Deputy Durkan is in possession and has eight minutes.
European Financial Stability Facility and Euro Area Loan Facility (Amendment) Bill 2011: Second Stage (Resumed)
Question again proposed: "That the Bill be now read a Second Time."
It is difficult to cover the length and breadth of the subject in the course of seven or eight minutes.
Do your best anyway.
We will do our best. I was commenting last night on the changing situation and the debate in this House over recent months where, depending on which side of the House one is on, one hears a different side of the story. There are those who repeatedly state that we should burn the bondholders, refuse to pay and default, and every day on the Order of Business every opportunity is used to state that there will be default, the euro will collapse, we must get out from under this, and so on. People seem to have forgotten that we have some standing internationally and we are expected to stand up for ourselves. We are expected to discharge our duties and our responsibilities and fulfil our commitments. That is what we have always done. An amazing job has been done in a short space of time by the Government of digging in and setting about doing the job it was given to do. It is not a very pleasant task.
I noted that Deputy Ross raised other issues throughout the eurozone and European Union area. He was correct, but there was nothing new in what he said. Some of us have been saying that in this House for the past three to five years. This is the first serious financial crisis that has affected the European Union, apart from what has affected this country. We are fairly substantial contributors to the problems that have arisen as well, but we are not the only ones. The problems that have arisen have required a cohesive, coherent and united approach, and to be fair, the President of the Commission, the President of the European Parliament and the President of the European Council have tried to provide that. There is nothing as bad as a lack of confidence in any system, and what the international speculators have recognised quickly is that there does not seem to be a co-ordinated and united approach or a willingness on behalf of some countries to live up to expectations and the commitments they have made. In fact, there have been those Members in this House and citizens of this country who have been expounding the merits of withdrawing from the scene and defaulting. I am unsure in what world some people are living, but the reality is that default is not an option; it simply does not work that way. Some expect that we can borrow money on an annual basis to pay for public services and at the same time say to people we do not intend to pay back the money received. That is a crazy notion and attitude. There are people inside and outside the House and experts who rant and rave on a regular basis and maintain they know better and that this is the way it should be done. That is not to say, however, that everything has been done in the fashion it should have been and that European institutions have responded in the way they should have or that they have done so quickly.
Let us consider what has happened in so far as we can to try to address the issues involved and let us put in place something that will at least protect us from something like this in the future. The euro has been singled out as the cause of all the problems. Naturally, this is nonsense. Had the single currency been applied throughout the European Union the position would have been a good deal more favourable. Let us recall the position before the euro was introduced. The banking sector suggested banks would cease to exist because all of the charges for currency exchanges would be removed and that they would not be able to make a profit. It turns out that they were able to make a profit, but not everyone would agree with the way they did it.
There was always a certain bitterness towards the euro. The fact is that it offers by far and away the best chance of salvation in the current economic climate, provided a united approach is adopted by all on board. The ECB has representatives of the central bank of each of the euro member states. I cannot understand, therefore, why there has not been a co-ordinated approach, whereby everybody thinks alike and why there has not been across-the-board application of the rules and rigorous adherence to them. This did not happen because the clever hot shots who believed they were the economists of the future decided to conjure up ways and means of multiplying everything and bypassing the old and established rules and criteria and to make a name for themselves. That is how we arrived at where we are.
The European Union laid down the Stability and Growth Pact which was ignored by large countries as well as, to some scale, the authorities here. How did that come to pass? I remember how a Taoiseach in the previous Administration became apoplectic at the thought of departing from these economic guidelines. However, no one raised a hand or said a word about it. We were told about it afterwards and sleepwalked into the situation in which we find ourselves.
Where do we go from here? I believe that at least the foundations have been laid. The country has shown that it has the guts, determination, will and stamina to stand up and do what must be done, on which I congratulate all concerned. The people also recognise what must be done. They do not do so happily, but they are willing to make sacrifices. However, they have no wish to make them forever, as this hurts a broad spectrum of the population. It is all very well to preach to others and say we must all do it and that the burden must be applied equally and so on, but it is hurting some and it will hurt others even more. However, we must do what needs to be done.
At this level we must give leadership. We must stop the rhetoric, the ranting and the pretence that we are living in a different or parallel world. We must cut out the nonsense and stop suggesting we will opt out, that we will not pay and that we will continue to live happily ever after. It does not work that way; it never did and never will. I congratulate the Minister for Finance, the Taoiseach and the Tánaiste and all those associated with their efforts to date. They have done extremely well in very difficult circumstances. We should all wish them well and hope the current rate of success can be sustained.
In trying to make an assessment of the merits of the European Financial Stability Mechanism, EFSM, we should begin by setting down our priorities. What are the priorities and interests of ordinary people? In so far as we are discussing the majority in this country, these priorities and interests are about the hundreds of thousands who have lost their jobs through no fault of their own in getting back to work. We must do something about the situation where the most vulnerable sectors of society who bear no responsibility whatsoever for the current economic crisis are having considerable suffering, pain and misery inflicted on them. The anguish and despair are palpable for parents who have children with special needs, and who are unsure whether these children will have a future equal to that of other children because of cuts in resources and the numbers of special needs assistants, for persons dependent on social welfare, and those who are disabled or have invalidity issues. The people concerned are facing cuts in their fuel allowance. Their incomes which are miserably low are being cut. These issues should dictate our priorities.
The ways by which we get people back to work, how we give them hope, how we end their suffering and provide for their basic needs and how we develop a strategy for the economy in the interests of the people are priorities any Government worthy of its name should state are its first priorities. Every proposal and suggestion put to it should be judged by how it meets these needs and priorities. Surely, that is what democratic government is about.
Nevertheless, it seems this and the previous Government, the political authorities of Europe, the EU-IMF troika and everyone else do and did not have this set of priorities. Since the crisis broke, what they have done and continue to do at every meeting and summit and in every agreement and new mechanism developed up to and including the proposed EFSM is maintain that banks and the financial system come first. They maintain this is the only realistic way to deal with the crisis and prioritise stabilising and recapitalising the banks and nursing the banking system back to health. They maintain this is the only way forward and in our best interests. They further maintain that anyone who says anything different is being unrealistic.
It is nearly three years since the crisis broke. Is it not time to assess the effectiveness of that approach? Is it not time to ask whether it has worked, whether the priority of nursing the banks back to health and developing opaque mechanisms in Europe designed to bail them out is working, and whether this is helping in responding to the basic needs of ordinary citizens both here and elsewhere? If one puts that question, is it not obvious that it is not helping to make things better, that it is not improving our prospects for economic growth or recovery, that according to every serious indicator, things are getting worse, not better, and that the crisis is getting deeper and spreading, that the contagion is becoming more virulent with every week that passes and that every new agreement EU leaders come up with and every great new plan or stratagem introduced finally to contain and deal with the problem and put us back on the road to recovery unravels within hours or days? We stumble from one crisis to another and, meanwhile, the ordinary people continue to suffer, the austerity continues to rain down on them, the jobs continue to be massacred, and it just gets worse and worse.
It is in this context that we must ask whether it is a good idea to ram through what is a sort of monster-sized, souped-up version of the same bailout strategy and mechanisms that have been deployed for the past two or three years. Having looked at a situation where the priority of bailing out the banks for two and half years has failed, we are now going to put together a monster-sized bailout for the banks — a pan-European mechanism for bailing them out to an enormous degree — yet we think it is going to make things better when every move in this direction has made things worse.
Some of the provisions of this mechanism are quite extraordinary and amount to nothing less than a political coup d’état, a usurping of the democratic rights of the citizens of this and other European countries, and of national parliaments, to decide their priorities, economic strategies and economic and social objectives. Some of the provisions of the European Stability Mechanism, ESM, are indicative of how undemocratic, how rotten, is the direction Europe is taking, although our Government is going along with it. For example, Article 27 of the ESM Treaty grants immunity from every form of judicial process, with no legal accountability whatsoever to citizens. Article 30 grants full legal immunity to all ESM governors and staff, and states that all employees will be free from national income taxes and will only have to pay an internal tax for the benefit of the ESM on salaries and emoluments paid by the ESM. It is unbelievable.
This is an enabling treaty to undermine the basic rights of citizens in countries across Europe, as well as of parliaments and of representative democracy, and all to bail out the banks. It is not working. The Government has always challenged us by saying "We do not like this; we wish we did not have to do it but it is reality; in any event, you, who criticise us, have no alternative". I put it to the Government that we have an alternative. It might be worth the time of the Minister of State, Deputy Brian Hayes, and other Government members to read the UN Conference on Trade and Development report produced in recent weeks, which lambasted the policies of austerity and of focusing on bank bailouts, and stated that what was needed was stimulus and that the policies being pursued by Governments such as the Irish Government, as well as the European authorities, were moving in the opposite direction to the one needed to ensure economic growth and recovery. They argued for stimulus, for social transfers, for subsidies and for investment in the economy in order to put people back to work.
Yesterday, the Minister, Deputy Howlin, told us the deficit this year, if we walk away from the EU-IMF deal, will be €15 billion. He acknowledged that this included interest repayments on the loans, which I suspect is some €4 billion or €5 billion, although the Minister of State, Deputy Hayes, might be able to confirm the figure. Therefore, the deficit gap we have to make up is approximately €10 billion or €11 billion. If we consider that 350,000 people have lost their jobs as a result of the recession, and that they probably cost us the best part of——
The Deputy is suggesting welshing on sovereign debt.
No, I am suggesting welshing on bankers' debt. If half of the social welfare budget, which is €21 billion, is accounted for by people who are now on the dole, and it costs us some €10 billion to keep them on the dole when they want to work, we could make up the deficit by simply putting them back to work——
With what?
——and topping up the €10 billion or so it costs us to keep them unemployed by getting €4 billion or €5 billion elsewhere. Where could we get that €4 billion or €5 billion? By taxing the wealth in this country.
The Deputy is over time.
It is the one thing this Government, the last Government and all of the Governments and institutions across Europe refuse to do, namely, to tax a bit of the wealth of the tiny minority who have hoovered up the wealth and resources of our society for the past 20 years, who live on obscene salaries——
The Deputy is over time.
Their wealth should be taxed and we should put that money back into our economy and into employing people to do useful jobs——
The Deputy is over time. I ask him to resume his seat.
——improving infrastructure and providing services. Why can we not do that?
I wish to share time with the Minister of State, Deputy Brian Hayes.
Is that agreed? Agreed.
I am pleased to have the opportunity to speak on this important Bill amending the European Financial Stability Facility and the Euro Area Loan Facility. As the House knows, the Bill effectively facilitates the implementation of the agreement of eurozone Heads of Government last July. It is extremely important both to Ireland and to the eurozone, as we have seen in recent days and weeks, and also to the wider global economy. While I do not pretend it will solve all of our problems or that it will definitively put an end to the uncertainty that has plagued the eurozone, there is no doubt it will make a difference to Ireland and to the eurozone to some limited extent.
Until last March, it is fair to say Ireland was deadlocked in its negotiations on a reduction in the interest rate on our loan package. This was an extremely frustrating place for us to be and an extremely difficult one in terms of trying to ease the burden on Irish taxpayers. We were politically paralysed as a nation at that point, unable to achieve even the slightest degree of flexibility regarding the terms of the IMF-EU bailout programme. It has been my experience in recent months, as I have met counterparts from other Governments throughout the EU, that our reputation was in tatters, to put it mildly. Right across the EU and beyond, on a global basis, rightly or wrongly, we were regarded as being spendthrift, arrogant and as not having anything to contribute, which reflected extremely badly on us and on our ability to negotiate.
It is fair to say we have come a long way since then. In just over six months, the perception of Ireland has changed dramatically. The Government has managed to renegotiate some of the terms of the IMF-EU loan, enabling us, for example, to introduce the jobs budget. While some on the other side of the House may scoff at that, anybody who talks to retailers, particularly in the hospitality sector, including restaurants, pubs, hotels and so on, will almost unanimously say it has made a profound impact on their trade, and they welcome the measures introduced by the Government earlier in the year. These have boosted trade, in particular tourism over the summer months, whether Deputy Boyd Barrett likes to acknowledge it or not. I know it is difficult for him to acknowledge that anything at all that happens in this country is good but——
Just look at Dún Laoghaire main street.
——hopefully, he will begin to see things in a slightly more positive light. Perhaps if he talks to retailers and business people in his constituency——
——he might get a flavour of some of the good news that is happening in this country.
Furthermore, we have employed an all-of-government approach across every single Department to rebuilding our reputation across the European Union and globally, and this is bearing fruit. A contrast can be made with the kind of editorials and commentaries that were not merely common but were almost akin to a daily barrage towards the end of 2010 and the early part of 2011, in which analysts repeatedly condemned Ireland, which was regarded as one of the PIGS with no prospect of getting its house in order or correcting and balancing its budget. However, this viewpoint and prospective has changed dramatically. If one reads the Wall Street Journal, the Financial Times and all the euro-press in pretty much every member state — I do not know whether Deputy Boyd Barrett takes the time to do this——
Yes, I do.
——there now is almost unanimous positive editorial comment on the progress this small island has made in just six months. It would be big of Deputy Boyd Barrett to even acknowledge this because the contrast is clear. I do not know whether he read the editorial in the Financial Times on 1 September stating:
Ireland has made "considerable progress" in extracting itself from the emergency that forced it ... to negotiate [the] €85bn international support package [last year]. ... Wage cuts and price deflation have restored Irish competitiveness.
While this may be bad news to Deputy Boyd Barrett, it is good news to the business world, to those who seek jobs and to those who wish to see this country recover. The view of the Financial Times constitutes just one example of how international commentary with regard to the global perception of Ireland has changed utterly, which is a positive development.
The latest phase in our negotiation has resulted in the Government achieving better terms for Ireland's IMF loan. This is what this Bill will implement and I find it difficult to understand how any Member could object to that. The agreement of 21 July will result in a dramatic reduction in Ireland's interest rate. At one point, while sitting in this Chamber only three or four months ago, I was told the Government could not even achieve a 1% reduction in the interest rate. While it now has achieved a reduction in the interest rate of nearly 3%, that does not appear to satisfy Deputy Boyd Barrett either. In addition, agreement has been reached to extend the maturity on Ireland's loan repayments. This is good news for Ireland.
As I stated at the outset, it does not necessarily resolve the overall euro crisis for which I believe a much more radical solution is required. However, this Bill is good news in respect of our national self-interest and it behoves all Members to support it because it will deliver better terms and a lesser burden on the people. The difference between the Government and the line coming from the Opposition is that the former will tell the truth. It is clear that our recovery will not be painless and will not happen overnight. However, with a good deal of goodwill, skilled negotiation and realistic focus — not fanciful or fantastical demands — the Government will manage to improve the terms of its loan facility. It will continue to improve them and will ensure the burden on Irish people is lessened week by week and month by month. This is the Government's task, which it is achieving, and hopefully at some point in the future Deputy Boyd Barrett might acknowledge this.
The task and mandate given by the people to the Fine Gael-Labour Party Government that has been in place for the past six months was clear and twofold. It was first to sort out the economic mess it has inherited and second to rebuild the country's international reputation. The Government has been in office for six months and I ask people to be fair and objective in this regard. During the last general election campaign, our opponents stated there would be no renegotiation of what was a dreadful deal for Ireland negotiated between the previous Administration and the troika. In a six-month period, the Government has demonstrated to the public that the jobs budget it brought through this House and the small help that gave to the domestic economy — I will not exaggerate it — as well as the difference made with regard to the negotiations at eurozone and ECOFIN levels, has allowed it to reduce the totality of the debt payment by approximately €1 billion per year. Moreover, as the Minister of State, Deputy Creighton, has noted, the loan period has been extended. This has been an enormous achievement by the Government. It also has been helped by circumstances in Greece and people should not overdramatise that.
In this six-month period, however, the enormous reputational damage done to the country by a previous Administration has been healed and more of this is required. A fundamental choice faces this House. A minority of Deputies, such as Deputy Boyd Barrett, believe in a unilateral position that Ireland should renege on its debts, leave the euro, paddle its own canoe and should then face the world regardless of the consequences that may arise from so doing. However, the great majority of Deputies, many of whom are on the Opposition benches, believe the task is to negotiate a better deal, brick by brick and step by step, as a confidence-building measure. The Government has shown over the past six months — this Bill is proof positive in this regard — that the slow, deliberate confidence-building that has come about during this period has delivered real results for this country. I put it to Deputy Boyd Barrett and others that their unilateralist views, their "Ireland on its own" or "Ireland for the Irish" view——
That is not my view.
——the kind of Argentinian basket-case for which the Deputy likes to argue——
That is not my view.
——will not deliver such a future for this country.
Thank you.
The Deputy is putting forward a view that can bring about only ultimate ruin in Ireland. The Government's task is to work within the EU, to negotiate and to deliver the best deal possible in the appalling circumstances it faces and this Bill constitutes a small step in that direction.
I thank the Minister of State. Does Deputy Wallace intend to share time?
I am unsure to be honest.
He has ten minutes in any case.
As Barney says, "sharing is caring" and I am prepared to share time.
No, I simply was not sure. The Deputy has ten minutes.
I will share some of the Deputy's time.
Fine, the Deputy is on.
Members will vote on this EFSF proposal and while I am not an economist, if anyone on the Government benches is interested in having a bet with me on whether it will work, we can meet outside to put down a wager, as I do not believe it will. Having started with 17 countries in the eurozone, three have been bailed out, which means the other 14 will guarantee borrowings for three. When that number increases to four, only 13 will remain to do so. This group could then fall to 12 countries and could eventually fall to just ten countries. I do not see how it will stack up in the long term and cannot envisage its survival. Moreover, I do not believe many people in Europe can envisage it working out either. I wish to cite a small piece from today's edition of the Financial Times by Peter Spiegel that discusses this very topic. He wrote:
The sum of €440bn was intended to "shock and awe" financial markets ... in May 2010 during the first Greek crisis. The EFSF has since evolved from a temporary set-up to help small peripheral countries into a multipurpose firefighter to assist large banks and bigger eurozone economies such as Italy and Spain. Most analysts believe it is too small for the tasks it will soon be called on to perform. Because increasing the size of the fund has proved controversial in many creditor countries — particularly Germany, Finland and the Netherlands — senior officials have tried not to discuss options publicly for fear of spooking parliamentarians who must approve the new powers...
The hurdles to increasing the fund are not just political. For some countries, bigger contributions to the EFSF will add ... pressure to their already strained public finances. Daniel Gros, director of the Centre for European Policy Studies think-tank, estimated that under some scenarios, the EFSF — and its successor, a permanent agency called the European Stability Mechanism — would have to be as big as €4,000bn.
Given the Italians owe €1,900 billion and realisation is slowly dawning that Italy's position is much worse than had previously been known and that, in recent weeks, matters have begun to unravel for French banks, developments in Europe have amounted to sticking plasters. No real solutions to the financial crisis that is swamping the whole of Europe have been put in place. The reason the Germans, who are the kingmakers, have been sitting on the fence to an extent is that they cannot make up their minds as to whether they really want a European Union that is a fiscal union. Such a union is coming down the tracks if the Germans choose it. Their alternative is an exit from the euro and they are yet to make up their minds as to which option to choose. Either way, the idea that Ireland will retain much financial sovereignty is pretty fanciful at this point.
The transfer of private banking debt to sovereign debt, with three years of deflationary budgets across Europe, has proved too much to bear. For some reason, Ireland does not seem to be interested in being active, rather it is reactive. Things happen to us, not because of anything we are doing but because something happens elsewhere in Europe which has an impact on us. We have become the victim of the impact of other serious matters in Europe. However, we are not doing anything ourselves or making anything happen. We are not dealing with our problems. What has been done for the domestic economy? I run wine bars and coffee shops, while my son runs clothes shops, and the system is failing. The amount of money in the pockets of those coming through the doors is decreasing. That is what austerity does. We have to invest, as what we are doing is not working. We are draining the system. That people will have more money in their pockets if it is constantly taken from them is akin to taking blood from a patient and thinking he or she will be well afterwards.
Not just Ireland but Europe also will eventually do a U-turn on the austerity philosophy. In the past few weeks the Bank of England and the Federal Reserve in America have rethought the matter and are starting to turn. The world economists with the highest stature, Paul Krugman and Joseph Stiglitz, have been shouting from the rooftops for three years. Unfortunately, the neoliberal agenda has kept their philosophy out of the equation up to now but eventually we will listen to them and start doing things their way.
The Deputies opposite are not listening to Deputy Wallace. They are chatting the whole way through his contribution.
Reforms are required in countries throughout Europe, including our own. The issue of waste needs to be tackled. A lot of things have got out of control and it is only right that we sort them out. However, that does not make the austerity package introduced by the Government right, as we are hitting the most vulnerable in society.
On SNAs, I listened to the Taoiseach this morning as he tried to defend the situation at St. Senan's and it was hard to take. He is economical with the truth and how he uses words. I will give him credit for the way he does it, in the sense that he is crafty, but there is no honesty. I have spoken to many of the parents and met the children involved and what is happening is draconian. Children with SNAs who were in mainstream classes are not attending them this year. They were progressing at a fantastic rate and the parents were delighted with them. Now, however, they are back at square one and regressing. I know the Government inherited a poisoned chalice from the previous Government which destroyed the place. However, surely it must believe the primary purpose of any Government is to look after those in society who most need our help, but that is not happening.
We will vote on the Bill, but I am sure it will be passed because the Government has the numbers. However, it will not mean an awful lot in the long term because it will not work.
As a Donegal man, I always reserve a healthy scepticism for anything European and the overall European project. I have to look at the historical context in that Donegal people voted "No" in the first Lisbon treaty referendum. By a slight margin, they also voted "No" in the second. Having had an opportunity to analyse the two referendum results at local level, one decides to examine the situation a little more closely and try to understand where we are going. With that in mind, it is very interesting to pick up on the fact that there are two groupings of political experts among the Opposition. One group revises the past, while the second, which comprises the majority, includes political experts in predicting the future. However, that is very dangerous territory when it comes to considering anything European. It is an evolving project and no one, not even me, can predict what will happen in six months' time. Every time I turn on the radio or watch television people are talking about the Greek economy collapsing in six months time and Greece leaving the euro. There is an array of colourful predictions about what will happen. While it makes for interesting listening and reading, I do not think we are in a position to make predictions because of the enormity of the problems faced. Some have pointed out that a Europen project involving 17 eurozone member states and 27 EU member states probably became too big too quickly. We have to be conscious of this when we try to understand its dynamic.
Realism sets in when one is in government. It set in for me, especially having spent 12 years in opposition, which is a nice place to be. It is comfortable, open-ended——
It is frustrating.
It is easy.
It is diverse.
Does the Deputy want to be on this side of the House?
It is particularly easy in the Seanad.
My colleague, Deputy Timmy Dooley, who was on this side now looks more relaxed. I remember that in government he always looked stressed and worried, but he even smiles now and again. Bing in opposition gives one that luxury. When one enters government, it is important one should realise what one can do.
Some commentators have pointed out that the Government is not doing enough in the European Union. However, we can only do what we are able to do. We have to try to put our house in order and we do not need political experts to point this out to us. We needed a general election to listen to the people on the doorsteps. I was asked, "Joe, are you mad going for election?" As Deputy Wallace said, we have inherited a poisoned chalice, a problem which it will take ten, 15 or 20 years to sort out. I was told it would be an incredible job and a mammoth task and asked how we were going to do it. I have run in three elections and it was the first in which people did not know what was going to happen. There was fear. In 1999 I ran in the local elections and people gave their opinion on what was going to happen. In 2002 I ran in the Seanad election and they talked about the future. During the recent election they feared they did not know what was going to happen because of the international dynamic — the Chinese, the American dollar and the euro. Everything has become global. The only opinion being offered was that we should clean up our mess. We are cleaning it up, but it will take time, as the Minister of State, Deputy Hayes, pointed out. In the short time we have been in office we have decided to decouple from the likes of Greece and Portugal in terms of international confidence. People are pointing to Ireland, but not, as some on the other side of the House have said, as a goody two shoes looking up to European leaders and the best boy in the class. Such a view is nonsense.
We have to get our fiscal strategy right. Obviously, there are challenges at European level, which is what the Bill is about. If passed, €440 billion will be put into a fund to stabilise an ongoing complicated and dangerous journey. Will €440 billion be enough? I do not know the answer, it may not be. Some experts think trillions of euro will be needed to deal with the matter, but that is an issue to be considered in the future.
The future realm of politics is a dangerous zone, because we could spend considerable time expending energy on discussion on what might happen down the line. If we were such great experts on predicting what would happen in future we would go into the grocery shop every day to buy lottery tickets. However, we are gaining a reputation for the work we are trying to do. This is work that needs to be done to stabilise our economy. We need to get away from the idea that in order to do something we need a consultant or an expert. For example, over a 12 or 13-year period the Department of Social Protection spent between €12 million and €13 million on consultant reports. We need to listen attentively to the people on the street, who still know there is waste and there is a job to be done. They know there is still considerable pain ahead in getting things sorted out, but they are realistic in understanding that we need to do something about it.
I am the first to admit there has been plenty of procrastination on a European fiscal management programme. Perhaps there is dithering because it is new territory and people may not know where the project is going, of which we need to be conscious. I am critical of the leadership at European level. Important ECOFIN meetings take place. The Taoiseach has been representing us as recently as last August, when he agreed to introduce this legislation before the end of September. He is committed to that aspect of the European project. If there is to be a fiscal realignment in Europe, the reputation we are building and the consistency of our argument will ensure that we have to look after our own interests, including the 12.5% corporation tax rate.
I refer back to what I said earlier about the healthy scepticism for the European project in Donegal. Donegal is not dissimilar to other counties along the coast, on the periphery of Ireland and the periphery of Europe. The main argument during the campaign on the Lisbon treaty referendum was over how much of our fishing rights we had given away. People pointed to the number of French and Spanish boats coming into our waters. I will make the same argument in government as I made consistently in opposition. As I have told the Minister for Agriculture, Fisheries and Food, Deputy Coveney, we need to be more bolshie in re-establishing ourselves as a fishing nation. If there is to be a fiscal realignment or a fiscal adjustment and if give and take is required in different areas, it is important that we put the fisheries debate back on the agenda. I say that as a Government backbencher who feels I have a role to play as a conduit for getting the message to Government, especially one with such a large majority. We need to ensure we have the confidence to do that because over the years of protracted negotiation on the CFP, we have lost out considerably on fishing.
With respect to the crystal ball, some of the stuff is fantastical. The Sinn Féin manifesto did not want the EU and IMF money. It planned on using €15 billion of the national reserves and taking €15 billion from the Central Bank. It wanted to use that €30 billion to take us through to the end of the year. We are nearly at the end of the year — the €30 billion would have been gone and there would be no money in the National Pensions Reserve Fund, there would be no money from the EU-IMF and we could not have gone back to the market. We need to get real about what we can do. We need to look in our own backyard before we start a debate about stuff where nobody really knows what will happen.
This debate provides us with an opportunity to have a broader discussion as the Bill is somewhat technical in nature as it gives effect to the changes agreed by the Heads of Government in June. I wish to pick up on a number of points mentioned by Deputy McHugh. It is important to try to remove some of the myth that has surrounded the transition from one Government to another. There has been an effort by some of Deputy McHugh's colleagues to suggest that somehow the Irish position in Europe had become extremely sullied and we were being seen in extremely negative terms there. That is not the case from my vantage point — I am not being party political on this. I had the benefit of visiting Brussels on Monday as part of a delegation from the Oireachtas Joint Committee on European Union Affairs. The myth that there had been a magnificent change of direction is not the case. While I do not want to rerun the general election debate——
It would be good therapy.
——the previous Government set about resolving the problem it was charged with in terms of how we got to the situation we were in.
The previous Government and the two before that.
Notwithstanding that, it was the previous Government that negotiated and fought the general election on that memorandum of understanding and the programme developed and agreed with the troika. We put it to the people and clearly they spoke regarding our record, which we absolutely accept. Unfortunately the current Government fought the general election on a very different set of proposals, but that is history and it is over. The Deputies opposite should acknowledge that we are taking a much more proactive approach and operating in a much more positive way than the current Government parties did in opposition. They made it very difficult at every step of the way and were largely responsible for assisting in the negative image that existed. There is a little play-out in terms of how all this gets positioned.
Revisionism.
I am sure history will view that differently. Deputy McHugh spoke about improving the country's and Government's image by dealing with our fiscal situation — dealing with the deficit and the banking crisis. The fact remains that it is continuing with the programme we developed. We had made very significant movements on debt reduction, close to €20 billion before——
We agreed that before the general election.
I accept that and the Government has continued to do that. The only change in its banking policy is that it calls the two main banks two pillar banks. The word "pillar" is probably the only difference that has emerged compared with what we had done. I do not believe there has been any improvement in reputation as a result of any of the policies the Government has managed to bring to the table, but that is for another day.
It is important to get Ireland back on track and to decouple Ireland from Greece and Portugal. That is being done and represents a culmination of the process we started. I recognise the Government has continued in that vein and that success is being achieved, which is to be welcomed, particularly given that Greece finds it difficult to face up to its own issues. There are much more fundamental issues in how it handles its administration and the sooner we can move away from that the better. We need to be careful that we do not over-respond to the bond market and in particular the narrowing of spreads on bonds. That happens, usually without any great reason and is based on sentiment rather than on reality. We should not over-react when there is a positive movement as undoubtedly there will be negative movements from time to time. It should not be used as a bellwether or a benchmark as to how we are achieving. We need to continue with the very strong programme that was initiated whereby we continue to face up to the difficulties particularly in the deficit and continue to resolve the banking crisis.
There are very positive aspects to this legislation and agreement from an Irish point of view. It will significantly ease the burden on the Minister for Finance and his deputy in the preparation of the budget, to which we look forward. While I recognise that there are significant reductions in the projections for growth, those projections have not reached the target. However, despite that there is now considerable headroom as a result of the interest rate reduction, which is positive.
Sadly the Government's jobs initiative, involving raiding the private pension funds and which reduced tourism-related VAT by four percentage points, has not been as successful as we had all wished. I did not agree with the fundamental policy at the time, but I wished it well when speaking in this House on the basis that if it worked it would be great. Sadly it has not and we have seen unemployment continues to rise and we have not seen any appreciable passing on of that VAT reduction. It brings us back to the central plank of some of the promises the Government made and continues to make since the general election, as it did with its programme for Government which rehearsed its pre-election promises. The Government did it again at the "pat on the back" day it had after it was 100 days in government when everything was going swimmingly and it made commitments not to make any income tax increases through rates, tax bands or credits at the next budget. Not wanting to be trumped by the Taoiseach, the Tánaiste and Minister for Foreign Affairs told us he would protect social welfare rates. Sadly, despite the fact that considerable headroom has been provided to the Government by virtue of the interest rate reduction, the Taoiseach now seems to be weakening on that position. He said in the House yesterday that he has now discovered there were commitments in regard to tax increases in the memorandum of understanding, that it would be a matter for the ECB, the IMF and the EU and that he would have to try to alter that position. That was all in the memorandum of understanding which, as the Minister present knows, was negotiated before the general election and, therefore, before the Government was 100 days in office and before the drawing up of the programme for Government. It is disappointing and will add further to the cynicism that, on the one hand, promises were made and now the Government is weakening on that position. It is not enough to say the memorandum of understanding was a document the Government inherited. The fact is that as a result of some of the renegotiations that were made in respect of that document, the Government put its signature to it and it is now its memorandum of understanding between it and the troika. It is disingenuous to suggest it is an agreement made by somebody previously. It is important we get clarity on that.
All these measures taken at European level are important for the future of the State at a macro level but the recovery of confidence in this State will be based on the micro activity of families, individuals and citizens of this State. If citizens cannot plan in a way that assists them in managing their daily, weekly, monthly and annual budgets, it will be impossible to restore confidence in the market. We know the recovery of this State will be from the ground up. Admittedly, we must have in place the right macro policies but it will come down to individual choices on a daily and weekly basis. Unless the Government can succeed in giving confidence to the people on the ground, the macro issues will not materialise in a way that we will generate growth, which is the only way we will emerge from this crisis.
The Government has a good deal to do in terms of restoring confidence. I look forward to hearing what the Minister for Finance will say in certain statements I understand he will make later this month that will give longevity to the policy framework the Government will bring forward not only in the forthcoming budget but in future budgets. We must get clarity on individual personal finance in that regard. I hope the Minister will move away from the notion of making grand statements that are seen to appease but are not realisable. We had an instance of that on the Government's 99th day in government when the Minister, Deputy Noonan, visited the United States. He got a jolt of the green energy when he got there and decided to tell the Europeans to hell with it that we were going to burn the unsecured senior bondholders in Anglo Irish Bank. While it sounded good, the reality was that there had been no negotiations or discussions with the ECB, in particular, which, for its own good reasons, has set its face against burden-sharing with bondholders, particularly those who are classified as "senior debt". Unfortunately, that has further added to destabilising the markets and could be seen as having influenced some of the negative trends on the bond spreads since then.
The previous speaker spoke about some of the difficulties in Europe, and if I had more time — I might have an opportunity at another time — I would go into that. There are significant issues in Europe where there has been a move away from the community approach. There is now a more bilateral approach. France and Germany have taken very strong positions. Heads of State attend meetings, agree a measure and then return to their respective parliaments and countries and say something different or what the measure means for them. That is not good for the future of Europe or for putting forward a cohesive approach which will give some confidence to the international markets on which we all depend for the financing of individual states.
The Minister for Finance's comments in the US at that stage was yet another example of member states saying what suits the home audience and then going to Europe and recognising it is not doable. There needs to be more careful consideration of the matters rather than playing to the audience when, in effect, ultimately one will not be able to deliver.
I wish to share my time with Deputy Jim Daly.
That is agreed.
I congratulate Deputy Dooley on his selective amnesia. He talked about the previous Government but I am not sure whether he meant the Fianna Fáil Government in coalition with the Green Party, the Fianna Fáil Government in coalition with the Progressive Democrats or the Fianna Fáil Government in coalition with the Progressive Democrats and the Independents. The only common denominator between all of them was Fianna Fáil. I am disappointed the Deputy brought up that point.
I have a huge interest in history and I must read up on the start of monetary union because it was at that point the possibility of the current crisis was not discussed as a future consequence of that measure. Monetary union came about as a result of a meeting between Helmut Kohl and François Mitterrand back in 1990. It was a deal done where the French sought monetary union while the Germans got political union between east and west Germany. One wonders if the bureaucrats in the EU at the time had the foresight to predict the problem that has occurred. When we devalued our currency in 1986 the consequences of that internationally were that our exports became cheaper and we could trade more in the market but people who had borrowed Irish punts lost 20% of the value of their money. Surely the bureaucrats could have foreseen potential problems and have put in place the structures that are needed now. We are dealing with basically emergency legislation that has come about as a result of a meeting in June. The EFSF is being put in place as a result of that. It is a pity we cannot deal with the ESM at the same time and the reason we cannot is that it is evolving on foot of the situation in Greece. What we are dealing with now is a new situation. When I look back to the 1929 crash and the consequences of it, there was nothing like this structure in place at that time. We are now dealing with an evolving position. When the monetary union was set up there were two strong leaders in France and Germany but, sadly, there are not strong leaders in office now. Both the French and the Germans are dithering and they will not make the call that is needed for Europe to progress out of this crisis.
We are dealing with the EFSF, the ESM and the ECB and it is all around the EU. The common letter in all of it is the letter "E". "E" does not mean egotism and nationalism. Sadly, a German Commissioner said recently that countries in serious deficit should lower their national flags. Deputy Dooley alluded to the fact that the previous Administration was very much pro-European, yet a previous Minister for Finance from my constituency, when criticised for his economic policies at the time, called those critics "Pinkos".
We should take stock of where we are at now. The letter "E" stands for European. Members on my side of the House are all committed Europeans. The more than 200,000 people who will spend time over the next three or four days at the National Ploughing Championships are all committed Europeans because they realise the benefit. We as a nation must make sure the policy we want to put in place is portrayed in Europe. I congratulate the Minsters for Foreign Affairs and Finance on putting across that message — that a distinctive and strong leadership is required in Europe and that decisions that must be made for the future of Europe are made. People talk about the Germans leaving the eurozone but if they do so, that will affect their economy.
I welcome the introduction of the legislation to provide for the EFSF. I assume the legislation on the ESM will be introduced shortly and I look forward to supporting that. I congratulate our Ministers on the work they have done so far on easing the burden on the country.
It was great to witness Deputy Dooley's road to Damascus moment, when he accused the Minister for Finance of saying one thing when playing to the home audience and speaking another language when in Europe. Deputy Dooley has a very short memory if he has forgotten the arrival of the IMF last October and names like Dermot Ahern and Noel Dempsey.
Notwithstanding that, I share the aspiration of everyone in the country to see the IMF and the ECB leave the country and to see us regain our sovereignty. This is a battle we fought and won before and it is one we will fight again. We all look forward to that day.
Deputy Dooley also referred to the image of Ireland abroad. It is important to correct the record in this regard. Deputy Dooley seems to suggest that we are inclined to get ahead of ourselves, to look beyond our own weaknesses and to see too much that is not there. I refer Deputy Dooley, and anyone else who is wondering about our image, to a German Parliament budget committee hearing of this week. Klaus Regling, who is head of the European Financial Stability Facility, EFSF, addressed the committee. These are, in effect, our paymasters so what they say about us is worthy of note. Klaus Regling said:
The international rescue programme for Ireland, with support from the EFSF, is showing very positive results. Ireland generated a current account surplus through increased exports and recovery in her competitive position. The State's deficit is sinking faster than originally planned for. Also, the Government's restructuring of the banking sector is faster than originally required. The markets have recognised and honoured these steps with a reduction in interest rates for Ireland from 14% to 8.5% in the last two months.
We cannot underestimate how far we have come, notwithstanding the challenge that lies ahead for us.
Deputy Wallace argued for an end to austerity. That is something we would all love to see, in an ideal world. If we were not living in the real world we would support him wholeheartedly. Unfortunately, we must exist in the real world.
On Monday of this week, the Handelsblatt, which is the German equivalent of the Financial Times, reported that the Institut für Wirtschaftsforschung, Ifo, which is the German equivalent of the Economic and Social Research Institute, ESRI, had warned about excessive lending by Germany and the continued fear of the markets as to where Germany’s generosity will bottom out. The Ifo suggested that Greece will probably have to leave the eurozone and that there is too much uncertainty with regard to Portugal. Speaking about Ireland the report said:
Ireland has, however, shown that through a realistic and strong programme of reforms it is possible to eliminate a current account deficit. The other countries should learn from Ireland. After a period of loose budgeting guidelines in the eurozone only through a programme of hard reforms can a realistic programme of devaluation be pushed through.
The Ifo held up the measures Ireland is taking as an example of the right steps. It is important to recognise the opinions of others, especially our paymasters.
The argument for default, which has frequently been made recently, is tied in with the move to the European Stability Mechanism, ESM. Sinn Féin and others speak about burning bondholders. Default as an aspiration is ridiculous. We cannot begin from a point where we wish to default and set out to do so. A philosopher examining any system, finance or otherwise, has to begin from a beginning. The beginning principle of our finance system is that we pay what we owe. This must be set in stone. Only from here can we continue to work on and be part of a community based finance system.
The ESM is an exceptional model for Ireland and suits the current Irish situation. The challenge is that while the reduced interest rates are favourable an individual country has the ability to derail the interest rates by defaulting and causing the cost of borrowing to go up. That challenge lies ahead of us. However, I welcome this development and support the legislation.
I welcome the opportunity to contribute to the debate on the European Financial Stability Facility and Euro Area Loan Facility (Amendment) Bill 2011. The Bill arises out of a European Council decision of 24 June and a European summit of 21 July which agreed to increase the EFSF from €278 billion to allow for a loan facility of up to €440 billion to be provided to member states. It also included the lowering of the interest rates, which has been much lauded by Members on the Government side of the House as a success for the Irish negotiating stance. The reduction in interest rates was, in fact, a response to the deepening crisis throughout the eurozone. The Government is being disingenuous in claiming responsibility for it, when the rates were merely overtaken by events.
It is surreal to stand here in September and debate legislation that will copperfasten changes that were announced in June and strengthened in July, when the crisis has deepened over the last couple of months and has moved on rapidly since then. We saw the downgrade of Italian debt in the last couple of days. The two largest French banks have been downgraded. Everyone is openly talking about a Greek restructuring, or default, and the possibility of Greece even being forced out of the euro. There is no mechanism for forcing any member state out of the euro. There is not even a mechanism for a state to leave the euro. That has not even been worked on.
This is what makes this debate so strange and is, perhaps, why most of the debate has not focused on the EFSF. Events have moved on so quickly since June. Events continually overtake each other. I am reminded of the British Prime Minister who, when asked why he had lost an election replied, "Events, dear boy, events". Events are overtaking what we are doing here. We are not in control.
The situation is made even more stark by the continued obsession of the Government with forcing deeper austerity on our people. Other Deputies have said that people need some sort of clarity so that confidence can be returned. As we continue down this road and as the crisis in Europe deepens further, leading inevitably to a Greek restructuring and the effect that will have, the EFSF will make no difference at all.
I was interested to hear the Taoiseach flatly refuse to answer Deputy Ross this morning when he asked how much more of our independence or sovereignty he was willing to cede to our, so called, European paymasters in Germany and France. That is the key question that the Government must answer. We must have a debate on this issue in the coming months. The ESM provides an opportunity for that debate. The Government has already agreed, and Europe has pushed for this treaty change to be brought in by the simplified mechanism, under the Lisbon treaty. I believe this treaty change is too extensive. It cedes too much of our sovereignty to Europe and gives away our national sovereignty. Therefore, we must have a full public debate on it and a referendum where the people can have their say. If the people are so much in favour of this change and want it to happen, as the Government repeatedly tells us they do, they should have their say and be allowed to vote on the ESM. The Government would then have the mandate which it says it has already. Last February, the people voted for change. What they got was more of the same. We must move on to that debate, because events in Europe are fast overtaking any discussion we are having on the European Financial Stability Mechanism.
Deputies on the Government side say we can only do what we can. This is true, but we must talk about a Europe of equals and of partners. We do not need to cede more and more sovereignty to Europe and give Angela Merkel and Nicolas Sarkozy more and more rights and control over our sovereignty and our future. When Greek restructuring occurs, arguments will be made in favour of handing even more fiscal responsibility to Europe and a Commissioner for fiscal matters who can overlook errant member states and force policy changes on them. That is a ceding of sovereignty and that is the debate we should be having in the House and throughout the country. The Government should have the courage of its convictions. Instead of refusing to answer questions in the House and deflecting them onto other issues, it should be telling us what the Commission intends to do. It should let the people have their say and their vote on it and see if that is the way we want to go.
We should be talking about a Europe of equal members and equal respect and a Europe that can deal with these financial problems rather than a Europe where Germany and France are leading the charge and forcing austerity on the so-called peripheral countries and forcing us into destroying our domestic economies in order that we can ultimately save the German and French banks. Even that is not working at this stage because the French banks have been downgraded and German banks are in need of capitalisation. The IMF stated yesterday that Europe has to grasp the nettle and recapitalise its own banks. We are moving beyond the austerity packages we have in Ireland, but the Government does not seem to be having that debate with Europe. The Government is intent on ensuring we are seen to be the best boys in the class. Members on the Government side of the House might not like to hear that, but that is its policy. If we are seen as the best boys in the class, we can be held up and seen as shining lights.
Our bond yields have been reduced from 14% to 8.5%. That still leaves us nowhere near the ability to go to the so-called markets to fund the State. Events will take place over the next few weeks and months that will push up those yields even further again. We will be no closer to having any control on that. In the meantime, we have a jobs initiative that has clearly failed, we have continued austerity, and a budget will be brought forward that will take another €4 billion out of the local economy. People are faced with more uncertainty, even more debt, an inability to work their way out of it, and a sapping of confidence, yet in a few months we will still be faced with a Greek restructuring and the possible break-up of the euro.
The Government needs to open up the debate, put the ESM Bill before the House and let it be passed, and then put the question to the people in the form of a referendum. The people should be allowed to decide whether they want to go down this road. If the people want greater fiscal control to be handed to Brussels and the European Commission, then that is their democratic wish, but the Government should let them have their say.
Deputy Dara Murphy wishes to share time with Deputy Kevin Humphreys. Is that agreed? Agreed.
I welcome the opportunity to speak on this Bill. There is a pattern developing in the Opposition. We saw it before the summer, when there was almost a hope that our interest rates would not be reduced in order that we would be listening to statements about how the Government got it wrong. Interest rates have been reduced through the good work of our Government. Equally, our corporation tax rate remains in place, which was also the subject of a prophecy of doom. The new buzzword in this term is our sovereignty, which apparently is under ever-increasing threat.
Some questions were raised about the ambition of this Government. The ambition of our Government is to get people back to work and paying taxes, and with that income to start reinvesting in our public services and the people of our country. To arrive at that point, we need to go on a journey that has been predetermined for us by an agreement made by the last Government and this sovereign State.
I want to take a moment to address some of the terms being used today, such as bailout, austerity, paymasters and best boys in the class. The bailout is effectively a loan, where the international community has agreed to lend our country money to pay our way forward over the next few years. It is entirely reasonable that as this country demonstrates through good government that we can repay our loans in due course, the cost of that borrowing should be reduced. However, the bailout is effectively a loan. Our paymasters are the people who are giving us the loans. These are the people who see faith in the Irish people and in the Irish economy and are willing to allow us to have the opportunity to pay for our public services.
The most important word is austerity. I studied economics in UCC, although not to any particular PhD level, and austerity is effectively the ability to balance our books. It applies to every household and to every business, and over time in the international community it must apply to individual states. No matter what happens in the world around us, our economy must arrive at a point where we are austere. It is being used as a negative term, but the reality is that we must bring in what we pay out to sustain our economic development. The objective is to increase revenue through having people back at work in order that we can invest in our public services.
Someone said to me recently that Ireland should not be described as the tail of the European dog, but rather as a small individual dog among 27 European dogs that are working together for all the people of Europe. As we prove that we can be different from other countries that are experiencing economic difficulty, we can give an optimistic view to the international community, not just of our own island economy but of the European movement and the European economy in general. It is time the Opposition took into account that the European movement and the European Union has served our people extremely well in the past and that the money flowing into our economy at the moment is coming predominantly from European sources.
I welcome this Bill today. It is time for Europe to endeavour to get ahead of the curve, but I certainly feel that there should be an optimistic outlook that Ireland can be a domino that will push back against some of the negative dominoes that have been falling. The yields on Ireland's bonds have been falling recently, as have our interest rates. There is a great sense that Ireland is becoming a country where foreign investment is welcome and that people can trade in our country and see a positive outcome. I welcome the Bill and I hope it passes Second Stage.
I welcome the Bill and I welcome the Minister back to the Chamber. The various elements of the Bill dealing with the EFSF, as far as I can see, allow for the recapitalisation of the financial institutions, but they also provide a longer maturity date for debt. I believe we can use this to address the €31 billion in notes in Anglo Irish Bank, and I would like the Minister to expand further on that element in the Bill.
Like the Minister of State, Deputy Hayes, I welcome this Bill very strongly. It is good news for Ireland and I believe it is one further small step on the way to recovery. Since being elected to the House, I have heard Members state repeatedly that this Government would not get a reduction in interest rates. The Government has secured a 2% reduction in the interest rate paid on European Financial Stability Facility funding and loans from the European Financial Stabilisation Mechanism are now provided at cost. I have not heard anyone compliment the Ministers on the work they have done in this regard. In the previous session they were told they would not achieve these objectives without sacrificing our corporation tax rate. Despite this, they have, through negotiation with our partners in Europe, delivered these outcomes.
Deputy Boyd Barrett referred to stimulus packages. If my memory serves, many Opposition Deputies voted against the stimulus package the Government introduced in the previous session. I remind the Deputies in question that stimulus packages cost money, of which we have very little, not least because no one is willing to lend to us. We must manage our affairs and get our deficit in order or face the prospect of enduring the same problems as those experienced by people in Argentina some years ago.
The Minister must continue with the work he is doing by reducing the debt burden. The Bill is a small step towards returning the nation to prosperity. The country is still in receivership, having been placed in that position by the previous Administration. Every day, Ministers are taking small steps to return Ireland to growth. I commend the Bill to the House.
I join with my colleagues in the Fianna Fáil Party in expressing support for the Bill. I note with interest that we are discussing this important legislation on a particular anniversary, namely, 21 September, exactly two months to the day since the 21 July eurozone summit at which Heads of Government and State and Finance Ministers agreed provisions aimed at strengthening the European Union's capacity to defend and protect the euro by bolstering and expanding the European Financial Stability Facility established in May 2010. As Deputies will recall, the EFSF was originally established by the Ecofin Council to safeguard financial security in the eurozone by raising funds in capital markets to finance loans for euro area member states.
In addition to measures to prevent contagion and improve the eurozone's crisis management, agreement was reached on a second buy-out package for Greece and improved rates and terms on current bailout packages for Portugal, Greece and Ireland. Not only was the 21 July announcement important for the eurozone and wider 27 member European Union but it was long overdue for Ireland. Everyone knew the interest rates being imposed on Ireland were penal and unnecessary and before the Government assumed office work commenced on achieving lower rates.
I was impressed to hear the Polish Finance Minister, Mr. Jan Vincent-Rostowski, make this very point during a recent interview on RTE's "This Week" radio programme. Mr. Vincent-Rostowski specifically described the 6% rate being charged on funds made available to Ireland and others as "penal". To his credit, he and the Polish Government said as much nine months ago. Fortunately, the Polish Government used its term as holder of the EU Presidency to strongly advance the case for reducing these interest rates. It could be argued that the Polish Government invested much more diplomatic effort and energy in reducing the interest rates than the Taoiseach did. It is incredible that the Taoiseach has gone an unprecedented six months without having any significant bilateral discussion with a eurozone colleague at a time of major crisis in Europe and further afield.
In addition to describing the interest rates previously applied to Ireland as "penal", the Polish Finance Minister stated in his interview that he considered the European Union's "bouncing" of Ireland into the European Financial Stability Facility last November to be a mistake which need not have happened. This is an interesting take on our position from an EU partner and one that strongly suggests that the standing in which Ireland was held among our European partners was not as low or as poor as the Taoiseach, Tánaiste and some Ministers continue misleadingly to claim.
I will refer to a few European issues on which I have some experience. Deputy Joe McHugh spoke eloquently of the difficulties facing the fisheries sector and its economic potential. In the short time I served as a Minister in the Department Agriculture, Fisheries and Food, the former Minister of State, Mr. Tony Killeen, and I achieved very good outcomes in regard to quota and total allowable catches. I recall that in December 2008 when France held the EU Presidency it was particularly determined to abolish what are known as the Hague preferences, which are of major importance to Ireland for securing top-ups in species. We successfully fought a battle to retain the Hague preferences. Moreover, we obtained for Ireland increases in quota and total allowable catches for the various species in each of the years we served in the Department. As Deputy McHugh will be aware, only last December we secured a 67% catch for boarfish, a new species being developed and one in which the Killybegs Fishermen's Organisation has invested considerably in co-operation with the Marine Institute and Department. Ireland has by far the highest allowable catch of this species in the European Union.
On the agricultural side, Ireland, on both an official and a political level, was always to the forefront in working with like-minded member states on the issues of the day. This may have meant working with a small group of countries consisting of France, Germany and three or four other member states on a particular issue or working in a group of 12 or 13 member states which shared similar views on specific issues. On all such occasions, Ireland was to the forefront and I, in my capacity of Minister, chaired many of these groups and worked with like-minded member states on specific issues such as milk quota or World Trade Organisation talks. It is patently wrong to suggest that Ireland did not participate to the full at political or official level in the deliberations of the European Union.
On 1 May 2004, during Ireland's Presidency of the EU, ten countries acceded to the Union while two further countries acceded subsequently. In 1990, when there was scant determination among its European partners to assist its reunification process, Ireland, which held the Presidency at the time, was at the forefront in supporting Germany in its efforts to reunite the country. These are only a few of the issues with which Irish Presidencies under Fianna Fáil Party Governments were involved. It ill behoves Ministers to continue misleading members of the public on the participation of previous Governments at European Union level.
Returning to the announcement made on this day two months ago, it is more than regrettable — it is irresponsible — that foot dragging and uncertainty at European level was allowed to delay the full implementation of the decisions taken at the summit. It is yet another example of inaction by European leaders, a continuing inaction that has created uncertainty on world markets and resulted in widespread commentary about the very existence of the euro. As my colleague, Mr. Pat The Cope Gallagher, MEP, pointed out recently in a debate on this issue in the European Parliament in Strasbourg, we now demand, at the very minimum, a co-ordinated initiative across the European Union to implement the decisions of 21 July to help restore confidence to the markets. Any of us who reads or listens to commentary on this issue will be well aware that confidence is badly needed.
By passing this Bill, which amends the European Financial Stability Facility Act 2010, legislation which was brought before the House by the late Brian Lenihan, we are playing our part in that process. I compliment the Minister and his officials on introducing the legislation. Nonetheless, while we all welcome that we are now, hopefully, in the final stages of turning the 21 July announcement into action, it is regrettable that delays at EU level have held up the process for this long. I understand President Barroso sought assurances last August from EU Heads of Government and State that they would accelerate national parliamentary procedures to ratify the revised EFSF framework agreement by the end of September. In allowing such a long timeframe, the EU institutions have failed to convey or underline the seriousness and urgency we should give to the implementation of the 21 July decision. This legislation is essential not just for Ireland's situation but also in trying to re-establish some credibility for the EU and eurozone decision-making process.
Speaking of credibility and decision making, I echo the call made by my colleague, the Fianna Fáil finance spokesperson, Deputy Michael McGrath, when he said the Government should clear up the confusion about the value to Ireland of the reduction in the interest rate and the impact it will have on the 2012 budget. We now have two announcements from the EU on our interest rates: the one we are debating here, arising from the eurozone summit of 21 July to reduce the interest rate on the EFSF funds, and last week's proposal by the European Commission to reduce the interest rate charged to Ireland on funds under the EFSM. As my colleague, Deputy McGrath, has observed, different figures have been proposed for how much money the interest rate reductions on the EFSF and EFSM funds will save Ireland in 2012 and over the remainder of the drawdown period. Different figures were given by the Taoiseach and the Minister for Finance, Deputy Noonan, and by the head of the NTMA, Mr. Corrigan, so we need clarification on those issues.
The Government needs to make clear how the saving on interest payments fits into the overall budget arithmetic. People are preparing for a difficult budget, but they deserve to have the fullest possible information on how difficult that budget is likely to be. It is also important that the Government starts to flesh out the potential costs and consequences to the Irish taxpayers and economy of its decision to explicitly commit this country to engaging in serious discussions on the common consolidated corporate tax base, CCCTB, as part of this deal. The Minister, Deputy Noonan, said quite recently that there would be no change to our corporation tax. That is the message that must be hammered home at all stages. In my limited experience of Government trade missions to the United States, the one question one was always asked was whether Ireland was fully committed to the retention of the current rate of corporation tax. At a time when, thankfully, we are the number one destination in the world for foreign direct investment, it is important there is no uncertainty with regard to our determination to retain our corporation tax rate.
The forecasts of modest economic growth in the EU made only some months back are now being revised downwards, unfortunately. Against this background, the passage of this Bill by the end of the month is essential, and my party supports the Government in its efforts.
One thing that is often forgotten about in the overall commentary on the eurozone and the importance of stability in Europe is the fact that we are a trading country that is dependent on exports. We export 80% of what we produce in Ireland, which is double the European Union average, and there is the difficulty inherent in the fact that our major trading partner has a different currency from us. All of these things make life difficult for us as a country, and it is to our credit that in 2010, despite the observations of some Members of the House, we had the highest level of exports ever, reaching a value of €161 billion. I hope that will be surpassed this year.
I wish to share my time with Deputy Paschal Donohoe.
Is that agreed? Agreed.
I too support this legislation. This country is fighting to get its sovereignty back, but the reality is that the future of Europe requires greater economic integration. We know the political reality that greater integration with a reduction in sovereignty may not be acceptable to the people. It would also require a new European Union treaty, which makes the prospect of greater economic integration extremely difficult. However, from an economic point of view it is a necessity. The most likely approach to this would be through partnership with our EU and eurozone colleagues, but we may need to take the lead in accelerating this prospect to protect our economic future.
There is major criticism of the present EU policy for dealing with the euro crisis. Europe stands accused of acting too slowly and in a piecemeal fashion. In other words, it seems to respond to each facet of the crisis as it happens rather than responding to the overall crisis. This is the criticism that has been levied about all countries in the eurozone over recent months. It is a deliberate policy that takes into account the political, economic and regional differences within the 17 eurozone countries and the broader 27 countries of the EU. This has always been the way that Europe has done its business: through negotiation rather than conflict. It does take time and concessions must be made along the way. However, there is now a belief that this policy instrument is no longer suitable, and we may need a new economic integration policy that can respond not just to the present crisis but also, rapidly, to future crises, and that takes into account the economic and political concerns not just of the eurozone but of the greater European Union.
Much of the debate that goes on at the moment is very simplistic — the sort that was once described as kindergarten economics. People talk about burning bondholders, not realising the damage this would do to the most vulnerable people within society. The other thing that is discussed is what the European bureaucrats are going to do about this. This comes from the same people who talk about loss of sovereignty. They seem to have completely missed the point that it is up to the parliaments of Europe, who represent the citizens of Europe, to come up with decisions that affect Europe. Many members of the Opposition, rather than throwing out the simple, clichéd remarks we have been hearing over recent weeks, should be talking about how we can move Europe forward and protect our future within it. We should be making the decisions and taking the lead. I would prefer to see us talk about this type of integration and about balanced budgets in the future in order that we do not end up in a similar situation to the one we are in now. We should talk about how to deal with financial responsibility and how governments take responsibility and react when things go wrong. We should consider how we can sustain our future in a way that does not discriminate against any country within the Union from an economic point of view. That is the sort of approach we should be considering.
Why do we strongly defend the setting of our own tax rates? This is important when we are adjusting how our economy works. It does not necessarily affect the other countries, but how it affects our own economy is important. Why are we so strong on corporation tax? In some respects, corporation tax is a means of protecting our competitiveness. We are an island nation on the periphery of Europe and we need to consider what improves our competitiveness in relation to the large central economies of the European Union. We should defend that role strongly. That is understood by many of the other countries who say we should not do this.
I find it difficult to understand elements of the Opposition who claim they represent the most vulnerable in our society but have a burning desire to harm them with some of the policy decisions they propose. All sectors of society, including the most deprived, voted for this Government in the hope that we would give them the best possible opportunities for the future. I hope we will pursue the policies that protect all sectors of society, and this will have an impact on the policies we take to Europe. I would like this House, as the Parliament that represents the people, to consider our relationship with Europe and Europe's relationship with each of the countries within it.
Anyone who intends to vote against this Bill or advocates opposition to participation in a mechanism such as this has a duty to answer one simple question: where would they find the €15 billion that is needed this year to fund the difference between what we take in as tax and what we are spending? That is €15 billion that has nothing to do with the cost of recapitalising banks but is needed to fund the public services on which this State depends, particularly for those vulnerable citizens mentioned by Deputy Twomey in his contribution. Anyone who is against our participation in a mechanism such as this must answer that one simple question, which this Government is capable of answering. Where would they find the €15 billion for this year, for next year and for the year after that? That is the crux of the challenge this State is facing. We cannot borrow from anyone else in the world at a rate we can afford, so we are dealing with the lender of last resort. If people are advocating that the State does not deal with the lender of last resort, they must explain who will lend that money to us at a rate we can afford.
The political reality facing leaders throughout Europe is that while citizens who are inside bailout plans or external aid programmes do not want to be in them, an increasing number of people do not want to pay for them. This issue is now being raised in countries such as Germany, Finland, Holland and Austria which are asking why they should fund programmes like this one while, at the very time, people participating in the mechanism are saying, understandably, given the cost involved and the social difficulty arising, they do not want to be part of it. Major tension is developing around that point which will lead to some of the challenges referred to by Deputy Twomey. The key point is that while the politics of being inside a bailout plan or external aid programme are terrible the economics of dealing with a default are far worse.
In his contribution Deputy Smith alluded, as was fair, to the delay in coming up with plans to deal with all of this, and the fact that within a day of any strategy being announced, criticism is levied by the financial markets. Two points must be made about that. First, the sovereign crisis with which people are dealing is one of a kind in Europe. There never has been a situation where a group of countries which have come together to form a monetary union has had to deal with a sovereign debt crisis of a country within that union. People are facing a brand new challenge. The textbook, theory and history that led up to this point are largely redundant when one is dealing with the complications and consequences of being inside a monetary union nobody knows how to get out of, even if they so wished. Second, those who are most vocal about the delay in dealing with the crisis are the people in banks, financial institutions and markets who lent money to countries like Ireland at the same rate with which they were lending to Germany. They certainly do not have a monopoly of wisdom in making those criticisms, making allegations or pointing out issues regarding this deal.
This State is now accessing funding at a rate that is cheaper than that given to most of the countries which are funding this plan. This will create tension and raise questions regarding the feasibility of such plans in the future. That is why we must use this plan in the way it is being tackled at present, namely, as a breathing space or buffer zone which provides insulation for us to get our house in order so that we may be able to chart our way again in the future as a sovereign State.
I take Deputy Donohoe's point about those who oppose this Bill having an obligation to state from where the necessary money will come, which is a fair debating point. It does not mean one cannot be critical either of what has been going on or of the bones of this Bill. However, perhaps the Opposition, like all Oppositions, should make suitable suggestions — not a popular thing to do — about where there should be cuts in public expenditure or increases in taxation in order to bridge the gap of €15 billion.
I wish to address this Bill and the extraordinary lack of urgency, alluded to by Deputy Pringle. The Minister will know this was agreed initially in June, ratified in July and has now come before the Dáil in September. One assumes it will be passed shortly by the Seanad and will then become part of our law. However, it will be delayed by a large number of problems further away in Europe, particularly by the fall of a government in eastern Europe, and therefore will not be ratified in that quarter for a certain period.
It seems to me there is an extraordinary lack of urgency both about what is happening in Europe and the attack on this problem. I mentioned this on Leaders' Questions today. I would have thought it would be embarrassing for the leaders of Europe, the Commission and Heads of Government to come under such attack from external and impartial independent sources such as the IMF as they have recently done. Without any doubt, they have been accused of being bunglers and should take much more dramatic steps than those they are taking. The expression used by the chief economist yesterday, namely, that they should get going and act in a much faster way is criticism of a major sort on the part of the IMF to a body that has apparently been posturing with regard to taking action about its problems.
It is not only the fact that this particular piece of legislation will not be passed by all the member states for many months but also that a series of so-called suggestions was suggested which has not got us anywhere. I would be interested to hear the Minister's comments on the reaction to Mr. Geithner at the weekend. The result of the meeting he attended in Poland was, to outsiders, desperately disappointing because no decisions were taken. It seems that Europe is paralysed in its response to the debt problem in a way which could be fatal for certain currencies and the sovereign debts of certain nations. It is very hard for observers to believe in the credibility of the two principal leaders in Europe when they have met so often and so often emerged from meetings with sticking plaster solutions. They meet specifically to satisfy the markets and in an effort to reassure them that the two great powers are in charge, are doing something about the debt problem, will move everybody else into order and Europe will move ahead as a single entity. The reality, of course, is that these two people who are leading Europe in its supposed crusade for a way out of this problem are paralysed politically and are working to very precise political agendas. One is thankful that their agenda is not one which the Government, or our Minister for Finance, must necessarily dance to — they do not have the same electoral timetable.
The realpolitik is that when President Sarkozy and Chancellor Merkel meet, apparently to produce solutions, they produce nothing other than a few sticking plasters such as this one. They emerge from these meetings and suggest that all is well but on each occasion in June, July and September, the markets have turned on them, unconvinced by what they have had to say. That is not a satisfactory way out of what is a very deep problem. When both the Treasury Secretary of the United States and the IMF claim that the problem is not being tackled and that the leaders should get on their bikes and do something about it we should wake up and take notice. It appears that we must wait for elections in France and Germany before it can be resolved in any meaningful way or even that there be any resolution or determination to resolve it.
I question the credibility of the President of France in giving any leadership on this issue. As every Member present knows, France is fatally exposed to the Greek banks. Two of the three principal French banks were re-rated and downgraded last week by the ratings agencies simply because of that exposure. It means that they are in the same sort of boat as are many of the other banks in Europe. Therefore, the unthinkable must be thought. For Mr. Sarkozy to be presented as giving some kind of stable leadership is just not credible and the markets have recognised that. These two leaders and their meetings to sort out the problem are the worst thing that could have happened. I believe Alan Dukes said as much on a radio programme. They should be stopped from meeting because it damages the efforts being made by people of goodwill in the Commission and elsewhere. It damages the efforts of nations running good, strong economies when someone from a country with an economy which is weak and vulnerable to the same attacks as those being endured by Italy, Spain, Portugal, Ireland and Greece poses as the person who is going to solve the problem. That individual is not going to be successful. We should remove President Sarkozy from the pitch, in so far as is possible, and tell him to solve the problems in France rather than informing us how we should solve ours. The main difficulty relates to the agendas to which these people dance.
The EFSF is fatally flawed to some extent. It represents an effort to intervene in the debt markets. Essentially, it involves establishing a fund to be used to engage in the buy-back of bonds in these markets. That is a completely artificial operation. I gained experience in this area during my time as a stockbroker and when I was involved with investment trusts. I have witnessed what happens when one engages in a buy-back. I have approved buy-backs and I am aware that they only work in a very temporary way. If they are not accompanied by fundamental attacks on the problem, they will only last a few minutes or a few months. Whereas it is obviously the policy to increase the €440 billion by a great deal, the markets see that figure as a target. That is all. It is a sum of money, an artificial way to prop up an economy without necessarily attacking the fundamental problems by which that economy is beset.
We have lost a huge amount of valuable time as a result of the two principal leaders in Europe stating the funding available to the EFSF is going to be increased, that the facility's powers will be expanded, that it will have greater scope to intervene in markets and that this will solve the problem for now. It is not going to solve it. It may provide temporary relief, but the only action that will convince the markets is the leaders of the two main nations in Europe stopping jumping to the tune of the domestic political agendas in their countries and stating they are going to try to save the euro in a meaningful way. That includes tackling the problems relating to debts, deficits and other matters in their own countries.
I would be interested to hear the Minister's comments on Mr. Geithner's suggestion at the meeting in Poland that the fund should be leveraged up. That would be a dangerous development. Leveraging means borrowing. I understand Mr. Geithner to be suggesting we should go into the markets, obtain a facility which is five times the size of the facility we already possess and then show this to these markets and state "This is our firepower". Again, that would be filling a larger hole in the dyke. I am not sure whether the Minister should necessarily regard Mr. Geithner's suggestion as a solution. When the amount to which the latter refers proves to be insufficient, are we supposed to seek even more money? The markets will attack any weakness they perceive.
Eurobonds are put forward by many of the weaker states as being one of the solutions to this intractable problem. Is it true that the weak states are in favour of their introduction and that the strong states are opposed to them? These bonds are seen by the weak states as a way of supporting their economies. The strong states, particularly Germany, are against them because they do not wish to underwrite European debt in its entirety.
I am delighted to contribute to the debate on this Bill. I congratulate the Minister and his staff on their efforts in respect of it.
The IMF reports which have emerged indicate that what is occurring is a European problem. When one considers this matter, one comes to realise the major issue that arises is the recapitalisation of the banks in Germany, France and Spain, in particular. The Germans and the French previously espoused a policy which suggested we should recapitalise our banks. They are not adopting such a policy themselves. They need to draw a line under the problems relating to the banking system in order to restore confidence. An architecture which provides confidence in the banking system to the effect that, regardless of what happens, Europe can withstand any eventualities must be put in place. The international markets do not believe this is the case. If one considers the level of recapitalisation required by the banks as a percentage of GDP, it is obvious that Germany and Spain are well below Ireland in this regard. Other European countries, particularly Germany and France, asked us to recapitalise our banks. The European Commission was clearly in favour of NAMA, which represents another form of recapitalisation because it removed risky assets from the balance sheets of the Irish banks and improved their capital ratios.
Deputy Ross was correct when he referred to domestic issues in the countries in question. I do not believe Germany wants to leave the euro because it has too much to lose. When the euro was introduced, Germany achieved an effective devaluation of its currency. It also eliminated risk in inter-trading between eurozone countries. Germany benefited enormously from joining the euro. The Germans are intrinsically European and believe in the euro project. However, they and others need to deal with their banking systems in order to provide confidence for the markets. If they do so, this might restore the possibility of inter-bank lending. The IMF has drawn attention to this matter, but it has been spoken about in general terms. Germany, France and Spain must either recapitalise their banks or put in place a guarantee that they will cover losses in these banks.
Ireland is an exporting nation and, as such, is dependent on growth. Both global and European growth rates are determining factors for us in restoring the economy to health. Our objective should be to extricate ourselves from the EU-IMF deal as quickly as possible in order to regain our financial independence and sovereignty. How can we achieve this in a way which is sustainable and brings about the proper structural changes required? Yesterday the IMF stated that for 2012 Ireland's growth rate, 1.5%, will be above the eurozone average, 1.1%. That is the first sign of this happening since 2007. The rate to which I refer is sustainable, whereas that which obtained in 2007 was effectively built on foundations of sand in the property market.
There are positive and encouraging signs for us. However, the IMF and the other members of the troika will be obliged to make strategic decisions of their own. If there is going to be a slowdown in the European and global economies and if they want to protect their investment, they should consider allowing the Government to use some of the money we have been given to fund proper jobs initiatives and stimulate domestic growth. I have no doubt discussions will take place in this regard. The troika should be asked to consider the suggestion I have made.
Is it possible, in the European context, to have monetary union in the absence of fiscal union? I accept that considering the matter in this way is not entirely practical. When the Stability and Growth Pact was established, a target of 3% of GDP was set as being the maximum level which general government deficits could be allowed to reach. Ireland never breached that ceiling during the years of the Celtic tiger, but we still found ourselves embroiled in a banking crisis which probably began in 2007. A proper mechanism needs to be in place within Europe. Countries like Ireland need to retain control over tax policy and how we implement individual policies. Sustainable proposals need to be made by Europe. Much of this country's economy depended on the growth of the property sector. That should never have happened. It is often overlooked that we never breached the 3% general government deficit limit. We found ourselves in this horrendous situation nevertheless.
There are some encouraging signs for Ireland. Our growth rate will be above the EU average in 2012. The IMF has said it expects Ireland to meet the budget deficit target it has set — 8.6% of GDP — by 2012. We are improving our competitiveness. For us, it is key that Europe gets to grips with its situation. There is now a banking crisis in Europe as well. Other European countries, particularly Germany and France, need to adopt the policies they asked us to adopt. These discussions will have to take place.
As Deputy Ross said, Mr. Sarkozy and Mrs. Merkel will have to deal with this is a way that benefits the overall European project. If this nettle is not grasped, we will limp from crisis to crisis. Germany has kicked the can down the road, in some ways, whereas we have dealt with the issue and continue to do so. Germany and France cannot continue to use Ireland as an example of a country that is dealing with these issues and getting the results. They have to deal with the situation in a way that draws a line of confidence under their banking systems, separately from the EFSF and the measures in this legislation. Ireland needs Europe to be stabilised. We need the foundation of a stable Europe.
Export-driven growth is important for Ireland. If the world economy or the European economy shrinks, that will affect our exports. I ask the troika to consider allowing Ireland to put job initiatives in place to stimulate domestic demand and credit. There needs to be a twin-track approach. Not only do we want exports to move ahead, we also want domestic demand to increase. We are at a watershed. Critical decisions will have to be made by Germany and France in a way that benefits everyone. The measures that are being adopted at the moment are of short-term benefit to the European project. They are not of benefit in terms of long sustainability. That is the critical issue.
We must look at the positive aspects of this question. The IMF is projecting that in 2012, Ireland will have a higher growth rate than Germany and France. We are getting things right. As a small and open economy, Ireland is affected by external factors. We have recapitalised our own banks at enormous cost to the Irish taxpayer, and thereby stabilised the banking system here. Germany, France and Spain need to show leadership and consistency in the policies they espouse. They need to step up and put in place measures to recapitalise their own banks by way of guaranteeing losses or investment in the banks. We can stabilise Europe overall. The international markets will make the decision. The banking systems in the respective main countries in Europe will withstand whatever eventualities that arise.
This Bill, taken on its own, is worthy of support. It will bring about a significant increase in the lending capacity of Europe. It will give Ireland a significant interest rate reduction and a much-needed decrease in our annual payments on our debt. It will give the fund the ability to intervene in the primary and secondary bond markets. I agree with Deputy Ross that it is a sticking plaster, albeit a very useful one. The Bill on its own is worthy of support.
Over the last two days, some Ministers and Deputies have claimed a great deal of credit for these benefits. I do not know how much credit they deserve. Perhaps they deserve the credit they claim. Looking at the negotiations from the outside, it seems that when the Government went to Europe to look for interest rate reductions and the latitude to deal with some of the bondholders, the answer was "No". It seems that these concessions were correctly taken in an opportunistic manner, which is understandable. Essentially, they came about because the Greek economy is imploding. I hope the Minister and his team of officials helped to achieve some of these concessions. Credit is absolutely due to them for everything they secured.
My concern with the Bill is that it moves us further down the wrong path in the context of the evolving economic crisis in Ireland, Europe, the US and around the world. It seems to reinforce many of the mistakes that have already been made at European level. The European solution seems to have had four main planks so far. The first involves forcing European citizens to pay the losses and forgone profits of investors in banks — the infamous unguaranteed senior bondholders. The second plank seems to involve using more of the money of the same citizens to over-capitalise all the banks, including the failed banks in Ireland and throughout Europe. No European bank has been allowed to fail, not even those that should have been. The third plank involves the banks lending vast sums of money to the same citizens, through their governments, to pay back the losses and profits of bondholders and to over-capitalise the banks. The fourth plank seems to involve enforcing very severe austerity. It is hoped that the combination of the four planks will somehow stimulate sufficient GDP per capita growth to allow us grow our way out of problems like our debt and our unemployment rate. That plan is not working, as we know.
I would like to take a look at what has happened in Ireland so far. It is estimated that when the dust has settled, the Irish people will have covered approximately €100 billion of other people's losses. I am sure many Deputies read a recent report suggesting that the unguaranteed senior Anglo Irish Bank bonds are set to become some of the most profitable such bonds on earth. It is particularly galling that the Europeans are forcing us to repay the full amounts on these bonds to speculators who are sitting on vast sums of money. They have absolutely no moral right to those profits. It is something we are being forced to so.
Research that was undertaken by Deutsche Bank last December combined personal, corporate and national debt. When Ireland is compared with the rest of Europe in that context, our level of combined debt as a percentage of GDP is approximately twice the level of next nearest country and approximately two and a half times bigger than the average. Much of the conversation has related to the national debt, whether we can service it, be it 100% or 110% of GDP, and the fact that other countries are dealing with it. When one examines the total quantum of debt with which Ireland is dealing, it turns out we are completely on our own. No other country is near us. That is something else that is going on. We know that the over-capitalised banks are not lending. There are figures to suggest that very few appeals are being made under the process that has been put in place. We can all give examples of people who have made inquiries on behalf of companies that seem to be in good shape but have been told not to bother applying. In other cases, banks have said they will not lend unless they can take the family home as collateral against the loan.
Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.