We will proceed with statements in accordance with the agreed arrangements. I call the Taoiseach, who has five minutes.
EU-IMF Programme: Statements
I wish as a matter of courtesy to inform Dáil Éireann of the outcome of a Government meeting this morning. The Government has decided that Ireland will exit the EU-IMF assistance programme on 15 December next without the need to pre-arrange a new precautionary credit line from our EU and IMF partners.
This is the right decision for Ireland and now is the right time to take this decision. This is the latest in a series of steps to return Ireland to normal economic, budgetary and funding conditions. Like most other sovereign eurozone countries, from 2014 we will be in a position to fund ourselves normally on the markets. The Minister for Finance, Deputy Noonan, is travelling to Brussels to convey this decision to our partners at a Eurogroup meeting this afternoon.
In preparing for this decision, the Minister for Finance and I along with other Ministers have engaged intensively with international institutions and our European and international partners on Ireland's exit strategy, and all have indicated to us that we will continue to receive their strong support whatever our decision. In that context, I have spoken on a number of occasions to Chancellor Merkel. She confirmed this was a decision for Ireland to make, and whatever the decision we made, the Chancellor was open to finding ways for Ireland and Germany to work more closely together to find ways to reinforce Ireland's economic recovery by improving funding mechanisms for the real economy, including access to finance for Irish small and medium-sized enterprises. The German Government has asked KfW, the German development bank, to work with the German and Irish authorities swiftly in order to deliver on this initiative at the earliest possible date.
We will exit the bailout in a strong position. This Government has been preparing for a return to normal market funding in 2014 for three years and the NTMA has built up a cash reserve of more than €20 billion. Growth has returned as our economy regains its competitiveness. Exports have grown to all-time highs and our balance of payments is in a strong surplus. We are creating 3,000 jobs a month and the numbers on the live register have reduced for 16 consecutive months to below 400,000 for the first time in four years. Our budget strategy is on track, and the Government deficit is now falling rapidly. Public debt will start to fall next year relative to the size of the economy.
As with all eurozone countries that have ratified the fiscal stability treaty and that are pursuing responsible economic policies, Ireland is eligible for access to the €500 billion funding backstop provided by the European Stability Mechanism. The very existence of this backstop for all eurozone countries has contributed significantly to improved investor confidence in Ireland and the eurozone as a whole. Confidence in Ireland has improved considerably in recent months and interest rates on Irish Government bonds are now at highly affordable levels. We still have a long way to travel, but clearly are now moving in the right direction.
Neither today's decision, nor the exit from the bailout in December, means the end of difficult economic decisions. There are still demanding times ahead. It does not mean any windfall of cash. It will not mean that our economic and financial challenges are over.
Alongside the bailout exit in December, we will publish a new medium-term economic strategy to set out a new sustainable economic pathway back to prosperity for the country. This will include a recommitment to bringing Government borrowing down to sustainable levels during the remainder of this Government's term of office. It will be an economic plan based on enterprise, not speculation. Never again will our country's fortunes be sacrificed to speculation, greed and short-term gain. Despite the economic challenges that people will continue to face in their daily lives, we will set out a path to a brighter economic future for our people - a path from mass unemployment to full employment and from involuntary emigration to the return of the many thousands of our people who have had to leave to find work. I thank the people for their diligence and commitment.
Nobody should doubt the Government's commitment to finish the job we started when we took office. Today is just the latest step on that ongoing journey. While it is a significant step, it is also just another step towards our ultimate objective of getting Ireland working again.
The effect of today's decision by the Government is that Ireland will now exit the EU-IMF bailout programme on 15 December without applying for a precautionary programme. This is an important decision on our country's road to recovery. It is an important milestone, and now is the right time to make this decision and take this step. The market conditions are now in our favour with Ireland holding more than €20 billion in cash reserves and bond yields at historically low levels. The public finances are now under control with the budget targeting a small primary surplus for next year. Investors now have increased confidence in Ireland. The ESM has been established. Domestic and international economic conditions are improving and international confidence in Ireland has improved significantly in recent times.
We all recall the shock and sense of grief that was felt when Ireland had to go into a bailout at the end of 2010. Since the Government was elected in 2011, we have worked to exit the bailout and to get our economy to recover. Today's decision is an important milestone along that road. We are in a position to make this decision today because of the actions we have taken over the past two and a half years: the renegotiation of key terms of the bailout programme, including the reduction in the interest rates; resolving the Anglo Irish Bank promissory note; getting the deficit down and putting our public finances in order; concentrating on jobs and economic growth so that we are now creating 3,000 jobs per month; and restoring our country's international reputation so we can attract the investment we need to create jobs.
Today's decision to exit the bailout without a precautionary programme restores us to a normal place among the eurozone countries. We will no longer be a programme country, but a normal member of the eurozone subject to the normal conditions of euro membership and continuing to work our way to full economic recovery.
We still have a distance to travel to get our country to grow at an even faster pace, to attract even more investment, to boost confidence further in the domestic economy and to create even more jobs, especially for the young.
Today's decision is historic, important and welcome, but there will be no celebration until our economic fortunes are fully recovered and until economic recovery is fully experienced in people's daily lives. The Government will continue its determined and consistent work to that end. Today's decision and our exit from the bailout would never have been achieved without the patience and endurance of the people, who have suffered from the crisis and who have, deep down, understood there is no easy route to recovery. Today's outcome could not have been reached without the courage and support of those Members of the Oireachtas who continued to have the courage to support the difficult decisions the Government has had to make.
When we put our country first, we will get our country to recover. The Government will continue its patient and determined work to bring that about.
At the outset, the Taoiseach said he was making his statement as a matter of courtesy to the Dáil. I suggest to him that the Dáil deserves more than a courtesy.
It deserves the fundamental presentation of a case justifying the Government decision-----
It is more than Deputy Martin did.
-----not to seek a backstop and not to seek a precautionary credit line. That is the very least the Dáil deserves today. I respectfully say-----
The Deputy is a disgrace.
Deputy Martin and his party dragged our country into the dirt.
Is this democracy here? Are you going to allow-----
Deputy Martin and his party dragged our country into the dirt.
I ask Deputy Dowds to settle down, please.
Last week we had a debate in advance of an EU Council meeting.
Deputy Martin and his party dragged our country into the dirt. How dare he.
Deputy Dowds, I will not ask you again.
Will someone get oxygen for the little man over there?
I suggested to the Taoiseach at the time that it was a good opportunity to present the case, the pros and the cons of whether we should have a precautionary credit line, but he refused to do so. That has been characteristic of the Government's position on this key issue, which deserves far more than the Dáil is getting today.
A total of €53 billion is needed over the next three years, €35 billion of which is for maturing debt and €18 billion for the Exchequer to maintain public services. The Taoiseach and the Tánaiste spoke about the implementation of the programme but the bottom line is that the Government voted against 70% of the proposals contained in that programme. Every member of the Government condemned the programme but they are now slapping themselves on the back for implementing it with such aplomb.
We changed it.
There was no need for this politically stage-managed event because we know that as a result of the decision taken by the European Union General Affairs Council last month, the actual date for ending the oversight arrangement of the bailout programme has been delayed until next February. What the Cabinet has agreed today is not to seek any new programme. It has not negotiated any exit or backstop agreement. That is the decision the Government has taken.
The Deputy is wrong. His facts are wrong.
Throughout this programme the Government has never acknowledged the fact that it condemned it before the election and voted against 70% of its measures. Many economic analysts and other people have advised-----
Would the Deputy please stop speaking for a moment? Members should show the same courtesy they showed to the Taoiseach and the Tánaiste to all future speakers and allow them speak without interruption. They can have debates afterwards.
We are being provoked by this rubbish.
An order has been made in this House that each speaker gets five minutes to speak. I mean five minutes uninterrupted.
Someone sent in the wrong script to Deputy Martin.
It is clear that Government Deputies do not cherish parliamentary democracy in this House any more. This is an important issue for the country. The Government has put political strategy above what is right for the country.
Fianna Fáil did not pay any heed to it either.
I cannot believe Deputy Martin is saying that.
Not a single piece of paper has been presented to anybody as to the merits or demerits of the decision not to seek a backstop arrangement, not from the Minister for Finance, the Taoiseach or the Tánaiste. No figures have been produced about how much we would save in interest payments if this conditional funding were available.
The troika was coming in.
The only direct and proven impact of having conditional credit would be to reduce the risk of lending to Ireland and therefore the cost of that funding.
Terms and conditions would apply.
That is the key point that should inform the decision as to whether we want a backstop. It is clear the IMF and the ECB would have preferred that the country seek such a backstop arrangement. The ESM and the precautionary credit line system and approach is to support countries whose finances are becoming economically sound. It is not a sign of weakness, it is to seek maximum security for the State. There are headwinds out there. As the former deputy chief executive of the IMF said, it is not that we might crash into somebody but somebody else might crash into us. It is fundamentally an insurance policy for the benefit of the people and the country. That is the issue. Let us not dress it up in any political high drama.
There was a Cabinet meeting on Tuesday when the Government could easily have made the decision instead of having a hurriedly arranged meeting today, and a hurriedly arranged meeting of the Dáil and the presentation of the issues.
The Deputy is laughing himself as he says that.
The Deputy is laughing.
That is fair enough. The Government is entitled to do that. The key point is that serious issues remain across the eurozone. We know that. Mario Draghi did not reduce interest rates last week for nothing. He did it out of deep concern about deflation across the eurozone. Greece is raising its head again, as the Government well knows, and may seek further assistance. Italy and France are not out of the woods as we know, and neither is Spain.
The woods the Government is wandering in.
Deputy Martin is in no place today, God help him.
Those issues are important to the overall context of the market in which we will be borrowing. There are also the stress tests to come, which may necessitate some form of recapitalisation. That is important because that could - and I hope it does not – undermine our capacity to borrow. I accept we have an expensive backstop in the €25 billion that the National Treasury Management Agency, NTMA, has borrowed, with significant costs attached of between €700 million and €800 million per annum.
That is not borrowed. That is a cash reserve.
The Government had to borrow it.
We had it.
The rates are favourable at the moment and in the immediate 12 months there may not be an issue. In the aftermath of 2014, many analysts say there could be difficulties, not just for us but for Europe. It would have made sense to take out an insurance policy which would have been to the benefit of the people and the country.
We know the insurance we need.
That is like the burglar giving advice on house insurance.
We may have lost our sovereignty for a while but we have not lost democracy and that means we are in a parliament where people are entitled to express all views. Please allow people to make their statements uninterrupted. Even though Deputies may not like the content, they should please keep their mouths shut.
Especially the Government backbenchers and Ministers.
I hope the Government listened to the Ceann Comhairle when he said we had lost our sovereignty. Yesterday, the Minister for Finance told the Oireachtas Joint Committee on Finance, Public Expenditure and Reform that Ireland’s decision on a precautionary credit line was not on the Eurogroup’s agenda. This morning it is. An emergency Cabinet meeting was called. This Dáil was called at very short notice.
The Dáil was in session.
Once again this Government has been bounced into a decision with no strategic planning or overview. The banks are in crisis. We stumble from crisis to crisis and the Government’s position is totally and absolutely clueless.
Deputy Adams would know all about that.
Sinn Féin has consistently called on the Government not to take the conditional precautionary credit line because we believe that would be akin to a second bailout-----
What is Deputy Adams complaining about?
-----so it is a good thing that it appears to be taking the Sinn Féin position.
If Members want the sitting suspended I will suspend it. I will suspend the sitting if people continuously interrupt the speaker. I am serious.
The trouble is over there, on the Government side.
I am addressing everybody. Deputy Adams may proceed without interruption. I am serious in what I said about suspending the House.
Part of the problem of this Government of the Labour Party and Fine Gael is that they will not listen to dissenting voices.
Please proceed, Deputy Adams.
I am proceeding. Let us be clear, the troika may be leaving but the troika mindset remains. Fine Gael and the Labour Party have blamed the troika for all sorts of decisions the Government has taken in direct breach of its electoral mandate. It has brought in many austerity measures that were not recommended by the troika. It has taxed and cut the most vulnerable in society. Next year, regardless of whether the troika is here, the Government will take another €2 billion from the economy in water charges, taxes and cuts to health, education and other vital services. What will this mean to citizens who are suffering under its policy?
It is also subject to the fiscal treaty which the Government and Fianna Fáil pushed people to support. For many years to come we will be forced to keep deficits low to reduce the unsustainable debt burden inflicted on us as a people by the Government’s austerity policies. It has done nothing to relieve the citizens of the odious banking debt.
An féidir leis an Taoiseach éisteacht liom, lena thoil? The Taoiseach shouted 17 months ago at a Euro summit that a game-changer had been achieved, that there had been a seismic shift, that the European Stability Mechanism would reduce banking debt and separate banking debt from sovereign debt, that this would be done retrospectively and that the citizens would get back the money they gave.
Why has this not happened? The Government has not even put it on the agenda at subsequent meetings.
Sinn Féin is glad that we are not taking a second bailout but there is an awful lot of work to be done if we are genuinely going to regain economic sovereignty and it will not be done under this Government. This Government should go. This Government has led us from calamity to calamity. It will be only be done by a Government that understands that you have to be fair in terms of how you move forward. You have to try to treat people on the basis of equality and you have to make deficit adjustments that are fair and growth-friendly. An economy cannot be cut but must be stimulated and jobs must be created if recovery is to be sustainable. A Government needs to appreciate that the banking debt is a noose around the citizens of this State. This Government does not do this. It has been bounced once again into leaving this programme - another decision taken by others that the Government did not perceive. The way this Dáil was brought together this morning is proof positive of that. Let us be very clear. The Government will continue to saddle people with desperately obnoxious austerity policies for the rest of its term. It continues to decimate, emasculate and destroy public services, guarantees and workers' conditions and to push more and more people off the island and across the world. Those of us who remain here - working families - are pushed into poverty. Labour or Fine Gael have nothing to applaud themselves for this morning.
I call Deputy Donnelly. I understand he wants to share time with Deputy Ross but, unfortunately, the order does not make allowance for that unless the House agrees to it. Is that agreed? Agreed. The Deputies have two and a half minutes each.
This is a bittersweet moment for the Irish people. At the start of the crisis, we had very low national debt, very high employment, very low emigration and no negative equity or mortgage crisis. Five years later, we have heartbreaking unemployment, particularly for young people. An entire generation has been financially destroyed. We have very high emigration - the highest level ever - that is continuing to rise this year. The losses of professional investors around the world have been shouldered by the Irish people. Billions of euro of Irish people's money has been paid out in windfall profits to speculative investors over the past number of years. Unfortunately, we are the toast of financial centres all over the world because we have made an awful lot of speculative investors very wealthy over the past number of years.
Today is a bittersweet moment. I am glad the troika is gone. I think we are all glad the troika is gone, particularly the ECB and the European Commission because it is those two institutions that led the charge on the Irish people picking up the tab for international financial losses. It turns out that the IMF actually spoke in our favour over time. I am glad the troika is gone and that it will not be telling us how to run our country according to an outdated economic outlook.
I support the Taoiseach's decision not to avail of a precautionary credit line. As the Tánaiste said, there is about €30 billion in the bank. I believe we must roll over about €7 billion in national debt and, of course, we will have a deficit somewhere between €8 billion and €9 billion. It looks like we have about twice the cash that we would conceivably need for next year. I think the Taoiseach has made the right decision. The next thing he must do is get retrospective recapitalisation from the ESM because we cannot continue to ask the Irish people and children not yet born to continue to pay for the mistakes made by the financial sector over the past number of years. I know there is a lot of effort going into this but it must be achieved.
I recognise that this is a very important decision made by the Government but I regret that it has been reduced to the level of political bravado, the fact that the Dáil has been called at such short notice and that there is no proper debate on this. The Taoiseach's speech was missing something, which means that neither I nor anybody else in this House can judge properly whether this is the right or wrong decision. What were the terms that were offered to the Government for this particular credit line? We met the troika as a group and it spelt out quite clearly that the terms were going to be very punitive indeed. If one takes this, which is, after all, just an overdraft, there is a heavy price to be paid initially for getting that overdraft. What was due to this House was not an announcement about how well the economy and Government were doing but the merits of the decision the Government has taken today. How much would this have cost? Would it have cost nothing? What was the interest rate? What was the length of repayments? What was the deal? We got no details of that so we cannot judge. The Dáil is being treated with a certain amount of contempt by being asked to support this in a vacuum when the Government is aware of the terms that were on offer.
It is not a historic day in terms of any great changes which are to happen in Government policy because a movement from the hands of the troika straight into the hands of the bond markets will mean that we are subject to exactly the same, if not greater, discipline than we were subject to before. The bond markets will require as much austerity as the Government has been imposing at the whim of the troika.
Will Members please stay quiet or else leave the Chamber?
To present this, as the Tánaiste did, as an historic day is not an honest opinion. We are not restoring our sovereignty today. We are not regaining our sovereignty. We are being treated to a political theatre by the Government which is a camouflage. One can tell the people today that there will be a change in policy but there will not be one. Austerity will continue. The imposition of other measures will continue. The one thing that was missing from the Taoiseach's speech was any mention of the banks - the important element of our economy. We had no mention of the ESM or paying back legacy debt with ESM funds. We have achieved nothing today that we could not have achieved otherwise.