Euro Area Loan Facility Bill 2010: Second Stage (Resumed)

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

We must show solidarity with Greece and with all fellow European Union member states. I and my party are very much pro-Europe. However, the first question we must ask is whether the aid package will work. From a short-term liquidity perspective the answer is that, like the Government guarantee scheme of 29 September 2008, it probably will. Will it address the long-term solvency issue for Greece? That remains to be seen. These are the questions that must be asked.

In terms of the financial stability mechanism currently being discussed in Brussels, at a cost of €750 billion, we must have all the details. Moreover, we need to know whether there will be a jobs dimension to the process. In Ireland, half the general government deficit is a result of unemployment, but the Government has no initiative to address this. The markets are nervous that the austerity measures will be so severe that we will have growth in countries' national debts and unemployment will stagnate at current levels. The Government must produce an effective jobs stimulus package.

Section 4 should be amended to change the reporting mechanism from annual to quarterly. The reference in the loan facility agreement to ranking pari passu with existing professional bond holders must be examined. Will the Minister of State, Deputy Mansergh, elaborate on the indication that we will not make a loss from this process?

Last Sunday the magazine section of the Financial Times included a four-page article entitled “A Plague on their Houses: How Bankers, Builders and Politicians Brought Ireland to its Knees”. The article observed that at the “height of the lunacy”, three quarters of total Irish bank lending was for property construction, land and speculation. This is described in the article as what Ireland did for a living. Yet while all this was going on, the then Minister for Finance, now Taoiseach, told us that the fundamentals of the Irish economy were sound. Moreover, we were told in the late summer of 2008 that the banks were sound and solvent.

By the end of September 2008, however, the deposits of most of our financial institutions had to be guaranteed. We were subsequently told we would have to take on a significant portion of their debt under the NAMA process but that this would provide the cheapest bailout in the world. It turns out, however, that it is the most expensive bailout in the history of the OECD. We were told that the haircut applied under NAMA would be 23%, but the assets transferred so far have had an average discount of 50% and it is expected that the haircut on the next tranche will be even greater. We were then told that Anglo Irish Bank is of fundamental systemic importance to the Irish economy. We have since seen that it has been fundamental to the ruination of the country. We have already committed at least €22 billion that we will never see again as a result of the bailing out of that bank.

Almost every week we find ourselves exposed to another €1 billion, €2 billion, €3 billion or €4 billion, and the Government is obliged to revise the promises or assertions it made the previous week. The story keeps changing. The Minister of State must forgive us then for being a little apprehensive when we find that over a weekend, we were suddenly exposed to a further €6 billion between our share of the Greek bailout and our contribution to the stabilisation fund. We recognise that the financial situation in Europe was as grave that weekend as it has ever been. We accept that decisive action had to be taken. My concern is that every time the Government takes decisive nation it costs the nation money. Moreover, on every occasion, it has been wrong in its predictions of the outcome of its strong decisions. It has been wrong even in its understanding of those decisions. I strongly suspect that when the guarantee was given on that fateful day in September 2008, the Government did not even realise that the guarantee extended to bonds. If it did know, it did not understand the implications — that it would be a millstone around the neck of the next generation.

The Government's so-called decisive actions, made in haste and with no parliamentary discussion or scrutiny, have led us into a vortex of repeatedly throwing good money after bad. Given that almost every action and statement made by the Government on the financial and banking front has been wrong — and sometimes proved wrong within days — it is just a little foolhardy for the Taoiseach to run off to Europe and sign up to the provision of another €1.3 billion. I accept that we must contribute to bailing out Greece, but this was done without any prior consideration in the national Parliament of the terms of that bailout or its implications for Ireland.

We were told that our portion of the bailout would be based on our share in the European Central Bank. That seems fair until one considers that we are paying more per household than any other eurozone country with the exception of Luxembourg which is the richest country in Europe if not the world. Is it fair that debt-ridden Ireland, the country carrying the highest level of personal, banking and Government debt, should pay more per household than any other member state? Three days after the initial announcement, our disproportionate burden was compounded by a further commitment of €4.4 billion to the eurozone stabilisation fund. Was the Government aware of the disproportionate household burden for Irish families? Was any other formula even considered, such as the agreed formula modified by consideration of debt per household in each country? Alternatively, was consideration given to a greater burden for those countries that engaged in reckless lending and are now, bizarrely, horrified by the reckless borrowing of others? I understand the Germans were the big lenders. In giving this money to Greece, we are effectively bailing out the German banks.

The tragedy is that the debate on the legislation to confirm our Greek commitment is virtually irrelevant because it is too late to influence any aspect of what the Government has signed up to, too late to use another formula, too late to get a fairer deal for Ireland and too late to even say it is too late. Time and again, particularly at budget time, Deputies Bruton and Kenny have called for a different way of doing our business, particularly in respect of major decisions including budget decisions and decisions such as this, and emphasised the need to use our Parliament to tease out issues before they are set in stone so that mistakes are avoided, pitfalls are foreseen in time and unfairness such as that arising from this process is prevented. Europe is now demanding surveillance of our budgets. Does it occur even now to the Government that if we did our own surveillance properly and if Parliament played its correct role as a watchdog for the people, we might never have ended up in our current mess?

The Minister in his speech criticised me for even pointing out that we are paying disproportionately more than other eurozone countries. I regard it as my duty to point that out and I resent the Minister's suggestion that it is somehow unpatriotic to do so. The reality is that debt per household is a very legitimate measure of a country's well-being and of its ability to borrow and make repayments. Therefore I absolutely stand over what I say. The Minister is wrong to suggest we should not question the manner in which responsibility was shared among countries.

As the Taoiseach stated last week, he must convey confidence in Ireland's ability to survive. While this is true, one does not inspire confidence by burying one's head in the sand, hiding the facts or pretending everything is rosy in the garden. It was this approach that landed Ireland and Greece in the mess in which we find ourselves. The Government has a history of making decisions behind closed doors, in haste and informed only by vested interests. It does not appear to have learned the lesson that if one is continually wrong, one must change the way in which one does business.

Many have raised the loss of sovereignty arising from the proposed requirement for greater surveillance of national budgets in the European Union. The real loss of sovereignty has been in this House, not Europe, and has been caused by a Government which will not learn from the mistakes of the past, for which people are paying. The Government has abrogated the role, responsibilities and powers of the people's Parliament by preventing proper scrutiny of decisions before they become irreversible. The decision before us is now irreversible.

While the Fine Gael Party supports the bailout for Greece, I challenge the Minister's assertion that we will get our money back. We will sing for this money. It is being paid out on the understanding that it will not be returned and on the sole condition that it will prevent the collapse of the euro. Nevertheless, the bailout was necessary. My party also accepts the need for greater control of eurozone country deficits. We do not, however, accept that these matters cannot be discussed in this Parliament, whose role is to act as the watchdog for the people.

I will share time with Deputy Michael Mulcahy.

The Minister for Finance has set out in detail the context of the Bill and its provisions. Notwithstanding arguments made, I welcome what I understand to be the support of the main Opposition parties for the Bill.

European Union and euro membership are fundamental to our positioning as a country and our economic strategy. We have every interest in sustaining not only our euro participation but the currency itself. Every member is systemic to the euro, which means in recent times we have had to do what was necessary. Those who have been observing events will have noted that this storm has been brewing up for some time, certainly over the past two or three months.

There are, among certain high profile commentators outside the House, some who urge us to part company with the euro. In that context, I will cite the words of Kevin Gardiner, the man who invented the phrase "Celtic tiger" in August 1994. Mr. Gardiner, who is Irish, is the head of investment strategy for the Europe, Middle East and Asia region, EMEA, at Barclays Wealth. In a recent article, he noted:

Euro participation is part of the competitive package that initially made Ireland such an attractive place in which to invest. After all, if a large US company wants to invest in an English-speaking, financially volatile and euro-sceptic EU base outside the single currency, there is always the UK.

Precisely. There are echoes in Mr. Gardiner's words of my favourite historical quotation, which is from Thomas Addis Emmet. Answering a question at a parliamentary committee on the causes of the 1798 rebellion as to how Ireland could possibly go it alone economically, he replied: "America is the best market in the world and Ireland is the best situated country in Europe to trade with that market." These words sum up our position if not then, certainly now.

There is a necessity not only in Ireland but around the world to pull the financial reins tighter and get on to a more sustainable path. While we could have found ourselves in the same position as Greece, we have not done so. With all due respect to Deputy Mitchell, the reason is that we have taken many correct decisions during this crisis. The Deputy quoted one article from the Financial Times. One could find many quotations, particularly in recent weeks, in praise of the course being followed by Ireland.

The position has been the same for the best part of two years. Either we make our own necessary choices or have them imposed on us in a way we may not like or choose. Experience has shown that complying with the Maastricht criteria, while necessary, is far from sufficient because the buoyancy in many countries, whether one describes it as a boom or bubble or uses another word, has hidden a much more vulnerable situation.

We are not paying the Greeks but providing money that is pooled by the European Commission, which is lending to Greece. I do not believe there is any fundamental dispute that we have to show solidarity. If we do not hang together, we will hang separately and there are powerful speculative forces. I was interested in the argument as to the reason they justify their attacks on the euro, namely, that countries will either not be able to sustain the difficult policies they are imposing or having imposed on them or, alternatively, if they all do so successfully, they will depress the economy so much so that it is not successful. The attitude seems to be one of heads one loses, tails one loses. Nonetheless, I am hopeful that as a result of the decisions taken on Sunday, 9 May, the situation will gradually stabilise and turn around with further details of implementation.

There has been some debate inside and outside the House on the issue of European surveillance. The European Commission has put forward some propositions to which many governments have reacted. Budgetary surveillance is of two kinds, both of which we are accustomed to in some degree. One relates to specific budget measures which may offend against state aid rules. Often, in budget speeches, the Minister states he will introduce a certain scheme subject to the consent of the European Commission. Some weeks or months later, this consent is generally forthcoming and the measure is then implemented. The second is a more general type of surveillance which is reflected in the EU stability report that appears at the back of the budget booklet. This is normally three or four year projections on the sustainability of the public finances. There has not been a particular difficulty in principle. We announced months before this year's budget that we would be seeking €4 billion in expenditure cuts, and that was duly implemented.

I was surprised by the shrill nature of the initial Fine Gael reaction to those proposals. I wondered on radio whether it was connected with concerns about the NewERA document. I was re-reading it on the train from Tipperary on Saturday and it seems to involve quite a lot of additional borrowing which——

Has the Minister of State read the document?

I have it here. Does the Deputy want me to read bits of it?

The Minister of State only has one minute and Members of the House should be allowed to speak without interruption.

That document needs to be examined closely to see if it stands up to the imperative necessity to deal with the issue of sovereign debt in this country. Jobs are important, but the most important stimulus for jobs will come from an improvement in competitiveness rather than specific stimulus measures.

(Interruptions).

Allow the Minister of State to finish.

It is time the Fine Gael document was scrutinised and debated rather than simply having answers——

We are looking for the scrutiny of documents.

Does the Minister of State know what the document is about?

There is a serious question whether it is compatible with what is developing. I can understand why there are concerns about it.

Has the Minister of State read the document?

Yes, I have read it several times.

Does the Minister of State know what it is about?

Allow the Minister of State to conclude.

There is a theoretical debate in Europe on whether the current situation requires more economic and monetary union. I represent the country on the EU budget council and the reality is that there is no willingness among our partners to put more funds into the EU budget. In fact, many of them would like to put even less money into it. We have an interest in defending the sums that are put into the Common Agricultural Policy.

Apart from some excise duties on the night, the budget is not set in stone until the Finance Bill is passed so there is plenty of time to discuss and refine budget measures in this House.

I welcome this Bill in so far as it amounts to Ireland's effort to help a fellow eurozone member, namely, Greece. I welcome the Minister's speech and I agree with it entirely. It is quite clear, however, that more needs to be said.

The first issue I would like to raise is the issue of scrutiny of all that has transpired in recent weeks. The Lisbon treaty promised greater scrutiny of EU matters, especially by national parliaments, and contained specific protocols in respect of scrutiny and subsidiarity issues, yet this debate is the first on this issue, either in the Chamber or in any Dáil committee. I have to put my hands up as a member of the Joint Committee on European Affairs and the Joint Committee on European Scrutiny. This matter has been trundling along for some weeks, beginning on 11 April when finance ministers across Europe agreed to the terms of the formal support to be given to Greece. On 14 April the Government agreed with this and approved the preparation of legislation. On 8 May the European Commission signed the loan facility agreement. I appreciate that things happen quickly in international financial markets. However, the lack of scrutiny on this issue to date has been inadequate. We must look at more in-depth scrutiny of other vital EU issues as they move along. I hope colleagues can agree with me in supporting that general point.

The terms of this assistance to Greece have been set out by the Minister and the Minister of State. It consists of €110 billion over three years. This will represent a very difficult time for Greece, much as it represents a difficult time for Ireland. We know it will require a large downward adjustment of the debt to GDP ratio in Greece from 2013 onwards. Greece will be required to keep primary balances in surplus to at least 5% until 2020. It will involve a cut in Greece's public sector wage bill and pension outlays, an increase in excise taxes and further increases in VAT. These are very similar to the measures we have seen in our budgetary and fiscal adjustment. These budgetary issues have stretched across Europe to reach many member states. There is hardly one country in or outside the eurozone that is not having to make substantial adjustments in its budgetary position.

I welcome the establishment of a European financial stabilisation mechanism, which represents an early scrutiny of the budgetary cycle. It was referred to by the Minister of State and it is very important. Some people made the point that it might represent a loss of sovereignty as the European Commission and perhaps the European Parliament would be involved in internal budgetary matters. What use is sovereignty if one is bankrupt? What use is sovereignty if people are going to be rioting on the streets and discommoded? It was implicit in the single currency that governments would stick to their proposed maximum 3% budget deficit per year. It is a sorry state of affairs that the opposite has come to pass in Ireland. The Irish Government ran substantial surpluses for most of the early years of this decade. We were not running deficits. There was a surplus of €2.1 billion in 2004, €1.9 billion in 2005, €5.3 billion in 2006 and €500 million in 2007. We had a collapse in tax revenues in 2008 and there was a deficit of €13 billion, while there was a €19 billion deficit in 2009. The point I am making is that in the good times, unlike in other countries, we were actually running budget surpluses and so were strictly adhering to the EU criteria.

That was property related.

Whatever its cause, we were running surpluses. It has always been the intention of any Fianna Fáil-led Administration that we would adhere to that maximum 3% budget deficit requirement at all times.

I am very proud that the Government is committed to reducing our budget deficit to 3% by 2014. We have already taken several clear and decisive steps in various budgets and adjustments to public pay. I pay tribute to all those public servants who have recognised the need to make that adjustment in the national interest. We have taken these decisive steps on the roadway despite every possible block being put in our path by the Opposition parties in this Dáil. I have yet to hear from the Opposition parties a clear and unambiguous commitment to reducing our budget deficit to 3% by 2014 in clear and unequivocal terms. I do not believe they will make that commitment.

The leader of the Labour Party was happy to accuse the Taoiseach of treason. I would suggest that history will judge very harshly all those politicians who, for naked political gain, have impeded the Government in its very important work of reducing the public deficit and bringing our finance into balance. Perhaps it is some Members of the Opposition who should hold the mirror of patriotism up to their own faces and see if they can recognise a noble reflection in it.

I wish to share time with Deputy Breen.

Is that agreed? Agreed.

We have been told on numerous occasions that the purpose of this rescue package for Greece is to stabilise the euro. The contributions by the 15 member states are headed by Germany with €22 billion, followed by Italy, France and the Netherlands with €14 million, €16 million and €9 million. We realise that those major economies in Europe have seen it as essential to support the euro. Given that it is Greece that is in trouble, one wonders whether it would be the same for all other countries in Europe if any of them had fallen into this plight.

In page 16 of the Bill, item No. 14 states: "This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by and shall be construed in accordance with English law". I find that strange on the basis that Britain is not a contributor because it is outside the eurozone, why is there this reference to English law?

Since the start of 2010 the Greek Government has shown its determination to address its fiscal difficulties through its three-year programme. One wonders how effective it can be when we see that it is a question of raising VAT to 21%, increasing taxes on alcohol, tobacco, petrol and diesel. A property tax is to be included and pensions are to be reformed. Most other countries in Europe have a far wider economic base than has Greece. What has it other than tourism? It has very little for export. Deputy Bruton made the contrast today in saying that while Ireland has many similarities and some of the same needs as has Greece regarding recovery, we have a very important export trade with other European countries and beyond. One wonders whether it will be possible for Greece with those efforts of reconstruction of the economy to extract itself from the difficulties in which it finds itself despite the fact that it is getting an enormous subvention of €80 billion over three years from the eurozone countries.

It is stated that the European Commission has imposed strict surveillance conditions on Greece for the first time. On many occasions the Bill provides for very obvious interference by Europe — interference might be too strong a word. Repeatedly the EU, the Council of Ministers, the Commission or the ECB are all there on the sidelines. There is a series of watchdogs demanding serious input into the decisions made within the Greek economy. One wonders whether this is the first real establishment of the power of Europe, a power it has not had to date. This seems the first time it has the opportunity to flex its muscles and impose on member states its particular policies. I ask the Minister to comment on that.

The Minister and representatives of other governments have said that there will be a profit for the countries that have made these loans. They are bilateral loans on the one hand, while at the same time the governance is not between the lending state and the borrower. Europe is the dominant force. It needs explanation as to why it should be called bilateral.

The Bill provides that the Commission "shall open an account in the name of the Lenders with the ECB, to be used for processing all payments on behalf of the Lenders and the Borrower in the context of this Agreement". The Commission has the power with regard to the lenders' loans to the borrower. Will it have the same determination and power regarding the repayment of the loans? If there is default, what is the process then? I believe the Bill provides that the lender then goes after the borrower rather than the Commission, whereas in this instance it states, "The Commission shall open an account in the name of the Lenders with the ECB, to be used for processing all payments on behalf of the Lenders and the Borrower in the context of this Agreement." Does the reverse apply when the repayments are being made?

We have reached various critical dates in early 2010, including on 25 March, in April, and on 4 May and 11 May. Tomorrow, 19 May, is the crucial day with the reception of the loans. The Bill states:

The rights of each Lender under or in connection with this Agreement shall be separate and independent rights and any debt arising under this Agreement to a Lender from the Borrower shall be a separate and independent debt. The Borrower shall not give priority to one Lender over the other Lenders.

Surely as I have said, there is an obligation on the Commission to move into that particular area and make a decision. Certainly no priority can be given to one rather than another. It is clear that with Germany providing €22 billion, it will have the first bite of the cherry.

In Ireland the Revenue always has first bite of the cherry in this regard.

Another issue I wish to bring to the Minister's attention concerns the scrutiny and surveillance by the Commission of activities in Greece. If we apply the same effort and endeavour to countries such as Ireland, Portugal and perhaps Spain, and if similar situations recur, there is a danger of a very serious adverse effect on the euro. Will the same degree of support continue within the EU?

We are talking essentially about the 15 members of the eurozone that are making contributions. Some member states, especially Britain, which has a huge deficit as we know from the very recent past, have not shown the same solidarity with the eurozone as have other countries that have their own currencies. One wonders therefore whether there is a two-tier Europe now because of the absence of support for Greece from these non-euro countries.

I welcome the opportunity to contribute to this very important and topical Euro Area Loan Facility Bill 2010. The entire situation in Greece has dominated our television screens in recent months. There are very serious problems there and we have all seen the violence reported on television. Unfortunately, a number of people were killed as a result.

There has been much scaremongering in this House in recent days, with accusations of anti-European sentiments thrown across the floor at Fine Gael by Government Deputies when Deputy Enda Kenny and our finance spokesperson, Deputy Richard Bruton, raised legitimate questions regarding the future of Ireland's budgetary process. As a result of the bailout package agreed for Greece last week by the EU Finance Ministers it appears Ireland will have to have pre-clearance from the European Commission before a budget can even be discussed in this House. It is a sizable sum of money but Greece is in dire financial straits. We do not want a rollercoaster effect if Greece fails to live up to its budgetary commitments.

I reject the accusations from across the floor of the House. They are completely unjustified. It is a sad attempt by a very tired Government to deflect attention——

Here we go again.

——from the fact that the economy has been brought to its knees by the Minister of State's Government. I must say that. We are supporting this Bill and have every right to question budgetary procedures and the plans for greater EU scrutiny of our country's budget, as agreed last week. For years we have been demanding a radical overhaul and have sought greater transparency and a greater role for parliaments in the budgetary process. It is extremely important that Parliament has a role.

Nobody denies the doomsday scenario Greece is facing and the threat to the survival of the euro. Some years ago the European Commission celebrated the fact that the euro was one of the most successful currencies after being in place ten years. We are now in a very different scenario.

The €110 billion bailout agreed by the EU dwarfs any bailout ever witnessed for any other country. One might compare it to the IMF bailouts of Mexico and Argentina, of $30 billion and $8 billion, respectively, or that of South Korea, whose population was almost five times that of Greece, which received $58 billion in a rescue package during the Asian financial crisis in 1997. That bailout was unprecedented in European terms and it anticipated the revelation by the Greek Government which was elected last September that the country's deficits had been understated for a number of years by the previous Government. In other words, it had cooked the books and sent different figures to Brussels which put us in the situation we are in now. This drove the markets wild and many European countries became very concerned about their banking systems, fearing another collapse similar to what happened in Lehmans Bank in the United States some time ago. In particular, Germany had to cough up more than €22 billion for the loan to Greece. The German banks were saturated with Government bonds from Greece and it was that situation coupled with the fact that regional elections were taking place in the country which led to the reluctance on the part of the German Chancellor, Angela Merkel, to support the rescue package. Perhaps if Germany had acted sooner we might not be in this situation. However, that is politics and that is what happens when elections are coming up. There was a similar situation in the United Kingdom where hard decisions must be made now after the election.

It is important that Ireland shows solidarity for Greece. There is no doubt that the Irish taxpayer will have to pay a heavy price. The Minister stated today the money would be paid back but we are right to ask questions in this House. We must ask them on behalf of the taxpayer. That is why they elect us and that is why Deputies Kenny and Bruton asked those questions. Four billion euro was cut in last year's budget and further cuts are on the way, as we have heard from Ministers who have four weeks to come up with another €3 billion worth of spending cuts. Further tax increases are probably on the cards for 2011. As a result of last week's agreement front line services in health, education and social welfare are all expected to come under the spotlight again. Much pain has been inflicted already on the Irish taxpayer who has tolerated a lot already. Our situation is not the same as that in Greece but people are very angry. Last week there was a similar situation when the spotlight was put on old age pensioners. There are threats to cut the pension again and the situation is very uncertain for the future.

In spite of the Greek bailout the markets continue to be volatile and there is considerable uncertainty. When word filtered through of the bailout at the weekend there was an initial surge in response in the US and European stock markets. Attention quickly turned to the high level of sovereign debt and whether this would add to the debt load of already over-indebted European countries. The interest rate for the Irish Government's requirement to borrow from sovereign debt markets rose by 20 basic points, from 0.2% to 4.7% last week, the third highest rise in those markets in Europe after those for Greece and Portugal.

The austerity measures introduced in Greece and the bailout from European member states has done nothing to quell spectators, and government bonds traded in such small quantities, particularly in countries like Greece, Italy, Spain and Portugal, forced the European Central Bank to reverse a prior refusal and agree to purchase eurozone government bonds to help restore confidence in the market.

This shows how serious the position was, and some economists are worried that if the rescue package fails in calming the markets, European countries could end up footing a bill of €500 billion to save other countries. We need a strong euro and today we saw the currency hovering around its lowest level, at approximately $1.22. We all know that a weak euro will have significant costs when we buy our barrels of oil in dollars. There will be a real effect on everybody at the petrol pumps.

Everybody agrees that saving Greece is important and it is vital that we show solidarity with our European counterparts. There is no doubt that, like here in Ireland, ordinary people in Athens, on the thousands of islands and throughout Greece will have to suffer real hardship if the austerity measures are introduced. The EU governments must co-ordinate fiscal monetary policies, and Fine Gael agrees with such action.

I heard our spokesperson, Deputy Richard Bruton, arguing tonight that parliament participation is very important and must be a key element in these processes. Budgetary proposals should be scrutinised in this Parliament before any decisions are rubber-stamped at EU level. The Minister for Finance might clarify the position of this House, if any, in advance of agreeing budgets with the EU and what levels of scrutiny might be involved. Deputy Bruton said this evening that Ireland can correct the errors of the past but will not succeed if responsibility for the work is simply passed to others. More clarity is required on the implications of the agreement for the Irish taxpayer and I look forward to the response of the Minister tomorrow, as well as the contributions of others in this debate.

At the outset it would be wrong of me to say I welcome the Bill because all of us would prefer not to deal with such legislation. We are part of a team with European colleagues and there is a certain responsibility and onus to play our part at a very difficult time for many European countries, with Greece the focus tonight.

One would be forgiven for getting an impression from various commentators both within and outside the House that we are the only country in financial difficulty, although nothing could be further from the truth. We are one country of many throughout Europe and the developed world that has been hit very severely by a recession which has taken its toll. We are not unique in that sense. For the record, Fianna Fáil was not in power in any of the other countries; we were in power here but if there was a recession in Germany, the UK or the US, other governments were in power in those countries.

I am not for a moment arguing that we did not make mistakes because we did, without question. We should always own up to those mistakes and take responsibility for them.

The Deputy's party has not quite got there.

It is very easy for any of us——

Was the Deputy not advising those countries?

——in the House and outside it to look back with the benefit of hindsight. Unfortunately, from time to time, Ministers from whatever parties they represent——

The Deputy's party just happens to have been in power for the past 12 years.

——have to make decisions——

What about ICI?

——in Government.

Members from all sides should allow the Deputy in possession to speak.

Those decisions are made in good faith with the best advice possible at any given time. From time to time such Ministers get it wrong.

Is that an apology?

We should not have any difficulty admitting that. We should move on from the tired argument at this stage. When we made the tough decisions we were told they were wrong and would not get the country out of trouble. Now we have turned a corner and people are saying we are not doing so badly, we see a return to the old argument that this Government is responsible for the current economic position.

It is important to record that the Greeks obviously misled the European Commission and their colleagues in Europe, telling bare-faced lies. It is okay to argue that it was an election year but we had local elections last year, and our party and coalition partners faced up to very tough decisions prior to the election. Those decisions cost us many good people throughout the country who lost their seats not for their own sins, but the sins of their party in government, which was forced to make tough choices. We did not dodge the issue.

If we are to lay blame at the Taoiseach's door, and many people do, we should note that he has parked the Fianna Fáil Party and organisation, putting the focus instead on the country. He knows we must take tough decisions that will affect the party and have a negative effect that will lead to numerous percentage points being dropped in opinion polls.

It sounds like an obituary.

To the Taoiseach's credit, and whatever is said or unsaid, history will be kind to Deputy Brian Cowen as Taoiseach and leader of my party for his bravery in putting his country first and not playing politics by looking at county council seats or gaining points in polls. He put his country first and history will be very kind to him for that reason.

We can consider many commentaries, particularly those in Europe and outside our country, which argue that Ireland has got it right. An editorial from 4 May in The Irish Times was headlined “Hopeful Indicators”. It stated:

Count the number of ships using Dublin Bay and you get a fairly good impression of the overall health of the economy. Traffic there slowed dramatically in 2008 and 2009. But now, the good news is that trade is recovering at Dublin Port".

That is just one indicator and I could also quote Jean-Claude Trichet, who is a very well respected gentleman in his own field in Europe. He has said we got it right. Davy Stockbrokers have said the Irish economy is out of recession, and there is declining cross-Border shopping as competitiveness improves.

These are all positive indicators, although I am not saying for a moment we are out of the woods because we are not. A Member on the benches opposite correctly stated that we are facing into a very difficult budget again this year and we must make very difficult cuts. I admire the bravery of the Taoiseach and the Minister for Finance, Deputy Brian Lenihan, as well as other Ministers and colleagues on the backbenches. They have never flinched from their responsibility and have walked up these steps night after night, on the day of the budget and subsequent to the budget, to make tough decisions that were right for this country. We cannot be questioned on such actions. They are unpopular and our party is losing points in polls, which I accept, but we had little choice.

It has been mentioned that there are threats to the old age pension. I have the utmost confidence in the Minister for Social Protection, Deputy Éamon Ó Cuív, and the pensioners in this country can sleep easy in the knowledge that he is in that portfolio. That man has a fantastic tradition from his family background within our parliamentary party and he has a great feel for rural and elderly people in particular. I am sure he will do a good job.

We do not need to be reminded of this issue by anybody else, as we have been very solid in our support for the elderly and vulnerable in our society. We have substantially increased the pension year on year for the past number of years, a fact of which I am proud. That cannot be taken from us. It will not always be dark at whatever hour of the evening it becomes dark at the moment; there will always be a better day. We should not curse the dark but light a candle instead. We should be positive and talk our country and economy up, which is very important.

I remember hearing two pensioners in conversation last year, with one saying the pension had been cut by €8. The other acknowledged that fact but said that if the IMF came in, they would not have €80 per week. That is a fair comment. We did not reach that stage. We tackled the issues in time.

We regret that we have arrived at this point. Peoples lives have become difficult. We make decisions on a weekly basis that have a direct impact on people's quality of life, but what we must discuss from now on is the creation of jobs and getting people back into the workplace. People have taken cuts in their pay, which has been difficult. Those who have received pay cuts, including every Deputy, must try to adjust their budgets accordingly. However, if someone is told on a Friday evening that his or her job is gone, having no wages the following week will be difficult. If that person's spouse or partner is told something similar the following week, it is also difficult. We would no longer be discussing pay cuts. Rather, we would be discussing the loss of a household's income, a serious situation for people to bear.

Many thousands of people have lost their jobs, but I always make the point that I do not accept the figure of 430,000 people unemployed. I am not saying the live register is lying, but when there was full employment, some 130,000 people were unemployed.

To achieve full employment, we needed to bring thousands of foreign nationals into our country to work in our service industries. For one reason or another, the 130,000 people signing on were not in a position to take up employment. As such, I always take 130,000 people away from the overall figure. I am not playing games, but being honest. While those people are considered to be signing on to the live register, they are not in a position to take up or are incapable of taking up employment, in many instances through no fault of their own. We should take this factor into account.

We must link the able-bodied people benefiting from the social welfare system with the provision of services locally, be it working for local authorities or supporting voluntary organisations. We must tie those people in. We must get them out of their beds and houses in the morning and into places of work. We must give them their dignity back and provide them with incomes. During the course of this year, the Minister, Deputy Ó Cuív, and the Government could do much with this capacity to put people back into the workplace.

As with all colleagues, I receive requests day after day from people who are trying to join community employment schemes. To them, the benefit is the restoration of their dignity and the ability to contribute to their communities. The more we do of this, the better. It is a step in the right direction. A CE scheme might not be permanent, full-time, pensionable employment, but it would take someone off the live register, give him or her a place of work and allow him or her to make a contribution to the local community and the country's economy.

Greece must make tough decisions. It does not deny that it told the European Commission lies. I understand that a part of the reason was that it was an election year. Why would the European Commission not be ultra careful in ensuring against a recurrence among the other member states? This is not just about Greece. Instead, it is about the European Community and its further development and security. If people behave in the same manner as the Greeks, I am not surprised that the EU, which has put a rescue package for the Greek economy in place, wants to ensure proper policies are pursued. I have no difficulty in this regard.

We are the masters of our destiny. We will control it at all times. Next September, the Cabinet will agree a budget that will be introduced by the Minister for Finance in the House. The EU is not telling us it wants to see the detail of the budget. Rather, it wants to ensure we are making good on our commitment to the European Central Bank, ECB, and the EU. Last year, we committed to removing €4 billion from our economy. We did it. Our commitment this year is €3 billion. We will do it. I understand €1 billion in capital savings has already been identified, that there will be additional taxation and that further savings will be made across every spectrum. Any Minister who is asked about savings in his or her Department would be right not to rule anything out. It is the only way a Minister can operate. He or she must examine the Department's budget and then make a decision. I would have no difficulty with the Commission telling us that it wants to ensure we are honouring our commitments because I do not doubt we will do so. I have no reason to worry in this regard either, since it is not as if we are giving away our sovereignty or as if the Commission will tell us how to run our business. The Commission and our colleagues in Europe are paying the piper. For our benefit and that of every other member state, Europe must ensure the Greeks behave.

While we are making a contribution that we can ill afford and the National Treasury Management Agency will source funds of up to €1.3 billion in loans that Ireland will make available over three years, we will receive a repayment of interest. We got no return on previous bailouts that were made in this country over the years.

We put a 2% levy on the insurance subsidy.

I compliment the NTMA on a good morning's work.

It wanted to sell bonds valued at €1 billion and €1.5 billion this morning, but it was unsure how the sale would go. The full €1.5 billion in bonds were snapped up as soon as they went on offer. This says something about our economy. We have regained the respect of the financial markets and of the people who buy bonds. The NTMA has borrowed two thirds of the required funding for this year and has a further €20 billion tucked away. I admire the NTMA for what it has done, since the ability to do so is important. We are not looking for a bailout, but we must respect the fact that we are part of a team. We stand up and play our part admirably.

Given our economy, we are fortunate to be ahead of the posse. We took the tough decisions. Last week, our nearest neighbours in Britain were arguing. The outgoing Prime Minister argued that there should be no cuts this year while some of the incoming individuals argued that there should be cuts this year. If we had not cut when we did, we would have been putting off the inevitable. We have given the rest of Europe an example. On 11 May, The Times told its readers that if they were “deep in debt, the Irish can show you a way out”. I did not write these headlines, but they are factual. What surprises me is that most favourable comment is coming from outside Ireland. I wonder why. As late as night, two economists were sitting on the same panel and the Leas-Cheann Comhairle was lucky to get a word in edgeways.

What he did say was quality.

The Chair should not be drawn into the debate.

The economists were negative and talking us down. One remarked that since the foundation of the State, we had failed to put people into work. There are 1.8 million employed in this country.

There are 1.9 million in employment here.

People appear to miss that fact.

There are 250,000 people on the live register.

We can believe the glass is half full or half empty. I have spoken already on the issue of the 430,000 people on the live register. I am saying now that there are 1.8 million people in this country in good employment, a fact which does not appear to be appreciated. One can say we blew the boom but we put 1 million people to work, decreased the national debt, increased the pension fund——

We built new roads.

——and built new hospitals and schools. Before it is shouted from across the floor, we purchased electronic voting machines, which I fully accept. However, that is pretty minuscule in the overall context. As I said at the outset, governments make mistakes. They are not infallible; they take the best advice at any given time and do not have the benefit of hindsight.

We must make tough decisions as did the British and the Greeks. Other countries will have to do likewise. We have made tough decisions. While we are far from being out of the woods, with co-operation and support from all sides, we can move forward and ensure we return to growth during the next couple of years.

I wish to share my time with Deputy Morgan.

Is that agreed? Agreed.

I am glad to see Deputy Cregan is in fighting form and to learn that Fianna Fáil is not responsible for the Greek tragedy. While the Labour Party supports this Bill, it is legislation which should not have had to come before this House. The Bill commits us to support Greece up to €1.5 billion in loans on a bilateral basis. It is important we do this because Greece is currently in serious danger of defaulting on the first tranche of loans that are required to be paid by tomorrow. In that respect, some countries have already made their contribution to the fund. We require legislation to do so and so our loans cannot be given until the end of the month. I would like to hear from the Minister when replying when the first tranche is likely to be made.

While we would prefer not to have to do this, it is important to acknowledge the principle of what we are doing in solidarity with other members of the European Union. In many ways, this is what is at the heart of the European project, namely, solidarity between the member states of Europe who should seek to pursue peace and prosperity. That was the origins of the European project. Whatever else we say about what is happening now, this is a benchmark and an important moment with all countries in the eurozone coming together to bail out a member state that has fallen on hard times, harder than most. In many ways, Greece is the prodigal son because not alone did it misgovern its country, it told lies to the European Union and provided false statistics on its misgovernment. Whatever about Fianna Fáil misgoverning this country, in so far as we can gather, it has not falsely informed the European Union of the statistics in that regard which means we would at least be able to address the issue as it stands. The Greeks went a step further than we did.

While this legislation is an urgent response, the situation can be traced back some time. The Taoiseach has during the past month been attending summits in Brussels on a fairly regular basis. Usually a summit is held once every quarter. However, the Taoiseach is away today, was away last week and will no doubt be abroad again before this economic crisis is dealt with. What I find quite unacceptable is that despite all this toing and froing to Europe by the Taoiseach he has not found time to brief this House on the discussions he has had with Heads of State in Europe in regard to Ireland's reason for supporting these measures. We are speaking here not about €1.3 billion but about the stabilisation mechanism which will require up to €7.22 billion, also committed to in principle at this time. These are large sums of taxpayers' money.

There was much debate in this House when we introduced the bank guarantee scheme and on recapitalisation of the banks. The biggest issue on the European plain is the Greek crisis, whether it will default, be forced out of the eurozone, what will be the future of the economic and monetary union if this happened and what would be the future of the European Union yet not once has the Government seen fit to come into this House or the Seanad and share with us its views or those expressed by other members states, in particular eurozone member states, on this issue, which is totally unacceptable. Parliament has a responsibility to hold Government accountable, as provided for in the Constitution, of which I am sure Deputy Mansergh is well aware. He also knows well that the Lisbon treaty places new requirements on every member state, irrespective of whether they have a constitution like ours, to hold their governments accountable for the decisions they make, yet we have not had the slightest opportunity to hold our Government to account. We are now pretty much faced with a fait accompli . This has been agreed by all countries, including Ireland. All that is required of us now is that we put our stamp on it. While I accept it is right that we put our stamp on it, this might not be the stamp we would put on it had we been consulted on the matter.

We are elected by the people to represent them in this House and to ensure that the Government, when it goes abroad, reflects in its decisions the views of this House. One cannot have a purely executive Government that operates on its own. I believe that this business shows a lack of respect for all things European and a lack of structures in both Houses for dealing with matters European. The manner in which the Executive behaves is totally contrary to the degree of integration that has taken place between the various states of the European Union, through various treaties since the Maastricht treaty in 1992. That is one of the fall-outs from this decision. It is hoped that the Taoiseach will, rather than expect us to quickly enact legislation within a day and a half, following which he will attend the next summit in Europe and sign up to what he wishes, address this House and keep us informed about what is going on. This is not how these matters can be addressed in the future. We will make bad decisions if this is what we continue to do.

Tonight is the first occasion on which we had an opportunity to discuss this matter. We will, as a Parliament, have to put our foot down to ensure this does not happen again in response to future crises. We understand that crises occur. Members should recall this started as €500 million euro before rising to €750 million and then to €1.3 billion. The legislation now refers to a maximum of €1.5 billion although, at the same time, the stabilisation mechanism will increase the figure further to €7.22 billion. Moreover, all this is happening at a time when we are tightening our own belt.

My concern is that the proposed measures are very harsh on Greece and others have questioned whether Greece has the requisite ability, given its narrow base. The main focus is on taking money out of the economy by taking it out of people's pensions and payroll and by levying excise duties and VAT, all of which will greatly restrict the ability of the ordinary Greek citizen to make ends meet. The danger is that unless this is combined with a stimulus package to create jobs that will put money into their pockets and into the economy, we will be going down the wrong road.

I refer to the communication received recently from the Commission. Incidentally, the Commission does not appear to have recognised that it must now include all member state parliaments among the bodies to which it sends its communications. Neither this Parliament nor any other was included. The aforementioned communication appears to be going down the fiscal road solely, without consideration for the other requirements.

I thank Deputy Costello and the Labour Party for sharing time. While in Barry McGuigan mode, I also thank the Minister and his officials for the briefing on this Bill last week, which I found to be useful. In addition, I regret my absence from the Chamber when the Minister for Finance made his contribution. I was caught in the Select Committee on Enterprise, Trade and Employment where I was moving amendments to a Bill in my name.

Were this Bill intended to fund essential public services in Greece for its people, I would have no problem with it. Were it aimed at providing a stimulus package to working people in Greece to try to build their way out of the economic mess, again I would have no problem with it because helping neighbours was part of the culture in which I, in common with many other Members, was reared. One always helped one's neighbour in times of need. That is not the purpose of this Bill. It is about bailing out international bondholders who are a very wealthy, elite group of people. To describe this measure as a way of helping neighbours in Greece is to mislead entirely the public and this House. This Bill is about the direct provision of funding to bondholders, the majority of which are German banks. If one opposes a bailout for bankers in Ireland, surely it similarly must be opposed at an international level. These bondholders operate within the market, which I always took to mean taking one's chances. Why is no risk or chance left to bondholders? Why must taxpayers and poor people in such economies pick up the tab when the market goes wrong for these people? Someone should provide Members with the answers.

As I noted, this primarily affects German banks. I was disappointed with the analysis of this situation by the Labour Party and Fine Gael as Opposition parties and their failure to perceive that it is just as problematic to bail out German bankers and others as it is to bail out Irish bankers. I consider it to be the same. This pertains to the market and, if it fails, that is the job they are in. There should not be an absolute guarantee for those in this wealthy club that ordinary people will carry the can for them at all times. This is completely unacceptable.

The perfect example in this regard took place in this State in the 2010 budget last December when the wrong option was taken. The Government was faced with a number of options in respect of how to build our way out of this recession. It took the wrong option because it opted for fleecing public servants, cutting pensioners' Christmas bonuses and all the rest that went with it instead of going the other way and building a stimulus package. It did so instead of introducing a wealth tax or borrowing some money from the National Pensions Reserve Fund to kick-start the economy. Sinn Féin's pre-budget submission, the Road to Recovery, outlined in a detailed and costed fashion how that option would work, and it is most unfortunate this did not happen.

It is demanded of Greece that its economy be hamstrung by pay cuts and job losses and that it should service a now increased level of debt. Deputy Costello was correct when he made a similar point. Reducing incomes while increasing debt only enhances the risk of default and, hence, yields will continue to rise and the international bondholders again will have a field day. A crucial yet completely ignored point from Standard & Poor's when downgrading Greek and Portuguese debt was that the austerity measures have depressed activity and tax revenues. This is the complete opposite of what people should seek to achieve. One should seek to generate additional incomes and try to ensure people have sufficient funds to stimulate the economy and keep economic activity going. Instead, this Bill proposes the complete opposite and takes a slash and burn approach. While the latter phrase is a cliché, it is correct in this case. It is known that such measures are counter-productive because when budget deficits consequently increase, the rate of interest and so on rises and Government debt becomes more expensive. This is crazy.

The European Commission obviously is seeking to have a veto — I acknowledge it is called consultation at present but will, of course, end up as a veto — in respect of national budgets in the member states, which is completely wrong. Incidentally, Sinn Féin warned during the course of the Lisbon treaty debate that this is exactly what would happen. Moreover, the Lisbon treaty facilitated this taking place. I also seek an explanation from the Government on its exact attitude in respect of going to the European Commission and meeting other finance ministers of the eurozone states in particular to discuss the implications in this regard.

Members will have seen the substantial dip in the value of the euro but it certainly has not collapsed or anything like that. Arguably, a weaker euro constitutes a substantial economic advantage by virtue of the export opportunities it gives both to this State and throughout the eurozone. I acknowledge the European Central Bank has primary responsibility for the euro. It is most unfortunate that when evaluating from an Opposition perspective what is good for the Irish people and economy, Ireland's economy is approached in one way, but when it comes to dealing with Greece and this bailout for international bondholders, a completely different approach is taken. I hope this can be explained in the coming days.

One way to reduce the volume of financial transactions that are taking place as markets take advantage and attack the euro's position is the introduction of a tax on such financial transfers. The Tobin tax, which has been mooted many times, proposes the levying of a marginal percentage of a cost on financial transactions, which would eliminate the benefit to spectators in attacking the euro. I do not understand the reason this is not a central part of debate and discussion throughout the eurozone. I have not heard it being mooted substantially since the onset of this crisis, which is most unfortunate as it is a simple, low-cost and effective measure to prevent speculators from attacking currencies and the euro in particular in the manner that obtains at present.

Debate adjourned.