Tuesday, 28 February 2012
Dáil Éireann Debate
1. Deputy Micheál Martin asked the Taoiseach the details of the issues he discussed at the meetings and-or bilaterals he had when he attended the World Economic Forum in Davos, Switzerland; and if he will make a statement on the matter. [4761/12]
2. Deputy Joe Higgins asked the Taoiseach if he will report on his attendance at the Economic Forum in Davos, Switzerland, on the 25-29 January 2012; and if he will make a statement on the matter. [5174/12]
6. Deputy Richard Boyd Barrett asked the Taoiseach if he will report on the issues he raised at the World Economic Forum in Davos on 25-29 January 2012; and if he will make a statement on the matter. [6592/12]
On foot of an invitation from Professor Klaus Schwab, I travelled to Davos, Switzerland to attend the annual meeting of the World Economic Forum, WEF, from 25 to 27 January. The forum was attended by political and business leaders and heads of international organisations from across the globe. I participated in a series of discussions that focused on current economic, structural and political challenges and how they might be addressed in a more proactive and integrated manner. These issues were reflected in the overall theme of the forum — The Great Transformation: Shaping New Models.
On Wednesday evening, I attended a function hosted by Professor Schwab, executive chairman of the forum, and also attended by other Heads of Government and the business council of the WEF. The forum organises a series of formal interactive sessions for the participants. On Thursday afternoon, I participated as a panellist in a plenary interactive session, entitled “Rebuilding Europe”, along with Prime Minister Katainen of Finland, President Komorowski of Poland and Danish Prime Minister Helle Thorning-Schmidt. This session, moderated by Mr. Lionel Barber, editor of the Financial Times, focused on the future of Europe and principally on measures to address financial instability within the eurozone area. The following day, I participated in a private discussion session on the prevailing global themes for 2012, including the fallout from the Arab spring revolutions of 2011, turbulence in the Middle East, global financial issues and employment, job creation and social stability.
While I was at the forum, I had a bilateral meeting with Prime Minister Helle Thorning-Schmidt of Denmark and later with Prime Minister Katainen of Finland. We discussed the current situation in the eurozone and progress in the negotiations towards the new intergovernmental treaty. I explained the issues that remained of particular importance to Ireland, including in respect of our bank-related debt. We discussed the growth agenda and I stressed the need to focus on growth and jobs. I briefed the Prime Ministers on the successful outcome of Ireland’s recent EU-IMF quarterly review. I congratulated Prime Minister Thorning-Schmidt on her Government’s successful start to the Danish Presidency of the European Union and I said that I looked forward to working with her and her Government over the next five months. I also updated both Prime Ministers on Ireland’s current chairmanship of the OSCE.
On Thursday evening, I addressed a dinner organised by IDA Ireland and attended by senior executives of major international companies. I took the opportunity to convey the message that, as a result of the necessary economic adjustments we had made, Ireland was significantly more competitive as a location for doing business. I noted, for example, that the World Bank rated Ireland as providing the most supportive business environment in the euro area in 2011, while the IMD World Competitiveness Yearbook awarded us three firsts for 2011 — for corporate tax regime, business legislation for foreign investors and the availability of skilled labour. I conveyed the same positive messages about Ireland in a series of bilateral meetings with chief executives and other leaders of major multinational firms over the course of my time at the forum. The IDA event and these bilateral events were very useful opportunities for me to convey strong messages about the attraction of Ireland as a location for foreign investment, research and development and export-oriented operations.
The World Economic Forum provides an exceptional opportunity to interact with key opinion formers in the business world and I made every effort to take full advantage of it. I also met with President Martelly of Haiti at his request. He was on his way to Ireland for a private visit after the forum. I expressed our continued solidarity with the people of Haiti following the devastating earthquake of 2010 and noted the assistance that had been given by Ireland and the international community towards the recovery programme.
Deputy Micheál Martin: I thank the Taoiseach for his reply. He has been attending Davos for years and speaking at similar high-level events. It was the first time that a Taoiseach made comments that reverberated significantly and somewhat negatively at home. The main theme of the Taoiseach’s public comments was that Ireland was doing better because of the 2011 budget against which he voted. That was fair enough. However, the main news at home was his unguarded comments regarding the Irish people. His press people were industrious afterwards in trying to clean up after his comments, but the bottom line is that he claimed it was the fault of people who had gone mad with greed. No doubt he will have prepared significant remarks. There has been an attempt to spin the issue with the usual political attacks, but let us put all of that aside for a moment. Does the Taoiseach accept that he might have gone too far in his comments? If he does not withdraw them, he must accept that he made one statement in his pre-budget television speech and stated the exact opposite in the Swiss mountains.
The Taoiseach: It was actually my first time to attend the World Economic Forum in Davos. I found the whole thing very interesting in the sense that it was a gathering of quite influential world leaders in business and politics. Those who have been attending it for quite a number of years may know of the opportunities that exist for meetings on a one-to-one basis, of which I had a number.
When I spoke at the panel discussion with the President of Poland, the Prime Minister of Denmark and the Prime Minister of Finland, I set in context what had happened to our country. It was not so much that the words used were associated with greed. I made the point that the amount of reckless lending that had gone on and the sort of system that applied — the more one loaned, the more one got in terms of remuneration and compensation — led to a point where the situation transformed into one in which property prices and lending policy became reckless. The result was that, when the bottom fell out of it, it devastated many people.
I would not say that it was the people from the Government who were very active here. There were some people on the Deputy’s own side who were equally active. In that sense, I set out for an international audience the background to the situation that applied in this country in so far as the property bubble and property collapse were concerned. From this point of view, it was important to set that in context.
Ireland was always a model for other countries in terms of the judicious use of European funding and how to grow an economy. Obviously, that element of our economy was being driven by taxes from the property market. When that collapsed, it caused and is causing serious distress for a number of people because of the banking situation and the mortgage distress in which they find themselves.
Deputy Joe Higgins: I read the Taoiseach’s Davos comments very carefully. Does he agree that he should apologise to the Irish people? It was not an awkwardly phrased sentence that meant something else. He stated that people simply went mad borrowing and the extent of personal wealth created on credit was done between people and the banks, a system that spawned greed to the point where it went out of control. Does he accept that no one could have interpreted these comments as doing anything other than applying to a substantial number of people and that they were made in an indiscriminate fashion? Does he not accept that he should at least clarify, if not apologise, to the suffering people of this country for heaping that insult on them on top of what they are undergoing as a result of the crash?
Does the Taoiseach not realise that, even more recklessly, for him to use words like those is to give justification to the European political establishment to insist that the Irish people pay tens of billions of euro to cover the bad gambling debts of European and other bankers? The Taoiseach gave the impression that the people were the ones who went mad and, therefore, it was moral that they should pay. Does he not understand how reckless these remarks were? Why did the Taoiseach not use the opportunity in front of the world’s media to tell the truth?
The first debate at the World Economic Forum asked whether 20th century capitalism is failing 21st century society. The Taoiseach attended the forum alongside billionaire speculators from Goldman Sachs and the rest of the people whose greed over 20 years of unrestrained profiteering and speculation in the financial markets caused the global financial collapse. Why did he not use the opportunity to attack that system and those individuals for their responsibility for a crisis that has caused endless suffering around the world, and even more so in our country? Does he agree that he lost a great opportunity?
The Taoiseach: No, I do not. I made my point already. Perhaps the Deputy does not move out of Dublin as often as he should because if he did so he would be aware that thousands of people came home from work in the evening to find letters from their banks approving loans of €10,000, €15,000 or €50,000 and asking them to come in and collect the money. Perhaps he is not aware of people who bought not one or two but 10 or 12 apartments over their mobile telephones at the height of the rush of property acquisitions. Perhaps he is not aware of the consequences in terms of ghost estates and other symbols around the country.
I understand that the Deputy is speaking from his own narrow focus but I used the limited time available to me to speak with at least seven or eight chief executive officers of international businesses, some whose companies are located here and others who have since decided to propose further investments in this country or are considering investing. This is a matter of jobs, confidence, hope and opportunities for the future. I used these face-to-face meetings to express the view that the Government is making serious decisions in the interest of the country. What we offer as a package in terms of tax, technology, talent and track record is second to none. Evidence of this can be found in the continuous stream of decisions to invest in this country, including one last week relating to a firm that employs 1,400 people in the Deputy’s constituency. That is what we need for the future and it is where the future lies. This is why it was important to speak directly to these individuals when I had an opportunity to express confidence in the facilities and packages that Ireland offers in respect of investments from which jobs can be attracted and developed.
I could not meet everybody who was in Davos because it was attended by several thousand people from all over the world, but I met a significant number of influential individuals, both politicians and business people. These business people include some who were happy with the investments they have made in Ireland and who continue to espouse that cause strongly and publicly in the world’s media, and others who are considering serious and substantial investments in our country. I am sure the Deputy supports that work and will also support the investment and jobs that result from it. Although I had not previously visited Davos, I realised there are strong reasons for taking the opportunity to meet face to face with serious investors and serious players.
Deputy Gerry Adams: I hope the Opposition will be third time lucky in giving the Taoiseach an opportunity to clarify his remarks and set the record straight. I regularly travel out of Dublin. I will visit Castlebar next Friday morning to launch a defending rural Ireland campaign. If the Taoiseach is available he will be welcome to listen——
The Taoiseach stated that people went mad borrowing in a system that spawned greed, went out of control and led to the crash. The people were at fault. He and I recognise that there were people who bought a number of apartments but the people who were most offended by his remarks are those who borrowed money to buy a home. They did not go mad. They borrowed not out of greed but to provide a home for their families. Many of them were cajoled to borrow large sums of money to buy homes during boom times. The prices of these homes had been driven through the roof because the policies of successive governments encouraged property speculation. The only reason I raise this issue is because the Taoiseach said in his state of the State address that the people were not at fault.
Deputy Gerry Adams: In Davos he said that people went mad borrowing. I do not want to be provocative but the Taoiseach should acknowledge that the people did not cause this crisis. He knows that and he has said as much on numerous occasions. All of us say things that are inappropriate or do not properly summarise our thoughts at any given moment. We all have slips of the tongue. My concern is that the Taoiseach’s failure to clarify his remarks means that he meant them. This may be an insight into his belief that the Irish people, or at least the people of this State, had a collective burst of madness and were fickle and gullible. It was not the gombeen men and the greedy bankers and developers who were at fault, it was the ordinary people for being so immature. I respectfully ask the Taoiseach to set the record straight by making it clear that he does not believe ordinary people caused this crisis.
The Taoiseach: I certainly do not, and I said clearly in my state of the nation address that the people were not responsible. The people were the victims. I never said that all of the people went mad borrowing. I made the point against the background of explaining matters to an international audience. When I see the letters that were sent to students to offer large overdrafts or the incentives given to persuade people to take out loans on their houses to spend €100,000 on furniture, €50,000 to tarmacadam the drive and another €50,000 for the BMW, I am reminded that people were the victims of an incentivised scheme which spawned a sense of greed among those in higher echelons. The more they lent, the more they got. The implications of that are still being felt by responsible people in the banking system, who are also the victims of public retribution because of the sins of others and the policies that were in place. Deputy Adams quoted me accurately on this occasion.
The Taoiseach: I stand over what I said in my state of the nation address in terms of the people not being responsible. Many people became victims of an incentivised scheme where they were seduced into borrowing easy money on the assumption that it could all be paid back. The difficulties in repaying the money were created when the bottom fell out of the construction industry because the economy was being driven by a Government that relied on taxes coming from property. That was unsustainable and now we know. This Government has had to make the decisions that will rectify that situation and I am glad to say the country is headed in the right direction.
I met the CEO of Citibank’s operations in Europe, the chief executive of Liberty Global, the chief operating officer of Facebook, the chief executive officer of the New York Stock Exchange, the chief executive of the EMC corporation, the chief executive of Adobe Systems and the chief executive of Medtronic among a number of other serious business people. These companies employ thousands of people in Ireland and the satisfaction they get from the talent and productivity of their workforce, as well as the reputation of each individual workforce as part of the country’s brand, is very high. A number of those and others consider investing in Ireland. At the IDA Ireland function I attended there were half a dozen or a dozen people who had no association with Ireland but are now being followed up with in respect of what we offer in terms of talent and a package in regard to tax, technology and a track record. I hope that brings about job opportunities for young people in a range of areas in the future. Please God it will.
Deputy Richard Boyd Barrett: The Constitution has today forced the Taoiseach and his Government to hold a referendum on the brutal austerity agenda that it and our EU-IMF overlords have been inflicting on the people. That has happened despite the Taoiseach’s——
Deputy Richard Boyd Barrett: That has happened despite his best efforts behind the backs of the people to avoid a referendum. The question relating to Davos is whether the stock in trade of the Government is being two-faced and duplicitous when it comes to saying one thing to the people here and saying quite different things when talking to the high and mighty in Davos or in the European Union. On the one hand the Taoiseach told the people here he did not blame them and that they were not responsible for the economic crisis. Then he told people in Davos — in many cases precisely the people who helped cause the economic crisis and were guilty of all the greed he mentioned — that people went mad borrowing. He did not say that some people went mad borrowing. He did not say that a few super-rich people went mad borrowing. He did not say that the cronies of Fianna Fáil went mad borrowing.
Deputy Richard Boyd Barrett: He said that people went mad borrowing. Is there not a consistency in the Taoiseach’s behaviour which is that he says one thing to people abroad and a different thing to people here, whether it is on trying to avoid a referendum on the austerity treaty or on whom to put the blame for the current economic crisis? Was it not a treacherous thing to say given that on that particular day an all-party delegation, including members of the Taoiseach’s party, the Labour Party, the Fianna Fáil Party and Independents, made the case to the Bundestag finance committee that ordinary people in this country were not responsible for the economic crisis and that there should be debt relief? On that very same day the Taoiseach made a statement to this——
Deputy Richard Boyd Barrett: ——gang in Davos blaming ordinary people, fundamentally undermining our case to get a write-down on the debt that has been unloaded on the backs of ordinary people because of the gambling and speculating of international financial institutions and bankers in this country.
The Taoiseach: That cuts no ice here. Some of these international audiences are not aware of the history of the historic party of Fianna Fáil. It was important to explain the context in which this property collapse took place. If the Deputy reads his English, he will notice I did not say “all of the people” were responsible. In fact in my state of the nation address I said that the people were not responsible. I have pointed out to Deputies Martin and Adams how the incentivised scheme in banking regimes fired out money left, right and centre without it even being requested. Of course the Deputy does not want to accept that. On the panel discussions in which he has participated he has failed pathetically to explain what he is on about except that he keeps coming up with the recurring words of “austerity”, “hardship”, “overlord” and others.
The Taoiseach: They know how these problems were caused and know what it takes to sort them out and are prepared to do that. If Deputy Boyd Barrett were speaking to any of those serious businesspeople considering investing in our country, I wonder what he would say to them. Would he say “Take up your bed and walk”? That seems to be what he seems to say here consistently. I cannot recall him making one constructive suggestion about employment in his constituency or in any other constituency.
An Ceann Comhairle: We have spent 26 minutes on the subject of Davos. It is up to the Deputies if they want to continue. There are other questions to be answered. I call Deputy Martin if he has a genuine supplementary question — no statements.
Deputy Micheál Martin: I have a supplementary question which I signalled. I acknowledge that Davos represents a very important networking event. I had the privilege of attending it and I know that some of the events there broaden the mind and broaden the horizons if one is prepared to be open and listen to what people have to say. It is a good networking event with people who can create many jobs in the country.
There is a big debate globally on whether capitalism is in crisis and whether the financial model that has governed in recent decades is in crisis. The Financial Times has been running a series for some time on the topic. There was considerable debate at Davos on the big issues. The origins of this crisis, which has been called the great recession, are much more profound than people sometimes care to admit in the domestic political arena for obvious political reasons. Mistakes were made here and I have acknowledged those and so on. However, the fundamentals of the crisis go back some time, particularly to the establishment of the euro and the flawed nature of the euro design. There were also the events after 11 September 2001 in the US and what the Federal Reserve did. Essentially in the developed economies across the world cheap money became available, which fuelled bubbles across Europe.
At Davos, with the exception of Chancellor Merkel and a handful of other European leaders, everybody agreed that Europe had not adequately addressed the economic crisis and particularly the eurozone crisis. That was the general consensus external to Europe and in many European areas as well. Economists, journalists, business executives and world leaders at Davos all said that the core flaws in the eurozone have not been addressed and there is a great threat to the international economy as a result.
Deputy Micheál Martin: Does the Taoiseach accept that such a consensus emerged from the discussions at Davos? If he listened to those, are they reflected in any of the Government’s policies, particularly in the context of the fiscal treaty?
The Taoiseach: I was not able to attend many of those discussions which took place in break-out rooms. I participated in a panel discussion about the European issue with the Prime Minister of Finland and a representative of the Polish Presidency. I attended a lunch where people were allocated indiscriminate tables where there was a discussion on the issues of the Middle East, including north Africa, Iran and Iraq, the global perspective on the emergence of new economies in the Far East, South Africa and Brazil, and the implications for other countries. The rest of the time was taken up with face-to-face meetings with individuals. I did not have an opportunity to sit in as a member of the group in those general discussions that took place in particular rooms.
It is perfectly clear in what the Deputy says that the financial crisis had its roots in the millions of sub-prime mortgages in the United States, the application of light-touch regulation and how rating agencies allocated a number of these financial instruments and continued to allocate them very high star ratings and then it collapsed. As the Deputy is aware, billions of dollars worth of those found their way into the European system and the domino effect played its part here. The conclusions of Davos for me were certainly in the context of the connections it was possible for Ireland to make. I genuinely believe that a range of those people look at our country now in a different way than they did previously. They see the results and they know that a solid start has been made although there is a long way to go. It was important that I had the opportunity as Taoiseach to talk to some of those people face to face. I am unsure whether I will be invited back again. I made the point to the professor that I found the exercise very interesting and fruitful. This has grown over 20 years from a small gathering in the beginning until it exploded into something of a world forum. Following the Global Irish Economic Forum last October there is a suggestion that Ireland should host a Davos-type conference for those involved in creativity in the theatre, acting and so on in 2014. This could have implications for the good of the country as well. That is where it was. I did not have the chance to sit in at the general discussions, except for the panel discussion and the discussion in respect of the world economic situation, which I was happy to participate in and outline our view at as a member of the eurozone.
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