Euro Area Loan Facility (Amendment) Bill 2013: Second Stage

Minister of State at the Department of the Environment, Community and Local Government (Deputy Fergus O'Dowd)

I move: "That the Bill be now read a Second Time."

Ba mhaith liom buíochas an Aire Airgeadais a chur faoi bhráid na Dála as ucht an Bhille seo a thógáil anocht. Tá sé tábhachtach go dtógfaí an Bille mar tá sé práinneach ó thaobh an mhargaidh nua atá déanta idir an Ghréig, an tAontas Eorpach agus na hAirí Airgeadais go léir.

I thank the House, on behalf of the Minister for Finance, for agreeing to discuss the Euro Area Loan Facility (Amendment) Bill 2013 today. This Bill allows Ireland to ratify the changes to the Greek loan facility required to implement the new programme of assistance for Greece as agreed by the Eurogroup finance Ministers in December last year. In order for the enhanced assistance provided under these amendments to the Greek loan facility to be made available to Greece as quickly as possible, all eurozone member states have been asked to complete their national procedures by early next month. The Bill is therefore being treated as urgent, with all stages in the Dáil being taken this week, and all stages in the Seanad scheduled for next week.

The purpose of the Bill is, first, to further facilitate, in the public interest, the financial stability of the European Union and the safeguarding of the financial stability of the euro area as a whole. Essentially, the amendment agreement is required to facilitate implementation of changes to the Greek loan facility approved by the euro area finance Ministers in December 2012, subject to national ratification procedures. These measures are the lengthening of the term of the loan to a maximum of 30 years, and a further reduction in the margin to 50 basis points. The second purpose is to provide that subsequent amendments to the Greek loan facility agreement can be approved by a resolution of Dáil Éireann pursuant to Article 29.5.2° of the Constitution, subject to certain conditions.

This is the third amendment to the Greek loan facility, so the House is by now familiar with its terms. However, I will give a brief outline of the development of this facility before addressing the changes covered by this Bill. As is widely known, for the last number of years Greece has been experiencing serious budgetary and economic problems and remains unable to secure international funding at sustainable rates. In order to safeguard the financial stability of the EU and the euro area, intergovernmental agreement was reached in May 2010 to provide a programme of financial assistance to Greece. This resulted in the provision of bilateral loans totalling €80 billion to Greece by the euro area member states along with IMF assistance of €30 billion over a three year period to mid-2013. The Euro Area Loan Facility Act 2010 ratified Ireland's participation in the agreement. Ireland loaned a gross amount of just above €347 million to Greece under this facility. When we entered our own programme of assistance in late 2010, we stepped out of the Greek loan facility. However, as Ireland is an original signatory to the Greek loan facility, our consent is required to implement any amendments to it.

Two previous amendments have been made to the Greek loan facility that required amendment of the Euro Area Loan Facility Act 2010. These were dealt with under the European Financial Stability Facility and Euro Area Loan Facility (Amendment) Act 2011 and the Euro Area Loan Facility (Amendment) Act 2012. The Euro Area Loan Facility Act 2010, as amended, must now be further amended before Ireland can confirm acceptance of the third amendment to the Greek loan facility.

In June 2011, euro area finance Ministers agreed to amend the Greek loan facility. These changes provided for the extension of the maturity period for loans from five to ten years, a change in the calculation of the margin on loans to Greece to give it a lower interest rate, and the extension of the grace period between drawdown and commencement of repayment from three to 4.5 years. Ireland ratified this first amendment to the Greek loan facility through the European Financial Stability Facility and Euro Area Loan Facility (Amendment) Act 2011 and our agreement to the amendment was confirmed with effect from 23 September 2011. It soon became evident that these amendments were insufficient and a need for further measures was recognised.

On 20 February 2012, Eurogroup finance Ministers approved a programme of assistance for Greece, including the second amendment to the Greek loan facility. This amendment included three key elements: a further extension of the grace period, of up to ten years, for paying back the loan principal; a further lengthening of the loan maturity to a minimum of 15 years; and a further reduction in the margin to 150 basis points to apply from the three month interest period that ended on 15 June 2011. These amendments were ratified by the Euro Area Loan Facility (Amendment) Act 2012.

Greece's problems have, however, continued, and its financial position remains a major cause for concern. In late 2012 it was agreed that additional measures would be required to assist Greece to meet its commitments under its programme of financial assistance. The measures agreed for this latest set of changes include a debt buyback of bonds held by private investors; a reduction of 100 basis points in the interest rate margin on the Greek loan facility, bringing it to 50 basis points - I would note here that other programme countries, such as Ireland, are not required to participate in this reduction while they are in receipt of financial assistance; the guarantee commitment fee on European financial stability facility, EFSF, loans to be cancelled; the maximum maturities of the loan to Greece to be extended by 15 years to 30 years; interest payments on EFSF loans to be deferred for ten years; and member states to pass on to Greece's segregated account an amount equivalent to the income on the securities market programme portfolio accruing to their national central bank as from budget year 2013. Again, member states under a full financial assistance programme are not required to participate in this scheme for the period in which they receive financial assistance.

All signatories to the Greek loan facility agreement have been requested to notify acceptance of the third amendment by 10 February 2013. This is to ensure the next phase of the Greek loan facility can proceed as planned from that date. It has been necessary therefore to bring forward the Euro Area Loan Facility (Amendment) Bill 2013 as a matter of urgency to ensure Ireland can confirm acceptance by that date.

It is also important to note that, as before, the new concessions to Greece will accrue in a phased manner and are conditional upon a strong implementation of the agreed reform measures in the programme period as well as in the post-programme surveillance period. Given this package of measures, particularly the extension of the loan maturities, it is likely that Greece will be subject to troika review for decades to come. In Ireland, on the other hand, we are currently preparing to exit our programme. Both Greece and the other euro area member states agree that it is only through the full and strict implementation of the fiscal consolidation and structural reform measures included in its programme that Greece will regain competitiveness and will be able to fund itself through the international markets.

As I have already mentioned, the Bill also contains provision for subsequent amendments to the Greek loan facility agreement to be approved by a resolution of Dáil Éireann pursuant to Article 29.5.2 of the Constitution, subject to certain conditions.

This is the third time that the Oireachtas has been asked to approve amendments to this legislation since it was enacted in May 2010. Since amendments to its terms are becoming more common, the Bill provides a mechanism to amend the Greek loan facility which will be recognised by way of primary legislation in the Bill and may be recognised as binding the State in the future by way of Dáil resolution made under Article 29.5.2° by amending the definition of that agreement to include such amendment as approved by positive resolution under Article 29.5.2° with a motion published in Iris Oifigiúil. This is similar to the approach taken in the Development Banks Act 2005.

It would appear to the Government to be more appropriate to provide for the ratification of technical amendments agreed to the Greek loan facility by way of resolution rather than through continued amendment of the legislation. This will apply to variances of terms and conditions such as interest rates, margins, maturity periods and grace periods. Changes to the Greek loan facility which require substantive changes to primary legislation or to substantive Irish law, including any proposal to raise the amount to be spent by non-voted expenditure, will still require new primary legislation. The inclusion of the provision to allow for certain future changes to the Greek loan facility agreement to be agreed by resolution of the Dáil is not to be taken as indicating any particular expectation of further changes. It merely facilitates a more efficient means of giving effect to certain types of future such changes if they were to arise.

Some will ask why Ireland is not seeking or being offered the Greek package, or one similar to it. I would respond by strongly emphasising that it is important to differentiate between Ireland and Greece. Ireland's situation differs in fundamental aspects to that of Greece. Therefore, one would want to approach the issues in a fundamentally different manner. In terms of fiscal and economic performance, there are several key differentiating factors. Greece's public debt prospects are of a different order of magnitude to Ireland's. Notwithstanding significant private sector involvement in March 2012, in its autumn forecast the European Commission still projected the Greek debt to GDP ratio to reach 188.4% at the end of 2013. This, combined with the worse than expected recession, prompted a reconsideration of Greece's debt sustainability. Even after the recent debt swap and taking account of the impact of structural reforms in raising both growth and revenue over the coming years, the IMF still expects Greek public sector debt to remain above 124% by 2020. The corresponding Department of Finance forecast for Ireland's public debt, published in last December's budget is for it to peak at 121% in 2013 and begin to decline thereafter.

The Greek economy is still in the throes of a recession that is more severe than anticipated. The troika expects Greek GDP to have contracted by 6% in 2012. Greek GDP has been contracting since 2008 and is expected to shrink by another 4.25% in 2013. By contrast, the Department of Finance estimates that GDP grew by 0.9% in Ireland last year and it is projected to increase by 1.5 % this year, with average annual growth of 2.7% forecast for the period 2014 to 2015. In Ireland's case, therefore, economic growth is helping to ensure debt sustainability. In Greece, the economy is shrinking and this is compounding the problem of an unsustainable debt burden.

A critical difference between the two economies in this regard relates to the importance of international trade. In Greece, exports amount to the equivalent of about 25% of GDP. This means that export growth is not in a position to provide much by way of offset to the contractionary effect of fiscal austerity. In Ireland, by contrast, exports amount to the equivalent of more than 100% of GDP which means that the growth of exports can provide a powerful offset to the impact of fiscal consolidation on economic activity. It therefore follows that what is appropriate for Greece is not necessarily appropriate for Ireland.

Ireland's route back to economic stability and financial sovereignty is different, shorter and less severe than that of Greece. That is not to play down the pain being experienced by many in this country, but this is not a case of one size fits all. Each programme is tailored to the economic factors at play in the relevant member state. In this context, in terms of the economic challenges facing Ireland and Greece and the best way to deal with them, Ireland's needs as a country exiting a programme are very different from those of Greece. We are, however, examining the Greek package to see if aspects of it offer any possible benefit to Ireland, particularly in the context of our programme exit.

The Bill provides for amendments to the Euro Area Loan Facility Act 2010, as amended by the European Financial Stability Facility and Euro Area Loan Facility (Amendment) Act 2011 and the Euro Area Loan Facility (Amendment) Act 2012. The Bill has four sections with the amendment of December 2012 to the loan facility agreement set out in the Schedule. The first section provides the definitions to the legislation. The second section provides for the third amendment to the Greek loan facility, dated December 2012, to be included in the references to the Euro Area Loan Facility Act 2010, as amended by the European Financial Stability Facility and Euro Area Loan Facility (Amendment) Act 2011 and the Euro Area Loan Facility (Amendment) Act 2012. The second section also provides that subsequent amendments to the Greek loan facility agreement may be approved by a resolution of Dáil Éireann, pursuant to Article 29.5.2° of the Constitution, to be published in Iris Oifigiúil. The third section provides for the third amendment to the loan facility agreement of December 2012 to be inserted as Schedule 4 to European Financial Stability Facility and Euro Area Loan Facility (Amendment) Act 2011. The fourth section provides that the Act may be cited as the Euro Area Loan Facility (Amendment) Act 2013. The Schedule contains the text of the amendment to the €80 billion loan facility agreement dated 19 December 2012.

This amending legislation includes the two elements I have outlined: the lengthening of the term of the loan to a maximum of 30 years and a reduction in the margin to 50 basis points. When we entered our EU-IMF programme we stepped out of the Greek loan facility. Before that happened, Ireland had provided a gross amount of €347.44 million to the Greek loan facility in 2010. Greece in fact received a net sum of €345.7 million from Ireland as 50 basis points in commission was deducted from the gross amount. Quarterly interest payments are being made by Greece on the gross amount. The 100 basis point reduction in the interest rate provided for in this set of amendments will apply once Ireland is no longer in receipt of financial assistance under a programme. When it does take effect, it is estimated that the interest we receive will fall by €3 million per annum to €6 million per annum. In addition, the extension of the maturity will extend the timeframe for repayment of the moneys advanced.

I look forward to a constructive debate on this Bill. It is essential that all eurozone countries answer the calls made on them to help the currency zone achieve renewed and sustainable financial stability fully and promptly. This Bill represents Ireland's latest contribution to this unquestionably desirable cause, and we must play our full part. Therefore, I would urge Deputies to agree to ratify the changes to the Greek loan facility. I commend this Bill to the House.

Deputy Michael McGrath

I welcome the Minister of State's opening statement on the Bill. Fianna Fáil will support this legislation but I want to lay down a marker that I am dissatisfied with section 2 and what the Minister of State is proposing, that any future changes to the Greek loan facility will not require primary legislation to be put before this House and will instead be approved by way of Dáil resolution.

Not only have we given approximately €350 million to Greece as part of its bailout arrangement, but it is also an important benchmark for Ireland in terms of any changes to its agreement with our European partners. I believe that any such changes should require a full debate in this House and the best way to do that is, as we are doing at present, by having a full legislative debate in respect of any change to the Greek loan facility.

It was very much in Ireland's interests that a successful conclusion to the recent round of Greek talks was reached. A disorderly default in Greece would have dire consequences for all eurozone countries and the contagion effect would certainly have caused a sharp rise in Irish bond yields. It is the case that there has been a general fall in bond yields among peripheral nations, not least in Ireland, and this has been beneficial for Europe as a whole. However, despite the more benign backdrop in recent times, my party does not believe in any sense that the eurozone crisis is resolved. Last year Citibank rated the prospects of Greece leaving the euro at 90%. Following the actions of the new ECB president, Mr. Mario Draghi, and his pledge to do whatever is necessary to preserve the eurozone, together with the measures agreed in November for Greece, Citibank now estimates the likelihood of a Greek exit to be approximately 60%.

The measures that are being provided for Greece, namely an extension of its loans from the European financial stability facility, EFSF, a ten-year deferral of interest and an extension of the maturity on both the Greek loan facility and the EFSF loans, will help it to some extent. Greece will benefit from having almost €53 billion of its debt at a lower interest rate and to be repaid over a much longer period of time. However, it is far from certain whether Greece will be able to stabilise its debt by 2020 as is intended.

The Greek economy is still experiencing negative growth and further painful fiscal adjustment lies ahead for the country and its people. In fact, it is still the case that their situation can still be described as little short of desperate. By 2014, their economy will be approximately one quarter smaller than it was in 2007. This represents a significant decline in living standards and is unleashing considerable hardship on its citizens. I welcome the fact that Greece's deficit is coming down, albeit slowly. It is expected to be approximately 7% in 2012. It will still be a considerable task to get it to the 3% Maastricht target. It is welcome that the Greek Government expects to run a primary surplus in 2013 which means the easing of the interest burden will be particularly helpful to it. However, the scale of the crisis facing Greece can be seen from its unemployment levels. The unemployment rate in Greece was 26.8% in October 2012, four times what it was in 2008. It is the youth unemployment figures in Greece that are truly frightening. The number aged between 15 and 24 out of work rose to 57% in October last, compared with 22% in the same month four years ago.

Questions must still be asked as to whether Greece has the capacity to deliver consistently on its pledges, particularly tax increases, improved tax collection, spending cuts, privatisation targets, structural reforms to the economy, public sector redundancies, and wage and pension cuts. I have heard it argued that European policymakers are setting dangerous precedents by granting further assistance to countries which fail to deliver on their programme commitments. However, the threat to the eurozone is so grave that cutting Greece adrift at this stage was not a viable option.

Apart from tourism, Greece has few sources of foreign earnings. It has a tiny export sector and few multinationals. The country was to a large extent closed to the outside world until its relatively recent return to democracy. Undoubtedly, the reputational damage it has inflicted on itself has put off some overseas investors. When we debated the Euro Area Loan Facility (Amendment) Bill last year, I argued that Greece needed more than merely more loans and cheap loans over extended periods. Its situation was reaching the point where it needed something akin to the Marshall aid plan which the United States extended to Europe after the Second World War. It is worth remembering that Ireland itself got investment under this plan of approximately $130 million. If Greece is not assisted to develop a sustainable industrial base capable of generating foreign earnings for itself then there is every reason to believe that in time we will be back debating a fourth, fifth or even sixth amendment to the terms of its loans. My view is that the European Investment Bank, EIB, should have a much expanded role to play in this regard.

In addition, Greece must tackle its woefully inadequate tax collection mechanism if it is to make a long-term recovery. In 2012, only 88 major taxpayers, including corporations, were the subject of full-scope audits, well below a target of 300. In addition, only 467 audits of high-wealth individuals were completed, compared with a goal of 1,300. In the run-up to our own budget, I was sharply critical of cuts to resources within Revenue. I pointed out that this was self-defeating and counterproductive, but none the less we are fortunate that Revenue has a strong record in identifying and tackling tax evasion. By contrast, a report for the troika concluded that in Greece necessary "changes have not yet been reflected in results in terms of improved tax inspection and collection". The report went on to state that the failure to pursue tax evaders aggressively is deepening social tensions. Interestingly, it suggested that, in terms of a crackdown on tax evasion, doctors and lawyers are a good place to start.

As is often said, Ireland is not Greece. In Ireland, a banking crisis precipitated a crisis in the public finances. This was made worse by a collapse in the employment intensive construction industry. Unfortunately, we now know that for years, in the case of Greece, public spending was deliberately understated. The basis on which it entered monetary union was highly questionable. In hindsight, it should probably never have joined the single currency at all as it was unprepared for the disciplines which inevitably come with being part of a single currency area.

While this sticking plaster will buy some time for Greece, we still need to confront the fact that the EU is embroiled in the most serious crisis since the launch of the project in the 1950s. In fact, while this week France and Germany celebrate the 50th anniversary of the Elysée treaty, the agreement that became the basis for their close co-operation on building an integrated European Union, it is very much the case that the crisis remains existential.

Four years on, Europe still has not put in place an agreed framework for winding down bust banks and ensuring all costs do not fall on the taxpayer. It is inexplicable that it has taken so long for European institutions to recognise that design flaws in the original eurozone project precipitated a banking crisis which in several countries, including our own, turned into a fully fledged fiscal crisis.

It is my view that the eurozone project now needs two sets of policy actions. The first is a redesign of monetary union taking account of the original design flaws and prescribing remedial action. The second is decisive action to assist economic recovery in the economically distressed countries, including both Greece and Ireland. In terms of the first requirement, a Europe-wide bank rescue fund is a necessary part of the solution. However, bank bondholders must bear the risk of loss also. Since the Minister for Finance's trip to Washington in summer 2011, that is effectively off the agenda for the few remaining unsecured unguaranteed bondholders in IBRC, but it should not be the case in the future. It is also my view that to mitigate the risk of further financial upheaval, bank deposits in all eurozone countries must be seen as equally secure. This means putting in place a Europe-wide deposit insurance scheme. I do not believe progress has been made to date in this regard.

A number of other items also need to be put in place, for instance, the formalising of the ECB's role in supervising banks. This needs to be a hands-on rather than a hands-off arrangement. In addition, its role as a lender of last resort should be formalised. While Mr. Mario Draghi has stated the EU will do everything necessary to preserve the euro, the exact range of measures the ECB has at its disposal need to be formally prescribed. Finally, the risk associated with emergency lending must be shared among all member states. This is not currently the case.

In addition to all these measures, to ensure the architecture of the currency union is fit for purpose we cannot separate this from the need for a comprehensive response to the difficulties of the bailout countries of Greece, Ireland, Portugal and, more recently, Cyprus. It is timely, therefore, that we are having this debate today, given the developments overnight in respect of Ireland's and Portugal's loans from the EFSF and the European financial stabilisation mechanism, EFSM.

We need to ask the question could and should Ireland get a similar deal and if it would be enough?

The June 2012 summit committed the EU to "examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme". There were essentially three ways in which this could be done: changes to the terms of the promissory notes; relief in respect of the continuing banks by means of the ESM taking stakes in the Irish banks; and changing the terms of the EU-IMF programme in a manner similar to the November 2012 Greek deal. By no stretch of the imagination could last night's discussions be considered a comprehensive solution or even a significant part of one. In fact all we got was a very small step in the right direction. However, it will only make a modest difference to our debt profile and the apparent absence of any interest deferral element means there is no immediate cash-flow benefit to the State. The torturous negotiations in respect of the promissory note need to be concluded in an expeditious manner and there is still no meaningful progress on a deal on the ESM taking a stake in the pillar banks.

From the very beginning of Ireland's programme, the IMF has been more flexible and innovative in proposing solutions to increase the chances of the Irish programme succeeding. We need to pay close attention the words of its most recent report that it will be difficult for Ireland to be able to borrow in the markets on a sustainable basis without further help from its EU partners. The report stated: "Given Ireland's high public and private debt levels and uncertain growth prospects, inadequate or delayed delivery on these commitments poses a significant risk that recently started market access could be curtailed, potentially hindering an exit from official financing at end 2013".

Consideration also needs to be given to the €3 billion to €5 billion in profits on which the ECB is sitting in respect of its holdings of Irish Government bonds. In the case of Greece, the ECB committed to repatriating these profits to the country and we should make a similar case now. The public want to see a real benefit to them from any measures that are agreed. Last night's tentative agreement will not change the reality of property tax, and cuts to child benefit and respite care, introduced in the recent budget.

A real game changer would be a deal that frees up resources for investment in job-supporting initiatives. To date that has not been forthcoming and the Government urgently needs to press the case for it. The time has passed whereby sticking plasters whether it be for Greece or Ireland will suffice. There have been more than 20 crisis summits since 2008 yet most countries will remain mired in an economic slump this year. One aspect of the solution has to be for Germany to examine its own economic strategy.

Last week the Spanish Prime Minister, Mr. Mariano Rajoy, made some prescient comments to the Financial Times. He was sharply critical of the one-size-fits-all fiscal policies which are leading to contraction in the eurozone overall. This is making it particularly difficult for countries such as Spain and indeed Ireland to bring about an export-led recovery while at the same time bringing down their deficits. Despite weak growth, Germany was still able to run a modest budget surplus last year. Incredibly further austerity measures are in the pipeline for Germany this year.

The domestic challenge of private and public sector deleveraging has meant that domestic demand continues to be weak. In these circumstances the only way for GDP to grow is from net exports. Ireland has been successful in this regard but the whole process would be made considerably easier if different policies were adopted in economies such as Germany. When we talk about game changers we need to keep in mind that rather than just tinkering with our bailout terms a much more comprehensive response to the crisis on a pan-European level is needed.

Deputy Pearse Doherty

Cuirim fáilte roimh an díospóireacht seo. Is mór an trua, mar atá ráite ag an chainteoir deireanach, má ghlacaimid leis an reachtaíocht seo gur seo an díospóireacht dheireanach a bheas againn ar athraithe ar bith do phacáiste na Gréige, ó thaobh reachtaíochta ag teacht os comhair na dTithe seo de. Rud dona don daonlathas é seo, go háirithe nuair atáimid ag caint ar dhá thír atá i gclár an troika. Feicfimid an damáiste atá an clár sin ag déanamh don daonlathas i ngach tír, sa Ghréig agus anseo, agus táimidne ag vótáil le níos mó daonlathais a bhaint as an Teach seo mar nach mbeimid ábalta é a phlé, ó thaobh reachtaíochta de.

Once again it is clear we are being asked to rubber-stamp another change to the bailout regime in Greece. Today marks another attempt at resuscitation of a bad policy by tweaking it. The austerity regime being heaped on the Greek people should be allowed to die. When things do not work in politics we should stop doing them. It is important that we are having this debate today after last night's meeting of the Eurogroup and today's meeting of ECOFIN. Last June we were told the Eurogroup had decided to separate banking and sovereign debt. We were told that this week's meeting on Monday would be about finalising the details of how the ESM would capitalise banks and how to deal with legacy debt. However, we find ourselves in the same situation as we were this time last year. They have tweaked our plan when in reality fundamental review is needed. It needs actual progress on recouping the taxpayers' money that was pumped into the pillar banks and a write-down of the Anglo Irish Bank debt which should never have been the people's debt.

What the people have been saying to me and, I am sure, to Government Members, is that they have had enough of the tweaking and spin. Those suffering most from austerity will be no better off tomorrow or even next year as a result of what the Government secured last night or as a result of its spin this morning. In Ireland’s case the need for a change is as clear as day. Austerity has meant a steady decrease in employment, a stagnant economy and forced emigration of its young, amounting to nearly 250,000 people since 2010. In Ireland’s case the troika must stop resisting reality. We need real deals, including a capital write-down on the promissory notes.

It is not enough to shift the burden to another generation by extending the repayment period. A deal on promissory notes must lead to a real reduction on our debt-GDP ratio. More critically - this is the litmus test of any deal - it must shift the burden away from the taxpayers and citizens who did not create the debt. The €28 billion outstanding on the promissory note needs to be paid back to the State. The promissory note should be torn up and should not be paid out. Any deal which does not reflect that is one that will disappoint me and the vast majority of people.

On our legacy debt and the debt we have injected into the pillar banks, €24 million, the remainder of the promissory note, people hope that this week's meetings of the Eurogroup and ECOFIN would bring us closer to the day when working citizens are no longer paying off the bankers' debt. However, based on the announcements last night and today, those hopes seem to have been dashed once again. There appears to be hardening of opinion on just how special Ireland is. The opposition of the triple-A Eurogroup countries to any deal on retrospective debt being recapitalised seems as resolute as ever. The comments this week from the Finnish Prime Minister who said that the old bank debts of Irish banks are, above all, a problem of the Irish Government is a worrying indication that the opposition of Germany, Finland and the Netherlands to a sustainable deal has not budged.

I have made this call numerous times and I repeat it now: the Government needs to up its game. After nearly two years of negotiations on this issue of banking debt, little if anything has been achieved. We have not got back one cent of the €64 billion that was pumped into or committed to the banks. Concrete and beneficial results are overdue. The commitment to consider extending the maturities of our EFSF loans and potentially our EFSM loans if it comes to pass is a small step in the right direction.

However, it is not the crux of what we need. What we need is a genuine resolution and not window dressing or Government spin. As in the case of Greece, the EU is now admitting its plan for Ireland was not good enough. This is a failure not alone of the EU but of those who sit around the table at the Eurogroup and ECOFIN, including our Minister for Finance and other Ministers for Finance across Europe, whose heads were stuck so far into the sands of austerity they could not see the reality that the Greek plan would never work and that the Irish plan too was flawed.

We were told that Ireland is not like Greece, that we would pay our way, meet our targets and would live happily ever after. However, this was never going to happen. This reality has finally been accepted. What we are witnessing is the beginning of a restructuring for Ireland, which is a start. It is long overdue. It is unfortunate this was only extracted after painful years of forcing the plan to work. The Government needs to seize this opportunity and put the ball in the back of the net. It is almost a year since the EU announced the separation of banking and sovereign debt yet the Government still has not run with the ball or been able to deal with this issue effectively. In the intervening period, different countries have started to take a more hard lined position.

We are now entering a critical period. If the Government stands up for Ireland it can achieve a real deal on restructuring that will be immediate and long term. It is naive to believe that the markets will not turn against Ireland if it does not receive a fair hand on the promissory note and the issue of legacy debt because the markets have factored this in. The Government should, as mentioned by the Minister of State in his speech, examine the Greek amendment in detail. Last November, Greece secured two essential things which the Irish Government has to date failed to secure, namely, a reduction in the interest rate and an interest holiday. These are key requirements. Neither seems to be on the table, which is a failure of the Government and its banking strategy.

Despite the assertion of the Minister for Finance last night that billions of euro will be saved, it appears, when one cuts away all of the spin, that during the term of office of this Government - which I expect will run to December 2015 - not a single cent will be saved by the Irish State or taxpayer based on what was announced last night. On waking this morning many people heard the spin that progress had been made on Ireland's debt deal. Listening to the Minister, Deputy Noonan, people would have thought millions of euro would be saved. The only potential for any savings, unless we get an interest holiday or interest reduction, neither of which appear to be on the cards, will be our not having to roll over these debts when they mature. Some of our loans from the EFSF are of 29 years duration. The term of one loan is 25 years and others are for shorter periods. The first time we could potentially save any money, without securing an interest holiday or interest reduction, will be in December 2015.

It is important to be up-front and frank with people. What people want to know when they hear progress has been made on the debt deal is if we will get back the €24 billion paid into the pillar banks or, at least, as much as possible of it. They want to know that when their taxes, including VAT and excise duties, will not end up in Anglo Irish Bank to pay off bankers' debt. They want to know if the impact on them today or next week, in terms of the austerity burden which they have been carrying, will be eased somehow by these pronouncements by our Minister for Finance as he emerges from the Eurogroup meeting. It is clear, when one cuts through all of the bull and studies the detail of what was announced, that without an interest reduction or interest holiday, which I understand are not yet on the table, there will be no savings whatsoever by this State until 2016 at the earliest.

I am on the record as saying last November when the Greek deal was announced that there were parts of the Greek deal which Ireland needed to examine and achieve. I also said that on its own this deal was insufficient as it would not reduce the overall burden of Greece and kept the foot of austerity firmly pressed on the Greek people. I still believe that. The events of this week are indicative of Ireland's failure to grasp the opportunity to, like Greece, secure a reduction in interest rates and an interest holiday. The argument that Ireland is not Greece and should not, therefore, be looking for the same benefits does not hold water. Some Ministers would like the people to believe that if we got the same preferential treatment as Greece, in terms of an interest holiday or interest reduction, we would, when we wake up in the morning, be able to speak Greek, which is not the case. Obviously if we got the same deal as Greece we would not have the debt to GDP ratio - 186% - of Greece but it would benefit us and leave us confident of being able to exit the programme we are in.

Ireland is unique. We expect fair play across Europe. There are positives in this Bill in terms of the interest rate reduction, extension of maturity and the interest holiday, which I welcome. It is clear that this was forced upon European leaders and that this was not done in solidarity to help the Greek people. It is also clear this came about as a result of the potential Greek exit and the realisation that Europe's plan, of which our Minister for Finance was part and which set targets of 120% of debt to GDP, was simply unrealisable, leaving Europe having to stick another plaster on the sore which is the Greek problem. Unfortunately, this will not go far enough and this will be proven correct after the passage of time.

While the extension of the period over which Greece can repay its loans and reduction in the interest rate is a pragmatic step, it is not being taken by choice by the EU or the troika rather, it is being forced upon them. What we should be trying to do is lift the weight of austerity off the Greek working people. Anything that would do so should be commended. What we really need is a reversal of the EU's total reliance on austerity as a solution to the ills whether those ills manifest themselves in Greece, Portugal, Germany or Ireland. Fundamentally, this new agreement is not about helping the Greek people. It is, once more, about protecting the system. It is not worthy of our support because it does not offer solidarity to the people of Greece. It recommits us - this is important - as a contributing country to forcing a bad economic policy on a country whose sovereignty and democratic institutions are not being recognised as they should be.

Let us be clear. What we are being asked to support is no let-up on the cuts being imposed on Greece. Every positive aspect of this deal is conditional on Greece continuing to cut wages and slash services. This is no great gesture of magnanimity or solidarity. It is a pragmatic admission that the programme designed by Europe was unrealistic to begin with. It is a sticking plaster on a gaping wound, and in terms of how it will improve the lives of the unemployed or vulnerable in Greece, it means a slightly less painful experience over a longer period.

We do not have the right to tell Greece that it must cut wages and essential public services. The EU cannot be absolved from responsibility for the Greek crisis. The broad macro-economic policies of the EU and the ECB contributed to the crash in the Greek economy. This is most definitely not a simple case of the EU riding to the rescue.

The man on the streets of Athens or the working family in a rural area are not responsible for the destruction of their country's economy. We must be honest in accepting it is not a purely unselfish act by the EU to include Ireland in committing to Greece. Greece is a part of Europe and it deserves our solidarity not our condescension.

I also note the Bill means no discussion will take place in the House with regard to future legislation if an adjustment to Greece’s programme emerges. This begs the obvious question as to how many more adjustments the EU and troika think will be necessary. They seem to be preparing for the long haul, and they are right because there is no way Greece will be able to meet the targets set for it. It points to a refusal to accept reality for as long as possible, and this has been a trait of Europe. It pretends the problem does not exist, sticks its head in the sand and does as little as possible for as long as possible.

For years, I, Sinn Féin and other commentators have pointed out the obvious, that Greece’s programme set for it by Europe was unsustainable, would not work, was cobbled together in an attempt to shore up market confidence, and has completely failed. The legislation before us is an example of the fact that it has failed time and time again. The adjustments before us today will do to nothing to boost growth or employment in Greece and nobody even claims they will. It is baffling how many times the EU can talk about growth and jobs and then implement policies which kill off any hope of achieving either. Unfortunately, this is the same approach taken by our Government also.

Once more the troika has put its faith in austerity as a policy. On occasion, the IMF has wobbled on this, but when push comes to shove it backs austerity over growth every time. We are now years into the euro crisis and growth and jobs are as elusive as ever. Starting at the top and working at every level on the way down, a change in direction is sorely needed. A change in direction means investment and stimulus at EU level and nationally in member states.

Today's debate has been punctured with figures and references to meeting targets and setting new ones, and it would be easy to forget in all of this that we are speaking about people and their future. Immediately we hold in our power today the ability at least to try to stop potentially another 30 years of austerity being forced onto the Greek nation. A total of 50% of young Greeks are unemployed. The anti-social and arbitrary nature of austerity has led many into the vicious arms of fascism. More generally, as a Parliament elected by the people we have the power to bring about policies which promote growth and job creation at home and, through our Presidency, throughout the EU. Unfortunately, the Government, the troika and its masters shown no interest in taking this route.

Fianna Fáil surrendered our sovereignty and this shame is its to carry. There comes a point when the Government must stand on its own record. To get back to targets, when we will see a target to reduce unemployment and when will we see it reached? When will we see a target set and met to reduce the number of children living in poverty in this country? Are we content that 23% of households are in mortgage distress as we tick the boxes our masters have set for us? Are we happy to rely on immigration and a generation with massive levels of unemployment to pay off the debts of future generations?

I have welcomed some of the positive aspects of the Bill for the people of Greece. However, on balance the deal must be seen as another attempt to force an unsustainable way of dealing with the Greek situation into a box into which it simply will not fit. Reality dictates that Greece needs a write-down on its EU loans like Ireland needs a write-down on its promissory note. Kicking this can down the road serves no purpose and directly leads to the misery of working people. Yesterday's announcement, as I stated earlier, was a small step forward but what we really need is the Government to keep its eye on the big prize. It needs to take the giant leaps forward. The big steps are obvious. We must make a write-down on the promissory note a reality, not a sleight of hand like we had last year. We need to recoup the €24 billion pumped into the pillar banks of AIB and Bank of Ireland. These demands should be put forward not only by Sinn Féin or me; they should be put forward in a forceful way by the Minister for Finance, the Taoiseach and every Minister. They say these are not optional extras but necessities on which the Government must deliver if we are to return to sustainable growth and ease the burden of austerity which is bearing down, and has borne down, so hard on people throughout the State. We should be under no illusion that there are big steps to be taken by the Government. The key question is whether the Government has the ability and willingness to take these steps.

I have said time and again that I wish the Government well in its negotiations in Europe on Ireland's debt. However, I cannot stand here in all honesty and subscribe to the type of spin which comes from the Government as it emerges from European meetings. We need the Government to do the serious job being left to it and deal with the burden passed to it from the previous Government which made those reckless decisions. It is not about extending maturities or saving billions of euro at some time in the future, if these billions even materialise. It is about the here and now, the people up the long lanes, those considering going to Australia, Canada or London, and those who cannot see the light at the end of the tunnel and want a reprieve now. The Government needs to start to demand this. It needs to up its game.

We need a deal on the debt now and not in three years or four years time. People cannot take any more of this. Unfortunately, we need to learn the lessons from Greece with regard to writing down debt. Our country has spiralled in the past. We can look at targets in terms of growth and exports, but I look at real people. I sit in their living rooms and speak to them. I hear what they have to say. As a spokesperson on finance I deal with facts and figures and official reports, but nothing can tell a story better than hearing it - I was going to say "from the horse's mouth" but we have had enough horse jokes in recent times - from the individuals themselves. This country lost its way in the past decade as a result of bad policy, but it has also lost its way in trying to resolve and untangle this.

The Government has made serious mistakes, and some of the mistakes being made now are creating problems for a future generation. It is time to step up to the mark. It is all right to be on the front page of a magazine accepting awards and being able to spin that this is hugely beneficial, but people on the street know how to measure these things and they want to see real progress and not spin.

Debate adjourned.

Dáil Éireann díospóireacht - Tuesday, 22 Jan 2013