Deputies Peader Tóibín and Sandra McLellan will have ten minutes between them.
Promissory Notes: Motion (Resumed)
The following motion was moved by Deputy Clare Daly on Tuesday, 24 January 2012:
That Dáil Éireann:
notes that
- the Government intends to pay €1,250 million to unsecured Anglo Irish Bank bondholders on 25 January, 2012;
- these bondholders are anonymous speculators, many of whom bought Anglo Irish Bank bonds at between 50% and 80% discount and who stand to make huge profits if they are paid full face value for the bonds;
- the Government intends to make a payment of €3,100 million on a promissory note for the Anglo Irish Bank/Irish Nationwide Building Society (INBS) debt on 31 March, and that promissory note payments to the value of €3,100 million will be made every year until 2023, with further payments due after that date also;
- Anglo Irish Bank/INBS payments will reach at least €47,000 million by 2031, with future related borrowing and interest charges bringing the possible total cost of the Anglo Irish Bank bailout to approximately €85,000 million;
- the Government plans to raise up to €1,200 million per year by 2015 through household and water taxes, deepening the impoverishment of ordinary people – and especially the unemployed and low paid; and
- while payments to un-named bondholders are prioritised, the Government plans to cut thousands of jobs in the health service, to close hundreds of nursing home beds, to cut 3.5% from education spending over the next three years, and to cut €475 million from welfare spending this year; and
resolves that the Government:
- shall not make the Anglo Irish Bank bond payment on 25 January, 2012;
- shall not make any further payments to Anglo Irish Bank bondholders; and
- shall not pay the promissory notes for the Anglo Irish Bank/INBS debt on 31 March, 2012 and shall not make any such payments in the future.
Debate resumed on amendment No. 1:
To delete all words after "Dáil Éireann" and substitute the following:
recognises that:
— the Government inherited a situation in relation to the banking sector and specifically in relation to Anglo Irish Bank and Irish Nationwide Building Society which resulted directly from the decisions taken by the previous Government;
— decisions taken by the previous Government included the decision to guarantee the debts of the covered institutions and this decision and consequential decisions taken by the previous Government have effectively transferred the liability for private bank debt to the taxpayers of this State and contributed to the need for the EU/IMF bailout; and
— the Irish Bank Resolution Corporation will fulfil its legal obligations to redeem €1.25 billion (gross) in senior unguaranteed bonds;
acknowledges that:
— the Government is working with our partners in the EU and IMF to address the situation and is actively involved in discussions with a view to reducing the overall cost to the State including the cost of the promissory note;
— the Government should not act unilaterally in relation to the repayment of unguaranteed senior debt and should have regard to the views of our partners who are providing the requisite funding for the State and for the financial institutions;
— the implications of not making such payments are such that the State's ability to fund the provision of services, pay wages etc. could be put at risk; and
— the Government must broaden the tax base and that the introduction of the household charge and the proposed introduction of water charges are part of this process;
affirms that the approach being pursued by the Government is, given the situation the Government has been presented with, the optimum approach which will produce the best medium to long-term outcome for the State and the Irish taxpayer; and
encourages the Government to press ahead with discussions and negotiations around a range of support measures that recognise the contribution made by the State in support of the stability of the Eurozone.
- (Minister of State at the Department of Finance, Deputy Brian Hayes).
Is it normal practice for a Minister to be in attendance?
Perhaps we might wait until a Minister arrives.
We will pause for one moment.
Sitting suspended at 7.31 p.m. and resumed at 7.34 p.m.
I welcome the Minister of State, Deputy Fergus O'Dowd.
I give a céad míle fáilte to the Minister of State and thank him for joining us.
I have to object to the Government's attitude to this Private Members' motion. It is simply not good enough that it was panicking to round up a Minister of State from the highways and byways of the Dáil in order to fulfil the norm. If the Ministers for Finance and Public Expenditure and Reform were taking this issue seriously, they would be in attendance.
I understand the Minister will speak later in the debate. We should get started because we are running late already.
I agree with my colleague that the Government is showing enormous disrespect for the excellent motion moved last night. People throughout the State are agog with disbelief about the Government's decision to hand over this amount of money. The failure of an individual who plays a particular role - he has been identified already - to attend the debate is a disgrace. We are handing €1.5 billion to unsecured and unguaranteed bondholders today.
It is €1.25 billion.
It is a huge amount of money to take out of the State. I will explain the normal way the multiplier works. Every €1 invested in the economy normally adds up to a multiplier of €1.25 over the course of a year. Over four years one would expect a sum of approximately €4 to develop from one's initial investment of €1. As the reverse is also the case, we will have a negative in this instance. Therefore, the Government's decision to hand €1.5 billion to bondholders will have a negative effect, to the tune of €5 billion, on the economy over four years. Jobs, wages and wealth will be lost to the economy. It reveals as a lie the Government spin to the effect that its primary goal is job creation. The primary goal of any Government can be identified by examining the resource levels invested in various areas. The Government's decision to put more resources into bailing out the banks than into any other area demonstrates that its primary goal is bailing out the banks, rather than job creation.
I would like to clear up a number of untruths spun by the Government in recent times to deflect attention from its shameful payment of €1.25 billion to bondholders. It has stated the troika has forced it to take this action, but that is plainly untrue. Paying unsecured and unguaranteed bondholders does not form part of the memorandum of understanding. The only reference to bondholders in the memorandum is in the Government's desire to impose discounts on subordinated junior bondholders. The troika will not withdraw the money we are due to borrow under the Government programme if we do not pay these bondholders. If it were to do so, it would be breaking the agreement we reached with it. When that point is made to the Government, it usually shifts its position. It claims that the European Union and the ECB have forced it to pay bondholders, even if it is not in the memorandum of understanding. Its argument is that it cannot upset the ECB on this issue because it has provided massive liquidity for Irish banks. If we leave aside the fact that Anglo Irish Bank is a dead bank and the reality that commercial debt should be dealt with in a commercial fashion, the simple truth remains that Ireland is unable to deal with its level of debt while repaying these bondholders.
The Greek Government is renegotiating a discount of up to 70% with private sector bondholders, and the ECB is not withdrawing liquidity from Greece. We are fulfilling our requirements over and above what Greece is doing. Why should we be treated any differently? If the plug was pulled on the provision of liquidity for Irish banks, it would create financial armageddon across the European banking system. The link between Irish and European banks was the reason this liquidity was provided in the first place. Will the European Union create financial armageddon in Europe if commercial debt is not repaid? I do not think so.
The Government has also made the point that Ireland should not want to be like Greece, in the sense of having the word "default" written on our heads. When the Minister for Finance, Deputy Michael Noonan, entered into negotiations with the ECB this week on the possibility of a reduction in some of our banking debt - the Anglo Irish Bank promissory notes - the sovereign bond market rate was approximately 6%. We were being punished by the markets not because we had threatened to default or because of an inability to pay but because of the fantasy of the suggestion that we would be unable to pay all our debt. It is clear that we cannot do so.
The Government has claimed that the Opposition, in arguing that we should not pay these bonds, is failing to explain how we would be able to meet the immediate requirement to make up the deficit if the troika was to take away our funding. I have dealt with the troika issue by clarifying that this is not covered in the memorandum of understanding. Our objective is to remove the troika by returning to the markets. If Ministers had read our pre-budget submission which was costed by the Department of Finance, they would know that our policies which we would implement after negotiating a new memorandum of understanding would lead to a quicker deficit reduction than through the Government's approach. In addition, it would happen in a more sustainable way. Our policies would help the economy to grow, whereas the Government's policies are strangling it. The Government would have us sign up to an anti-investment austerity treaty in Europe which will mean austerity budgets in perpetuity. Sinn Féin wishes to see our budgets decided democratically and on the basis of our economic cycle, not the election cycle of France and Germany.
Nobel prize-winning economists have stated the route the Government is taking is leading to an austerity suicide. It is crucial that at this time the Government does not become the textbook lesson for future students of economics on how to train-wreck a whole economy.
Go raibh maith agat a Chathoirligh. I welcome the opportunity to speak on this motion tonight and I commend the Technical Group for putting it forward. It is a timely motion, given the Government's hand-over today. I commend the work of the range of groups and individuals who have organised to highlight this completely unreasonable, irrational and illogical position being taken by the Government. These include, among others, Bondwatch, the Ballyhea group, the Chattering Magpie, Namawinelake, the Fermoy group in my own area and the over-arching Not Our Debt group. Their efforts to raise awareness of this complex and technical area is welcome as is their commitment to resist it at every turn. The pressure they can bring to bear on Government will be important. They will need the support of Members in this House and tonight's vote provides us with a chance to voice our opposition to the Government's failed economic strategy. It gives Fine Gael and Labour Deputies the chance to change course.
The idea that this Government actually believes that paying this money is sensible, is tantamount to economic madness. It seems the negotiating position is analogous to a person sitting down with the bank manager and saying, "I can pay my bills. I can meet the repayments and I can pay on time. Now would you mind giving me a better deal?" It is preposterous.
The implication of December's budget is starting to hit home. Pupil-teacher ratios, household charges, water taxes, septic tank charges, changes to tax credits, social welfare payments; the list goes on. Families are really struggling. There is no work to be found yet this Government claims it is renegotiating a more jobs-friendly deal with the troika but this is not happening. Young people in their late teens and twenties are leaving in their droves. Housing, health, education and social welfare systems are experiencing severe pressure.
With regard to health service alone, one gets the sense that we are at breaking point. The Government's strategy seems to be a chaotic one. Communities across my own area have been up in arms about the handling of acute and emergency care services. Emergency and pre-emergency care in the HSE south region, with the looming threat to the accident and emergency department at Mallow General Hospital and plans to cut ambulance cover for vast rural communities, is leaving people very worried. This is compounded by the fact that plans to cut community nursing home beds will leave our elderly and infirm in a very vulnerable position.
In my home town of Youghal, as a direct result of this Government's economic strategy, the local community hospital faces bed closures. The exodus at the end of February, retirements, the recruitment embargo and the HSE's plan to close almost 900 community nursing home beds, are the reasons. St. Francis nursing home in Fermoy is also a casualty. The decisions will have a devastating effect on the quality of life of individuals, families and communities and they should be resisted at every opportunity.
The Government is intent on paying back the debt of speculators and gamblers at the expense of our most weak and defenceless. The language of the Taoiseach and other Cabinet members this week has been significant. The contention that they have delivered anything of significance is almost laughable, €10 billion saved over the lifetime of the programme. It is like Fine Gael and Labour turned up to the aftermath of a hurricane with a dustpan and brush. The dustpan and brush approach is failing. All of the important economic and social indicators say this.
Anglo Irish Bank is a dead bank and the market solution is that these bonds should not be paid. Even ignoring the market, the simple truth remains that Ireland has to plead inability to pay these bonds, for the sake of the people. The Greek Government is currently negotiating a discount of up to 70% with bondholders in the private sector and the ECB has not withdrawn liquidity. We are fulfilling programme requirements over and above what the Greeks are doing. We cannot be treated any differently.
When the Minister for Finance, Deputy Noonan, entered into negotiations with the ECB this week on a reduction in some of our banking debt, the sovereign bond market rates fell to under 6%. We were punished by the markets not because we threatened default and our inability to pay but rather because we said we would pay everything when it is clear we cannot do so. We seem constantly beholden to the markets but it seems they can see through this Government. Now might be a good time to start listening to the people.
I so not support this motion and I will vote against it. It is a motion calling for a default. A section of parliamentarians elected to this House talk about burning bondholders etc., and withholding the money but in the 11 months that I have been here, I have not seen a single person who takes this line who has the courage to put down a motion calling for Ireland to default. They couch their motions in language such as this one to try to avoid the real choice between-----
Perhaps the Deputy did not hear us on this side.
Order, please.
May I continue?
Of course.
Thank you. The motion is couched in a particular language because of the fear of putting down or of being identified with a motion to default. Anybody wishing to talk about the language of default in Ireland should speak to the labour congress in Iceland or some of the shop stewards in Iceland about the tone of default and I am sure this would result in a very different attitude. I suggest one should speak to the teachers' unions in Iceland about the state of their wages since they ran into their difficulties. The Sinn Féin view on the alternative of default will lead to misery.
I note one significant omission from the motion. It suggests we should not pay this money. I was hoping the second part of this riddle could be answered, which is the €1.5 billion payment which requires to be met every month and which is due in the next few days. The motion does not address this nor does it say that we should not pay those concerned. Why does it not call for the refusal to pay this €1.5 billion monthly sum? It will be difficult for the people who have moved this motion to explain to nurses in hospitals or teachers in schools where the money will come from. However, they will very cleverly avoid getting themselves into that situation.
I refer to some of the Members who signed this motion. One would need a neck made of Wicklow granite to call for a default. Some of those who signed the motion were here on the night of the Anglo Irish Bank bailout, which has been referred to in this debate. People freely made a decision to bail out probably the most rotten bank in the world that has cost us billions since and now they present this motion talking about why we should default. Where was their conscience the night of the bailout in September 2008? Some or those who signed this motion did not even turn up for the vote but they do not mind putting down a motion tonight which in reality encourages defaulting - but they cannot say that. I do not know how people can live with this inconsistency. They should take a hard look at what they did in September 2008 in supporting Anglo Irish Bank.
I doubt if there is a Member of this Parliament who in reality would want to pay this money that has been paid today but it is the lesser of two evils. If the people want to come forward next week with a Private Members' motion on default, we will sort this out for once and all but default will put us back and put this country back where it was in 1913, when those at the bottom of the social class had no shoes on their feet. This is what the default will lead to. The lesser of two evils has happened. I will vote against the motion.
I will speak along similar lines to Deputy Maloney. We are all in agreement that what we are being asked to do is a pretty obnoxious deed. Nobody would pretend that what we are being asked to do is fair, right and just and would happen under any circumstances other than those in which we find ourselves today. I have heard much about septic tanks today but we are effectively talking about what was and still is in many people's minds a septic bank. When this period of history is written in 50 or 100 years, Anglo Irish Bank will be written all over it.
I know to my cost and that of the community which first politicised me in the Dublin docklands what Anglo Irish Bank was all about. There is a little school there where I worked and the Dublin Docklands Development Authority promised it a new building. Two members of Anglo Irish Bank were on the board of that authority. This was only three or four years ago but people should remember the magic dust that these people sprinkled on this country, which was incredible. One could not, in all seriousness, question anything that these big developers, builders and businessmen were doing. Everything seemed wonderful and they kept their businesses ramped up. The Glass Bottle Company site in Ringsend was identified as an ideal site and the authority became involved in a partnership with a third party development, funded by Anglo Irish Bank. Some €400 million was spent on the Glass Bottle Company site and it is now worth €34 million. The promissory note my school got for a new school building went up in dust, and for the foreseeable future it is condemned to an 1840s-era building.
Many people have been betrayed by the bank and the crazy attitudes surrounding it. It goes against everything I know to be just or right to stand in the Parliament like this and speak in favour of what we are doing. As Deputy Maloney has quite rightly said, I know we are effectively talking about putting a €30 billion promissory note process on the table in the hope that we win €1.25 billion, all the while understanding that we have €147 billion of ECB money in our banking system. I do not gamble.
That is what the Government is doing.
Even somebody like me would know that gamble is not worth the risk. We may lose this battle on the €1.25 billion, and it is right and just that we in this Chamber at every opportunity have the right to discuss the process. Payments like this should not happen without having a proper discussion or debate through the likes of a private Member's motion. That is the way Parliament should work and I welcome the opportunity to discuss the issue. This is something about which the public will want a very tight explanation. Unfortunately, we have little more to say than that we do not think it worth the gamble.
Effectively, we are looking at a process of working with our European partners on something that is much more valuable, which is deconstructing the promissory note and changing it so we get some real change for this country. What would happen if we defaulted on this or previous payments? The European Central Bank, ECB, might have found it interesting as it has €110 billion in the Irish banking system at 1%, and it may have increased the interest rate. What would happen in that case and how could it be explained to the people who are rightly protesting and want to know what on Earth the Government is doing?
This is something we inherited and it is not of our making. Nobody in this Chamber would agree that this is the fault of the Fine Gael-Labour Administration. We are dealing with the issue as we find it, although we are not happy about it. The bigger game is the €30 billion figure, and I am not somebody willing to win a battle to lose a war. We should be careful about the information we send to our constituents when we are, correctly, discussing this payment to the unsecured and unguaranteed Anglo Irish Bank bondholders.
I wish to share time with Deputies Daly, Neville, Barry and Walsh.
Is that agreed? Agreed.
I understand why the motion was tabled and I agree with other speakers in that there is nobody in the House or the Chamber that is not sick to the stomach at the prospect of paying this money to the bondholders in Anglo Irish Bank. The truth is that the day Anglo Irish Bank was nationalised, that bank debt became sovereign debt forever. People argue that this is not our debt but that is not true, although we wish it was not our debt. Making it our debt was a catastrophic mistake for all of us but it is now our debt. By all the laws governing civilised nations in international affairs, it is our debt.
We could renege, as is suggested in this motion, but there would be consequences. I know there has been a great deal of debate about such consequences but in truth, none of us know them. Perhaps the troika would pull down the curtain and end the money supply, perhaps it would put more onerous conditions in place or perhaps it would make the money dearer. It could be any or all these possibilities. We should bear in mind that when we got the bailout, it was largely to prevent a default. There was a fear about our defaulting and the impact of this on other countries and their banks, so we know for certain that the troika feels strongly enough about defaults to give us a bailout. The kinds of pared services that are now possible would not be possible in the event of a default.
People have said that the markets have no memory and that within weeks, there would be lending to Ireland, which is true. However, that would come at a very high price. It is not true to say markets have no memory as credit histories count, for individuals and countries; they are not forgotten and are priced into what is charged for every penny lent. The markets would only lend money to Ireland at a very high price for a very long time. Does anybody really believe that if we decided not to pay our debts today, it would not frighten the ECB, which is exposed by more than €100 billion to Irish banks? It is charging a pittance in interest on that money so do Deputies not believe it is worried about it already? It would be very worried if we indicated that we would not pay our bills. I know how I would react if people told me they would not pay their debts but would like to keep borrowing anyway. If Deputies believe the banks are strapped for cash now, imagine what would happen if the shutters came down and the consequent impact on the economy.
This morning Deputy Ross suggested that we should default like Argentina and that we would be back in the markets in no time. That country returned to the markets a few years after default but it went through absolute hell. My colleague, Deputy Michael Creed, was in Argentina in 2003 and has an abiding memory not from the slums but in boulevards of the capital city, where people sat on footpaths trying to sell furniture. That was outside the houses most had already lost. That was their reality; we believe we are in purgatory but those people suffered hell for quite a long time. There are consequences.
It would be irresponsible at this stage, having repaid nine tenths of the bondholders of Anglo Irish Bank, most of it by the previous Government, suddenly to decide now we are not going to pay the last tenth. We have taken the pain. We have perhaps got some of the credit for that with the people who are lending to us, but not to pay the last one tenth would be stupid apart from anything else.
I will not go into detail on the promissory notes of €3 billion because it would be purely irresponsible to suggest not repaying it, but I hope whoever advised the late Minister, Mr. Brian Lenihan, on that kind of device to pay his bills did not get any kind of golden handshake because it is such an onerous arrangement that it is usury. It is approximately €17 billion on €30 billion. The Government is correct to go back to Europe to say that we were early movers to save the banks and we did it under intense pressure from Europe to save their banks. We paid too high a price and Europe must respond to that now.
I welcome the opportunity to contribute to this important debate. I echo what was suggested previously, that we follow this Private Members' debate with another one on default because that is, in effect, what the Technical Group is seeking, even though it has chosen to muddy the waters with its selective phraseology on dirty bankers and the other language its members use. They are trying to equate the payments to bondholders with cuts to hospitals and schools. Speakers have muddied the waters and created much angst. I congratulate them on that. If that is what they were looking for, they have achieved something. Many hard-pressed people are very annoyed, angry and frustrated with this added pressure. I say well done to them on that.
I urge the members of the Technical Group to do the responsible thing. They were elected to this House and in that regard they should show a small bit of leadership and inform people on the facts, not on the cheap, popular headlines they have sought to date. They should be honest and tell people as it is. They should do the decent thing and follow up this Private Members' debate with one next week to the effect that we as a State would default on our debt. It is one and the same thing. The debt we have inherited from Anglo Irish Bank is a State debt.
I do not know why the Technical Group has chosen to hone in on this issue other than that it is popular because it relates to bankers. We also owe a huge debt to the European Central Bank, ECB, and a massive debt to the International Monetary Fund, IMF. Why is the Technical Group not asking us to default on those debts? Debt is debt. The Members opposite know how the Irish Credit Bureau works. If someone defaults on any debt, his or her credit rating goes down. It does not matter whether it was a loan for a holiday or to educate one's children. Once one defaults, one defaults. If the Technical Group wants the State to default, then its Members should put it up to the Government to default. We would welcome such a debate because it would be an opportunity to deal with people head-on, to tell them the truth and the facts they need to hear.
The fact is that this country has a €12 billion deficit. I read Deputy Boyd Barrett's pre-budget submission and listened to the proposals he made. Watching people play the game of Twister makes more sense than listening to him explain how a wealth tax would bridge the divide. A wealth tax is a permanent asset. It is a stagnant asset. One cannot keep taxing it indefinitely. We might get a return in one year by putting a 30% or 40% tax on the wealth which the Deputy cannot make up his mind exists today. We might get over the hill in one year. We could raid the National Pensions Reserve Fund. That is all very well. If the Members of the Technical Group had been put in government 12 months ago and had introduced a wealth tax and raided the National Pensions Reserve Fund, one must ask where we would go from there. Both of those sources of income would be gone and we would rely on the troika, the ECB, the IMF or the EU to keep this country going for the next 12 months. Or else they could reduce the €12 billion with a once-off budget. That is the stark reality of the choices facing this country. I resent the hyperbole and hysteria that the Technical Group is generating throughout the country in the past two days for cheap political gain and to glorify its own ends.
Austerity has become the new dirty word. It is an awful pity we did not have austerity in this country ten years ago. Austerity is merely cutting one's cloth to suit one's measure. It does not have to be a dirty word.
The Government would have had us in sackcloth years ago.
If austerity was introduced years ago we would have a far better society and a far better country. It is an awful pity that people did not cut their cloth to suit their measure previously than going along with this process. The Estonian economy is an example of austerity. An austerity government was in place there for four years. It was re-elected with a huge mandate in the past year.
With growth of 6%.
The Estonian economy actually achieved growth of 7% on the back of four years of austerity. The members of the Technical Group should wake up and smell the roses and give the people of this country a break with a bit of truth.
I welcome the opportunity to contribute to the debate. As everyone has stated, it sticks in the craw to pay Anglo Irish Bank bondholders what we did, but the alternative is so stark that we have no choice given that we must restore balance to the public finances. The Government is slowly achieving that but it will not be achieved overnight. There will not be any instant solutions. We are engaged in a programme of reform which will restore the economy over a period, as Deputy Jim Daly has indicated.
Those who suggest we default or who are in the default mode should reflect on the outcome where default has occurred. Reference has been made to the Argentinean experience. Last year I looked closely at what happened in Argentina. The economists are correct; if we do something like that we will correct the economy in three to four years but one must not ignore the social ramifications and the pain people would have to endure. We would be at almost famine levels. It would be so irresponsible that under no circumstances could we even imagine the effect of such an approach as to default and not be able to bridge the €12 billion deficit, to which previous speakers referred.
The debate on default is ongoing. It might be an economic solution but for a start it would destroy our international reputation, on which we depend as an open economy. There would be serious implications for life opportunities and the standing of our citizens. Were we to default it is likely we would be thrown out of the eurozone and revert to the punt. Some people promote such an approach. The value of the Irish currency would collapse, thereby causing a currency crisis, as occurred in Argentina. A default would probably result in the value of savings being wiped out and make it impossible for people to get their hands on such savings. If this country defaults on its foreign debt and reintroduces the punt, most of the money in bank accounts would be in punts rather than euro and, as such, given the economic situation in the country, the value of the punt would plummet, the value of savings would decrease and the currency would depreciate. People with life savings in credit unions would find their value diminished. The cost of foreign goods and services would increase. There would be a devaluation in the value of the currency of between 50% and 70%, as occurred in Argentina. All imports, including 50% of supermarket purchases, would increase by 50% to 70%, as would all other imports and, as an open economy, that would have serious effects.
How does the Deputy know that?
As the Tánaiste outlined yesterday, a cut of €12 billion to our finances currently would reduce the level of payment for services - doctors, nurses, the public service and others - by between 50% and 70%. That is what those who propose a default are suggesting. It is irresponsible.
I value speaking in the debate, although the timing is poor. I have no doubt that it is a simple request but the scenario is complex. The timing is poor because today this country re-entered the bond markets - quite successfully at 5.15%. Nobody would have predicted that up to now. That is not bad but I do not hear any praise for it.
One must recognise that the Government is steady in its approach and consistent in the way it does its business. I know the wrongs that were perpetrated. I felt them more than many of the Members sitting looking across at me. I almost lost my business on the back of Anglo Irish Bank's false banking and backing people to own big portions of the sugar industry who eventually sold out through greed. I do not need lessons from Members on the far side of the House. When one's house is on the line, one knows all about it. Let us not go back to the past. Who owns the bonds is irrelevant. They are bonds and that is it. Discussing their owners is populist.
Returning to the market today shows there is market confidence, something that is vital. I run a business and am not about to be lectured by people who do not know how to create jobs. Creating jobs takes a great deal of effort and work. One builds a reputation over many years. If one defaults once, that is it - one is gone. People view the business as unreliable and the person as being someone who will cod them at some stage. Gambling never worked and I am not a gambler. We need to ensure consistency in our approach.
For those Members who have heard of Edmund Burke, he said we should not consult our invention, but with our past. This is important. Regarding the land annuities, the Government of the time decided we should not repay the loans the British provided to Irish farmers. We did not pay them, but we still collected the money from farmers. In 1932, 90% of our trade was with England. All of a sudden, prices for our cattle and commodities decreased and we were in major economic difficulty. This time was known as the Economic War. After six years, we tucked our tails between our legs and repaid England £10 million to say, "Sorry". By Jesus, we found ourselves in trouble in those few years.
Remember the credit unions that wrote to their small investors last Christmas to tell them the unions could give them no money because the bondholders had been burned? There are consequences to actions.
When I see populism like this, it makes me cross. I will stand by decisions that keep the people who work for me in their jobs. It is all about job creation.
I do no one a disservice when I say there is not a single person in the House who is entirely satisfied or comfortable with the events of noon today when we transferred funds to unnamed bondholders in the Irish Bank Resolution Corporation, IBRC. Given the volume of correspondence my colleagues and I have received from the public on this matter in recent days, it has not been a popular decision, but it is undoubtedly the correct decision. In time, we will derive great benefit from the decision to honour our sovereign debts.
For far too long, our predecessors made decisions on the basis of short-term political gains. Thankfully, the policy of keeping an eye on the next general election has been confined to the history books. During its short term in office, the Government has demonstrated numerous times that it is prepared to make difficult, unpopular and unpalatable decisions in the national interest. Today's honouring of our obligations to the bondholders is one such decision.
Everything the Government does is with a view to returning to international bond markets, as we did today, and relieving ourselves of the troika's assistance. The Government has been successful in this regard. Prior to the last general election, Irish bond yields stood at 14%. The yield on those same bonds when we dipped our toe in the markets today was marginally over the 5% mark. Bond yields have fallen sharply because of the Government's decisions since assuming office, including the honouring of our obligations to the bondholders. Lest there be any doubt, failing to pay the bondholders would be catastrophic for our ability to return to the markets and for the rate of interest we would pay on bonds.
National debt is forecast to hit €200 billion during the course of the next 12 months. Each 1% reduction in bond yields that we achieve will result in a saving of €2 billion per annum. The reality is that this is our debt and we must repay it.
It is not out debt.
We assumed responsibility for this debt when Fianna Fáil signed the bank guarantee and nationalised Anglo Irish Bank.
I wish to address some of the misinformation that has been supplied. Some members of the Technical Group suggest that we should aspire to the Greek model and attempt to achieve similar write-downs. This would be catastrophic. Some of the group's members remind me of the story of the Grand Old Duke of York and I have visions of Deputy Boyd Barrett or Deputy Higgins leading us on the march to the top of the hill. When they discover what is occurring in Greece, they will not be long turning on their heels and marching right back down again. Perhaps the Deputies might bring their colleague, Deputy Mattie McGrath. When he gets to the top of the hill and witnesses what is occurring in Greece, it might cause him to fill some of those famous septic tanks he is constantly discussing.
Other misinformation suggests that the funds transferred today could have been used for other essential services. That is absolute nonsense. We are in a programme and borrowing money. Indeed, we borrowed money to fund the bondholders today.
We do not need to pay.
Had we decided to renege on our debts, the level of support received from our international partners would have been reduced accordingly.
I support the Government's amendment, as the motion as presented is populist rhetoric. There should be no place for it in the House, particularly in light of today's successful return to the bond markets, as Deputy Barry mentioned.
I call Deputy Boyd Barrett, who has seven and a half minutes. His colleagues, Deputies Luke ‘Ming' Flanagan, Tom Fleming, Halligan, Finian McGrath and Catherine Murphy, have four and a half minutes each.
To swap metaphors with the previous speaker, the Government side in this debate reminds me of the captain of the Italian ship that sank recently because he was so busy trying to impress his friends onshore that he could not face the fact of a massive gaping hole in the side of his ship or that it was going down. The reality is that the Government is keeping the country on an unsustainable path, namely, paying off the gambling debts of bankers and speculators by crucifying our society and economy while trying to convince us it is somehow a good thing and the situation will right itself in the end.
Lest there be a mistake, the suggestion is that we in the United Left Alliance are afraid of the word "default". Let me say it - default, default, default. Contrary to Deputy Walsh's suggestion, these are not our debts. They are not the debts of pensioners, low and middle income families, the hundreds of thousands of people who have lost their jobs, the schoolchildren who have lost guidance counsellors, learning support teachers and language support teachers or the disadvantaged in our society. They are the debts of bankers, speculators and people who are driven by nothing but greed and profit. The Government is saying that the interests of speculators come before the interests of schoolchildren, families whose loved ones are getting on boats and aeroplanes to leave the country, people who are rotting on the dole and pensioners who are shivering with the cold this winter because of cuts in the fuel allowance. I hope the Government will spare a thought for those people as it defends, justifies and spins the paying of €1.2 billion to speculators and bondholders while real human beings, not markets, suffer considerably. Make no mistake. The money paid today and the €3 billion the Government plans on paying at the end of March come directly from the pockets, livelihoods and services of ordinary working people and citizens who have no responsibility for the criminal actions that caused this economy to crash.
What makes all of this worse is the fact that we are not even paying the bondholders who initially bought the bonds. We are paying people who bought the bonds recently on the secondary market at a 30% or 50% discount. The original bondholders burned themselves. We would not, but they did. The speculators and gamblers we paid today will make a profit of between 30% and 50%, some €300 million or €500 million. Once again, the vulnerable, the workers and the people lose, but the speculators win handsomely.
There were also the insurance companies, represented by the United States Treasury Secretary, Timothy Geithner, who vetoed proposals to burn bondholders. We did not discover this from the Government but through a leak from the United States Embassy. Mr. Geithner, we learned, knew that people in this country were angry, but he did not deny that he had vetoed the proposals. It is important to stress that it is not just the people of Ireland who are losing out as a consequence of this decision but also the people of Europe. Everybody is suffering because of a decision by the political masters in Brussels, Paris and elsewhere in Europe, together with the political masters in this State, to sacrifice everything - our economic future, fairness and social justice - in order to pay off bankers and speculators. All of this might possibly be justified if there were even a slight glimmer of hope that any of it is working. There is no such glimmer.
The Government is not even listening to what Christine Lagarde, managing director of the IMF is saying. As she warned, loudly and clearly, before Christmas and as was repeated by the IMF yesterday, we are careering towards a 1930s-style depression. All of the austerity measures that have been imposed have only made the situation worse. It is an absolute lie to say the European Central Bank would retaliate to a decision not to repay these bondholders by cutting off liquidity funding to our banks. The only reason it is providing that funding is that a failure to do so would, as well it knows, see the entire European financial system, including its banks, come crashing down. That is the leverage we must use in standing up to these people.
Unfortunately, the Government will not stand up to them because it buys into their agenda and into the dogma of markets which caused the financial crisis. This crisis is being used to ram even more market dogma down the throats of people throughout Europe. It will have the exactly the same result in other markets and other sectors of society as it has had in the financial markets. In other words, it will lead us towards a depression. The only responsible action for elected Deputies in this Chamber to take is to call the bluff of those who are using the politics of fear to intimidate people in this State into accepting austerity. We must encourage people to resist, community by community and workplace by workplace. Otherwise our society will suffer the consequences for generations.
The Government has advised us on several occasions that actions have consequences. I am well aware of that. If the bank were to give me €10,000 tomorrow morning and I decided to lose it all in a bookmaker's shop, I realise there will be consequences to my actions. If I lose, the bookmaker is not obliged to return my money. On the other hand, the people to whom €1.25 billion was repaid today have been taught that there are essentially no consequences to their actions. They took a risk which did not turn out as they hoped. Some of them sold on the bonds, in some cases for as low as 54 cent in the euro. Unlike somebody like me, who would not burn down the bookmaker's shop if my losing stake was not repaid, these people are repaid in any case. If Paddy Power was being run by the Government it would be out of business by now.
We are told that if we kick up a row about repaying these bonds we will be slapped on the wrist. One Government Deputy observed that there is €110 billion in the banking system, put there by the European Central Bank, and if we do not repay this money the bank might raise the interest rate it is charging us. The reality is that if that were to happen, we would be unable to repay any of the money. We are the man or woman in the street who is sure the banker will tip his hat to us for fear we will not pay him back. That argument has been going around for a long time. It is an argument members of the Government were using before they came into power. Unfortunately, that is now forgotten and they have become so responsible that they no longer run the country. When I lived in Germany I never voted for Angela Merkel's party. There was no opportunity for me to vote or not vote for her on this occasion, but the Government is letting her and Mr. Sarkozy run the country. It promised to get tough with these people and to work for this country. If it had done so, we would not have had the debate today on the Water Services (Amendment) Bill because there would be enough money to run the country without the need for such measures.
I do no accept the scaremongering which says we will be locked out of the markets if we do not repay this money. I know of several business people who found themselves unable to repay their debts in the past and were obliged to go out of business. Over a period of years they went back into business and nobody had a problem with them. People move on, just as the markets will move on. They have already done so in the case of Iceland, with that country's credit rating now restored to health, thus allowing it once more to borrow on the markets.
Some people argue that we cannot know the consequence of a failure to repay the bondholders. However, there are certain facts of which we can be sure. We will still be producing just as much food as we are now and there will be a demand for it from all corners of the planet. People will still want to come to this country for tourism reasons. The multinationals are not here for the craic or because we pay back debts we do not owe. They are here for other reasons and those reasons will still apply following a default. It will not all fall apart if we default, a word which some are afraid even to say.
How will the Government succeed in terrifying people after it has put through the next several budgets? The only threat that will be left in three years' time is that if we do not pay the bondholders we will not have enough money to pay the interest on our debts. According to the figures from the Department of Finance, we will have a primary surplus in 2014. The only fiscal deficit we will have in that year will be the interest we are paying. How will the Government frighten us into submission then?
Today, €1.25 billion was paid to unnamed and unguaranteed bondholders. This country is being bled dry by Goldman Sachs, Credit Suisse and a conglomeration of hedge funds. Reliable sources indicate these are the principal holders of the bonds. Anglo Irish Bank is likely to end up costing the Irish taxpayer close to €50 billion by 2031, with future related borrowings and interest charges bringing the possible total bill to approximately €85 billion. While Greece and Portugal are negotiating haircuts to their debts of more than 50%, Ireland is held to ransom and obliged to pay bondholders their full capital plus interest, which in some cases is charged at up to 8%.
The taxpayer is being forced to pay through the nose for the reckless behaviour of Mr. FitzPatrick and Mr. Drumm. Between 1978 and 2008 Anglo Irish Bank's loan book grew from IR £1 million to €78 billion. To cover these loans, it bridged the gap by borrowing cheap money on the international markets and issuing bonds. Many huge transactions were not approved by the board of directors and there were ad hoc arrangements whereby massive sums were approved over the telephone. The regulator was gone missing at this stage and good ship Ireland was drifting towards the rocks. This reckless and irrational borrowing by developers was facilitated by irresponsible lending on the part of banks, lending which amounted to acts of criminality.
One of the most worrying aspects of all of this is that these people are still at large, whether abroad or still in this State, and are continuing to trade. By contrast, we saw what happened in the United States where such persons were brought before the courts in a very public manner and the appropriate custodial sentences were handed down. It irritates and disgusts the people that we have not acted in a similar manner to the authorities in America. There is no sign on the horizon that this will happen. Irish people are experiencing unprecedented hardship and the most vulnerable and helpless in society are bearing the brunt of all these wrongs. The most extreme draconian measures are being inflicted on them to address the financial quagmire in which we find ourselves.
No one envies the Minister for Finance, Deputy Noonan, in terms of the dilemma he faces. Despite that the sum of €1.25 million was paid out today, I am sure we are all agreed that he, with the support of Government, should play tough and hard ball in the negotiations on the promissory note of €3.1 billion due to be paid at the end of March. It is hoped the Government will be able to obtain a sizeable write-down in this. If we do not secure a better deal or have our debt repayments spread out over a longer period, this country will remain deflated, with more unemployment, emigration and austerity measures of the type introduced during recent years. If this continues, the backbone of the country will be broken. It is hoped that will not happen.
I refer to the troika's warning this week that a financial bomb would go off in Dublin if Anglo Irish Bank senior bondholders are not repaid. This was a horrendous scaremongering tactic designed to create anxiety and panic among the people. The implication that the troika holds a bomb that could decimate the Irish economy is shameful and wholly inappropriate. It is emotive and threatening behaviour. The people will not fall for this PR stunt. They have more to be worried about given that the latest statistics show that 60,000 householders are in mortgage arrears, Irish householders now owe twice their income and 100 people a day are leaving the country. All this despite the €20 billion plus we have already slashed in budgets.
What is confusing and angering people is why, despite the harrowing austerity measures they are being forced to endure and our 14.4% unemployment rate - 18% in my constituency - the budget deficit remains static. How can this be? People have now realised the implications of the austerity measures, which bow before the greed of the bondholders. Despite all their sacrifices and the cuts they have sustained, there is no improvement in their daily lives. All we hear are warnings that we face more of the same for years to come. People throughout the country are asking - Members of the Government must be hearing it too - why we are handing over to private bondholders and banks €1.2 billion, which we have no legal or moral obligation to pay. The argument that we do so because we promised to is ludicrous and offensive to the people. That is the only argument being made by the Government side.
People are asking why, if the country is broke and they had to sustain cuts of €2.8 billion in the last budget, we are giving €750 million to unsecured bondholders. Fine Gael promised prior to the last election that it would burn the bondholders and bring about change and reform in this area. I have listened carefully to some of the words and phrases used in this debate, including "austerity", "default", "zombie banks" and "not our debt". Fine Gael used these words prior to the last election. It came up with the word "austerity". It accused the previous Government of implementing austerity measures. It used the word "default" and the Labour Party most definitely used it. There is no one here from the Labour Party, members of which used the word "default" on every television and radio programme. The Minister for Finance, Deputy Noonan, when in Opposition used the phrase "zombie bank".
That is correct.
He continually told the people of Ireland "this is not our debt". The people no longer believe the Government, members of which are deliberately trying to confuse them. The Government has not succeeded. The people believed Fine Gael and the Labour Party that they would not pay the bondholders because they told them so. Both parties used the phrase "burn the bondholders" on television programmes and so on.
I remind Members opposite of the criticism they fired at the Independents. That was a bad mistake. Each of them was elected with a sizeable majority. We were elected based on what we told people, namely, that we would do everything in our power to ensure the bondholders were burned, to prove the Government wrong and to put it down because of what it was doing to the people. This Government is destroying the economy and people's livelihood. There are people who are hungry. We recently gave money to a Greek bondholder who is a multimillionaire. The Government needs to explain that to the people, including the people on the dole and the 100 people that will emigrate from our airports tomorrow morning. Fine Gael and the Labour Party should be ashamed of themselves: they lied to the people.
I welcome the opportunity to contribute on this important and urgent debate, in light of today's payment of €1.25 billion to unsecured bondholders. While for me this is a huge issue, for the citizens of this State, it is a major drain on our economy. It is important to have a clear and honest debate and less spin and waffle from this Government. The people deserve better: they deserve the truth.
I was a Member of the previous Dáil and witnessed first-hand senior bankers appearing before committees, conning politicians and misleading the people. Their lending policies were economic vandalism of the worst sort. At that time Members of this Government were very excited about payments to bondholders and so on. Their high moral ground antics were breath-taking yet today they paid out €1.25 billion to those bondholders. These bondholders are anonymous speculators, many of whom bought Anglo Irish Bank bonds at between 50% and 80% discount, who stand to make huge profits if paid full face value for those bonds. This Government intends to make a further payment of €3.1 billion on a promissory note for the Anglo Irish Bank-Irish Nationwide Building Society debt on 31 March. It will also make similar payments every year up to 2023 with further payments due after that. This debate is about reality and the facts in regard to the banking crisis and bondholders.
Last week, the Taoiseach said the growth rate for Ireland next year would be 1.3%. My colleague, Deputy Ross, exposed the truth and, along with the IMF, said that growth would be 0.5%. Did the Taoiseach come in here yesterday and today and accept that he got it wrong: he did not. That is the type of leadership I will not accept. It is dishonest leadership that should not be accepted. The people had no hand in this debt, will not benefit from its repayment and do not consent to paying it. That is the message I hear across my constituency every day. The people do not consent to paying this debt.
The Minister for Transport, Tourism and Sport, Deputy Varadkar, also got it wrong last Sunday in relation to his comments on Denmark. He did not put his hands up in acknowledgment either. Denmark is now back in the markets. We need to stand up to the ECB. We need to tell it the truth. Elements within the IMF accept the analysis of the Technical Group. In addition, one should consider the real issues. In the context of cutting expenditure, the Government should stop cutting DEIS schools or services to people with disabilities but should consider the ongoing waste in the public service. For example, the Members opposite all jump up and down in respect of electronic voting machines about which the previous Government cocked up to the tune of €50 million. Do they know it costs €145,000 per year to store the aforementioned machines? Are they aware the State was forking out €500,000 to rent empty offices? I challenged the Minister of State at the Department of Finance with responsibility for the Office of Public Works, Deputy Brian Hayes, on this issue. I have cited two small examples but there is no logic to spending and wasting money.
As for blaming mortgage payers and those who were hammered during the Celtic tiger years in respect of their apartments, flats and houses, I note the Taoiseach's brass neck in attacking people who are opposed to the household charge. However, in 1994 Deputy Enda Kenny stated "It is morally [wrong,] unjust and unfair to tax a person's home". This is the kind of politics I will not accept. The people demand truth and an honest debate. The Independent Group and the Technical Group in the Dáil are working hard to deliver such a debate. The Government should get on with the issue, negotiate on behalf of this country, put on the Ireland jersey and deliver for the Irish people. They deserve truth and honesty and, above all, they deserve respect.
This time last year, people were short of only one thing, namely, the date for the general election. They were about to head into a month of debate in which they listened to declarations that it was either Labour's way or Frankfurt's way and listened to the current Minister for Transport, Tourism and Sport, Deputy Varadkar, talk about not paying a cent more. The Government should not lecture Opposition Members about rhetoric because it provided the Government with a large part of the majority it enjoys in this House. This is because people paid attention. Government Members visited the same doorsteps as did Opposition Members and know people were paying attention. They did not talk about local issues on those doorsteps. They expressed their unwillingness to take on board the responsibility for bank debts and certainly for unsecured bondholders.
The point is it is now dead money, as of today, because it has gone and it is disgraceful that it was paid. The bondholders must be the luckiest people ever, as what happened today is the equivalent of someone giving them the winning lotto numbers. It was noted earlier that these bonds were even traded on the secondary markets. While the Government may not wish to know who these people are, I wish to know who they are, both on my own behalf and on behalf of the 40,000 households in my constituency. I wish to know to whom the €700 per household is being paid.
As this Government is supposed to be about job creation, how many jobs could be created with €1.25 billion? If one takes the average industrial wage, one could create 35,000 jobs for one year with €1.25 billion. There would be wealth generation, consumer spending, increased Government revenue and a reduction in social welfare payments. This is the kind of opportunity that has been lost by not retaining that money in this economy. As for the work that could be done, the €1.25 billion also could be used to deal with the ageing water mains infrastructure, thereby saving money and creating jobs. It would provide enough money to construct offshore wind energy that could then be exported. It could be used to retrofit homes, which again would create jobs and save money. This would not be money going down the drain and would not be expenditure without return. The money also could dramatically enhance the rail network or would allow the construction of two hospitals of the size of the proposed national children's hospital. This is the kind of project that could be carried out with that kind of money.
The promissory note, which is due to be paid on 31 March, is absolutely unsupportable. Gene Kerrigan wrote an article recently in which he discussed who would pay this debt. He noted the 60,000 children who were born in 2002 will be 21 in 2023 and will be paying the interest rate and residuals arising therefrom. Similarly, the 74,000 children who were born last year will be paying it in 2031. What is being done in respect of the promissory note has a consequence way beyond Ireland's reputation with the troika. In this context, the Technical Group met representatives of the troika last week and I listened to their press conference, at which they stated they read the newspapers and that they pay attention to what people say. They told us there had to be buy-in and that they thought there was buy-in to this programme in Ireland as, otherwise, they would see resistance.
The point is that resistance in Greece brought a reduction in Ireland's interest rate. Resistance paid off, while this passive slapping of people's backs will not deliver for Ireland. It will not be a success if Ireland ends up getting a small interest rate reduction on these promissory notes. There must be either an almost complete write-down on them or, as was suggested last night, or an extension of their terms to enable inflation to take care of the problem. Two things are required to control people, namely, fear and insecurity and this is what the Government is dishing out in abundance. It is making a population passive, which I believe to be highly dangerous in the longer term, because the people will boil over at some point. Moreover, I believe they are not too far from so doing.
First, I apologise to the House for the delay at 7.30 p.m. There was an unavoidable mix-up between who was meant to be present and who was present, for which I apologise. It was unintentional and was an accident but, please God, it will not happen again.
That is all right.
The motion before the House is both timely and appropriate. Having listened to the contributions and debate, the Minister for Finance is of the view that there is considerable common ground on all sides of the House. All Members are agreed that every effort must be made to reduce the cost to the Exchequer of the promissory note. They are also agreed, to various degrees, that the State should continue discussions with its international partners on how this can be achieved and, in general terms, that the State should not act unilaterally in this regard.
There is a clear recognition that the situation with regard to the eurozone is evolving and that developments in this respect may provide opportunities for the State to revisit certain matters, including the cost to the State of the Irish Bank Resolution Corporation, IBRC, arrangements that were entered into by the previous Government. As an independent State, Ireland has taken the initiative to deal with its problems. The Government has taken the hard decisions and will take whatever other decisions are necessary to get the country back on track as quickly as possible. The Government must ensure, and our international partners must have regard to the need to ensure, that Ireland's capacity to repay its debts is maintained and enhanced.
The Minister accepts the necessary adjustments in State expenditure have affected and will affect the level of services and the living standards of people. The Minister accepts the impact of the adjustments must be fair and proportionate. The Minister accepts it is galling to be obliged to pump State resources into supporting the financial sector. These actions are, however, necessary as our economy will not operate without a banking system. Moreover, we must get back to the financial markets for funding, we must re-establish our financial credibility and we must return to growth and prosperity for the good of our people. We must do all these things in order to exit the programme of financial assistance from the EU-IMF at the earliest possible date to avoid this country being hamstrung for years or even decades by an enforced regime of austerity. The Government is committed to delivering a return to a successful vibrant economy. In this context, the Minister has indicated there is no private sector involvement for senior bank paper or Irish sovereign debt without the agreement of our external partners. This commitment has been agreed with our external partners and is now the basis on which Ireland's future financing strategy is built.
There appears to be a suggestion that it may be possible simply to make the promissory note go away and that the Central Bank or the ECB would continue to fund the institution through the working out of the remaining loan book. The Minister refers Deputies to the balance sheet of the bank. In the first instance, the Central bank and the ECB are effectively funding the bank. If the promissory note was removed from the balance sheet, there would be certain consequences, namely, the gap on the asset side of the balance sheet would still have to be filled; in the absence of this asset, the bank would fail, leading to insolvency and a requirement to repay all amounts due under all contracts; the Central Bank and the ECB could not continue to fund the bank under their own rules because the institution would no longer be a going concern or a licensed bank; the Central Bank-ECB funding of approximately €40 billion would have to be repaid and, as this is State backed, it would fall to the Government to repay it; and the assets of the bank would have to be disposed of in a fire sale, which would increase the losses to the taxpayer. Is it realistic, in the current environment, to consider default as an option or to assume that the Central Bank or the ECB would continue to fund the bank in the circumstances I have outlined?
As indicated, the Minister is committed to reviewing the approach to the promissory notes with a view to reducing the overall cost to the State. The troika has agreed to engage with Irish officials in a process to produce a common paper in which all options for restructuring the notes in terms of the source of funding, the duration of the notes, the interest rate, etc., would be considered. In tandem with this technical review, the Government has commenced an intensive campaign at political level to garner support for an approach which would be more beneficial to the State. The Minister met Commissioner Rehn and the President of the European Central Bank this week to progress the matter.
The Government is committed to restoring sustainability to the public finances. Clearly, this presents challenges for policymakers. However, we must remain steadfast in our commitment to reduce the deficit below 3% of GDP by 2015. To this end, the Government has committed to increase the tax base and reduce expenditure as part of an overall budgetary strategy which is fair and measured. It is essential, in conjunction with this approach, that productivity and efficiencies are achieved in the delivery of public services.
The Minister thanks Deputies for this constructive and helpful debate and I ask them to support the Government's amendment.
I call Deputy Mick Wallace who is sharing time with Deputies Shane Ross and Joe Higgins.
The Government thinks it is a good idea to pay €1.25 billion to unsecured bondholders. It is of the view that it is not a good idea to upset the ECB or the financial markets. However, it appears to be okay to upset people who depend on one-parent family payments, carer's allowance, the fuel allowance and the rent allowance and parents whose children are losing their guidance counsellors. It also seems to be fine to cut the funding for DEIS schools and community employment schemes. Those in government made one argument before the general election and a different one afterwards and they were unable to back up what they had said on both occasions. They gave the impression prior to last year's general election that it would be a good idea not to give money to unsecured bondholders and the people believed them.
On the household charge, in January last year Fine Gael stated:
But the Government's proposal to introduce a steadily–rising, annual, recurring residential property tax on people's homes is unfair for two reasons ...
• It will be difficult to pay for asset–rich but income poor households, particularly the elderly and the unemployed.
• It will be deeply unfair for a young generation that paid exorbitant amounts of stamp duty and VAT on the purchases on over–valued houses, many of whom now find themselves in negative equity.
There was one story before the election and a different one afterwards. What does power do to people?
At Question Time last week I referred to the continued use of Shannon Airport by American military aeroplanes on their way to Afghanistan. In October 2007 the Tánaiste, Deputy Eamon Gilmore, stated:
The war is wrong and Ireland was wrong to support it through the use of Shannon Airport. The war was wrong on grounds of international law, wrong on grounds of morality and wrong because it degenerated into an assault against the most basic principles of our common humanity.
When I challenged him last week on the fact that the Government had done nothing in respect of the US military continuing to use Shannon Airport, he stated, "There are no plans to change the arrangements for the overflight and landing of US military aircraft, which have been continuously in place under successive Governments for over 50 years." He thinks it is okay for military aeroplanes to land at Shannon Airport and then proceed to Afghanistan in order to drop bombs on people asleep in their beds in the middle of the night.
The difference is standards is incredible. Making one argument when in opposition and arguing the complete opposite when in power is so dishonest. How, in God's name, can anyone expect politicians in this country to have credibility? The people threw the previous Government out on its ear. During the election campaign those opposite stated they would take a stand on various matters, but when they entered office, they did the exact opposite. That is completely unfair to the people who voted for them.
I wish to respond the Minister of State's comments. His attempt to wrap those in opposition around him and state we were united in agreement on the bones of the motion was complete and utter nonsense. He said: "They also are agreed, to various degrees, that the State should continue discussions with its international partners on how this can be achieved and in general terms that the State should not act unilaterally in this regard." I reject this assertion. The State should act unilaterally. That is what we are seeking, particularly if it proves necessary and we are pushed in that direction.
There is a gross misunderstanding among those on the Government benches of what is happening in respect of these and other bonds. I accept that I sometimes speak from a different perspective from those on these benches who are opposed to the Government. I do not know what those in government believe was in the minds of those who were buying bonds at 55 cent, 60 cent or 70 cent. However, Deputy Catherine Murphy put her finger on it when she stated the people concerned thought they had won the lottery. The market had clearly indicated that there was no one on God's Earth who would pay 100 cent on the bonds in question, unless, of course, they were mugs. The only mugs who have emerged from this episode of market madness are those in the Government. The Government has actually paid 100 cent on bonds which were purchased at 55 cent.
Because I used to work in the financial world I am familiar with the individuals to whom I refer. They would not have been too worried if the Government had not paid them back. They did not expect to be paid back, which is why the market had priced the bonds in question at the level to which I refer. Those who bought them cannot believe their luck. The Government did not have to pay back the money for these bonds and it would not have suffered any great hit to its credibility if it had burned bondholders who had expected to be burned.
What is the Government doing? It is showing extraordinary deference to the ECB. Like the gladiators in ancient Rome, it is saying to that institution, "Those who are about to die salute you." It is showing deference to the ECB when it does not need to do so and the ECB is responding by kicking it in the teeth.
When commenting on this issue this morning, the Taoiseach made two large mistakes. The first, as Deputy Finian McGrath stated, relates to the fact that the Taoiseach continues to refer to the 1.3% growth rate on which the deal with the troika is based. That is nonsense and the rate in question no longer applies. On that basis, the Taoiseach is going to have difficulty in paying back the money to the troika. The second error he made was when he stated we were not going to write off any of the debt and that we were not looking to do so. The first thing we should be seeking to do is write off some of the debt on all counts.
The Taoiseach was mealy-mouthed and uttered weasel words when he stated the Government was seeking to reduce the cost of the debt. All that would involve is the lowering of interest rates and extending the period for repayment of the debt. The first thing the Government should be seeking to do is not pay back the principal amount.
I thank the United Left Alliance Deputies for tabling this motion and I thank the Deputies who supported it.
There is no doubt in my mind that in the major financial centres of the world, from Wall Street to London and Paris and further afield, there have been celebratory lunches and champagne receptions today organised by the sharks of the financial markets who, courtesy of the Irish Government, have just pocketed €1.25 billion in funds belonging to the Irish people. These are speculators who cannot believe their good fortune that the Irish people have now been put in a position of virtual financial serfdom by their own Government, at the diktat of the European Union and European Central Bank bureaucrats, in order to pay the toxic debts of the European financial system which recklessly lent to Anglo Irish Bank in pursuit of private profit in the crazed property market in this country.
However, while the champagne is flowing freely in the financial capitals today, while the hedge fund gamblers are toasting the capitulation of a spineless Irish Government that has channelled these huge funds into their coffers, our education system is being shorn of its teachers and other crucial supports. Children in disadvantaged areas are faced with a rowback of advances made in education over recent years. Children in rural Ireland are losing teachers in their hundreds, and children in Gaeltacht schools are even more harshly treated. All of this is for want of the very resources that are being transfused from our society into the bloated bellies of the major players of the European and world financial markets. Likewise, our health service and elderly care is being stripped, layer by painful layer.
Labour Party Deputies came to this debate with weasel words, denouncing the United Left Alliance and our motion. What was their rationale for that? It is that the Irish people should give €1.25 billion to the Anglo Irish Bank bondholders in order that we may impress those who wrongly dictated that this money should be paid in the first place, namely, the EU and the ECB, and in order that these masters would deign to allow some relief from the €47 billion in further funds from the same toxic bank that is supposed to be paid again by the Irish people over the next 20 years. Labour Deputies justify throwing €1.25 billion into the snouts of these Anglo Irish Bank speculators, with outstretched hands to the bosses of the ECB and the EU to go easy in the matter of the promissory notes. How far the Labour Party Deputies are from the founders of their party, Connolly and Larkin, and their approach to the financial markets of their day.
The crazed casinos that are the financial markets today arise from a diseased system. It is a capitalist system that is now in acute crisis. Finance capital has become a bloated parasite over the last 30 years as it moves money from productive manufacturing investment into crazed speculation and starving production. The crash and the crisis worldwide is the result.
The answer to this is a financial system that is in public ownership and democratic control, directed towards the well-being of society. Across Europe, hundreds of millions of ordinary people are the victims of this capitalist crisis. The Labour Party is part of a Europe-wide network of parties that call themselves socialists and democrats. Why do they not use that network to have a Europe-wide campaign in opposition to this crazed financial system that is lording it over the working people of Europe at the moment? It is because the Labour Party Deputies have long since bought into the capitalist markets. They have embraced financial capitalism and, therefore, they implement its law. They are, therefore, pathetically inadequate in front of this crisis. When we in the United Left Alliance say, "Don't pay" - I do not use the word "default" because they were never our debts to default on - our alternative is a financial system publicly owned and democratically controlled.
The Irish people must intervene decisively to stop these crazed policies. For three years they have endured this horrific austerity. They voted massively a year ago for change. They have been cheated in that regard. They now have an opportunity. New taxes have been put on top of them - the household tax and the septic tank tax - in order to continue this austerity and bailout. They can now say, "No". The Irish people can now organise a mass boycott of these taxes, which is what they should do and I believe they will do in their hundreds of thousands of households, which means millions of people.
The Government has set 31 March------
On a point of order, the order of the House states that this must conclude at 9 p.m.
We started at 7.35 p.m.
(Interruptions).
Where has Deputy Stagg been?
I ask the Deputy to conclude.
The Government has set 31 March as a date to scare people for registration for these taxes. The campaign against these taxes is saying to the people that we should arrive at 17 March with the bulk of households refusing to register and pay and boycotting these iniquitous new taxes. That will then create a situation where this Government has to think. We will hold the line with a massive and powerful campaign to force a change of policy, to stop the crazed bailouts and payments to the bondholders, to stop the crazed promissory note situation, to change the austerity policy and to bring about a policy of investment, job creation and reinstatement and reinstitution of our society.
Deputy Stagg is wrong.
The Deputy is like the militants in Liverpool.
The order of the House was not-----
Deputies, please.
Deputy Stagg cannot be wrong.
Please conclude, Deputy Higgins. Your time has expired.
My concluding word is this. It is despicable and it shows calculated contempt by the Minister for Finance and the Minister for Public Expenditure and Reform that they did not grace for a single minute three hours of debate on this critical issue of policy within their remit.
We have heard it all before.
People find the Minister of State, Deputy O'Dowd, a very nice and personable man. That he has been sent in from an entirely different Department to read a script that was put into his hand as he arrived shows the most calculated contempt. The people should take note of that as well.
Amendment put:
The Dáil divided: Tá, 87; Níl, 41.
Tá
- Bannon, James.
- Barry, Tom.
- Breen, Pat.
- Bruton, Richard.
- Butler, Ray.
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Cannon, Ciarán.
- Carey, Joe.
- Coffey, Paudie.
- Conaghan, Michael.
- Conlan, Seán.
- Connaughton, Paul J.
- Conway, Ciara.
- Corcoran Kennedy, Marcella.
- Coveney, Simon.
- Creed, Michael.
- Creighton, Lucinda.
- Daly, Jim.
- Deasy, John.
- Deenihan, Jimmy.
- Deering, Pat.
- Doherty, Regina.
- Donohoe, Paschal.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- English, Damien.
- Farrell, Alan.
- Feighan, Frank.
- Ferris, Anne.
- Fitzpatrick, Peter.
- Flanagan, Charles.
- Gilmore, Eamon.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Brian.
- Hayes, Tom.
- Hogan, Phil.
- Howlin, Brendan.
- Humphreys, Heather.
- Humphreys, Kevin.
- Keating, Derek.
- Keaveney, Colm.
- Kehoe, Paul.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lynch, Kathleen.
- Lyons, John.
- McCarthy, Michael.
- McEntee, Shane.
- McFadden, Nicky.
- McHugh, Joe.
- McLoughlin, Tony.
- Maloney, Eamonn.
- Mitchell, Olivia.
- Mitchell O’Connor, Mary.
- Mulherin, Michelle.
- Murphy, Eoghan.
- Nash, Gerald.
- Naughten, Denis.
- Neville, Dan.
- Nolan, Derek.
- Ó Ríordáin, Aodhán.
- O’Donovan, Patrick.
- O’Dowd, Fergus.
- O’Mahony, John.
- O’Sullivan, Jan.
- Penrose, Willie.
- Perry, John.
- Phelan, Ann.
- Reilly, James.
- Ring, Michael.
- Ryan, Brendan.
- Sherlock, Sean.
- Shortall, Róisín.
- Stagg, Emmet.
- Stanton, David.
- Timmins, Billy.
- Tuffy, Joanna.
- Wall, Jack.
- Walsh, Brian.
Níl
- Broughan, Thomas P.
- Browne, John.
- Calleary, Dara.
- Collins, Joan.
- Collins, Niall.
- Colreavy, Michael.
- Crowe, Seán.
- Daly, Clare.
- Donnelly, Stephen S.
- Ellis, Dessie.
- Ferris, Martin.
- Flanagan, Luke ‘Ming’.
- Fleming, Tom.
- Grealish, Noel.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Higgins, Joe.
- Kirk, Seamus.
- Kitt, Michael P.
- Mac Lochlainn, Pádraig.
- McConalogue, Charlie.
- McDonald, Mary Lou.
- McGrath, Finian.
- McGrath, Mattie.
- McGuinness, John.
- McLellan, Sandra.
- Moynihan, Michael.
- Murphy, Catherine.
- Nulty, Patrick.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O’Brien, Jonathan.
- Ross, Shane.
- Smith, Brendan.
- Stanley, Brian.
- Tóibín, Peadar.
- Troy, Robert.
- Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Catherine Murphy and Joe Higgins.
Amendment declared carried.
Question put: "That the motion, as amended, be agreed to."
The Dáil divided: Tá, 87; Níl, 41.
Tá
- Bannon, James.
- Barry, Tom.
- Breen, Pat.
- Bruton, Richard.
- Butler, Ray.
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Cannon, Ciarán
- Carey, Joe.
- Coffey, Paudie.
- Conaghan, Michael.
- Conlan, Seán.
- Connaughton, Paul J.
- Conway, Ciara.
- Corcoran Kennedy, Marcella.
- Coveney, Simon.
- Creed, Michael.
- Creighton, Lucinda
- Daly, Jim.
- Deasy, John.
- Deenihan, Jimmy.
- Deering, Pat.
- Doherty, Regina.
- Donohoe, Paschal.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- English, Damien.
- Farrell, Alan.
- Feighan, Frank.
- Ferris, Anne.
- Fitzpatrick, Peter.
- Flanagan, Charles.
- Gilmore, Eamon.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Brian.
- Hayes, Tom.
- Hogan, Phil.
- Howlin, Brendan.
- Humphreys, Heather.
- Humphreys, Kevin.
- Keating, Derek.
- Keaveney, Colm.
- Kehoe, Paul.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lynch, Kathleen.
- Lyons, John.
- McCarthy, Michael.
- McEntee, Shane.
- McFadden, Nicky.
- McHugh, Joe.
- McLoughlin, Tony.
- Maloney, Eamonn.
- Mitchell, Olivia.
- Mitchell O’Connor, Mary.
- Mulherin, Michelle.
- Murphy, Eoghan.
- Nash, Gerald.
- Naughten, Denis.
- Neville, Dan.
- Nolan, Derek.
- Ó Ríordáin, Aodhán.
- O’Donovan, Patrick.
- O’Dowd, Fergus.
- O’Mahony, John.
- O’Sullivan, Jan.
- Penrose, Willie.
- Perry, John.
- Phelan, Ann.
- Reilly, James.
- Ring, Michael.
- Ryan, Brendan.
- Sherlock, Sean.
- Shortall, Róisín.
- Stagg, Emmet.
- Stanton, David.
- Timmins, Billy.
- Tuffy, Joanna.
- Wall, Jack.
- Walsh, Brian.
Níl
- Broughan, Thomas P.
- Browne, John.
- Calleary, Dara.
- Collins, Joan.
- Collins, Niall.
- Colreavy, Michael.
- Crowe, Seán.
- Daly, Clare.
- Donnelly, Stephen S.
- Ellis, Dessie.
- Ferris, Martin.
- Flanagan, Luke ‘Ming’.
- Fleming, Tom.
- Grealish, Noel.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Higgins, Joe.
- Kirk, Seamus.
- Kitt, Michael P.
- Mac Lochlainn, Pádraig.
- McConalogue, Charlie.
- McDonald, Mary Lou.
- McGrath, Finian.
- McGrath, Mattie.
- McGuinness, John.
- McLellan, Sandra.
- Moynihan, Michael.
- Murphy, Catherine.
- Nulty, Patrick.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O’Brien, Jonathan.
- Ross, Shane.
- Smith, Brendan.
- Stanley, Brian.
- Tóibín, Peadar.
- Troy, Robert.
- Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Catherine Murphy and Joe Higgins.
Question declared carried.
The Dáil adjourned at 9.30 p.m. until 10.30 a.m on Thursday, 26 January 2012.