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Dáil Éireann debate -
Tuesday, 26 Nov 2013

Vol. 822 No. 3

Bond Repayments: Motion [Private Members]

I move:

“That Dáil Éireann:

calls on the Government:

— to immediately lobby the European Central Bank for a one-off exemption from the rules of monetary financing, to allow the Central Bank of Ireland to destroy the €25 billion in sovereign bonds issued in February of this year, in lieu of the remaining promissory notes, plus the €3.06 billion bond also being held by the Central Bank of Ireland in payment for the 2012 promissory note; and

— to cease any and all interest payments currently being made on those bonds.”

I wish to share time with Deputies Richard Boyd Barrett, Seamus Healy, Catherine Murphy, John Halligan, Thomas P. Broughan and Patrick Nulty.

As Deputies will be aware, there was an extremely important judgment this morning in the High Court. This judgment was made in regard to the case in which I, as an elected Member of Dáil Éireann, challenged the constitutionality of the promissory note arrangement made by the late former Minister for Finance in December 2010. The basis of the challenge was that some €30 billion in public funds was appropriated without a vote in Dáil Éireann. I believe the judgment of the three judges today was a monumental decision and has huge implications as to the rights and power, or lack thereof, of the elected Members of Dáil Éireann.

In light of that, I urge all Deputies to consider carefully this judgment. If the full 68 pages are too much, I refer the Deputies to paragraph 143 of the judgment and refer them back to paragraph 10. I want to read into the record those two paragraphs. Paragraph 143 states:

The Court accepts as the definition of appropriation for the purposes of Article 11 [of the Constitution] that proposed by Alexander Hamilton in respect of the parallel provisions of the US Constitution, namely that the appropriation must be for “an object, to an extent, and out of a fund, which the laws have prescribed.” Applying that test to the present case, it can be said that the objects of the appropriation under the 2008 Act are clear and satisfy the requirements of Article 17.2 [of the Constitution]. Section 6(12) of the 2008 Act further provides that the payment comes from the Central Fund in the manner envisaged by Article 11. The extent of the payments are also clear. While, of course, the Oireachtas did not know precisely the sums which were at stake when enacting the 2008 Act, it laid down principles and policies in s. 2 and s. 6 of the 2008 Act which circumscribe the extent of the Minister’s discretion to provide financial support.

Paragraph 10(1) states:

The Minister has, in the public interest, the functions provided for under this Act because, after consulting the Governor and the regulatory authority, the Minister is of the opinion that-

(a) there is a serious threat to the stability of credit institutions in the State generally, or would be such a threat if those functions were not performed,

(b) the performance of those functions is necessary, in the public interest, for maintaining the stability of the financial system in the State, and

(c) the performance of those functions is necessary to remedy a serious disturbance in the economy of the State.

This is to say that the money appropriated, some €30 billion, was for a purpose and it came from the appropriate fund. This means that in quite a wide range of circumstances, without any upward limit, a power to spend public moneys has transferred from the Dáil to the Minister for Finance. In my opinion, this has to be reversed. This gives the Minister for Finance - in the past, in the present and into the future - the power to appropriate public funds without limit and without any reference to, or a vote in, the Dáil, provided it is for the purpose of bailing out banks.

I want to come back to the issue of the promissory note. An important question in this debate is why there was a promissory note. If the Government, or in this case the Central Bank, wanted to put money into Anglo and Irish Nationwide, why did they not do so? The answer to this question is very important to this debate. The Central Bank could not extend emergency liquidity assistance to Anglo or Nationwide because the problem was not one of liquidity but of insolvency, and this would have contravened ECB regulations. The Government, the Central Bank and, very importantly, the ECB knew they were dealing with insolvent, non-rescuable banks, which is why the financial manoeuvre of the promissory note was resorted to. The Government gave two busted banks an IOU which they could put on their books as an asset, making them technically solvent. The Central Bank was, therefore, free to extend the emergency liquidity assistance to them to the tune of €20 billion.

The other question which is very pertinent to this discussion is why the ECB, the Central Bank and the then Government engaged in this manoeuvre. Was it a mistaken, ill-judged attempt to rescue two failed banks? No. This was done to satisfy the demands of the ECB that the bondholders of Anglo and Nationwide be paid, and paid in full. The reason for that was to protect the European banking system. The ECB was in it up to its neck and it should be under enormous pressure. It has very serious questions to answer regarding its role in these events but it is not doing so because this Government has failed - it has failed spectacularly to ask those questions.

What this motion proposes is what this Government should have been doing over the past two years if it was to fulfil the promises made in the 2011 general election. It involves exposing the role of the European Central Bank in transferring a huge and disproportionate part of the cost of saving the EU banking system on to the backs of the Irish people. The Government should be putting forward clear and, in the circumstances, reasonable demands for the removal of the burden.

The transfer of the promissory note into bonds held by the Central Bank is neither here nor there. Every year for the next 40 years, €2 billion will be taken out of our economy and destroyed. That €2 billion cannot be used to solve problems in our health service, provide jobs, build homes, develop our education system or provide SNAs in our schools. It will not be used to provide an extra bed in a hospital.

I moved this motion on behalf of the Technical Group with the support of other Deputies in the Dáil and commend the "Ballyhea Says No" campaign for its relentless campaign on this issue over the past two years. I salute it, its actions in Ballyhea every Sunday and its actions in going to Europe to ask questions that this Government should have been asking over the past years, namely, to write down this debt that is not our debt.

I apologise for not being able to stay for the entire debate but we are dealing with the Finance (No. 2) Bill 2013 in the Oireachtas Sub-Committee on Finance and I have to be there to deal with it. That is a Bill where many of the disastrous consequences of taking on board an odious debt that does not belong to the ordinary people of this country are felt. They have been felt in this year' budget, last year's budget and the budgets before then. Ordinary citizens will be hit yet again with the consequences of a decision by both the last Government, and now tragically this Government, to continue to ask us, the ordinary people, to pay off debts that are not our debts to protect the financial and banking elites of Europe and the world.

This motion was inspired by the people of Ballyhea and Charleville and other people around the country. They are ordinary people who were not politically active or aligned or who are not ideological, as the Minister of State, Deputy O'Dowd, might often accuse me of being. They are just ordinary people who are sickened at the thought that our country has been beggared and that vast numbers of our citizens have been beggared as a result of a decision to use our resources and essentially sacrifice our economy to pay off the gambling debts of bankers and bondholders. Those people have marched week after week and again and again - their numbers growing across the country - because they cannot believe that the Government will not even ask that this debt be written down. Some of us believe the Government should tell those concerned to go to hell and not pay it.

A total of €9.1 billion will be paid in interest next year. That is the same as the education budget. That is what we are paying on this odious debt. Imagine what €9.1 billion would do for investment in health, education, infrastructure and jobs. Imagine how far it would go in preventing the outflow of tens of thousands of our young people, in getting people left to rot on the dole back to work and in alleviating the needless and cruel suffering imposed on the elderly, chronically sick, young people and families who have just lost loved ones. All of these groups are victims of what the Government is doing in this year's budget not to mention the litany of other vulnerable groups that have been victims of previous budgets.

It does not end there despite all the fantasy about exiting the bailout. As a result of this odious debt that is not our debt, we will be in a vice grip controlled by the troika and financial markets for at least a decade, if not 20 years, as we are forced to pay down that debt in a scheme that has been set out, that is absolutely rigid and that demands that we pay billions in interest and capital payments on a debt that is not our debt. Every cent that is going out is money that should be going into our economy, citizens, infrastructure and jobs. It all leads back to the debt.

The people of Ballyhea and Charleville are simply asking for the Government to just ask questions about this. It is bad enough that before the election, when in opposition, its members used all the rhetoric of "not a red cent" and so on. The Minister for Finance, Deputy Noonan, said it was "morally indefensible" that the debts of these financial institutions should be loaded on the back of ordinary citizens - all that tough talk that people believed when it voted for the Government. If it will not get tough could it not at least ask Angela Merkel? The ECB says it does not do monetary financing but it did not mind monetarily financing the bubble. It monetarily financed the bubble. It used the periphery economies as a casino to gamble and find cheap profits when the bubble was up but when it comes to actually giving some protection or bailout to ordinary people, it says it does not do monetary financing. That is rubbish.

It is one law for some and one law for others because debt write-down is being done for some people as I have said again and again. Let us talk about the richest person in this country - Mr. Denis O'Brien, sorry to mention names. A total of €110 million has been written off in respect of a company in which he takes a controlling interest which then gets the contract to install water meters. Another company in which he has a stake, Independent News & Media, gets over €100 million written off. People who are saddled with mortgage debt cannot get a write-down and we cannot get a write-down on the public debt because the ECB does not do monetary financing but it seems we can monetarily finance the richest people in the country. It is sickening.

All the people of Ballyhea are asking for - I would ask for a lot more - is for the Government to ask that we do not have to pay off the debt incurred because of one bank, Anglo Irish Bank, which is a zombie, dead, casino bank. We have no interest in protecting or bailing it out and it would go a long way towards alleviating the burden that has been imposed on the people of this country.

Debt is the single biggest issue facing the citizens of this country. I publicly congratulate the "Ballyhea Says No" group which has raised this issue and kept it before the public over a long period of time, marching every week. I also congratulate the other groups around the country linked with "Ballyhea Says No" who are doing the same thing, including "Clonmel Says No", which marches every Saturday.

The motion effectively calls on the Government to seek a write-off of the promissory note from the European authorities. I support the motion because the Government has not even sought that but I am under no illusions that asking alone will bring about a positive response. Already, the Tánaiste's game changer has been blown away by the German authorities. Not alone will there be no agreement by other eurozone countries to shoulder any of the legacy bank-related debt of the Irish State, they have made it clear that they will not shoulder any Irish bank debt in future. There will be no serious talks about mutualising the eurozone bank debt until we stop honouring the promissory note now and in the future. It is only then that real talks will start.

The EU has placed a huge millstone around the necks of the Irish people. That millstone is called debt, debt and more debt. The bank debt of €64 billion is not the debt of the Irish people and we are not responsible for it.

The EU has placed a huge millstone around the necks of the Irish people. That millstone is called debt, debt and more debt. The bank debt of €64 billion is not the debt of the Irish people and we are not responsible for it. It is the debt of speculating European banks and finance houses. These institutions must be made to shoulder it. Ireland must get a write-down, as the debt is a crushing burden on us, our children and our grandchildren. It has created considerable austerity. We need only consider the large unemployment and emigration figures, cuts to services, tax increases, social welfare, pay and pension cuts, increased levels of poverty, particularly among children, and high levels of mortgage distress. This is what the EU has done to Ireland, our children and our grandchildren. It must be made to declare bank-related debt a burden on all countries in proportion to their GDPs. In other words, the debt must be mutualised.

In the matter of bank debt, the EU has been singularly unfair to Ireland. The Commission's data agency, EUROSTAT, has produced shocking figures. Ireland has taken a large hit for the rest of Europe. In terms of the cost of the banking crisis to individual member states, Ireland is at the head of the queue. The crisis has cost us in excess of €41 billion. It is worse when one views it as a percentage of GDP. We are at the head of that posse as well. The bank crisis cost us 25% of our GDP. The nearest member state in this regard is Latvia with 3%. While Ireland has 0.9% of the EU's population and our economy represents 1.2% of the EU's GDP, Ireland has paid 42% of the total cost of the European banking crisis. It gets worse when one considers it on a per capita basis. European statistics show that the banking crisis has cost every individual in this country €8,981. The average across the EU is €192.

Matters are actually worse, as these figures do not take into account the €22 billion from the National Pensions Reserve Fund, NPRF, that was used to address the banking crisis or the €30 billion that NAMA paid for bank loans. Our money is streaming out of the country, as are our people, including many who have been expensively educated and are highly qualified.

The claim that we will recover our sovereignty when we exit the formal bailout is a sick joke. If we cannot force the mutualisation of bank debt, we will pay approximately €4.5 billion per year under the fiscal treaty. All of the indications are that there will be no significant growth in the near future. This situation occurred previously in Irish history when British landlords bled the country dry and Michael Davitt launched a Plan Of Campaign to start the ultimately successful land war. James Connolly, who we remembered in this centenary year of the Lock-out, wrote of the need for the reconquest of Ireland. We need a new plan of campaign and a new reconquest of Ireland. Sadly, the three main political parties are in league with the EU, acting through the troika, and have sold out our economic and political sovereignty. However, I am confident that the current generation will not be found wanting when it comes to re-establishing this country's well being, independence and sovereignty.

I welcome the group from Ballyhea in the Gallery. I also welcome the many people who sent e-mails in support of this motion. Collectively, I estimate that approximately 100,000 e-mails have been received by Deputies during the past week. This is not just a small number of people who are expressing concerns.

I congratulate our colleague, Deputy Joan Collins, on having the courage to take a High Court challenge. The judgment exposes how undemocratic the decision was. We should be fearful.

This motion was intended to be inclusive of the Government so that we, as politicians, might collectively ask for a write-down of a debt that is not ours. The Government's ambition was stated to our colleague, Deputy Donnelly, today when the Taoiseach told him that it would not accept this motion. By not answering the question, the Taoiseach actually answered it, in that he will not seek a write-down on behalf of the people of the State.

While I welcome the fact that the Minister of State, Deputy O'Dowd, is present, I get the impression that Private Members' motions have become a matter of drawing the short straw. This is an important issue. We are approaching the point of no return at which these bonds will be sold. There seems to be a lack of interest, as only two Government Deputies, including the Minister of State, are in the Chamber.

The London debt agreement was signed in February 1953. It was essential to the recovery of Germany in particular, but of Europe generally, following the Second World War. In an extraordinary act of solidarity in much more difficult circumstances than those that exist today, Germany saw a 50% write-off of its national debt, which had risen to more than 300% of GDP by 1938. The agreement included an extended payment schedule of decades for the balance. The last payment was made in 2010.

No one thinks of Germany as a defaulter, which is the threat that is dangled in front of us when there is any question of a mutualisation of this banking debt. We are constantly told of the German memory and fear of hyper-inflation, which was a major problem after the First World War. Hyper-inflation did not recur after the Second World War because Europe acted in solidarity, with the assistance of the US.

Now is the time for Germany to recognise that solidarity is necessary again. Jürgen Habermas, the German sociologist and philosopher often described as one of Germany's most influential thinkers, has argued that solidarity in today's terms means debt mutualisation and that crisis management decisions have become long-term, unquestionable policy diktats. He observed that the euro must be saved at all costs except that which is necessary to save the euro. The excessive intergovernmentalism at European Council level has frozen the Union from being able to respond effectively. Habermas says that Germany, the Netherlands, Austria and Finland should accept short to medium-term negative effects of wealth redistribution, as it is in their longer term interests.

Regarding the aftermath of the London debt agreement, Professor Tony Fahey of UCD stated: "There were many reasons why the economic aftermath of the Second World War became so positive within such a short period." He referred to how France recovered through inflation and how Britain's recovery was slower because it wanted to protect sterling as a reserve currency. However, the country that was exceptional in all of it was Germany.

We can learn lessons from history. One is that solidarity helped to build the EU into a union of equal members. Once the crisis hit, this was shattered by the intergovernmental approach of a small number of stronger states. It continues to be the approach taken. We may not be in the aftermath of a major world war, but let us be clear, there are many casualties of this crisis. Unemployment in Ireland has increased from 4% to 14%, with a persistently high level of long-term unemployment.

The level is decreasing.

The suicide rate has reached shocking proportions. Mass emigration has returned, bringing with it social consequences. Vulnerable people, including the elderly and those with disabilities, have been directly impacted by cuts in services.

This is not our debt. It was not our debt in 2008.

It was not our debt in 2011 when, during the general election, so much was said about Frankfurt's way or Labour's way. It is not our debt and there is an obligation on this Government to seek to mutualise it and write it off. It is an unfair and disgraceful burden that has been placed on the citizens of this State.

When the history of Ireland in the 21st century is written, one of the most despicable and almost implausible moments will undoubtedly be the €31 billion gifted by the ECB to two zombie banks through its branch office in Dublin, the Central Bank of Ireland.

I have enormous pity for the teacher who will have to explain to future generations of schoolchildren how and why an Irish Government stood over the decision to pay back the debts of private corporates and individuals. Why did that Government refuse to seek an alternative to borrowing? Why did it then burn this colossal sum of money, while paying back the interest on all those borrowed billions and the capital?

More than 100,000 e-mails have come in posing the simple question of why the Government did not seek to cancel the debt. Perhaps that teacher will be lucky enough to have a permanent job, or perhaps he or she will be on a JobBridge scheme, preparing young charges for emigration, such is the legacy of the promissory notes.

Despite the Government's best intentions to convey the impression that the sovereign debt deal has made the remaining €25 billion of promissory notes go away, everybody knows this is inaccurate and far from the truth. The sovereign debt schedule that replaced the promissory notes does not affect the nominal, monetary value of that mammoth sum. It may make life a little easier for the Government, but future generations will be saddled with debt to the EU, the ECB and the same international bondholders whose greed bankrupted this country in the first place.

While savings from the so-called promissory note deal earlier this year could have been used to reduce fiscal consolidation or as an investment stimulus, the Government opted to continue to suck money out of the economy to the tune of €28 billion in the past five years. Over the same period, 300,000 have emigrated and we are now saddled with more than 400,000 on unemployment benefit.

The European Central Bank has said, on the record, that no documents were ever submitted to EU institutions by Ireland to request improved terms on the Anglo Irish Bank promissory notes. The Minister for Finance, Deputy Michael Noonan, has said that a write-down of the Anglo Irish Bank debt was never an option. Surely, however, the opportunity to test this was when Greece was given its debt write-down. Surely Ministers of the Government owed it to the people who elected them at least to ask, but they did not even do that.

The Government has failed the people by negotiating a better deal on the bailout at the expense of ordinary people. Despite lofty pre-election promises, the Government failed to negotiate an interest rate reduction and term extension on the European component of the bailout once it took office. It also failed to negotiate with the ECB a burden-sharing arrangement for senior bondholders at the Irish Bank Resolution Corporation. This is unbelievable.

Last year, at a meeting of the World Economic Forum in Switzerland, the Taoiseach described Ireland's "mad borrowing frenzy", with many taking this as an implication that the Irish people themselves caused the crisis. The Taoiseach later told the Irish people that they were not responsible for this crisis. Why then are they being forced to pick up the tab? It is simply because they elected a Government that does not have the courage to stand up to the financial institutions.

Right now, the banks are mauling this Government. Ordinary people are being told to get lost by the banks, while banks say they will do what they like. Despite whatever legislation is introduced. the banks will continue to maul the public. The Government allowed banks, bondholders, investors and speculators to destroy the economy and destroy people's lives, even driving some to suicide. When the banks saw they could get away with that, they knew they could get away with anything and they continue to do so.

The cost of all this has been cuts to medical cards, special needs assistants and hospital facilities. Garda stations have been closed and a devastating ban on recruitment in parts of the public sector has been maintained. Irreparable damage has been done to the body politic in Ireland. No one believes anybody anymore, particularly when they found out what Fianna Fáil did to put us into this crisis. They listened to what the Government said about getting us out of this crisis, including burning bondholders and dealing with banks, but instead it placated them. This Government will pay a hefty price for that. In advance of this debate, 100,000 people sent e-mails asking the Government why it did not seek a debt write-down.

I am happy to contribute to this debate. I thank the Ballyhea campaign, not just as a Teachta Dála but also as a fellow citizen. I also thank everyone who contacted us in the run-up to this debate. They have done a far better service to this country than the elected Members of Fianna Fáil, Fine Gael and the Labour Parliamentary Party who are acting contrary to the interests of this country by continuing to maintain the charade of the Anglo Irish Bank promissory notes. The so-called deal means that every red cent of that debt will be paid back by this State.

It is quite shocking that there is no one from Fianna Fail in the Chamber for this debate.

Yes. The Deputy is right.

That party concocted this whole scheme. I wish I could say I expected better from Fianna Fáil but the party of Charlie Haughey, Bertie Ahern, Ray Burke and Liam Lawlor has never, and will never, serve the best interests of this country. I am from west Dublin where I saw what happened with rezoning and speculation, so I would never expect anything better from that party. The people expected better, however, when they elected a new Government in 2011. They acted in good faith but they got more of the same - crushing austerity and failed neoliberal policies that have not worked, will not work, and which are driving our young people away. Those who are not driven into poverty through dole cuts are heading for Dublin Airport.

I recall the words of my fellow Deputy for Dublin West, the Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, who said that not one red cent extra would go into Anglo Irish Bank. What a lie that was. This Government has continued the same failed banking policies the previous Government undertook. Fine Gael members were cheerleaders for Fianna Fáil when the bank guarantee was introduced in 2008. What are the consequences of this failure to deal with the debt? Fine Gael and Labour have brought in their own dirty dozen cuts, including child benefit and the fuel allowance. In addition, the respite care grant has been abolished, while water charges are to be introduced. Incidentally, the Tánaiste, Deputy Gilmore, built his political career on opposition to water charges, yet he has turned heel and will bring them in. Property tax has been introduced, while jobseeker's allowance has been cut for the under 25s. The over 70s and people with disabilities are losing their medical cards. The mortgage interest supplement was scrapped along with Traveller education supports. Student grants and maternity benefit have been cut, while the mobility allowance was scrapped.

I hope the Minister of State and his Government are proud of themselves. As a Deputy and a citizen I reject their policies which are disastrous for this country, including the communities I represent. I stand full square behind this motion.

The Deputy was happy to be with Labour to be elected to the House.

The Deputy's party colleagues put around leaflets saying they were the only Government candidates, and they were right. Unlike others in the Labour Party, I will never kow-tow to the Deputy's party, Fine Gael, which has decimated this country and targeted the weakest.

The Deputy was elected to the House on a false promise.

Fine Gael has always stood for cutting the dole, cutting education supports and cutting Traveller supports. It is a disgrace.

Last February, we were told that the promissory note deal would save Ireland €10 billion over the next decade or so but this so-called €10 billion saving in Irish borrowings was a comparison saving against a theoretical and totally impossible promissory notes payment schedule. The Irish Government was faced with finding €9.3 billion to pay the Cowen-Lenihan deferred schedule of 2012-14, which was an impossible and totally ludicrous commitment. Even though the promissory note arrangement was a scheme devised by and repaid to ourselves, the task of finding the huge tranche of real cash required to satisfy the ECB was something no Government could have delivered. Conversely, we now have to spend €1 billion per annum in real additional payments on our growing national debt as a result of the promissory notes deal and the pain of austerity continues for all citizens. Recent figures, quoted previously by the Acting Chairman, Deputy Mathews, suggest that Ireland has paid an astonishing 42% of the total EU bank recapitalisation programme.

Like my colleague, I warmly congratulate the Ballyhea movement on its continued pursuance of the disastrous changes made by the Fianna Fáil-Green Party Government, strongly supported by Fine Gael in September 2008. The transfer of massive private sector bank liabilities onto the backs of the Irish people was the core element of the promissory notes deal. Clearly, the Government did accept Frankfurt's way after two years of shameful grovelling by the Taoiseach, Deputy Kenny, the Tánaiste, Deputy Gilmore, and their Ministers.

Since delivery of the first Fianna Fáil austerity budget in October 2008, devastating levels of austerity have been inflicted on our people. Almost €1 billion has been cut from the education budget, €4 billion has been cut from the health budget and almost €4 billion has been taken from the social protection budget. We have also witnessed the decimation of the capital programme budget from €9 billion in 2008 to its current level of €3 billion. The financial situation in Ireland remains bleak in light of our desperately high levels of indebtedness, with a debt to GDP ratio of 125% and low inflation. This huge burden will remain with us through to the 2016 general election and into the early 2020s, which is a shocking legacy for our people on the 100th anniversary of the struggle for independence.

The debates on the promissory notes during February and the bailout exit last week involved blatant and unashamed attempts to rewrite history by the Taoiseach and the Fine Gael Party. It was the Taoiseach, Deputy Kenny, and Fine Gael who when in opposition delivered the 2008 blanket bank guarantee hand-in-hand with Fianna Fail, the Green Party, Sinn Féin and others. The then Fine Gael spokesperson, the Minister, Deputy Richard Bruton, and later, the Minister, Deputy Michael Noonan, following the sacking from that post of Deputy Bruton, supported the Fianna Fáil-Green Party Government at every turn. It is notable that Fianna Fáil continued in its support of Fine Gael through the most recent renewal of the blanket guarantee and the bailout exit strategy.

When on the backbenches with the Minister, Deputy Rabbitte, and I during the debate on that fateful night in 2008, the Minister, Deputy Noonan, asked if the crisis was one of liquidity or insolvency. The then Minister for Finance lied to us about this matter. Although the Minister, Deputy Noonan, felt it was a solvency issue, he voted in favour of the guarantee. That is the reality of what happened in this House and the reason we have no confidence going forward in the ability of a Government in which Fine Gael is a leading partner to resolve the shocking situation facing our people in fiscal terms.

I draw the Deputy's attention to a remark he made during the course of his speech, which I think he would probably like to withdraw, namely, that the Minister lied to the House. That is not the protocol of this House and I ask that the Deputy withdraw the remark.

The proposed banking inquiry, which may be conducted by the Joint Committee on Finance, Public Expenditure and Reform under the chairmanship of Deputy Ciarán Lynch, will seek to establish the facts. On that basis, I will alter my remark and say that the then Minister misled current Ministers, Deputy Noonan and Deputy Rabbitte, and myself. There is no question about that.

Yes, in my opinion.

I move amendment No. 1:

To delete all words after “Dáil Éireann” and substitute the following:

“recognises that:

— decisions taken by the previous Government have unfortunately resulted in the inclusion of the promissory notes as a part of Government debt since they were issued in 2010;

— this Government successfully reached a conclusion to its discussions with the Central Bank in February, that delivered on our commitment to put in place a fairer and more sustainable arrangement on the Irish Bank Resolution Corporation promissory notes for the Irish taxpayer and this was noted by the European Central Bank, ECB;

— the agreement represents the best outcome available to the State in relation to the promissory notes and the Government will fulfil its legal obligations and redeem the sovereign bonds issued to the ECB in relation to this transaction as they fall due;

— the current approach with our European partners has led to a number of other positive developments during the lifetime of this Government to date that will serve to alleviate our debt burden, including the reduction of the interest rates on our EU programme borrowings and the extension of the maturities of our European financial stability facility and European financial stabilisation mechanism loans; and

— this is the best course of action in order to restore our international reputation and successfully exit the EU-IMF programme and regain sustainable market access;

acknowledges that:

— the implications of not making such payments, or raising the possibility of refusing to make these payments, are such that the State’s ability to regain sustainable market access could be put at risk with major implications for the funding of vital public services such as the social welfare, health, and education systems; and

— the Government should not act unilaterally in relation to the repayment of sovereign debt and should have regard to the views of our partners who are providing the requisite funding for Irish financial institutions;

and 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."

I wish to share time with Deputies Dara Murphy, Jim Daly and Paul J. Connaughton.

The Minister for Finance, Deputy Noonan, is unable to be here as he is attending the Select Sub-Committee on Finance.

Ireland is on the right track. Since taking office, the Government has stabilised the banks, restored confidence in the economy, reduced unemployment and introduced fiscal reforms to improve the management of the public finances. It has made difficult decisions that it believed were necessary and has met all of the targets set by the troika programme. Ireland has worked hard to get where it is today and these efforts have paid off. We now have full independent access to financial markets. The absolute necessity for Ireland to have this access should not be forgotten. It provides us with finance to provide the essential public services we expect, social welfare payments and our health and education systems.

In light of the nature of the motion proposed it is important to put on record the actual legal position regarding the relationship between the State and the ECB. It should be noted that in carrying out the functions of the Central Bank of Ireland the Governor is subject to Article 7 of the ESCB Statute which provides that:

.....Neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Union institutions, bodies, offices or agencies, from any government of a Member State or from any other body. The Union institutions, bodies, offices or agencies and the governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the European Central Bank or of the national central banks in the performance of their tasks.

Unless that country is Germany.

If this motion is passed, seeking to lobby the ECB for an exemption from monetary financing to allow the Central Bank to destroy €25 billion in sovereign bonds validly issued by the State and for the Government to unilaterally cease payments on the interest associated with that sovereign debt would be detrimental to the recovery of Ireland and its ability to obtain funding from international financial markets. This approach would jeopardise all the work that has been done so far by the State and the Irish people to restore not only our economy, but our reputation abroad. Reputation, reliability and meeting commitments are essential elements in accessing financial markets. We have regained the trust of our European partners and have demonstrated that Ireland is a country that can be trusted. Any motion such as this, if passed, would certainly break that trust and raise serious questions about meeting our legal obligations. We cannot undermine the remarkable achievements that have been made to date.

The promissory notes were designed and issued by the previous Government as a funding instrument to provide capital to Anglo Irish Bank and Irish Nationwide, to be repaid over time at an annual cost of €3.06 billion. The cost of this commitment imposed a massive burden on the State and the Irish taxpayer. Despite this, the Government has always maintained that it will respect the sovereign commitments entered into by the State regardless of by what Government these commitments were made. This strategy is finally paying dividends. Why pass a motion which would destroy the reputation we have worked so hard to build?

Government bonds yields are now much lower than the rate of interest that applied to the promissory notes when issued, thanks to the hard work done by Ireland in restoring its standing abroad. This Government and its officials worked tirelessly to reach agreement with our European partners on a restructuring of the promissory notes which provided a fairer and more affordable solution which significantly reduced the debt servicing costs of the State and the NTMA's market borrowing requirements over the coming years.

It was never a realistic possibility that the Government demand a rejection of the promissory notes in total. The reality is that the notes were a sovereign commitment and have formed part of general Government debt since issued in 2010. This Government resisted calls to adopt a confrontational approach in its negotiations around the promissory notes as it recognised that a sustainable solution had to be achieved by leveraging the support of our international partners. It was clear to the Government that the co-operation and support of our European and international partners was essential to reaching a solution that was in the interests of all. The Government has always set out clearly that it would not act unilaterally and that it would be bound by agreements entered into by it and previous Governments.

Our strategy has paid and is paying real dividends. The agreement on the promissory notes in February is a major step in regaining our economic independence through improving the affordability of our debt position and reducing our debt servicing costs. That agreement was reached after months of tough political and technical negotiations with our European partners and resulted in the replacement of the promissory notes with sovereign bonds of longer duration and with a lower interest rate. The benefits of the current arrangement are numerous. The agreement has greatly improved Ireland's means of dealing with the debt we inherited from the promissory note by reducing our borrowing requirement and debt servicing costs. The elimination of the annual promissory note payment has reduced the State's cash borrowing requirement by €20 billion over the next ten years. Any motion which questions the Government's commitment to following through on the agreement has the potential to derail our ability to regain full market access.

During the first quarter of 2013, the National Treasury Management Agency raised €7.5 billion from two bond sales. Both of these bonds attracted strong international interest and were heavily oversubscribed. Most importantly, more than 80% of the demand came from overseas investors. These sales confirmed Ireland's ability to access long-term market funding on sustainable terms. The NTMA is now in a strong funding position and Ireland will end this year with a cash buffer sufficient to cover 12 to 15 months of Exchequer financing needs. This strong position has been instrumental in the Government's decision to exit the EU-IMF bailout programme on 15 December without an application for a precautionary credit line. I noted with interest how only three members of the Technical Group voted to exit the EU-IMF programme last week. Should we take it that the other Members of the group endorse the programme and wish to continue under its guidance? Has the Technical Group proposed today's motion to cease interest payments on legitimate sovereign debts as a way of jeopardising our exit and keeping us in a programme?

The decisions taken by this Government in conjunction with our European partners have been instrumental in the restoration of confidence in the Irish banking system. There has been a significant reduction in reliance on euro system funding by the remaining banks, and the liquidation of the Irish Bank Resolution Corporation has led to the complete removal of emergency liquidity assistance, ELA, from our banking system. As part of the 2011 financial measures programme, Irish banks were recapitalised to meet a capital requirement identified at €24 billion. This was sourced from the private market, burden sharing with subordinated bondholders and also from the State. We have also implemented the merger of Allied Irish Banks with the EBS Building Society. AIB recently announced the completion of its deleveraging plan under the financial measures programme, ahead of the December 2013 target date. Bank of Ireland and AIB have successfully re­engaged with the markets on the back of their own asset-covered securities. More recently, unsecured offerings in AIB and Bank of Ireland were oversubscribed. Furthermore, the sale of Bank of Ireland's convertible contingent notes early this year reflects the renewed belief in the sustainability of the Irish pillar banks. Private capital has also been introduced to the banking system through the sale of equity in 2011 and the sale of Irish Life in 2013.

All of these developments have strengthened Ireland's ability to access long-term market funding and illustrate how successful we have been in our efforts to re-enter the financial markets. These achievements were based on the Government's commitment to ensuring Ireland is an attractive place in which to invest. That is the basis on which the country's future financing strategy is built. Any motion which threatens to cease payments of interest on a sovereign liability of the State is akin to default and brings with it substantial threats to our international reputation, which we have worked tirelessly to restore.

Let us not forget that the majority of Government debt is related to the provision of public services. Access to financial markets is essential for the running and maintenance of those services. It is the responsibility of Government to ensure, to the best of its ability, that public services are maintained and international debt finance is accessible. Policy decisions must ensure that access to funding is stable. The passing of this motion would threaten that stability.

We have had constructive engagements with our European partners since we entered government. In addition to the restructuring of the promissory note, we also managed to deliver many other successful agreements through partnership. We have achieved a renegotiation of many of the conditions of the EU-IMF programme such as the reversal of the minimum wage cuts. A substantial reduction in the interest rates on the EU funds, estimated to be worth in the order of €9 billion, was also won. The extension of the maturities of our European financial stability facility and European financial stabilisation mechanism loans of up to seven years is yielding significant savings. In addition, the agreement to retain half the proceeds from State asset sales for investment in job creation projects was an important concession.

These arrangements were agreed on the trust and understanding the Government has managed to build up with our European partners over the course of recent years that we will follow through on our commitments. This motion, if passed, would have a detrimental impact on that trust and significantly impact the Government's ability to negotiate in the future. We must persuade investors that Ireland is an attractive place in which to invest. Defaulting on our debt or lobbying to renege on that debt is not a message we want to deliver to the international community. It would damage investor confidence and seriously hinder our ability to attract foreign investment. Ireland cannot improve its economy by going it alone. We need our European partners' agreement and support if we are to build our financial position successfully. Foreign direct investment plays an important role in our economy, supporting 250,000 jobs directly and indirectly. Any default or threat of default on a sovereign obligation would threaten not only the thousands of foreign investor jobs in our economy but also future investment and employment opportunities for Irish citizens.

Today's employment figures show the improvement in the economy is real. Unemployment has fallen to 12.8%, the lowest figure we have seen since the second quarter of 2009. This is clear evidence that we are making the right decisions, boosting confidence and rebuilding the economy. The proof of that is in the increase in employment, which should have a positive effect on consumer spending and retail sales and serve to reduce mortgage arrears. Employment has grown by 58,000 in the year and now stands at 1,899,300. Moreover, the majority of the new jobs created are full-time positions.

We are not done yet and this Government continues to push for further agreements with our European partners. It is clear that our decision to work collaboratively continues to bear fruit. That is evidenced by recent discussions between the Taoiseach and Chancellor Merkel which may give rise to potential funding mechanisms for the State, including access to finance for Irish SMEs through the German development bank, KfW. That initiative is in the very early stages of development and the Government hopes it can provide a sound funding basis for SMEs into the future. Any announcement that Ireland was proposing to row back on its commitments and potentially default on its sovereign debt could have serious implications for the goodwill that surrounds the initiative. We are working hard to get agreement on these issues. The assistance being offered to us is illustrative of the trust our European partners have in Ireland's ability to turn around its economy and their willingness to aid us in that effort where possible. Any lobbying now to cancel the €25 billion bond repayments would seriously hinder the possibility of future offers of assistance of this nature.

Judgment was delivered today in respect of Deputy Joan Collins's challenge to the promissory note payments, a case that was taken against the Minister for Finance and the Attorney General. The plaintiff sought in these proceedings to challenge the lawfulness of providing public funding to IBRC and EBS in the form of promissory notes. The plaintiff also challenged the lawfulness of the subsequent issuing of long-term Government bonds to the Central Bank of Ireland in exchange for the IBRC promissory notes. The judgment was delivered in favour of the State by Mr. Justice Peter Kelly this morning.

European solidarity is in our interest and to our benefit. Economic growth will only be successful in the long term if the international markets are persuaded that we will adhere to our debt repayments.

We need to look to the long-term implications of lobbying for a default. We have gone to considerable lengths to improve our economy and debt repayments. It would not be wise for the State to lobby our European partners further on the issue now that agreement has been reached. Finally, it would not be rational for the State to abandon diplomacy and consider ceasing on payment on its contractual obligations at this critical time.

Deputy Dara Murphy is next. I am afraid I have to pare you back to four and a half minutes.

I am pleased we have a Deputy from Fianna Fáil in the House because the debate on how best to clean up the mess this country is in has had an absence of the people who caused it in the first place.

The motion from the Technical Group is remarkably naive and simplistic. I would be surprised if they all agree ideologically. Some of the references are plainly untruthful. The cost of our banking debt, specifically the promissory note debt, is being totalled with all our Government debt. However, 75% of the cost of servicing our debt is made up of our public service debt that has built up over recent years. Are people really suggesting that the country, which was on its knees and had to borrow money to fund our hospitals, schools and social protection system, should now, having taken the money to pay for these services, renege on that debt?

It is true to say that it is a sickener for everyone involved in the country to see the amount of money that remains on our shoulders by virtue of the total banking debt. However, in the case of the promissory note deal in particular it would be crazy in any way, shape or form to renegotiate. One of the speakers opposite referred to Greece. Greece, which partially reneged, is today paying three times what we are paying on the bond market.

That is not what Greece is paying.

That is not right

That is right. Greece is paying at over 8%. It went to 44% some years ago.


One point mentioned several times by the Minister of State related to reputation. The reality is that our reputation has given rise to the increase in confidence internationally to invest in our country. That investment has given rise to job creation, with the unemployment rate now gone below 13%.

The Government is now creating almost 6,000 jobs per month. In a way it is welcome that we have an ideological debate between a mature and sensible negotiated approach, that is, what we have from the current Government, and the type of simplistic socialist approach, which seeks to pretend the problem will go away, seeks not to negotiate with our partners and burn the people who have given us the money in the past. The view is that this is perhaps an option but it is not an option.

Deputy Murphy does not understand the promissory notes.

The path the Government is on is finally working. Our deficit, which was far too high, has narrowed to the point where it is once again manageable. The cost of borrowing has significantly decreased. Most important, the people who are looking for work can now see that a significant number of their peers have found jobs. They can see that a government which creates 6,000 jobs per month can create 7,000 jobs per month and continue on.

The Government did not create the jobs.

The people in the Opposition can smile. Following the tabling of the motion, employment figures were published yesterday, which will have been disappointing for those in the Technical Group, who trade completely on negativity and the fears of the people that there is no future for our country or economy, but there is a future.

It is a question of truth.

People who have left the Fine Gael Party in particular will see that much of the doom and gloom that we heard to the effect that Ireland would not recover and that Ireland could not negotiate has not come to pass.

He did not leave. Fine Gael threw him out.

That having been said, there remains a significant amount to be done, especially on the other related issues. When the ESM, the supervisory mechanism and the resolution mechanism are brought forward we will see that the work will continue to be done. I appreciate my time was cut a little short.

Cuirim fáilte roimh deis labhartha ar an ábhar seo. Having read the Private Members' motion I can inform the House that it is the first "Dear Santa" letter I have seen this Christmas. That is all it reminds me of. It is a complete fanciful fairytale. It begins something like "Dear someone, please write off €25 billion in money that we as a sovereign State owe to you".

It is being done all over the world.

No. Sometimes it is difficult to listen, but there are two sides to the argument. No one has a monopoly on any side of it. I am entitled to my say. This is my time on the clock.


No one has a monopoly on it. I am entitled to my view.

Through the Chair, please.

It is fanciful-----

If you cannot stay quiet, leave the Chamber. We have a system whereby people are entitled to say what they have to say, whether you like it.

He is talking to us, not through the Chair.

I will speak to the Chair. I am happy to speak to the Chair.

Get on with it then.

If this motion was passed, we should consider the damage it would do to the country, our children and our children's children. It would immediately undermine up to 250,000 jobs in the economy, jobs we rely on and which pay for the services that are so badly needed. That would be the first consequence.

It is ludicrous to aspire to default. Default as an aspiration makes no sense. Default is a position that an entity ends up in through a lack of choice and opportunity and the lack of any other available option. However, to aspire to default is bizarre. We have worked hard as a Government in recent years. Many other Deputies, who are not part of the Government, have worked equally hard to restore the reputation of the country. That reputation was in tatters when we took up office two and a half years ago. The country was a basket case by any standards or measurement. I dread to think that we would throw that out the window when we are just finding our feet, when the economy is starting to turn, when jobs are being created in their thousands each week, when we are starting to see reductions in the amount of money owed and when we are starting to see the benefits of the hard work.

This ludicrous, childish and silly motion has been put down to the effect that we should write away €25 billion.

That is because Deputy Daly does not understand it.

Dear Santa, how are you? I am sorry that the day ever came when it dawned on me that Santa did not exist, because I would love to send the motion off to him.

The money system exists for better or worse. The fundamentals of any money system are that one borrows and one pays back. Those responsible for the motion think that we are in some dream land where we can subvert that system and then wake up when it has all gone away. The writers of "Dallas" would have a challenge on their hands to come up with something like this.

We did not borrow it. It is an IOU.

Let us consider Germany, which has been referred to by several speakers. The Germans are effectively the paymasters. Austerity is a necessary thing. Everyone must live within their means and that is what we, as a country, must do. The people in Germany are dictating that we must do that and rightly so if they are paying the tune. I mentioned previously that the Germans are the people with 7% youth unemployment compared to countries such as Greece which has 57% youth unemployment. Greece did not adhere to the rules of finance or economics or to the basics.

The renegotiation of the deal to date has seen a reduction of €10 billion on our interest rates and a further reduction of €20 billion in repayments to be made in the next two years. That is €30 billion in total. That is as a result of negotiating and dealing with our partners. It means we can maintain our reputation and standing.


Most important, we can maintain our ability to borrow on the markets. The people putting forward this motion refuse to look at the day after tomorrow. They simply look at the short term or the quick gain. Who will pay the welfare bill, which is €20 billion as it stands in the country at the moment? Who will pay the education Bill? Who will pay those bills afterwards?

I thank the Ceann Comhairle for the opportunity to speak on the motion. I am unable to support the motion, which seeks to stop all interest payments currently being made on sovereign bonds issued in February and which calls on the Government to lobby the European Central Bank for an exemption of the rules of market finance in order that sovereign bonds can be destroyed. However, it is worthwhile to have the debate.

I believe the approach being taken by the Government to the undoubted crisis in which Ireland finds itself is on the correct course and the proof of this lies in the figures contained in the latest quarterly national household survey, which shows a significant increase in job numbers in Ireland. Members opposite do not need reminding that the deal which underpins Ireland's current economic debt was done prior to the present Administration's taking of office and the most difficult task facing the Government was to steady the ship in the state in which it was, as it passed through extremely turbulent waters. History has shown instances in which promises undertaken by this State were reneged upon, with huge economic repercussions that filtered down to every family in the State. I believe that simply reneging on commitments made, for example, in respect of interest payments on bonds is not the way forward.

The success enjoyed by the Government to date stems from hard work behind the scenes with our partners across Europe. This is work that often has gone completely unnoticed by the media as it often appears to be of a mundane nature. However, it is such painstaking work, which can only be done between partners who have trust in one another, that has continued to pay dividends in recent months and years. It is this work that has brought the country back from the brink of the precipice and it must continue for many more months and years to come.

I understand fully the huge anger and frustration that exists among the people with regard to the private debt of banks being taken on by the State. Personally, I also have grave issues with it and it is an issue that must continue to be addressed. While it would be easy to spend five minutes in giving a deserved kicking to the banks, that would only take away from the serious position facing Members. The ongoing continuous work at a European level must continue, as Irish finance officials must drive home to European politicians and bureaucrats the pain and difficulty this decision to take on the bank debt has had on Irish people, as well as the fact that pressure from Europe was a key element in the decision and consequently, that Ireland needs Europe to support it at this crucial juncture by using European Stability Mechanism, ESM, funds to recapitalise Irish banks. The Irish economy is beginning to grow and this is a key message that must be communicated to our European partners, as it will bolster the Irish reputation for stability and underline further that Ireland is stepping back from the precipice, that the progress that has been made to date now is gaining momentum and, therefore, the time now is right for the ESM funds to be used.

All the economic achievements of recent months and years, underlined by today's jobs figures, could be lost were the Opposition motion to be passed. Members must consider what could happen, were they to follow through on the motion before them. There certainly would be consequences and they must be realised before any decision can be taken. I believe to suggest there would be no negative effects from such a move simply is to detract from the seriousness of this problem. Members should consider for a moment what the repercussions might be, were this motion to be passed. I refer to the undermining of foreign direct investment, the impossibility of accessing funds to finance public services, the increased cost of credit and the undoubted locking-out of Ireland from international markets. Would Members opposite lend to someone who repeatedly repudiates his or her debts and negates previous contracts?

There are many signs that the path taken to date is the correct one and will continue to be so. While continued lobbying must be undertaken to ensure the best deal possible is secured for Ireland, reneging on interest is not in the country's best interest at present. I remind those promoting the motion of a line in the direct bank recapitalisation instrument, which states "The potential retroactive application of the instrument should be decided on a case-by-case basis and by mutual agreement." I believe this is how it must be pursued and has been pursued. Moreover, I believe fully that such a course will yield much greater results than the proposed repudiation of our debts. The key phrases in the aforementioned line are "case-by-case basis" and "mutual agreement". Ireland's improving economy and increasing job numbers bolster the case that can be made. The second phrase on mutual agreement has underpinned the Government's actions to date and is far preferable to the tactics envisaged by the motion before Members.

I welcome the opportunity to speak on this Private Members' motion tabled by the Technical Group and others, which deals with the issue of the Government bonds that replaced the Irish Bank Resolution Corporation, IBRC, promissory notes. First, I note that I am substituting on behalf of my colleague, Deputy Michael McGrath, of Cork South-Central, who at present is attending the Committee Stage debate of the Finance Bill with the Minister, Deputy Noonan. They have been there all day and will return there tomorrow and on this basis, I apologise. Second, I welcome to the Gallery the group from Ballyhea, in north County Cork, who have been closely watching this debate for some time. This group has been raising this issue for some time in their own quiet and effective way. I understand they have held a protest almost every Sunday for quite some time. They have travelled to Brussels and to Frankfurt to raise this issue and essentially, their message is the burden is too much for the Irish people and it is not their burden. I welcome the group to the Dáil today.

As for the motion before Members, Fianna Fáil tabled a series of amendments to the Government amendment that was moved today and I wish to deal with the essence of my party's proposals. First, our amendment emphasises the importance of the commitment given at the European Heads of State and Government summit meeting in June 2012. It stated "The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme." At the time, the Taoiseach called this a game-changer and stated it would bring about fundamental changes in respect of dealing with Ireland's financial industry and the debts associated with the banks. Since then, no further action has been seen on this matter. Now and again, one hears it being stated that there is a commitment. However, it is a commitment with no substance. I met representatives of the troika when they were in Dublin a fortnight ago, as part of the Fianna Fáil delegation, and we actually asked them whether there was any possibility of retrospective bank capitalisation. They simply laughed, as they knew it was nonsense. Everyone in the room knew it was nonsense. It was a great bit of public relations - the Taoiseach is excellent in that department - and he must get 100% for his public relations efforts. He fooled many people on that issue and still continues to do so. However, while there is no substance, he will peddle that story again.

My next point is that Fianna Fáil also believes the current Government agreed to a conversion of the Irish Bank Resolution Corporation promissory notes into long-term bonds, the non-payment of which would result in a sovereign default, that is, were there to be any default in those payments. This is the first time, legally, that this debt was copper-fastened on the backs of the Irish people. I acknowledge that my party, when in government, had nationalised IBRC at that time. It subsequently has been liquidated but at that time, the debt was not formally copper-fastened on the body of the Irish taxpayer but on a State organisation. State organisations have come and gone and have welshed on debts in the past. I note it has been stated by some Members opposite that the essence of any market transaction is that one borrows money and one pays it back. In other words, one pays the debts, but I wish to digress in respect of the IBRC promissory notes and the Government bonds that have replaced them.

The legislation introduced in this Chamber some months ago by the Minister, Deputy Noonan, on the liquidation of IBRC and the appointment of a special liquidator resulted in a State body welshing on its debt and on its bonds. I have raised this issue in the Chamber previously. This legislation was drafted by the Minister and his officials months in advance. It was agreed with the KPMG special liquidator, Mr. Wallace, and simply was sitting in the top drawer for several months. While I acknowledge it was rushed through the Dáil in a single night, it was not rushed legislation but had been in place for months. It had been prepared and planned for months and the consequences of that legislation were known in advance to the handful of people who were involved in its preparation. Members only knew about it and had an hour or two to deal with it here in the Chamber. However, I wish to provide Members with one example concerning a State body and IBRC. While the latter was afraid to welsh on its bondholders, it welshed on its own bonds.

As for the bonds to which I refer, I am looking at the impact of that decision here that night. Members are learning of the impact on housing estates that have been left unfinished by developers, who themselves have gone to the wall. Developers take out financial bonds to ensure that estates can be finished if they go out of business before the job is completed. All Members are familiar with this process. However, all bonds held by IBRC are no longer being paid out and this is causing huge difficulties. Local authorities now face the impossible choice of leaving estates unfinished or taking money from other services to pay for the cost of finishing road surfacing, drainage, water, sewerage works and street lighting in certain estates. The Minister knew what he was doing on the night he liquidated IBRC, namely, that local authorities would be left out of pocket as a result of that decision. People may not be fully aware of this but IBRC, like all major financial institutions, had issued bonds to developers. The councils had accepted these bonds as part of their planning conditions, that is, if the developer in question went bust, the financial institution would honour the bond. I will provide an example of which I am aware in County Laois. The Quinn group had issued bonds to several developers in County Laois and when that group went into administration, those bonds were honoured in full because it was continuing to trade. However, as soon as IBRC went into liquidation, those bonds were no longer being honoured and some work the council had expected to be done in estates through the bond mechanism cannot now be done. This was a direct result of the Government decision and those concerned must have known about this on the day in question. Moreover, these bonds were put in place as part of a planning condition and this is no idle issue, as four estates in County Laois have bonds in place that were from IBRC, ranging from €87,000 in one estate to €354,000 in another.

In all these cases there will be a call on some of these bonds to complete the work. This will not be possible because IBRC no longer exists as the Minister chose to liquidate it. I asked the Minister if he would put in place special arrangements. He gave my request short shrift. During the Topical Issue debate he informed me that the special liquidators and the departmental officials had met on several occasions with officials from the Department of the Environment, Community and Local Government. They are aware the problem exists in several counties. The Minister stated these bonds will rank as an unsecured creditor for the purposes of liquidation, in other words, that the local authorities are at the end of the list of creditors and the Minister will not honour the bonds that were issued by a State body to complete estates in various counties. The Minister is not being upfront with the truth. He said that throughout a liquidation process it has to be acknowledged there are, unfortunately, unavoidable costs. This cost was avoidable because he could have put measures in place to deal with it. He asked for a full report from all Departments. I call on the Minister to honour the IBRC bonds.

The Government must be awarded full marks for its PR spin on selling the new arrangement. It has stated the new arrangement will have reduced the State's cash borrowing requirement by €20 billion over the next ten years. The notion there will be a saving in the short term is juvenile economics. It is like a bank spreading a client's debt over a longer period, charging more interest and the client will pay back every penny owed plus more interest. The client will pay more than was owed but the bank will go easy for the first couple of years. The Minister successfully sold that arrangement to the people as a good deal. It is a bad deal because it increased our debt. I do not understand how it was regarded as a good deal. The Government fooled a lot of people for a long time-----

It was promised by and given to us by the EU. Creditors do that.

We know the burden fell on the backs of the Irish taxpayers because the majority of the bonds were held by German and French banks who would not countenance it. In the case of Cyprus, the bondholders had to pitch in because many of them were Russian and the Germans and the French did not care about them. The big and the powerful always win.

Our amendment deals with reform of the banking system and the supervision and resolution mechanisms to be introduced. The ECB could immediately help the Irish Government at any stage it chooses. In the period 2010 to 2011, the European Central Bank purchased approximately €200 billion in distressed euro sovereign debt on the secondary market. It is estimated that up to €20 billion was Irish distressed debt. The ECB sold on this debt at a profit - bought at below par and sold for closer to par. The ECB will not give the figures. Professor Honohan runs for cover on this issue and he does not want to discuss it at the finance committee. The ECB made a profit of up to €5 billion on buying Irish distressed debt at a reduced price in the secondary market. The bank has made a profit of €5 million from the Irish taxpayer and it should devise a mechanism to hand that money back to the Central Bank and to the Government. The ECB made money out of our difficult situation.

The banks will face stress tests in the coming year. Former stress tests did not adequately deal with small business debts. Whoever carries out the stress tests on behalf of the European Central Bank must not be a European consultancy firm and must instead have global experience, including in the United States. It is preferable to have tougher stress tests rather than a harmless and soft result. The full unvarnished truth is preferable.

The promissory note deal was replaced in due course by these bonds. There was no mention of unilateral default or anything of that nature. They asked for discussions with the European Central Bank. What might not seem possible today will inevitably come to pass. The promissory notes were dealt with and were replaced with these bonds. People regard the bonds as sacred cows which cannot be touched. I am not suggesting they can be torn up but in the fullness of time, those bonds can be renegotiated. It is not sensible to say it can never happen because one can never say never in politics or economics. The economic realities will always decide the outcome of these issues. The Government must always leave the door open for future renegotiation. It happened with the debt and it will happen in the future. What was not possible in a business five years ago is possible today.

The deal we achieved on the bonds is postponing €25 billion debt to the year 2020. Our debt is still there and the interest is piling up. We will not have to pay it this year but we will pay for it in the future years. Despite this, some people think it is a good deal.

It must be identified how many European banks will undergo proper stress tests under the supervisory mechanism. The European bank resolution process is not yet in place. The officials attended the finance committee two weeks ago. It was very obvious to me before they went to Europe that we were a long way from agreement. Those who were responsible for reckless or careless trading must be properly dealt with.

Two days after this Government was formed on 31 March 2011 the issue of the promissory notes arose for many people both inside and outside this House. Having listened to the Tánaiste and the Taoiseach in the lead up to that campaign, many people would have been under the impression that things would be different. This Government was elected on a mandate of change yet one of the first decisions it implemented at the time was to pay a €3 billion promissory note. That clearly set the agenda for this Government.

There were social consequences as a result of every decision the Government took since it came into office. We saw tonight one of those consequences in that people over the age of 70 who worked all their lives and contributed to economic growth for decades will now pay a price for decisions made by others. I am not an economist. Very few people in this Chamber are economists. I look at this in very simple terms. It is similar to me paying the debts accrued by someone who got into trouble as a result of gambling or spending money recklessly and that person walking away without paying any of the debts they accrued. Not only would I have bailed that person out, but I would have suffered the consequences of doing that. That is what has happened in this case. We are talking about people who gambled recklessly and spent money like there was no tomorrow. They traded, speculated, made a great deal of money and when the economy went bust they walked away with everything. A burden was then put on the Irish people to pay back that debt.

Some of the decisions taken since are difficult to fathom. We spent hours in an emergency session in this House debating the Anglo Irish Bank legislation. In effect what happened that night is that we took an odious bank debt, turned it into a sovereign debt and placed it not only on the shoulders of this generation and the next generation, but the generation after that. It was then spun by the Government as a good thing to do. There have been some short-term benefits from the deal secured on the promissory notes. No one is arguing that but if we look at the overall deal, the longer term consequences of that will be felt for many decades by generations to come. My children's children will end up paying a debt neither I nor any other Irish citizen accrued, with the exception of a few speculators and bondholders.

I listened carefully to the Minister of State when he said that to seek a write-down of this debt would be ludicrous and that it would damage our reputation in Europe. How does he know that? Nobody has even discussed the possibility of a write-down of that debt.

I refer to the €35 billion in respect of Anglo Irish Bank and Irish Nationwide Building Society. That was put in place to save our partners in Europe, stabilise their banking system and the economic crisis sweeping across the European Union at the time. We should go to those very partners, about whom the Minister spoke highly, and tell them that there is an argument to be made for burden sharing. We are told that is not possible but nobody is going to the negotiating table and putting that possibility to them. Unless there is a change in policy, we will continue to pay an odious bank debt we did not have any responsibility in creating. That is a shame.

Debate adjourned.
The Dáil adjourned at 9.15 p.m. until 9.30 a.m. on Wednesday, 27 November 2013.