Tag: budget

Banking Crisis needs Public Inquiry

17th December 2009

In his statement before the Joint Committee on Economic Regulatory Affairs on Tuesday, the Governor of the Central Bank, Professor Patrick Honohan argued that an inquiry into recent developments in the banking sector was required. I strongly support the Governor’s position. Professor Honohan also stated he was sure the average discount to be applied to the €77 billion loans acquired by the National Asset Management Agency would be different from the 30% estimate provided in September. We know already that the basis on which we are operating is wrong and will need to be updated. We have been informed by Government spokespersons that it will be necessary to invest further State money in capitalising the banks. We must, therefore, conclude that in analysing the budget this week and last week we were operating with sight unseen, as it were, in terms of what will be the true budgetary position in the coming months. It is vital that the Government confirm and clarify precisely what is in store in terms of further State moneys being invested in the banking system.

I concur with others on the urgent need for a full-blooded inquiry into what led to the banking crisis. Most of us have suspicions, for which there is significant supporting evidence, about what occurred. The matter should be investigated carefully and meticulously in a public manner, as has been done in other countries. For example, in the early 1930s one of the reasons public discourse in the United States turned around and members of the public were prepared to countenance difficult measures was the decision to hold a public inquiry into what had occurred, with full public disclosure and scrutiny.

Budget cannot be viewed as fair

11th December 2009

Last night, I had an opportunity to speak in the Seanad in reaction to Budget 2010. Below is my own contribution.

I am grateful to Senator Boyle for his acknowledgement, which members of the Government find it difficult to make, that at least part of the deficit problem the Government, and by extension the people, must deal with is attributable to what has occurred in the banks. That is unquestionably the case. From time to time and mainly in the context of NAMA, Ministers attempt to suggest, in a roundabout fashion, that the NAMA borrowings are not real money or real borrowing. However, the borrowings are real and will constitute an exposure for the people in respect of the bonds that banks will be given in exchange for loans.

More immediately, the deficit has increased since September when the Department of Finance acknowledged that it amounted to just over €20 billion compared with €9.4 billion at the end of September in the previous year. The statement reads: “The year-on-year deterioration in the deficit of some €10.8 billion is primarily explained by a decline in tax receipts of €4.8 billion, the €4 billion payment to Anglo Irish Bank and €1.7 billion in respect of the frontloading of the annual contribution to the National Pensions Reserve Fund.” It is no use that Government spokespersons attempt to convey the impression that the issue of the banks and the extraordinary exposure of the taxpayer in that respect is off line and has nothing to do with the budgetary crisis. These matters are connected in a substantial way, meaning that there has been an element of dishonesty in the remarks of some Government spokespersons.

Senator Boyle, similar to Senator MacSharry, stated that these budget decisions would have been made by any political party in power, but I do not accept that the decision to reduce the pay of public servants earning €30,000 per annum would have been made by any party in government, certainly not mine. I do not accept that the decision to cut child benefit or social welfare would have been made by any party in government, as was suggested by Senator Boyle more in hope than in a belief that it was the case.

This is about politics. Perhaps I am approaching politics from a slightly different perspective than Senator MacSharry who stated that the issue has gone way beyond politics, which is an extraordinary phrase. The current situation signals the arrival of politics, not its departure. I do not know what my colleagues understand or believe politics to be, but it is my belief that politics is about making choices and deciding, for example, whether one agrees, as parties did in recent weeks, on the appropriateness of reducing the 2010 deficit by €4 billion. Politics is about where to make the savings and what choices to make, be it on cutting public expenditure and, if so, where, or on increasing taxes and, if so, where. People should not be afraid of this. When there is an argument on these issues, people refer to it as being “all politics”. In my respectful submission, the problem with the current system is that there is not enough politics or calm, measured and careful debate, contest and disagreement on issues. I am not calling for disagreement for its own sake, but the only way to determine what will next occur in any society, particularly one in paralysis and crisis like ours - I am referring to wider society, not just the economy - is to have a free flow of debate and interaction. This is called politics. I am not looking to get away from this fact. Rather, I am looking to embrace it.

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Taoiseach’s ‘my way or the highway’ approach to budget cuts

28th October 2009

I never received an answer to my question to the Leader of the Seanad some weeks ago as to when and why the decision was made to move from a policy of securing savings of €4 billion in public spending through a combination of €2.5 billion in spending cuts and €1.5 billion in taxation measures to a position where the entire €4 billion is apparently to be achieved by way of cuts alone. Reports in today’s newspapers say the Taoiseach has put forward another version of his “my way or the highway” approach to the debate on the forthcoming budget with an indication that what he envisages will occur come hell or high water.

Will the Leader facilitate a debate on the fundamental issues associated with the desirability and advisability of instituting such radical spending cuts? The question is whether our economy will be able to withstand such deep cuts in public services and the associated impact for the entire economy. No other country in the OECD is engaging in these types of radical cuts as a matter of policy in the midst of a severe recession. The conventional wisdom has always been that governments should wait until the economy shows some signs of improvement before engaging in such draconian reductions in public spending. The Government apparently shared this view earlier in the year but it seems there has been a change of mind in the interim. No explanation has been given in this House or elsewhere as to whether such a decision was made and, if so, why or when it was taken. When I put this question to the Leader on a previous occasion he replied that we must wait to see what is done in the budget.

There must be a debate on how increases in taxation can contribute to making up the required saving of €4 billion in public expenditure. Why was the Commission on Taxation tasked with setting out the various options in this regard if its findings were to be jettisoned?

I am not saying that anybody in the Labour Party or elsewhere would feel particularly comfortable standing up and advocating tax increases. Nobody likes to do that, but it is part of the picture and we have to deal with the balance between cuts and taxation measures. It is simply not good enough to spend money and effort on these reports during a serious recession and do nothing. There is a need for serious public debate in places like this House. I second the proposal on the Order of Business that we have a debate here in advance of the budget on what ought to occur.

Are we heading towards our own ‘Day of Reckoning’?

25th February 2009

I previously called for a debate in the Seanad on the incredible disparity between prices here and those in the North and Great Britain. I and others asked for this debate to be arranged a couple of weeks ago but there is no sign of it. Surely it is a very urgent issue, sufficiently urgent to have the Minister in the House to explain what action, if any, is being taken by her to address the question of price disparities. It appears none is being taken.

I have no problem with having a debate on intellectual property rights this afternoon but, for the life of me, I do not know precisely why we are having it and what it is about. I am in favour of a debate, but there are urgent issues that require to be dealt with today and tomorrow, including the issue of prices, and we are not debating them. Not only is the economy grinding to a halt, but the political system is doing so also. We are not allowing debates on issues about which the people on the streets are talking.

With regard to prices, consider what has been happening in recent months. I think it was in the autumn that the question arose in the Dáil, when the Taoiseach had a famous Paul Gogarty moment and said to the Tánaiste that she should bring in certain people and speak to them. Then the Director of Consumer Affairs expressed certain views on the issue of prices, after which there was a Forfás report. Most incredibly, the Tánaiste is not taking action or addressing the issue but, as she stated on the radio this morning, she is asking the Competition Authority to conduct an investigation.

When will a Minister make a decision on an urgent question facing the people? Will the Government ever make a decision? As somebody said yesterday, will it constantly off-load and subcontract decisions on serious issues facing us all? We cannot talk about tax because the Commission on Taxation must deal with it, and we might deal with it in next year’s budget.

We cannot talk about prices because this or that body is being asked to investigate them. From what I can see, the political, parliamentary and government systems are grinding to a halt.

Barack Obama said one thing of considerable substance last night, which applies to us here. He said that a day of reckoning had arrived in the American economy in regard to decisions that had been put off there for many years, which people were now having to face up to making. The day of reckoning has arrived for the people of this country, for those who have lost their jobs and for those involved in the real economy. Sooner or later the day of reckoning will arrive for the people who made the decisions and those responsible for indecision over a period of ten or eleven years who have us where we are today.

Seanad relevance questioned with lack of Government legislation

12th November 2008

There is an extraordinary absence of Government legislation in the Houses of the Oireachtas. We have debates on efficiency and relevance in respect of the public service and apparently the debate is bubbling away. Members have asked whether we should spend time considering efficiency in the public service but it may not be long before eyes start looking at this wing of the public service and deciding whether it is up to scratch in terms of its contribution. It is really extraordinary that, week in, week out, not a single Bill is brought forward. This draws attention to the debate on the efficiency and relevance of this House. We are to have statements on a number of issues this week but we do not have any opportunity to debate the issues that Members on this side of the House have been raising and on which they have been asking for a debate.

The Leader, Senator Donie Cassidy, told us we were to have a rolling debate on the economy. When will it start rolling? It has not happened yet. There is a very considerable debate taking place outside the Houses on whether the banks require capitalisation. It is taking place everywhere except in the Parliament of the people. Why can we not have scrutiny in the House and debate the various arguments for and against capitalisation? It seems the banking policy rests entirely on the guarantee that was given. The remainder of the policy is a matter of keeping one’s head down and hoping for the best. This is a fair definition of our national policy on the crisis that everybody else in the world recognises. We appear to believe it does not exist.

More :: Click here to see this week’s schedule in the Oireachtas

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.

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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.

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.