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Dáil
‹ Ceisteanna - Questions (Resumed)

Irish bank debt and bailout policy

Summary

Deputy Martin challenges the Government’s handling of European appointments, bank debt and retrospective recapitalisation. The Taoiseach defends restructuring the banks, replacing the promissory notes and pursuing relief for taxpayers, while the exchange becomes increasingly confrontational.

There are six questions in this group on the appointment during the summer of the President of the Commission, Jean-Claude Juncker, as well as of Donald Tusk, Federica Mogherini and Phil Hogan. I have tabled two questions. It is fair to say one of the more consistent factors in the past three years is that Ireland regularly supports people for major European posts without asking them questions. The most dramatic and remarkable was when the Taoiseach agreed to the appointment of Mario Draghi as President of the ECB without even meeting him, let alone asking him about his attitude towards Ireland's issues with the ECB. We have issues with it, yet there was no discussion of them with Mr. Draghi. All the indications are that, once again, we have signed off on appointments without seeking assurances on fundamental policies.

The Taoiseach will remember that it is about seven weeks since the single supervisory mechanism was brought into operation. That is the deadline he set himself for applying for retrospective aid to help us with bank-related debt. He said over two years ago that Ireland had been dealt with unfairly by the ECB and the European Commission and that in order to preserve the eurozone and in the absence of a bank resolution mechanism in 2010, the European Union had forced individual states into positions into which it should not have forced them. I understand the Government has made no application for retrospective bank debt aid and it appears that none will be made. The Taoiseach has not said one word about it. New office holders are in place and the policy remains the same. I can recall how a year or two ago the Taoiseach trumpeted the idea of a single supervisory mechanism as the key catalyst in moving on Ireland's bank-related debt and seeking retrospection. He will remember the then Tánaiste, Deputy Eamon Gilmore, talking about a seismic change and how the Ministers for Public Expenditure and Reform and Finance talked about billions coming back to the country as a result of the famous summit but nothing has actually happened. Will he confirm that he sought no assurance from President Juncker on bank debts before he agreed to his appointment? It is clear enough from what he has just said that he wrote a letter to President Juncker, but it was all about fixing up Mr. Hogan whom I welcome in the agriculture portfolio. That is fine, but it seems strange that in the letter the Taoiseach did not mention anything about Ireland's bank-related debt and the degree to which the European Union owes Ireland some recompense in dealing with banking issues. The Taoiseach says he had a great relationship with him; therefore, I find it strange that he did not press these issues with him prior to his appointment. Will he indicate how his relationship with President Juncker has helped Ireland on the issues of bank-related debt and retrospection?

The Luxembourg tax story, the subject matter of another question, points mainly to President Juncker's hypocrisy in criticising Ireland in the case of Apple. Ireland was unfairly and deliberately singled out by the Commission. Calling for President Juncker's resignation is not sustainable at this point in time because there is no evidence of any illegality and nobody has produced any evidence, but I find the Government's silence on the matter somewhat incredible. Has the Taoiseach recorded Ireland's demand that all countries, including Luxembourg and the Netherlands, be treated equally and examined at the same time in taxation issues?

On Ms Mogherini's appointment, will the Taoiseach explain whether he discussed her approach to the job with her before agreeing to her appointment? In particular, did he seek assurances that she would not continue the Italian policy of ignoring or downgrading the importance of Russian aggression against Ukraine and the partition of Russia's neighbour, which is a very important issue? Did he have any discussion with her prior to her appointment on the situation in Ukraine and Russia's unacceptable aggression?

Did the Taoiseach ask Donald Tusk, the new President of the Council, to support Ireland's case for full justice on the issue of debt before agreeing to his appointment? What discussions did he have with him before his appointment? In short, it seems that he readily agreed to all of these appointments without in any shape or form presenting Ireland's case for retrospection in the matter of bank-related debt, an issue about which he spoke frequently some years ago but on which he has become strangely silent in more recent times.

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Enda Kenny The Taoiseach Fine Gael

The Deputy seems to think it is the privilege of Ireland to call people into rooms to interrogate them. He did not table any question here about the issue of recapitalisation, but I will deal with it for him.

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Enda Kenny The Taoiseach Fine Gael

The Deputy tabled two questions on the appointment of Federica Mogherini and the former Polish Prime Minister, Donald Tusk.

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I asked whether the Taoiseach had spoken to her.

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Enda Kenny The Taoiseach Fine Gael

I do not see any question about recapitalisation.

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There are two questions.

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Enda Kenny The Taoiseach Fine Gael

I said I would answer them for the Deputy who usefully has tabled a bland question on which he can move from here to the South Pole, if he so wishes.

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The issue of bank-related debt is not taking us to the South Pole. These are more of the inanities that emerge from the Taoiseach's mouth every now and again.

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Enda Kenny The Taoiseach Fine Gael

The Deputy had five minutes.

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The Taoiseach will probably go on for about 20 minutes.

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Enda Kenny The Taoiseach Fine Gael

The Deputy says appointments are made without us asking questions.

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Enda Kenny The Taoiseach Fine Gael

The Deputy is well aware that one does not need to ask questions here. He asked enough questions about the former Minister, Phil Hogan, for many years. It is the European Parliament that puts Commissioners-designate through their paces.

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I am talking about President Juncker.

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Enda Kenny The Taoiseach Fine Gael

His view and presentation were outstanding. As the Deputy knows, the Parliament refused to ratify one Commissioner-designate because of the inadequacy of the answers given.

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I did not ask about Commissioner Hogan at all.

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Enda Kenny The Taoiseach Fine Gael

During our Presidency we set out the strategy in respect of the European Parliament and the future of the institutions. The Deputy mentioned President Juncker and his position on the tax issue. First, he was involved in a competition with Michel Barnier for the right to become President-designate of the Commission. That contest and vote were held in the convention centre in Dublin. There was a very enthusiastic and vigorous debate between the two men. Obviously, President Juncker travelled throughout the European Union and to capitals in holding public debates on his views on the development of the Union and so on.

A motion of censure against President Juncker was debated last week in Strasbourg and was defeated by 461 votes to 101. It was proposed by the EFDD group, which represents 48 MEPs of the 751 in the European Parliament. None of the other six parties supported the motion. Most speakers argued that it was a time-wasting exercise and that the Commission needed to move forward and concentrate on important agendas-----

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On a point of order, I did not ask anything about that issue.

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Enda Kenny The Taoiseach Fine Gael

Yes, the Deputy did.

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Enda Kenny The Taoiseach Fine Gael

The Deputy asked about President Juncker's tax business in Luxembourg.

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I asked the Taoiseach about Ireland-----

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Enda Kenny The Taoiseach Fine Gael

The Deputy made a comment on President Juncker's tax position in Luxembourg.

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The Taoiseach does not answer questions. We have had a lot of rows in the House about this. If he was more specific and stopped running down the clock every time we had questions to him-----

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Enda Kenny The Taoiseach Fine Gael

Did the Deputy mention Luxembourg?

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That is all the Taoiseach does. He runs down the clock by answering questions he was not asked.

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Enda Kenny The Taoiseach Fine Gael

Did the Deputy mention Luxembourg?

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I asked the Taoiseach about bank-related debt. Did he ask President Juncker about the issue - yes or no?

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Enda Kenny The Taoiseach Fine Gael

I will come to it. Did the Deputy mention Luxembourg?

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The Taoiseach should stop the filibustering.

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Enda Kenny The Taoiseach Fine Gael

Did I hear the Deputy mention Luxembourg?

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It was in a different context from that about which the Taoiseach is rabbiting on.

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Seán Barrett An Ceann Comhairle Fine Gael

Will the Deputy, please, respect the Chair?

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Enda Kenny The Taoiseach Fine Gael

He does not like the answers. As I said, tax systems are matters for each individual country, as they are for this country. The Deputy mentioned Ireland's bank debt. It has clearly been a priority of the Government to ease the burden on taxpayers. The Deputy should not get me started because the Government of which he was a member put €34 billion into a black hole for Anglo Irish Bank that we will never get back. Of course, he has no responsibility for this at all, as if it never happened.

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The Taoiseach voted for it also.

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The Taoiseach voted for it.

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Seán Barrett An Ceann Comhairle Fine Gael

Deputy, please.

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Enda Kenny The Taoiseach Fine Gael

We have taken a number of steps to achieve this. We recapitalised and restructured the banks, we liquidated the IBRC and we replaced the promissory notes used for recapitalisation with long-term bonds in order to dramatically reduce our own market funding requirements. Those steps have had the effect of stabilising the financial system and reversing the outflow of deposits and other funds that damaged our economy. Deputy Martin is aware that yields are currently at their lowest level in our history. In addition, in 2011 we secured an interest rate reduction in the EFSM and EFSF loans under the programme. In April last year we reached agreement with the 28 countries and eurozone partners to extend the average maturity of the EFSM and EFSF loans by a further seven years. Last December, we exited the programme and, more recently, we secured agreement on the early repayment of a significant portion of our IMF loans, resulting in total interest savings of approximately €1.5 billion. We got approval from all our colleagues in respect of that. It is testament to the resilience of the Irish people and the loyal support of our EU partners that Ireland has been able to return to the markets in a sustainable way, having delivered on all of our commitments in the last three years. However, work remains to be done.

In June 2012, the euro area Heads of State and Government resolved to create a banking union to break the vicious circle between banks and sovereigns, and committed to examining the situation of the Irish financial sector, which was named specifically in that decision. The precondition laid down at that time was for the possible use of the ESM to recapitalise banks directly, with the establishment of a single supervisory mechanism, SSM, for the European banking sector. That legislation was agreed by the Council and the European Parliament during the Irish Presidency of the Council of the European Union last year, and the SSM became operational on 4 November. On 10 June 2014, euro area members reached a preliminary agreement on the operational programme and framework for the ESM's direct recapitalisation instrument. That included a specific provision to keep open the possibility of applying to the ESM for retrospective direct recapitalisation of banks by mutual agreement. This would require unanimous endorsement by the board of directors. An application can only be made when the mechanism enters into force. As a precondition for this, the SSM is now in place and is operational. Another precondition is the completion of national approval procedures for the direct recapitalisation instrument. Our procedures are in place with the enactment of the ESM Amendment Order Act 2014.

Once all member states have completed national approval procedures, the ESM could agree to implement the direct recapitalisation instrument. That could happen as early as this month. It is an issue that the Ministers for Finance will address. The Minister for Finance, Deputy Noonan, has referred to this issue. Clearly, the objective is to get the best possible result for the Irish taxpayer, and the question of keeping open the application for direct recapitalisation still stands.

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Who is keeping it open?

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Enda Kenny The Taoiseach Fine Gael

The Minister has stated that, unlike in 2012, the ESM is no longer the only option we can use to recover the money provided to recapitalise our banks. Investors are again willing to invest in Irish banks, and the market value of our investments has improved accordingly. In Europe, a strategic approach tends to deliver. The Minister for Finance has said that he intends to keep open the option of retrospective recapitalisation, with the timing of any application to be decided in due course.

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Did you speak to Mr. Juncker about it?

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Enda Kenny The Taoiseach Fine Gael

Gabh mo leiscéal.

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Seán Barrett An Ceann Comhairle Fine Gael

Through the Chair.

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Sorry. Did the Taoiseach speak to Mr. Juncker?

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Seán Barrett An Ceann Comhairle Fine Gael

The Deputy cannot ask another question. Two other Deputies wish to contribute.

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I asked a simple question. Did the Taoiseach speak to Mr. Juncker about all of this prior to his appointment?

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Seán Barrett An Ceann Comhairle Fine Gael

Please resume your seat.

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Enda Kenny The Taoiseach Fine Gael

Mr. Juncker was well aware of this prior to his appointment.

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You did speak to him.

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Enda Kenny The Taoiseach Fine Gael

Yes, of course. Not only that, but we spoke to Mr. Juncker about a number of other things as well.

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You did not make any requests.

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Seán Barrett An Ceann Comhairle Fine Gael

Deputy, please.

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Enda Kenny The Taoiseach Fine Gael

Mr. Juncker has been a close friend and ally of Ireland.

In formal session of the European Council we discussed the whole question of the European Council's response to the requirement to deal with the OECD programme for BEPS and the tax structures in other countries. Everybody agreed to participate openly and fully in this, as Ireland is doing. That is why, in the most recent budget, the Minister for Finance made the announcement that we have ended the "double Irish" concept with a transition period out to 2020, thereby giving clarity and certainty to companies. We are forthright in our support for that.

The answer to Deputy Martin's question is "Yes." The direct recapitalisation concept remains open and on the table, but there are now other options in terms of the value of the banks.

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It was always open.

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Enda Kenny The Taoiseach Fine Gael

Yes, but as the Deputy is aware, the banks when he was dealing with them were completely unworkable-----

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You told untruths in 2012.

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Seán Barrett An Ceann Comhairle Fine Gael

Deputy, please.

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Enda Kenny The Taoiseach Fine Gael

-----and self-destructive and needed to be restructured completely. I will return to your original point-----

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Seán Barrett An Ceann Comhairle Fine Gael

Perhaps you will reply through the Chair.

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Enda Kenny The Taoiseach Fine Gael

-----where you put over €30 billion into Anglo Irish Bank that can never be recovered. We can get the rest back for the taxpayer and more.

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