Thursday, 29 September 2011
Dáil Éireann Debate
Deputy Éamon Ó Cuív: The news of possible large job losses in Covidien in Athlone over the next two years is a devastating blow to the people of the midlands and, in particular, the workers and their families. My heart goes out to the workers who are left with this great uncertainty in their lives. Added to that is the threat of closure of the barracks in Mullingar, something the Tánaiste promised would not happen. When the Government parties came to power, they promised a significant jobs budget and all we got was a damp squib of a jobs initiative. Month by month, the Government presides over increases in the live register, despite net outward migration.
Deputy Éamon Ó Cuív: Have the IDA and the Government been informed of the exact number of jobs at risk? What steps have been taken by the Minister responsible and the IDA to save the jobs? What proposals does the Government have to provide alternative employment to people affected by this decision across the midlands and the west? What plans are in place to work with the employees and management of the company to organise training and reskilling of workers? Will the IDA seek a clawback of grants paid to the company? Can I also be assured by the Tánaiste that there is no threat to jobs in another company facility in Blanchardstown, Dublin? Is it intended to use the underspend of €10 million at the end of the August on the Tús programme to provide more jobs and opportunities for unemployed people?
The Tánaiste: First, I would like to express my concern about the announcement in respect of Covidien which has operated in Athlone for 30 years. I understand the company is undertaking a transformation of its operations and that, as part of this, one of its basic products will transfer over the next two years to Thailand and it intends to offer a voluntary redundancy programme. It is too early for the company to state how many jobs will be impacted, as it is also looking at bringing in new products and technologies to the site, which will affect the final number.
The Tánaiste: The creation of employment and investment in the economy is the Government’s main priority. Later we will announce a number of initiatives to progress our strategic investment strategy. The Government will announce significant reforms in the semi-State sector to ensure it will be an engine for investment and job creation. We will take a total portfolio approach to the State companies. The setting up of a shareholder executive operation within the National Treasury Management Agency, NTMA, to be called NewERA is modelled on similar arrangements in other countries, including one established by the last Labour Party Government in the United Kingdom. The objective is——
In addition, the Government will also announce the establishment of a strategic investment fund, which will channel resources from the National Pensions Reserve Fund towards productive investment in the economy.
The Tánaiste: The establishment of the NewERA entity within the NTMA, which will be headed up by a new chief executive officer, Dr. Eileen Fitzpatrick, who is a director of the agency, will be aimed at maximising——
The Tánaiste: ——the contribution that the semi-State sector will make to the creation of jobs in the economy. That coupled with the strategic investment fund and the continuing efforts of the State agencies to attract inward investment, which is evidenced by the announcement of more than 3,000 new jobs in that sector, demonstrates the Government is serious about generating employment and securing replacement employment where jobs are lost.
In respect of Covidien, the State agencies will remain in close contact with that company to discuss with it the new investments it will be making in Athlone in order to minimise the number of job losses.
Deputy Éamon Ó Cuív: Would the Tánaiste not agree that it takes a number of years before an initial contact with new companies coming here and the announcement of jobs? In other words, all of the jobs being announced this year——
Deputy Éamon Ó Cuív: ——in a systematic way since this Government came into power, that is, that everything we put in train that the Deputies opposite believe is good they claim they did in miracle time.
Deputy Éamon Ó Cuív: I was very interested in what the Tánaiste had to say about the semi-State companies but how does he square the selling of the semi-State companies and the selling of minority shares where shareholders’ interests will dominate with his big plan——
Deputy Éamon Ó Cuív: ——directed by the State, to develop the semi-State companies on the jobs front? How will he square this dilemma that I outlined here previously? Also, can the Tánaiste tell us how many jobs have been lost since the Government came into power this year?
The Tánaiste: I presume he will also take appropriate credit for the huge numbers of people who have lost their jobs in the course of the recession. I agree with him that it takes time for investment decisions to be made and that is why the Government has a programme to encourage inward investment into this country.
The Tánaiste: That is why the Minister, Deputy Bruton, was in the United States last week. That is why, in the course of my own work in New York last week, I worked with the IDA in talking to a number of companies. That is why the restoration of Ireland’s reputation, which was so badly damaged in the lifetime of the previous Government, has been so important to us. We are seeing the fruits of the work of this Government over the course of the past six months in the restoration of this country’s reputation.
The Tánaiste: It is also why over the course of the next couple of weeks we have arranged a number of events aimed at encouraging additional investment into this country. The convening of a global Irish economic forum on 7 and 8 October will bring together senior people from the corporate world, many of whom have Irish connections. The Minister, Deputy Bruton, in turn has an additional event which is co-organised with the United States embassy——
The Tánaiste: ——aimed particularly at potential investors from the United States. All of that, in addition to the measures I spoke about earlier, is aimed at encouraging investment in this country and the creation of jobs. The reality is that we have a very high level of unemployment. Everybody knows that. We must try to get that level of unemployment down. The only way we can do that is by the creation of employment and the way we are doing that is, first, by encouraging additional inward investment into this country through restoring the country’s reputation and, second, using the assets available to us, including the semi-State companies which need to be reorganised and harnessed in a different way from what has been the case in the past to ensure that the combined strengths and talents of the staff and all of those involved in the semi-State companies, and the National Treasury Management Agency, can be brought together to increase investment, increase the number of jobs created and get economic progress in this country.
Deputy Mary Lou McDonald: Since when has the Labour Party been in the business of lining the pockets of private investors at the expense of the taxpayer? It has clearly bent the knee to the troika. That is nothing new. That is a pattern that has emerged, but in this instance it is also clear that it has bent the knee to Fine Gael. In fact, the Tánaiste stands in this House this morning and waxes lyrical about NewERA as though it were a creation of his own. The Tánaiste knows as well as I do that semi-State companies such as ESB, Bord Gáis, Eirgrid, Bord na Móna and Coillte are all profitable industries. They have consistently self-financed, consistently returned a dividend to the Exchequer and consistently employed thousands of people and they have been built up over generations of investment by Irish taxpayers. The Tánaiste talks about non-strategic assets. Can he tell me on what planet is the energy sector non-strategic? On what planet is the transport sector non-strategic?
Deputy Mary Lou McDonald: Can the Tánaiste tell me also what of the promises made by his party to the electorate only a few short months ago that his party is opposed to short-term privatisation? Has he had a road to Damascus experience hand in hand with his boss, the Taoiseach, Deputy Enda Kenny?
The Tánaiste: There is no fire sale of State assets and there will be no fire sale of State assets. There is no wholesale privatisation of State assets. The Government is taking a strategic approach to investment in the economy. We are doing that because I believe even Deputy McDonald will agree that there is a necessity and a priority to generate employment in the economy. We have a number of things going for us in this country. We have very good State companies, as the Deputy has said. We have the National Treasury Management Agency, NTMA, which has developed considerable expertise in the area of finance and of corporate governance. It makes sense to take what I call a whole portfolio approach to the State companies. That is the progressive approach that has been taken in a number of other countries. The investment strategy, the corporate governance strategy, the obtaining of finance and the entire State shareholding in the State companies are looked at as one. There is huge potential for investment in some areas of the economy, including communications, which the Deputy mentioned, energy and infrastructure such as water. In all those areas, there is a requirement for additional investment and potential for the generation of employment. It makes sense for the State to harness the resources it has available in order to invest in those areas of the economy and generate employment both directly in those areas and, through that investment, outside them. There are two arms to the strategic approach the Government takes. One is the total portfolio approach that is being taken to the State companies and the other is the establishment of a strategic investment fund that will use resources from the National Pensions Reserve Fund and leverage resources in the private sector in order to invest in the economy.
Deputy Mary Lou McDonald: The Tánaiste knows as well as I do that the total portfolio approach can and should be taken with those companies still in full public ownership. He knows well that the moment shareholder interests enter the equation in the semi-States, they will trump the public interest. I imagine that is why his party’s manifesto stated categorically that the party was against short-term privatisation, yet that is precisely what he is proposing to do — to cash in the chips of the semi-States. He tells us we need to invest in jobs. The troika has the view that that will be used to write down debt. The Government is guilty of exactly the same short-term political thinking exemplified by the Fianna Fáilers, and an incapacity to understand that those assets and industries need to be harnessed. They can generate employment, but they will deliver their full value in the medium and long term to the State, the citizens and the taxpayers only if they are kept in public ownership. The Tánaiste has singularly failed to tell us what the non-strategic assets are. He has not told us that because his plans are to go in and vandalise key strategic infrastructure.
Deputy Mary Lou McDonald: Deputy Rabbitte and his cheerleaders to my right may scoff, but they and we know full well that they have buckled to the troika and to Fine Gael. Shame on the Labour Party for pursuing this. We understood that its job in Government was to stop the worst excesses of the privatisation agenda, but it is clearly not serious about that.
The Tánaiste: The Government’s priority is to bring about economic recovery, get people back to work and get people into jobs. To do that, we have to reform the way in which things have been done in the past.
The Tánaiste: They do not want to change anything. The Government is in the business of effecting change, and that means we will change the way in which our semi-State companies are used in our economy.
The Tánaiste: There are areas of our economy that require further investment — energy, communications and several others — and where there is potential to generate additional employment. The Government will take a constructive approach to using the State companies to invest in those areas of the economy and combine that with private sector investment to get people into employment.
Deputy Shane Ross: The Tánaiste will be aware that Europe has woken up to the fact that bankers are not the only scandals in suits in the financial crisis. The draft regulation has surfaced this week pointing the finger very decidedly at auditors. They say there is no longer any trust between the clients of auditors, the public and the Government because auditors have betrayed that trust particularly in the financial reporting of financial institutions.
Deputy Shane Ross: It also points out specifically — this is where Ireland comes in — that the auditing world is dominated by what it calls an oligopoly. By that, it means the big four — PricewaterhouseCoopers, KPMG, Deloitte & Touche and Ernst & Young. Nowhere is that problem greater than in Ireland, and the kernel of the problem is the consultancy work that has been given to auditors who are also auditing the company in question. In other words, the same company is doing consultancy work and doing the audit, so it has a serious conflict of interest.
Deputy Shane Ross: I have a question coming. The Government has invariably employed the big four to do consultancy work in the case of the banks, and at the same time, in many high-profile cases, they have passed the banks and given the all-clear for the solvency test. How long will the Government continue to accept the independence of these guys when they are patently compromised? How long will it continue to give them millions in consultancy fees when they are also auditing the banks’ accounts?
The Tánaiste: I thank Deputy Ross for bringing me good news from Frankfurt. There has been a lot of good news from Frankfurt since the Government took office, including the significant reductions in the interest rate that we have been able to negotiate.
I also agree with him in respect of the performance of auditors. There are questions to be asked about their performance, particularly in some of the financial institutions where accounts were signed off by firms of auditors, particularly over the last couple of years when we have seen some of the extraordinary transactions in and between banks and financial institutions.
I agree there is an unhealthy concentration of business among a small number of auditing and accounting companies and that must be looked at. The present Government, however, relies less and less on consultancy work being done for it by various financial companies.
Deputy Shane Ross: I am getting used to the Tánaiste and the Taoiseach replying to my questions by agreeing with the sentiments in them and then doing absolutely nothing. The vast fees paid to PwC, KPMG, Deloitte and Ernst & Young, a company that disgraced itself in Anglo Irish Bank, are completely indefensible. How long will the Government continue to pay these fees when there are equally reputable — or equally disreputable — people in the second line of auditors who will do the job for much less? Why does the Government always and invariably go, sometimes without going through the tendering process, to the big four, which are not only discredited in Ireland but are now discredited internationally and in Europe, as we will see in the coming draft regulation?
The Tánaiste: The European Union is working on a new directive on the role of auditors. A consultation phase is under way at present and that will establish Europe-wide regulations governing the role of auditors and that will obviously apply here.
The second part of the question related to the way in which the Government engages firms of auditors or obtains financial advice. I do not disagree with the Deputy and he will find that as time progresses, the Government’s approach to the securing of financial advice will reflect more the sentiments expressed in the question than it will reflect the practices of the past.
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