Speaking in 1959, Seán Lemass stated "the historical task of this generation is to consolidate the economic foundations of our political independence". The Taoiseach and the Government have politically betrayed our country. They have led down the founding fathers of their own party, they have let down those who fought to achieve Irish independence and, by their actions, they have now endangered the economies of other European countries. Their greatest failure has been to let down our people. The blatant incompetence of this Government has resulted in the people being paralysed by anxiety, concern and fear about their future in respect of their businesses, employment, families and mortgages. This is all because of the gross incompetence of a Government that has ignored every proposal for a constructive future. It is our job as politicians——
Leaders’ Questions
Could we have a question, please?
It is our job as politicians to determine what solutions exist and to make decisions accordingly. This Government's gross inability to lead the country has resulted in the most shambolic mismanagement of the people's affairs since the foundation of the State.
Hear, hear.
The outright dishonesty of what happened during the past week, with Minister after Minister proclaiming that all is rosy in the garden, is a far remove from the reality on the streets of Ireland.
Deputy, a question please.
Will the Taoiseach make a clear statement of truth about what has gone on during the past fortnight? The Taoiseach partially opened the books in the Department of Finance but no Opposition party has had any word from the Department of the Taoiseach about the most potentially catastrophic consequences for our country. Will the Taoiseach tell the people what has been going on during the past week? Have there been discussions or intentions of discussions about an emergency bailout for this country or other? We are aware of the statements of Ministers who have said, "We have not applied for this". Will the Taoiseach now tell the people, truthfully, the extent of the contact, technical, formal and political, with the European institutions in respect of the seriousness of the banking problem that afflicts our economy?
I regret very much the tone and content of what Deputy Kenny has had to say. The Government has, since the crisis began, taken all necessary steps to secure our economy and the finances of the country and to provide a functioning prospect for recovery, but it has been opposed practically every step of the way by the parties opposite.
It has not.
The meeting that is taking place today, at which the Minister for Finance, Deputy Brian Lenihan, is representing Ireland, is a meeting of the euro group finance Ministers, ECOFIN. There has been rumour and conjecture for some time regarding Ireland's position, which I clarified a number of times over the weekend, as did the Minister. Despite suggestions to the contrary from whatever quarter — including some who may not be disinterested — this country has not applied to use the European financial stability facility. We made the point, as we have done previously, that we are pre-funded up to mid-2011.
As people also know, there has been a continuing problem with regard to underpinning banking and financial stability in the euro area generally, and the peripheral countries — including Ireland, because of the size of our deficit, the banking crisis and other issues — have had to deal with this. All of the policy initiatives we have taken were with the consent and approval of the EU institutions. Many of the proposals put forward by the Opposition, unfortunately, would not have obtained approval.
Deputies
How does the Taoiseach know?
He never put any of them forward.
No interruptions, please.
The idea of default as a way of dealing with this matter is far wide of the mark.
My way or no way.
The fact that people opposed——
The Taoiseach is not in the real world.
——the National Asset Management Agency, which is the means by which we have segregated assets in a transparent way, using the——
He has the cheek to lecture us.
I am just dealing with the facts.
For someone who destroyed the country, a little humility might be a good idea.
NAMA has used the office of the Financial Regulator to outline those distressed assets and the level of loss involved in them. All of these actions by the Government have been in an effort to show that we are doing all we can within our power to deal with the situation that has arisen. We are making sure we work with our partners in the European Union in dealing with the issue that now affects the entire euro area. It is not specific to Ireland. Of course, Ireland has its own issues, which it has been talking about with the European Union institutions on an ongoing basis since the crisis first began. What we need to do is to allow those discussions to take place at the meeting of euro area finance Ministers, and presumably a statement will emerge. We will then be in a position to come back to the House after the ECOFIN meeting to discuss this further. I do not think it does the country any good to engage in controversy here while people are representing our essential national interest abroad. We are all trying to make sure Ireland sees its way to recovery from this difficult period.
It is a bit too late for that.
We should just stay quiet.
What happened to the green shoots and soft landing we heard about?
The Taoiseach has had his opportunity to see that Ireland makes its way to a prosperous future and he has failed in that duty. The head of the Centre for European Policy Studies said this morning that the September 2008 bank guarantee, and the way in which it was constructed, had led to the downfall of this country.
The Taoiseach talks about speaking the truth. This House and the Irish people were never given the full facts——
Deputies
Hear, hear.
——in the past by the Financial Regulator, the Central Bank, the Department of Finance, the various Ministers for Finance and the Taoiseach. We have never been told the full truth.
It is my belief that a bailout is not inevitable. That means that if we get a few things right, it will not have to happen. First, the Government must restore the confidence of other governments, the markets and the international community, so that they will actually believe its words; second, there must be a parliamentary majority in this House with the moral authority and political credibility to make the necessary changes; and third, there must be a proper growth plan to demonstrate to others that we are serious about our business and about the future. The Taoiseach has failed on all three of these fundamentals.
Can we have a question, please, Deputy?
As Seán Lemass said, we cannot opt out of the future. This is a democracy and people died on the streets for it. It will not be closed down by incompetence. It will not become the laughing stock of Europe.
It will not.
If the Taoiseach wanted to do his patriotic duty as Seán Lemass described, he would leave this House and let the people decide.
Deputies
Hear, hear.
The Taoiseach should not be deceived; the people are not mocked. The time has come——
A question, please.
——because he has lost the authority to govern. If he wants to do something in the national interest, if he wants to do his national duty and act as a patriot, he should let the people decide. He should leave this place, go to Áras an Uachtaráin, tender his resignation and let the people make a decision about the kind of Government they want to lead our country into the future.
Deputies
Hear, hear.
Practically every week during this session Deputy Kenny has made similar remarks about the situation in which the country finds itself.
What does the Taoiseach want — applause?
It is because every week the situation gets worse under the Government.
I accord respect to the Deputies' leader. They might reciprocate now and again.
I do not accept for one moment that this Government has acted other than in the best interests of the country and competently in every respect in dealing with a crisis of such magnitude.
It created the crisis. It is responsible for it.
I say that fully——
Now it wants praise for trying to tackle it incompetently.
Deputy Shatter, the Taoiseach is in possession.
It is a farce.
The situation in which this country has found itself since mid-2008——
Who created the crisis?
We have dealt with these matters appropriately and introduced measures which have been appropriate in all circumstances.
The issue of the guarantee was raised by Deputy Kenny again. The post-mortem Honohan report makes it clear that a guarantee was needed.
That 70% of it was our own fault.
Yes — otherwise——
The insolvency of Anglo Irish Bank is why we are where we are.
Otherwise——
The Taoiseach without interruption, please. Deputy Shatter will be leaving the House.
Either we want to use the House as a place for important debate or we do not. It is not a place for shouting each other down.
The Taoiseach should stop misrepresenting the facts.
There we go again.
The guarantee was required. If people want to talk about the subordinated debt, which made up 3.3% of the total volume, they can do so. Overall, however, there is no doubt that a guarantee was required to avoid an economic implosion. That is the truth.
Including Anglo Irish Bank.
Yes. That was unfortunately also a bank of systemic importance, as confirmed in the report by the Governor of the Central Bank.
The Government told us it was just a liquidity problem.
If Deputies have a problem with that, they have a problem with the Governor and the authors of the other reports. Those are the facts. We obtained EU approval for those guarantees. There was no existing European system at the time. We had to act in the national interest, and it has been confirmed subsequently that some banks would have had to close their doors in a matter of days had the guarantee not been established.
Other countries have introduced similar State guarantee schemes to deal with their banking systems. Governments throughout the world have had to intervene due to the impact of the financial crisis. To suggest that Ireland, uniquely, would have been immune is to refuse to face the facts. Yet it continues even now, after all that has been said and written about the crisis by those who examined the facts. We subsequently recapitalised the banks because we needed to do so, and then we segregated the distressed assets and parked them in the National Asset Management Agency.
That is a disaster.
It has all failed.
Throughout all of that, the Opposition, for its own reasons——
We were right. The Government's policies were wrong.
——decided that default was the way to deal with the situation, or that the Icelandic solution was required. That is not true. The way we are dealing with it at the moment is as follows.
In everything the Government has done it has failed.
Deputy Hayes, please.
The market situation is as it is. The cost of money is simply too high. We know that.
That is the view of the markets at the moment.
This country and other countries in the euro area are facing concerns regarding this matter precisely because——
Because the present Government is still in office.
——we need to find further initiatives within the euro area to deal with that matter. That is precisely why those discussions are ongoing, with the Minister for Finance, Deputy Brian Lenihan, attending today representing our interests in that matter. That is what we will be doing in the coming days and weeks as we seek to address the issue.
To continue the Government's success.
I want to ask the Taoiseach what is going on. Last week the cost of State borrowing reached record levels and last Thursday morning I asked the Tánaiste on the Order of Business if the Minister for Finance was going to make a statement either that day or sometime over the weekend about the very turbulent financial situation the country was facing. No such statement was made. However, we had a series of quite extraordinary developments over the weekend. On Friday morning we had the statement that emerged from the meeting of the G20 in Korea. By lunchtime of that day there was speculation in news media outside the country either that Ireland was seeking some kind of state bailout or that some kind of European support for the State was being discussed. All through the weekend the Taoiseach and some of his Ministers were making statements to the effect — as he repeated in reply to Deputy Kenny — that no application for European assistance or no application to the European fund was being made.
We need to get some clarity. I am not sure what the Taoiseach was saying in reply to Deputy Kenny. I accept what has been said that no application has been made. What types of contacts have been taking place between the European institutions and the Government over the course of the weekend? Were they at Central Bank level, official level or ministerial level? Has there been any suggestion from European sources that some assistance is to be provided to the State or is it the case, as is being speculated in this morning's newspapers, that what is now being discussed is in effect another bailout for the banks, this time through the European institutions? What are the implications of that for the State's finances? In his reply to Deputy Kenny the Taoiseach appeared to be acknowledging that the Irish banks now need a further bailout. I believe the phrase he used was "banking stability"; he made a couple of references to that. The people want to hear a clear statement from the Taoiseach as to what is going on, what is being negotiated, what kinds of conditions are being attached to it and over what period of time.
I made it clear yesterday evening that I am not responsible for the rumour mill all over Europe or elsewhere. I was told last Friday that, as Head of this Government, I had made an application at that stage to enter a facility, which was not true. Despite the fact that I said it was not true, the person who asked me the question seemed to think it was true. What I was indicating was that the suggestion that we had applied to enter a facility was not correct. At the G20 meeting in Seoul obviously discussions took place on the currency situation worldwide, including the euro. Obviously the situation in Ireland and other countries, which has been the source of public comment for some time, was mentioned there as well. What was welcome about the Seoul statement from the finance Ministers concerned was that should the question emerge at the December Council meeting regarding private sector involvement in the whole question of public debt and how that was to be paid off in the future, in the event of there being problems in any particular situation, which is not ours, that would mean it would only relate to debt that would take place after 2013. That provided a lot of reassurance, presumably, to the markets which were interpreting comments on this matter in previous weeks as if it related to debt — existing debt or debt that was already within the overall public debt portfolio of states, which was not the situation. That is from where that emerged.
The second point that emerged was that, as I have already said, discussions have been going on all the time on the whole banking situation — generally the European Central Bank and the central banks themselves. The European Central Bank, governing bodies and governors have all had their views on these matters. At the end of the day I was simply confirming a fact as far as Ireland was concerned, which is that we had not applied to any facility and despite the fact that it was being mentioned in a lot of so-called reputable news organisations it did not make it any truer. That is the first point.
The second point relates to the wider issues that have emerged regarding the currency itself. Market conditions have not normalised as we can see. There are concerns out there regarding the markets. From our point of view it gives rise to concerns. We are discussing with other European partners what stabilisation is necessary and what further policy initiatives might be considered. That is an issue that is being discussed at ECOFIN level and finance Minister level on an ongoing basis at their monthly meeting and obviously officials have been involved in those discussions, but we have not been involved politically in those discussions until such time as today's meeting takes place. I mentioned I took a phone call from the President of the Commission last Friday and I made it very clear, if anyone wanted to know, that we had not made any applications for the facility and obviously he was happy for me to confirm that.
These are matters at all times for sovereign governments. At the moment we are making sure that regarding our own situation it is understood that we are pre-funded up to the middle of 2011. Regarding banking policy, we have taken all the necessary steps with full transparency — a lot more transparency than might be attempted to be conveyed by others — regarding how we are dealing with our banking situation. We have done the guarantee; we have done the capitalisation; we have segregated the assets; we have set a very rigorous test on the capital requirements of banks — it is 8% tier 1 capital requirement, including 7%——
And it has not worked.
However, we have provided all that and the markets are pricing——
Correspondingly.
—— not just for this country but throughout the euro area where one has seen changes regarding spreads. That is a fact of the situation. We are prepared to work with others — with our counterparts in the euro area — to see in what way we can help address that issue and help to normalise market conditions. From our point of view, it is not appropriate to suggest that we are doing anything other than protecting our interests and ensuring that our national interests are understood. We will work constructively with people on that basis as part of our international obligation as part of a euro area that is wider than our own jurisdiction as we know and that is what we are doing. For people to be coming to conclusions about those discussions before the conclusions have even been reached as we speak does not serve our interests in any way either because there has been far too much speculation on those matters. While I am not saying it is anybody in this House, there are some who have been involved in those sorts of public positions being taken, who perhaps are not exactly disinterested themselves in what might emerge in terms of what they could get out of it.
I accept that the Taoiseach is not responsible for the rumours and speculation in the international media, but he and his Government are responsible for putting those rumours to rest and for settling the position. Unfortunately, that has not happened over the course of the weekend. The Taoiseach continuing to rely on the phrase that the Government has not made an application to the European fund does not address the issue.
I asked the Taoiseach a direct question. I accept that no application has been made, and I accepted that on Sunday when I was asked about it by a journalist. However, the issue remains that we need to be told, because there is speculation about it not only in our media but also in the international media, including it being the subject of comment today in the Financial Times, whether discussions are taking place about assistance being provided to the State, in the first place, and, second, about the question of additional funding for the Irish banks. It is important to address that.
I was interested to hear the comments by Daniel Gros of the Centre for European Policy Studies on "Morning Ireland" this morning. He made a direct connection between the State and what is happening in the banks. He said Ireland was the first country to say its government would guarantee all of the banks and every penny of their liabilities and that the decision, which looked smart then, is now the downfall of the entire country. He went on to say that, in his view, the financial markets were saying that the Government and the banks are the one thing as they are tied together. He elaborated further on that point.
All I am seeking from the Taoiseach is information. There is continuing speculation and comment in the media and among the public. It is one thing for the Taoiseach to tell the House that there is a general discussion about the eurozone area, but that is not the way it appears. Instead, it appears to be a specific discussion about Ireland's difficulties and the consequences for the euro area. There is an obligation on the Taoiseach to level with the House and with the public about what exactly is happening, but he continually fails to do that and speak directly. There is no point in being cagey and coy about this now, because it is being discussed anyway. Are we talking about assistance for the State? Has that been offered? Are we talking about assistance for the Irish banks? The Taoiseach must tell us exactly what is happening because it is being discussed anyway.
To say that these discussions are taking place at ministerial level and when they are concluded we will receive a report would be perfectly in order in normal circumstances, but it is not in order now. What is being discussed at that level is the subject of speculation and the Government's response to that over the weekend has not settled markets, public opinion or sentiment or international comment about this country.
As I said to the Deputy, I have always levelled with the Irish people and have always defended their interests. Some people would have liked to have had Ireland apply for this facility, with no prospect whatever of Ireland being able to put its case. Ireland has a case to put with regard to all of these matters.
Second, there is the question of market risks. Of course we are working with others to see how we can ameliorate market risks, but we are also in the business of trying to ensure that what emerges for Ireland and the euro area will be about bringing the type of stability that is supposed to be the objective of the policy in the first place. We have done everything we were required to do in best practice, and we have done everything transparently and above board. The market's sentiment or position is not normal at present. It does not look to the underlying strengths of economies or to the fact that we expect to have a net debt to GDP ratio of 83% this year when one takes account of the National Pensions Reserve Fund.
There are a range of issues here, including whether, if the market wishes to act completely irrationally, one is supposed to be enslaved to that and allow it to determine the matter. What we are trying to do——
There is only one certainty, that it is not your fault.
If the Deputies are not going to be serious about it, they are better off saying nothing. They are doing enough harm.
The issue is very simple. We are in discussions with our European counterparts to see how we can assist to ensure that market risks are taken out of the equation. We are not in the market at present. We are seeking to ensure that we underpin stability for the entire euro area, including Ireland because we are part of that area. We are working with others to see what will emerge from the discussions taking place at present.
Does that involve us taking money? If so, how much and from whom?
Until such time as those political meetings take place this evening and among the 27 member states tomorrow, one is not in a position to hear what the overall EU position is. However, the ongoing discussions——
We are concerned about Ireland.
——by Irish officials have been to ensure that people understand what the Irish position has been,——
Tell us.
——what the basic strengths of our economy have been and why we should be part of the discussions that are ongoing at present.
That concludes Leaders' Questions.