PROMISSORY NOTE OVERVIEW

PROMISSORY NOTE OVERVIEW

For a full overview of the mechanics of the recent agreement between the Government, the Central Bank of Ireland and the European Central Bank please follow the link provided.

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CREED CALLS FOR FAIRNESS FOR THOSE IN SUB-PRIME MORTGAGE DIFFICULTY

Dáil Speech on European Banking crisis and Mortgage arrears

Fine Gael European Affairs Spokesperson Michael Creed has called on the Government to protect those in difficulty with sub-prime mortgages by ensuring they’re interest rates are brought in line with those on more competitive established bank rates.  Speaking during a debate on the recent European Council, Deputy Creed said;

“We have a serious problem, namely, a European banking crisis which will manifest nationally. Now that the big issues such as cleansing of developer loan books and recapitalisation of the banks have been dealt, the banks will go after Joe and Joan in terms of their mortgage, which is the real problem for 2011. The State needs to get its act together and to assist in an innovative way people with mortgages, in particular those on sub-prime mortgages, getting onto high street variable rates”.

“Europe has a banking crisis. It has not gone away. Irish and other banks here were recently stress tested. We now find those stress tests were not worth the paper they were written on and there are to be new stress tests. There is a beginning of a realisation that this problem is only in its infancy. It is a much bigger problem than Europe has been prepared to confront to date. The public manifestations of this in, for example, a country like Ireland will become apparent in 2011 when the moratorium on mortgages expires and the 35,000 people in mortgage arrears of more than three months and the 12,000 people who have made no payments for more than 12 months will be in the firing line. That is the reality of the banking crisis facing Europe”.

Dáil Statement Financial Emergency Measures Bill – (Minimum Wage)

Dáil Speech – Financial Emergency Measures Bill (Minimum Wage) 10/12/2010

Cork North West TD Michael Creed outlined his opposition to the reduction of the minimum wage by €1. Speaking during a Dáil debate on the Financial Emergency Measures Bill Deputy Creed said;

“In deference to the time constraints, I will be brief. Fairness and national solidarity are critical to getting us out of our mire. However, these measures are being introduced in a pressure cooker atmosphere whereby Members are not allowed time to reflect on their implications. Yesterday Deputy Noonan pointed out that self-employed people who earn more than €200,000 will be substantial net beneficiaries of the universal social charge and other budgetary changes. I am sure that was not the Minister for Finance’s original intention but it was a mistake which will benefit high earners at the expense of those who earn the minimum wage. Somebody who earns €200,000 will probably gain €20,000, which is more than can be earned on the minimum wage in one year. That is fundamentally unfair at a time when the State is using the money it saves to pay bankers’ bonuses. These measures are generating an unprecedented level of social unrest”.

“Cuts in welfare generally affect the most vulnerable members of society. Yesterday I spoke at length about the unemployed people with children who are the new poor. Bringing people on minimum wage into the tax net exacerbates that trend. We need an enterprise society that values work but we are instead demeaning work and encouraging fraud. If we had more time for reflection we would construct a better Bill”.

Dáil Speech Social Welfare Bill – Budget 2011

Dáil Speech Social Welfare Bill – Budget 2011

As it is not possible for me to deal with the complexities of the Social Welfare Bill 2010 in the limited time available to me, I will instead address what I consider to be the most important points.

We have a significant problem with truancy and it is high time that the child benefit is linked to school attendance. A universal payment could apply until children reach school age but the most effective way to arrest the problem of school drop-outs would be to link entitlement to child benefit with school attendance records. We could have a win-win situation with a bit of creative thinking between the Departments of Social Protection and Education and Skills. Most people accept that payments should be targeted at those who are most in need. Child benefit is paid universally regardless of recipients’ income levels. There is considerable anger that we pay approximately €15 million to people who are outside the State. I accept that cuts both ways and that Irish citizens are entitled to payments in other countries but by linking child benefit to school attendance we could address two problems at once. We need to start thinking outside the box. People who leave the country continue to receive payments which are often greater than the average weekly wage in the new accession states to the EU.

I acknowledge the Minister has set substantial targets in regard to fraud. The problem of fraud needs to be tackled aggressively because it betrays those who are in receipt of meagre payments as well as the taxpayer generally. We could afford to be more generous if we eliminated fraud. One of my constituents continues to runs a bone fide construction company employing three or four workers despite being hammered by large companies for which the only obligation in respect of contracts is a tax clearance certificate. He tendered for a small job worth €11,000 but was undercut by two people on social welfare who offered a price of €5,000. Why do we not oblige the sponsors of construction projects valued at more than €3,000 to notify the Revenue Commissioners? As tenders will thereby know Revenue is in the loop, they would be encouraged to operate within the law. Such a measure would be simple to introduce. Given that we own the banks, we should also direct them not to issue payments where people cannot produce tax clearance certificates.

Fair play to the pensioners. There is a consensus in this House that they should not be touched but this comes at a cost. A married couple with two dependent children currently receive €385.70 per week in social welfare benefits. It is not easy to live on that amount of money. These people are the real poor in today’s Ireland and this budget continues to hammer them. Many of them have lost their homes or are paying mortgages on negative equity. They are worse off than any pensioner. A married couple will receive a pension of approximately €440 in addition the household benefits package. Where is the justice for people who are trying to raise their children? Deputy Gogarty made some solid points about the education system but children are going to school without a good coat or proper shoes for the current inclement weather.

The Minister’s intentions in revising the entitlements for disability payments has caused fear among my constituents. I have tabled a parliamentary question on the issue because I an anxious to have it addressed in more detail. I urge him to make haste slowly in this area because we should not dismantle the current system without certainty that its replacement will work.

CREED RAISES ISSUE OF CHILDCARE PROVISION

Dáil Speech on Childcare Provision. Budget 2011.

Cork North West TD Michael Creed has raised the issue of the cost of Chilcare, during the debate on the financial instruments implementing Budget 2011. Speaking in the Dáil Deputy Creed said:

“I wish to address the issue of the removal of the benefit in kind exemption for employer provided child care. The yield is expected to be approximately €6 million in a full year. Access to and affordability of child care is a major issue as the cost of child care is the equivalent of a second mortgage and more for many families. I know of someone in Dublin who pays €2,400 a month for three children under school-going age. Child care facilities provided by an employer may seem to place employees in an enviable situation but we should consider what the consequences for employees would be of not having access to child care at an affordable price. Often people without affordable child care cannot take up employment opportunities”.

“Another aspect we should consider is community child care facilities that are scattered throughout the country. I must declare an interest in this area as one of my children is in such a facility. These facilities are subsidised through a tiered system and Deputy O’Donoghue, as a former Minister, can take some credit for the network of such facilities. However, we only have a patchwork arrangement. Some communities are well served with such facilities, while others have no access to child care. We could argue that the optimum provision is where employers provide a facility for their employees”.

“The expected yield from the removal of the exemption is only €6 million. Rather than remove it, we should be striving to provide a much more comprehensive pre-school child care arrangement at an affordable price. Instead, this proposal dismantles a positive development. I agree that it may only be public service employees or the employees of large corporations who benefit from employer provided child care and that the majority of employees of small companies do not have access to this type of facility. However, that does not mean that affordable child care provision is not laudable or should not be encouraged”.

“It seems that we have not thought through the issue of the affordability of child care. Given that we are going through a crisis, the Minister has with the stroke of a pen dismantled one of the most innovative provisions in terms of child care and is penalising beneficiaries without having put in place a comprehensive child care programme. This is a retrograde step. In terms of the minuscule amount of money this move will save, the Minister should step back from it”.

“We should be striving for a nationwide, comprehensive, community not-for-profit provision of child care that was subsidised in a tiered way relative to employment status. In the interim, we should not penalise employers who had the foresight to avail of the incentives that were there to provide a service for employees. In light of the costs involved for child care for young couples, the removal of the exemption is a seriously retrograde step. I appeal to the Minister, in the interest of the children and of the ability of parents to be able to afford to go to work, to revoke this decision. One could argue that subsidised community child care facilities sometimes act as a disincentive for people to take up employment opportunities but in this case we are talking about people who are working and availing of a service that has been provided by employers. Now, in one fell swoop, the Minister will dismantle this progressive service for the sake of a relatively small amount of money”.

“By its nature, child care affects younger people. These are the same people who are in negative equity and up to their necks in debt with mortgages they cannot afford and in danger of having their houses repossessed. Many of them are also in vulnerable employment situations. They already suffer enough stress, financial and otherwise. I appeal to the Minister not to dismantle what was an innovative provision in terms of child care, all for the sake of a minuscule amount of money in the context of the problems we face”.

CREED CALLS FOR ECONOMIC & POLITICAL STABILITY IN DÁIL SPEECH

Dáil Speech 30/11/2010 Economic Stability & Budgetary Process

To delay the inevitable any longer is to stick one’s finger in the eye of the public who are seething with anger about where we are and how this Government has led us to this scenario.

As far as I am concerned the blame game is over. The focus now is on how we can progress from here. The fundamental foundation of any progression will be democratic legitimacy. In the context of the enormity of what the Government is contemplating leading the country into, the fact that it does not have the democratic imprimatur of the public means it will never be accepted. It will always be a millstone around the neck of Fianna Fáil but it may well be a millstone around the neck of incoming Governments if it is not given the democratic legitimacy an election affords. Therefore, to deliver political and economic stability we need to clear the decks. We need to know that there will be a general election early in the new year. In order to get to that position we are saying to the Government that we will co-operate in terms of time provision to bring forward the finance Bill, social welfare Bill and the budget. That is eminently sensible and reasonable. I cannot understand why the Government will not accept the motion.

Woodrow Wilson, a former President of the United States, said on the occasion of the passing of the Federal Reserve Act, which I understand is the foundation stone for the American taxation system, that America was a country controlled by its credit system. He went on to say that it was no longer a government by free opinion, conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men. How applicable, regrettably, that is to where we are at as a nation. We are subject to the duress of a small group of dominant players outside of this country. The duress to which we are being subjected has never been debated or approved in a public forum. In the context of the enormity of what is being considered an election is the only way that such legitimacy can be brought about.

We are told that what is contemplated in the bailout by the IMF and the European Union cannot be renegotiated. It will be subject to quarterly reviews. We were also told it was an article of faith that the Lisbon treaty could not be renegotiated. Yet, no sooner had it been rejected in the initial referendum in this country but wheels were put in place to take on board the reservations, improve the treaty and offer greater guarantees in respect of the fears that were expressed by the Irish electorate. Ultimately, a better deal was secured. A better deal can be secured in this regard also.

I acknowledge that we must get access to funds given that we cannot do so at market rates because of the mess the Government has led us into. We need access to funds. In many respects we are fortunate that people are prepared to give us funds. It is ironic that having been good Europeans for years, the funds available from Europe come at a premium whereas the funds available from the IMF are at a more favourable rate. That sticks in the craw of many people in this House and around the country who have supported the European ideal and movement.

In respect of where we are at and the deal that has been the subject of debate earlier, last year the Government introduced a national recovery bond at 3.96% over ten years. There were soundings in the four year plan published last week about a national recovery bond. We should be in a position to take maximum advantage of the remaining capital that is held by Irish investors in Irish banks and offer them an equivalent rate to put their funds into a national recovery bond for a shorter term than the ten years originally envisaged. Ten years is too long a period not to have access to one’s funds. It should be done on a comparable basis for three, five or seven years in the same way as the various funds that are available to us in the rescue package. We should pay that rate to Irish investors and get Irish capital. That would establish a platform to which ordinary citizens of this Republic can contribute.

I am alarmed at the use of the National Pensions Reserve Fund. In effect, what we are being asked to do with our pensions reserve fund is to bail out pension fund managers across the European Union who put their pensioners’ funds into Anglo Irish Bank and other banks in the State. We have a ticking timebomb in respect of the cost of pensions. Now we have this pot plundered to the extent of €20 billion – €10 billion under this deal and €10 billion previously. No consideration has been given to that ticking timebomb, which is arising due to our demographic profile, in terms of future pension provision

DÁIL SPEECH ON MAINTAINING 12.5% CORPORATION TAX RATE 23/11/2010

Corporation Tax Dáil Speech

“I commend Deputy Noonan and his colleagues on the Fine Gael Front Bench on introducing this timely motion. The biggest crisis the country faces relates to the fact that 450,000 people are unemployed. The taxation system, whether it be the part which relates to income tax or that which relates to corporation profits tax, is critical to whether people remain in employment, whether new employment is created, whether businesses expand or fold, whether new foreign direct investment is attracted to this country or goes to other EU or global locations or whether existing foreign direct investment relocates elsewhere. That is why it is important this debate is taking place”.

“It is also important that the House, in the context of the financial straitjacket in which the country finds itself which has led to others coming to our assistance, lays down a firm marker regarding what we believe to be the pillars of public policy that are sacrosanct. The corporation tax rate is one such pillar. It is regrettable, therefore, that the Government saw fit to muddy the waters by tabling an amendment to the motion. At a time when it is seeking cross-party co-operation, it is disappointing the Government has tabled the amendment. Those opposite should reflect on this between now and the vote tomorrow”.

“There are approximately 240,000 jobs in Ireland that were created and are maintained by foreign multinationals which established operations here. Foreign direct investment accounts for in the region of 70% of total exports, the value of which amounts to €110 billion. The companies involved provide 55% of the total of corporation profits tax paid. In addition, they pay approximately €7 billion in salaries to their staff and are responsible for direct investment in the economy of €19 billion. It is regrettable, therefore, that any uncertainty should hang over this sector at a time when the critical issue is jobs”.

“In 2008 the OECD carried out a survey and discovered that for every 1% rise in corporation profits tax, there is a corresponding likelihood of a 4% reduction in foreign direct investment. If one considers this in terms of the impact it could have on the economy, it is clear that 10,000 jobs and €5 billion worth of exports would be placed in jeopardy and €400 million in wages and €1 billion in direct investment elsewhere in the economy would be lost. In such circumstances, the stakes are enormously high. Given that 450,000 people, many of whom may have worked in the foreign direct investment sector or in indigenous companies for which corporation tax is critical, are unemployed, I am of the opinion that this is an opportune time to lay down a marker”.

“I agree with Deputy Noonan that the threat to our corporation tax regime may be more imaginary than real. If our partners, the IMF or the EU in its many guises, are interested in Irish economic recovery, they must recognise that the engine of such recovery must be job creation. Corporation tax is critical in this regard. Rather than the lowest, Ireland has only the third lowest rate of corporation tax in Europe. The average rate across the 27 member states of the EU is 22%. Ireland’s rate of corporation tax is 12.5% but there are two other member states with even lower rates. It is important to highlight that fact”.

“There have been a number of hostile soundings in recent times, especially from France and Austria, regarding the fact that the bailout package should be conditional on an amendment to our corporation tax regime . Such soundings do not necessarily come from critical players in the countries to which I refer but they certainly emanate from those on the fringe. Against that background, we must take account of comments such as those attributed to Mr. Lionel Alexander, managing director of Hewlett Packard, a company which provides approximately 4,000 jobs at various locations throughout Ireland, who stated today that if the corporation tax rate increased, his company would reconsider its investment in Ireland. That is a salutary reminder of the stakes for which we are playing”.

“There is another matter which we must consider in this regard. If we were to alter the corporation tax regime, what guarantees are there that companies which have located their operations here to avail of the 12.5% rate that applies would relocate those operations to other European countries? There are no guarantees in that regard. The other 26 member states of the EU should take note of that fact. If the companies to which I refer decided to locate to countries outside the EU, there could be significant outflows of capital from all 27 member states. The latter must be borne in mind, particularly in the context of the emerging economies in Asia. India, for example, is turning out more people with PhDs than any other country in the world. Singapore, China and Brazil in South America are all chasing foreign direct investment”.

“Our corporation tax regime is but one piece of a jigsaw of incentives which make Ireland an attractive location for foreign direct investment. Other such pieces include our educated workforce, recent legislation relating to holding companies, taxation on patent royalties, etc. and double taxation agreements. These incentives make locating operations here very attractive”.

“It is also important to take the indigenous sector into account. Any interference with the existing corporation tax rate could well be the difference between indigenous companies surviving or going under. These companies are driving onwards, exporting goods and services and are the real engine of our economy in the context of the number of people they employ. We should, therefore, make haste slowly. The House should send out a clear message in that context that our corporation profits tax regime is not open to negotiation”.