To help to process the legislation more efficiently, will the Minister confirm that he is in a position to accept amendments to the Bill? It is my understanding amendments cannot be tabled because they will not be accepted. Is that the case?
European Financial Stability Facility and Euro Area Loan Facility (Amendment) Bill 2011: Committee and Remaining Stages
SECTION 1
Question proposed: "That section 1 stand part of the Bill."
We can table amendments for discussion purposes. However, since the text must be endorsed across the member states, if we were to vary it here, it would have to go back again. There are only three sections in the Bill, one of which is the Long Title; therefore, what we are really talking about are the Schedules and Appendices which are standard across Europe, which means all other Parliaments will be amending them also. We are not in a position to accept amendments because we are committed to doing this in September and certainly not going back a second time, but we can discuss any issues involved.
It is probably a unique experience, as Irish legislators, dealing with legislation we cannot amend. While we are having a debate on Committee and Report Stages, it is just for the purposes of going through the motions. I will not delay proceedings but I would like to ask a question about section 1, to which the Minister referred. It states the European Stability Facility Act 2010 is being amended by substituting €12.5 billion for €7.5 billion. I know Ireland is a stepping out guarantor. Will the Minister tell us if it can become a stepping in country again under the legislation?
There is no provision for stepping back in, but I presume that if we finish our programme successfully and the country is sovereign again, conducting its affairs independently of the IMF and the European authorities, that question will be raised by either the Commission or our European colleagues. However, there is no provision in the Bill which requires us to go back in.
The argument is being presented to us that increasing the guarantee by €5 billion is merely a cosmetic exercise because this is a stepping out country. We have stepped out since 3 December 2010. Could there be a time when Ireland could be called upon to guarantee the €12.5 billion figure in the Bill? The Minister has already spoken about Ireland coming out of the programme and there is reference on page 22 of the Bill to handing over the contributions to the ESM at that point. Is it conceivable that this guarantee could be called upon at some stage, or would it require this Parliament to again pass legislation? We are well aware of the structures being put in place by the German Parliament to ensure there will be some sovereignty in this whole process. A committee is being set up there to ensure there will be no draw on that country's Exchequer. There is no such measure being facilitated in this Bill. We are being told not worry about the figure of €12.5 billion because it does not apply to us. I want to be crystal clear that this will be the case indefinitely and that there are no circumstances in which this measure which the Minister is asking us to enshrine in law will be called upon.
The stability fund is temporary in nature and will be replaced by the ESM fund after 2013. There will be further legislation to put the ESM arrangement in place. When we see the text coming through, I expect that provision will be made for guarantees also. It may be bigger or smaller or the same, but the stepping out arrangement will be in place. The ESF fund will run out and be replaced by the ESM fund. We will not be coming back to move amendments to this Bill to allow Ireland to step back in again, but it may incur analogous obligations under the ESM legislation when it passes through the House. The Deputy will have his opportunity to debate it and oppose or agree to it as he sees fit.
What we are participating in is a charade. This is not a Committee or Report Stage debate on a Bill. It is a process that would be fitting in the old Stalinist parliament in Russia, in which the Politburo came forward with a fixed agenda, whereby it proposed and the members of the parliament loyally disposed. This is not a democratic process. The elected Members of this Parliament are being dictated to by an agenda devised in Brussels. It is an increasing feature of governance within the European Union as the crisis in the financial system and the capitalist economies of Europe has worsened. It is now increasingly the case that decisions are being made by diktat by forces outside the State, many of which are unelected. Therefore, Jean Claude Trichet, who answers to no voter, dictated to the Minister on Saturday that the €3.6 billion allegedly owed to gambling bondholders in Anglo Irish Bank should be paid and the Minister capitulated and agreed to this. The Treasury Secretary of the United States, Mr. Geithner, dictated——
I have given the Deputy some latitude and ask him to refer to section 1 please.
I am not going to participate any further. Deputies have the right to ask questions for as long as they want, but let us get to the vote and bring to an end this painful charade in order that we can at least mark our resistance to this further consolidation in trying to solve the problems of the financial system of Europe on the backs of the Irish, Greek and German peoples, with everybody else.
I think there is a misunderstanding. The House cannot amend the agreement, but the agreement is included in the Schedules. If Deputies want to table amendments to sections 1, 2 or 3 of the Bill, they have the same rights to do so, as they would with any other Bill. I do not see much scope for amending it, but rights are not being taken away. Deputy Higgins has been here for a long time and knows that the House is frequently involved in ratifying secondary legislation from the European Union. Once directives are agreed to in the European Union, they are brought here as secondary legislation. I do not recall there being a power to amend agreements, but the vehicle which conveys an agreement through the House is amendable.
On the basis that we cannot table amendments, may I ask the Minister three relevant questions?
As I understand it, we will deal with each section and questions must be relevant to the Committee Stage debate. I will allow the Deputy the latitude I allowed the other two Deputies.
Thank you.
In his summing up in the House a few minutes ago and when talking about not being able to burden share with the Anglo Irish Bank bondholders the Minister stated that when this was done in Greece, it caused a run on some European banks. Does he accept that all that happened was that the markets factored in normal trading losses? That is exactly what would happen if we applied the same at the very least to the unguaranteed senior bondholders in Anglo Irish Bank. Were we to see this write-down on those who hold the bonds, all that would happen is that they would not receive this super profit which it is being forecast they will receive. The situation in Greece in respect of senior bondholders not only tells us we should not cover the Anglo Irish Bank bondholders, it actually provides the exact template for what we should do.
The reason I am voting against this Bill is not that I do not understand the serious cash flow benefits that it will bring, rather I am voting against it because the entire euro approach is failing and tearing the eurozone apart. The evidence for this view is mounting. While I understand the reason the Minister is pushing through the legislation — to reap its cash-flow benefits — does he believe it is a step in the right direction or that this approach of solving a debt problem by acquiring further debt is working? On the same issue, does he support large-scale quantitative easing in the eurozone? Jean-Claude Trichet has called for such an approach and virtually all the economic evidence indicates it would be a sensible and necessary part of any solution.
I thank Deputy Donnelly for his contribution and questions. He made an interesting speech on Second Stage, to which I did not refer in my closing remarks because he was not present.
On burden sharing in respect of unguaranteed bonds in Anglo Irish Bank, I was relating to the House the advice I had received. Without quoting Mr. Trichet, I was giving the burden of his advice to the House because they were the reasons set out. What happened in Greece is not yet finished. As I understand the position, the country needs to achieve something akin to a 90% willingness rate among the relevant financial institutions before private sector involvement, PSI, is invoked. The last I heard, the relevant figure stood at between 75% and 80%. Deputies should remember, however, that this is a voluntary arrangement and I am being asked to push a coercive arrangement. Greece did not go that far. The effects in Greece would have been manageable if the measure had been confined to Greece and provided it achieved the ratios it had planned. The difficulty is that when the markets examined the Italian position and, to some extent, the position of Spain, they concluded that something similar would be done in these countries. There was, therefore, a direct contagion effect.
Ireland is in circumstances where since mid-summer the value on the secondary market of the unguaranteed senior bonds in Anglo Irish Bank has been moving towards par. Values have moved up to 85%, 86% and 87% and are now in excess of 90%. There is an expectation that this tranche will be redeemed at par. If we were to get involved in a voluntary exercise along the lines of what was done in Greece, we would hardly get €100 million out of it. That is what this issue comes down to. The judgment question is whether Ireland would risk reputation for such a sum. As Deputy Donnelly is aware, as a small programme country, it is very hard to explain the details of what one is doing and get one's message across. All that would happen is that Bloomberg would run a line under its bulletin stating Ireland had imposed haircuts on senior bondholders. In such circumstances, it would be very hard to get Jack back into the box, which has been my experience previously. It is very hard to nuance what one is doing when one comes from a country of Ireland's weight which receives very little attention. That is the response to the Deputy's first question in so far as I can answer it.
The Deputy's second question was whether I consider the action being taken in Europe to be adequate. It is clearly inadequate and evidence is emerging all the time to support this view. I can, however, understand the problems in Europe. The introduction of a single currency 12 years ago was a good idea and, as I noted in my reply on Second Stage, it has major advantages. The value of the euro has increased. Having started out at €1.22 to the dollar, it now stands at approximately €1.37 to the dollar, despite all the pain and suffering of the past fortnight. Ten days ago it stood at €1.44 to the dollar.
The euro needs to be devalued.
All I am saying is that it has gone up in value.
The euro also controlled inflation which in the past 12 years has averaged 1.97% per annum. Inflation was higher than this under the Deutsche Mark in the 12 years previously. The single currency has, therefore, been a great success in controlling inflation. European trade has also increased by 50% in the 12 years since the introduction of the euro, a development from which Ireland has benefited greatly.
Just two weeks ago, when Switzerland decided that the value of the Swiss franc was rising too fast and damaging the country's exporting capacity, it decided to peg the franc to the euro, rather than the dollar, gold standard or yen. The Swiss made a shrewd judgment that the euro was a strong currency and a good one to peg their currency to. The problem is that when the euro was introduced, the authorities did not, despite the proven advantages of doing so, fit the policy instruments to defend it in times of adversity. This is being done retrospectively and in instalments. The problem is that we have never got ahead of the curve and bigger initiatives than those taken thus far are needed. I advocate this all the time. As I did not want to offend anyone in the larger countries when they were dead set against eurobonds, I simply changed the language and stated we were seeking mutual guarantees. The Deputy is aware that eurobonds and mutual guarantees amount to the same thing, although the language differs.
On quantitative easing, I can see the problems the European Central Bank in Frankfurt would have with such an approach because its primary mandate is to protect the value of the currency and keep inflation low. That is its mission statement. If one pumps significant sums into the economy by printing money, which is the effect of quantitative easing, one needs to measure the results to ensure there are no inflationary effects. I assumed buying bonds on the secondary market was a distant cousin of quantitative easing, but this is denied in Frankfurt which argues that there are balances elsewhere in the system and one does not increase money supply by buying bonds on the secondary market.
Quantitative easing has been used successfully in the United States and — also successfully I believe — in the United Kingdom, although an inflation problem is emerging there where the inflation rate has reached 5%. This is a very high rate both comparatively and in absolute terms. This is a judgment for the European Central Bank to make, but I will put the issue in this way. If a decision were taken in Frankfurt to engage in quantitative easing, I would not jump up and down and say it was wrong. That is my position on the matter.
On the Anglo Irish Bank bondholders, while I understand the Minister's argument, its logic is a little circular. It appears to follow the following route. Arising from an expectation in the markets that Ireland would not honour investors' profits and serious haircuts would be imposed, bonds were trading at significant discounts. However, as the Government made it increasingly clear that it would pay or would have to pay the bondholders, the gap between par and the expectation of the markets closed. The logic, therefore, is that there is, as a result of Government statements that we would pay the bondholders, no point in refusing to pay them. Perhaps we could factor this logic into some of the other bonds we have to deal with by issuing statements that we may not pay them as this would correctly reduce the expected value.
It is a problem that the euro is maintaining and increasing its strength against the dollar and various other international currencies. We need the single currency to devalue significantly if we are to export our way out of our problems. On the linked issue of quantitative easing, it is my understanding Jean-Claude Trichet is constrained by the 2% ceiling on inflation and has stated he wants this ceiling raised. The Government is a member of the Economic and Financial Affairs Council, ECOFIN, and the euro group which are able to change the terms of reference of the European Central Bank. It is my understanding Mr. Trichet wants the bank to have the ability to print more money. If we can print more money, we can start to inflate our way out of debt. If the inflation rate were to hit 4.5% or 5% for a small number of years before being reined in again, we would be able to start to deflate the debt in real terms. Other than a write-down, the debt will not go away without inflation and quantitative easing. Moreover, increasing the money supply would result in significant stimulation of economic activity. These measures will enable us to begin to deal with the debt because the current approach is simply not working.
Mr. Trichet is independent in the exercise of his functions and not subject to political direction. I have never heard him express the view the Deputy ascribes to him. While he may have done so in a speech somewhere, he has certainly not expressed it at any of the ECOFIN meetings I have attended.
Deputy Doherty may ask a final supplementary question.
I will speak to the section rather than ask a supplementary question. I do not wish to digress and discuss Anglo Irish Bank bonds.
Deputy Donnelly is absolutely correct in his point about burden sharing with bondholders at Anglo Irish Bank. Nobody really swallows figures such as the €100 million mentioned, but that is not what we are dealing with.
The Minister knows that my party will be voting against the Bill. I do not want to drag this out for too long because it is a sham, as others have said, that we cannot amend the legislation. In reality, the annexes are the legislation; the rest is just the Title and so on. There is one key aspect, the additional €5 billion liability. I would like to tease this out because it is important that we, as legislators, scrutinise the legislation.
From June 2013, the EFSF cannot issue any new bonds and will cease to exist after the last loan is repaid. I am looking at this from an Irish point of view. The Bill will stand on the Statute Book. If the European Union or ECOFIN wanted to agree to allow the EFSF to issue bonds after June 2013, would this require a change in legislation in Ireland? I say this because when I asked whether there was any possibility that the liability we are enshrining in law — the additional €5 billion — would be called in at some point in the future, the Minister's answer was that the ESM would replace this fund and legislation would be introduced. We know that is not a good way to deal with legislation. We introduce legislation for the here and now. I take the Minister's word that his intentions are sincere with regard to what he thinks will happen, but there is no guarantee that the ESM will actually replace the EFSF. We have only to consider the ruling of the constitutional court in Germany; it is clear that the introduction of the ESM would require a referendum in Germany and there is no guarantee the German public would agree to it. There is no guarantee that the Government will get away with introducing legislation without a challenge in the courts which might require the establishment of this facility to be put to a referendum.
I am asking about the here and now. Would an extension of the EFSF's remit to issue bonds post-June 2013 require us to amend legislation, or can the matter be dealt with at a meeting in Brussels, or wherever, by unanimous agreement? Is there any situation where the potential additional liability of €5 billion we are enshrining in law can be called upon in the future, whether through an extension of the EFSF's role without referring to Parliament, or a transfer of liabilities, as mentioned on page 22 of the Bill, to the ESM if it ever applies in law?
As this is a programme country, the notional guarantees ascribed to Ireland will never be exercised because of the stepping-out arrangement for guarantee countries. The ESM has already been agreed to. There may be minor amendments before it is fully signed off, but it has a different structure from the ESF. Under the ESM, there is no guarantee system; countries must pay actual capital into the fund. Neither is there a stepping-out facility for the ESM. Ireland's share in terms of paid-in capital will be approximately €1.3 billion. That will be the arrangement, rather than a system of guarantees. This is to be paid in five equal instalments starting in 2013, which equates to about €250 million per annum for each year from 2013 to 2018, but there will be no accompanying guarantee system as it is a different mechanism. As I said, it will require separate legislation here and Deputies will have a full opportunity to debate it at that point. Nothing in this Bill impinges on it.
I am not getting a direct answer to my question. The Minister keeps talking about the ESM which has been agreed to in the European Union but does not exist in Irish law. Many things have been agreed to in the European Union but have changed in subsequent months. There is no guarantee that the ESM will come into law across all EU Parliaments. I am asking the Minister whether a change in the law would be required in Ireland to extend the remit of the EFSF to issue bonds after June 2013. I suggest that if Germany decides the ESM cannot go ahead, European leaders will decide instead to tinker with the institution already in place or make it into something more credible or similar to the ESM. In this way they would get around the right of the German people to have a constitutional referendum. Does the sunset clause of the EFSF require a decision in this Parliament? The reason I am asking is this: if it were able to issue bonds after June 2013 and we were to come out of the programme at that time, the liability in the Bill could be called upon.
If we successfully exit the programme we are in at the end of 2013, is there a situation where the EFSF could still be in existence and the guarantee of the enhanced amount in the Bill could be invoked? Is that a possibility, or do we have a legal commitment that on the introduction of the ESM in mid-2013, the EFSF will cease to be in place?
There is no provision for Ireland to step back into the EFSF and the EFSF would have to be amended to allow it. There is no question of that happening, however, because the ESM has been agreed to at the highest level in the European Union and signed by representatives of member states. All I am saying is that because it has not yet come through the national Parliaments, there is still potential for minor amendments. It does not require a referendum, whether here, in Germany or anywhere else. Some countries, as Deputies know, can implement constitutional changes in Parliament without having a referendum. The advice is that the introduction of the ESM does not require constitutional change, certainly in Ireland, and that it will be this House and the Seanad that decide on the matter.
Question put and agreed to.
Sections 2 and 3 agreed to.
SCHEDULE 1
Question proposed: "That Schedule 1 be Schedule 1 to the Bill."
Schedule 1 is where we get to the nitty-gritty. We are opposing the Bill and this Schedule. I will not delay the House but I have a number of points to make.
The text on page 10 of the Bill, from lines 11 to 25, deals with the extension of maturities of EFSF loans. It states: "We have decided to lengthen the maturity of future EFSF loans to Greece to the maximum extent possible from the current 7.5 years to a minimum of 15 years and up to 30 years with a grace period of 10 years", and, "The EFSF lending rates and maturities we agreed upon for Greece will be applied also for Portugal and Ireland". Can the Minister explain this to me? I know we have discussed it before, but I am just not clear on it. My reading of the Bill is that it has been agreed to extend the maturity of future loans for Greece to a minimum of 15 years and up to 30 years, and that the same must be applied to Portugal and Ireland. Can we avail of 7.5 year average loans, or is it the case that any future borrowing from the EFSF must be for a minimum of 15 years and up to 30 years? The Minister has mentioned that there is a debate on whether the NTMA will consider extending the maturities of the bonds. I could be wrong, but my reading of the legislation is that this will not be possible for us any longer, that it will be for a minimum of 15 years. Perhaps the Minister might explain this to the House and refer to the grace period of ten years.
My understanding is that we would have discretion, but we have not yet made a policy decision. Obviously, we would need to obtain the advice of the NTMA. In the future we would certainly not want the repayments to be lumpy — in other words, that there would be a very large repayment in any one year. We will use the discretion allowed for on the timeframe to ensure payments are ordered in such a manner they can be made in the easiest possible way and will also look at the advantages in terms of cost as we advance. Spreading out a loan obviously reduces the burden, but it is also the case that one pays more overall. In managing their normal personal finances people build extensions, for example, to a term loan of five years. They find the repayments a little heavy and have the loan rolled into a mortgage. They will end up paying more, but it will be much easier to make repayments and the burden of the debt will not weigh as heavily. This measure is analogous.
As I understand it, on the grace period, Greece will have an arrangement for 15 to 30 years and may seek a further arrangement for 40 years.
I appreciate what the Minister has said so far. The quote comes from the Heads of State in the euro area, but I do not understand why it is included in this legislation. In dealing with legislation we know how important a word is, but this does not give us scope to have loans from the EFSF for less than 15 years. Under the EFSF, we have been able to avail of loans for less than 7.5 years because that is the average term. However, the wording does not even refer to an average but to a minimum period of 15 years and up to a maximum of 30. Are there any consequences for having this wording in the legislation, given that the Minister's understanding is that we will have flexibility? Obviously, the extension of maturities is something we would welcome, as we would having that flexibility, something I have claimed from day one. I am just concerned that the reference is to a minimum period of 15 years and whether we would want this, or prefer a ten-year maturity, will no longer be an option for the State to consider.
The context was that Greece was failing to meet the conditions of its programme, although neither Ireland nor Portugal was failing in that regard. Therefore, it is couched in terms of a new set of easements to facilitate Greece. The Greeks will receive a lower interest rate and there will be flexibility on the maturities and other details. These will then be applied to Ireland and Portugal, even though neither is having a difficulty with its programme. That is the way it is structured.
The advice I received when I inquired about this matter was that we would have flexibility on the terms of the maturities. If we thought it was in our interest to have longer maturities, we could go that way; if we thought it was not, we could stick with the period of 7.5 years and EFSF management would have discretion to facilitate us. It is a question of judgment. I have not yet received the advice of the NTMA. We are in the early stages of the programme negotiated only last November-December. We are not yet 12 months into it and as we work our way through it, we can see what is to our best advantage. Everything helps us to move on and restore the country to economic growth.
Is the Schedule——
That was only my first point about the Schedule. In fairness, as this legislation is about keeping money back, we will have a short while in which to go through this sham.
Page 12 deals with the service fee and I seek the Minister's explanation. It reads in regard to the service fee in respect of EFSF loans:
This shall provide remuneration for the Guarantors and shall be specified in the relevant Financial Assistance Facility Agreement. The EFSF shall review periodically the pricing structure applicable to its Financial Assistance Facility Agreements and any changes thereto shall be agreed by the Guarantors acting unanimously in accordance with Article 10(5).
When I read that, I am worried. Is the pricing structure fixed, or does this allow for it to be amended by agreement?
The pricing structure can be amended by agreement to enable the condition that money will never be given below the cost of the money to be made available. As a general condition, the price will not go below the cost of money. Therefore, if interest rates go up internationally and the EFSF sells a bond to the Chinese, it will still have to be passed on at a rate above what one paid for it. That is where the flexibility lies.
I understand that and agree with the idea of providing money at cost. Obviously, the EFSF should not lose out as a result of. However, if one looks at the line written above which is to change, it reads: "the third sentence shall be deleted and replaced by the following sentence:"The pricing which will apply to each Loan is intended to cover the cost of funding" [which is fair enough] "and operations incurred by EFSFand shall include a margin (the "Margin")." I realise the Minister mentioned two elements, but this legislation allows for a margin. At present there is no margin, only the operational costs and the costs of funding. However, the first piece I read to the Minister referred to remuneration for the guarantors and the fact that it could be amended by unanimity among the guarantors. For the purposes of clarity, can the guarantors sit around a table and decide that the pricing structure which would be beneficial to the State can be amended by agreement among them within a year or so, or is the positiion now fixed for the entirety of our current programme?
When I was answering questions at an earlier stage of the debate, perhaps on Second Stage, I said the ESFM fund was supplying the money without a margin. The relevant deduction was 3.75%, even though we had thought it would be around 2%. That is agreed to in principle, but has not yet been signed off on by the 27 member states. On the other side, regarding the EFSF fund, I have stated that rather than receiving a 2% reduction, we are getting a reduction of 260 basis points. The reason is that some countries, principally Germany, apparently have a parliamentary condition that requires a small margin. I have stated there might be a figure of ten or 15 basis points in this regard. The EFSF fund will have a very small margin, at the insistence of Germany, in order to comply with a decision that country has taken previously. The mechanism to be used for varying anything subsequently is the list of countries that are guarantors.
There are no limits on the margin.
Nothing hangs on it either.
That is fair enough.
There is an understanding that the figure will not be more than 50 basis points. If there was no margin, I would be telling the Deputy we would receive the EFSF money with a reduction of about 280 or 283 basis points. By using the figure of 260 basis points, I am allowing a margin. This is not yet exact and minor adjustment must be made at the end.
I have one final point, to which the Minister referred at the conclusion of his Second Stage speech. For the record, I am not naive and know this is not the legislation under which the ESM will be introduced. It will be provided for later. However, we cannot get away from the fact that by passing this legislation we are referring to the ESM for the first time. It is mentioned not once or twice but three times in this legislation. I have said in that regard that what we are doing in this Bill is underhand. It has been agreed to by 17 members sitting around a table in Brussels. The Taoiseach and the Minister signed up to an agreement which we believe should be put to the people.
Leaving that aside, the ESM has not been agreed to by this Parliament. It has not come into existence and may never do so. However, the legislation before us makes provision for its establishment in law, to which we have not agreed. We are facing a massive liability in respect of this matter. As the Minister stated, we are going to be obliged to contribute €1.3 billion to the facility in question. It is for this reason that I believe what is being done is underhand in nature. The Bill should not contain reference to the ESM. If this and other Parliaments across the European Union to which the ESM is relevant want to introduce it, it is at that point the relevant legislation should be amended. That happens all the time. If the ESM were to be established in the future, we could amend the legislation before the House to make reference to the transfer of rights, obligations, etc., to it at that stage. However, referring to the ESM in this Bill is an underhand way to proceed.
I am not surprised by what is being done because this is the way the European Union works. Those in the European Union are considering how to circumvent the constitutional issues in Ireland and Germany. Their approach is that the matter should be kept from the public at all costs and that the ESM should be introduced by the back door, the side door or any way at all. We are losing our sovereignty bit by bit. I am completely alarmed by the lack of focus and leadership at European level. With respect, the Minister and the Taoiseach are both European leaders. It is not just Chancellor Merkel or President Sarkozy who hold sway, all of our European leaders are in it together.
We have offered suggestions to the Government. Deputy Donnelly made suggestions in respect of quantitative easing. Other proposals have been brought forward in respect of ECB bonds and the forced recapitalisation of the banks. At a meeting of the Joint Committee on Finance, Public Expenditure and Reform a fortnight ago I pressed representatives from Anglo Irish Bank and the NTMA on the restructuring of that institution's loans. The Minister subsequently made an announcement on this matter in Brussels last week. However, I have never heard him or the Taoiseach who are our leaders in the European Union clearly state what they would like to see as the outcome of the European crisis. What solutions can we expect? A multitude of views on that matter have been expressed by Members on this side of the House. We represent various parties, groups and interests and, as a result, there is no clear, unified solution among us as to how we should proceed. However, people are at least offering ideas and solutions. On the opposite side of the House, the Government is not providing a clear direction with regard to how the European Union should deal with this matter.
A Greek economist, Mr. Yanis Varoufakis, has offered his own solutions to the crisis, which are supported by seven or eight former European prime ministers, the Irish Congress of Trade Unions and many interest groups. When Mr. Varoufakis appeared on TV3, neither Fine Gael nor the Labour Party would allow any of their Deputies to go on the programme to speak on the issue because they did not have a policy on it. There is a need for the Minister, as a European leader, to state he believes in quantitative easing or burden sharing or that he is of the view that we should move in a particular direction. I say this with the utmost respect. I accept that his position and that of the Government is to wait on the sidelines and nip into and out of the negotiations. That is wrong. The Minister possesses many skills and should be front and centre in the negotiations. He should also spell out in very clear terms the direction Ireland wants the European Union to take in the future. Furthermore, he should also spell out the principles on which we should seek to proceed.
Unfortunately, I will be opposing the legislation because it contemplates the wrong approach to take to solve the euro crisis. I recognise that it will give rise to benefits, but one cannot take someone outside and beat the living daylights out of him or her and then state it is okay because one will drop him or her to the nearest accident and emergency department. That is what has happened here. The European Union is beating up on us big time. On 7 November a bond worth €700 million will come to maturity. The Minister and everyone else in the House is aware that this bond should not be paid. I reiterate that the European Union is beating up on us big time, but it is going to take us to the accident and emergency department and stop screwing us on the interest rate. As a result, we should all be happy. That is not good enough for the people. It is unfortunate that we are in the position in which we find ourselves.
Normally when somebody beats one up, they do not stick €65 billion in one's pocket before going away.
They are putting that money into the pockets of those in the banks.
I would nearly allow myself to be beaten up outside the gates of Leinster House this evening if I thought that would happen.
I would settle for less than that amount.
Has the Minister ever come across loan sharks? Those individuals lend one money, but they take one's blood in return.
The Deputy's analysis of the cross-references to the ESM is incorrect. There is nothing in the Bill which ties us to the ESM. The cross-references are included because there is an agreement in the European Union that, as we negotiate, the ESM will replace the EFSF. Separate legislation will have to be introduced to facilitate the establishment of the ESM.
The Deputy engaged in a critique of us and that for which we stand. If any criticism can be made of me, it is that I say too much when I go to the European Union. The position is clear. The country is in a frightful fix. We lost our sovereign control and got into a situation where we have been saddled with an enormous amount of debt. We were not able to raise money in the markets and this left us dependent on the kindness of strangers in order to obtain funds. Those strangers, our colleagues in the European Union, proved to be very kind. They voted us money in their Parliaments and that is what is paying for our health, education and other public services, including those provided by the forces of law and order. It is unfair to refer to big, bad Europeans beating us up and doing harm. If it were not for the Europeans, the economy would have collapsed because we had nowhere to go. Who was going to give us the money we required? We would have been obliged to make a correction of approximately €20 billion in one budget — the Deputy can imagine the devastation to which that would have given rise — in order to try to bring expenditure into line with taxation in one fell swoop over a 12-month period. One can imagine the social impact such a move would have had.
We should appreciate what our European colleagues have done. They have been extremely helpful in this matter. During the recent general election campaign — which brought about a change of government — we stated we would renegotiate the programme. We have commenced doing so, but we are proceeding in phases. The first phase was that when the jobs initiative was announced, we were allowed to restore the minimum wage to its former level. Many other things have been done. The correction period for the programme has been extended by 12 months to 2015 and there has been no second NAMA phase because the banks must deal with assets with values below €20 million. Our European colleagues agreed that we could reduce the rate of VAT applying to the hospitality sector from 13.5% to 9%. This had a significant effect for those involved in the sector during the summer months. We were also allowed to halve employer's PRSI below certain limits.
The second phase of the renegotiation relates to the price of the programme. As I stated on the day it was introduced, the programme was priced incorrectly. We did not require the lessons in moral hazard expressed by the addition of 3% to the cost of the money we received. That was the thinking in the European Union when the programme was introduced. Adequate moral hazard was expressed when members of the electorate went into polling booths during the general election. Our colleagues in Fianna Fáil can attest to this because their party's support decreased by 28%. To date, thank God, people in this country, unlike their counterparts in Athens, have not taken to the streets. In addition, we have not, as has been the case in other European countries, had a general strike here. The effect of what was done in polling booths on this occasion was absolutely devastating. It sent a clear signal right across Europe. I am not seeking to dump on Fianna Fáil; I am simply describing how the electorate exercised moral hazard. We did not need an additional 3% on our interest rate to teach us that we do not like participating in programmes and that we would prefer to exercise our own sovereignty.
The second phase of the renegotiation went well and the interest rate has been reduced dramatically. Matters such as lengthening maturities and entry into the secondary markets to which reference was made have also been dealt with. However, the renegotiation continues. I want to renegotiate further in order that the burden of the debt on Ireland will be lessened. The best device which I can come up with in that regard is investigating the possibility of whether we can exchange the promissory note on Anglo Irish Bank for something that would be more amenable and that would cost us a great deal less. There are ways of doing this and there are many individuals who can design the relevant vehicles required. The crucial part of the negotiations will be trying to convince our European colleagues to agree to what we are seeking. We will keep trying it.
There are other things we can do also and we will do them. I listen to the suggestions made in this House all the time. I find these debates very helpful. I appreciate those who participate in them, as good ideas come from them. There is no monopoly of wisdom about these matters on this side or the other side of the House. Good ideas are being suggested by individuals and we take note of them. If I think they will travel and they will be to the advantage of the country, I will run with them as part of the Irish negotiating position. The Deputy should not think he is wasting his sweetness on the desert air. We are listening to him and taking note of what he is saying.
Question put and declared carried.
Question, "That Schedule 2 be Schedule 2 to the Bill", put and declared carried.
TITLE
Question put: "That the Title be the Title to the Bill."
The Committee divided: Tá, 97; Níl, 26.
Tá
- Bannon, James.
- Barry, Tom.
- Browne, John.
- Burton, Joan.
- Butler, Ray.
- Buttimer, Jerry.
- Byrne, Eric.
- Calleary, Dara.
- Cannon, Ciarán.
- Coffey, Paudie.
- Collins, Áine.
- Collins, Niall.
- Conaghan, Michael.
- Conlan, Seán.
- Connaughton, Paul J.
- Conway, Ciara.
- Corcoran Kennedy, Marcella.
- Costello, Joe.
- Cowen, Barry.
- Creed, Michael.
- Creighton, Lucinda.
- Daly, Jim.
- Deasy, John.
- Deering, Pat.
- Doherty, Regina.
- Dowds, Robert.
- Durkan, Bernard J.
- English, Damien.
- Feighan, Frank.
- Ferris, Anne.
- Fitzpatrick, Peter.
- Flanagan, Terence.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Brian.
- Heydon, Martin.
- Howlin, Brendan.
- Humphreys, Heather.
- Humphreys, Kevin.
- Keating, Derek.
- Keaveney, Colm.
- Kehoe, Paul.
- Kelleher, Billy.
- Kelly, Alan.
- Kenny, Seán.
- Kirk, Seamus.
- Kitt, Michael P.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lynch, Kathleen.
- Lyons, John.
- McCarthy, Michael.
- McConalogue, Charlie.
- McFadden, Nicky.
- McGinley, Dinny.
- McGrath, Michael.
- McHugh, Joe.
- McLoughlin, Tony.
- McNamara, Michael.
- Maloney, Eamonn.
- Mathews, Peter.
- Mitchell, Olivia.
- Mulherin, Michelle.
- Murphy, Dara.
- Murphy, Eoghan.
- Nash, Gerald.
- Naughten, Denis.
- Neville, Dan.
- Nolan, Derek.
- Noonan, Michael.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Ríordáin, Aodhán.
- O’Dea, Willie.
- O’Donnell, Kieran.
- O’Donovan, Patrick.
- O’Dowd, Fergus.
- O’Mahony, John.
- O’Reilly, Joe.
- Penrose, Willie.
- Perry, John.
- Phelan, Ann.
- Phelan, John Paul.
- Ring, Michael.
- Ryan, Brendan.
- Shortall, Róisín.
- Smith, Brendan.
- Spring, Arthur.
- Stagg, Emmet.
- Troy, Robert.
- Tuffy, Joanna.
- Twomey, Liam.
- Wall, Jack.
- Walsh, Brian.
Níl
- Boyd Barrett, Richard.
- Collins, Joan.
- Crowe, Seán.
- Daly, Clare.
- Doherty, Pearse.
- Donnelly, Stephen.
- Ellis, Dessie.
- Ferris, Martin.
- Flanagan, Luke ‘Ming’.
- Fleming, Tom.
- Halligan, John.
- Healy-Rae, Michael.
- Higgins, Joe.
- Mac Lochlainn, Pádraig.
- McDonald, Mary Lou.
- McGrath, Finian.
- McLellan, Sandra.
- Murphy, Catherine.
- Ó Caoláin, Caoimhghín.
- Ó Snodaigh, Aengus.
- O’Sullivan, Maureen.
- Pringle, Thomas.
- Ross, Shane.
- Stanley, Brian.
- Tóibín, Peadar.
- Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Aengus Ó Snodaigh and Catherine Murphy.
Question declared carried.
Bill reported without amendment and received for final consideration.
Question put: "That the Bill do now pass."
The Dáil divided: Tá, 97; Níl, 26.
Tá
- Bannon, James.
- Barry, Tom.
- Browne, John.
- Burton, Joan.
- Butler, Ray.
- Buttimer, Jerry.
- Byrne, Eric.
- Calleary, Dara.
- Cannon, Ciarán.
- Coffey, Paudie.
- Collins, Áine.
- Collins, Niall.
- Conaghan, Michael.
- Conlan, Seán.
- Connaughton, Paul J.
- Conway, Ciara.
- Corcoran Kennedy, Marcella.
- Costello, Joe.
- Cowen, Barry.
- Creed, Michael.
- Creighton, Lucinda.
- Daly, Jim.
- Deasy, John.
- Deering, Pat.
- Doherty, Regina.
- Dowds, Robert.
- Durkan, Bernard J.
- English, Damien.
- Feighan, Frank.
- Ferris, Anne.
- Fitzpatrick, Peter.
- Flanagan, Terence.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Brian.
- Heydon, Martin.
- Howlin, Brendan.
- Humphreys, Heather.
- Humphreys, Kevin.
- Keating, Derek.
- Keaveney, Colm.
- Kehoe, Paul.
- Kelleher, Billy.
- Kelly, Alan.
- Kenny, Seán.
- Kirk, Seamus.
- Kitt, Michael P.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lynch, Kathleen.
- Lyons, John.
- McCarthy, Michael.
- McConalogue, Charlie.
- McFadden, Nicky.
- McGinley, Dinny.
- McGrath, Michael.
- McHugh, Joe.
- McLoughlin, Tony.
- McNamara, Michael.
- Maloney, Eamonn.
- Mathews, Peter.
- Mitchell, Olivia.
- Mulherin, Michelle.
- Murphy, Dara.
- Murphy, Eoghan.
- Nash, Gerald.
- Naughten, Denis.
- Neville, Dan.
- Nolan, Derek.
- Noonan, Michael.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Ríordáin, Aodhán.
- O’Dea, Willie.
- O’Donnell, Kieran.
- O’Donovan, Patrick.
- O’Dowd, Fergus.
- O’Mahony, John.
- O’Reilly, Joe.
- Penrose, Willie.
- Perry, John.
- Phelan, Ann.
- Phelan, John Paul.
- Ring, Michael.
- Ryan, Brendan.
- Shortall, Róisín.
- Smith, Brendan.
- Spring, Arthur.
- Stagg, Emmet.
- Troy, Robert.
- Tuffy, Joanna.
- Twomey, Liam.
- Wall, Jack.
- Walsh, Brian.
Níl
- Boyd Barrett, Richard.
- Collins, Joan.
- Colreavy, Michael.
- Crowe, Seán.
- Daly, Clare.
- Doherty, Pearse.
- Donnelly, Stephen.
- Ellis, Dessie.
- Ferris, Martin.
- Flanagan, Luke ‘Ming’.
- Fleming, Tom.
- Halligan, John.
- Healy-Rae, Michael.
- Higgins, Joe.
- Mac Lochlainn, Pádraig.
- McDonald, Mary Lou.
- McGrath, Finian.
- McLellan, Sandra.
- Murphy, Catherine.
- Ó Caoláin, Caoimhghín.
- Ó Snodaigh, Aengus.
- O’Sullivan, Maureen.
- Pringle, Thomas.
- Ross, Shane.
- Stanley, Brian.
- Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Aengus Ó Snodaigh and Catherine Murphy.
Question declared carried.