Seanad Éireann - Volume 195 - 13 May, 2009
Corporate Governance: Motion.
Senator Dominic Hannigan Senator Dominic Hannigan
Senator Dominic Hannigan: I move:
That Seanad Éireann, recognising that Ireland is crippled by a lack of confidence:
lack of confidence among consumers;
lack of confidence among investors in our banks;
lack of confidence in the Government;
calls on the Government, as a step towards restoring confidence, to demonstrate its seriousness about rooting out corruption, corporate sleaze and crony capitalism by introducing a series of measures, including legislation
to regulate the practice of political lobbying;
to develop a system for whistleblowers protection;
to ensure good corporate governance; and
to restore the original provisions of the Freedom of Information Act 1997.
I welcome the Minister of State to the House. The Labour Party is using Private Member’s time to make a constructive contribution to the debate about standards in public life, standards in corporate life and citizens’ rights, which we have led. The Leas-Cheann Comhairle, Deputy Brendan Howlin, has introduced a Bill to regulate lobbying, our leader, Deputy Eamon Gilmore, has introduced a Bill on corporate governance and it is ten years since we introduced our Bill on whistleblowers protection. While Fianna Fáil publicly supported the latter Bill, it consistently dodged dealing with it, but these issues can no longer be dodged.
It is of crucial national importance that these matters are addressed quickly because the Labour Party’s proposals are all about restoring the nation’s confidence to the level we need — confidence among citizens, confidence among investors and, ultimately, confidence in our economy. We are all in agreement that confidence is key to getting ourselves out of recession and putting people back to work. We need to understand why we have such poor regulation in public and corporate life to address the current lack of confidence in Ireland plc.
Many of the problems we are experiencing have their roots in the corruption of the past, which resulted in councillors, Ministers and Members from some parties, though not the Labour Party, taking bribes in exchange for favours. These bribes were primarily connected to planning matters, but serious questions also hang over the connection between corporate political donations and the actions of Ministers. When the scandals broke around former Deputies Haughey, Burke and Lawlor and a slew of county councillors, the Government, led by Deputy Bertie Ahern, resisted putting in place the required measures to root out questionable payments to politicians.
Builders and other business interests did not want anything to change nor did a number of political parties. The reason for this reluctance was twofold. Some public representatives were just plain greedy and they wanted to pocket the largesse of benefactors but others did it for electoral advantage. Many educational institutions have gathered ample evidence that the more money a candidate has to spend on a campaign, the better his or her chances of being elected. Not only did members of some parties accept money for personal gain, they also did it for electoral gain. This distorted our democracy and the hangover remains. It continues to affect public confidence in the political system. The current scandals relating to banks, which also go back to the Haughey era, have undermined confidence in the financial system. Today people want to know how we can stop the scandal of bad loans and exorbitant executive pay in banks.
With regard to politics and lobbying, a rather shaky system of checks and balances was eventually put in place. It remains weak however, reflecting the reluctance to deal with this matter. The chair of the Standards in Public Office Commission, SIPO, Mr. Justice Matthew Smith, has indicated his dissatisfaction with the regulation of lobbying and political contributions and there have been unforeseen consequences for non-political organisations. The country is reaping the whirlwind of inaction now more than ever.
The Labour Party is consistent with its tradition in tabling the motion. We introduced the first Freedom of Information Act in 1997 and the first Ethics in Public Office Act in 1995. When Fianna Fáil took office without a Labour Party watchdog, it undermined the Freedom of Information Act by breaching the confidentiality of applicants and applying charges to FOI requests. However, this still allowed too much transparency for Fianna Fáil’s liking and the party eventually filleted the Act to recreate the cloak of secrecy around its clientelist ways. The Information Commissioner, Emily O’Reilly, has repeatedly called for the Act’s scope to be widened. In her annual report published last month she commented on the increase in requests regarding financial institutions, stating:
This new thirst for information should cue a re-evaluation of the role of FOI in holding such institutions to account. I have noted before how many of the state institutions are outside the scope of FOI including the Central Bank and Financial Services Regulatory Authority of Ireland, the National Treasury Management Agency, the National Pensions Reserve Fund Commission and the State Claims Agency. I have also commented before on the secrecy provisions which are contained in the legislation establishing a number of public bodies and which, by virtue of the provision not being included in the Third Schedule to the FOI Act, are outside the scope of the FOI Act.
She is referring fundamentally to a citizen’s right by calling for the creation of structures that create public confidence. It is not good enough to demand sacrifice from the public while doing nothing to break up the “golden circle” at the top that got us into this mess and to prevent it from forming again.
To that end, our party leader, Deputy Eamon Gilmore, brought forward the Corporate Governance (Codes of Practice) Bill 2009. We hear constantly about the need to position ourselves for the upswing in the global economy, but the solution to our problems is not only about financial restraint, it is also about financial controls. We must engender trust to engender confidence. We need to ensure money flows into Irish companies and by creating a regulatory regime in which investors can feel they trust a company’s board, we can restore that confidence. The first step towards that is a legally enforceable code of good corporate governance. My party’s Bill recognises that a one-size-fits-all approach will not work. That is why it suggests that codes of practice vary depending on the size of the company.
Our Bill empowers the Central Bank to draw up codes of practice, which this legislation would make legally binding, but there must be public oversight in the drafting of such codes. We, therefore, propose that the Central Bank submits a draft code to the Minister for Finance and the Joint Committee on Finance and the Public Service, which could make recommendations to the Minister. In this way, the code would be developed in an open and transparent manner and the views of companies and their stakeholders could be heard in the open so the public could make a judgment on whether the regulations serve their purpose. As part of that principle, this legislation also covers financial reporting. It makes the ISEQ’s corporate disclosure provisions legally enforceable. Currently, corporate interests can simply explain the reason they do not intend to comply with the disclosure provisions. In other words, board directors can declare to shareholders that they will not be transparent about the way the company is being run. That is not good enough.
People’s pensions, savings and sometimes their incomes are reliant on a functioning and healthy market. Market dysfunction affects many people and those worst affected are small investors. We have seen how the secrecy of company directors has contributed to the financial meltdown we are experiencing both here in Ireland and globally. That is the reason there is a number of specific provisions regarding company directors in this legislation.
If chairs and chief executives are to have such vast salaries and bonuses, the buck must stop with them. They must have direct responsibility for ensuring good corporate governance. If boards are to provide a proper oversight function for shareholders, the practice of a chief executive also being chair of the company must come to an end. This Bill provides for that.
The Bill also prohibits a former chief executive officer becoming chair of the same company and bars non-executive directors serving on a board for more than seven consecutive years. It also stops the cosy practice of cross-directorships. The potential for conflicts of interest is far too great. To put it in language Members on the opposite side of the House will understand, we cannot have public and international confidence in Irish corporate governance if the boards of companies resemble golf courses that everyone gets to play eventually. That is the reason the Labour Party is proposing such a comprehensive set of measures.
This country has been run not just by a golden circle but by a golden chain, from wealthy interests seeking favourable tax treatment and secret meetings with bankers, to political favouritism in public appointments all the way down to local level. In counties such as Wexford and Kerry rezonings continue to be promoted for private gain and political donations. All the while, the Government has been holding back the tide of demands for transparent governance. Green Party Members once agreed with us on this but they now drag their heels as they continue with their “my Government right or wrong” approach. Either they support crony capitalism or they oppose it. In politics, one cannot afford to be ambivalent.
Senator Phil Prendergast Senator Phil Prendergast
Senator Phil Prendergast: I welcome the Minister of State, Deputy Mansergh. I second the motion proposed by Senator Hannigan. My colleague outlined the reason the Labour Party is moving this motion and spoke in detail about our corporate governance proposals. We must have an accountable economic system but we also need an accountable social system. One of the ways of doing that is to remove any suspicion that influence can be bought. The public is right to be suspicious because, as Senator Hannigan outlined, influence has been bought in Irish politics in the past and the abuse of the political system for personal gain has arisen again this year in Kerry.
A strict code limiting political donations to €2,500 for parties and €1,000 for individuals would send a clear signal to our citizens, and the outside world, that influence in Ireland is not for sale. We cannot allow our democracy to be blown away, so to speak, by money either. The Lisbon treaty campaign might not have been lost had our proposals on political funding been in place, but we must learn a lesson from the success of Libertas and the controversy that surrounds that party’s funding.
Under our proposals, no one would be able to use their personal wealth to have such a profound influence on our democracy again. The Labour Party wants to go further. For ten years we have been calling for the registration of lobbyists to ensure the lobbying process can be regulated from both sides. Currently, lobbying can only be detected by Oireachtas Members declaring their interests and larger political donations. That undermines public and sometimes commercial confidence in the system.
The public is entitled to know who wants to influence public policy, especially when legislation with significant financial implications is passed. It would at least make it more difficult for a hidden hand to have an influence on policy, and politicians will be more accountable for their public statements and their voting record.
We propose barring people such as ministerial advisers and members of State boards becoming paid lobbyists for two years after they leave their brief. The aim is to stamp out cronyism and undue influence in the running of government.
Restoring the powers of the Freedom of Information Act to its position when Labour introduced it would add to our reputation internationally as an open and transparent democracy. That is particularly important in light of the Government’s national assets management agency plan. It is essential also from a public confidence point of view because it would be unthinkable for a country which has been screwed by an alliance of builders, banks and Government to allow NAMA to act in secret. Public probity in business and Government is not a political football. It is an economic and social imperative.
Senator Marc MacSharry Senator Marc MacSharry
Senator Marc MacSharry: I move amendment No. 1:
To delete all words after “Seanad Éireann”’ and substitute the following:
“commends the Government for:
its management of the economy and public finances, which means that Ireland faces the current global economic crisis from a position of comparative strength, given the strong growth of recent years and relatively low levels of public debt;
the policies it is pursuing to restore credibility and sustainability to the public finances. These will help Ireland to take full advantage of the global upswing when it emerges, thus ensuring that the economy returns to its potential growth rate;
its recent Supplementary Budget which introduces further measures to consolidate the ongoing restoration of stability to the public finances which will underpin employment creation and lay the foundation for a return to prosperity;
 the recent initiatives undertaken by the Government to preserve the financial stability of the banking system and to address the issue of asset quality in the banking system through strengthening the banks’ balance sheets in order to achieve a sustained flow of credit to the economy;
the external factors impacting upon the economy and the recent publication of economic forecasts by the European Commission and the IMF which have downgraded the growth outlook for the global economy in addition to that of the euro zone;
whilst the labour market has deteriorated significantly recently, approximately 2 million people are still employed, which is 600,000 more than a decade ago;
the Government through its ongoing management will continue to address the economic, fiscal and banking sector issues facing the country over the coming years in a responsible and sustainable manner;
the 2001 code of practice for the governance of state bodies sets out the principles of corporate governance which state bodies are required to adopt and the Government’s approval of a revised code of practice;
the recently published Finance Bill will help ensure a progressive implementation of the adjustment needed in this economy and provide for a proportionate sharing of the burden of this adjustment;
the commitment in the Programme for Government to regulate political lobbying;
the many initiatives taken in Government departments extending whistleblowing protection;
the substantial body of Company Law providing for good corporate governance under the Companies Acts 1963-2006 and the work of the Office of the Director of Corporate Enforcement;
the work of the Company Law Review Group in producing proposals for the major reform and consolidation of the 13 Companies Acts resulting early next year in the publication of a very significant piece of legislation of some 1,250 sections;
the publication in the meantime of the Companies (Amendment) Bill 2009 currently before the Oireachtas, providing among other things:
enhanced powers for the Director of Corporate Enforcement in his efforts to ensure compliance with the Company Law code and,
improving the transparency of loans made by companies that are licensed banks to their directors and to persons connected with them;
notes the continued operation of the FOI legislation.”
I join with other speakers in welcoming the Minister. I welcome the opportunity of making some points on the motion before the House, which I will not support. I will support the Government amendment.
I wish to state on my behalf and on behalf of my colleagues on the Government side that we do not condone any political wrongdoing or bribe taking, which has been perpetrated in the past. We would not condone any such behaviour. Recent Administrations have presided over the introduction of more legislation in this area than any previous Administration and have done more to try to root out the instances that have occurred in the past.
As Members will be aware, lobbying plays a significant role in our democracy. We all come into contact every day with some form of lobbying from individuals and organisations. I am aware that representatives of the Irish Cancer Society are in the House today making representations on how they would like their views practised. Groups from a variety of interests, whether it be economic, professional or, as with the Irish Cancer Society, civil society, engage in lobbying. Lobbying is conducted through varying forms of communication to influence our political decisions, Government and legislation that is brought forward.
Ireland may be unique in that individuals and groups can easily access their local representatives be they TDs, councillors or Senators, and that is to be welcomed. In the United Kingdom the process is much more distant. Before I was elected to this House I appreciated that people enjoyed unprecedented access to their public representatives. That is not a process from which we should move away.
In recent years the Government has introduced several pieces of legislation and codes of conduct on the work we, as elected representatives, carry out and how that work should be done. In the past ten to 15 years this and previous Governments have introduced more legislation in that regard than at any other time in the history of the State. We have had the Local Elections (Disclosure of Donations and Expenditure) Act, amended in 2001 to include expenditure and donations disclosure regimes at local elections and annual donation disclosure for all councillors. We had the Electoral Act 1997, amended in 2004, on the expenditure and donations disclosure regime at Dáil, European, presidential and Seanad elections, although limits must be introduced in the context of Seanad elections. We have had the Standards in Public Office Act 2001, which established the Standards in Public Office Commission. We have had the Prevention of Corruption (Amendment) Act 2001 to provide for a presumption of corruption in certain cases. We have had the Local Government Act 2001 which modernised local government law which provided for an updated ethics infrastructure, a requirement for annual declaration and disclosure of interest for the local government. The Proceeds of Crime (Amendment) Act 2005 gives additional powers to bolster the operation of the Criminal Assets Bureau in the fight against all forms of crime, including white collar crime and corruption. We also had the Ethics in Public Office (Amendment) Act 2007.
Various codes of conduct have been established for parliamentary Members and county councillors. We have had a number of tribunals and while much good work has been done by the tribunals, it is time they began to wrap up their work. We have seen some political wrongdoing in the past but as a public representative I would much prefer to see the gardaí investigate such matters to ensure that when wrongdoing is found, people receive the full rigours of the law in terms of punishment if they are found to be in receipt of bribes or abusing their positions.
In addition to this legislation by the Department of the Environment, Heritage and Local Government, the Minister commissioned reports in 2001 by the Institute of Public Administration and again in 2006 by Dr. Raj Chari of Trinity College and Dr. Murphy of DCU on assessing the best international practices in the regulation of lobbying. Many of these proposals are currently being reviewed by the Department with a view to bringing forward legislation to regulate lobbying. I look forward to that. The Minister, Deputy John Gormley, is actively considering it.
I thank the Labour Party for tabling this motion. There is always a way to make good existing legislation better and there will always be a need for the Houses of the Oireachtas to monitor and adjust legislation continually according to the ever-changing needs of our economy and civil society.
A study is currently being carried out by Trinity College, Dublin. It has reviewed the Labour Party’s corporate governance Bill on the regulation of lobbyists. It found that if implemented as it stands, Ireland would be lowly to medium regulated. According to the review, we would be above Poland but below Lithuania and Hungary. While there might be good aspects to the Labour Party’s proposals, we should aspire to introduce improvements that would allow the country to score a little better than that. One of the main proposals in the Bill is a cooling-off period but only for political advisers, not politicians. The report is of the view that this weakens the Bill considerably.
With regard to developing a system for whistleblowers’ protection, in March 2009 a Government sponsored report by Transparency International, entitled National Integrity Systems — Country Study, was produced following a study carried out over two and a half years. One of the primary recommendations of this report was that protection for whistleblowers should be introduced through anti-corruption safeguards across the public and private sectors. The Government in recent years has been implementing protection for whistleblowers on a sectoral basis. There is still no formal word from the Department of Justice, Equality and Law Reform on implementing an overall national safeguard framework but work is continuing in that regard. The report found that Ireland, by international standards, has the lowest level of petty corruption, which is encouraging. That is not to suggest we do not have continuing challenges to meet and continuing changes to make.
There have been changes to the Freedom of Information Act. Before I became a Member of the House I was a regular user of that Act when I worked in the chambers of commerce movement. I used it to facilitate the movement’s work. There were frustrations about information that was not available and I certainly felt them as chief executive officer of Sligo Chamber of Commerce on certain issues. However, one can appreciate the need for confidentiality at certain times and the need for Cabinet confidentiality. At the same time, I understand the frustrations. It is something we should monitor. I was interested in the views expressed by the Information Commissioner, Ms Emily O’Reilly. The Department should continue to monitor the issue and be flexible in making changes as may be appropriate when issues are raised in debates such as this and by our Labour Party and Fine Gael colleagues and Members of the Houses generally. The introduction of fees was a necessary evil. When one considers the current economic situation, it is certainly appropriate, as it was with the fees applying to objections to planning permissions. For a credible objection or a credible application under the Freedom of Information Act, it is appropriate that there should be a fee.
I welcome the opportunity to discuss these issues. The Labour Party tabled the motion in good faith but I support the Government amendment. I am sure the Minister and the Government are willing to listen to innovative and constructive suggestions that could make improvements to what I believe is already good legislative change over recent years in the areas of corporate governance, freedom of information and lobbying.
Senator Eugene Regan Senator Eugene Regan
Senator Eugene Regan: The motion is non-contentious and I do not understand why the Government could not agree to it. The motion invites the Government to act on certain legislation, political lobbying, whistleblowers’ protection, good corporate governance and restoring the original provisions of the Freedom of Information Act 1997. It does not condemn the Government but invites it to act in these areas. I do not see a problem with that and do not understand why the Government insists on proposing an amendment which bears little relation to the motion.
The main proposal in the amendment is that the Seanad should commend the Government on a number of measures which concern more general economic matters and the management of the economy and public finances. That is rather ironic. The amendment states that the Government has done a good job in the management and control of the public finances by reducing the level of public debt. We know the public debt doubled in the last two years under the Government and Taoiseach, Deputy Brian Cowen. The amendment commends the Government on restoring the credibility and sustainability of the public finances — whatever that means given that the public finances are in disarray — and suggests this provides the basis for Ireland to benefit from the global upswing, whenever that comes. However, everybody knows that restoring competitiveness in the Irish economy is what will lay the basis for Ireland to benefit from the upswing.
The amendment also mentions the supplementary budget and the Government’s work on restoring the financial stability of the banking system. However, it has clearly failed to do that. By the day, the proposals relating to the national asset management agency, NAMA, are coming unstuck. To set up a new organisation and structure to deal with the bad debts and toxic assets of the banks would take ten years at the pace at which the Government has attempted to introduce this. The confrontational nature of the Government’s amendment is needless, beside the point and does not address the Labour Party motion, which I consider to be well grounded.
The lack of confidence in crony capitalism, the Government and corporate governance all starts with the political process and culture in this country. It is the political culture that has existed under successive Fianna Fáil Governments. An article in today’s Financial Times states:
Ireland has come through more than 10 years of judicial tribunals that exposed a culture of corruption in planning and property development. Bertie Ahern, Brian Cowen’s predecessor as Irish prime minister, was forced to step down last year amid questioning by the tribunal into his business affairs. Recent banking scandals have merely added to Ireland’s image problems.
This Government has created the problem and the political culture. Its appointments to State bodies and key economic organisations within the economy has added to the problem of securing good governance, good control, proper scrutiny and proper standards.
As has been mentioned, there is a series of legislative measures to ensure standards in public life, including the Standards in Public Office Act, the Ethics in Public Office Act and so forth. However, these are just words if they are not adhered to. We know about the obligations of politicians and public representatives, for example, to have tax clearance certificates, but when the Taoiseach of the day does not have a tax clearance certificate, there is cynicism about the political process. The entire Government criticised the work of the Mahon tribunal, which was established to restore confidence in the political process, and Judge Mahon for the manner in which he was conducting the tribunal with regard to the Taoiseach of the day. There must be a change in the political culture that has inculcated and promoted this type of governance, lack of responsibility and lack of transparency in our public affairs. It has permeated the business and banking communities.
Let us start with appointments to State bodies. When questioned about the appointment of a particular gentleman as a director of a State body, the former Taoiseach said he was a friend of his. They are the standards that have traditionally been applied by this Government to State appointments. Qualifications and background checks are not taken into account. In general, significant checks are made on the competence and eligibility of persons to be appointed as directors of companies in the private sector, but those standards have not been applied by the Government.
Fine Gael’s spokesperson on enterprise, Deputy Varadkar, introduced the Public Appointments Transparency Bill 2008 to legislate for the appointment of persons to State bodies. He proposes that appointees would be subject to scrutiny by the relevant committees of the Oireachtas and that they would also be subject to being called before those committees to account for the performance of their functions. The Bill also proposes that the qualifications of all ministerial appointees to State boards and other State bodies would be laid before the Dáil and that they would be subject to scrutiny by the relevant committees. That is where it starts, namely, with our respect for the standards with which we, as public representatives, are obliged to comply and where we have an influence on corporate governance in terms of appointments to State bodies. We should start there. In putting forward the Bill, Fine Gael has attempted to do that.
We have much legislation. The Government’s amendment points to other legislation that has been introduced. We have the Office of Corporate Enforcement, the fraud squad, the Financial Regulator, the Companies Acts, the possibility of having court appointed inspectors to examine the affairs of companies and, ultimately, the Criminal Assets Bureau. However, when an issue arises, unless there is a public outcry, those provisions and mechanisms do not seem to function very well. When we heard of the disclosure about the Anglo Irish Bank-Seán FitzPatrick loans in December, all the Minister for Finance said about the matter was that it was disappointing, instead of ensuring that the matter was fully investigated and that the law was applied. It was only belatedly, following the public outcry, that the wheels began to move on this matter.
On the same subject, an article that appeared in a newspaper today suggested that auditors warned the Irish Nationwide about loans to Seán FitzPatrick. That all misses the point, namely, whether the standards that were applied in concealing those loans complied with the Companies Acts and directives and regulations on market abuse and sensitive information about public companies. Those are the issues. The problem is that there is no leadership on standards because there is no credibility in the Government and its leadership on these matters. That is where the problem lies. I support the Labour Party motion and commend it to the House.
Senator John Hanafin Senator John Hanafin
Senator John Hanafin: I note the wording of the motion, “That Seanad Éireann, recognising that Ireland is crippled by a lack of confidence, lack of confidence among consumers; lack of confidence among investors in our banks; lack of confidence in the Government; calls on the Government, as a step towards restoring confidence, to demonstrate its seriousness about rooting out corruption, corporate sleaze and crony capitalism by introducing a series of measures, including legislation”.
The first thing the speaker opposite suggested is that we accept that innocuous motion, which of course is patently unacceptable. The salient points in the motion refer to the need “to regulate the practice of political lobbying; to develop a system for whistleblowers’ protection; to ensure good corporate governance.” I have some good news for the Labour Party on those first three points, which is that they are being comprehensively dealt with by the Government. The recently published Finance Bill will help to ensure the progressive implementation of any adjustments needed in the economy and to provide for a proportionate sharing of the burden of this adjustment. There is a commitment in the programme for Government to regulate political lobbying and many initiatives have been taken in Departments to extend whistleblowing protection.
A substantial body of company law exists to provide for good corporate governance under the Companies Acts 1963 to 2006 and the work of the Office of the Director of Corporate Enforcement must also be taken into account. In addition, we should recognise the work of the company law review group in producing proposals for the major reform and consolidation of the 13 Companies Acts, resulting early next year in the publication of significant legislation of 1,250 sections. That Bill will be in the House shortly.
The Companies (Amendment) Bill 2009 will provide for enhanced powers for the Director of Corporate Enforcement in his efforts to ensure compliance with the company law code and to improve the transparency of loans made by companies that are licensed banks to their directors and to persons connected with them. We also note the continued operation of the freedom of information legislation. The fourth point in the Labour Party motion was to restore the original provisions of the Freedom of Information Act 1997, which were causing unnecessary burdens and had to be altered.
Since the Government came to office we have introduced codes of practice and legislation, including the Standards in Public Office Act 2001 that established the Standards in Public Office Commission and the Prevention of Corruption (Amendment) Act 2001, which provided for the presumption of corruption in certain areas, the Local Government Act 2001, which modernised local government law, the Proceeds of Crime (Amendment) Act 2005, and the Ethics in Public Office Act 2007. It is clear that the Government has worked strongly to promote openness, transparency and good government.
The necessary work that had to be undertaken by the Government was not at all times supported by the Opposition. I refer in particular to the nationalisation of Anglo Irish Bank, a bank of systemic importance to the Irish economy. I note that an Opposition spokesperson referred to the nationalisation of the bank as an attempt to bail out the friends of Fianna Fáil. In political terms that is not correct. In economic terms it was extremely damaging to this country abroad. At this time of economic uncertainty, comments such as that were bound to lead to repercussions, and that was the case.
We also had difficulty underpinning the banks, as if anyone would wish to extend €7 billion to the banks for any other purpose than to save those banks and to provide sufficient liquidity for business so that they might survive, rather than the many other deserving areas we were unable to support with the limited means at our disposal. We had to ensure that we had a financial system and economy. If one has no economy, there is no support for the necessary social welfare we upheld and maintained at the most difficult time in this country.
According to international trends, it appears that we have taken the right approach. We were in a good position, despite the Opposition questions about what we did with the boom. At that time 2 million people were at work. We set up the National Treasury Management Agency, which had a deposit of €19 billion. We had the lowest tax wedge in the OECD. We ensured that we catered for the less well-off. When the bad times came we were able to increase borrowing because if we had not done so, we would have had an economy that was in crisis rather than one that was being managed.
The world economy is looking forward to coming out of recession in 2010. Long-term low interest rates are having a strong effect. The quantitative easing taking place in the UK and the US are also having an effect. The expectation is that we will start to see the recovery in 2011. Every day that goes by where people lose jobs or are out of work is very serious. With that in mind, I hope we have an opportunity in this House to debate some of the positive things that are happening.
In spite of the fact that 400 people will be let go over time, there are positive signs at the Dublin Airport Authority for the construction of a second terminal and the development of Dublin Airport city, which is as novel, as innovative and as forward thinking as the IFSC was in its day. It will attract the type of industry and headquarters to Ireland and to Dublin that we want. The metro will allow for a huge increase in numbers of up to 30 million passengers to pass through Dublin Airport. There are positive signs and good things towards which we can look forward. This economy has been well managed. This Government was prepared to take the pain and was prepared to take the unpalatable decisions. We had an Opposition that was prepared to say “No” to the removal of medical cards from people who were earning €70,000 per annum in pension entitlements — meaning they were earning €100,000 while working — but this was unaffordable. The Government dealt with a very progressive and fair tax system and did so with an eye to what is best for Ireland, rather than what is best for the political party. That is what this Government has done and will continue to do.
Senator Feargal Quinn Senator Feargal Quinn
Senator Feargal Quinn: I would welcome a debate on the whole question of corporate governance. We need to be very careful we do not go too far the other way. I found myself speaking in different countries over the last few years about the wonderful success of Ireland, but that success was clearly due to a number of factors, including our investment in education, our tax policy, our involvement in Europe and our investment in what I call the sunrise industries. It was also due to the fact we had a Government policy of making ourselves attractive to investors. If we go to such pains to protect investors and to protect customers to that extent, we must remember those who invest must take some care themselves. I have some worry about putting in such red tape and strict controls that will make it less attractive for investors in this country. I would be loathe to go too far along the road of saying we must protect everybody and we must have so many regulations for that. We were attractive because we gave freedom to institutions, even if we have had some problems with them recently. Let us not bend over backwards and make a mistake the other way round.
I would be very careful about how we place restrictions on the area of appointments to State boards. If we had examined appointees to the extent they had to go through committees and be cross-examined, as happens in the US, we would not have got some of those people who have been willing to give their time to a State board and offer to help. Those who have done that — we picked the best — would not have wanted to go through a grilling by Members of the Oireachtas before getting the nod. I am not sure of the answer, but if we are to attract people onto State boards, we must attract the best.
On the other hand, I welcome the suggestion to regulate political lobbyists. It is an idea which has been recently taken up in Europe. The European Commission has set up a lobbying register, the Register of Interest Representatives, which lists the names of organisations that attempt to influence European legislation, their stated aims and funding sources among other details. In a proposal I put for the reform of the Seanad, I suggested all lobbyists should be registered and all lobbying should be open and done here in this House. It is dangerous to have lobbyists who are not recognised as such and who are expressing an opinion when they are not known to be lobbyists by those opposed to that opinion. It would be much healthier to have it done openly.
There have been problems with the register because it is voluntary. This means that lobbyists in Brussels, who number about 15,000, do not have to sign up if they do not wish to do so and only about 9% of lobbyists have registered so far. However, the register is growing all the time and there are about 1,500 groups registered as of this week. The intention is that the register will become compulsory in the coming months. It is also envisioned that the register will require consultancies and law firms to declare their “turnover attributable to lobbying the EU institutions” alongside the “relative weight of their major clients,” while inhouse lobbyists and trade associations will need to provide an “estimate of the costs associated with direct lobbying” in this regard. NGOs and think-tanks will have to publish their overall budgets and a “breakdown” of their main sources of funding. All these quotes are taken from the register’s website.
A similar register could be implemented here. It would be on a much smaller scale so may be easier to do. The problems associated with the introduction of the register in Brussels should demonstrate the way to introduce a better system in Ireland and we must have a proper debate on a lobby register being introduced. It is worthy to bring up the issue in this motion, and I am delighted that has been done.
The other major issue is whistle-blowing legislation. We need a different approach to whistle blowing or what is also known as “good faith reporting” in the public interest. Perhaps it is an un-lrish thing to do, but the behaviour of some of those in the Irish banking system needed to be shown-up earlier. We need to afford whistleblowers more protection and commend them for their civic contribution rather than ostracise them as “informers”. There are people within the banks who knew of malpractices that were happening but were too scared to come forward. In particular, employees may come across insider or fraudulent dealing, or falsified or misstated company accounts. The public interest would therefore benefit greatly from such disclosures.
We need whistle-blowing legislation more than ever. Mr. Tony Spollen, who exposed the DIRT scandal at AIB ten years ago, was a good example of the sort of white knight we need. It was a brave thing to do and there are numerous examples of other brave Irish whistleblowers. Fr. Gerard McGinnity was removed as senior dean at Saint Patrick’s College in Maynooth in 1984 when he tried to draw the attention of the bishop trustees to seminarians’ concerns about the behaviour of the then college vice-president. Ms Susan O’Keeffe was charged with contempt of court for refusing to name her sources to the beef tribunal following her 1991 “World in Action” documentary. Ms Sheenagh McMahon experienced devastating personal repercussions when she revealed in 1999 that her husband, Detective Garda Noel McMahon, had planted home-made explosives, later claiming them as significant IRA explosives finds. This led to the establishment of the Morris tribunal.
In her 2006 Lourdes Hospital inquiry report, Judge Maureen Harding Clark noted the resentment towards the four nurses who exposed the systemic wrongs in Drogheda: “We heard of comments to the effect that the whistleblowers would never get a job in Ireland, that they would be sued for defamation and would generally come to a bad end.” Judge Harding Clark listed 11 categories of people who did not complain about Dr. Neary’s actions and remarked that “No one made a formal complaint and no one questioned him openly”. It is almost ten years since Deputy Pat Rabbitte introduced in the Dáil a Private Members’ Bill entitled the Whistleblowers Protection Bill 1999. The Government, in March 2006, said it would not proceed with a general legislative proposal although it has introduced certain whistleblowing provisions in limited areas such as the legislation governing child abuse, consumer protection, some competitive issues, ethics in public office and in respect of the Garda Síochána. Employees should be able to reveal valuable information about their companies on ethical dealings without having to suffer negative consequences. The Government appears reluctant to introduce adequate legislation in this regard. I mentioned those areas because the issue of whistleblowing is one in respect of which we need some form of legislation. As I said, it is regarded as a non-Irish thing to do. However, I urge the Minister of State to take on board the intent of the motion.
While I do not support the motion as a whole, I support the general theme, direction and intention of what it seeks to achieve. I urge the Minister of State in his reply to give some indication that the Government will recognise that part of this motion deserves serious attention.
Senator Larry Butler Senator Larry Butler
Senator Larry Butler: Senator Quinn has summed up much of what I was going to say. Over-regulation in any country is not the way to go. However, I welcome the motion, most of which is reasonable. What I do not accept is that the Government has not handled well the extremely difficult situation we have experienced during the past 12 months. I believe it handled the situation confidently and in a measured way. The public does not have confidence during times of recession and, as such, no matter what a government does in a recession Joe public, whose money is worth less, will opt to defend rather than spend it. This is happening not alone in Ireland but worldwide. Income from taxes on which we depend are down.
I visited the UK last week where spending on the high street is down by approximately 55%. That is what counts. One measures one’s taxes by what comes in from the high street. Currently, the high street has no confidence in the economy. Until such time as we begin to come out of recession the public will not spend. Germany did not experience a property bubble but its car manufacturing industry has fallen through the floor. Some 45,000 people employed in that sector are on short-time working. If the situation does not improve soon there will be major redundancies in that industry in Germany, Europe and America. The car industry in America is seeking a further bailout. It is entirely dependent on the public.
One must ask oneself why the public decides not to spend money. The answer is simple: they are afraid to spend money that they might need another time for more important matters, including if they lose their job or need to visit the doctor more often. These are the types of problems that arise when there is a downturn in an economy. I have experienced five economic downturns, three in the UK and two here. I have a great deal of experience in terms of how a downturn in an economy affects a country. As I said, I went on a short trip to the UK last week. The construction industry in the UK is virtually non-existent. There would be nothing happening in the UK in terms of construction were it not for the Olympics. While most of the infrastructure required is already in place, there are steps that must be taken to prepare for the Olympics. The UK has handled this situation by imposing extra taxes on people, in particular people in London. It is interesting to note how other countries are handling the crisis.
It is natural that people blame the Government for all that has gone wrong. It is the norm when it rains to blame the Government for the bad weather.
Senator Dominic Hannigan Senator Dominic Hannigan
Senator Dominic Hannigan: The Government takes the credit when the sun shines.
Senator Larry Butler Senator Larry Butler
Senator Larry Butler: Yes, I accept that. That is human nature. I agree with much of what is contained in the motion. The Government led by former Taoiseach, Liam Cosgrave, was in power in the 1970s. He is a man for whom I have great regard. Senator Regan referred to the standards applied by Fianna Fáil in appointments to public office. The Government at that time was a coalition of Labour, Fine Gael and Democratic Left. On cronyism, that Government, before going out of office, appointed to public office friends, relations and anybody it could get hold of. It is not fair for Opposition speakers to lecture this side of the House about cronyism when Labour and Fine Gael did likewise in the 1970s. I accept neither party has been in office too often since — they were in office for only a short time, in the Government led by former Deputy John Bruton and as such their ability to make appointments was minimised.
As Senator Quinn said, people from the private sector, if we make it too difficult for them by wanting to know what they had for breakfast, will be reluctant to give of their time to serve in the public interest. Many of these people do not need the remuneration they are paid. Many of them would probably do the job for nothing. It is important we attract people with the requisite knowledge, skill and expertise in whatever field we require. The group, Spirit of Ireland, which came together and produced a product for energy supply did not engage in that task for financial reward. That group is to set up a co-operative in which farmers and other members of the public can purchase shares. Its aim is to make our country energy efficient. This has come about because we are in crisis. It might never have happened were we not experiencing the current crisis.
It is important we encourage people to come up with ideas and to be of service to the country. I do not have much time for over-regulation or red tape as this makes much more difficult the start up of new business and job creation, which we all want. Currently, people wishing to develop an idea or project in the interests of the country cannot do so because our planning laws are too restrictive. We should have a national plan whereby if it is in the national interest we are able to do it. We could be self-sufficient in energy in five years. We cannot be self-sufficient in energy in five years because the planning requirements will not allow it. We as legislators should change the planning legislation to ensure we deliver to the country.
An Leas-Chathaoirleach An Leas-Chathaoirleach
An Leas-Chathaoirleach: The Senator has one minute remaining.
Senator Larry Butler Senator Larry Butler
Senator Larry Butler: Therefore I support the Government amendment to the motion. It is important for us to continue to ensure our finances are in a strong position. We need to find a proper solution to the banking problem. I believe we are a good part of the way there. We need to ensure the smart economy starts to work for us. Job creation is the number one issue. A solution to our energy crisis is critical. It will create many jobs and reduce our imports by €6 billion every year. Over ten years the investment would save us approximately €60 billion, which is colossal. That would put the country back on its feet. We could be self-sufficient in energy and export it.
I thank the Minister of State for coming in. He has been a regular visitor to the House and has certainly been able to keep us up to date on all the banking and other issues that have gone on.
Senator Liam Twomey Senator Liam Twomey
Senator Liam Twomey: I was somewhat surprised at the Government’s amendment to the Labour Party motion. The amendment focuses very much on the economy. I took the spirit of the Labour motion to be about how we behave ourselves in public office or in public service and how the people view public service and public office. The Government amendment went way off the point on a tangent, which might have been deliberate to stop us talking about what is basically corruption in public life and public service. There has been a systemic acceptance of corruption in recent years. We pay lip service to ethics in public office. However, the history of what has been revealed in the tribunals shows an unbelievable acceptance of corruption. One could almost say it should be legislated for because it is so endemic.
For instance, the last Taoiseach turned up with loads of cash and money in bank accounts, and nobody quite knew if some of it was sterling or dollars. There was a convoluted story about all of it. He came out with an explanation of having won it on the horses. There was an acceptance of that. Would that be accepted in any other civilised country? A premier who claimed to have won his money on the horses would more or less be forced to resign by his party colleagues. It was laughed off and joked about. It goes further than that because there was moral indignation about corruption from the Green Party when it was in Opposition. When it got its opportunity to go into power, the moral indignation disappeared and it was quite happy to go into power with the very same Taoiseach with whom it had so many problems before it went into power. It seems that when it comes to achieving power, corruption falls way down in the levels of priority.
We have the same hypocrisy day in and day out when Ministers are caught out. We have never seen a Minister resign for incompetence or poor behaviour, which reinforces the acceptance of lack of ethics and of corruption in our society. If those at the top do not feel the need to take responsibility, nobody feels the need to take responsibility, which is what is happening at the moment. Some people said the former Minister of State, Deputy McGuinness, was a man of principle when he stood up and spoke of the incompetence of the Tánaiste and the way she carries out her duties as a Minister was viewed across the world. However, he only said this after he was fired. He was there long enough to realise there was a problem but he was not going to come out and say the country was going down the tubes faster than it should be because of the incompetence of his bosses. He was quite happy to keep his mouth shut as long as he was holding on to a position of power.
Part of the problem in the country is that we accept very low standards across the board. It appears to be accepted as part of our culture. We get morally indignant about corruption in Irish society. If people are so concerned about corruption they should consider people like Charles Haughey, Ray Burke, Liam Lawlor and Deputy Bertie Ahern, and ask themselves why they have consistently voted the same people back into power in successive general elections. That means as a society we have no problems with corruption whatsoever. The problem with poor principles at the top of Irish politics, especially within the Fianna Fáil Party, is that they contribute to the mess in which we find ourselves. Those same poor standards and lackadaisical ideas about principles and ethics went right through to the banks. The excuses made by directors of the boards of Anglo Irish Bank, Bank of Ireland and Irish Life & Permanent to their shareholders in recent weeks make one realise they were all just chasing each other around to make the last buck and fastest buck. Principle and everything else were just thrown to one side. We have done nothing to get rid of that.
One of the greatest concerns I have about coming years is over a party like Libertas and where it could end up. That party has been extremely coy about its financing and its sources of funding in many of its campaigns. It is extremely adept at manipulating the media and public opinion. We have been brought into a crisis, with the concept, no doubt encouraged by the Government Members present, that somehow we are all the same. I am sure the Minister of State, as a keen historian, will accept this was the sort of scenario we saw in Germany in the 1930s where someone was able to take power on the back of very spurious concerns.
If we are really serious about doing something about this, there is a need particularly for Members from the Government parties to show principles. They need to understand the concepts of whistle blowing and freedom of information. Freedom of information is about protecting our democracy. It was 60 years ago this year that John A. Costello declared Ireland a Republic. While we have much to be proud of, we equally have much of which we should not be so proud. Much of that has arisen from the dominance of one political party. I would like to hear the response of the Minister of State. We should stay away from the economic arguments for the moment and stick to the principles of ourselves as public representatives in public service. We should put to one side corruption and the abuse of public office in order to enrich ourselves or a small group of people. That corruption has totally discredited the political system here in recent years.
Senator Ivor Callely Senator Ivor Callely
Senator Ivor Callely: To a great extent the motion and amendment before the House are overshadowed by the severe global difficulties and the impact on our economy. It was interesting to hear the last speaker, who made a few very valid points.
It amazes me that a Senator should state in this Chamber that Members should stay away from economic arguments at a time in our history when we probably face the most severe economic difficulties.
Senator Liam Twomey Senator Liam Twomey
 Senator Liam Twomey: I am sick of engaging in debate about it when Government Members will not tell the truth.
Senator Ivor Callely Senator Ivor Callely
Senator Ivor Callely: Were the public informed and questioned on the merits or otherwise of this debate, I believe a level of dismay would be recorded. I am convinced that public reaction would be positive, were there an agreed motion with detailed specifics and a precise understanding of what is involved in respect of restoring confidence and helping to turn around the economy.
I attended another meeting today and although it was held in private session, those Members who were present undoubtedly will not mind my putting on record that there was unanimity among the political groups on one important issue, namely, recognition that Ireland has lost its edge of competitiveness and the measures that will be necessary to restore it. I made a number of points regarding matters that must be considered and on which action must be taken, perhaps in consultation with the social partners. Certainly, issues that affect our competitiveness must be parked for the time being. All Members are fully au fait with the issues and ingredients that are having an impact on our competitiveness and they need the political courage to spell out the measures that are necessary. I should add that in the few minutes available to me in this debate, I do not have sufficient time to go into great detail and can only touch briefly on a couple of points.
The current economic and political position is a frightening and traumatic experience for nearly everyone in our community. The level of uncertainty and lack of confidence is real for most people and families. If Members are genuine about their practices, they should try to steer away from the “them and us” syndrome and from muck-slinging in the hope that if one throws enough muck, some of it will stick. This is not helpful at this time in particular. Members are in this crisis together and the public expects them to get out of this crisis. Members’ ability to work together in difficult times has never been more important. They face an historic challenge which must be addressed head on. They should seize the opportunity to develop new concepts, approaches and a period of fresh creativity. Otherwise, there may well be, as the previous speaker noted, a revolutionary transition in respect of current systems, political institutions and processes.
The Labour Party proposal on corporate governance has merit, as do the Fine Gael proposals on some of these matters, such as appointments to State bodies. On the other hand, as Senator Quinn rightly noted, the question arises as to how to get the balance right if one chooses to adopt the system used in the United States Congress, whereby committees hold confirmation hearings into every State appointment and what impact that ultimately has. I believe there is a balance to be struck in this regard.
I listened to Senator Regan’s contribution on competitiveness in the economy and wholeheartedly agree with his point in this regard. Moreover, having listened to the debate to date, I agree with what Senators MacSharry and Hanafin outlined regarding the provisions and mechanisms that are in place, as well as the legislation that has been introduced in recent years. I believe Senator Butler referred to the accusation that we have blown the boom. I make this point to all Members because what I have witnessed in my short time in this House is that all of us both lived and enjoyed the boom. I have participated in debates in both Houses of the Oireachtas in which Members on all sides suggested when we had the money, we should do this or that and should spend more. I cannot recall great disagreement from Members when measures were being introduced by the Government that now is under fire for taking certain measures. At that time, I cannot recall such disagreement and the record will show——
Senator Dominic Hannigan Senator Dominic Hannigan
 Senator Dominic Hannigan: Questions pertaining to efficiency were raised in respect of PPARS and e-voting at the time.
An Leas-Chathaoirleach An Leas-Chathaoirleach
An Leas-Chathaoirleach: Senator Callely, without interruption.
Senator Ivor Callely Senator Ivor Callely
Senator Ivor Callely: Perhaps it would be interesting to conduct a forensic revision of the debates on all such matters, including those mentioned by Senator Hannigan, to ascertain whether any group had a magic wand or the vision to state that a particular measure was not appropriate, what it envisaged would happen and what other mechanisms it believed would be required to address what would come to fruition a number of years later. Members will acknowledge that while hindsight is great, they probably all would prefer to shy away from such a forensic revision of contributions to debates on the aforementioned issues. I gather the answer would be negative for all Members.
It would be fair — the public would greatly appreciate it — were Members somewhat humble in their approach to the present state of affairs. They should put their hands up, state they all made mistakes, that they do not have a magic wand or the necessary answers and that matters are changing at such a rapid pace that they must change to address those issues.
An Leas-Chathaoirleach An Leas-Chathaoirleach
An Leas-Chathaoirleach: One minute remains to Senator Callely.
Senator Ivor Callely Senator Ivor Callely
Senator Ivor Callely: This is the reason I noted at the outset that it is regrettable that Members have such a short time. This is such an important issue to try to squeeze into a few minutes.
I wish to keep to the forefront of Members’ minds that no matter how one wishes to turn or twist it, they are discussing real-life issues and human beings. Great numbers of individual human problems have arisen, in addition to distress and an impact on living standards. While great hopes had been built up, it has been followed rapidly by tragic disappointment. All Members must be honest and forthcoming with people in regard to the country’s actual position and the measures that now are necessary. Everyone, including the public, has been bombarded to an extent with news on how the Government and its agencies, the Opposition and individual political groupings are dealing with such difficulties, as well as on the measures they consider to be necessary. At present, what is most necessary is to rebuild the trust of the public. I do not refer to rebuilding such trust by any individual group, the Government alone, its agencies, the Opposition or any political grouping. First and foremost, the trust of the public in Members as public representatives must be rebuilt. Some of the measures that have been referred to constitute steps in the right direction. Equally however, some of the measures that have been introduced in recent years also constitute steps in the right direction. I accept the point which has been made to me and undoubtedly to everyone else in the Chamber, that people seek guidance and leadership at this difficult time.
While I can discern from the Leas-Chathaoirleach’s body language that my time is up, as I mentioned at the outset Members’ ability to work together in difficult times has never been more important and will be most appreciated by the public at large.
Senator Pearse Doherty Senator Pearse Doherty
Senator Pearse Doherty: Ba mhaith liom mo chuid ama a roinnt leis an Seanadóir Mullen. Ba mhaith liom tacaíocht a thabhairt don rún atá curtha chun tosaigh ag Páirtí an Lucht Oibre agus ba mhaith liom labhairt faoi dhá pháirt den rún, an reachtaíocht maidir le whistleblowers’ protection agus faoin Acht a bhaineann le freedom of information. These are the specific matters I wish to address. Regarding political lobbying, at the time of the Companies Act 1990, the banks used their influence to ensure they were exempt from provisions that prohibited loans to companies’ directors. I spoke on this previously when the Minister of State was in the Chamber. We saw how this measure was used by banks.
The reference to political lobbying in this motion is important. Legislation along the lines of the False Claims Act in the US is urgently needed in Ireland. This Act contains strong whistleblower legislation and provides incentives to report fraud. Since 1986, when the Act was established, it has returned over $20 billion to the American people. The False Claims Act is about far more than money. It is about discouraging fraud and changing the corporate culture. Under the Act, those who knowingly submit or cause another to submit false claims for the repayment of government funds are liable for three times the government’s damages plus civil penalties. The unique aspect of this Act is that it contains whistleblower provisions called qui tam, a legal mechanism that allows citizens with evidence of fraud to sue on behalf of the Government to recover funds that have been stolen. The whistleblower may be awarded a proportion of the funds recovered, typically between 15% and 25%. It excludes tax fraud and, while it has been used to tackle fraud in defence contracts, in recent years most actions have centred on health care fraud.
Some of the scenarios are important for this State and a similar Act would be beneficial, given the growth of the private hospital sector, which remains completely unregulated. These hospitals will be licensed but it will apply to public hospitals first, meaning that private hospitals will be unregulated. Contracts have been awarded by the HSE to companies such as Quest, which has the contract for cervical cancer testing and which was obliged to pay over $250 million to the US Government in criminal and civil fines when the HSE had given it a clean bill of health.
The whistleblower legislation called for in this motion is timely. It is well beyond the time when we should have had that legislation. Where doctors engaged in whistle blowing, such as Dr. Gupta’s complaints at the treatment of breast cancer patients in Barrington’s Hospital, it has been ignored. Legislation is important to protect those who want to provide information but also to incentivise those who have information. If the incentive is there, they might give the information.
The motion refers to the Freedom of Information Act. We only have to look at the report of the Information Commissioner, Ms Emily O’Reilly, where recommendations were made about freedom of information. The report called for a number of actions to be dealt with by the Government but these went unaddressed. They included that fees for internal reviews of freedom of information decisions and appeals to her office be brought into line with other jurisdictions that do not charge or have a nominal charge, that such fees be returned in the event of a successful appeal to a public body decision, that some of the amendments made to the Freedom of Information Act in 2003 be removed, particularly those relating to Government records and the fact that the definition of Government was too wide. It was also recommend that the Freedom of Information Act apply to all records of the Health and Safety Authority, whose enforcement records were removed from the scope of the Act in 2005. The Information Commissioner has called on all new State bodies to come under the scope of freedom of information legislation as soon as they are established. Perhaps the Minister of State can clarify that the Freedom of Information Act will apply immediately to NAMA, which will be set up as a State body. This will place a major burden on taxpayers and transparency in this body is essential if it is ever to gain the confidence of the Irish people. I support this motion and welcome the fact the Labour Party tabled it.
Senator Rónán Mullen Senator Rónán Mullen
Senator Rónán Mullen: Ba mhaith liom buíochas a ghabháil leis an Seanadóir Doherty as ucht a chuid ama a roinnt liom. I compliment the Labour Party on tabling this motion. I agree with speakers who said there was no need to table an amending motion. There is nothing contentious in the motion, nor is there an attempt to play the blame game. We should have approached this on a cross-party basis.
Jokes are going around about oxymorons, one of which was the concept of military intelligence. Independent Newspapers has been offered as a possible oxymoron on another occasion. It would be a terrible shame if transparency in government, in public policy or in lobbying was seen as an oxymoron.
I take as my starting point the lack of confidence to which the Labour Party adverts in its motion. It has been well said that trust takes a long time to build up and an instant to lose. We can see a collapse in confidence but also a collapse in trust that had been building up over many years vis-à-vis many institutions that were seen to let the public and individuals down. Most recently, it is business and banking. The collapse in trust is detrimental to our society. It is in all our interests to try to restore confidence and do what we can as different players in public life to restore confidence in the institutions and people that serve the public.
We need a renewal of the debate on integrity, morality and the concept of virtue. For too long we have been ashamed of having a discussion on morality, as if some thought such a discussion required people to go back to an authoritarian past, when people were not allowed to think for themselves. It is sad to see what is almost an allergy to a proper, searching, thorough debate on the principles of morality, integrity and virtue.
In the business scandals, the economic crisis and the crisis in banking, we see a crisis of virtue more than a crisis of regulation. People focused on meeting narrow interests such as the interests of shareholders, where they were under pressure to reach short-term goals of profit. To meet those goals they put self-interest front and centre and disregarded other issues that personal integrity would require them to consider. I refer to moderation in their dealing, self-control and respect for those who worked beneath them. Those above put pressure on those below to achieve certain results. They failed to apply the standard expected and failed to recognise their responsibility, particularly those in positions of leadership, and compromised the integrity of those acting beneath them in the chain.
The crisis of virtue calls for a reflective response rather than playing the blame game or scoring points off each other. The media has a particular role to play. Elements of the media are feeding a scepticism about business and politics and, while it may be deserved, when this veers into cynicism it is damaging to society. We need a more thoroughgoing journalism that is willing to lead the search for answers. As Aristotle said, politics is about free people reflecting on how they should order their lives. How little we get of that genuine, searching debate and how much we get of point scoring. Today the media has gone off at the deep end about something that should not have happened, namely that the Seanad did not sit yesterday while some people were off playing golf — not myself I hasten to stress. Regardless of whether they should have been doing that or whether the Seanad should have been sitting, how predictable and Pavlovian of the media to rise to this and see it as yet another stick with which to beat politicians. The more contempt generated for politicians, the more contempt generated for politics itself and the more people’s willingness to participate in their own democracy is undermined. We are all the victims when scepticism spills over into cynicism.
What is the response? It is to return to these principles of integrity, morality and virtue. We in politics need to set a standard in areas like how appointments to boards have been made. It must be the best person for the job rather than the person from the constituency looking for travel expenses.
In the way we raise money, it seems rather odd we have put together a legal apparatus which requires us to declare donations above a certain limit but we can collect a small fortune provided the donations are small enough, without having disclosure. This nonsense brings the regulatory system for donations into disrepute. We must be careful about the way we spend taxpayers’ money in expenses on needless junkets etc. Until leadership comes from politics, scepticism will sadly spill into cynicism.
Perhaps it will be for another time, but with regard to lobbying I would like to reflect on the research of Professor Gary Murphy in DCU and others, including Raj Chari and John Hogan, in their brief analysis of the need to regulate lobbying and the different models of doing so in other countries. The salient point is that where there is regulation of lobbying systems, people are more likely to agree that such regulations help to ensure accountability in government, which is greatly desired.
The British chief rabbi, Jonathan Sacks, spoke about religion on occasion losing its way when it seeks power rather than influence. As we consider the role of lobbyists in our society, we should encourage a culture where lobbyists are free to seek influence provided they do so transparently. It is when they have access to power in a way that is not transparent that damage is done to the public culture and people become cynical about decisions.
As much as we need to introduce regulation around lobbying, we must never forget we cannot be embarrassed about the need to promote a culture of virtue. No amount of regulation will save us from problems unless there is a strong culture of civic virtue where people operate the golden rule and act out of respect not just for their own needs but that of others in the wider society.
Deputy Martin Mansergh Deputy Martin Mansergh
Deputy Martin Mansergh: I am pleased to be in the Seanad again and to have this opportunity to speak in the debate in support of the Government amendment on the management of the economy, confidence in business and relevant ethical issues. Some regrets have been expressed by Senators that there is not an agreed motion but realistically, there will not be an agreed motion in which part of the preamble states there is a lack of confidence in the Government.
Senator Eugene Regan Senator Eugene Regan
Senator Eugene Regan: The Minister of State should look at the polls.
Deputy Martin Mansergh Deputy Martin Mansergh
Deputy Martin Mansergh: At this critical juncture, it is important we have an informed discussion of the issues relevant to the current situation. The economic environment has changed fundamentally. The strong and decisive management of the economy now being delivered by the Government will prove key to restoring the confidence essential to the restoration in time of healthy economic growth.
The world economy is experiencing its deepest and most widespread recession for over a half century. This severe deterioration has its root in problems emanating from global financial markets and has spread across the world economy. In an unparalleled post-war development, economic output is contracting and is predicted to be accompanied by a fall in world trade.
Clearly, as a small open economy, our export performance will be severely affected by the predicted 3.75% contraction this year among the advanced global economies which are Ireland’s principal trading partners. Furthermore, the depreciation of sterling has proven very unhelpful for our indigenous exporting sector and has further eroded its competitiveness. On the domestic side, the continuing adjustment of the residential building sector to more sustainable levels of output will subtract about 3.75% from economic activity this year.
As the recession which commenced during 2008 extends further, Ireland’s GNP is projected to decline by 8% this year, its sharpest decline on record. A further decline is expected in 2010 but as the expected international recovery gains momentum and the sharp shock to residential housing output passes through, our economy is expected to start growing again in 2011.
In the supplementary budget, the Minister for Finance highlighted a number of key steps to ensure the economy recovers from this period of economic distress. These included resolute steps directed at the stabilisation of the public finances, the restoration of the banking system, the recovery of our lost competitiveness, the protection of existing jobs, the stimulation of economic confidence, and the restoration of Ireland’s reputation abroad.
The European Commission has welcomed the Government’s reaction to the economic crisis and endorsed the approach pursued in the supplementary budget. The Minister will meet key investors and explain the Government’s strategy in this regard. Such action will play a further important role in restoring international investor confidence in Ireland’s economic prospects and clarify the actions we are taking to underpin the sustainability of our public finances.
The recent supplementary budget forecast a general Government deficit of 10.75% of GDP at the end of 2009. It is acknowledged that this deficit is still at a high level but it follows the introduction of a significant level of adjustments in the supplementary budget amounting to some €3.3 billion in 2009 and over €5 billion in a full year. The supplementary budget built on measures that began last July and which were followed by subsequent measures in the October budget and again in February of this year. The measures introduced are undoubtedly difficult but are absolutely necessary to stabilise the fiscal position.
I do not have much time on this occasion to go into the causes of our current position. I did so in the Dáil earlier this afternoon. I remember the mantra that the country was awash with money, and this was used as an argument and justification for supporting practically any and every spending project.
The supplementary budget set out a multi-annual consolidation plan for the public finances to bring the general Government deficit to 3% of GDP by the end of 2013, as is required by European rules. For the first time, multi-annual plans have been contained in the budgetary projections. Targets have been set for adjustments to taxation and expenditure in 2010 and 2011 and while the specifics of the measures are still being formulated, the overall policy areas for examination in this context have been announced. It is clear that further difficult decisions in all areas of policy must be taken. However, they are necessary to restore sustainability to our public finances and ensure international confidence in Ireland as a place in which to do business.
The Commission on Taxation and the Special Group on Public Service Numbers and Expenditure Programmes, due to report by mid year, will also have important roles to play in identifying measures that will improve the budgetary position in the coming years. The exact scale and nature of the measures to be taken in later years will be informed by the course of the economic cycle over the next two years.
In response to the threats to the financial system in recent months, the Government’s actions have been based on three broad principles. These are to prevent the collapse of systemically important financial institutions, and therefore the banking system as a whole, by protecting depositors and other important creditors who finance the banking system; support the economy by ensuring the flow of credit to sound business and personal borrowers; and protect fully the interests of the taxpayer in all of the Government’s interventions to save the banking system. I attended a lunch with EU ambassadors today and sat next to the Swedish Ambassador. He made the observation that when they set up a bank for bad loans in the early 1990s, they made a modest profit on the overall transaction.
The Government’s approach to the financial crisis has been structured and considered, demonstrating its commitment to preventing the failure of any systemically important financial institution. While the range of measures already introduced have gone a long way to supporting the banking sector and ensuring its stability, it has become clear that Ireland, like many developed countries across the globe, will require further measured and appropriate action. That is why the Government decided that the asset position of the banking system must also be addressed. Accordingly, a national asset management agency, NAMA, will be established on a statutory basis under the aegis of the National Treasury Management Agency, NTMA. The Government has received expert financial, economic, legal and valuation advice at every step of its measured response to the recent turbulence in the banking sector. Likewise, specialist expertise will be procured by NAMA in all relevant areas to ensure it is established in the most efficient manner to safeguard taxpayers’ interests. The Government does not consider it practicable to extend freedom of information to the operations of NAMA any more than it would consider such an extension to the activities of the NTMA.
To ensure the new banking system remains fit for purpose, it will also be necessary to restructure our regulatory and supervisory regime. This will require the introduction of necessary measures to allow the domestic banking sector to service effectively the needs of the real economy and to restore the reputation of the country as a sound and secure centre of excellence in international financial services — in which sphere employment has been maintained virtually at the same level as previously — ahead of its peers and regulated to the best EU and international standards. As the Minister for Finance, Deputy Brian Lenihan, indicated in the recent supplementary budget, the role of the Central Bank of Ireland will be reformed to place it at the centre of financial supervision and financial stability oversight, providing a single integrated structure combining both these critical functions.
The reconfiguration of our financial regulatory and supervisory system — the previous system was debated at some length by this House when I served as a Member of it — is, therefore, a priority for the Government. It is imperative to establish a new model and approach to financial regulation that will lead to the introduction of new regulatory structures, new standards in banking supervision and new standards of corporate governance for the banks.
Understandably, there has been a call for measures to improve the regulation of the business and political environment in the aftermath of recent financial and economic developments. It is worth pointing out that there is already a substantial body of company law which provides for good corporate governance — I refer here to the Companies Acts 1963 to 2006 — and for its enforcement by the Office of the Director of Corporate Enforcement, which has a very good track record. Irish company law is a significant part of the infrastructure which underpins the development of Irish business. It provides the framework that governs how Irish companies conduct their business, how they communicate with shareholders and other investors and how they deal with creditors. To remain fit for purpose, company law has been updated and refined regularly since 1963 in response to dynamic changes in the Irish and international corporate environment. In this connection, I commend the work of the company law review group in producing proposals for the major reform and consolidation of the 13 Companies Acts, resulting early next year in the publication of a significant item of legislation which will contain 1,250 sections. A lengthy period will be required for the debate on this legislation. In the meantime, the Companies (Amendment) Bill 2009 is before this House. Among other things, this legislation provides for enhanced powers for the Director of Corporate Enforcement in his efforts to ensure compliance with the company law code and improvements regarding the transparency of loans made by companies that are licensed banks to their directors and persons connected with them.
The Government is committed to ensuring the corporate governance regime for the financial and corporate sector generally accords with best international practice. The Minister for Finance will be working closely with the Tánaiste and Minister for Enterprise, Trade and Employment to take account of the lessons that will emerge from current inquiries by the Director of Corporate Enforcement in respect of recent developments. We will address, as appropriate, any concerns in this area.
The code of practice for the governance of State bodies sets out a governance framework within which the internal management and internal and external reporting relationships of such bodies is to take place. A review of the code’s operation has been under way since 2005, predating recent events in the financial services area, and drafting of a revised and updated version is now complete. The Minister for Finance has notified his colleagues that he intends to publish the revised and updated code of practice soon.
There have been some discussions during this debate with regard to nominations to State boards. A number of prominent persons associated with Opposition parties have been appointed by the Government to such boards. Included among their number is a former Leader of the Opposition in this House who was appointed to the Irish Human Rights Commission. I will be interested in seeing, should there be a change of Government in the near future or in the next few years——
Senator Eugene Regan Senator Eugene Regan
Senator Eugene Regan: The Minister of State almost let the cat out of the bag there.
Deputy Martin Mansergh Deputy Martin Mansergh
Deputy Martin Mansergh: ——whether Fine Gael’s proposals in respect of this matter will be carried through if that party gains power.
The Government amendment also calls on the House to recognise the many initiatives taken by various Departments to extend protection to whistleblowers. Subsequent to its introduction by Deputy Rabbitte in 1999, the Government was informed by the Office of the Parliamentary Counsel that the initial whistleblower legislation would require substantial redrafting in order that it might deal with a number of detailed and complex issues which had arisen. As a result, the Government decided on 7 March 2006 to formalise a sectoral approach as part of its policy on the provision of statutory protection for whistleblowers because this would provide a better and more focused way of dealing with the issue. This decision requires Ministers, in consultation with the Office of the Parliamentary Counsel to the Government, to include, where appropriate, whistleblowing provisions in draft legislation. Such an approach also acknowledges situations where the provision of whistleblowing provisions may not be appropriate.
Before and subsequent to this decision, the Government has included whistleblower provisions in much legislation, including the Standards in Public Office Act 2001, the Competition Act 2002, the Safety, Health and Welfare at Work Act 2005, the Garda Síochána Act 2005 and the Consumer Protection Act 2007. This approach ensures new measures will continue to be informed by and benefit from existing legislation and that Members of this House will be able to make contributions to developing legislation on a case-by-case basis in this important area.
I agree with Senator Quinn that whistleblowing or, as it is otherwise known, informing is not exactly an integral part of Irish culture. I was asked by The Irish Times to review three volumes of journals of a previous Upper House, namely, the former Irish House of Lords and I came across an interesting debate in which peers agreed that informing on one another was simply not done. In a modern democracy, however, people who come across serious wrongdoing and bring it to the attention of the authorities should be protected and not, as happened in the fairly recent past in both the commercial world and the public sector, punished and excluded.
Lobbying is an integral element of democracy where the citizen, interest groups or businesses communicate to policymakers their legitimate concerns and preferences. We need to be informed by outside views, regardless of whether they come from an industry representative, an environmental non-governmental organisation, a residents’ association or a trade union. I reject the notion that golden circles exist. As a Minister of State, I am in a position to state that, unfortunately, the majority of people who lobby in respect of what they want to be done, and these things usually cost money, receive responses which either are negative or indicate that their desires cannot be fulfilled at that point.
In Ireland, a small number of public relations companies carry out lobbying work on a fee basis from time to time. This is a very small industry by international comparison. However, we have a very open political system in which Senators, Deputies and Ministers meet citizens and interest groups, often on day-to-day business and through their clinics. Our political system lends itself to easy and free access, a real strength.
In designing any system of regulation, we must demonstrate that it brings tangible benefits in transparency, that it fits well with public expectations of access and the specifics of our political system and that it does not present an unnecessary drain on public resources to administer, especially at this time of constrained resources. The Minister for the Environment, Heritage and Local Government is considering this issue on behalf of the Government.
The Freedom of Information Act had its origins in the Fianna Fáil-Labour Government in the early 1990s. People associate the phrase, “letting in the light” with the then Taoiseach, Albert Reynolds. The legislation is working well to ensure the public can obtain access to information held by public bodies to the greatest extent possible, consistent with the public interest and the right to privacy, while balancing the effective functioning of the administration. In areas where much work and research is required to handle a freedom of information request, it cannot be entirely free of charge. The legislation’s remit has been steadily extended by the Government. Up to 520 public bodies are subject to freedom of information. The total number of requests made in 2008 was 12,600, representing approximately a 20% annual increase.
Senator Twomey is wrong in his claim that no Minister has resigned on reputational matters. In 1946, there was the sad case of the resignation of the then Parliamentary Secretary to the Minister for Local Government and Public Health, Dr. Con Ward. He was the victim of a scandal, artificially generated by opponents in the medical profession who did not like the direction he, a pioneer of the health services, was taking towards socialised medicine. Others such as Eddie Collins, a Minister of State in the Fine Gael-Labour coalition of the 1980s, and Hugh Coveney, a Minister of State in the rainbow Government, both resigned on such grounds. Ray Burke not only resigned from the Government but from the Dáil. The idea Ministers never resign is not true.
I am concerned about an ambivalence that does exist. I was horrified to hear IBEC’s chief executive a few days ago saying we should bend the rules, as the French do, in EU rules governing public procurement. We have got into many problems with the culture of bending the rules. I strongly believe we should not bend the rules.
We are facing tough economic challenges. To succeed, we must continue to pursue appropriate policies to position the economy to benefit from the global recovery. We must regain the competitiveness we have lost. This will mean an adjustment in our labour market, costs and work practices. We are already demonstrating such wage flexibility in both the public and private sectors, a significant achievement which many countries would wish to emulate.
Senator Brendan Ryan Senator Brendan Ryan
Senator Brendan Ryan: I thank the Minister of State for his contribution to this debate. He has spent much time in this House in recent weeks.
Members spoke about a range of measures needed to restore confidence in our economic and political systems. As Senators Hannigan and Prendergast pointed out, in the current economic climate failure to act is not an option and the sooner we clean up our act the better. The Government needs to take a lead in good governance by stamping out political patronage. The same people keep cropping up on State boards and semi-State companies. The former Taoiseach, Deputy Bertie Ahern, unashamedly said he appointed people to boards on the basis of friendship. Until we adopt a system whereby ministerial appointments to State boards and semi-State companies are based on merit, public bodies cannot function to their full potential and accusations of cronyism will remain valid.
Senator Hannigan has previously called for the Seanad to have ratification powers for public appointees, which I support. Considering the Seanad is seeking more powers in response to public criticism, then a scrutiny role over matters such as this fits the bill. It would create greater public confidence in both the Seanad and the public appointments process. It is recognised that politics must not have a role in public appointments. However, the current system is about ensuring an unacceptable continuance of party influence in the public sector.
Senator Quinn referred to the Labour Party’s efforts over the past ten years to introduce whistleblower’s protection legislation. This is an essential element of transparent governance, be it in the public service, the private sector or the Government. Whistle blowing has already led to the establishment of tribunals inquiring into planning and Garda corruption. Often those in a position to blow the whistle cannot because they fear being victimised and losing their jobs. That is why Labour’s proposal includes full protection for employees.
Ireland’s reputation abroad has helped our economic interests over the years. We are reputed for our flexible approach to rules. It is portrayed, at home and abroad, as an endearing feature, a sign of our relaxed nature. However, we cannot be relaxed about matters like corporate governance or have international investors regarding us as lax about good regulation. It is not a selling point for a country that aspires to develop a smart economy and a society of equals.
I thank Senators Hannigan, Prendergast, MacSharry, Regan, Hanafin, Quinn, Butler, Twomey, Callely, Doherty and Mullen for their contributions. I commend the motion to the House.
Amendment put. The Seanad divided: Tá, 26; Níl, 16.
Motion, as amended, put and declared carried.
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: When is it proposed to sit again?
Senator Donie Cassidy Senator Donie Cassidy
Senator Donie Cassidy: At 10.30 a.m. tomorrow.
Seanad Éireann 195 Corporate Governance: Motion.