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The difference between millions and billions

De Facto

De Facto
Liamy MacNally

WE are in the season of Brexit and Trump, with a few new political offerings also on the horizon later this year and next year. Many important issues like homelessness, refugees, the trolley crisis in hospitals, public pay and the Northern Ireland Assembly vie for space and our attention. Lost in the haze of the Christmas season column inches was a decision of our own Supreme Court.
Last month, Independents4Change TD, Joan Collins, lost a legal challenge against the Finance Minister’s decision to issue €31billion in Promissory Notes to Irish banks, Anglo Irish Bank (€25.5billion), Irish National Building Society (€5.5billion) and the Educational Building Society (now a subsidiary of AIB). In the unanimous judgement the six Supreme Court judges dismissed the appeal by Ms Collins.
Go back to 2010, when it all started. Both banks were insolvent at the time, yet both banks received funding from the Central Bank, as a follow-on from the famous Government bank guarantee. RTÉ reported it thus: “Ms Collins argued that the Minister for Finance did not have the power to allocate an unlimited sum of public money. She appealed the High Court’s rejection of her challenge… The core issue in the case was whether or not the Minister for Finance had the power to allocate unlimited sums of public money without the funds being quantified and considered in advance by the Oireachtas. Ms Collins’ legal team described this as an enormous case and argued the Constitution did not permit the allocation of unlimited monies. The State argued the minister had the power to issue the €31billion in promissory notes…”

Chief Justice Susan Denham, delivering the judgement, said the legislation was ‘undoubtedly exceptional,’ a permissible constitutional response to an exceptional situation. Ms Justice Denham added that it could not be considered as a template for broader ministerial power on other occasions.
According to Article 11 of the Constitution, revenues collected by the State shall go into one fund and be appropriated for purposes determined by law. In 2010, a total of €26.83billion was collected by Revenue through all forms of tax. This was topped up with €4billion from the National Pension Reserve Fund and given to the two banks by then Finance Minister Brain Lenihan.
How much is €1billion? To put it in a time perspective, one million seconds equal about 11.5 days; one billion seconds equal 31.75 years. According to Joan Collins, TD, the Supreme Court ruling means ‘a Minister for Finance can spend any amount of money they deem necessary in an emergency without going back to the Dáil and we will be challenging that in the Dáil itself’.
Mr Diarmuid O’Flynn from the Ballyhea Says No campaign group said: “The reason it was done was twofold: 1, The ECB had no structures in place to deal with insolvent banks (it does now, far too late for us), and 2, in the absence of such structures, it feared a domino effect if those two banks were allowed collapse, thus colluding with the Irish government and the Central Bank of Ireland to circumvent its own rule on bailing out insolvent banks and accepted the Promissory Notes as collateral.
That €31billion must now be taken back out of circulation by the Central Bank of Ireland. It’s being done in chunks. Originally, starting in 2011, it was scheduled to occur before March 31 of every calendar year, and the new government did in fact destroy €3.1billion that year. Then came Michael Noonan’s infamous Promissory Note deal, in February 2012, when both Anglo and INBS (now the IBRC) were eventually and inevitably wound up, and with it a new schedule.
The Central Bank destroyed €1billion in 2014; €2billion in 2015; €1billion in 2016. So, €6billion has already been destroyed, with €25billion to go! We are borrowing with the left hand and refusing Apple’s €13billion with the right hand.
According to Focus Ireland, there are 6,985 people ‘officially homeless’ in Ireland, an increase of over 40 percent since last year, and one in three of those in emergency accommodation is now a child. Our political and legal decisions, with moral imperatives neatly left to one side, have everyone justifying themselves.