Friday, 19 December 2008
Seanad Eireann Debate
Senator Donie Cassidy: The Order of Business today is No. 1, Finance Bill 2008 — All Stages, to be taken at the conclusion of the Order of Business; with contributions of spokespersons not to exceed 12 minutes and those of all other Senators not to exceed seven minutes, and Senators may share time by agreement of the House. The business of the House will be interrupted for 30 minutes at the conclusion of Second Stage.
Senator Frances Fitzgerald: If ever there was evidence that the Oireachtas should not be adjourning until 27 January, which is such a long time without democratic accountability, it is certainly to be seen in today’s news. There is news on the economy and on banking regulation that is very disturbing and that needs to be discussed in the Dáil and the Seanad and in the finance committees of these Houses.
On “Morning Ireland” this morning, the ESRI spokesman described yesterday’s launch of the Government economic strategy as an interesting, aspirational document which did not deal with the immediate crisis facing us or the hard decisions that need to be taken to protect jobs and the economy. That is a damning indictment. He stated that the current crisis needs a far more detailed and immediate response. The document contains very disturbing news, as we meet on the last sitting day of the Seanad this year, in that it forecasts that unemployment will rise, possibly to 10% and beyond, that more than 50,000 people will leave the country by April 2009 and that the deficit will be even more than was imagined until yesterday, with a potential rise in public borrowing to €18.2 billion in 2009. It is a disturbing story about our economy and our public finances.
These are challenging times for the Government and the people. It has also been an extraordinary political year from an economic point of view. None of us will forget the sight of those thousands of elderly people in the church protesting against the budget decisions. That really was a defining moment to see those people packed into the church, so disturbed by the decision to take the medical card from them. As Fine Gael said in the House this week, we are not happy with the current decision on the medical card.
Many Senators spoke yesterday about their concern that none of these issues was discussed in the House. The report that was launched yesterday will not be discussed. It will come up during the debate on the Finance Bill today, but we needed a discussion on that report. Therefore, I propose an amendment to the Order of Business that we will have an opportunity to discuss the Government’s strategy, as outlined in the report that was launched in Dublin Castle yesterday. That is the least that should happen.
We also must talk about the governance of the banks, especially following the issue that came into the public domain yesterday about Anglo Irish Bank. Mr. Sean FitzPatrick has resigned as a result of this. This astonishing news, which raises most serious questions about the regulation and governance of our banks in recent years, must be discussed by this House. The amendment to today’s Order of Business that I have proposed includes a reference to the need to discuss the governance issues in the banking sector that arise from what has emerged today.
Senator Joe O’Toole: I will speak about the economy during the debate on the Finance Bill 2008. It is worthwhile to focus on the second point that was made by Senator Fitzgerald. I argued three months ago that the Financial Regulator was the most appropriate authority to make a statement about the capitalisation of the banks, as no other body had seen the books. That point was not accepted by any commentator or politician in either House. The Financial Regulator was right, but nobody noticed that either. It was not said again. It should be noted that despite all the criticism of the public service, the problems in Anglo Irish Bank were discovered by the Financial Regulator rather than by a team of high-powered auditors. The regulator brought the problems to the attention of the board after they were discovered earlier this year. The regulator works to the best of its ability, even if some people suggest otherwise.
The Deputy Leader suggested last week that the Financial Regulator did not do its job properly when it failed to take action against those offering loans of 100% and 110%. I remind him that the regulator was unable to take such action because the Oireachtas did not give it the authority to do so. When the regulator was being established, I tried to give it additional authority but my proposal was rejected. I spent weeks fighting on the floor of this House for legislative provision to be made for a directors’ compliance statement, which would have dealt with the issue that arose last week. With the exception of the Labour Party, I did not get any support from either side of the House for my proposals in respect of huge issues like compliance statements and governance. It appears that we are being asked to give control of the €10 billion recapitalisation package to the same people who were involved in the transfer of loans worth €87 million. I will ask the same questions I have asked time and again. How can we do that? How do we know it will work? Why should we give this money to the people in question? What is the next step? A clear and old-fashioned case needs to be made. We will have much more to say about this. I thank the Financial Regulator for uncovering these problems. These people have pulled the wool over our eyes. Fool me once, blame on you. Fool me twice, blame on me. That is what we are looking at. I would not trust these people with €10 billion.
Senator Alex White: I agree with what Senator O’Toole has said about the banks. It seems there will be an initiative early in 2009. We need to pause before we consider putting taxpayers’ money into those banks in which certain activities, which have been exposed in recent days, appear to have been occurring. We do not know precisely what has been happening. We do not have the precise detail of the story that has emerged this morning. Like many such stories, it appears to have been dragged out rather than revealed publicly in an open fashion. Senator Fitzgerald is right to suggest that there is very little cheer, Christmas cheer or otherwise, in the ESRI report. I am sorry if it seems a little harsh, but we got some good news this morning when we heard of a resignation in the banking sector.
Senator Alex White: It was about time for a resignation in that sector. I have to say, without trespassing too far into a personal matter, that the resignation about which we heard this morning was particularly welcome for me.
As the Labour Party leader in this House, I ask the Cathaoirleach to allow me to briefly note the death in the past 24 hours of Dr. Conor Cruise O’Brien, who was a Member of the Seanad and the Dáil at various times. He made an enormous contribution to Irish life as a politician, diplomat and journalist. When I was a student of politics in the 1970s, I had to read Dr. Cruise O’Brien’s book, States of Ireland. Along with other books that were published in that era, States of Ireland had a huge impact on the way we viewed our country, particularly in the context of the Northern crisis. While I did not agree with many of Dr. Cruise O’Brien’s opinions, I cannot deny that as a politician and intellectual, he introduced a very high level of debate to Irish politics and public life. One had to raise one’s game if one wanted to take him on or disagree with him. I convey my condolences and those of my party to Dr. Cruise O’Brien’s family on his sad death.
Senator Dan Boyle: I agree that there is a need for a debate on the banking sector. Such a debate will take place. I would like to respond to Senator O’Toole’s comments on remarks I made about the Financial Regulator last week. I pointed out that the standard of regulation in this country is in line with the hands-off approach to regulation throughout the world. Internationally, there have been substantial failures in the regulation of financial institutions in the western developed world. I accept that the legislation pertaining to the Financial Regulator needs to be reconsidered by both houses. As an Opposition spokesman on finance when that legislation was originally introduced, I made several of the criticisms Senator O’Toole has made today. The resignation of the chairman of one of the banks represents the start of the process of restoring public confidence in the banking sector. I do not know of anyone in public life who is prepared to support a State programme of recapitalisation of the banks in the absence of strict conditions applying to those who have shown they are incapable of inspiring public confidence. I am confident that such conditions will be set out when a decision on the matter is made in this House. All Members of this House have a role in identifying and applying such conditions, in the interests of the health of our financial services and the recovery of the economy.
Senator Paul Coghlan: I second Senator Fitzgerald’s amendment to the Order of Business. She spoke about three matters, the first of which was the ESRI report. It is frightening to think that 117,000 people will lose their jobs in 2009. She also mentioned the Government plan that was announced yesterday, which this House will not discuss. I have not been able to read all the editorials in all the media this morning, but I understand the plan has been branded as a failure. The Leader, who will have his own comments to make on the matter, will correct me if I am wrong in that regard. We need a debate on the meat of the plan, if there is meat in it. Perhaps it is merely aspirational, as has been suggested. Senator Fitzgerald also referred to the important banking issues that have been brought into sharper focus by the two resignations of the last 24 hours. Like Senator O’Toole, I have always believed in strict compliance with directors’ compliance statements and the best corporate governance practices. Things have gone amiss. Perhaps the Financial Regulator spotted certain things a long time ago. He may have complied with his own requirements. There has been a breakdown. I agree with and support Senator Boyle’s suggestion that the matter needs to be revisited.
Senator John Hanafin: I welcome the proposal that was made yesterday to restart the economy. At a difficult time, the Government is trying to put a positive slant on enterprise in this country. I note that the Financial Regulator has made significant progress in rooting out bad practice. It is important to note that provision was made a long time ago to allow the Central Bank to deal with issues of this nature. I refer to section 6 of the Central Bank Act 1942, which makes it clear that the Central Bank has wide powers. I am glad the Financial Regulator has been enabled in a similar manner. I do not believe further legislation is necessary under this heading.
Senator David Norris: I would like to raise two matters. I have been shocked by this morning’s financial developments. When I interviewed the gentleman in question on the radio, I found him to be very pleasant. It is astonishing to think that the entire establishment has been impugned. Leading people from practically every pillar of our community — politicians, clergy of various denominations, lawyers and bankers — have gone to jail. It is astonishing. I was involved in a directors’ loan some years ago. I gave money to a company to keep it going. That is my understanding of how a directors’ loan works. Directors should not take one third of their companies’ funds, which really belong to other people, for themselves. It is clear to me I simply do not understand high finance, but I think it is sometimes fairly low finance.
I refer to another matter I regard as quite serious. On foot of newspaper reports, without any personal animus against people whom I do not recall ever having met and about whom I do not know anything, I have raised questions about the way in which the chief executive officer of the Equality Authority was driven out of office. He is a person of the highest integrity. I asked a series of questions. I wish to put on the record of the House that attempts have been made by senior members of Government to intimidate me, to indicate to me that I would be politically punished if I attempted to continue to raise these matters. If that ever happens again, I will name the Minister who did it, and I will not stop in this House. I will do the same outside and I will let anybody who dares to intimidate me or to interfere with the democratic process take his or her chance against me in the courts. I am one of the most litigious people in this land and I have never lost — the worst I had was a draw.
We have indicated that we will celebrate the first meeting of Dáil Éireann in 1919 and it is perfectly proper, wonderful and honourable that we should. In the context of the attacks upon human rights and the swingeing cuts, the Government should bear in mind these two sentences from the programme of Government for the First Dáil in 1919:
Senator Jim Walsh: In times of stringent financial constraints, that is a very good investment in that area. I am alarmed at some of the salaries paid to people in many authorities that have been established.
Senator Jim Walsh: I concur with much of what has been said about the overnight revelations on the banking sector. For some time there has been a need to strengthen corporate governance, particularly for public companies. Salaries, remuneration packages and obviously now other aspects of benefit to people who are directors and chief executives of those companies are alarming and very detrimental to the interest of shareholders in those companies. When we come back we should have a full debate on that matter.
I point out to those who might seek to exonerate people who work in the public service, which has regulatory control over these matters, that the episode highlighted last night has been going on for the past six or seven years, according to reports, but it is only now coming to light. It is not good enough that people within the regulatory authorities are not more diligent. I fully agree with what Senator Boyle said. Internationally and domestically there are serious questions to ask of those who regulate the banking sector and those who operated and ran the banking sector, in many instances for their own benefit rather than for the benefit of the organisation for which they were working and for the benefit of society generally. When we resume in the new year we should have a debate on all these aspects.
Senator Fidelma Healy Eames: It is little wonder that people are losing faith in the system. We have proof yet again this morning that the banks have not told the truth or the whole truth. How can we trust them with taxpayers’ money? It is incumbent on the Government, particularly the Minister for Finance, to find ways to make them more accountable and to make that as foolproof as possible. There has been one rule for one and one rule for the other.
I was saddened this week when I heard the news of the resignation of Niall Crowley from the Equality Authority. In my constituency I had at least two cases where I found him very helpful. He was straight-talking, with no bureaucratic rubbish and he gave good advice. The issue was sorted without huge fees being encountered. What is the Government doing by cutting the authority’s budget by 43%? I call on the Leader to ask the Minister for Justice, Equality and Law Reform, Deputy Dermot Ahern, to seek the reinstatement of Niall Crowley.
Senator Fidelma Healy Eames: The Minister should also make a statement indicating the Government is committed to equality, fairness and non-discrimination. Cutting a budget by almost half basically indicates that the Government wants to get rid of the body concerned. The Minister must come good on this and do the honourable thing before Christmas — he should meet Mr. Crowley and ask him if he will reconsider his position and return. We should support and congratulate a person who is doing a good job.
Senator Shane Ross: I wish to add a few words to concentrate the minds on what happened last night. I gather that the Labour Party spokesman on finance has asked for a meeting of the Oireachtas Joint Committee on Finance and the Public Service on Monday to question the Financial Regulator and maybe others. This House should support that call, even though it is for Monday. Senator Healy Eames touched upon this point. What is happening here is a complete and utter collapse of regulation in this country. It is not just an isolated incident. What the chairman of Anglo Irish Bank was doing has been going on for eight years. It did not just happen yesterday. Senator O’Toole touched on it when he asked what were the auditors, Ernst & Young, doing. Had they not issued a warning about this and, if they did, was it ignored? It is not just the auditors who are involved in this, it is the loan committees, the audit committees, the board and everybody else.
A serious question must be asked of our old friend, the Financial Regulator. It is absolutely plain that the Financial Regulator knew about this matter much earlier this year. It appears that he knew about it in January, and it is now December. What has the Financial Regulator been doing? The only reason this has emerged now is that the €87 million in loans must appear in the accounts to be published in the next few days. Credit is due to the Minister for Finance that it has emerged because the chairman and some other people from Anglo Irish Bank met him on Tuesday and this issue arose then. If that had not happened, we would not have known about this at all and it would probably go on for many more years.
Financial regulation in this country is a joke. The Financial Regulator is ultimately responsible for that. The Financial Regulator has known about this since January and apparently has done absolutely nothing to insist——
Senator Shane Ross: ——that those responsible for it took the rap. We have a very serious situation which many Members of this House are very happy to ignore because the appalling vista of removing the Financial Regulator, which is necessary, is one that people are not prepared to tackle in the present circumstances. It is essential and we should do it. We should debate it and support the Labour Party’s call for the Financial Regulator to come in and answer questions.
Senator Jerry Buttimer: With regard to the situation in the banking sector, how have we allowed it to go so far? Senator Ross made a very eloquent point in this regard. I do not blame the regulator on his own. Where was the governance in the banking fraternity? Where was the sense of trust? It was breached. This emanated from Government due to a lack of leadership.
As a representative of the Government, the Leader is presiding over a five-week break in the House. I am not playing politics. There are real concerns about three issues, namely, the banks, unemployment and general living conditions among ordinary people. The fourth issue, which was the subject of the committee chaired by Senator Donohoe, is the Lisbon treaty. We adjourned yesterday at 2 o’clock. We could have started our deliberations on the Finance Bill, had the Minister for Education and Science in the House or had a discussion on the Lisbon treaty, but we did not. What does that say about us?
Senator Jerry Buttimer: The Government is hiding. Its members are afraid to come out and answer the questions people are asking. The Government has presided over what is happening before us this morning. This is its legacy to the people of Ireland.
Senator Nicky McFadden: This morning when listening to “Morning Ireland” I was outraged to hear that Mr. FitzPatrick of Anglo Irish Bank had been taking a salary of €430,000 and that he had lent €87 million to his directors and to other banks. He was secretly moving it around from director to director. We discussed the Social Welfare (Miscellaneous Provisions) Bill in the House the other day, and as spokesperson on social welfare I appealed to the Minister to raise the fuel allowance by €2 per week. This Government has bailed out the banks and this carry-on has been accepted. That is the bottom line. We are accepting this sort of carry-on. I am not, but the Members opposite, in Government, are, by turning a blind eye. It was a coincidence that the chief executive resigned last night after the Dáil broke up. Is that not interesting? The Minister for Finance refused——
Senator Nicky McFadden: We are representing the honest, poor taxpayer. The ESRI has said that 10% of our people will be unemployed next year. What are we doing? We are breaking up now, as Senator Buttimer said, for five weeks to go away and forget about the whole thing.
The Minister, Deputy Lenihan, said he realised only in July what was coming down the tracks, even though the Taoiseach, Deputy Cowen, was previously the Minister for Finance. What is going on? What are we doing?
Senator Donie Cassidy: I join with Senator Alex White in mentioning the sad passing of Conor Cruise O’Brien. The former Deputy and Member was a very strong-minded man and made an immense contribution in his time. He was a central figure in Irish society for much of the last 75 years. I pass on our condolences to his wife Máire and his family.
Senators Fitzgerald, O’Toole, Alex White, Boyle, Coghlan, Hanafin, Norris, Walsh, Healy Eames, Ross, Buttimer and McFadden expressed their shock and horror on matters pertaining to the banking sector, its governance and regulation, the role of the Financial Regulator, and the news that has been divulged in the past 24 hours. I have no difficulty in having time left aside for a special debate. I will propose to the House today to adjourn sine die, but I will review the situation on a day-to-day basis if required. As we know, the regulator has an extremely difficult job. The task on hand now, especially in view of the possibility that taxpayers’ money is involved, is extremely onerous. I have no difficulty in convening the House at short notice to support the strengthening of regulation, as the Minister may request us to do from time to time. I note the views of the Senators, particularly those who have experience in the area of financial services.
The Minister for Finance is waiting to come into the House so I do not intend to take up any more time on the Order of Business. I have noted the various points made about the ESRI. The Taoiseach and Ministers launched a framework document yesterday inviting everyone to participate. Those of us who were heavily involved for many years in the area of enterprise, trade and employment know that the smart economy framework proposal encompasses high value research-intensive multinational activity. We know the importance of the contributions that Google and Microsoft have made to the world. All these new initiatives may inspire new Irish innovators in creating high value jobs. That is the direction in which we need to go. I compliment everyone concerned — the Ministers and the Taoiseach — on developing a plan for fighting back when the American economy starts to recover. That is sensible and wise. With regard to the request made by Senator Norris, I am endeavouring to obtain the responses he asked for, and I will relay them to the Senator directly from the Minister’s office as soon as I receive them.
As this is the final day, I wish everybody a happy Christmas, including the Cathaoirleach, his staff, the Leas-Chathaoirleach, the very efficient Clerk of the House, Deirdre Lane, her Clerk Assistant, Jody Blake, and all the staff of the Houses who have assisted us during the year. I thank the Captain of the Guard, Comdt. John Flaherty, who has been helpful to us every sitting day, his staff, the Superintendent, the ushers, and all the ladies who help keep the House to the standard it is. I also thank the staff of “Oireachtas Report” for all the exposure they give our proceedings, and we must not forget Jimmy Walsh in The Irish Times for his accounts of the proceedings in the House. I thank the leaders of the groups and the Whips for their great work and assistance throughout the session, the Deputy Leader for the assistance he has given me, all the Members of the House and their families, and everyone who helps us from time to time. I wish all these people a happy and holy Christmas and look forward to working with them in 2009.
An Cathaoirleach: Senator Frances Fitzgerald has moved an amendment to the Order of Business: “That statements on the resignation of the chairman of Anglo Irish Bank and on the Government’s economic strategy as outlined by the Taoiseach yesterday be taken today.” Is the amendment being pressed?
|Bacik, Ivana.||Bradford, Paul.|
|Burke, Paddy.||Buttimer, Jerry.|
|Coghlan, Paul.||Cummins, Maurice.|
|Fitzgerald, Frances.||Healy Eames, Fidelma.|
|McFadden, Nicky.||Norris, David.|
|O’Reilly, Joe.||O’Toole, Joe.|
|Ross, Shane.||Twomey, Liam.|
|Boyle, Dan.||Brady, Martin.|
|Butler, Larry.||Callely, Ivor.|
|Carty, John.||Cassidy, Donie.|
|Corrigan, Maria.||Daly, Mark.|
|Ellis, John.||Feeney, Geraldine.|
|Glynn, Camillus.||Hanafin, John.|
|Keaveney, Cecilia.||Leyden, Terry.|
|MacSharry, Marc.||McDonald, Lisa.|
|Ó Murchú, Labhrás.||O’Brien, Francis.|
|O’Malley, Fiona.||Ormonde, Ann.|
|Phelan, Kieran.||Walsh, Jim.|
|White, Mary M.||Wilson, Diarmuid.|
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