EU-IMF Programme: Statements

I welcome the opportunity to update the House on the outcome of the first and second quarterly programme review of the EU-IMF programme of financial support. Since taking office, the Government has addressed the banking situation, with the measures set out in the announcement made on 31 March. The Government has also engaged in a more co-operative fashion at European level with a view to restoring Ireland's position within the European Union. This approach will continue at this month's Eurogroup and ECOFIN meetings, where we will continue to pursue our case for a reduction in the cost of the programme.

The benefits of this greater engagement are already apparent. Deputies will be aware that last month the Government successfully concluded the first and second quarterly programme review mission with the EU Commission, the ECB and the IMF, that is, the troika. The purpose of the review was to evaluate performance against targets to date on all the elements of the programme of financial support for Ireland, including fiscal developments, the macroeconomic outlook, progress on commitments in the restructuring of the financial sector and structural reform.

During this programme review, a number of my Cabinet colleagues and I, along with senior officials, met representatives from the troika and assured them of the Government's commitment to the fiscal targets set out in the EU-IMF programme. In the negotiations with the troika, the Government outlined the policy priorities that it wished to have included in the revised programme. I am happy to say there was sufficient flexibility within the programme to allow us to include these important policy measures, while respecting the overall fiscal parameters and goals of the programme.

These policy priorities include measures such as the jobs initiative, the reversal of the minimum wage cut, the comprehensive spending review and important changes to banking policy in areas such as recapitalisation, as well as ending further loan transfers to NAMA. These are included in the draft revised programme documents, which have been circulated for Members' information in advance of this debate. These documents include the revised memorandum of understanding and memorandum on economic and financial policy, the technical memorandum of understanding and the accompanying letters of intent. I have sent these documents to the EU agencies and to the IMF.

The review will be formally completed with the consideration by the Eurogroup, ECOFIN and the IMF executive board of these revised documents, along with the reports by their various staff on progress to date. The final documents will be made publicly available following final approval on 16 and 17 May. It is clear that the conditions of the programme are being broadly met to date. The fiscal programme is on track and important progress has been made in addressing banking sector challenges.

It is encouraging that the fiscal programme is on track. The targets set for the Exchequer primary balance — the Exchequer balance excluding interest costs — for both the end of December and the end of March were met by a comfortable margin. The targets for net central government debt for the same periods were also achieved. We remain on course. My Department will publish data later this afternoon which will show that, in broad terms, spending and tax outturns to the end of April are in line with expectations. The details will be published as usual at 4.30 p.m. today.

However, it remains the case that further significant budgetary adjustments will have to be made in the coming years so that we align more closely the State's revenues and its spending and reduce our levels of borrowing. We cannot continue to spend more than we earn. This is simply not sustainable. It is important to ensure that our debt level, although high, remains on a sustainable path if we are to be in a position to return to accessing market funding as soon as possible.

During the review mission, we reaffirmed our commitment to achieving a deficit of less than 3% of GDP by the end of 2015. We also made it clear that we would adhere to the aggregate adjustment target as set out in the joint programme for the combined period 2011-12. However, we did outline that given the current degree of uncertainty surrounding the economic growth outlook, we would review progress on deficit reduction in the context of achieving the deficit reduction target by 2015, in preparation for the 2013 budget. We will strive to ensure that future budgetary consolidation is as fair as it can be and that it does not overburden those in most difficulty.

Budgetary reform to strengthen our fiscal framework is an important element in the Government programme and it is also something that we are committed to implementing under the terms of the EU-IMF programme of financial support. In November 2010, the Joint Committee on Finance and the Public Service published a detailed report entitled Macroeconomic Policy and Fiscal and Economic Governance. In addition, early last month, my Department published on its website a discussion document entitled Reforming Ireland's Budgetary Framework with a view to assisting debate and setting out a range of policy options in this important area.

Within the next number of weeks, my Department will hold a seminar to advance the discussion on fiscal reform. In addition, under the EU-IMF programme, we are required by the end of June to establish the proposed fiscal advisory council. We are also required to introduce a fiscal responsibility Bill by the third quarter of this year. Work is advancing on both fronts.

The macroeconomic outlook was also discussed during the negotiations with the troika. There was a general consensus that the Irish economy will return to growth this year, albeit at a more modest level than envisaged at budget time. The latest official forecasts were set out in last week's stability programme update. GDP is forecast to grow by around 0.75% in 2011 and 2.5% in 2012. This growth is largely export led, with a gradual improvement in domestic demand. For the period 2013 to 2015, the Irish economy is forecast to grow by 3% per annum on average.

As Deputy McGrath pointed out yesterday, 0.75% growth is not very dramatic. However, it is worth putting this in context. In 2008, the economy declined by 3.5%. In 2009, it declined by 7.6%. In 2010, contrary to predictions, it declined by 1%. That is a decline in the economy of over 12% in the last three years. In the fourth year of the cycle, we now have growth in the economy and it is beginning to accelerate. It may not be what was predicted at budget time, but when we take a figure of minus one for 2010, then 0.75% for 2011 means there is a lift of 1.75%. The projection for 2012 is 2.5% and it is 3% for 2013 and 2014.

If we can get more confidence back in the economy, continue the export-led drive and concentrate on different sectors of the economy where growth and employment are possible, and if we can encourage people with savings to start spending again in the consumer market, then we may be able to get those growth figures up another bit. The overall strategy of the Government must be to grow the economy and to get people back to work and to start paying our way again. The situation is improving and we see the level of the improvement when we look at the decline in growth for three years in a row, which has now been replaced by the start of an upward growth pattern.

As outlined in the stability programme update and in the discussions with the troika, there is a high degree of uncertainty surrounding macroeconomic projections for Ireland and the world at this time. Due to this, we consider it prudent to review progress on deficit reduction in preparation for the 2013 budget. Our immediate priority is to support enterprise, restore confidence to the economy and get people investing and spending to create sustainable employment. To that end, next week we will be presenting a jobs initiative to the House. The measures to be introduced to assist in the generation of employment have been outlined in broad terms in the programme for Government. The measures are designed to lift public morale and confidence in the economy, to provide jobs, to provide suitable job placement for unemployed persons and to encourage spending by consumers. It became clear during the review mission that there was sufficient flexibility within the programme to allow us to include this important initiative, while respecting the overall fiscal parameters and goals of the programme.

This Government is committed to protecting the vulnerable, which is why we are committed to reversing the recent cut in the minimum wage. The effect on business costs will be offset by a reduction in employers' PRSI. In addition, we are reviewing the employment regulation orders, or EROs, and the registered employment agreements, or REAs, and are promoting other measures to increase competition in sheltered sectors of the economy. All of these measures are part of a comprehensive package designed to make work pay and improve the competitiveness of the economy.

The review group on State assets and liabilities published its report on 20 April 2011. As set out in the programme for Government, non-strategic assets up to a value of €2 billion will only be sold when market conditions are right and when adequate regulatory structures are in place. The review group has been clear that it does not favour a fire sale. As the Government comes to a view on what parts of the report's recommendations it wishes to implement, we will agree with our EU-IMF colleagues on the appropriate use of realised funds, with a view to getting the right balance between debt reduction and growth stimulation.

There are several structural measures in social welfare to which the Government is committed under the revised memorandum of understanding. This includes a commitment to reduce the risk of long-term employment though a number of initiatives such as reforming the unemployment benefit system and taking steps to tackle unemployment and poverty traps. The Government is also committed to reforming the system of labour activation policies by improving the efficiency of the administration of unemployment benefits, through social assistance and active labour market policies, enhancing conditionality on work and training availability and the introduction of instruments to identify better job seekers' needs — this is known as profiling — and increased levels of engagement, including the application of sanction mechanisms for beneficiaries who do not comply with the conditions of job-search.

These measures are linked to other structural changes with the transfer of FÁS employment and community services programmes to the Department of Social Protection. Changes in working age payments and to rent supplement are part of the structural commitments within the EU-IMF programme. They will also assist with the budgetary stabilisation process.

Among the other structural measures to be progressed this year are an assessment structure for water provision and charging, and also a review of the energy sector with particular reference to electricity and gas sectors. Reform of personal insolvency and bankruptcy laws is also proposed to assist persons to re-engage in economic activity in society.

The review by the external authorities notes the good progress we have made in restructuring of the banking system. On the wider banking landscape, we have met the target of carrying out the assessment of the capital and liquidity needs of the banks and the results were published at the end of March. I will not repeat in detail what I dealt with in my statement of 31 March to the House, but I believe the assessment gives us a firm estimate of the needs of recapitalising and restoring the banking system and a framework for how this will be achieved in the coming years. Central to that framework is the deleveraging of the banks to make them smaller but more robust and reduce their dependency on funding from central authorities so that they can re-enter the markets in the future to a greater extent.

I set out on 31 March the outline of the approach to the banking sector including the establishment of two pillar banks, the effective amalgamation of the EBS into AIB as part of that process and the selling off from Irish Life & Permanent of the life assurance business. Under the programme of financial support, the Government was committed to submitting a plan to the EU Commission by end-January for the resolution of Anglo Irish Bank and INBS. This deadline was met and a plan to wind down these institutions is with the Commission awaiting its decisions. In the meanwhile however, we are pushing ahead with the overall strategy and, to this end, the deposits and matching assets were transferred out of the institutions in February. The path forward has now been set for these two bodies. The Central Bank is reviewing the capital needs of the two bodies and the results will be available in May. Should additional capital be needed the Government will be involved in consultation.

The Government has shown determined action in tackling banking issues and these plans will develop a new banking sector better matched to the needs of the economy, and help the banks play their role in funding economic revival. I should also note that proposals for a new banking resolution regime were published at the end of January and this matter will be coming before the House soon for debate. This also will help in the future to deal with banking crises.

The Central Bank will continue to build on the programme of initiatives already underway in the area of banking supervision. It will further strengthen its capacity to supervise credit institutions by reinforcing its staffing levels and expertise. The Central Bank will also enhance its risk assessment and monitoring framework, including the collection of relevant data from the banking system, particularly drawing on the lessons learned in the PCAR process on data validation and integrity and asset quality review.

I will publish legislation before the summer to enhance the supervision and enforcement powers of the Central Bank. This legislation will take on board:——

The Minister's time has elapsed.

I can circulate the script in which there is other material. If necessary, when I am concluding the debate I can use some of the material.

I welcome the opportunity to make a contribution to the debate on the outcome of the second quarterly EU-IMF programme review mission. This review has resulted in a new set of programme documents which the Government released yesterday evening, including a draft of the updated memorandum of understanding between Ireland and the EU and IMF.

I welcome the fact that the conditions of the programme have been broadly met to date. The programme presents an essential funding source for the running of the State. The programme agreed in November last has been much criticised but I have yet to hear a credible source of funding which would allow for essential public services in this country to be maintained. All of us hope that Ireland can return to the sovereign debt markets as soon as possible and, therefore, no longer be subject to the onerous conditionality imposed under this agreement. I will return to this issue later.

The review concludes that the fiscal programme is on track. The new Government has now fully accepted the €6 billion fiscal correction for 2011 which was introduced by the previous Government in December last. No changes have been made to that budget despite the most trenchant opposition to it in December last from those parties now in Government.

The Minister for Finance, Deputy Noonan, indicated in the Dáil yesterday that the Exchequer returns to the end of April, which I understand are being published this afternoon, are ahead of the projections set out in December last's budget. This is to be welcomed. It will remain essential that the path of fiscal correction which has been laid out continues to be pursued. That will not be an easy task for the new Government and will require a seismic change in the attitude adopted by the Government parties since 2008 when the process of fiscal correction was commenced by the previous Government.

One point is clear. There has been no wholesale renegotiation of the EU-IMF agreement which was reached in November last. Last year the Minister, Deputy Noonan, referred to the deal as an obscenity and a disaster. The Tánaiste, Deputy Gilmore, stated it was "Labour's way or Frankfurt's way". The Irish people were promised substantial renegotiation of the deal. What they got was a copy and paste of November last's deal with some strictly fiscally-neutral tweaking. There has been, and will be, no change to the fiscal targets. Any changes to the detail of the agreement must be fiscally neutral and must be agreed in advance with the troika. There will be no burden-sharing with senior bondholders, a point to which I will return later.

There even seems to be some doubt about the reduction in the interest rate that was being negotiated by the previous Government on leaving office. A final decision on this is now to be taken by the euro group and the ECOFIN Ministers, and hopefully this will happen sooner rather than later. A reduction in the interest rate will not solve our fiscal problems, but it can make an important contribution. While a 1% interest rate reduction would result in annual savings of €130 million based on the current drawdown of the facility, a 1% reduction on the rate charged on the full €45 billion available from EU sources, as opposed to the loan from the IMF and the bilateral loans, would result in a €450 million saving for each full year borrowed. That would make an important contribution. If this €45 billion was held for an average of seven and a half years, that is, the term envisaged in the programme, the total saving would amount to €3.375 billion. We support the Minister and the Government in the efforts to secure this reduction. The sooner it can be achieved the better.

The truth is that the Government parties are now fully supporting and implementing a programme that they resolutely opposed while in Opposition. In his banking statement to the House at the end of March, the Minister made clear the Government parties' new-found commitment to the EU-IMF programme. He stated:

For the benefit of our people and of market participants, I want to be clear that we are committed to the EU-IMF programme. We have issues that we wish to raise and changes that we need to make in the context of ensuring growth and recovery in the Irish economy. However, we will respect the overall fiscal parameters of the programme and where adjustments to the programme affect these, we will make appropriate offsetting adjustments.

This is a far cry from the rhetoric of the election campaign only a few short months ago.

We were told during the recent general election campaign by the parties now in Government that there would not be another cent for the banks in the absence of burden-sharing with all classes of bondholders, including senior bondholders. The same parties have now agreed to put a further €24 billion into the banks without a single cent being taken off senior bondholders. The Minister had already stated that the debate is over on burden-sharing with senior bondholders in the proposed three main banks, AIB-EBS, Bank of Ireland and Irish Life & Permanent. In reply to a parliamentary question of mine yesterday, he stated:

I also reiterated in my statement [at the end of March] that it is Government policy to work out Anglo Irish Bank and Irish Nationwide Building Society in an orderly manner over time and to minimise further injections of taxpayer capital into either institution. I have made clear that should additional capital be required, the Government will consult the external partners on the timeframe and means of recapitalising those institutions at minimum cost to the taxpayer, having regard to the financial stability impacts in Ireland and abroad.

In other words, the issue of burden-sharing with senior bondholders in Anglo Irish Bank and Irish Nationwide Building Society only arises if further money must be put into these institutions beyond the recapitalisation that has already been committed.

In essence, when confronted with the reality of the European Central Bank's position on the issue of burden sharing with senior bondholders, the Government threw in the towel. Asked on radio in January about the renegotiation of the deal Deputy Eamon Gilmore, now Tánaiste, stated it had to be renegotiated as several aspects were just not acceptable such as the fact that it had been struck without any contribution being made by senior bondholders. Sadly, we no longer see any of this no-nonsense straight talking by the Tánaiste. As was pointed out on many occasions, the issue of burden sharing was raised by the previous Government with the international authorities during the negotiations last November. However, the then Opposition parties did not believe us. The Government has acknowledged that in respect of the €36 billion of outstanding senior debt in the Irish banks, a contribution will not be required to the banking bailout.

The updated draft memorandum of understanding makes reference to the jobs initiative to be announced next Tuesday in the House by the Minister for Finance, Deputy Michael Noonan. I sincerely hope whatever measures are included in next week's announcement will actually work. We all accept the point that growth is the key to working our way out of our current economic difficulties. Assuming the pathway of fiscal correction is continued, we need economic growth. Unemployment is a scourge in society and we must replace the hopelessness experienced by thousands of unemployed people with optimism. Yesterday the Taoiseach and the Minister sought to lower expectations about the impact of the jobs initiative, but next week they will have to be clear about how the initiative will be funded.

We already know the jobs initiative will provide for a reduction in the lower rates of VAT and employers' PRSI. Based on written replies by the Minister to parliamentary questions, these two measures alone will cost up to €1.3 billion to the end of the lifetime of the programme — the end of 2013. A reduction in the lower VAT rate will cost approximately €850 million, while the PRSI reduction will cost more than €400 million. As I acknowledged at Question Time yesterday, it is hoped the net costs will be considerably lower if the measures result in additional economic buoyancy. All of us hope these measures will remove people from jobseekers' payments and increase income tax revenue for the State. However, it is not possible to anticipate their impact in advance. Therefore, the Government must ensure the package of measures is fully funded. The European Union and the IMF are very clear that the estimated costs must be offset in full in the period to 2014. Presumably, we will find out next week whether the package will be funded by spending cuts, tax increases or a combination of both.

The Government is examining the McCarthy report on State assets and liabilities. On a number of occasions it has informed us that the European Union and the IMF were agreeable to allowing the proceeds from the sale of State assets to fund job creation initiatives and it is hoped this will be the case. However, the programme document published yesterday makes no reference to using the proceeds for job creation measures but instead states on page 16, "It is important that we make effective use of our state assets and, where appropriate, dispose of them to help reduce our government debt". The Troika appears to have asserted its authority on this issue also.

At Question Time yesterday the Minister and I had an exchange on the issue of national debt sustainability. The downward revision of the growth forecast by the Department of Finance in the stability programme update is a serious development which underlines the debt sustainability issue Ireland faces. According to the Department of Finance's projections, interest payments on the national debt will use up 21% of State tax revenues by 2015. However, this is based on a tax revenue figure in 2015 of €44.3 billion. For comparison purposes, the expected tax revenue this year is €34.9 billion; therefore, the Department is factoring in an increase of almost €10 billion in the tax take between now and 2015. That would be a 27% increase in the four-year period. We all hope these figures are correct.

I am not privy to the economic model being used by the Department, but I believe it is healthy to ask questions about some of the figures being used. For illustrative purposes, let us assume tax revenues increase by a more modest 2.5% each year from 2011. This would give a tax revenue figure of €38.5 billion in 2015 as opposed to the €44.3 billion estimated by the Department. However, with national debt interest payments set to reach €9.2 billion in 2015, this would mean 24% or just under one quarter of the tax take would be going on interest payments alone at that stage. This is still lower, as the Minister would point out, than the amount of the tax take that went on interest payments in the 1980s. However, it would take us to a very dangerous level.

For 2012 the Department is predicting GDP growth of 2.5%, whereas the IMF and the European Union believe the rate will be less than 2%. They believe a figure of 1.9% is closer to what is expected. As the Minister indicated, the Department believes the economy will grow by 3% in the period 2013 to 2015, following the three successive years of economic contraction we experienced to the end of 2010. However, it is only right and proper that we question the Department's ability to make such growth predictions. Yesterday the Minister stated these were the Government's economic growth predictions, as did other Ministers outside the House. They are made by Department of Finance officials. I am sure the Minister did not interfere in the Department's decision to revise downwards the forecast for the current year to 0.8%. Equally, it was not the then Minister, Deputy Brian Lenihan, or any other Minister, who came up with the figure of 1.75% last December for the rate of growth in 2011.

The question I ask is whether the Minister really believes Ireland will be borrowing on the international sovereign debt markets next year. He has stated the NTMA is in constant contact with market participants and that its view on market perception of sovereign debt in Ireland is a crucial input into our deliberations. It is clear from the bond yields that market perception of our sovereign debt is not favourable. On the basis of the evidence it seems less rather than more likely that Ireland will be back to the markets any time soon to meet its funding requirements. The truth is that, irrespective of the level of the fiscal correction any Government can reasonably be expected to achieve, if the growth forecast pencilled in by the Department is not at least achieved, the prospect of debt restructuring will loom on the horizon for Ireland at some point. I have no doubt that the European Union and the IMF are acutely aware of this and the Government needs to be also. It is only prudent that in private the Government should conduct contingency planning and enter discussions with the Union and the IMF to discuss the possibility of the rate of economic growth in Ireland not reaching the level we anticipate it will. On page 14 of the document published yesterday it is stated "the scale of the necessary consolidation in Budgets 2013-2015 will have to be reviewed in the context of the likely growth prospects nearer the time". This underlines the point I am making, that if the growth projections made by the Department prove yet again to be too optimistic, clearly the Government will have to increase the fiscal consolidation measures in 2013 and beyond.

I agreed with the Minister who stated yesterday that the issue of debt sustainability was not black and white. If we anticipate that the level of tax revenue accounted for by national debt interest repayments could reach one quarter by 2015, how much further are we prepared to go in terms of fiscal consolidation and the impact on ordinary people's lives? These are discussions we need to have on a contingency basis with the relevant authorities at the earliest opportunity.

If I had time, I would go into many other issues. I have just come, like the Acting Chairman, Deputy Joe Costello, from a meeting of the committee established by the House to examine the subsidiarity issues arising from the CCCTB proposals. I wish the Minister well in the forthcoming meetings with his finance Minister colleagues at ECOFIN and among the euro group. In particular, I wish him well as he seeks to achieve the reduction in the interest rate which we all hope will happen as soon as possible.

Tá sé soiléir anois go bhfuil an chleasaíocht thart agus go bhfuil na gealltanais a thug páirtithe an Rialtais thart ar ocht seachtaine ó shin anois sa bhruscar. Tá siad séanta ag an Rialtas seo agus tá an Rialtas ag glacadh leis na téarmaí a foilsíodh inné ó thaobh an airgid a tá imid ag fáil ón EU-IMF. Níl a fhios agam ar cheart dom trua a bheith agam don Rialtas agus don Aire, mar is cinnte go bhfuil an Rialtas agus an tAire Airgeadais briste ag an IMF agus an EU. Níl aon cheann de na gealltanais a thug an tAire, Páirtí Fhine Gael ná Páirtí an Lucht Oibre le feiceáil sa cháipéis a foilsíodh inné. Ní chloisimid aon rud i dtaobh na bondholders, i dtaobh fostaíochta a chruthú nó faoi gheallúint Fhine Gael 100,000 post a chruthú. Ní fheicimid an t-athrú suntasach a fógraíodh ocht seachtaine ó shin agus Fine Gael ag iarraidh fáil isteach ar an oifig atá aige anois. Tá trua agam do phobal na tíre seo, mar an rud atá soiléir sa phlean seo ná go bhfuil níos mó ciorruithe agus am crua le bheith ann do ghnáth theaghlaigh agus daoine — daoine atá dífhostaithe, daoine atá ar ioncam íseal nó ar mheán ioncam, daoine atá ag déanamh sár oibre san earnáil phoiblí agus daoine atá ag iarraidh fostaíocht a chruthú. Is iad sin a bheidh thíos leis na cinntí atá déanta agus leis an mbeartaíocht lag a bhí ar an Rialtas seo lena athrú suntasach a fháil sa socrú seo a bhí de dhíth don tír.

Throughout the general election campaign, Fine Gael and the Labour Party told the electorate they would make renegotiation of the EU-IMF austerity package their No. 1 priority if elected to Government. The Tánaiste famously told an election press conference that after 25 February it would be Labour's way not Frankfurt's way. Since forming the Government, both parties have repeatedly told the House and the public they are making progress on the renegotiation of a deal which would contain significant changes. The wait is now over and it is clear that they have signed, sealed and delivered a package they were hell-bent against just eight weeks ago. The revised EU-IMF programme of financial support for Ireland is virtually identical in letter and spirit to that agreed by Fianna Fáil last year. It is an unrevised programme and the only support it provides is for the failed policies of the bank bailouts and austerity measures imposed by Brian Cowen in the dying days of the last failed Administration.

Is this the change for which the people voted? Is this the promise of a new era of Fine Gael and the Labour Party in Government? This is the pup that was sold to the Irish people. It is an act of political fraud by a Government on a scale unprecedented in history.

The unrevised EU-IMF programme is based on the same failed economic logic as its identical predecessor. We are told the Government deficit will be reduced to 3% of GDP by 2015. When other parties claimed that target could be reached in 2014 we were alone in this Chamber in arguing it was unachievable and I repeat that argument now. Any serious attempt to meet the target will cripple working families, undermine front line services, increase unemployment and add to the growing mountain of public and private debt. With this revised document, the Government has promised to continue the failed policies of the previous Administration, which have already caused the problems I have outlined. Working families have already been crippled and pushed into mortgage arrears. Spending in the domestic economy, which is key to our recovery, has decreased to the point where growth rates are flat or negative. The Government has promised to pursue that failed agenda over the coming four years.

The fact that jobs are only mentioned in a single paragraph on page 14 of this programme of austerity is a measure of how far Fine Gael and the Labour Party have travelled since the general election campaign. The Government's No. 1 priority gets one paragraph out of 41 pages. That reveals the skill of the negotiators we sent to Brussels and Frankfurt and to deal with the IMF. We only have to compare this paragraph with the six pages of detailed policy prescriptions and costings for pouring more of Irish and European taxpayers' money into failed and toxic banks. At least €24 billion, including €10 billion from the National Pensions Reserve Fund, will be poured into these banks. Depending on the outcome of the stress test of Anglo Irish Bank, which will be announced in the coming weeks, we may see further taxpayer money injected into that failed bank. Not only is the Government content to continue honouring the promissory notes signed by the last Government which will inject €3.1 billion into that bank every year for the next ten years, but it is committed to pouring yet more money into an institution that holds no deposits and is of no systemic value to the Irish economy. For the life of me, I do not understand why such a decision is being taken when senior bondholders are receiving full payment. The people who own the bonds in Anglo Irish Bank are probably making money out of them because they were sold on the secondary market at discounts of 40% to 60%, as the Minister for Finance himself pointed out when he sat on this side of the Chamber. They are going to receive a huge lump sum from the Irish taxpayer and we are going to spend additional billions of euro to help them along their way.

If there was one major flaw in this Government's policies since it took power it was the attempt to spin the jobs initiative as a fully resourced jobs budget which would sort out all the big problems. Over the past several weeks, however, it has attempted to condition the Irish public for the damp squib which is likely to be announced on Tuesday. The downgrading of the jobs initiative will, according to the EU-IMF deal, be revenue neutral. There will be no new money or targets and I suspect no new jobs will be created by this so-called initiative. The EU, IMF and ECB are not interested in creating jobs in this State. They want to shore up our failed banking system in order to protect the other banks in Europe and to drive down wage levels and public spending in a vain effort to restore economic competitiveness. This is not a support plan; it is a vicious programme imposing an internal devaluation on the Irish economy. Its commitment to cut public and private sector wage costs will increase poverty and income inequality among working families. It will widen the gap between the wealthy and the working poor. Less income in people's pockets will further depress the economy as consumer spending continues to fall. As we have seen the result is further private sector job losses.

The programme proposes to reform the social welfare system. While slim on the details, it is a coded plan for reducing payments to the most vulnerable in society in order to incentivise them to take jobs that do not exist. It proposes to cut social welfare expenditure even though the unrevised projection on employment is 40,000 fewer out of work than is currently the case. Social welfare expenditure will be reduced even though the programme for Government states that payments rates will not be reduced. We have heard hints that the pressure will come on family income support, rent supplements and other supports required by the most vulnerable in society. That is a sad indication of how far this Government has come.

The objective of widening tax bands in 2011 and 2012 remains in the EU-IMF programme even though the programme for Government specifically states there will be no further widening of bands or reduction of tax credits. This is another U-turn. On whom will that impact? Once again, it will impact hardest on low income earners. The reduction in tax credits and increasing stealth taxes such as property charges and fuel charges will also hurt families and small businesses. Alongside all of this, the plan commits the Fine Gael-Labour Government to widespread cuts in front line public services and the sale of the strategically important State assets of gas, electricity and water, putting short-term financial gain before long-term social and economic gain.

As if all of this was not bad enough, the EU-IMF programme contains a commitment to a fiscal advisory council supported by a fiscal responsibility Bill, the purpose of which is "to safeguard fiscal discipline in the future". This is code for imposing the preferred policy prescriptions of the EU and IMF on future Governments. When the Government parties were in opposition they were, rightly and genuinely, critical of the previous Government, as it walked out of office, signing up to a plan to which the Government is now agreeing. This argued that it was wrong for a Government to tie the hands of a future Government. Incorporating the fiscal responsibility Bill into law will tie the hands of future Governments when the current Government is finally ousted from office. It is wrong. It should not happen and leeway should be given for those who are the people's choice to act in government without having constraints imposed on them in carrying out their fiscal responsibilities or in the choices they make.

Wage cuts, social welfare cuts and tax increases on working families will all push the economy further into recession and do nothing to reduce the deficit or the prohibitive interest rates barring the Government from borrowing on the international markets. How bullish the Minister for Finance was when the review was completed. He announced that interest rates had dropped by 80, or maybe 100, basis points. The actual figure was about 60. They were coming down, but they are going up again. The international markets are screaming that they are. The biggest bondholder in the world is telling us we need to burn senior bonds in the banks.

The Government does not understand the art of negotiation. In negotiation one must play one's hand. We do not have a huge number of cards to play, but we have strong cards. I recommend to the Government, and to whoever else will be dealing with these negotiations, to take a crash course in negotiation over the next couple of days. In the next term, they may be able to come up with something better. We in Sinn Féin will assist the Government in that crash course in negotiation, as we have particular skills in these matters.

It took Sinn Féin 30 years to get back to Sunningdale.

There will be elections tomorrow in the North, where I hope we will see significant support for Sinn Féin. We are arguing to devolve economic powers to the Assembly——

Where Sinn Féin is reducing social welfare benefits.

——while the Minister is handing them away and tying the hands of future Governments in making financial decisions.

The Minister will tell us he had no other choice, that his hands were tied and that everything is the fault of former Ministers. There are always choices and decisions that can be made. Otherwise, why is the Government there? Is Deputy Noonan a puppet for the EU-IMF or for the ECB or is he an Irish Minister standing up for Irish interests?

The document published yesterday does not stand up for Irish interests. I appeal to the Minister to stand up for Irish interests, take the crash course in negotiation that I commended to him and do the right thing. A couple of weeks ago, Fine Gael and the Labour Party said there could be substantial renegotiation of this deal. It does not need to be tweaked on a quarterly basis. It needs to be fundamentally restructured. The programme of austerity does not work. It is not working. Judging from the comments of the previous speaker, Fianna Fáil have realised we are going into default. The other parties on this side of the House realise we are in that trajectory. The Minister also knows we will have to restructure our debt. This exercise is a huge act of political fraud and betrayal. It should not be happening in this way.

This deal needs to be voted upon in the House. What is happening is wrong. Although the Government has a majority in the House, I want Government Deputies to walk through the lobby and vote for the same deal they jumped up and down about when in opposition and said they would not be bound by. "Labour will not be bound by this document" was the chat from Deputy Éamon Gilmore. I want him to walk through the lobby and vote for the document he held in his hand that day. There should be a vote in the House. The people deserve little less.

With the permission of the House, I will share time with Deputies Richard Boyd Barrett and Clare Daly.

A great opportunity has been missed by the Government. Let us conjure up the scene in the ECB many weeks ago and imagine what they were looking at in the Irish political scene. They saw a Government going out of power, having negotiated a deal about which the ECB must have been somewhat triumphant, and examined those who were about to take that Government's place with some trepidation. There was the red-haired fiery man from Dún Laoghaire, who said it would be Frankfurt's way or his way. There was a man from Limerick, who was more taciturn but who growled the kind of tough line that never came to pass. The ECB must have anticipated the emergence and arrival of a new Government with some worries. They cannot believe their luck at what has happened. The present Minister for Finance and Tánaiste have turned out, in European terms, to be paper tigers.

The happiest man in this House today is not the Minister for Finance, the spokesperson for Sinn Féin or myself. It is Deputy Michael McGrath. The Government has made Fianna Fáil's task so easy by its attitude to this deal. This afternoon, Deputy McGrath was exulting in once again congratulating the Government on taking the ECB line, which Fianna Fáil took a very few weeks ago. Fianna Fáil cannot believe that the opportunity Deputies Gilmore and Noonan and the Taoiseach saw eight weeks ago of going to Frankfurt and saying "We will not take this deal" has been thrown out the window.

Fine Gael and the Labour Party were right to say they would burn the bondholders and that it would be Frankfurt's way or Labour's way. They were an unknown quantity when they said that. However, when they came to the table their attitude, particularly to burning the bondholders, restructuring or whatever one wants to call it, was weaker than that of the former Minister whom Deputy McGrath is representing here today. Deputy Lenihan made it clear that he put the issue of restructuring, defaulting or burning bondholders to the ECB that Saturday night and that the ECB said, no. The Irish delegation capitulated on the spot. The nation was subjugated to the ECB on that day.

The great opportunity was there for the Minister for Finance and Irish officials to go back to the table and say, "The deal stays on the table or we walk". What would have happened? It is all very well to say there is no alternative. There is an alternative. Deputy Pearse Doherty is right. Those who are pulling the strings are the ECB and the Department of Finance. There is an alternative. What would have happened if the Minister had said: "We are going back to Ireland, we are holding a referendum and we are coming back with the result of that referendum and we are defaulting on structured renegotiated terms on that basis."

What would have happened? Iceland's default is not an exact parallel but this is an important point. On the issue of defaulting against British and Dutch banks, Iceland had a referendum.

I believe the Minister also knows we are going to have to restructure our debt. This programme is a huge act of political fraud. It is an act of betrayal and should not be happening The Icelandic authorities got much better terms offered because their threat of non-payment was realistic and it was believed. We could have tried the same. We could have said we were not going back to the Irish people and telling them that we are paying this debt, as the Minister said before the election.

It is pitiful for the Minister to come before this House and say we have renegotiated the minimum wage. As Deputy Doherty and Deputy Michael McGrath stated, that is revenue neutral. There is no concession in that. Someone somewhere will have to pay for it and someone somewhere next week will have to pay for what has now been downgraded to the jobs initiative because it is not a jobs budget.

I agree with what Deputy Doherty said earlier. I do not believe there will be much in what we get next week. Let us wait and see, but there is no concession from the IMF and the EU in the jobs initiative. There is an agreement that we can fiddle around with the figures all we like provided we keep paying the same amount of interest, a reduction in the rate of which has not yet been conceded. That was sold to us during the election as a given and something which would automatically happen with a change of Government but it is now already receding before our eyes.

I am not making a cheap political point but given that we are discussing the issue that will dictate and dominate our economic future for many years into the future I am amazed that so few Members have bothered to attend this debate. The emphasis put by the Government parties in advance of the election was on how this was such a bad deal for Ireland and a bad deal for Europe, that it had to be renegotiated, that it was economic treason and would all be reviewed. We are here discussing the review of that deal, yet hardly anybody bothers to attend. I find that extraordinary. That is not a cheap political point. I understand that people cannot be here all the time because they cannot follow every Minister but I find it extraordinary that a significant number of Members did not bother to turn up to discuss a document that will dictate our future for years.

Perhaps the reason so few Members have bothered to attend this debate is because nothing has changed. The Minister said the EU-IMF programme was a bad deal for Ireland and for Europe and had to be renegotiated, that it was economic treason and that he would do something about it but nobody has turned up for this debate because it is clear that nothing has been done about it. Nothing has changed. The position is exactly as it was when the dirty deed was done by Fianna Fáil. The Minister has agreed to carry on with the dirty deed of essentially selling this country down the river to pay off the bankers and bondholders who caused the economic crisis in the first place.

Is it not the case that this unrevised and barely tweaked EU-IMF deal is nothing other than a cold-blooded decision by the European Central Bank and the big states in Europe to protect the bankers and bondholders who caused the crisis and whose greed and lending to the property sector here caused the property bubble and the economic crash, and to make ordinary working people pay with brutal austerity and cutbacks for that crisis? This is not just a programme to make ordinary people pay for the crimes of bankers. It is worse than that. It is a programme to take advantage of the crisis and do things that these same bankers, bondholders and corporate elites would not have got away with previously. They now believe, in the atmosphere of crisis, they can get away with it because hidden behind the innocuous "techno-babble" in the memorandum of understanding is a programme for the asset stripping of this country and even more brutal and savage attacks on ordinary people in the interests of the very same corporate elites and golden circles who caused the crisis in the first place.

The reality behind words like "fiscal consolidation" is continued bank bailouts, savage cuts, home taxes, water taxes, and increased taxes on the low paid. When the Minister refers to "labour market restructuring" what he actually means is to savage the pay of low paid workers and smash up sectoral agreements that have protected those workers who are the lowest paid in the country. We can expect vicious attacks on their already beleaguered incomes. What is actually meant by "structural reforms" is privatisation and the asset stripping of the public assets of this country and the State companies that could be the engine of economic rejuvenation, employment growth and so on. The reality behind language like "structural fiscal reforms" is about making ordinary people work longer for less in order to pay off the bankers. One of my favourites phrases is "social welfare reform and labour activation measures", which means to slash social welfare and then hound people who have lost their jobs through no fault of their own but are unemployed because of the crisis created by others.

The appalling human cost of all of that was on show in this Chamber earlier when we were discussing education during Question Time. Parents of special needs children, some of the most vulnerable and innocent people in our society, were in the Visitors Gallery pleading with the Minister to take away the cap being demanded on special needs and education posts to ensure their vulnerable children could be provided with an education. Yet we were told by the Minister that it cannot be done because of the dictates of the IMF and EU.

I must ask the Deputy to conclude. Deputy Daly wishes to speak also.

The crisis was caused by bankers and the deficit problem was caused by the fact that we lowered taxes on the rich in this country to unsustainable levels. The answer, therefore, is to make the bankers pay for the crisis they caused and to put taxes on the wealthy rather than the vulnerable and working people in this country. It can be done if there was a will to do it but there is no will on the part of this Government and therefore we are stuck with this austerity.

Speaking this afternoon during Leaders' Questions the Taoiseach made the point that his approach to dealing with the EU-IMF and the economic crisis would be that he would tell the truth, which was the most definitive recognition of the fact that he was lying during the course of the general election campaign. The message now of slavish adherence to the EU-IMF deal negotiated by Fianna Fáil and the Green Party when in Government is very different to the one that was pedalled by Labour and Fine Gael in the course of the election. The messages were of not one cent more, burden sharing and so on but instead we are supposed to sign up to the fifth bailout in three years and put our people and our economy in hock to the tune of €70 billion.

The question that must be highlighted, and which will be highlighted as time passes, is who will pay for this crisis? It is clear that the method of payment will be vicious cutbacks and austerity, privatisation, further public sector pay cuts and, in reality, a setting back of conditions in this country for generations.

We have had to listen to a certain amount of double speak by the Government parties. The excuse for everything is a shrugging of the shoulders and either to blame Fianna Fáil for the problems that happened or to say they can do nothing about it as they are hamstrung by the confines of the deal. That is a very different message to the one the Minister was peddling during the election and is very different to the approach he is adopting in regard to corporation tax. His response to those who dare raise the question that big business might want to consider contributing a little more to this economy is to say that we will stand up to Europe, we will fight them on the beaches and so on. When it comes to defending the conditions of ordinary people, however, that is not the case. We have an unbelievable interference and micro-management of the economy, including bowing down at the EU-IMF altar, the details of which are only beginning to emerge.

Under this deal every home will be subject to a property tax which will be introduced this year. We have been told that this property tax will have to increase in 2012. The introduction of water charges and the establishment of a water utility company have also been mandated, which can only lead to privatisation. I find it ironic that the Taoiseach said earlier that we should not worry about the sale of semi-State assets, because we will be able to get around what the document actually says, while using the money for job creation. Why would one use the money for job creation, however, by implementing a measure to privatise and sell State assets, which inevitably leads to job losses? It is a fallacy. The Government, including the Labour Party, is prepared to stand over a situation where, in order to pay for speculation by bond-holders, the retirement age for social welfare pensions will go up from 65 to 68. We are now facing the spectacle that by 2028 people will have to work until they are 68. The generations who struggled for a better life, including improvements such as a shorter working week, can kiss it all goodbye because they will be working longer hours for less. In addition, they will not be able to access State pensions. Like all the other measures, not only will this not work, but I can also promise the Government that it will be resisted. Ordinary people are not prepared to pay that price for something they did not create.

We have just come though an election in which the people of the country gave a democratic mandate to the parties who are now in Government. The debate that took place during the election campaign was clear; it concerned the disaster of the blanket bank guarantee. Unfortunately, with the exception of the Labour Party, all other parties in this House, including the Independents at the time and Sinn Féin, voted for the blanket bank guarantee. In many ways, those votes of Sinn Féin and the Independents who were here, and who were aligned with both sides——

Not these Independents.

I am sorry but you voted.

The Independents in the previous Dáil voted as a group for the bank guarantee.

It was a completely different group.

That was because in their wisdom, like Sinn Féin, they felt it was something that was in the national interest. I wanted to say that in case the Deputy thinks that somehow or other, on the night, people like the Independents and Sinn Féin were forced to vote for the bank guarantee. I do not think they were. I think they chose to vote for the bank guarantee because they saw it as the better option at the time. The Deputy can discuss with them what their detailed thinking was, but that was what they did.

It was nothing to do with us. We were calling for nationalisation.

It is important therefore to focus on what united the voters as they went to the polls. The people of this country want an end to the recession as well as a restoration of their jobs, businesses, communities, homes and factories. Many Members of this House share the analysis of what created the boom and what destroyed the economy. I was one of those who, over a long period of years in the Dáil, identified things like ridiculous tax breaks that helped to create the bubble. I have spoken previously about how, when Ireland entered the eurozone, there were no checks or balances by the emerging European Central Bank on economies having a runaway credit bubble. Unfortunately, every man, woman and child has inherited the consequences.

The Government is determined to restore the economy, as well as rebuilding employment, businesses and economic activity generally. That includes returning to traditional areas of economic activity such as tourism and other indigenous industries. Our own resources should be utilised to get people working again. I am disappointed that some speakers seem to believe that most people actively seek a life which is going to become dependent on social welfare income support over a long period. Most people I know, whether young or old, want a job or to run their own business. They want to contribute to social welfare in their working years, so that if they fall on hard times and become unemployed they can avail of it. An extraordinary number of people are currently unemployed or have lost their businesses. They have little social welfare protection because they were self-employed. They never expected not to be working because their businesses failed.

The challenge for the Government, and for every Member of this House, is to work on a detailed plan to recreate employment, small and medium enterprises, and indigenous Irish businesses. By and large, the internationally-traded sector in goods and services is doing well. It does not depend on Irish banks for banking facilities. They are not like an indigenous Irish company or a small and medium enterprise. They are not popping down to the local branch of one of our big banks seeking credit. No matter what the banks are saying about the flow of credit, people in business — whether a large operation or a small indigenous one — are finding that their credit lines are either not available or are squeezed to the point where firms are hanging on by their fingernails. Alternatively, they find that facilities are being changed in title and large extra charges are being made because something which was an overdraft becomes a term loan and so on. Facilitation fees as well as interest rates are becoming even higher.

As regards the troika's support for Ireland, including the IMF, I spoke about the renegotiation at length in the course of the election. I have always said that it is a marathon and not a sprint. The Fianna Fáil Government signed up to an extremely detailed programme. Anyone who is familiar with the history of the IMF in particular will know that once such a programme is entered into, getting out of it is a long-term process lasting several years. Members of this House have spoken casually about default, but I wish they had had the experience of living in a country that defaulted entirely on its international obligations. This House would be well served by having a detailed debate on what exactly is meant by default and what the consequences would be for businesses in Ireland, particularly the small and medium enterprises.

Let us have such a debate.

What would the consequences be for people with mortgages? A default would have enormous implications on how an existing mortgage, and the interest rates on that mortgage, would be priced. If Deputies want to check, they should go and talk to people in Iceland about what has happened there.

People have spoken about Russia after the collapse there, as well as Argentina, as possible models. Members of the House who are interested in economies which have defaulted should realise that it is not in any way a soft option.

The result of a default on the scale some people suggest is that a state's only line of access to credit from the outside world would be through the IMF for a period of at least seven years. In raising the default option, there should be a detailed discussion of what people mean by it. They can mean different things.

However, the Government is determined to continue towards renegotiation, particularly on the interest rate, the structure and the duration of the deal, which is critical; renegotiation that separates bank debt from the fiscal deficit; and renegotiation involving the ECB and the Commission, which provides for the imaginative creation of new structures that assist peripheral countries such as Portugal, Greece, Ireland and other member states whose sovereign debt capacity will be tested by the markets in the future. We need the development of new instruments such as eurobonds, which would enable the peripheral countries to raise additional debt.

We also need new structures to deal with sovereign debt in the context of the complete change in financial markets over the past ten years where globalisation means a 28 year old with an MBA is as likely to make a decision about Ireland's sovereign debt as a senior Minister or Ministry official in capitals around the world, which is the way it used to be. However, this is the global financial market in which we live. We can wish it to be different but we cannot reinvent globalisation and the evolution of the financial market. We can reform them and that is where Ireland's interest lies. That is what the Government will do as well as rebuilding jobs and businesses. That is the mandate we have from the people and when we have finished, this country will be a better place for working people, the unemployed and those who have lost their businesses and want to rebuild them.

I welcome the opportunity to contribute to the debate on the revised document published recently following completion of the quarterly reviews for the first quarter of 2011 of EU financial assistance to Ireland and of the extended IMF arrangement.

I will deal with a number of aspects of the document before the House and then refer to our overall position as a result of this agreement. A major section of the document deals with financial sector policies, restructuring, deleveraging and recapitalisation. It says that the prudential capital assessment review recently found that €24 billion is required to ensure a sound capital basis for the banks and this will cover losses up to approximately 2013 over those previously estimated. That is in addition to funding that has already gone into the various banks. Much of this money will be put into the banks in the short term.

The revised document contains new changes about which I am worried. First, the position of the new Government parties is to go soft on the Irish banks again in a way they have not told the people about and in a way they hope people will not pick up on. They propose to inject up to €24 billion in the banks and the documents state that they will make arrangements "for a clawback of any injection of capital by the State subject to the approval of the CBI. This mechanism will require the banks to repay any such capital in excess of their regulatory obligations when the financial institutions again have stable access to the wholesale funding market or otherwise stabilise their funding, including a normal reliance on Central Bank funding". That means money has to be put in for recapitalisation purposes. If it is found to be too much, some of the money can be repaid with agreement.

More important, the cost of the €24 billion at the blended interest rate of 5.6% will mean the taxpayer providing an interest subsidy of approximately €1.3 billion per annum to the banks. Most of the loans taken out under the deal run for an average of seven years and, therefore, the taxpayer will provide a further interest subsidy of €10 billion to the banks for providing the €24 billion injection now. There is no mention of the Government making an effort to seek a refund of the interest the people will pay on the money drawn down from the EU and the IMF. I can understand someone saying I am splitting hairs when AIB is under State control and is almost 100% State owned but it is a commercial institution and it is effectively a semi-State body. There is a case for AIB to make a dividend payment to the Exchequer down the line to cover the interest subsidy it is receiving.

More important, why is such a subsidy being provided for Bank of Ireland? The taxpayer does not have full control of the bank but the State is putting expensive funds borrowed under this deal into the bank and no request is being made of the bank to repay the interest the taxpayer is paying. If between €4 billion and €8 billion is injected into Bank of Ireland over a period, the bank should be charged the blended rate of interest and the money generated recouped by the Exchequer. The bank should not be in a position to increase profits and pay dividends to its shareholders, thereby increasing their wealth, on the basis of this subsidy.

I acknowledge Bank of Ireland is in competition with a semi-State bank, AIB but the interest subsidy must constitute state aid when the bank is still operating outside the jurisdiction. It will be in receipt of not only the capital injection but the interest subsidy for the duration of this plan. The Minister has not referred to this at any stage. The Government parties are going soft on the banks and they are not coming clean on this, which is a new development.

The document refers to AIB and the Bank of Ireland as the two pillar banks. I worry about the over reliance on domestic banks to deal with our financial crisis. International competition is needed in the banking sector and, as part of this deal, the Government should try to attract banks from outside the eurozone and, therefore, outside the control of the ECB, which has a vested interest in recouping as much money as it can from our economy. The Government parties are in the process of creating two major banks, both of which will be too big to fail. They are creating new sacred cows, which will be untouchable, no matter how much harm or damage they do, no matter how much pain they inflict on the people and no matter how dangerous their behaviour is for the economy.

Now that there are only two Irish banks they are too big to fail. We are now making sacred cows out of them. We must guard against that. Currently, Ulster Bank is carrying out a significant amount of financial activity in this country. It is necessary that we have competition from outside the euro area. That is to be welcomed because otherwise the two banks will have a duopoly which is not a safe way to proceed.

The Minister made clear yesterday that the public interest directors have no right or legal authority to communicate with him. Having been appointed based on their previous CV, in the same way as judges, their sole duty is to do their job. There is no mechanism in law for them to do otherwise. They have a fiduciary duty to the banks of which they are board members to deal specifically with the bank. We have seen that problem occur in the past. In the previous Dáil the problem became especially evident in FÁS where departmental officials who were on the board did not report back to the Minister because they felt they had a corporate duty to FÁS rather than to the Minister when they were attending board meetings. That was a serious issue.

People will be keen to discuss in further detail the reference to the importance of making effective use of State assets and, where appropriate, to dispose of them to help reduce the Government debt. It is a disgrace to sell off some key State assets that can produce jobs. Two generations ago when the country was becoming strong we set up big semi-State companies such as the ESB, Bord na Móna and CIE. They provided a good social service in terms of employment. It is bad enough that the Government wants to sell them off, but one must ask who was fooling whom when it convinced the people that the sale of State assets would be used to create jobs.

I am also concerned by the reference on page 28 of the document to "the small but locally important credit union". The reference to "small" is almost derogatory. The Government intends to force mergers among credit unions. We agree there should be proper standards of governance in credit unions but the Government is picking on them unnecessarily in some cases. The document indicates that the Government will provide financial assistance if required, subject to EU state aid rules. In other words, it is going to hold credit unions over a barrel under that heading. There will be no mention whatever of EU state aid rules when it comes to giving billions worth of interest-free, major cash injections to Bank of Ireland and AIB.

The Fine Gael Party put much emphasis on the abolition of quangos. However, on page 30 there is a commitment to setting up a new water utility company. Every Member in the House is aware that if a water leak occurs or there is a water improvement investment programme to be carried out in a local authority, those best placed to do it are staff in the relevant local authority. There will now be one central agency. It will be another new quango and another layer of bureaucracy. It will be another way of making the Minister less accountable to the House. The new water utility company is one of the first official new quangos the Government is to set up. It will be interesting to see how many other new quangos it will set up. We are seeing the start of it now. I could speak further on the matter but I understand my time is up.

I welcome the opportunity to speak in this evening's debate. I wish to put on record an important classification of the issue at hand with respect to the overall transfer of funds within the EU. Currently, a total of €457 billion worth of funds is being lent through the European Central Bank through the inter-European transfer system with respect to national central banks borrowing and lending to one another. It is important to put that into context. Equally, it is more important to put into context that the biggest lender with respect to the transfer system are our friends in Germany through the Bundesbank, to the value of €325.5 billion that is being lent to various countries within the EU. Other countries such as Luxembourg, Holland and Finland are net contributors to the lending system. The list of countries that are borrowing within the euro transfer system include Greece at €87.1 billion, Portugal at €59.9 billion, Spain at €50.9 billion and France at €28.3 billion. The country that is at the top of the pile of net borrowers is Ireland with €146.1 billion borrowed from the European Central Bank through our banks. That is before we even refer to the EU-IMF deal of €67 billion. That is the situation. It is the reality of where we are at as a country and the straitjacket that has been passed to us by the previous Administration.

We must consider the matter in context. Between 2004 and 2010 there was an exponential rise in borrowing by this country, by a factor of seven. Our rate of borrowing continues to rise. We must examine constructively at a European level where we are going. We should bear in mind the recent commentary by Finnish politicians in the context of the formation of a new government there and the stalemate situation that has arisen. We should also bear in mind the comments of the Dutch Minister for Finance on the corporation tax rates in various countries. A circumspect debate is going on at an individual country level which must change. A constructive debate is required at EU level. If the type of borrowing practised by Portugal, Greece, Spain and this country is to continue, it will continue to damage confidence which will have a detrimental effect on the marketplace in terms of our liquidity.

We must look to structural funding in the short to medium term. The new round of structural funding will be of the utmost importance to this country because for every €1 billion worth of investment in capital projects, it will have a knock-on effect in the creation of up to 15,000 jobs. We must examine how we can work with Europe on the significant EU problem that has landed on all our doorsteps in order to try to get us out of the situation.

We should look closely also at what is happening in this country on a cross-Border level. I am aware of the co-operation and synergies that have been created by all parties on both sides of the Border in trying to keep alive capital projects. I will refer to two of them. There has been constant and consistent goodwill and co-operation towards the Altnagelvin project in Derry, the aim of which is to provide a cross-Border radiotherapy facility for the north west. A new government is due to come on-stream in the Northern Assembly in the not-too-distant future. We must also continue the co-operation, goodwill and joined-up thinking with respect to the N2-A5 road network. We must continue the all-party co-operation, communication and synergies with respect to one-to-one projects for both sides of the Border. The message we must deliver to Europe is that if we can co-operate on an all-party, cross-Border level, we must consider similar projects that have been hampered by the austerity measures with which we are faced.

There will be a probable reduction in many of the capital projects that have been on the table. We must look at Europe as a vehicle for new rounds of Structural Funds for tangible capital projects that will get people back working. All Members are singing from the same hymn sheet in that regard. If we get people back working, we will get money back into the Exchequer, we will create revenue and be in a win-win situation. I have a simple message for Europe. If the EU-IMF will not interfere with international projects, such as the Altnagelvin project and the N2-A5 project, which is welcome, we should send the message to Europe that there are other win-win projects which will create employment.

To return to the figures, we owe €146.1 billion, apart from the €67 billion we already owe. One should listen attentively to what people on the street have to say, something the previous Government failed to do during the good times. Under the previous Administration, people on the street were saying quite succinctly that the bubble would burst, the boom could not last, we could not continue to get free money and would face a watershed at some stage. The question now being asked by the man or woman on the street is from where will the jobs come. People are at a loss as to from where the jobs will come. There is no point in politicians articulating just for the sake of it the argument that they can create jobs here or there. We need capital investment. We need help, we need Structural Funds to be spent sensibly and we need co-operation at all levels.

We need to think about procurement and procurement rules. If we lose out on projects as result of the EU tendering system, social benefits will be restricted for many parts of the country. Obviously, we must have guidelines on procurement, but there is no point in ensuring we get Structural Funds in place through the next round of structural funding, if we then lose out on projects. We must ensure there is some sort of social contract in place that will ensure that we can create jobs at local level.

We continue to grapple with the idea of being in Europe and of losing some aspects of our natural resources, such as our fisheries — an issue always on the agenda in my constituency in Donegal. We must listen more to people expressing their sentiments on these matters, particularly the fishermen in Donegal. We had a successive "No" to Lisbon in Donegal, which should not be forgotten. We must ensure our continued participation in Europe is a two-way street and is not just about paying back money which, if the situation continues as it is, we will never be in a position to pay back.

I welcome the fact we are at last having this debate, although I note there will not be a vote on the issue. I understand the document which was published last night is the basis upon which the troika will deliberate. The Taoiseach has indicated that it is possible the matter will return to the House and I believe we should vote on it. I make that point repeatedly because what is agreed between the Government and the troika behind closed doors will have serious ramifications in the long term for low and middle income workers and families and the vulnerable in society.

Earlier, the Minister for Social Protection, Deputy Joan Burton, spoke about poverty traps. I could not agree more. Nobody in the House would wish to see any individual or family trapped in a welfare trap. However, it is disingenuous to use that argument as a smokescreen for a continuing austerity programme which will inevitably mean hardship and cutbacks for people on very low, subsistence incomes. The Minister also referred to the general election and claimed correctly that she and her colleagues on the Government benches had secured a mandate from the people. However, it is worth reminding ourselves that in the course of the election the Labour Party promised a strategic investment bank to support businesses. Also, Fine Gael promised some form of burden sharing. Neither of those commitments sees the light of day in the document. Deputies in the House should have been afforded a full debate, followed by a vote on the EU-IMF programme. I hope that will happen in the near future, because the programme shapes the State's budgetary process to 2014 and ultimately decides our economic fate.

Fianna Fáil has pursued an austerity model since the financial and economic crisis of its making began. The current Government, despite its respective parties' election promises to the contrary, continues on the same path. The Government's budgetary strategy should be focused on recovery, not austerity. It is time now to begin addressing the real, underlying problems with the economy. A refusal to do so will only prolong and deepen the recession. Recovery requires investment, supports and a commitment to real stimulus that will create jobs and increase revenue.

The memorandum as revised and presented creates uncertainties and ignores the outworkings of its internal devaluation model. For example, despite rising unemployment, now at just under 15%, the Government intends to target social welfare recipients and extend the age at which a person can receive his or her social welfare pension. Working age payments, child income support and disability allowances are all to be "reviewed", a term favoured by Government. There is a particularly insidious reference to "making work pay for welfare recipients" in the memorandum. I have made known my heartfelt opposition to poverty traps. Targeting people who find themselves out of work and on welfare in this way is unacceptable. The proposal to make work pay for welfare recipients begs the question asked by Deputy McHugh earlier: "Where are the jobs?" I find it hard to believe that the Government could be so out of touch as to imagine that people are languishing on welfare payments because they do not want to work, since these people are in receipt of their payments because there is no work.

There is a commitment to lower personal income tax bands and reliefs year on year, but there is no detail on how many of the State's lowest paid workers the Government intends to bring into the tax net or what impact this measure will have on low and middle income families struggling to pay the Government's property tax, flat water charge and the universal social charge. The Government has steadfastly refused to countenance measures such as a wealth tax or a third income tax band of 48% on individual incomes in excess of €100,000 per annum. It has steadfastly refused to consider these measures, leading people to the conclusion that austerity is for one class of citizens but not for the other.

The memorandum also promises a reduction in private pension reliefs and general tax reliefs. However, there is no detail on how much of a reduction there will be or on whether the intended changes will reduce reliefs on the lower rate of income or the higher. Sinn Féin has argued since the crisis began, and before, for a standardisation of all discretionary taxation reliefs, including pension relief, with a view to eradicating tax reliefs that do not return value for society. Taxation reliefs have historically favoured the better off. An ESRI study from 2009 showed that 80% of pension tax reliefs benefited the top 20% of earners.

Carbon tax is to be increased but again there is no detail on what measures the Government intends to undertake to tackle fuel poverty. Some 115,000 households are in arrears in paying their gas bills and we have no way of quantifying how many older people or families have been forced to do without oil during the coldest months. The carbon tax continues to have a negative impact on people experiencing or at risk of energy poverty. No compensatory measures have been implemented or even identified by the Government. The carbon tax is pushing more low income households into fuel poverty and this will only get worse.

The memorandum commits to a reduction in public service numbers in line with the Fine Gael and Labour parties' programme for Government, yet there is no detail on where within the service these cuts will be made or how it intends to resource or manage any area with depleted personnel. The Government needs to publish in detail exactly where these jobs cuts within the public service will be made. It is difficult to give credibility to the Government's commitment to job creation given that it is so intent on increasing the numbers of unemployed public servants in a random and indiscriminate fashion.

A comprehensive Government review of expenditure is under way and is due to be completed later this year. In consultation with the European Commission, the IMF and the ECB, the Government intends to introduce further budgetary measures, which begs the following question. How much more does the Government imagine the people or front line services can take? I believe — the figures bear this out — austerity is not working. Pumping billions of euros into insolvent banks like Anglo Irish Bank and out of public services is not working. Cutting front line services is not working. Cutting public spending while refusing to invest in stimulus can only lead to lower economic growth and higher unemployment.

There are two glaring omissions from this document. It does not refer to investment in the real economy and there is only a paltry reference to job creation. Without these two things, we cannot pull ourselves out of recession. I agree with Deputy McHugh on the value of the all-Ireland economy and cross-Border projects, and with what he said about EU procurement rules. Very good work has been done in the North on interventions in that arena, a policy which we should also adopt in this State.

The Government told us that its first 100 days was to be all about jobs and yet this memorandum of understanding contains nothing of real substance in that regard. The memorandum contains an explicit commitment to dispose of State assets not to pump the money into job creation or to stimulate job creation, but in order to write down debt.

The Minister, Deputy Burton, reminded us that the renegotiation of the matter is a marathon and not a sprint, which, I am sure, is the case. However, even a marathon begins with a single step. The revised memorandum makes it very clear that the single step has not been taken.

The Government has successfully concluded the first and second quarterly programme reviews with the European Commission, ECB and IMF. The EU and IMF have endorsed actions taken and to be taken by the Government regarding our public finances, the banking sector and jobs. The thesis which came across during the general election campaign and in the House today from Members of the Technical Group and Sinn Féin that in some way we should default unilaterally does not hold up in reality. I agree with the Minister, Deputy Joan Burton, who suggested that we need a specific debate on the matter. If we were to default unilaterally the following questions arise. From where would we source money? What interest rate would we pay? How would we pay our public servants and how would we maintain our public services? These are critical questions and people who use the bland, evocative and populist terms such as "burning bondholders" and "defaulting" are failing to fill in those blanks. I challenge Deputy Boyd Barrett to come into the House soon and fill in those blanks. He should suggest to us where he believes we will get the money, what interest rate we will need to pay, how much we will get, how we will pay it and how we will maintain our services. If he takes up that challenge, then it would be worthy of discussion, but until then we have an empty formula.

If the Government gave us the time we would do it.

I congratulate the Minister for Finance, the Taoiseach and the Tánaiste on their initiatives in seeking a pan-European solution. We need to continue with the diplomatic offensive, which is in place. We need to continue to build credibility. We will eventually achieve a reduction in interest rates and an improvement in the general terms of the bailout, but it is a marathon. It is not a matter to which there is a magic solution. With the greatest respect to Deputy McDonald, it is not tenable to suggest that we can deal with this matter instantly; it must be dealt with on a pan-European basis. I maintain the view we put forward before the general election that the deal is not sustainable in its current form and merits renegotiation. While we cannot achieve it overnight, it is being gradually achieved and results will accrue from that.

We are successfully restructuring the banking sector and the establishment of the two pillar banks and their rationalisation is a step in that direction. Its success is reflected in a reduction of the degree to which deposits are being withdrawn from those institutions and reform will ultimately be achieved. I come across this every day in my constituency work and I know it is repeated across the House. Despite what we hear from the banks' PR, there is a major problem with finance for small businesses. I know of viable businesses that are being refused term loans and overdrafts, thereby jeopardising two or three jobs, and therein lies the future of our country. It is important to get the banks into a position to lend and to get the money flowing through our banks into the economy. The restructuring is a critical first step, but we are by no means finished with that. I urge the Minister to stick with the idea of getting money flowing. I commend to the Minister the idea that we should implement the provision in the programme for Government to guarantee small loans in the business sector to get over this problem. Credit is crucial to getting investment going.

The memorandum of understanding contains an acceptance of the jobs initiative, which represents progress from where we stood before. It would be lovely if a Minister could come into this House and announce that billions of euro would be injected into a jobs programme, which is the ambition and what we ultimately want to get, but the jobs initiative will be a critical first step. We need to restore the dignity of work to people and end the lines of young people in the departure lounge at Dublin Airport going to Australia. While it is fine for people to go abroad voluntarily to gain experience during a gap year, it is a tragedy when people are going against their wishes because they have no option. While it is a tragedy for their families, it is also a tragedy for the future of our economy and society, and it must be reversed. The training programmes and propositions included in the programme for Government which will be implemented through the jobs initiative to be announced next week are crucial first steps in dealing with unemployment. We need to deal with this issue immediately.

It is important that we maintain the fiscal ambition to keep the deficit at 3% of GDP by 2015. It is important to our international credibility and the project of achieving a pan-European solution to the unacceptable bailout. With regard to the bailout, bondholders will have to take a hit. However, we cannot act unilaterally as a small country that depends on international conditions and that has such a great need for money to pay for services and maintain the apparatus of the State. Doing so would not make sense to me.

We should examine the Japanese mortgage model which I commend to the Minister for consideration. We should consider intergenerational mortgages and mortgages extended in time. This would involve putting more finance into the banks such that they would be in a position to act in this regard. There are too many people in negative equity and too many families whose income has been reduced by the universal social charge and other charges. In some cases, their income, or 50% thereof, has been eliminated. Such families are having a shocking problem trying to make mortgage repayments. Even to have them investing and serving as confident consumers in the economy to get the economy moving, it is vital that there be mortgage restructuring.

The proposition in the programme for Government and the proposition of the Minister for Finance, Deputy Michael Noonan, outlined in a number of speeches today, that Departments consider the Canadian model of departmental expenditure, is critical. This process is in train. One can prune expenditure without causing vulnerable people to suffer. I would be aghast and horrified if vulnerable people still suffered, perhaps through the withdrawal of a bus service to a special school, when wasteful expenditure was eliminated. There is potential for cuts in expenditure that would ultimately protect the vulnerable by making more cash available.

The Croke Park deal offers a great avenue to achieve an outcome that will maintain industrial peace and a fair society and keep people working together. The deal must be exploited to the full. Since the Government has been in office, serious strides have been made. Real confidence has been built outside the House by a leaner, fitter Government.

Something must be done to tackle exorbitant salaries, bonuses and ludicrous payments for failure. If we cannot tackle them because of contractual law, I support the proposition that we proceed through taxation measures in future budgets. We must have equity and fairness across the board. We should be saluting the Government and revel in the House in the fact that so much has been achieved in such a short time. This augurs well for the future.

I am sharing my time with Deputy Mick Wallace.

We have been told time and again by the Government that it received a strong mandate in the recent general election. It has such a mandate and an overwhelming majority, possibly an unhealthily large one. Surely we should tell the truth in this House, the truth being that the public was sold a pup in the general election. The document we are discussing is the same as that presented by the former Government. I said during the general election campaign that I believed there would be little or no difference between the policies pursued by a Fine Gael-Labour Party Government and those pursued by the Fianna Fáil-Green Party Government. From what we have been listening to in the House since the general election, there is no doubt but that this is the case. There is now a grand coalition of Fianna Fáil, Fine Gael and the Labour Party, all of which are singing from the same hymn sheet.

We were told it would be "Labour's way or Frankfurt's way". We were told the financial circumstances were an obscenity and that there would be burden sharing. We were told not one red cent more would be given to the banks, yet we are giving them an additional €24 billion. What we are witnessing is the implementation of the programme for Government introduced and pursued by the previous Government. The fundamental principle of the programmes of the current and former Governments is to make ordinary people, including lower income and middle income families and the poor, pay our way out of the recession, a recession in which they had no hand, act nor part in creating.

The other side of the coin is that there has been no taxation of very wealthy people. The super rich in this country, amounting to a figure of 6%, still have €250 billion in assets, but they are not being asked to pay a halfpenny thereon. A 10% windfall tax on these assets would bring in €25 billion and the super rich would still be super rich. There is no doubt that if one had blindfolded oneself while listening to various Ministers in recent weeks, one would have thought one was listening to Ministers from the previous Government. The hymn sheet, story and message are the very same in that they seek to make the ordinary man and woman in the street pay for the gamblers who gambled recklessly and lost. Taxpayers, including lower income and middle income families and the poor, are being made to pay for the reckless gambling losses. I have stated previously in the House that we must have a structured, negotiated default, but that will not be enough. The bondholders must be burned, but this will still not be enough. Together with these steps, there must be reasonable taxation of very wealthy people in this country who have significant assets and are not paying their fair share. We need to tax them urgently; otherwise we are headed towards a catastrophic default that will absolutely destroy Ireland's families, economy and society.

Deputy Joe O'Reilly made a few points that were very fair. He spoke about the lack of credit and stated the Government would ensure credit would be available soon. From my experience in business, I note it is now nearly three years since credit was freely available. I have been listening for a long time to Governments stating credit will become available every time the banks are given money, but, unfortunately, credit is not yet available and I am not sure when it will be.

It was good to hear Deputy Joe O'Reilly refer to mortgage restructuring. When we debated the notion last night, some Members on the other side of the House were throwing seriously cold water on it. The taxpayer and the bank is now one and the same person. If somebody bought a house for €400,000 which is now worth €200,000, does it make more sense for the taxpayer or bank to repossess it, put it on the market and sell it for €150,000 or to give the person some help, even in terms of €50,000? There would still be €350,000 for the State, rather than getting €140,000 from an initial investment of €400,000. We must seriously fight repossessions. They just do not make sense, financially or socially.

The Minister also mentioned the importance of equity and fairness. We agree on that. In the period before the publication of the revised terms of the EU-IMF programme, the Minister, Deputy Noonan, stated that all changes must be fiscally neutral and that in terms of total cuts and taxes the revised memorandum of understanding remains unchanged. Does this mean we will still achieve the target deficit of 3% of GDP by 2015? In the past couple of weeks the forecast for our growth rate has been revised down from the 1.8% forecast last December to an optimistic estimate of 0.8%. Can we still achieve the target of 3% in 2015 with the same figures?

I understand that cuts amounting to €3.6 billion are planned for the December budget. Will that figure be larger to compensate for the fact that GDP growth will not be as good as we thought? We are probably being very optimistic in anticipating that the levels we are calculating for 2013 and 2014 will be reached, given the serious effect of the austerity measures. If the budget is to be even more severe, do Members agree that the people who will probably suffer most are the most vulnerable? It is generally accepted that those who are most hurt by budget cuts are, as a rule, the most vulnerable. Fairness is disappearing at this stage.

There is reference to property tax and water charges in the document. I find it hard to believe that even the current Government could have the neck to impose water charges and property tax on people who are already suffering as a result of the universal social charge, rising interest rates — we have not seen the last of them — and mortgage problems. God knows, the figure of 44,000 households being 90 days behind with their mortgage repayments will certainly increase dramatically in the next year. All this adds up and makes one wonder about the role of the State. Is it to protect big business, look after the financial institutions and play ball with the boys in the ECB? I understood that the role of the State was to work towards protecting the most vulnerable in our society. Undoubtedly, history will be hard on the last Government, but I believe it will be hard on this one as well.

In January 2010, the then Minister for Finance, Deputy Brian Lenihan, assured the Dáil that our economic future was bright. In his speech he guaranteed that the national minimum wage was untouchable as it had been introduced "to protect the weak in our labour market". Before the year was out, Fianna Fáil slashed the minimum wage from €8.65 to €7.65, a reduction of almost 12%. It blamed the cut on the constraints imposed by the EU and the IMF.

However, we now know that the minimum wage was eviscerated at a time when Fianna Fáil was still approving bonuses for banking executives and when Deputy Lenihan had a path worn to the tax man's door to have tax bills reviewed for all sorts of characters who were in contact with his office. During the last general election campaign the Labour Party promised to restore the national minimum wage to its former level. That process is now in train and will be completed shortly.

The Government readily acknowledges that this is just a small part of repairing the colossal damage that has been done to this country. The people who gained the least from our plastic boom are paying a high price following its collapse as a direct result of the disastrous response of the previous Administration. The impact of the collapse on ordinary Irish families is manifold. As the "Prime Time" programme last night demonstrated, regeneration schemes in our most disadvantaged areas lie abandoned by reckless developers, who fled at the first whiff of the downturn. The cruellest mockery is that while many of our citizens are forced to remain in run down housing estates reminiscent of something from a Seán O'Casey play, the same developers left acres of unserviced, incomplete ghost housing estates.

We would love to be able to rectify all the injustices, right all the wrongs and repair all the damage wrought by the previous, rotten Administration, but we cannot. People know and accept that we cannot, at least not immediately. Our country is broken; its economy has been devastated. However, it can and will be fixed. We must put the country back together piece by piece, day by day. Part of that process will involve repairing international relations, especially within the European Union. The revised memorandum we are discussing today, political and diplomatic efforts and the continuous process of renegotiation allow us the opportunity to do this.

These relations were not soured solely by the impact of the banking collapse three years ago. The rot had set in long before. While the former Minister, Charlie McCreevy, high-fived the representatives of the German and French banks and encouraged them to pour more fuel into an already exploding Irish economy, we neglected our relationships with our smaller European neighbours. They were unimportant because we were playing with the big boys. Member states of a similar size to Ireland were arrogantly told to come to this country so we could show them how it was done. We now know how it was done and we also know the price of playing with the so-called big boys. When the fun ended and the big boys explained the rules and handed us the bill, we looked around for help and sympathy from our European neighbours, particularly the smaller nations. There was none.

The Tánaiste and Minister for Foreign Affairs faces the critical task of restoring our international standing, reputation and confidence. Slowly, bridges are being rebuilt. The revised memorandum of understanding proves there has been a discernible shift in the mood of many of our partners in Europe, in the institutions of the European Union and in the IMF. The process of restoring trust in Ireland has begun. It must not fail and we, as public representatives, must ensure it is not allowed to fail.

It is clear that many Members of the House have not run or are not running a solvent business. The only job some of them have created is their own. They have spoken highly of Iceland, but we are not in Iceland. We live and trade in this country. It is easy to be critical and difficult to be constructive.

I will speak about the systematic destruction of our indigenous industries, such as sugar and chocolate production. People say that the policies pursued by this Government are no different from those of the last Government. That is rubbish. It is populist speech. We are all workers. Some people might be aware that agriculture underwent negative benchmarking for many years.

I commend the Minister on the actions he has taken to date. As a person who has founded and currently runs a business, it is clear to me that his actions have instilled, and continue to instill, confidence in our economy both in this country and abroad. The extremely difficult process of ongoing negotiation is being dealt with in a businesslike fashion which shows both a clear minded approach and systematic thinking. The strands simultaneously put in place by this Government are working to sow the seeds of recovery. The Minister has sought to restructure and stabilise our banking system which, unpalatable as it might be to many Members of the House, is something which had to be achieved. The Government's jobs initiative will secure the economic growth that must accompany the EU-IMF programme.

I thank the Minister for paying heed to the suggestions put forward by many Members in respect of the jobs initiative. I am sure several of those suggestions will be taken on board, either in part or in full, with the aim of providing real employment in the community. It is important that people should see the strands of recovery coming together and forming a real opportunity to get Ireland moving again.

Who are the people responsible for stating that the pay of workers is being savaged? I run an indigenous, small to medium-sized agribusiness. We treat our employees fairly and with decency. Of course we have all been obliged to work longer hours, but that is how we will survive. The members of my generation have borrowed heavily and have invested in the State. It is they who are suffering under the debt burden. Other Members must recognise that fact.

Ireland's economic recovery will be led by exports. In that context, agri-industry will play a major and pivotal role. Real jobs are created in the area of manufacturing. It should not be forgotten that in business one trades on one's reputation. This country is no different in that regard. Members who continually refer to who created our problems should go away and read the Nyberg report. Focusing on the past will not allow us to fix the future.

I commend the Minister on looking forward and on taking all the steps and fostering the conditions necessary to facilitate the creation of employment. We must explain to people that creating jobs, particularly in respect of small to medium-sized indigenous industries, is a gradual process. One cannot merely switch on job creation as one would switch on a light bulb. The road towards job creation is long but, as a person who runs a business, I am of the opinion that each step we take upon it represents a step in the right direction.

I welcome the opportunity to contribute to the debate on this important matter. The kindest remark I can make about the document with which we have been presented is that it constitutes a gigantic anti-climax, particularly in the context of the boasting, pose-striking and breast-beating we witnessed and the grandiloquent phrases such as "Labour's way or Frankfurt's way" and "not a red cent" to which we were treated prior to the general election. The document before the House is extremely minimalist in nature when one considers the process that was undergone in respect of its production. It appears to be a prelude to the jobs initiative, about which we will be informed on Tuesday next. The latter has all the signs of being a damp squib. However, I hope I am wrong about that.

Apropos of the jobs initiative, the Minister for Enterprise, Trade and Innovation, Deputy Richard Bruton, appears to have a problem with his Department. These leaks are very unusual in nature. Those of us who have had the privilege of running Departments have been the victims of leaks. I refer to circumstances where, for example, someone — be it a civil servant, an adviser or someone else — might give a document to a particular journalist. What is happening in the Minister for Enterprise, Trade and Innovation's Department represents a peculiar form of leaking. Information has been given to several journalists and great pains have been taken to ensure that the relevant material received the widest possible exposure. There has also been a process of serial leaking whereby information has emerged in instalments on successive days.

I do not know what the House will debate on Tuesday next because we are all quite well aware of what the jobs initiative is going to involve. If I were of a suspicious frame of mind, I might state that the leaking is spin that was officially authorised. As I am not of such a frame of mind, I will not accuse the Minister of that. Regardless of the number of times one leaks or publishes information, one will not take the bare look off it.

One of the features of the EU-IMF programme of financial support for Ireland is the restoration of the minimum wage. I wish to make it quite clear that I am wedded to the notion that people who work should be properly paid. People who work for the minimum wage, whether it be €7.40 or €8.40 per hour, are not particularly well paid. I have taken cognisance of the difficulties faced by employers at present and I listened carefully to what the previous speaker, who is an employer, said.

The problem we face is that the new minimum wage will be approximately 30% higher than the comparable wage in the UK and Northern Ireland. It will, in fact, be the highest minimum wage in Europe. There are two types of people one can take off the dole queue. The first type is young single people who have relatively low skill levels. The vast majority of individuals of this sort with whom I am acquainted would love to obtain work, even for a minimum wage of €7.40 per hour. Why then are we making it more expensive for employers to offer them the opportunity to leave the dole queue? How does such a move contribute to restoring competitiveness to the economy?

It is quite wrong for the Minister for Finance to state that the change in the rate of employers' PRSI will compensate for this. It will not do so. According to the various leaks — I suppose they cannot all be wrong — the proposed change to employers' PRSI will mean that for someone being paid up to €356 per week, the rate of such PRSI will fall from 8.5% to 4.25%. As a result, someone who offers a person employment on the minimum wage will save 4.25% of the wage they will be paying. However, they will be obliged to pay out 13% because that is what the increase from €7.40 to €8.40 per hour represents. In net terms, these employers will be worse off to the tune of 9% or €25 per week regarding a minimum wage paid to someone who works 37.5 hours per week. That is the position in respect of young single people.

There is already a system in place to protect married people who have children or other familial responsibilities. This takes the form of the family income supplement. If my calculations are correct, a person with one child who is in receipt of family income supplement and who enters employment on the minimum wage and works 37.5 hours per week is, in gross terms, supposed to gain €37.50 per week. However, he or she will only gain approximately €9 per week.

According to replies given provided to my colleague, Deputy Michael McGrath, it will cost the State something of the order of €400 million to do what is proposed. As a result of the Government's decision to the effect that this change must be revenue neutral, the money involved will have to be taken from elsewhere in the economy. We will, therefore, take a certain amount out of the economy before putting an equivalent amount back into it. We do not know from where this money will come. We do not know whether it will result from tax increases, spending cuts or whatever. However, it will have to be removed from the economy and goodness knows what impact this will have on jobs. This single reform could mean that we will end up in a worse position than when we started.

When he is replying, I would like the Minister to respond to one question. The programme for Government appears to state that the level of employers' PRSI will be halved in respect of wages up to €356 per week. Does this mean that the old rate of 8.5% will apply in respect of the tranche of people's wages over and above €356 or will the new rate simply apply to wages up to that amount? If the latter is the case, there will then be an inducement to every employer to artificially drive down wages that are slightly in excess of €356 per week. Why would they not do so in order to avail of the new rage of employers' PRSI?

The programme also refers to joint labour committees, JLCs, regulated labour agreements, etc. However, this is only the vaguest reference. On 29 March, the Minister for Enterprise, Trade and Innovation stated that JLCs and the minimum wage increase are inextricably linked. In other words, we should take no notice of the fact that the minimum wage is being increased because the Government is going to restore lost competitiveness through introducing fundamental changes to the regulated labour agreements.

It is interesting that on 14 April, the Tánaiste and Minister for Foreign Affairs, Deputy Eamon Gilmore, contradicted the Minister and stated that the two are not linked at all and are entirely separate. The Tánaiste also stated that one is not dependent on the other. He refused to say whether there will be any substantial changes as a result of the current inquiry into the JLC-created agreements. When he is responding, will the Minister for Finance confirm whether the Government has received the Duffy report, which relates to the type of arrangements to which I refer? If it has been received, when does the Government propose to act on its recommendations? When will the two sides of the Cabinet agree to a common approach to this matter?

The only element of surprise regarding the document before the House is what it does not contain. For example, the programme for Government contains a commitment to renegotiate terms and to replace emergency funding from the ECB to the Irish banks by way of a fixed medium-term facility in order to bring confidence into the system. Our masters in Frankfurt gave the Minister, Deputy Noonan, a flat "No" and he accepted that and came home with his tail between his legs. The fact is that deposits are still leaving the Irish banking system. That cannot be gainsaid. I have had a number of queries over the last few weeks from people I normally regard as sane, straightforward, honest and sensible on whether it is still safe to leave money their money in Irish banks. There is no confidence in them.

Where are we in respect of the reduction in the 5.8% interest rate? This is about 3% more than is being paid for the money. I understand the matter is going to a meeting of ECOFIN Ministers, and I wish the Minister for Finance the best of luck in his attempts to renegotiate that. We will have to do something for this hard-pressed economy. There was much talk about burning bondholders, and we heard statements such as "not a red cent" and "Labour's way or Frankfurt's way". The Minister for Finance came back from Frankfurt and said on "Morning Ireland" that Frankfurt had said "No" and that the debate was over. Now we know whose way it was. It was always Frankfurt's way and the Government always knew it would be.

What about the commitment to compel banks to reduce interest rates on variable mortgages by 0.25%? That commitment was firmly given before the election. We have heard nothing about it since. What about the situation regarding the famous strategic investment bank? That will never see the light of day. Another part of the low-hanging fruit of the programme for Government is gone.

Does the Deputy expect us to do it all in six weeks?

This will be a very dog-eared document in about 12 months' time.

I have one final question for the Minister. The programme for Government states that it is "committed to maintain the current rates of income tax, together with bands and credits". Yet page 32 of this agreement states that the Government is committed to a lowering of personal income tax bands and credits. In his reply, I would like the Minister to reconcile those two statements and tell us exactly where we stand.

On a point of order, I am curious to know why Deputy O'Dea specified on two occasions that the minimum wage is €8.40. Why is the Deputy implementing a 3% cut in the minimum wage? It is actually €8.65.

That is not a point of order.

I meant €8.65.

I thoroughly enjoyed Deputy O'Dea's contribution. It was a delightful ten minute exercise in irony and the suspension of disbelief. We heard Deputy O'Dea lecture another Minister for seeking publicity, which I thought was particularly rich, given his own track record in that respect.

The Deputy is not too bad at it himself.

I am taking lessons from the master. I am but a humble apprentice at the feet of the Deputy. The most delightful part, if it was not so serious, was to hear Deputy O'Dea lecture the Government on budgetary prudence, when the Government of which he was a Minister left the people of this State a €7.1 billion debt for the first 12 weeks of this year. He has the temerity — I acknowledge it is skilful — to walk in here and criticise the Government regarding dealing with the budgetary legacy that he and his colleagues created. He referred to our masters in Frankfurt. Which Government created the environment where a sovereign state had to hand over its economic autonomy to other parties? It was the Government of which the former Minister for irony was a member.

This will last for another seven to eight weeks.

No Member of this House, nor anybody in this State, will take a Fianna Fáil Deputy seriously for lecturing us about honesty, when he denied the IMF was in the State——

I did not deny that.

——or when he lectures us about budgetary prudence when it was his Government's decisions that led to the IMF coming to this State. Nobody will allow a Fianna Fáil Deputy to lecture a new Government about how it should conduct itself, when the legacy of continuous years of the Fianna Fáil Government is the impaired sovereignty of our State. It would be enjoyable to hear the Deputy practice that wheeze were it not for the fact that the consequences for the ordinary people of our State are so savage.

I heard somebody else up on a pulpit today and that person deserved to be there. In his contribution at Arbour Hill, Archbishop Diarmuid Martin used a phrase that struck a chord with me. He said that we have spent a long time thinking about who we are looking for independence from, but not enough time thinking about what we want to use that independence for. As this Government goes through the difficult work of regaining our economic independence and autonomy, it is becoming clearer what kind of State we are doing that for. There are two elements to this. First, we will ensure that we will never again end up with a financial sector whose failure can bring down a State. Second, we will ensure that we have a State that can pay its own way in the world, that is not dependent upon the kindness of strangers to keep our hospitals open or to pay social welfare benefits to 440,000 people who are unemployed. That is the economic dimension of what we need to achieve.

There is a broader definition of sovereignty as well. I have heard it stated many times in this debate that we have lost our sovereignty. We have not lost our sovereignty. The IMF, the European Commission and the European Union are not dictating to us how we should run our schools, what our attitude should be to the killing of Osama Bin Laden, what the rights of children should be in this State, or how we should treat prisoners. What has happened is that a crucial part of that sovereignty has been lost, namely, our economic autonomy. However, there are many other areas of our sovereignty that are firmly within the grasp of this State and its elected Government.

One of the themes that has been continually suggested is that we should not have external bodies in our country, and that we should instead go down the route of unilateral default. I have two questions for those who advocate that action. Where are they going to find the €12 billion that we need this year to keep our schools and hospitals open and to pay the social welfare benefits for those people without jobs? If they cannot answer that question, perhaps they can answer the second question. What schools and hospitals will they close? We are in a situation where the only people who can lend money to our country are these bodies. If we decide that we do not want to do business with them, that is a course of action that no responsible government can incur. It is a strategy which has risks that are so vast that we cannot knowingly pursue it.

When other people make these points, they tend to preface that language by asking about the ordinary person. What about the weak, the poor, the people who suffer? They make those points as if they have a monopoly on representing those people. I also represent those people, as does every other Member of this House. Perhaps it is because I wear a shirt and tie that it is less acknowledged that I do so. I will yield to nobody in stating that my social conscience does not burn any less brightly than anybody on the other side of the House. However, I am clear that a tough course of action must be undergone if we want to look after the weakest in our society. It is in their interests, as much as it is in mine, to make sure that they have schools to attend and to make sure that the social welfare benefits on which they are dependent can be paid next week and for the next few years.

This leads on to another criticism that has been made, which is that this Government is not capable of delivering change. I am always fascinated by this charge when it is made. What automatically happens after we are told that we cannot make any change is that we are criticised for whatever change we do make. We are told that the Government does not want to make that change because it is counterproductive or because it cannot pay for it. That indicates that change has been delivered. It might not be the vast structural change that we are seeking to deliver, but the Government has been in office for a matter of weeks, not years. As Deputy Nash pointed out, the commitment that a new Government would be able to reverse the cut in the minimum wage is being met. This is something the newly elected Government did. Despite the claims of many that it could not be done, it has happened. We were told that we could not put in place additional plans to deal with job creation, and it is going to happen. I guarantee the same people who say that change cannot be delivered within the parameters of this plan are those who will stand up and criticise the change that has been made, and one cannot do both.

I want to conclude on one point regarding the outlook of the State within the arrangement and return to a theme I visited previously, which is what will happen to the State from the summer of 2013 when the European stability mechanism is in place. This mechanism will be very important to the prospects and destiny of the country because it will contain the idea of a collective action clause. That clause will allow, for people buying future debt, that a structured default would be delivered on that debt. The point I want to emphasise is that, for the State, this has the ability to be profoundly self-defeating, the reason being that the target for the State is that it will return to the financial markets at some point in the second half of 2012.

Anybody considering buying our debt at that point will form the conclusion that the debt they are buying might be subject to that stability mechanism. This will force up the rate of interest on our debt as we look to return to the market and that will create severe difficulty for the State. It is a flaw in the mechanism that must be addressed in the coming year and a half to two years that are open. The State can survive that dynamic by ensuring that we need to borrow as little as possible when we get to that point. We cannot allow the State to be dependent on the vagaries of money markets or the kindness of strangers again. In tandem with delivering jobs, which will ensure that the budget will over time correct itself, that is the job of the Government, and it has made a strong and decisive start to making that happen.

First, we are nine weeks in the new Dáil and it is important that the Government does not defend itself continually by contrasting itself with Fianna Fáil. The people of Ireland will not judge the Fine Gael Party-Labour Party Government on how it contrasts with Fianna Fáil. They will judge it on the basis of jobs and the ability of the State to function. North Korea would contrast favourably with the policies of Fianna Fáil over the past number of years. It is important to focus on developing policies that will bring real change.

The last election was all about how the people would witness massive change with the new Fine Gael Party-Labour Party Government. We were promised the renegotiation of the EU-IMF bailout package and that job creation would be central to this process of change. We are 100 days in and that change is nowhere to be seen. The EU-IMF bailout and the memorandum have hardly altered at all. In fact, we are seeing a Government that is Fianna Fáil mark two. It is incredible to sit here and have Fianna Fáil ex-Ministers congratulating Fine Gael on implementing exactly what they themselves would implement.

Government is about making choices, and the choices the Government makes will determine its legacy. It has real choices to hand. If the Government acquiesces in this current bailout, it will further the likelihood of this country going down the route of default. The Government has a choice about creating jobs. I was shocked when I read the memorandum of understanding. It is striking that amid all the paragraphs about banks, wages, etc., there is only one paragraph about job creation. There are no job creation targets or budgets. There is no information about the job creation programmes to be developed or how employment will be increased.

Job creation is central to the recovery of the State. It is the oxygen by which most of the State functions, from the family basis right up to the society and national basis. Job creation impacts on all levels of our being. It impacts on how we feed ourselves, clothe ourselves and even on whether we can house ourselves. It impacts on whether we, as individuals, can exist in this country in the future.

Job creation was the mantra of the Fine Gael and Labour parties for the past number of years. If one remembers the Lisbon treaty referenda, the posters were festooned with the words, "Jobs, jobs, jobs". Nobody knew it was the Lisbon treaty on which they were voting; people thought they were voting for jobs.

At the last election, each of the Government parties made a massive pitch that they would increase jobs in the State, yet now that they are in power we have had to wait 100 days for a jobs creation budget, initiative or whatever the Government wants to call it. In that 100 days, 13,000 people, the Government parties' constituents, have emigrated. They cannot wait for the Government to get its act together to implement a jobs policy.

The policy implemented over the past number of years has been deflationary and anti-jobs. Fianna Fáil implemented it for the past three years and the Fine Gael and Labour parties are implementing it at present. Deflationary and anti-jobs are two sides of the same coin and for each euro the Government takes out of the economy, there is a further multiplier effect which reduces the size of the economy.

It is significant that in the memorandum of understanding two lines are beside each other. The first line is that they expect growth to resume in 2011. The next line is that the currently estimated decline in real GDP in 2010 was larger than anticipated. The heart of the problem of the memorandum's economics is that expectations are always wrong. For three years, growth level expectations have been lower. Unemployment has been greater than expectations and investment recovery has been lower than expectations. One would expect in this situation that there would be a motivation on the part of Government to change the policies, but the Fine Gael and Labour parties refuse to leave Fianna Fáil's economic orthodoxy and continue on that road themselves. We can forget the programme for Government and the Fine Gael Party and Labour Party manifestos. What we have in the 31st Dáil is dominated by Fianna Fáil's four-year plan and EU-IMF austerity. The memorandum of understanding is the real manifesto under which the State will be run in the next number of years.

Unfortunately, there are not too many Labour Party Deputies in the Chamber. However, from speaking to Labour Party supporters and members, I know that they particularly feel the imposition of this austerity implementation over the past number of months. Within nine weeks, the Labour Party's ideology and policy has been gutted. It has been replaced with a mantra that the State is in receivership and the Government will not revisit any of the cuts made by the previous Government. Within nine weeks, Labour Party Deputies have transmogrified into Fine Gael vote fodder.

Absolute rubbish.

The previous Government will be remembered for bankrupting the State and burdening the population with debt to the tune of €80,000 per household. As a result, Fianna Fáil should remain politically toxic for a generation. Each of the Labour Party and Fine Gael Party's Deputies should now consider their legacy to the State.

The Government is sleepwalking the State into default. The memorandum will be seen by future generations as the blueprint of this default. The anger and bitterness the people of Ireland have for Fianna Fáil will in no small measure also land at the Government's doorstep if it continues with this. I want to echo the comments of my colleague, Deputy Doherty, that there is another way. We are here because choices are available to us.

The key to growth is job creation. Growth cannot happen without investment. The multiplier works both ways. To be able to pay for the running of the State we need to reduce debt to manageable levels, and this cannot happen without proper burden sharing. We also need to implement efficiencies, but we need to invest in the economy. In the current climate, the private sector cannot come to the rescue with regard to investment. Export growth, while it is key, will remain job-neutral in the foreseeable future.

The choice we urge the Government to take is to invest in the State's economy, reduce costs to businesses, restructure the enterprise development organisations so they are fit for purpose and resource small and medium-sized businesses so they can export. At present, there is no export programme for businesses in the State with fewer than ten employees. There are ad hoc programmes run by a number of county enterprise boards throughout the State but there is no programme. The Government speaks about an export-led recovery but surely we can gather the low-hanging fruit by enabling these small businesses to develop in this export area.

Will Deputy Tóibín tell us where to get the money for this investment?

The National Pensions Reserve Fund has a total of €14 billion, which the Government will pay on an annual basis to Anglo Irish Bank. The Government has the choice of putting that money into a dead bank or putting the Irish taxpayers' money into creating jobs. Its deflationary policy, which it has taken up from Fianna Fáil, has on every single occasion reduced all economic indicators against expectations. The people of Ireland now expect the Government to learn from these mistakes and change tack and grow the economy out of recession rather than making cuts.

This is a report card by the Government to the people who entered into an agreement to provide a working capital arrangement for Ireland over the next five or six years. Some of the points made by the Opposition this evening are understandable in so far as they are trying to grasp the situation without thinking it through fully. The straitjacket of the parameters of the template for this programme — a joint programme by the IMF, the EU and the ECB — is made out in such a way that we have to show discipline. We also have to show it for ourselves, as it is not just for others because we have to get the operational machinery of Ireland — the political, economic and social machinery — working again.

In early November, a G20 meeting was held in Seoul, on the other side of the globe. This was an important meeting because the finance Ministers present were concerned, most particularly the Europeans, that the exposure, referred to by Deputy McHugh earlier, of the ECB and our Central Bank as proxy for the ECB at more than €150 billion in total was perilously close to being uncollectible and could have been a serious fissure in the entire financial system. With regard to last weekend's conversation in the newspapers about whether the previous Government and the Minister for Finance knew what was the driving force behind the arrival of the troika, a close examination of the six Irish-owned financial institutions would have suggested the answer to that question and it remains the same. However, the new Government has a responsibility, and by virtue of a document such as this is fully accountable for the necessary corrections and reining in of what had got out of control.

The ECB has not done us any favours. Last week, Klaus Regling, who was a joint author of a report on what went wrong in our banking sector, in his address to the Institute of International and European Affairs confirmed that people in his country, namely, Germany, which has the largest population in the EU, did not understand that the bailout for Ireland is not a transfer of funds or a gift but a loan. This brings me to my next point, which is that it is a loan at an expensive rate of interest. Where I commend the Minister for Finance, the Taoiseach and the Government is that having been told "No" on their first presentation of a request some weeks ago immediately after the St. Patrick's weekend having just taken office, after 40 working days they acted wisely. This is like the first nine holes of a golf scorecard; one demonstrates one can keep within the operational parameters in the first nine holes and then one returns and re-opens discussions on two fronts. We now have a better picture of the true extent of losses in the banking sector. As the first step of what the Minister, Deputy Burton, stated will be a robust race and not a sprint we must ensure the figure for losses, which is the starting point, is in clear and sharp focus. As the first step, on 31 March, the outline was presented whereby we would regroup with a revitalised banking sector with new supervision, management, boards of directors, energies and competencies in place. This is all in the report card.

New capital has not yet been injected, and there are various ways of putting capital into businesses and banks. One is by direct injection and another is by writedown of creditor amounts, and this may be coming. It is already in the report card where it discusses liabilities management exercises for subordinated debt so we are on the right track. I am confident that with sharper and clearer focus and fuller measurement we will know at the end of the month what further loan losses are likely in the two banks being wound down, namely, Irish Nationwide Building Society and Anglo Irish Bank. We will have a better fix on this, and with that better fix we can present the losses to the counter parties in the troika, particularly the ECB, and state this is the full measurement and here is where we are, that our banks are indebted to it on the emergency funding basis at a level of, for example, €170 billion or €180 billion and that it is too much for the marathon ahead of us so let us discuss a resolution.

There is huge misunderstanding about default. Default is just a state of existence; it is not something one chooses from a panel of buttons. One arrives at default by going broke. It happens to households, businesses and countries. What is important is to be ahead of the curve and anticipate what is happening and likely to happen, measure it correctly and meet the people who will be part of the outcome prior to the outcome becoming harder to deal with.

I am confident we will do that because good and honest people from the Labour Party and the Fine Gael Party are sitting in Cabinet. Imagine what it would be like if one had to take over a business that was in a state of disarray with nobody willing to provide credit. That is not a nice thought. I invite each of the 166 Members of this House to collectively put their shoulders to the wheel rather than nitpick, particularly when the nitpicking comes from those who landed us in our current predicament. I remind Deputies that BlackRock Solutions prepared its report only after we entered Government.

Let us be courageous as a people and think in terms of values, responsibilities and accountability so that we fill in the second nine holes over the next year and get within striking distance of par. I am confident the Minister for Finance will be able to draw this simple picture for Mr. Trichet and others. There will be a resolution even if we do not achieve all the parameters we have set out for 2013. They are not set in cement because the IMF has a better understanding of our situation.

In regard to the interest rates, I am confident the Minister will be able to demonstrate that the EU portion of the funds provide a profit margin that amounts to almost 3%, which equals €1.3 billion per annum when translated into a full draw down of the facility. That is too much and it does not seem to capture the spirit of EU solidarity to charge a margin of €1.3 billion on top of the basic cost of providing funds. I am confident the Minister will address that issue. He comes from the solid foundation of being able to fill in the first nine holes. I use that as an analogy.

I have listened with great interest to what Opposition and Government Members have said and I stand somewhere between the two arguments put forward. I fully agree that the only way we can get out of our difficulties is by achieving economic growth and an increase in employment. However, the sources of the finance often suggested by Sinn Féin are based more on rhetoric and misinformation than on detailed analysis. For example, a Sinn Féin Deputy stated that money from the National Pensions Reserve Fund was going into Anglo Irish Bank. That is not a fact. The NPRF can invest only where it can achieve a return and the banks in which it invested were AIB and the Bank of Ireland because they were believed to have a future. If the money had not been provided from that source, it would have had to be found somewhere else.

The NPRF has been useful in dealing with a variety of issues and it is important it is used to our best advantage. The reason it is investing in the banks is that the Government intends to establish two banking pillars. By putting money in these two amalgamated institutions, the hope is that they will become viable banks which can lend to industry and commerce. The alternative is to put the same money in a separate vehicle to lend it directly but one then faces the problem of a non-functioning banking sector which cannot obtain the necessary finance. What cannot be done is give the money to one group and invest it somewhere else on the pretence that it was not already spent, which is the kind of economics practised by Members of the Government while they were in Opposition. They advocated all sorts of programmes and sources of finance. The Labour Party proposed to establish an investment bank but did not tell us where it would find the money.

It proposed to take €2 billion from the NPRF and borrow a further €18 billion to make a €20 billion fund. The need to find an additional €18 billion was a major flaw in that argument.

We have reason for hope in the future. The idea that nobody in this country has money is fallacious. We have to encourage the people who have money to invest in productive activities. I am also keen on motivating communities. If a community of 1,000 created ten jobs, which is certainly possible for the communities with which I am familiar, we could create 40,000 jobs across the economy, while at the same time increasing the tax take and reducing the social welfare bill. We need to engender something in the mind that is not necessarily reliant on State money but that creates an air of community commitment to job creation. If we were to encourage people who have wealth to use their money to create jobs in every small industry in the country our financial position would improve tremendously.

I am curious as to whether the Government has progressed the initiative on sovereign annuities. If it is looking for genuine sources of money, the pension industry has significant potential. However, if the Government is to go down this route, it will have to give an undertaking that it will not default on the money. That was the argument traditionally proffered by the pension industry for not investing in Irish bonds but pension funds invest in high risk equities as well as in German and French bonds with very bad returns. Legislation passed by this House before Christmas provided for the establishment of a sovereign annuity whereby NTMA would issue bonds to the pension industry. It was believed that between €4 billion and €5 billion could be raised, which is not to be sneezed at. We would, of course, have to pay interest on the bonds but we would be doing so over a period of 35 years and the money would be repaid into the economy.

We acted on a proposal by the trade union movement to issue solidarity bonds, although I do not think the Department of Finance was particularly enthusiastic about them. If these bonds had been sold with the same vigour as SSIAs we would have found a great number of individuals willing to invest in the future of the young people of this country. There is a call for old-fashioned patriotism where people who have funds would make them available to create better infrastructure, more jobs and a worthwhile future.

I was interested in what Deputy Peter Mathews had to say about the EU, the IMF and the €150 billion. What created the €100 billion problem in our banks, which it was in November, was that people were pulling money out of the banks. The challenge was that the Europeans had created uncertainty and people had got scared and started pulling money out of banks. The Europeans then came knocking on our door and saying they would lend us no more. I do not agree with Deputy Mathews when he says Ireland's difficulty was a major crisis for the European Union.

That is patent nonsense. For 4 million people, €150 billion is a huge amount. However, there are approximately 400 million people in the European Union. On a European scale, €150 billion is equivalent to Ireland having a problem of €1.5 billion. The scale is 100:1.

The real preoccupation of Europe at the time was not with Ireland. Europe did not think the Irish problem was unmanageable. It was only a pimple on the nose of Europe. The Governor of the Central Bank and the Secretary General of the Department of Finance agreed with that thesis at the time, no matter what head-wagging Deputy Mathews does. The problem was that the EU was looking at Portugal and Spain. That was the real concern, and not the absolute amount of money involved in the Irish economy. That proves this is not just an Irish problem but a general European problem, in which many peripheral countries are involved and which are collectively of serious concern to the European Union.

I am disappointed the European Union has not taken a more pan-European approach to the issue and come up with pan-European solutions, rather than deal with it on a country-by-country basis. It has taken some pan-European decisions but I get the impression it does not have a pan-European plan.

This brings me to the favourite topic of Deputy Tóibín and his colleagues, which is default. The only way to consider default in bonds is by an ECB pan-European arrangement. There is no way Ireland could unilaterally default. First, we would not get the money to run the country on a day-to-day basis. Second, there are consequential issues, too numerous to go into here, that would have huge downsides for our economy. Therefore, these issues must be dealt with at a European level. A European-created problem needs a European solution. Until we understand that we will not make progress.

There are two facts with which no Member of the House can disagree. First, no one wants to be at the behest of the European Central Bank and the International Monetary Fund. Second, the only way to claw ourselves out of the problem we are in is by job creation. However, this is where the agreement of Members comes to a sharp end.

Two trains of thought seem to divide the House at this point. One view is that we can create jobs by restructuring, retasking and resourcing some of our enterprise agencies to create an internal economy. The other is that we should default unilaterally. However, we cannot default and continue to operate unless we take a pan-European approach, as Deputy Ó Cuív has said. In time, a pan-European approach will have to be worked out. Since the Government took office, Ministers have been going everywhere they can on a diplomatic and trade mission to let everyone know we are a country that must export. The mistake we made, which is well documented, was to think we were so brilliant that we could survive as a domestic economy without doing what we had done for generations, which was to build a competitive export economy.

Deputy Ó Cuív missed the point when he said our €150 problem was only a pimple on the nose of the ECB. It was not. The ECB bought into the mantra that it could lend into this economy and that Ireland could sustain that level of debt. For that reason, there is an onus on the ECB to work with us on an ongoing basis. The involvement of the troika in Ireland's affairs is reviewed on a quarterly basis. This must be seen as a work in progress. It cannot be seen as a deal that is set in stone with no ongoing renegotiation, review or amendment. It will finally dawn on our European partners that the only way for the eurozone, or euro project, to survive is by a restructuring. This can happen in several ways.

The euro itself is a new project and is in need of fine tuning. Not every member state of the EU is a member of the eurozone. This has been a particular problem for Ireland. Our biggest trading partner is in another currency area and was in a position to devalue when the euro was not devalued. Our other big strategic partner is the United States, and the US dollar did the same thing. Ireland was hamstrung by not being able to make those decisions. With regard to the euro project, we must be either in it or out of it.

If we are to create jobs, and we must reassure the world that Ireland is open for business, we must reform those structures in which the troika has no input. Last night, the Fine Gael Parliamentary Party heard that 400 potential jobs in a call centre in a part of the country, which is not my constituency, are jeopardised by a single appeal to An Bord Pleanála by a notifiable organisation. As there is no deadline date for the planning decision the project has been thrown into jeopardy. This is something we can reform internally, and must reform. We can do the same with our bankruptcy laws. People who were persuaded, by financial institutions and on foot of fundamentally sound business plans, to take risks, to borrow money and to get into the property market now find themselves in distress. These people are excluded from business for 12 years by the most out-of-date law in Europe. We must review this law. The programme for Government states review of this law is Government policy.

Debate adjourned.