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 Header Item Economic Growth Initiatives (Continued)
 Header Item Banking Sector Remuneration
 Header Item Topical Issue Matters
 Header Item Leaders' Questions

Tuesday, 2 July 2013

Dáil Éireann Debate
Vol. 809 No. 2

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(Speaker Continuing)

[Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan] It is this kind of stimulation that the large creditor countries could pursue to benefit the euro. They could ease up on their budgetary controls and put more spending power into their economies. However, this is not at one remove through infrastructural investment. It is directly.

Banking Sector Remuneration

 69. Deputy Sean Fleming Information on Seán Fleming Zoom on Seán Fleming asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan when the banks will commence implementation of measures relating to the Mercer report; if he has received an indication of the nature of the measures to be implemented; and if he will make a statement on the matter. [31908/13]

 102. Deputy Brian Stanley Information on Brian Stanley Zoom on Brian Stanley asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the proposed actual reduction in salaries to those earning above €200,000 in the AIB’s proposal to the Minister following the Mercer report.  [31885/13]

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan I propose to take Questions Nos. 69 and 102 together.

As I have explained in previous responses to questions on this matter, discussions are ongoing at three banks - AIB, Band of Ireland and Permanent TSB - in response to the Government's decision that they were to come up with plans on how they intended to achieve savings of 6% to 10% of total remuneration costs. It was an inescapable conclusion arising from the review of remuneration practices and frameworks at the covered institutions, a report commissioned by the Government in response to a programme for Government commitment that the cost base of the institutions needed to be reduced further. This is essential if they are to return to profitability, be in a position to support the economy and repay the State's investment through a return to private ownership.

In requesting this, I was not prescriptive in how the target was to be achieved, respecting the banks' differing levels of State ownership and paths to profitability. I am not neutral on the method they may use to achieve the savings and must be satisfied that the terms of the Government decision will be honoured. However, there is a wide tolerance as to how the required reductions will be achieved.

Each of the banks submitted its outline plans to me by the due date requested. As a consequence of the ongoing negotiations, some of which are quite far advanced, it is not possible at this stage to reveal precise individual details bar what has been put into the public domain. In that vein, I can confirm that all three institutions have put forward pension changes to varying degrees as part of their overall responses.

My abiding mantra in dealing with these matters has been to insist that the normal industrial relations protocols and consultation procedures need to be observed by all participants. I am anxious, therefore, that all parties to these discussions are afforded the necessary space and time to conduct and conclude these critical negotiations.

I have put on the record that the Government readily acknowledges the sacrifices and changes made by bank employees to date at all levels and recognises that this has been achieved without major industrial unrest in what is a critically important sector. However, there can be no doubt that whatever emerges from the respective talks will present some unpalatable measures for those concerned and will require reflection from them and their representatives.

The cost bases of the banks must be reduced and remuneration costs must come down. While it would not be appropriate or realistic to specify a timeframe for the savings to be delivered, it is clear that the timely delivery of such savings is critical.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath I thank the Minister for his reply. We had an exchange on this matter during our last session of finance questions. I am not naive enough to believe that there would not be pain for all bank employees. Clearly, there has already been pain and there will be more. In particular, difficult decisions about pension schemes have been made. In the case of Permanent TSB, for example, these decisions are pending the outcome of Labour Court negotiations. People acknowledge that the banks need to reduce their cost bases but they want a key principle to be observed, namely, those at the top should lead by example and the impact of the reduction should be graduated accordingly.

I sought this commitment from the Minister previously. He has used some of the terms that arose during our previous exchange. For example, he stated that he was neither neutral nor prescriptive. I respect that a process is ongoing, although I would take issue with the manner in which some of the banks have proceeded, namely, making unilateral decisions in the absence of agreement and pending the outcome of the industrial relations machinery.

Will the Minister insist that middle and senior ranking executives lead by example - the Taoiseach gave this commitment in the House some months ago - and that the impact of the reduction in the cost base be graduated accordingly? Can we take it that this will be the abiding principle used in the implementation of the Mercer report?

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty The taxpayer spent €120,000 on the Mercer report and the public expected that senior bankers would see reductions in salaries. My question was specific, in that it related to base salaries. At AIB and Bank of Ireland, 257 individuals are on remuneration packages of more than €200,000. Some 2,500 are on remuneration packages of more than €100,000.

I want the Minister to lay my fears to rest. My understanding is that the hundreds of senior bankers at AIB, for example, who are in receipt of more than €100,000 will not take a cut to their base salaries. Their pensions will change, but their pay will remain intact. The Minister knows the details and has been looking at the banks' proposals for a couple of months. Is there a proposal for high earners to take a reduction in their base salaries?

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan I have asked that payroll costs be reduced by between 6% and 10%. I am interested in reducing the cost base of the banks for all of the reasons of which everyone is aware. I am not as interested in retribution or vengeance as Deputy Pearse Doherty. That is a different objective.

We have received the first round of replies from the banks. These deal with a range of issues. The banks are negotiating internally. As they do so, they will keep me informed. I will inform the House of the result of the negotiations after they have concluded. The principle is one of a reduction in payroll costs of between 6% and 10%, as the banks that were kept alive by the taxpayer cannot be exempt from cutbacks that are being applied elsewhere while the taxpayer is taking pressure across a range of expenses.

Topical Issue Matters

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt I wish to advise the House of the following matters in respect of which notice has been given under Standing Order 27A and the name of the Member in each case: (1) Deputy Jim Daly - the need for the Government to provide financial assistance to job action groups working to create employment across the country; (2) Deputy Charles Flanagan - the implications for the national procurement framework following a recent High Court decision; (3) Deputy Seán Conlan - discrimination against students whose parents and-or guardians for the purposes of assessment of income are in receipt of an allowance as dependants of cohabiting partners who are in receipt of an eligible social welfare payment for the purposes of complying with the legislation that governs SUSI; (4) Deputy Regina Doherty - the clear evidence of the link between sunbeds and skin cancer; (5) Deputy Pearse Doherty - the need for the Minister for Health to discuss the impact of the HSE recruitment moratorium on community hospitals in County Donegal; (6) Deputy Patrick Nulty - the need to maintain history as a compulsory subject for the junior cycle at second level; (7) Deputy Heather Humphreys - the need to regulate for the permitted height of hedges and trees in privately owned gardens; (8) Deputy Michael P. Kitt - the theft of six valuable Evie Hone oil paintings from the Church of St. Peter and Paul at Kiltullagh, Loughrea, County Galway; (9) Deputies Seán Crowe, Aengus Ó Snodaigh and Dessie Ellis - the crisis facing families of seriously ill or impaired individuals who must wait years for housing adaption grants, housing aid for older persons grants or mobility aid grants; (10) Deputy Andrew Doyle - the impact of proposed legislation in the US on the availability of J1 visas to Irish students; (11) Deputy Charlie McConalogue - the need for the Minister for Education and Skills to make a statement on his intentions with regard to the pupil-teacher ratio in mainstream classes at primary and secondary level; (12) Deputy Denis Naughten - the need for the Minister for Children and Youth Affairs to outline the steps she is taking on foot of the publication of the HSE audit of neglect cases in Roscommon, Waterford and Dublin; (13) Deputy Michael Moynihan - the need for the Minister for Health to honour the programme for Government commitments on home helps; (14) Deputy Timmy Dooley - the need for the Minister for Health to make a statement on the increase in day case and inpatient waiting lists; (15) Deputy Clare Daly - to discuss Edward Snowden's application for asylum; (16) Deputy Patrick O'Donovan - the urgent need for the Construction Contracts Bill to be enacted in light of recent Government investment announcements and the need to tackle the ongoing problem of the non-payment of subcontractors; (17) Deputy Richard Boyd Barrett - Edward Snowden's application for asylum in Ireland; (18) Deputy Mick Wallace - the application for asylum in Ireland by US whistleblower Edward Snowden; (19) Deputy John Lyons - the need to ring-fence funding for the planned Finglas primary care centre; (20) Deputy Brendan Smith - the need for clarification from the US authorities regarding their use of surveillance in European Union institutions and member states; (21) Deputy Aodhán Ó Ríordáin - the urgent need for the inclusion of Addison's disease in the long-term illness scheme and the need to tackle the high cost of hydrocortisone; and (22) Deputy Mattie McGrath - the urgent need for Gaelscoil Chluain Meala to be considered for a major funding grant, as it has been in temporary accommodation for 20 years and, despite being granted planning permission, has not been granted funding to progress the project.

The matters raised by Deputies Andrew Doyle; Brendan Smith; John Lyons; and Seán Crowe, Aengus Ó Snodaigh and Dessie Ellis have been selected for discussion.

Leaders' Questions

Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin Last Thursday, the Central Statistics Office, CSO, confirmed that Ireland was back in recession. GDP has decreased for three quarters in a row. Since last summer, the economy has fallen by 1.8%, the largest fall over three quarters since 2009. We are facing a perfect storm, with decreasing exports due to a co-ordinated austerity programme across Europe that Ireland has continued to support and a calamitous decrease in domestic demand brought about by some homegrown policies. These Government policies have contributed to the economic decline, for example, the cuts to our investment programmes, particularly the capital programme and the consistent underspending of same. Consumers have continued to be hit with regressive taxes, for example, the elimination of the PRSI allowance. The property tax has unquestionably impacted on consumer spending in the past while.

A coherent policy on small businesses is also absent and realistic access to credit is lacking.


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