Dáil Éireann debate -
Wednesday, 23 Jan 2013

Vol. 789 No. 2

Euro Area Loan Facility (Amendment) Bill 2013: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

Deputy Liam Twomey

It is important when members of the Opposition speak that they should follow through on what their policy preferences would lead to in this country and what would be the consequences of their actions. It was interesting to listen to the previous speaker, Deputy Boyd Barrett. He gave lots of nuggets of information but he did not follow through on what would happen if his policies were adopted. To some degree he also distorted what has happened. In order for this country to recover we must first stabilise the economy and restore confidence in it. Only then will we see a significant growth in jobs. Anyone who has even the most basic understanding of economics knows that is the way it will be. Allowing insecurity to remain, killing off confidence in what is taking place and constantly espousing issues that will lead to lack of investment or people being fearful is no way to restore confidence and stability.

The Government has no intention of being a poster boy for austerity. I was a Member of the House in December 2010 when the IMF crossed over from the Merrion Hotel into the Department of Finance. There was a palpable sense of relief from the general public that someone would make decisions and do something for the country. Decisions entered into by the previous Government such as borrowing the money to recapitalise the banks were taken in the name of the Irish people. This is still a democracy and we let Governments make decisions on our behalf. If those decisions are wrong to some degree we are stuck with them and must negotiate our way out. It is simplistic to say the least that one would just walk away from one’s responsibilities, regardless of one’s responsibilities in life. One cannot just walk away from something because it no longer suits one. That is not the sort of society in which any of us want to live.

I heard it said recently that the money we are now borrowing is to pay back bondholders and to recapitalise the banks. That job has essentially been done. We are borrowing €1 billion a month to pay for public services. Let us imagine a scenario whereby Deputy Boyd Barrett is in government and it is his intention that we will no longer pay our debts as a country. He has not explained where the money would come from to pay for front-line services such as those provided by schoolteachers, nurses, doctors and gardaí. One could ask what the consequences of such a radical approach would be for the ordinary man and woman in the street. Some evidence is available in that regard. The example that is most often quoted is Argentina, which decided not to pay back its debts and it could not borrow money. As a result, it had to radically reduce the services it provided, including health and education. Public sector pay and pensions were cut. The people who suffered most in Argentina were the old, the more vulnerable in society and those who required health services and social welfare supports – the very people Deputy Boyd Barrett claims to support the most were the ones who suffered the most when the sort of policies he espouses were pursued.

Deputy Boyd Barrett is correct about one thing; Ireland is not Greece. I do not say that because we want to put down Greece. The people of Greece are currently going through an incredibly tough time. They have seen changes to pensions to the effect that anyone in receipt of a pension of more than €1,000 per month has received a cut of one fifth to it. If a similar approach were taken in this country where the reduction has only been 4% it would hit the most vulnerable people in society hard. I would not advocate such an approach in terms of a solution to how we would get ourselves out of the current crisis, not just because we are bound by the terms of the programme but because it is unsustainable in the long term for this country to borrow €1 billion a month to pay for the services we need. As elected Members, we must look to the future and make responsible decisions. We have an obligation to our children who are not of voting age, and those yet to be born, not to land them with a greater mess than has already been created by the previous Government. We cannot continue to borrow billions every year and expect our children to pay it back.

The vast majority of money we are currently borrowing is for public finances. That appears to be the case for the foreseeable future. There is a need to balance what we spend with what we can earn in the economy so that we can live within our means and not burden future generations. We must take into consideration that many of us in the House are in the same age group as others who are not as fortunate as we are and they will also require public sector pensions in years to come. We must consider how we will pay for them if we continue to borrow money.

Even though some of what Deputy Boyd Barrett said about the difficulties we are experiencing in this country and in Europe is true, his policy alternatives as to how we should deal with the issues do not stack up. Perhaps that is due to ideology or the belief that because he is in opposition he feels the need to take a contradictory approach to the Government. There is a need to take the approach being taken but we are open to hearing what others have to say in discussions on the matter. We hear much of the first half of what Deputy Boyd Barrett said about what is wrong and how awful it is from our party members and those of our coalition partners. What is important is the second half of the debate, namely, what we are going to do about it and how that stacks up under scrutiny. Unfortunately, that is where much of what the Deputy says does not stack up.

Deputy Boyd Barrett objected to the reference to the Federal Republic of Germany in the legislation. The Federal Republic of Germany has a strong constitution and before it gives out funding in the name of the German people it must ensure that it stands up to its democratic tests. That is the reason for such a reference; it is not because the people of Germany have a sense that they can control the rest of Europe. As someone who travelled to Germany with me last year, Deputy Boyd Barrett is well aware of how members of the German Parliament feel about what is happening in Europe. One of the issues that became crystal clear during our trip to Germany is that it does not have a problem with doing its best to get Europe out of the euro crisis; what it has a problem with is that the solutions that are arrived at do not result in us being back in the same position again in five or ten years’ time. That was the message I got from my five days in Germany. Deputy Boyd Barrett appears to see it as an attempt by Germany to take over the world. As I pointed out to him, that is not the reason for the reference to the Federal Republic of Germany in the legislation. The reason for the reference relates to its strong constitution and how the country deals with matters and spends taxpayers’ money.

Ireland encountered a problem because we had a massive construction bubble and the ensuing collapse in the economy meant that our public finances need significant restructuring. The alternatives proposed by Deputy Boyd Barrett to get us out of the mess such as burning bondholders and throwing the economy into confusion will not help to restore the jobs to which he refers. They will only make things worse. One of the important issues from this country’s point of view is that exports are important for us, as is our international reputation. In order to recover we must ensure we do nothing to damage them.

We must continue to attract international investment into this country and continue to restore our reputation so that people will feel this is a safe country with which to do business and will continue to invest here.

The more left wing Members of the House talk about speculators as if anybody who ever invests anywhere is a speculator. When is a speculator an investor and when is an investor a speculator? Every person who takes a risk with their money is an investor from my point of view and obviously a speculator from Deputy Boyd Barrett's point of view. He has a problem with capital and with people investing money.

Deputy Richard Boyd Barrett

The problem is where they are investing it.

Deputy Liam Twomey

Would the Deputy invest his money simply to throw it away? The Deputy has investments so I presume he would think carefully about what he does. He does not simply toss them away on a whim. Why would he expect anybody else not to weigh up the risks? Everybody who invests looks at low risk, medium risk and high risk investments. In fact, there is a sense that people are moving into government bonds at present. If one invests in German government bonds, one is losing money. If one invests Irish bonds, which were considered to be very high risk and are now not so high risk, one will benefit from it.

At present, a huge number of companies throughout this country are investing, be they multinational or national. The Kerry Group, for example, is investing in County Kildare with a massive research and development business. Other companies throughout the country are also investing. They might be small companies with five to ten employees and sometimes even fewer. The Deputy calls them speculators as well. They are investing. That is what everybody does when the opportunity presents. The more stability we give to this economy and the more confidence we give to people in this country, the more people will feel they can not only invest but also spend money in the economy. All the talk that this country will go down the tubes at a specific time is having a knock-on effect on the general confidence of the people who live here.

I have no wish to over-hype the recovery, because it is extremely slow, but there is a need to be at least realistic about what is happening here. The country is still in a very difficult place and the recovery is incredibly fragile, but I will not either talk it down or talk it up too much just for the sake of political gain. However, I believe the country is in a far different position now, just over two years since Mr. Ajai Chopra crossed Merrion Road. There have been some significant changes in this country and a great deal of reform has taken place. Deputy Boyd Barrett talks about cutting services. When one considers the amount of reductions that have been made in big Departments such as Health, Education and Skills and Social Protection, it is quite remarkable that we are still able to provide the current level of services. However, I am also realistic. These reductions have had knock-on effects on the people who require the services, but those effects are nothing like the despair and trouble people would have experienced if we had followed some of the policies the Deputy and some of his colleagues espouse.

There is a need for this slow approach, but things are happening. Much reform is coming and it is necessary. There is also a need to speed things up. There is a need for a follow-up agreement to the current Croke Park agreement. There is a need for the public sector unions to see it almost as their duty to speed it up and not have the usual sense which we saw develop in the Celtic tiger economy, where everybody just protected their own, held what they had and sought more for themselves. We must change that attitude and take a bigger approach to what this country needs over the course of the next decade so we can get ourselves out of the current mess. I genuinely believe this country has a great future ahead of it.

It is very important that all Members of the House take into consideration the people who most need our support. It was important that this Government reversed the cut in the minimum wage as soon as it took office, to protect people on the lowest wages. The Deputy is correct in one thing he says, which is that some unscrupulous employers have tried, and will continue to try, to reduce the wages and the terms and conditions of their employees just to maximise their profits. That must be watched and resisted at all times. However, that is not the same as what I am saying, in the context of the public sector unions, about making concessions and allowing work practices to change so we can become more efficient.

I have a great deal of experience with the health service and I have seen how changes have been implemented in the last couple of years. However, it has been mainly sectoral and has not happened across the system. Where it has happened in the system, the change has been quite dramatic. At the same time, I have seen people be very resistant to and blocking change to serve their own interests. The people who pay for that are the service users, the patients who need access to our health services. We are battling against that. I believe the public sector unions have a moral responsibility to deal with it, because we do not have the money.

I recall being in this House when the last Government was in office. When the then Minister, former Deputy Mary Harney, was asked to look at a problem in the health service, all she did was throw an extra €1 billion per year at the problem. There was no sense of reform or of structural changes within the health services. She made a botched job of the Health Service Executive, HSE, unfortunately. What went wrong with the HSE is epitomised by what happened to senior management positions. There were 70 to 80 senior management positions before the establishment of the HSE and within four or five years of it being in place, there were 800 of these senior managers. That was when it was all about throwing money at the HSE without delving into where that money was being spent and how the structures supporting the health service were being managed. That was unfortunate and we are paying for it now.

I hope the people of Greece come out of this situation, although their prospects are a great deal worse than ours. The fundamentals of their economy are much weaker than ours and their ability to get out of the current crisis is a great less than ours. By no means, however, does that mean we are out of the woods. Our economy and recovery are still fragile, but we are taking the best approach. Perhaps we should spend more time discussing what the Opposition says, as much to see if we can glean something new from it that might be useful as to expose what are sometimes downright lies about our country and knocking our country. A Deputy who claims to be an economist was speaking on one of our national radio stations and what he was saying was completely wrong. It was farcical. There is nothing worse than hearing somebody who claims to be an expert talking rubbish. One can expect it from some people who do not have a clue about what they are discussing, but people who claim to understand what is happening talking pure nonsense does not serve them and certainly does not serve the country well. We must be tougher on that type of nonsense.

Deputy Éamon Ó Cuív

I am delighted to have an opportunity to contribute on this subject. I am a little concerned about the proposal in the Bill, which will mean the Government will not have to come back to the Oireachtas regarding similar adjustments in the future because it appears the Government parties are trying to hide the fact that time and again the Greeks have negotiated better terms for themselves and they have signally failed to get any significant change in the terms for Ireland to date. The legislation provides for a reduction in the interest rate on, and an increase in the duration of, Greece's loans. When money is borrowed, the interest rate is paramount. If a householder borrowed €100,000 at an interest rate of 0% to be repaid over 300 years, it would not be much of a burden. However, if it attracted a 10% interest rate over ten years, he or she would have a significant current burden. When money is borrowed, the term of the loan and the interest rate are important. Greece is having its interest rate reduced from 1.5% to 0.5% above the ECB rate, which is low. The margin was greater at the beginning than the base borrowing level. The loan term will be extended from 15 to 30 years. The double positive effect reflects one hell of a negotiation by the Greeks.

We are told all the time by the Government that if one is the good guy, one will get all the breaks. The evidence is that the Greeks, who we are always told in this country are the bad guys, are managing, despite that, to do a hell of lot better than we are in the hard stakes of negotiation and have secured many more concessions than us. It is funny how willing the Government parties are to piggyback on the Greeks because the famous interest rate reduction they secured in their first year in office, which they have kept on about, was an automatic consequence of an interest rate reduction for the Greeks. The Greeks negotiated for us and the addendum was if it was good for one, it was good for all and, therefore, the Government parties' boast is hollow because they did not negotiate the reduction. Their stance of never standing firm and saying something has to happen like the Greeks have done before taking their negotiations to the edge of the cliff and their unwillingness to engage in a tough manner has been an abject failure.

Let us be honest about this. We keep hearing reports of all sorts of extraordinary things happening, with little commentary from the media and little analysis of how hollow are the Government's promises. There was great talk about the extension of the maturity and interest rate of the EFSF loans but there is nothing new in this. Paragraph 10 of the Eurogroup statement of July 2011 following the extension of Greece's loans and the lowering of the interest rate on them outlined a commitment to lower Ireland's interest rate as follows:

We are determined to continue to provide support to countries under programmes until they regain market access provided they successfully implement these programmes. We welcome Ireland and Portugal's resolve to strictly implement their programmes and reiterate our strong commitment to the success of these programmes. The EFSF lending rates and maturity agreed upon for Greece will also be applied to Ireland and to Portugal.

In the meantime, we have continually been subject to big announcements about measures that were previously agreed, which are written into agreements, as the Government piggybacks on hard negotiations by the Greeks.

Last night, there was an announcement about the extension of the maturity of the EU-IMF loans. If that happens, I will welcome it. The Government parties have said all the time that they will exit the EU-IMF programme at the end of this year. They will and they will not, as they say. We should analyse that a little further. It is true that we will not receive more money under the programme unless we seek it but we will still owe money to the EU and IMF, which, hopefully, will be repaid over a longer period. Is the Minister of State saying the EU-IMF, having put in so much money, will stand back and say we can do what we want, there will be no more correcting of homework and they will have no more interest in our fiscal or other policies because they are not giving us more money despite the fact that we still owe them a significant amount? This is fallacy No. 1. On a technical level, Ireland will leave the programme but since we owe them a significant amount, they will still be interested in visiting Merrion Street to make sure their money is safe.

The second issue is we got the money at a good rate compared to the market rate at the time but it is not necessarily a good rate if the country has a good rating on the markets. This is about rolling over loans and as they fall due, if we have a good rating on the markets and they believe we have our problems sorted and have a sustainable debt, they will give us money cheaper than the EU-IMF but the Government parties know they are not ready for the markets unless they get external support and the reality is the EU-IMF money will be the cheapest available if they can hold on to it. All the boasts, therefore, about being market ready at competitive rates are given the lie to by the Government's own actions.

I am also interested in another feature of the deal announced on 29 June 2012, which appears to be unravelling. I do not know whether the Minister of State reads the Financial Times but, on 14 January, it stated: "The plan, circulated last year among eurozone finance ministry officials, would force struggling countries either to invest in failing banks alongside the rescue fund, the European Stability Mechanism, or guarantee the ESM against any losses." I am surprised, if this is incorrect, that the Government did not ask the newspaper to correct this and perhaps the Minister of State will clarify this. This proposal was made by the European Commission. During discussions, proposals such as this tend to be watered down rather than beefed up. In other words, we have to see whether countries will have to take the first losses.

The Minister seems to be trying to suggest that this was what was agreed all along and that the sovereign entity would have to carry some form of burden in any bailout by the ESM. This would mean that any initial losses would be to the account of the State. If this is what was agreed on 29 June, the Government kept it very quiet.

I want to move on to another crucial subject which, again to my surprise, has not caused much commentary. The Government might fail in many ways but, despite Deputy Rabbitte's worries, it seems to have the media in a state of amnesia.

Deputy Fergus O'Dowd

Was the Deputy dancing at the crossroads last night?

Deputy Éamon Ó Cuív

The Minister of State is a good Irish speaker and he will know what the biorán suain is. It is a little needle that puts a person to sleep.

Deputy Fergus O'Dowd

Tá an Teachta ag caint ráiméise. Ní chreidfeadh éinne go raibh sé ina shuí ag bord an Rialtais nuair a bhí an tír á scrios.

Deputy Anthony Lawlor

Deputy Ó Cuív was asleep for 14 years.

Deputy Éamon Ó Cuív

We had invested €1 billion in Bank of Ireland at 10%. The only risk that attached to that investment was that the Bank of Ireland might fail. The Government has assured us many times that the Bank of Ireland is on the road to recovery and will be one of our pillar banks in the future. If I came into the Chamber and said there was any chance of the Bank of Ireland failing, the Minister would say I was scaremongering and there was absolutely no chance of that happening. He would deny utterly that there was any risk, and with good grounds because I would concur with him. I do not believe there is any risk of Bank of Ireland failing.

Deputy Anthony Lawlor

Why is the Deputy bringing this up?

Deputy Éamon Ó Cuív

I will explain. That was the only risk to these preference shares. We were getting an interest rate of 10% on them. The Minister sold €1 billion worth of preference shares at par. He was getting 10% from the bank on the shares and borrowing at about 4%, so he had 6%, which is €60 million, of a gain every year from these shares. That would have paid for the reduction to the carer's allowance and left €30 million in change, and all the cuts by the Minister for Social Protection which caused all the rifts in the Government ranks need not have happened.

What did the Minister do? He sold the family silver, the money we put in at a very high coupon. His justification was that the sale proved people had faith in the Bank of Ireland. It did not show any confidence on the Minister's part in the Bank of Ireland because he was getting a fantastic return on his money. He was able to borrow at less than half the lending rate, yet he sold the goose that was laying golden eggs.

Then he made an even more extraordinary statement:

The total value thus far of preference shares and CoCo investments was €7 billion. I wouldn’t be averse to selling the preference shares and contingent capital on par, if you take out what the taxpayer put in. We’re not trying to make a profit on that.

The Minister says he is not trying to make a profit on our investments. What kind of lula land are we living in?

Deputy Shane Ross

Hear, hear.

Deputy Éamon Ó Cuív

It is crazy stuff. These are valuable investments. We put a good coupon on them.

Deputy Anthony Lawlor

Confidence.

Deputy Éamon Ó Cuív

Confidence in what?

Deputy Anthony Lawlor

In the markets.

Deputy Éamon Ó Cuív

Does the Minister see selling, on behalf of the Irish people, good investments below their realisable value as being prudent? That should scare the bejapers out of any rational person who would think there must be something crazy here if they are selling these really good investments at bargain basement prices. It would show confidence if the Minister had said these are good investments that will give us a good return and we have the confidence and the courage to hold on to them and make a return. I am certain that the two, so called, pillar banks will make profits in the future. Under current regulation and the arrangements we have put in place, I am confident they will make good profit. Since they are not on the national balance sheet, money invested in those pillar banks, if we have the patience to hold on to it, will give us a good return in the future. I have often cited the previous history of Irish Life, before the private sector made a mess of it. It was taken over by the State because it was in trouble and made significant money for the State over a number of years.

Why is the Government putting so much pain on our people and trying not to make a profit from investments that would give a good return in the future? I call on the Minister for Finance to say why we are not trying to make a profit on our investments. When we made the initial share capital investment in preference shares in AIB and Bank of Ireland, one of the questions from Government was whether or not we were getting a good coupon and a return on our money. The investment was not on the national debt because these were considered commercial investments. The Minister for Finance confirmed that to me in a reply to a parliamentary question last year. These investments do not count as part of the national debt because they are considered to be commercial investments. Why is the Government not trying to make a return for the ordinary people of the country whose money has been put into these investments?

Will the Government give full disclosure of the advice it was given for the sale of the so-called CoCos? The Government seems to be willing to dissolve any of its positions in the banks, including the most profitable ones, and will sell as soon as it can. The investors who are buying in know this. They know this is a giveaway sale that makes the Christmas sales in the shops look like robbery.

I will be particularly interested to hear the views of Deputies Peter Mathews and Shane Ross on all of this, if they have an alternative analysis from mine and if, in their view, there is some extraordinary reason why selling a loan at 10% when one can borrow at 4% makes commercial sense and shows confidence. If the only risk on the investment is the failure of the bank, the sale shows a great lack of confidence in the bank. It is farcical that anyone would fear that risk. There is, therefore, no explanation for this. It is one of the most incredible things.

Can the Minister explain his giving €60 million away to financiers every year from 2014 onward while making petty cuts to farm assist, grants to carers and all the things that were done in the budget, which need not have happened if the Government had insisted on getting its pound of flesh out of the commercial investments we have made?

Deputy Peter Fitzpatrick

I welcome the opportunity to discuss the Euro Area Loan Facility (Amendment) Bill 2013. The purpose of the legislation is to enable Ireland to confirm acceptance of the third amendment to the Greek loan facility as part of the proposed new programme of assistance for Greece. It is to facilitate in the public interest the financial stability of the European Union and the safeguarding of the financial stability of the euro area as a whole. These changes were agreed by Greece and the EU-IMF in December 2012. The original loan agreement in 2010 has been revised a number of times as the economic situation in Greece has deteriorated.

The Greek economic and fiscal situation has deteriorated dramatically since the first economic adjustment programme for Greece was agreed in 2010. This meant Greece could not meet its headline fiscal targets under the agreement in terms of the budget deficit and the debt to GDP ratio. Even after making the adjustment contained in the agreement, it was clear that Greek Government debt was unsustainable.

The key changes in the current Bill are that the interest rate for the loan is reduced to 0.5 percentage points from the previous 1.5 percentage points agreed in the spring of 2012 and that the original three or four percentage points and the terms of the loan are extended to up to 30 years from up to 15 years in the spring 2012 agreement. In addition, the Bill allows for further adjustments to the agreement to be made by a motion of the Dáil rather than by primary legislation. It should be noted the interest rate charge will not apply to loans to Greece by other countries in an adjustment programme until after they leave their programme.

The original loan facility agreement was for a facility of up to €80 billion. A total of €50.9 billion was drawn down at different intervals between May 2010 and December 2011. The IMF lent a further €20.1 billion to Greece under the first loan agreement. The terms of the agreement included significant economic and fiscal adjustment measures, including cuts to public sector wages and to pensions, tax increases and reforms, reforms of public administration and reforms of labour markets, other public expenditure cuts, the sale or privatisation of some State owned assets or companies and some market reforms, especially in the service sector. In addition, a number of reforms and initiatives were to be taken in the banking sector.

In the second programme it was clear by the end of 2011 that the first Greek adjustment programme had not stabilised the economic and fiscal situation in the country. Economic growth fell significantly in 2010 and 2011 and the forecasts for 2012 and beyond were revised down significantly. The second programme envisaged a bank recapitalisation programme of in the region of €40.5 billion, mainly provided by EU funds. The second programme also included the continuation and strengthening of reforms already underway, further cuts to public sector pay, further cuts to and reform of pensions, the continuation of the privatisation plan, health care reforms, including mandatory use of genetic drugs and other cuts to public expenditure across a wide-range of areas including social welfare and defence.

In early 2012 there seemed to be a real possibility of Greece leaving the eurozone. These fears were eased when the second programme was agreed and the result of the Greek general election meant a government could be formed that would implement the new programme. Ireland has lent Greece approximately €345 million as part of the Greek loan facility. This money will now be repaid later than anticipated. Once Ireland leaves its own economic adjustment programme, it will receive a low interest rate on its loan to Greece. Greece will benefit from having almost €53 billion of its debt at a lower interest rate to be repaid over a much longer period. The Greek economy, however, is still in a difficult position with negative growth.

Deputy Anthony Lawlor

This is part of an ongoing process and is the second or third Euro Area Loan Facility Bill we have had before us. This Bill deals with the current situation in Greece. This time last year, commentators and economists, and even politicians, feared the Greek situation was getting out of hand and that Greece would leave the euro, having a detrimental effect on the entire eurozone. Now, however, we are talking about a different situation, where there is greater stability in the eurozone.

The key word is "confidence". I mentioned this when Deputy Ó Cuív was talking about the sale of the Bank of Ireland preference shares. The Minister dipped his toe into the water to see if there was interest in those preference shares and there was: the offer was well oversubscribed. Yes, there is potential for losses over a number of years of potentially €60 million per year but confidence is key. There is confidence out there that is attracting people to invest in a bank that was in serious difficulty three or four years ago. There is confidence out there that is attracting people to invest in a bank the State had to bail out - AIB.

This is like going fishing. To catch the big fish, we must set the bait. The bait the Minister set was the number of shares he put on the market and many investors were interested in buying them. That instilled confidence in the Irish economy among the international community. What we must do with regard to this Bill is instil similar confidence in the Greek economy. The Greek economy has gone through dramatic changes in the last four or five years. Greece was the first country to require a bailout and its situation is totally different from that of Ireland. There is, however, light at the end of the tunnel in the Greek crisis. It is predicted that unemployment will stabilise in the country, which has one of the highest unemployment rates in Europe. It is also predicted that it is possible the Greeks will have a balanced budget by the end of the year. It might be a small positive sign but it is the sort of confidence building block that has been put in place by EU member states that will generate confidence in the international markets that we are trying to enable the Greek economy to exit the programme it is in now.

If we were to listen to the commentators in recent years, they tried to remove the confidence that had been there previously from the Irish economy. International markets felt the Irish economy was on a similar track to the Greek economy. Thanks to major changes in Government, policy and regulation, however, along with the input from our friends in the EU of the funds needed to keep us afloat, this outlook changed. I listened to a Member of this Dáil say on radio yesterday that all the funds given to us by the EU and the IMF were used to bail out the banks and such misleading commentary does not help build the sort of confidence we want to establish in this country.

I was fascinated in recent years by the commentary on some of our major radio stations. Any good news was always followed with a "but". Over the last two or three days, I have noted a seismic change in the attitude of some commentators on radio, particularly on RTE. I noticed this two or three days ago when a "Dragons' Den" type gathering in Cork was covered by a well known Cork journalist.

He used the word "positive", which was mentioned by those present. When I listened to him, it came across to me that he found it extremely difficult to say this word, "positive". What he was trying to express was that those who were at this "Dragons' Den" type event at which they were looking for funding for their innovative ideas all had positive feelings about the way forward in the Irish economy. What struck me was that he had difficulty in portraying to the listeners the positivity that was coming from those on the ground.

The next morning, on "Morning Ireland", in the business section, there was a commentator, Dr. Stephen Kinsella from the University of Limerick, who spoke about a report he had produced on the number of jobs being advertised. He stated that it must be a shock to have an economist coming on the radio to bring good news and I stood back and thought to myself that this is the first time RTE has brought on someone who is quite positive from an economic point of view. Dr. Kinsella mentioned the fact that compared with the previous year, there was a 25% increase in the number of jobs advertised. It was a good news story. At the end of his commentary, there was no such word as "but". He was positive in what he had to say.

Later on in the morning, "Today with Pat Kenny" interviewed Mr. Tony Foley from DCU.

Acting Chairman (Deputy Robert Troy)

Deputy Lawlor has one minute remaining.

Deputy Anthony Lawlor

Mr. Foley was discussing the talks that happened at the ECOFIN meeting. He came across in a very positive manner and explained it so simply that a layman like myself could understand exactly what was going on.

I am delighted that we are here today to support our Greek colleagues. Unlike Deputy Boyd Barrett who, if there was a fire in the house of my neighbour, would be running around to see who caused it, I would be going out to help put it out first. I note he was dressed in black. Should I call him the Grim Reaper in future given he is so negative about everything?

I am a staunch European who believes in all of the European ideas. In 1972, when we joined the EEC, I started studying agriculture in UCD.

Acting Chairman (Deputy Robert Troy)

Deputy Lawlor is eating into his colleague's time.

Deputy Anthony Lawlor

As a stanch European, I will do whatever I can in this Parliament to help our colleagues who sometimes are in difficulty, like our colleagues in Europe helped us. I welcome this Bill and I will be supporting it wholeheartedly.

Deputy Dara Murphy

Like my colleagues, I welcome the opportunity to speak on this Bill. To a large degree, it is quite sobering for those of us speaking about the legislation, which is to approve an increased and changed facility to our European colleagues in Greece, to acknowledge that elected representatives in our partner European states went through a similar process and debated whether they, with financial pressures and responsibilities as legislators to their own electorate, should come to the aid and assistance of a fellow EU state, and, gladly, for the Irish people, they did. We are here today in a similar position, to extend the help that our Greek colleagues require.

Some of the Deputies opposite, in particular Deputy Boyd Barrett, spoke about solidarity, death grips and poison, all the while completely disregarding the fact that this funding, when it makes its way to Greece, will pay for public services, for nurses, teachers, etc., because within the terms of the agreement, the repayment of interest and principal is not a matter for the current budget of the Greek people. In fact, this funding and current funding are purely to stabilise the Greek economy. That needs to be borne in mind. When Ireland, as one of the countries in a programme, sends the Minister for Finance, Deputy Noonan, and others from the Government to negotiate on its behalf and request reduced interest rate payments and the extension of principal and other concessions - we have already received concessions - it would be most extraordinary if the Dáil was to refuse this request to the Greeks and then somehow suggest that we would want what we refused to give to others.

The confidence that has been restored to the European Union and to the euro by virtue of the agreement of last June is something from which we are directly benefiting as an economy. Critics who suggest that this process was too slow are correct and the Opposition parties which criticise the Government for not yet completing a deal are playing a role within the general carrot-and-stick approach of politics, but that is not to say that the Government will not complete a deal. The consequence that has been discussed, particularly by Deputy Ó Cuív, of some of the benefits we have accrued in the past is not necessarily bad. A precedent has now been set and our economy can indeed benefit from precedent. Greece will benefit from a very low interest rate and the term over which it is to be paid has been extended. While it is true to point out that extending a mortgage over a longer term can result in an aggregated greater total of payments, given the position of the European economic and the world economy and certainly our own economy, we are obliged over these couple of years to ensure our budget includes the smallest possible outgoing amount each year. That is what will allow the Greek economy - perhaps somewhat misleading - to balance its budget this year given that it is not really making any payments on its substantial amount of debt.

Deputy Ó Cuív mentioned "lula land". In my opinion, he is referring to his party's 14 years in Government. He is extremely critical of the Government for not yet completing its negotiations. He seems to have forgotten completely that the Government is trying to renegotiate the lula deal that Fianna Fáil negotiated in the first place. It is a difficult renegotiation, but we would not be in the position of dealing with a renegotiation were it not for the Government in which Deputy Ó Cuív was a Minister and for which he bears direct responsibility.

All of us within the European Union should continue to support our Greek colleagues. Their position and their debt-to-GDP ratio is significantly worse than ours. Their economy, unlike ours, is not experiencing growth. Of course, Greece did not renegotiate better terms.

It has received three different bailout packages given the difficulty its economy has experienced. While ours is in difficulty, it is not, fortunately, in the same trouble that to date Greece has allowed itself to get into. We must continue to wish our Greek colleagues the best for the future. I am sure if people from Greece are waiting to see if Ireland, which has always stood in support of it in the past, will pass this Bill today, they will be quite happy to know that the People Before Profit Members who are opposed to supporting the teachers, nurses, doctors and social welfare assistants in Greece represent such a tiny part of our Oireachtas and are not in government anywhere else in Europe anymore even though there were of course parties of its ideology in countries such as East Germany, Bulgaria and Poland before the Iron Curtain was removed. I support the Bill and commend it to the House.

Deputy Shane Ross

In defence of my colleague, I am not sure his activities in Bulgaria and the Eastern Bloc were particularly multiple and indeed I think he was probably too young to be involved at that time.

It is indicative of the European attitude to us and the problem we have here that there is so little criticism of Bills of this sort in this House. That is not the Deputy's fault, but the reality is that the Opposition here is to some extent emasculated by virtue of the fact that the main Opposition party negotiated many of the deals to which we refer today and the Government is equally emasculated by having acquiesced in these deals after its parties claimed they would do the opposite when they were out of power. If Europe looks at proceedings in the Dáil today, it will not regard the Bill as being threatened or under any serious political analysis because there is such an extraordinary consensus in this House about the willingness of Members of this House to rubberstamp whatever comes from Europe. That is the unhealthy political situation in which we find ourselves. However, ironically it does not strengthen the Government's hand that there are so few elected Deputies who are willing to put a critical mind to legislation of this sort, which might as well have been written - and was indeed written - in the Bundestag. It is a pity we do not have more criticism of this.

We know this Bill will be passed very easily and will cause no concern in Europe. However, we should take the opportunity of Bills of this sort - there have been plenty of them - to play for Ireland and not for Europe. We need to ask not whether it is in the interests of Europe but whether it is in the interests of Ireland. It is time for us to stop taking our scripts from Germany and take our scripts and our lead from the people of Ireland. I was in the City of London the day before yesterday and I got the same reaction as I get throughout Europe when I am there as I am sure other Deputies do. They say, "You guys in Ireland are doing a great job with your economy". While they do not call us the poster boys for austerity, they say they are very pleased with Ireland. What does that mean? It means we are doing what they want us to do. I always suggest they should ask the people of Ireland what they feel about austerity because they do not like it. However, the governments in Europe along with its establishment civil servants - Eurocrats - love us. That is not where we want to be.

I cannot understand the craven attitude of our Ministers, including Labour Party Ministers, when they go to Europe. Instead of implementing a European agenda in the upcoming six months, they should be causing merry hell in Europe and putting Ireland first. They should put Irish demands first on the table, which is not an acceptable policy in Europe, but who cares about that? We are in a desperate situation and need to take radical measures and have radical attitudes.

When one looks at the Bill, one has to ask how in the name of God the Greeks are getting away with this. As the previous speaker said, it has had three bailouts and I predict there will be more to come. Every time the Greeks eyeball the German Chancellor, she blinks. Every time we eyeball the German Chancellor, she pats us on the head and we go off purring. Why can we not take the attitude that we are not a petty people and are not to be trifled with? I do not suggest we go down the Greek road that had extremely ugly street consequences - I do not believe in any of that. However, when it comes to a Bill such as this, we could have not completely disposed of our critical faculties. We could ask why we are giving this to the Greeks and whether Ireland, a bankrupt country, should realistically get involved in bailing out another bankrupt country, which is the purpose of the Bill. I know we have stepped out as a guarantor of some of the debts, but I believe we are still liable for those that were incurred prior to our own bailout. However, that attitude does not seem to occur to the Government. I might address the whole default write-off if I have time later.

I do not understand why I had to read in the newspaper this week that the French Finance Minister had a cosy little meeting our Minister for Public Expenditure and Reform, and Minister for Finance. Out came the French Finance Minister to say France was supporting a banking deal for Ireland - the promissory notes. He was not more specific than that and it is a very easy thing to say - everybody supports a deal for Ireland until it reaches the specifics, but it is the sort of deal that matters. Then some journalist, trying to create mischief, asked him whether the corporation tax was on the table. He said, as a friendly gesture, that corporate tax was not on the table at all. This was to save any embarrassment to Irish Ministers. There was obviously a sigh of relief around the table among Irish Ministers when that was said because it could be sold as something about which we did not need to worry because it was not there.

However, Ireland should have put corporation tax on the table because we forget that tax is still one of our preserves. It is one of the areas where we still have autonomy. What would the French, Germans, Dutch and Austrians, who do not want to give us any deal on the legacy debt, say if we said we were putting corporation tax on the table and announced that we were going to reduce it because we decided that the rate of 12.5% was too high?

What would they say if we said we were going to reduce it in order to undercut what is going on in Europe and attract more multinationals to Ireland, thus creating employment and a buzz in our economy? While I agree that is not something one could easily sell politically to my colleague, Deputy Boyd Barrett, it would certainly make Europe sit up and think. I see no reason we should apologise too loudly or openly about the fact that some of our multinationals are not paying the full 12.5% tax because throughout Europe the headline rate is not adhered to by anybody. There are so many special deals being done under the table it is difficult to work them out. If we were to agree to a reduction and it was to result in the creation of more jobs, economic expansion, growth and exports, what would be wrong with that? It would certainly scare the bejesus out of Ms Merkel, President Hollande and others who are putting pressure on us in this regard. There are no sanctions open to Europe if we stand up for ourselves - this is not a threat but a realistic proposal - on the issue of corporate tax and do not rubber stamp Bills like this when they come before us.

The issue of default has grabbed the attention of those who want to emphasise that there is a radical alternative to the Government's policy. Default is a word that jars with people. Greece has made progress. It has won every battle it fought with Europe by denial, defiance and default. We must be realistic when debating Bills like this, which are models of the sort of limited solutions which come from Europe. In other words, they embody lower interest rates - I think what is provided for is 100 basis points lower - and extended maturities but duck the big issue, namely, a write-off of the debt. This is the issue we must face.

During a recent meeting of the Joint Committee on Finance, Public Expenditure and Reform, Deputies Boyd Barrett, Fleming and others - Deputy Mathews was also at that meeting - asked the Governor of the Central Bank about "write-offs", which is code for "default". The Governor replied first with the same old line, which we have heard again today, that the result would be unpalatable. He could not spell out what would happen because we do not know that. The Governor was then asked the great old canard of what will happen to the ATMs. Despite what we have heard from every Government spokesperson and apologist about the terrifying prospect of default and what would happen to the ATMs, Professor Honohan said the ATMs would continue to operate. If this is the view of the Governor of the Central Bank, let us hear a little less on the issue from others. The ATMs will remain open even if there is a write-off of the debt. However, we do not know what else might happen.

It has become fashionable again in the past few weeks to speak about Argentina's default. No one is suggesting that default would be easy or that a write-off would be palatable. A negotiated write-off would, possibly, be acceptable. Argentina is not the only country that defaulted. We do not hear so much about Iceland or Russia, which were high profile defaulting countries in recent years. Iceland returned to the sacred markets within two years. Russia prospered. The point at which it defaulted marked the lowest point in its economic fortunes. After that, it began to recover. We must consider reviewing all these deals and stating write-off is the road we prefer.

A deal will be done on the Anglo promissory notes and in good time. I believe a deal has been already done and that the only issue is timing of the release of that information so as not to make it look like a done deal too quickly. I may be wrong and do not wish to criticise in advance but if the Government strikes a deal which involves extension of the period of the loans to 30 or 40 years and a reduction in the interest rate, it need not bother coming in here and heralding it as a great triumph because saddling the next or future generations with debts which we should be paying now is no triumph. To saddle our children and grandchildren with debts which we should endure is not a great victory, although it will, of course, be portrayed as a great political victory. While it will be politically convenient for the Government to announce that it will not pay the €3.1 billion this year, which will result in a more benign electoral environment, saddling future generations is not the solution. There is a solution, which is to seek a large write-off of the capital.

There is a flaw in this Bill which in my view will be difficult to resolve, namely, the guarantors to Greece and the EFSF money involved is fragile and limited. If we continue lending money with guarantors of this type the system is in danger of collapsing. It is bad enough for Portugal and Ireland, who are already in bailout programmes, to be guarantors or involved in lending money under these schemes but we should not be including other countries in massively fragile situations. Is it realistic to include Spain, which is on the point of a bailout, Cyprus which has also been bailed out and Italy, which is in a precarious situation, as solid nations that can afford to be involved in a rescue of this type? The solution is to seek write-offs rather than bailouts, thus rescuing drowning citizens.

I wish to mention the issue raised by Deputy Ó Cuív and responded to by Deputy Lawlor. This was the issue of hope and confidence, and I would like to see more hope in what is being said today. With regard to the issue of the Bank of Ireland preference shares purchased, Deputy Ó Cuív is correct. To sell a stock on a 10% coupon when one is borrowing on the markets at 4% does not seem on the surface to be particularly intelligent. It also seems that to excuse it by saying it is all about market confidence is a bit unrealistic. Ireland was mugged in this deal. They took us for a ride and the evidence is that the day after the 10% preference shares were bought, the same people who bought them and a mass of others were queueing outside the Department of Finance attempting to do exactly the same to AIB stocks.

Deputy Olivia Mitchell

I welcome the opportunity to speak on this Bill which is important for all of us in Europe. I looked at what I stated last March when we agreed the previous bailout for Greece. I stated then I did not have great confidence it would be a long-term solution when one looked at Greece's eye-watering debt to GDP ratio. I suppose I should not claim any great level of insight for coming to this conclusion because I do not think any observers at the time had great expectations of the package. Nevertheless, it did settle the markets for a number of months, but it was only temporary and what followed in the summer and in the months running up to the deal prior to Christmas looked to many observers as a doomsday scenario with the euro tumbling, and great concerns about the future existence not only of Greece in the euro but of the euro itself. This uncertainty continued until the new deal was agreed. This is the deal we are now confirming in legislation, albeit some months later.

The deal was very much bolstered, was made acceptable and did the job because of statements by EU leaders that whatever was required to save the euro would be done and would be forthcoming. This commitment was underpinned and demonstrated by the EU doing what it had stated in previous years it would never do, which was to offer debt relief and retrospectively reduce interest rates. It was this unequivocal commitment to underpin the euro which had immediate and dramatic results. The euro has recovered and is still recovering in value. The interest has fallen on EU bonds and continues to fall. The biggest winner of all, amazingly, is Spain which has managed to avoid a bailout simply on the promise there would be one if it needed it. Its bonds are now being underwritten and viewed in the markets as being as solid as German bonds because they are underwritten by this promise. The bonds are virtually risk-free. As an Irish person I am a bit miffed this deal was available, and I believe we all are miffed that the later deals were better.

These developments which reflect the current approach in Europe to indebted countries, such as the debt relief for Greece, the extension of debt maturity and the restrictive reduction in interest rates, together with the huge confidence boost to the markets of a promise to support the euro at all costs highlight the disadvantage Ireland suffered by being an early mover and being the country which went for a bailout very early on. To the extent we know what happened we did not go for a bailout; we were bounced precipitously into a very onerous bailout to protect the euro. Highlighting the different treatment of the troubled eurozone countries strengthens our hand in negotiating a better deal and pleading our case in a rational way and in a reasonable manner, while at the same time trying to do what we can at home to ensure we put our own finances in order.

These negotiations are beginning, and I completely accept it is tortuously slow, to bear fruit. I refer particularly to the crucial decision of the Eurogroup on Monday to examine the extension of debt maturities for Ireland and Portugal arising from loans from the EFSF. The ECOFIN meeting is reporting a similar commitment as far as the EFSM is concerned. These developments come on top of the €9 billion in cost savings to us as a result of interest rate reductions which we negotiated in 2011.

The promissory note is an outstanding problem but we are now assured there is some improvement in this mechanism in the offing, although we do not yet know the nature or extent of the better terms we will achieve. Apart from the burden of other debt, the €3.1 billion annually required to fund this is an intolerable burden and it is a completely unjustifiable burden to place on the shoulders of the Irish taxpayer. Any change must be welcome and is long overdue. I know the Government is fighting tooth and nail for the best possible deal for taxpayers.

We also have other battles to fight, such as that for sovereign responsibility for bank debt. Perhaps we have greater grounds for optimism in this regard. We have had other good news in recent times, for instance earlier this week a report from Morgan McKinley showed an increase in the number of professional job vacancies being advertised. We know the IDA has had its best year in a decade in attracting jobs to the country. I am very cautious about speaking about green shoots. I would not dare do so because we know from the experience of the previous Government that to do so prematurely and then subsequently see every possible economic indicator moving in the wrong direction is hugely demoralising for people and is counter-productive. I certainly will not speak about green shoots. However, after almost five years of bad news, when every indicator was going the wrong way and when the outcome of every situation was worse than we ever anticipated or forecast, at last when we get good positive news, however modest it may be, and have a series of positive developments as we have had in recent months we should welcome them and at least acknowledge them and be encouraged. There is nothing wrong with being encouraged by good news; even if it does not fit into our scenario of how the world works and what we would like to see happening we must be positive.

It will take a long time for these positive developments to be felt at an individual level by people who have lost all their savings, assets, shares and jobs. It will take time to translate into a positive impact on every individual. It will also take time for domestic demand to take off. This is when we will begin to see jobs being created in the Irish economy. It is absolutely essential for job creation. With these changes on the macro front we will get growth and confidence. This is how we will see recovery. The only way recovery can happen is through increased confidence in the bond markets, IDA successes, debt reduction deals with the EU and the good figures we hear with regard to export growth. This is what will feed down and into every constituency in the country with regard to jobs. This is why I was very taken aback when I heard Deputy Donnelly yesterday on "Morning Ireland". He made very negative remarks in respect of the Eurogroup's commitment to look at the extension of bond maturities. Apart from the fact he was completely wrong in what he stated in suggesting the bulk of money we are borrowing will pay for the banks, what is worse is that he knows it is wrong. He is not a fool and knows exactly what the money we are borrowing is for.

Debate adjourned.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.