IBRC declined pay cut request
The board of the former Anglo Irish Bank declined a request by Minister for Finance Michael Noonan last spring to impose pay cuts on senior staff members, an Oireachtas committee has heard.
Mr Noonan told the all-party finance committee this morning that he wrote to the chairman of Irish Bank Resolution Corporation Alan Dukes last April asking the board of the State-owned bank to impose the same scale of pay cuts on staff members as had been imposed on other employees in the public service.
“I wrote to Alan Dukes, who talked to the board about imposing the pay cut that had been done for the public service at the time.
“[The board] did not think it was wise and prudent to take the pay cut.
"They said they were losing staff and it was difficult for them to hire.
"My position is that although they have legal authority to set pay scales... there's a public interest as well. We will continue to push that as well."
Mr Noonan was responding to questions put by the Cork North Central Fine Gael TD Dara Murphy.
It followed the disclosure in The Irish Times this morning that six IBRC executives earned annual salary packages worth over €500,000 and a further 36 earned over €200,000.
Mr Murphy said Mr Noonan should write to them again.
The Minister was briefing the committee ahead of two meetings in Brussels next week, one of finance ministers from euro zone countries and the second a gathering of his counterparts from the 26 other EU states.
The committee’s new chair, Ciaran Lynch of the Labour Party, has imposed a strict new time limit on members for asking questions, which has resulted in a fairer allocation of time to all members but also led to one or two muted protests this morning.
During the course of the meeting, Mr Noonan reiterated Irish opposition to a financial transaction tax unless it was universally applied. He also repeated that growth rates for the Irish economy in 2013 would be marked down compared to the forecast last April.
Asked by Fianna Fáil TD Timmy Dooley about the promissory note, Mr Noonan said the deadline on that was effectively the next payment date, which is March 31st. "Obviously we are not waiting until then. We are pushing for earlier resolution," he said.
Mr Dooley said unless Ireland got a deal worth about €24 billion on the other strand of negotiations - recoupment of the cost of bank recapitalisation - the State would struggle.
In his reply, Mr Noonan said there was no question of Ireland defaulting. "If debt peaks at 121 per cent we will still service that. It will put a very severe burden on the taxpayer. The amount of resources need to service debt at that level is like driving a car with the handbrake on," he said.
Taking up that theme, Socialist TD Joe Higgins asked how Mr Noonan could describe debt at a ratio of 120 per cent to GDP as sustainable.
Mr Noonan insisted the Government was not making light of the situation. "Forty per cent of the 120 per cent is transfer of bank debt onto the sovereign. If that was not the case our debt ratio would be 80 per cent which would be one of the lowest in the EU - well under the average."
Mr Noonan said the Government was aiming to untangle the arrangement of the previous government.
Mr Higgins said that government's action had been "criminal lunacy", adding: "Your Government continues the process of bleeding the Irish people to honour this criminal arrangement."
Questioned by Mr Lynch and Kevin Humphreys of Labour, Mr Noonan said the Government would not agree to any arrangement for a financial transaction tax that would not involve London, as it would jeopardise 33,000 jobs in Dublin.
Mr Humphreys objected to the Government citing a tax that was introduced in Sweden in 1984 on the grounds that it was not the same. Mr Noonan replied that he was entitled to cite it as the Swedes themselves have brought it up, said it destroyed the industry in their country and that is why they oppose the tax.
On growth, Mr Noonan said there is a mixture of good and bad news. He said the rates for this year would be revised up slightly but the forecast for next year, to be published in next week’s medium term fiscal review, will be revised downwards.