Dáil Éireann díospóireacht -
Wednesday, 2 Nov 2011

Vol. 745 No. 2

Topical Issue Debate

Thalidomide Survivors

Deputy Seán Kenny

It is 50 years since a pregnancy drug called thalidomide went spectacularly wrong. The word "thalidomide" entered the dictionary, referring to an unthinking and risky approach to medicines which blighted the lives of thousands of people. Babies were born with devastating injuries. Families were torn apart and many of those affected have since died.

The babies have grown up but will face an enormous burden for the rest of their lives. Thalidomide was sold in a number of countries across the world from 1957 to 1961, when it was withdrawn from the market after it was found to be a cause of birth defects in what has been called "one of the biggest medical tragedies of modern times". It is not known exactly how many victims there are worldwide. Estimates range from 10,000 to 20,000 people. In Ireland there are 32 acknowledged survivors of the thalidomide tragedy who are now approaching their 50s. All are suffering rapidly deteriorating health, and disabilities usually seen in much older people.

The Irish Thalidomide Association has been seeking justice for those affected by the drug. It also seeks openness and transparency on the part of the Government along with an acknowledgment of the wrong that occurred. In addition, the association seeks an apology from the Government, together with a fair and equitable compensation. It engaged in discussions with the then Minister for Health and Children almost three years ago in regard to the fairness and adequacy of an arrangement entered into in 1975 on behalf of those affected. A comprehensive response is still awaited. During this time members of the association have witnessed a complete revision of these arrangements in other jurisdictions.

In December 2009, the British Government delivered an apology to those affected by thalidomide in Britain but the Irish Government still fails to acknowledge that a wrong occurred in this country. In Ireland the Attorney General advised there was no legal responsibility for the State. I find that hard to believe. The fact remains that the Government of the day failed to remove the drug for several months after it had been declared unsafe. It knew thalidomide was unsafe.

I have been made aware of the phrasing in Government documents relating to this issue, which date back for years. Phrases indicate that the Department was concerned about the economic cost of compensation by the State. There appears to be little indication of the human concerns in question. What about the parents of these children? They are now in their 80s and their children aged 50 and upwards are still trying to sort out some sort of comprehensive recompense for what happened to them. I welcome the Minister for Health's statement that he wants to enter into meaningful discussions about making a financial gesture of goodwill to survivors of thalidomide, in addition to the health care package that has already been mentioned. Regardless of any legal responsibility, there is certainly a moral responsibility on the State in this regard. A real and comprehensive settlement, rather than a token gesture, should be made to the survivors of thalidomide in Ireland.

Minister of State at the Department of Health (Deputy Róisín Shortall)

I thank Deputy Kenny for raising this issue. I am glad to have an opportunity to respond to him on behalf of the Minister for Health, Deputy Reilly. The Minister met representatives of the Irish Thalidomide Association, and separately the Irish Thalidomide Survivors Society, in July of this year. He informed both organisations that the main aim of the Government in this respect is to address the health and personal social care needs of thalidomide survivors living in Ireland. The Minister has written to both organisations to inform them that the parameters of a HSE health care package are being drawn up by officials in the Department of Health and the HSE. The Department will be in touch with the organisations when it is in a position to discuss the details involved.

The commitment in the programme for Government is to reopen discussions with survivors. The Government is committed to doing that. At his meetings with representatives of the Irish Thalidomide Association and the Irish Thalidomide Survivors Society, the Minister said he would have to be guided by the legal advice regarding the State's liability. The Attorney General has confirmed that the State has no legal liability in this matter. Notwithstanding this position, the Minister wants to enter into meaningful discussions about a financial gesture of goodwill towards Irish survivors of thalidomide. This would be in addition to a health care package. However, none of us can ignore the severe financial challenges the health service is facing at present. It is likely that these challenges will increase next year and continue for the foreseeable future.

The thalidomide product sold in Ireland was manufactured by a German company, Chemie Grünenthal. Irish survivors of thalidomide receive compensation from a German foundation that was set up for that purpose. Monthly payments range up to €1,116 per month, tax free, and annual payments range up to €3,680. A monthly allowance is currently paid by the Department of Health and is worth up to €1,109 per month. The majority of Irish survivors are in receipt of the maximum allowance from Germany and Ireland. When the German and Irish payments are combined, the maximum payment individuals receive is €30,386 per annum or €2,572 per month. On average, they receive a tax free payment of €26,000 each year or €2,166 per month. The monthly payments are tax free and are not reckonable for State benefits including disability allowance. Each individual is automatically entitled to a medical card.

The Minister's proposal to provide a health care package and to engage in meaningful discussions about a financial gesture of goodwill towards Irish survivors of thalidomide is a reasonable and compassionate response aimed at meeting the medical and other needs of survivors. The Deputy will join me in saying the State has great sympathy for the survivors. It is most regrettable that they were put through so much pain and suffering. The Government acknowledges the physical and emotional difficulties they and their families have faced as a result of the use of this drug. We recognise the challenges that persist for each individual. I assure the House of the Government's commitment to addressing the health care and related needs of all the Irish survivors of thalidomide. I thank Deputy Kenny for raising this issue.

Deputy Seán Kenny

I welcome the Minister of State's response and the Government's commitment to dealing with this matter. I reiterate that thalidomide sufferers in the UK received an apology from the British Government for what happened to them. I understand thalidomide victims in this country are seeking a similar gesture. Will the Minister consider making such a gesture?

Deputy Róisín Shortall

There are 33 Irish survivors of thalidomide. Thalidomide was not licensed by the Irish State. The regime in Ireland in the late 1950s and early 1960s was self-regulated by the drug companies. A regime of self-regulation by drug manufacturers also applied in most other European countries and states. The Government is satisfied that very few countries had systematic controls for licensing drugs at that time. Most countries developed such controls in light of the thalidomide experience. It is certain that a different approach to this matter would be taken today. Judged by the standards of the time, the Department acted in an appropriate manner at the time when faced with an unprecedented situation. The whole approach to dealing with issues of medicine control was completely different in 1962 than it is now. Responsibility for this tragedy rests with the manufacturer of the drug.

Dental Care

Deputy Patrick O’Donovan

I acknowledge the presence in the House of the Minister of State, Deputy Shortall. I wish her well in her role. Like other Deputies, since I was elected my attention has been drawn by a number of parents to the issues of orthodontics and dental care, especially as they relate to children. When I did some research into the operation and governance of the dental profession in Ireland, I discovered that in both 2002 and 2005, joint Oireachtas committees produced recommendations on how the dental strategy in this country should be operated. Nine years on from the 2002 report and six years on from the 2005 report, the situation is no better and is probably worse. I have spoken to parents who are frustrated because their children's teeth are getting worse as waiting times increase.

I am struck by the length of time for which the position of chief dental officer has been vacant. I understand there is an embargo on recruitment into the public sector and I appreciate the implications of the filling of posts. Having said that, the need for a chief dental officer cannot be underestimated, particularly given that the Dentists Act 1985 provided for the establishment of the grade of dental therapist, as an assistant to dentists and orthodontists, in order to help the State to reduce waiting lists. Unfortunately, that was never realised. As things stand, an Irish person who receives a dental therapy qualification in the UK is not allowed to practice in Ireland. If such a person presents himself or herself to the Dental Council, he or she will essentially be asking the council not only to ratify him or her but also to ratify the course he or she studied in the UK.

The international experience in this regard is that waiting lists for orthodontic care, especially for children in their formative years, are much shorter in countries where a different strategy is pursued. There has been a reluctance to consider such approaches in Ireland, for whatever reason. It is a pity we are still in such a position, 26 years after the original legislation was passed. I understand the Dental Council is considering giving acknowledgment to a course that can be studied in the UK. It should be noted, however, that the General Dental Council in the UK currently accepts seven courses as suitable for a person who wishes to work as a dental therapist there. None of them is currently recognised in this country.

Ireland is unique in western Europe for its failure to make great headway in increasing the number of people who receive dental treatment. I acknowledge the presence in the Chamber of the Minister, Deputy Noonan. During his tenure as Minister for Health in the rainbow coalition of the 1990s, massive progress was made at St. James's Hospital in Dublin. The strategy that was applied was different from that we are used to now. A similar strategy was applied by the former Mid-Western Health Board. All of that good work disappeared with the abolition of the health boards and the creation of the bureaucratic monster that is the HSE.

Is there an appetite for dealing with this within the Department of Health, the HSE and the dental profession itself? Having spoken to some of those who work in this sector and some of the parents of children on waiting lists, it seems there is a reluctance to deal with the issue effectively.

To cite a specific case, a journal published in 2010 in Camarthenshire in Wales indicated that orthodontic therapists could treat 2,268 children in one year. This is a substantial number of children and given that rural Wales is not much different from any area of Ireland, I ask that the Minister of State examine the issue, particularly in light of the reluctance shown to date towards implementing the recommendations made by the joint Oireachtas committee in 2002 and 2005.

While I accept that we face budgetary constraints, constituents have visited my clinic to show me pictures of their children's teeth or present their children in person in order that I can look in their mouths. I am then placed in the unenviable position of having to inform them that their child may have to wait for two or three years for treatment. I ask the Minister of State to raise this matter with the Minister for Health and I look forward to a response.

Deputy Róisín Shortall

I thank Deputy O'Donovan for raising this issue. Oral health services span primary, secondary and tertiary care services, including acute hospitals. The Department of Health agrees objectives and performance indicators with the Health Service Executive for the public dental service and dental treatment services scheme, DTSS, and oversees the development of policy and service delivery in this regard. The DTSS is provided by contracted dental practitioners and the public dental service is provided by salaried dental staff of the HSE.

The current goal for the DTSS is the provision of a basic level of service within budget to medical card holders. Unfortunately, owing to the current position of the public finances, it has been deemed necessary to reduce the services available under the scheme. However the Health Service Executive has measures in place to ensure patients with special needs, high risk patients and those who have greater clinical needs receive priority for treatment. In addition, a free oral examination every calendar year and free emergency dental treatment with a focus on the relief of pain and sepsis are available to all eligible patients.

The current goals for the public dental service are the provision of pain and emergency services for children aged under 16 years and routine care for targeted classes of primary school children with the provision of advanced, specialist and consultant care in hospital settings. Orthodontic services, which are also delivered by salaried dental staff of the HSE, are provided to eligible patients based on the level of clinical need. Oral and maxillofacial surgery are delivered either by secondary or tertiary services. The HSE intends to review the delivery of orthodontic services and all possible avenues related to internationally recognised models of good practice will be considered in that context.

The HSE is implementing the recommendations of the strategic review of the management and delivery of dental services undertaken in 2010. This includes the development of a national oral health office and an inspectorate. A national oral health lead has been appointed on an interim basis and is leading the implementation of the recommendations, which place a particular emphasis on probity and governance issues.

The National Recovery Plan 2012-2014 provides for changes in the existing range of dental services and supports provided through the health care and social protection systems to improve access to essential dental services for those most in need. This proposal is being considered in the context of the comprehensive review of expenditure. The current moratorium on the filling of posts has meant the Department of Health has not been in a position to fill the post of chief dental officer. Future decisions on this post will be taken against the backdrop of the Department's need to balance the delivery of business priorities with falling levels of overall resources.

Deputy Patrick O’Donovan

While I appreciate the Minister of State's comments on the current economic climate, the appointment of auxiliary personnel working in orthodontic teams, as they are described in Finland, offers the potential to achieve much better outcomes using the same level of resources. It is an indictment of all Governments since 1985 that the model of delivering orthodontic services has not changed in the past 25 years. I welcome the Minister of State's commitment to examine this issue. At present, the role of chief dental officer is being performed in an acting capacity. The position must be afforded the priority it deserves if we are to drive forward the delivery of the orthodontic service.

Deputy Róisín Shortall

I concur with Deputy O'Donovan that we can achieve more with existing resources and I am keen to change the way in which services are delivered. I am also sympathetic to his call for the appointment of a chief dental officer. I hope we will be able to take a decision on the matter when the position becomes clearer in the new year.

General Government Debt

Deputy Michael McGrath

It does not give me any pleasure to raise this issue, which can only be described as a humiliating schoolboy error committed by the Department of Finance in the calculation of Ireland's official debt figure, the general Government debt. Ordinary people can justifiably ask how the State authorities can make a mistake of the magnitude involved when calculating a figure of such importance as the official debt position of the country at the end of 2010. One question which immediately springs to mind is why a reconciliation was not done between the balance of the general government debt at the end of 2009 and 2010, respectively, as one would expect from the point of view of basic financial control. Why was an exercise not done showing the opening position, followed by all the movements over the period and arriving at the closing position? It is clear that such an exercise was not done in this case.

A more detailed examination of the figures highlights how grave the mistake was. The opening position as at the end of 2009 was a general Government debt of €105 billion. At the end of 2010 the equivalent and incorrect figure reported was €148 billion. This indicates a movement of €43 billion over the course of the year, of which €31 billion was accounted for by the promissory notes. The net movement, therefore, when one omits the value of the promissory notes, was an increase in general Government debt of only €12 billion. Given that the figure was overstated by €3.6 billion, the miscalculation accounted for approximately 40% of the net movement, which is an astounding error. It is especially astonishing when one considers that this is the standard measure of a country's indebtedness, the figure used across the European Union by investors when they are examining a country's total debt position as part of their investment decisions.

It is fortunate that the error in this case was favourable. While it is embarrassing, it would be much more difficult for the Government or anyone else to explain a scenario in which the total debt position had been understated by €3.6 billion at the end of 2010. Mistakes such as this undermine the credibility and integrity of information being provided by Government bodies on issues as sensitive as the debt position.

The explanation for the error has not been adequate and I hope the Minister will be able to shed further light on the matter. The National Treasury Management Agency stated it brought the matter to the attention of the Department of Finance on a number of occasions from the autumn of 2010 onwards. How many times did it raise the issue with the Department? Did it bring it to the attention of one official who then failed to act in an appropriate manner? It is important that the Minister sets out the chain of events, including the correspondence between the NTMA and Department on when the potential of double-counting the sum of €3.6 billion was first raised.

It is noteworthy that the NTMA included the incorrect figure in its own annual report and annual accounts published on 21 July 2011. If it had concerns about the figure, why did it include it in its official report and annual accounts which were signed off by the chief executive? The error also slipped passed the Comptroller and Auditor General. As the Minister indicated in his interview on "Morning Ireland" today, the accounts in question were signed off on 19 September last and included the incorrect figure. We need to know the precise chain of events, including the date on which the matter was first raised with the Department by the NTMA, the number of times the agency raised it, the reason the information was not acted on and when the Minister first found out the mistake was in the accounts.

Minister for Finance (Deputy Michael Noonan)

I thank Deputy McGrath for raising this serious and important issue. I will give the Deputy the information I have to hand, but if it needs to be supplemented later, I will provide additional information.

My Department has informed me that the general Government debt figure reported to EUROSTAT at the end of September last for the period up to the end of 2010 overstated the actual debt figure as a result of a double count. The reported figure for the end of 2010 was €148 billion, which overstated the amount by €3.6 billion. From the immediate review of the records to hand, it is the case that the matter was signalled at a technical level to the Department by the NTMA last year. At this stage it is too early to be definite as to what action was taken, but it would seem that the significance of the matter was not appreciated at that time. I understand that "last year" refers to August 2010.

In the context of the current work under way for the publication of the forecasts later this week, the information was again raised by the NTMA at an official level with my Department. Following examination of the issue by my officials, together with the Central Statistics Office and the NTMA, and after establishing that a double count had occurred, I was informed of the issue yesterday and briefed in detail on it. The CSO has already informed EUROSTAT about the double count and the information has also been communicated to the European Union and the IMF. The record shows the NTMA contacted the Department twice, one contact last August which was not acted on and one while we were preparing the figures for the coming Friday's publication, which has been acted on. The NTMA may also have made verbal contact, but I do not know that. The record shows the number of contacts to be two.

The double count in our debt figures arose because in 2010 the Housing Finance Agency, HFA, borrowed directly from the NTMA instead of from the open market. General Government debt is compiled by adding the central Government debt borrowed by the NTMA to debt sourced on the open market by other Government bodies. However, when the HFA borrowed from the NTMA, the €3.6 billion in question was already in the central Government debt figure. As the liabilities of the HFA were then added to arrive at the general Government debt figure, the €3.6 billion was counted twice.

Before turning to how this could have happened, I want to address the issue of what the revision means in terms of the Irish economy and public finances. First of all, our debt to GDP ratio for the end of 2010 is now 92.6% of GDP, not the 94.9% previously published. The reduction to the base at the end of 2010 due to this correction has been improved by 2.3% of GDP. This means that our projected peak level of general Government debt will be lower than previously forecast. The details will be made clear in the medium-term fiscal statement that will be published this Friday. However, this revision did not change the net debt position for 2010 — the general Government debt less liquid assets and cash — and does not have any effect on the general Government deficit for 2010 or for this year. In overall terms, Ireland is no better or worse off and the target deficit consolidation for 2012 and future years, to which we are fully committed, has not changed. Suppose, for example, a person got an incorrect statement from his bank which understated his current account by €500. The correction of the error in the statement would not make the person any better off. He would still have the €500 in his account — no more and no less. That is the situation. The total debt is being reduced, but this has no effect on the budgetary position whatsoever.

The questions to be addressed now are whether the mistake could have been prevented and what should be done to ensure that such errors do not happen in the future. This is a serious issue and I am determined that the necessary lessons are learned and immediately acted upon. It is clear there has been a systems failure. The Secretary General of the Department of Finance has already asked for a full report on the matter and will arrange for an external review of the systems in the Department, the NTMA and the CSO to be carried out in order that I have the necessary information to be satisfied that any systems errors have been addressed. Once I have the full facts of the matter, we will be better placed to establish the processes and systems we need to implement to ensure the data supplied by the State are robust and beyond doubt.

That is my information to date. If further information comes to me, I will communicate it to the Deputy and the House.

Deputy Michael McGrath

I thank the Ceann Comhairle for selecting this important issue. The statement made by the NTMA yesterday gave the impression that the issue had been raised repeatedly. It suggested it had raised the matter on a number of occasions, from as far back as autumn 2010. The Minister's information is that it was raised once in August 2010 and quite recently in the context of the preparation of the medium-term fiscal plan. Clearly there has been a breakdown at a number of levels. We had a breakdown of procedures in the Department of Finance in that it made the incorrect calculation. The NTMA says the Department is responsible for that calculation. Then, when the mistake was brought to the attention of the Department at a so-called technical level in August last year, it was not acted on. We need to know why and need more detail on that. There is also a question for the NTMA as to why, having signalled this error in August 2010, it included the incorrect figure, about which it had suspicions, in its annual report and accounts published in July 2011. There are, therefore, outstanding questions that need to be answered.

I welcome the fact the Minister has commissioned a report. If I understand correctly, that report is to be prepared by the Secretary General of the Department of Finance, to be followed by an external review of the systems. The review into the matter should be conducted by an external person given that officials in the Department are involved at the heart of the issue. The Minister should ensure an independent external person is appointed to carry out the investigation and that the report is returned to him and published. It is wholly unsatisfactory that Ireland's official debt position was overstated by more than 2% of GDP and that foreign investors looking at Ireland over recent months would have been basing their investment decision on incorrect information. This is deeply unsatisfactory. I hope the Minister will ensure there is an external review of what has happened in this case. There are also questions for the NTMA and the Minister should take those up with the agency and report back to the House on the outcome.

Deputy Michael Noonan

The Deputy may well be right in what he says, but the documentary evidence available is that the NTMA e-mailed a particular person in the Department of Finance questioning the manner in which this was treated. That was in August 2010. There is no indication and I do not believe for minute that my predecessor, Brian Lenihan, was informed of this. Therefore, I am not trying to spread the blame at all. It came to light at the start of the preparation of the figures for the budget — the budgetary process — and it came to light again this year in preparation for the statement to be issued by me on Friday on the fiscal position into the future. Obviously, the level of our debt is one of the crucial numbers included. An e-mail came again on that, but to a different official. It was acted upon this time, but not the first time. I do not know whether the NTMA rang officials or whether it had private conversations or what kind of interpersonal exchange took place between it and Department of Finance officials who are in contact with it at several levels every day. The record shows a couple of e-mails.

With regard to the inquiry and where we go from here, it is important to find out what happened and what caused the mistake to occur. So far, it looks like human error on the part of a particular official. That is not the big issue. Chasing an official in the Department of Finance who made a mistake is not the big issue. The issue is whether the systems are in place to ensure the figures are correct. We all know the word "systemic" from previous exchanges in House. The issue is whether there is a systemic problem in that section of the Department of Finance. Human errors occur, but whether this is a company or a section of a Department, we expect that where a human error occurs, the checks and balances within the system will ensure that somebody elsewhere in the process will discover the error. That is how we trap, correct and contain mistakes. I am quite happy to let the Secretary General inquire to establish in further detail the facts of the situation in respect of the error. However, an examination of the situation to see if we need to change systems will have to be conducted by an outside agency, as the Deputy rightly says. That cannot be internal and it has to examine the section in the Department of Finance, the relevant section in the CSO and the NTMA, because it occurred in the relationships between the three.

The system failed again when it was not picked up and when the Comptroller and Auditor General examined the 2010 accounts and reported to the House in September 2011. In fairness to the Comptroller and Auditor General and his staff, his primary scrutiny when looking at Departments is to track money in and out. While this would be within his remit, the overall figure for the debt would not be his primary concern when he is examining the account of a Department. I am not making a criticism of the Comptroller and Auditor General.

Bank Guarantee Scheme

Deputy Stephen Donnelly

I think it is fair to say there is agreement across the House that there is no moral or legal obligation on us to pay the bond due to be paid today by the Irish Bank Resolution Corporation Limited, formerly Anglo Irish Bank Corporation Limited. I agree with the Minister's own assessment from last year that it is a disaster and obscene thing for us to be doing. Taking that for granted, I would just like to understand why we are doing it. In his own speech last December, he dismissed the contagion argument, and I agree with that assessment. He pointed out that paying the bonds worsens our reputation, as has been borne out since, because we are now graded as lower than junk status. I also agree with that. This only leaves one argument, which is this assertion that the ECB believes that not paying this money back to the speculators would collapse the European banking system in some way. The IMF does not agree with that.

My understanding of the argument is that the ECB is forcing us to pay these speculators and if we do not, it has one of two options available which it will invoke. The first is that it will increase the interest rate for the emergency liquidity assistance and the second is that it can remove that emergency liquidity assistance. Doing either of those things would destabilise the Irish banking system and would cause exactly what the ECB claims it is trying to avoid.

Within that context, I would appreciate the Minister's position on the following two questions. Why does he think the ECB is credible if carrying out that threat on behalf of the ECB will cause what it is trying to avoid? Has the Government done a risk analysis of the cost of the ECB pulling either of these triggers relative to the costs of paying the bondholders?

Deputy Mick Wallace

Thank you, a Cheann Comhairle, for selecting this topic. I accept that the Minister has been dealt a terrible hand, but I think the goalposts have moved in Europe. I do not think we should continue to give a certain impression to the Europeans about things. We are eager to be positive and there is nothing wrong with that. However, we are not calling our position as stark as it might be. I wonder if Chancellor Merkel is quite aware of just how difficult things are for many Irish people. It is all very well for her to stand up in the Bundestag and say nice things about us and how well we are doing. I would like her to come over here and have a look at some of the things that are going on here at the moment owing to the austerity measures we have been obliged to introduce.

Our domestic economy is in a poor place. Life is so difficult for 450,000 people who are unemployed. We are cutting learning support SNAs and language support to the marginalised in our society. We are closing hospital beds to balance budgets. If Chancellor Merkel came over here, perhaps she would be a little bit more sympathetic.

Someone stated the following in an article in The Guardian today:

Greece quitting the euro of its own accord would probably come as a surprise to policymakers in the EU. They never really intended to drive Greece out since the risk to banks would be enormous. Misled by the meek attitude of the Greek government, they imposed ever harsher measures, imagining they were doing Greeks a favour. Someone in the bubble of Brussels should have told the decision-makers what was really happening among Greece's grassroots.

Chancellor Merkel might be more sympathetic if we gave her a clearer view of how difficult things are for many people.

Deputy Michael Noonan

I will read the prepared reply first and then will answer questions if we have the time.

It has always been my position that, given the significant cost of Anglo Irish Bank Corporation Limited and the Irish Nationwide Building Society, now known as the Irish Bank Resolution Corporation Limited, to the Irish State and the Irish taxpayer, there should be no repayment of unguaranteed senior unsecured debt. To avoid such repayments, the most logical option would have been to put the bank into administration. This was an option available to the previous Government, but instead it put the taxpayer on the line for the liabilities of the IBRC.

If we were to suspend payments to creditors in the IBRC, this would have a significant impact on both the bank and ultimately the State. This senior debt, unsecured as it is, is an obligation of the bank. If the bank does not meet such obligations, it would lead to a default and, following that, most likely insolvency. This would result in a significant increase in the cost to the State to resolve the IBRC.

In the period from the introduction of the guarantee in September 2008 to 31 December 2010, the previous Government allowed substantial repayments of around €20 billion of senior debt for the IBRC. One would gag on the hypocrisy of a party leader standing up here today complaining about a repayment of €750 million when his own party had already paid up to €20 billion to the creditors of Anglo Irish Bank. Since coming into Government, we have explored options with our European partners on senior debt burden sharing. As I stated after my meeting with ECB President Trichet and Commissioner Rehn last month, our European partners expressed strong reservations about burden sharing with senior bondholders in IBRC. Mr. Trichet voiced his opinion that he is against such actions for two reasons. First, private sector involvement carries very significant contagion risk and may be inconsistent with encouraging private investors to return to markets. Second, he said Ireland had done particularly well over the summer. He mentioned the narrowing of bond spreads and he said that he felt that anything to do with senior debt burden sharing might knock the confidence of the market in the absolute commitment of the Government to take its place once again in normally functioning markets. As a result, bond yields could widen again and we would lose the ground we had gained.

Mr. Trichet's views were echoed by Commissioner Rehn. The positive international commentary on Ireland has been created by the Government's successful renegotiation of the memorandum of understanding, the introduction of the jobs initiative, the sizeable reduction of the interest rate on the EU-IMF programme and the reduction in the cost of the banks to the taxpayer. The value of support, present and future, we receive from our European partners far outweighs any short-term gain from imposing burden sharing on these bonds in the face of European opposition to such a move. For example, €110 billion of funding is provided by the ECB and the Central Bank of Ireland to the Irish banks at a cost of 1.5%, a figure below which they could borrow in the market. This is in addition to the €85 billion set out in the programme with the troika.

However, we still have unfinished business with our partners to find the most cost-effective way of resolving the IBRC over the long term. Technical discussions between officials are under way at present on the IBRC promissory notes. For these reasons, I have decided not to take unilateral action on burden sharing on IBRC senior debt. Therefore, the IBRC has today repaid senior debt of $1 billion, which is around €700 million. This was a publicly traded senior liability and, as noted earlier, the bank was contractually obliged to repay this liability on its maturity date. The IBRC has announced the sale of its €9.2 billion loan book in the United States. The process is continuing and approximately €3.5 billion in gross loans have transferred to buyers. The net proceeds from the sale will allow the bank to repay these unguaranteed bonds and also to reduce its borrowings, including emergency liquidity assistance from the Irish Central Bank. It is important to state that the redemption of the bond will be made by the IBRC. It will not be funded by the Exchequer.

Both of the Deputies were in the House this morning, or at least Deputy Donnelly was, when the Taoiseach read out a quote from my predecessor as Minister, Brian Lenihan, stating that when he introduced the issue of burden sharing by senior bondholders with the European Central Bank back in December, he was told that if he pursued that course of action there would be no programme. Thus, it is not just the threat of increased interest rates or a turning off of the tap of liquidity to the banking system. By the way, neither of these threats was ever made, but the point I am making is that these were not our only concerns. There was also the concern about the collapse of the programme. If the programme collapsed, we would have to make the full adjustment in one year. To reply to Deputy Wallace, that is when we would really have problems in this country, if we had to make the adjustment that is paced out to 2015 in one year so that our revenue receipts matched our expenditure. That would devastate public services.

This is a judgment call. I do not like it, and I have not changed my position on it. It is a choice between two evils, as far as I am concerned, and the decision we are making is the lesser of two evils. It is my judgment and that of the Government that it is more in the interests of the Irish people to grit our teeth and allow Anglo Irish Bank to pay the bond than to default, because default takes us over the edge of the cliff. As the situation in Greece deteriorates by the day, could the Deputies imagine what would happen if, from the point of view of the euro, a second front was opened in Ireland by a default? It could bring the whole thing down. I am not prepared to put the Irish people or this House in that position and I take that responsibility.

Deputy Jerry Buttimer

Hear, hear.

Deputy Stephen Donnelly

In the Minister's prepared statement, the two arguments he gave from Mr. Trichet were ones that he himself dismissed when in Opposition. He absolutely dismissed them. I agree with his previous analysis and I do not accept Mr. Trichet's analysis. I do not accept that there is a significant risk of contagion from not paying bonds such as the one today. I simply think he is talking nonsense, and the Minister himself said exactly the same thing in this House when he was sitting in Opposition less than a year ago.

My question is about the emergency liquidity assistance. The Minister is saying that no threats were made. Actually, the threat is the collapse of the IMF agreement. I think he said that no threats were made on the interest rate.

Deputy Michael Noonan

I will clarify that.

Deputy Stephen Donnelly

The Minister said the real threat is on the IMF agreement. The agreement, as we all know, says nothing about these bonds, and therefore we are being held not just to an IMF agreement but to something beyond that agreement. I encourage the Minister to provide anything on the record to Members of the House in order that we can debate that and consider the cost-benefit analysis. I accept it is his judgment, but as fellow Members of Parliament it would be useful for us to be able to make judgments, and for that we need more than the Minister's say-so.

Deputy Mick Wallace

The Minister is saying that if we were to refuse to pay the unsecured bondholders on this occasion, it would likely result in Armageddon and it would be a bit of a disaster. The rules are changing. Things are not as they were in Europe even last month, and they will change more. Bondholders will take it on the chin a lot more, and not just what they took in Greece last week. They will be taking more haircuts in the next two years. I am not saying we will fall out with the Europeans, but we need to put more pressure on Europe to give us a fairer deal. Everybody realises at this stage that bondholders will not continue to get all their money in the next two years. It is time the ECB got real and took that on board in dealing with our problems. Rather than being dogmatic with us — telling us we have to do this or that — it must give a little more leverage.

Deputy Michael Noonan

Deputy Donnelly asked about the connection between the programme in which we are involved and the repayment of senior debt. The bit that is on the record is what the late Brian Lenihan said in this House before Christmas last year when he said it was made absolutely clear to him by the European Central Bank that if there was any talk of burden sharing with senior bondholders, there would be no programme. That is the connection between the two.

With regard to threats, the ECB does not operate that way. Jean-Claude Trichet is a perfect gentleman and I have had several conversations with him and with others in the ECB. It is also true, however, that when I start discussing in the same conversation the possibility of burden sharing with senior bondholders, I am always reminded of all the ECB has done for Ireland and how it kept the Irish banking system going with liquidity. Even now, when we have reduced the amount dramatically through deleveraging and accessing funds on the wholesale market, it is still €110 billion. It never threatened to raise the interest rate either, but it is also mentioned in conversation that not only is the ECB giving Ireland all this money, it is giving it at very favourable interest rates, and it will continue to do so.

Deputy Stephen Donnelly

Is there an implicit threat?

Deputy Michael Noonan

The Deputy must make up his mind. These facts——

Deputy Stephen Donnelly

I am asking the Minister.

Deputy Michael Noonan

I think there is a risk. These facts are put on the table in the politest possible way in the course of the discussion, and we did not make headway on it, but there was never any statement that the bank would not continue to support us, and it has been very helpful to us elsewhere. It is also my judgment that the best way to succeed is to continue to negotiate the programme. We did it in May and July and we have set up a position of negotiation to reduce the debt burden, which will be ongoing into next year. To do that successfully, we need the goodwill of the European authorities, and we have it. It is not that those concerned are giving us pats on the head; they actually think we are doing a good job. They are prepared to work with us and they have told us they will continue to work with us.

I agree with Deputy Wallace that the situation is evolving rapidly in Europe, but we have not withdrawn from the renegotiation. Our primary commitment at election time was that we would renegotiate the programme, and we are renegotiating it in phases. We did the May phase and the July phase on interest rates and we are now trying to position ourselves for a phase in which we will get a reduction on the burden of debt. There are various ways of doing that, and what I have in mind is the objective of taking a tranche of that off the shoulders of the Irish taxpayer, rather than the methodology of getting there. One option is to pursue the promissory note, which we are actively doing. It would be of great benefit if we could re-engineer the financing of the promissory note, and there would be no default or restructuring. However, there are other options, and we are pursuing those also.