‘Finance Bill- The sad epitaph of a failed Government’- Senator Joe O’Reilly

Ba mhaith liom fáilte a chur roimh an Aire. This Finance Bill is, effectively, the sad epitaph of a failed Government. Its tombstone is the bailout and the sale of our sovereignty and the writing on the tombstone is the Finance Bill. This debate is happening at a time when 1,000 people are emigrating each week. This statistic, when it rolls off the tongue, can hide a shocking human reality and sadness for parents. It is happening at a time when there are 450,000 unemployed and 30,000 mortgage holders in serious arrears or default. Therein lies an awful human story for them and their families, with the anxiety that it entails. The other evening I was canvassing in a place called Mullagh in County Cavan, one of the small satellite towns almost on the border with County Meath. After canvassing for three hours in a couple of estates I went home positively depressed because I had heard some horrendous stories. The timeframe for this debate does not allow me to give a graphic description, but they encapsulated all of the issues I mentioned, including unemployment and redundancies.

It is welcome that my party leader, Enda Kenny and Deputy Noonan are both meeting President Barroso today with a view to opening channels of communication that will lead to a renegotiation of the terms of the International Monetary Fund, IMF, deal. I wish them well in these negotiations which are important for the country. It is a given that we will have to renegotiate the deal. The Minister suggested we could not act unilaterally and that it was almost cynical to suggest we could. We are not suggesting we take unilateral action or something that would not involve round table discussions within the European Union with all countries. Implicit in the Minister’s suggestion was that we were going to on a solo run that would be rejected. That will not be the case. My party has connections within the European People’s Party, EPP, the largest party in Europe, of which Deputy Kenny is vice president. That will give us a network within which to operate.
We also recognise that there is a reluctance, which will continue until after the general election, to offer new terms, but new terms will have to emerge. I understand an interest rate of 5.8% – I do not fully understand the terminology – is 300 basis points above the cost of funds. In essence, this means the money being given to Ireland in the bailout is being sourced at a radically lower figure than the 5.8% interest rate at which we are paying. It is not sustainable that this would remain the case. It will have to be renegotiated and it will be. I accept there is a growing consciousness of this within the European Union and our connections within it will assist in that regard.
Fine Gael wants the holders of unguaranteed senior bonds to become involved in sharing the burden of bank debt. That does amount to populism. These are the people who gamble and it is the normal commercial practice that they make an investment. It is similar to betting on horses. When it goes well, they make the windfall profit, to use a term with which Senator Boyle would be familiar, but surely they have to accept some of the burden when it does not.
I accept that we cannot press a nuclear button, but we must work within the IMF framework and European structures to bring about a change. We are committed to negotiating an acceptable solution with our European partners, EU institutions and the central banks. It is not the case that we intend to press a nuclear button, as implied by those who use such rhetoric on radio stations, etc. Tragically, that will not be possible, but what is possible is a renegotiation of the fundamentals of the deal made in haste. There was a major bleed, so to speak, and a plaster was put on it without the patient’s consent and without any effort being made to do anything worthwhile. The entire deal is predicated on all the wrong principles. It must be put right in terms of the interest rates charged, the length of time involved and the entire approach adopted. There must be an examination of the sharing of the risk or burden by the bondholders who gambled with their money and must accept some of the consequences of failure. They cannot have an each way bet on this one. This must and will happen within a reasonable timeframe; it cannot be otherwise. I welcome the fact that the process is being initiated. If we were to do otherwise or acquiesce in the current circumstances and allow matters to continue, there would be a real risk that, ultimately, we would default, which would be tragic for everybody concerned. We must get it right before default becomes the only option.
The universal social charge represents the crystallisation of all our problems. While it may have progressive dimensions in objective taxation terms, if other levies and costs had been eliminated, we were operating in different times and if it did not have such a dramatic effect on those on low incomes – arguments that may be suitable for a parlour discussion and after dinner chats – the human reality of the universal social charge is different. I accept that the Minister, under pressure from a chorus of voices, has amended the criteria relating to those who hold a medical card and while the lower rate is preferable to the higher 7% rate, the charge remains regressive and damaging to those who cannot afford to pay.
Another issue with the universal social charge is that it applies to those earning as little as €4,000 per year. The tax net needed to be widened. That is a widely held principle arising from the reports of the Commission of Taxation etc., but the drop has been too extreme, radical and quick. If Members had been canvassing with me the other day, as others in this Chamber will be doing in the coming weeks, they would have gone home after an hour having been left in no doubt that the drop had been too radical. It is a blunt instrument and wrong in the way it has been designed.
It is welcome that the bankers’ bonus issue will be dealt with because, as I mentioned on the Order of Business, it is critical that we deal with bankers’ bonuses, bonuses at the top levels of the Civil Service and over-hyped salaries if we are to have any sense of fairness or, to use that awful modern term, have a buy-in by the people to austerity packages.
The missing dimension to the Finance Bill and the entire budgetary strategy of the Government in recent years when it has been caught putting up barriers here and there to stop the dams bursting is a stimulus package to promote job creation. There is tremendous potential in the agrifood sector, the tourism sector which I would like to have dealt with in greater detail and the green energy sector.
We can be the Saudi Arabia of Europe with our wave and wind energy. There is potential still in information technology and pharmaceuticals.I accept a point made well earlier that we need to do more about drilling for oil off our coasts. There is a clause – I will finish on this as it is the last point I want to make in the Finance Bill relating to €400 million of administrative efficiencies. That is a euphemism for real cuts. I would challenge the Minister to delineate those cuts in specific terms before we agree to the passage of the Bill.

Senator Joe O'Reilly representing Cavan & Monaghan 2010. | An ExSite website