences of not taking it. I support what has been said by others in regard to the level of scrutiny that is needed of the banks and financial institutions if this proposal is to be adopted.

We are a far cry from the point some months ago when the banks appeared before the Joint Committee on Finance and the Public Service. This is the most momentous economic decision that has been taken in a considerable period of time. Surely an argument can at least be made for the establishment of an Oireachtas committee. Sometimes we are criticised for having too many committees, but if there was ever a need for an Oireachtas committee dedicated to a central economic question, surely it is now. There is a compelling argument for a committee to deal with banks and the banking system so that Members of the Oireachtas can be afforded opportunities on a regular basis to scrutinise the banks, understand precisely what is occurring and raise questions about the history of loose and reckless lending and the issue of executive salaries. Such a committee would also provide a forum through which Irish people can ensure that banks and financial institutions pay for this extraordinary bail-out and what I heard the Minister for Finance describe as “succour”.

I sat in my car and reached for the Kleenex tissues at one point while listening to the Minister. I know it is important not to make light of this issue but he claimed that the measures had to be taken in regard to these six Irish banks because they had nowhere else to go for succour. I had a different kind of “succour” in mind when I heard that phrase from the Minister and it is the Irish taxpayer who is potentially being turned into a sucker in this.

Government ignoring Forum’s recommendations on Pre-School Education

29th July 2008

The release of the National Economic and Social Forum’s Periodic Report this week highlights the Government’s neglect of pre-school education.

During the general election campaign in 2007, Labour committed itself to offering one year of free pre-school education for every child regardless of income. It was part of a child-centred learning-focused system of childcare.

The NESF Report is damning of the government’s inaction in this area. This is their own advisory body labelling government policies as ‘weak’ and the report paints a picture of too many departments sharing responsibility for children.

It was the same body whose cost-benefit analysis showed that for every €1 spent on early childhood education the State would receive €7 later.

Labour took the analysis of the NESF and incorporated it into the Putting Children First document. Ireland spends less than 0.2% of GDP on our children when the EU average is 0.5%. A commitment to pre-school education is not in the current Programme for Government.

At a time when the Government is telling people to tighten their belts and look towards cost-savings, it would benefit the State to invest in pre-school education. The estimated €136 million annually it would cost to run the Labour-backed one year of free pre-school education is significantly less than the current early childhood care supplement.

As this report demonstrates, children were not a priority during the boom times. But it would be profoundly short-sighted to target childcare support in these more uncertain times.

More :: Click here to download the NESF’s Fifth Periodic Report (PDF)
More :: Click here to download Labour’s Putting Children First document from Election 2007

‘Visionary’ economic plans are simply a list of cuts

10th July 2008

[youtube=http://www.youtube.com/watch?v=o0Z1TjQzvgk]

Yesterday evening, the Seanad had an opportunity to discuss the current economic situation we now find ourselves in. We briefly discussed the subject last week and were told that a ‘visionary’ plan would be instigated this week. What Mr Cowen and Mr Lenihan brought forward this week was a list of cuts that were hiding under the term ‘savings’.

Where is the vision we were promised?

For weeks now, we have been told that the economic woes which we are now experiencing have been internationally generated. How can a government claim credit for a good economy but blame the international situation for a downturn? In development after development, whether large or small or in urban or rural areas, it massively over-incentivised the construction sector and failed to direct prudent investment into areas which would have yielded long-term results for the economy.

Above, you will find a video of my contribution to the debate.

More :: You can read the full debate by clicking here
More :: ESRI report shows that this year’s recession is homegrown (The Irish Times)

« First‹ Previous78910Next ›