Dáil Éireann díospóireacht -
Tuesday, 12 Feb 2013

Vol. 792 No. 1

Promissory Notes: Motion

Minister for Finance (Deputy Michael Noonan)

I move:

That:

Dáil Éireann welcomes the restructuring of the promissory notes provided for the IBRC, based on the outcome of discussions with the European Central Bank;

— recognises the benefit of the restructured arrangement for the State and its citizens, particularly:

— the removal of the promissory notes which will be exchanged for long-term Government bonds, with an average maturity of 34 to 35 years, as opposed to thepromissory notes' seven to eight year average maturity;

— the reduction in the State's general Government deficit of approximately €1 billion, 0.6% of GDP, per annum over the coming years, which will bring us €1 billioncloser to attaining our 3% deficit target by 2015;

— the reduction in the State's cash borrowing requirement over the next ten years by €20 billion;

— the significant element of the interest payments on the Government bonds that is expected ultimately to be returned to the Exchequer in the form of Central Bank dividends, while these bonds are retained by the Central Bank;

— the substantial improvement in the State's debt position over time;

— the removal of the remnants of the former Anglo Irish Bank and Irish Nationwide Building Society from the Irish financial system;

— the housing of all "wind down assets" in one entity, the National Asset Management Agency, which should lead to greater efficiency in their workout;

— commends the Government on progressing the commitment "to secure a Programme of Support and solution to the banking crisis that is perceived as more affordable by both the Irish public and international markets, thereby restoring confidence, growth, job creation and the State's access to affordable credit from private lenders"; and

— supports the Government's continuing efforts to foster economic growth and job creation which, in tandem with ongoing discussions on the extended remit of the European Stability Mechanism, will further improve the State's debt sustainability.

The elimination of the promissory notes last week meant it was a good week for the country. As a people, we can look forward once again with positive expectations. The promissory notes in Anglo Irish Bank and Irish Nationwide Building Society served as a millstone around the neck of the taxpayer.

This burden has eroded confidence and limited the economy's ability to grow. The Government has succeeded in alleviating this burden. It places the State in a position where the debt is more manageable and the State is provided with the space and time to recover and grow.

I note that every respected economic and political analyst has recognised that last week's agreement was the best possible outcome for Ireland. This shows what we can achieve as a country and a Government when we work together towards a common objective. We have rid Ireland of the annual 31 March promissory note repayment. We have reduced the State's cash borrowing requirement by €20 billion in the next ten years. We have brought the State €1 billion closer to meeting its deficit targets and consigned Anglo Irish Bank and Irish Nationwide Building Society to history.

I recognise that some on the Opposition benches have acknowledged the significant benefits of last week's deal for the country. It is a shame that others seem to be incapable of recognising positive developments for fear it may impact on their electoral strategy of negativity. It is truly appalling to devise a strategy of winning seats on the basis of hoping for the worst outcome for one's country.

I have heard Sinn Féin's criticism that the Government did not demand a repudiation of the promissory notes. However, as Sinn Féin knows from its experience during the Good Friday Agreement negotiations, it is pointless sticking rigidly to a position that will prevent an agreement which is in everyone's interests. Sinn Féin knows this full well, as it showed through its negotiating realism in not demanding a united Ireland as a precondition in the Good Friday Agreement talks. This is yet another example of how it talks very differently on this side of the Border from what it does in the North.

There are some in this House who seem to be determined to follow the policy of default, no matter what the consequences for those most reliant on the State. The reality is that the promissory notes have been part of the general Government debt since they were issued in March 2010. They can be seen in all national and European statistical releases since; therefore, a non-payment would have been a default. Like many others, I have detailed the dire consequences for all citizens of such a policy of default and I do not propose to repeat them yet again.

It is worthwhile revisiting the origins of the promissory notes. The concept of the promissory note was born out of the need to provide Irish Bank Resolution Corporation Limited, IBRC, and other institutions with sufficient capital. To minimise the impact this would have had on Exchequer borrowing, a promissory note was issued to the IBRC instead of Government bonds. The promissory notes were, by their nature and structure, unsatisfactory. From the State's perspective, the high interest rate and the amortising repayment schedule placed a considerable burden on the State's resources, particularly at a time when the current deficit had to be addressed. In addition, they required fortnightly approval for collateral purposes from the Central Bank and the European Central Bank, ECB, thus creating a long-term structural liquidity issue for the banking sector as a whole. From both the Central Bank's and the ECB's viewpoint, the use of exceptional liquidity assistance for long-term funding was also problematic. Exceptional liquidity assistance was only ever intended to be a temporary funding arrangement.

There is little to be achieved in revisiting the decisions taken by the previous Government in regard to the banking crisis. Suffice it to say that on coming into office, the Government inherited an extremely complex and piecemeal solution. The programme for Government clearly set out that our overall aim of renegotiation had to be to secure a programme of support that would be perceived as more affordable by both the public and international markets. There has been significant renegotiation of the programme of assistance which has meant real economic improvements and real savings for citizens. These include reinstatement of the minimum wage; renegotiation of many of the conditions of the programme; a reduction in the interest rates on EU funds, which will save the taxpayer approximately €10 billion; retention of half of the proceeds from State asset sales for investment in job creation projects; the 29 June agreement on breaking the vicious circle between banks and the State and the specific reference to improving the sustainability of the programme; and the clear recognition of Ireland's special position by our external partners and a commitment to review our position with a view to further improving the sustainability of a well performing adjustment programme.

The Government has taken considerable steps to stabilise and restructure the banking sector. In spite of calls on the Government to adopt an aggressive approach in negotiations with our external partners, it recognised from an early stage that a comprehensive sustainable solution to our problems, including our banking problems, had to be addressed in the context of an overall eurozone solution. We have worked hard to rebuild Ireland's reputation in Europe and build momentum behind proposals that are in the interests of Ireland and the European Union as a whole. It was clear to the Government that the co-operation and support of our European and international partners was essential to reaching a solution that was in the interests of all. The Government had always set out clearly that it would not act unilaterally and that it would be bound by agreements entered into by this and previous Governments. If Ireland is to remain attractive to investors, the State must abide by sovereign commitments, no matter which Government made them. Our strategy has and is paying real dividends. The recent announcement on the promissory notes is a major step in regaining our economic independence through improving the affordability of our debt position and reducing our debt servicing costs.

We have been seeking and will continue to seek a comprehensive solution to the remaining structural and funding issues in the banking sector. Our discussions always had two distinct but related elements - first, the structural funding issue in the banking system, particularly the exceptional liquidity assistance in the IBRC, which has now been resolved; and, second, the matter of investments in the going concern banks, including AIB, Bank of Ireland and Permanent TSB.

In recent months it had become evident that the complexity of issues around the establishment of the European single supervisory mechanism would impact on the timeframe for achieving a comprehensive solution. It was decided, in this context, to progress the situation with the promissory notes as an initial step and seek an adjustment of the terms underpinning the punitive promissory notes arrangements. Notwithstanding this, we will continue to participate in the development of the ESM, European Stability Mechanism, and the structuring of the single supervisory mechanism to ensure Ireland will benefit, on similar terms to other member states, from developments in this regard.

As stated, the revised arrangement represents a major step forward in the restructuring of the banking sector, strengthening the position of the Central Bank and reducing our borrowing requirement and debt servicing costs. These benefits, when coupled with making the necessary adjustments in line with our commitments under the programme of financial assistance, will serve to enhance Ireland's reputation, reduce our risk profile and increase our prospects of re-entering the financial markets. This decision re-establishes long-term stability for a large part of the banking system for the first time since the start of the banking crisis. The exceptional liquidity assistance which was provided for the IBRC and is inherently short term, costly and unstable is removed. It is clear that all parties to the current arrangements had something to gain from the discussions and an agreed approach to the resolution of this issue. The key objective of any new arrangement was to make the banking related debt more sustainable. This remains central to the Irish position in all negotiations with our European partners. The improved debt sustainability of the new arrangement is testament to the efforts and focus of the Irish parties in this matter and the benefits of the constructive and consensual approach taken with our European partners.

The €3.1 billion repayment due on 31 March each year served as a constant reminder of the devastating impact Anglo Irish Bank and Irish Nationwide Building Society had on the economy. The passing by the Oireachtas of last week's Act means that the IBRC, the former Anglo Irish Bank and Irish Nationwide Building Society, will be removed from the financial landscape. The IBRC promissory notes, of which the Central Bank has assumed full economic and legal ownership, will be exchanged for a portfolio of long-dated Government bonds with a maturity of up to 40 years. Over half of all the banking related debt will be pushed out over 40 years and its burden on the economy will be significantly lightened.

The principal benefit of this arrangement is that the promissory notes are gone. They will be exchanged for long-term Government bonds with an average maturity of 34 to 35 years as opposed to the seven to eight year average maturity of the promissory notes. The maturity of the bonds will have significant benefits from a market perspective, as it ensures the liability to repay is beyond most credit investors' time horizon.

There will be a reduction in the State's general Government deficit of approximately €1 billion or 0.6% of GDP per annum in the coming years, which will bring us €1 billion closer to attaining our 3% deficit target by 2015. This means the expenditure reduction and tax increases will be of the order of €1 billion less. A significant element of the interest payments on the Government bonds, which will now be held by the Central Bank of Ireland, will ultimately be returned to the Exchequer in the form of Central Bank dividends. The State will borrow €20 billion less in cash during the next ten years due to the cashflow benefits of this arrangement. Next year the cashflow benefit will be €2.3 billion, excluding initial transaction costs. The arrangement will lead to a substantial improvement in the State's debt position over time.

The housing of all the wind-down assets in one entity, NAMA, will result in one wind-down vehicle. The substantial benefits of this arrangement flow from the exchange of the promissory notes for far more efficient financing from the State's perspective. In real terms the benefits are considerable when compared with the existing costs associated with the promissory notes. A simple analogy for the restructuring arrangement is that of a household rearranging the payments in respect of the purchase of the house from a short-term loan to a long-term mortgage.

The decisions announced during the past week involved certain key steps. The first was the liquidation of IBRC by way of legislation. The liquidation caused the Central Bank of Ireland to assume full economic and legal ownership of the promissory notes and all other collateral held as security for funds provided by the Central Bank under various liquidity arrangements. Having been assumed by the Central Bank, the promissory notes were exchanged for long-term bonds with maturities of up to 40 years. The promissory notes are now terminated. The Government bonds were issued on Friday last and they will pay interest every six months based on the six-month EURIBOR interest rate, which stood at 0.369% today, plus an interest margin, which averages 2.63% across the eight issues. This interest rate is certainly at the better end of the expectations we held last week. Deputies will recall that when I presented the legislation I said that the interest rate would be between 3% and 3.5% on average, but it is coming in at somewhere under 3% now. It is significantly better than we had estimated before we got into negotiation with the European Central Bank on the interest rate.

All remaining debt of IBRC to the Central Bank, which is secured by a floating charge over the assets of IBRC, has been acquired by NAMA from the Central Bank in return for NAMA bonds. My Department's website has a detailed presentation and additional information on this arrangement. I have attached the schedule of the issued bonds in an appendix to my statement for the information of Deputies.

I note that in recent days there has been media speculation on a supposed fire sale of the assets of IBRC. I can provide the House with some comfort in this regard. Put simply, this will not happen. It is part of the role of the liquidators to ensure that the assets of IBRC will be valued independently before being sold. Any assets not sold to third parties at or above the valuation price will be sold to NAMA at the independent valuation price. This ensures a floor price on the assets of IBRC and that, where required, assets with limited sale potential can be worked through in the medium term by NAMA rather than sold to the best available third party at any price. The Government's approach is consistent and focused on the best outcome for the State and the people.

The success of our programme implementation to date has been recognised by the financial markets. Our ten-year bond yields have remained below 6% for several months now and have been under 5% since late last year, while the NTMA has commenced a programme of debt issuance in recent months. Furthermore, markets have reacted positively to last week's announcement and bonds have been trading at levels not seen since the programme of assistance, a position to be widely welcomed. In addition, Bank of Ireland and Allied Irish Banks have successfully re-engaged with the markets on the back of their asset-covered securities. These are all positive indications and the developments of last week serve to further improve sentiment. At close of business this evening, our 2020 bond was trading at 3.66% and our five-year bond was trading at 2.68% on the secondary markets. These are extraordinarily low figures by any comparison. It would have been difficult to match interest rates at those levels when we were a AAA-rated country and when the economy was supposed to be booming. Clearly, the deal on the promissory notes, which I had thought to be substantially priced into the market, was not priced into the market and there has been a significant movement on interest rates since the arrangement was announced.

A significant improvement in cost competitiveness has provided a much-needed boost to our export sector. We are introducing fiscal reforms to improve the management and control of our public finances. A stabilisation in the level of unemployment and positive expectations regarding employment growth have been experienced recently. There have been increased activity levels in the commercial property markets, especially among overseas investors. Residential property prices have stabilised and there has been an uptick in the volume of mortgage approvals. Above all, the renewed confidence in Ireland has been reflected in the significantly lower yields on Irish sovereign bonds.

These collective actions represent a major improvement in Ireland's position. We have demonstrated once again in respect of the promissory notes the value of what can be gained from a carefully managed and sustained engagement - that is to say, the maximum benefit for Ireland. The Government and the people are determined to recover our economic independence, our pride and our self-belief and to create a present and a future free from the excesses of the past and the burdens placed by the few on the citizens of the country.

I wish to acknowledge on the record of the House the extensive work done in bringing these discussions to a successful conclusion by the Governor of the Central Bank, Patrick Honohan, his officials, my officials, led by the Secretary General, John Moran, and the head of banking, Ann Nolan, the NTMA, and our diplomats, under the guidance of the Tánaiste. The commitment of these officials to making the country a better place for all citizens cannot be questioned and it is right to acknowledge their months of long, hard work. I commend the motion to the House.

Deputy Michael McGrath

I move amendment No. 4:

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

"recognises that the replacement of the promissory notes provided to the Irish Bank Resolution Corporation, IBRC, with long-term Government bonds announced by An Taoiseach on Thursday, 7 February 2013 provides important benefits to the State including:

— a reduction in the general Government deficit of approximately €1 billion per annum over the coming years and will bring the State approximately €1 billion closer to attaining the 3% general Government deficit target by 2015; and

— a reduction in the State’s cash borrowing requirement over the next ten years by €20 billion by virtue of paying interest only on Government bonds rather than capital and interest on the promissory notes;

— acknowledges the considerable efforts made in recent months by those who negotiated on Ireland’s behalf including the Minister for Finance, the Governor of the Central Bank and officials from the Department of Finance and the National Treasury Management Agency;

— calls on the Government to use the €1 billion gain on the general Government deficit to ease the planned budget adjustments and to invest further in job creation measures without compromising the achievement of the 3% deficit target by 2015;

— notes that the Government has not sought or received any write-down whatsoever of the legacy debt associated with the rescue of the former Anglo Irish Bank and Irish Nationwide Building Society;

— notes that the Euro Area Summit Statement of 29 June 2012 reaffirming the imperative need to "break the vicious circle between the banks and the sovereigns" has not been implemented in this case;

— notes that the conversion of the promissory notes to long-term Government bonds means that there will be no further easement of this debt as a result of evolving European policy;

— believes that the Central Bank should be permitted to retain the Government bonds for longer than the period agreed which would yield additional savings to the State;

— calls on the Government to publish a detailed analysis of the full impact of the deal on Ireland's debt and deficit figures over the full course of the deal including, for example, sensitivity analysis for varying interest rates on the Government bonds and possible payments to the National Asset Management Agency to cover any shortfall - should one arise - following the sale of IBRC assets by the special liquidator; and

— believes that the justice of Ireland's case deserves further relief from the impact of bank-related debt and, in particular, that the Government should be seeking to have the cost of bailing out AIB, Bank of Ireland and Permanent TSB lifted from the shoulders of the State through the European Stability Mechanism."

It would represent a real and tangible benefit to people if the Government was to announce that it was now freeing up resources to reverse the cut to the capital budget.

A multiple of practical job-supporting measures that could be undertaken in a relatively short period of time would have a real impact. For example, the cuts introduced last year to home insulation grants were short-sighted and counterproductive. The Minister should consider reversing these immediately. In addition, we should look to improving the package of supports for SMEs, which are the lifeblood of our economy. Yesterday's report from the Credit Review Office should be a long overdue wake-up call for the Government that of the total of €8 billion in lending advanced by the pillar banks, only an estimated €2.5 billion was deemed new lending, with the balance providing for the roll-over of loans over that period of time. The economic reality is that as a country we have made progress, but we are far from out of the woods.

To return to the deal announced last week, I have a number of outstanding questions, but I will raise only a few of them tonight. Above all, is the deal that has been reached legally watertight? Is there potential for a successful legal challenge in any other EU member state based on the treaties governing the operation of monetary union? This is a concern we hope never materialises, but we must be cognisant of it. Would a fire sale of the assets by the IBRC liquidator, which the Minister has assured us will not happen, result in the State missing out on a recovery in asset prices in subsequent years?

As recently as last September, the Minister for Finance stated that at that time he did not see any benefit to amalgamating NAMA and the IBRC. Will there be a need to revise corporate governance oversight processes for NAMA in light of its increased portfolio of assets? Given that NAMA will now take on a potential additional €15 billion in loan assets, this will be a major test of its capacity to deliver on its mandate. As I have said on the record several times, the transparency and governance arrangements in NAMA need to be reviewed and improved. The transfer of assets on this scale to NAMA now should provide an incentive to the Government to face up to that issue and to review those arrangements.

What impact would rising interest rates have on the savings under the deal? The Minister pointed out in his speech that the interest rate is now just a smidgen under 3%, which is welcome. Under what circumstances would the Irish Central Bank be permitted to exchange a portion of the new floating rate bonds issued for fixed coupon bonds? What implication will the liquidation of IBRC have on outstanding legal actions against the institution? Will the Minister make a statement on this issue?

I wish to raise the issue of the length of time the Central Bank will be allowed to hold onto these bonds. This is a critical issue because, for as long as it is allowed to hold them, the interest rate paid by the Government will essentially come back to the State by way of the Central Bank surplus in the following year. I note the schedule agreed with the ECB for the disposal of bonds by the Central Bank provides for a minimum of bonds to be disposed of over the period 2014 to 2024 and beyond. Is it within the power of the ECB to change that schedule? It refers to a minimum disposal level and our concern is that the ECB will come back to this and seek to increase the level of disposals in which our Central Bank must engage in respect of these bonds. It would reduce the benefits to the State if the ECB were to do this.

In the pro forma transaction impact analysis the Department has prepared, in calculating the benefits on the deficit and debt side, it has factored in a State financing cost of 5%. Therefore, it is saying that instead of paying out €3.1 billion this year and next year, we will pay out in the region of up to €1 billion at times, and the Department, assuming we will be paying 5% on the difference, calculates the saving. The Minister read into the record the bond yields that apply today in respect of the cost of borrowing for this State, and they are considerably lower than they have been. However, I submit that if we are borrowing at 5%, we are in trouble. I would like to point out for the record that factoring in a 5% State financing rate inflates the saving somewhat.

The final issue I want to address relates to the second tranche of work in which the Minister is and has been engaged for some time. This work relates to the European Stability Mechanism, ESM, and revisiting the cost to Ireland of bailing out AIB, Bank of Ireland and Permanent TSB. As the Minister knows, between these three institutions, the State has put in up to €30 billion. This money has already been paid over. In respect of Anglo Irish Bank and Irish Nationwide, the promissory note arrangement was put in place but the cash was not paid over. However, cash was paid over in respect of the three institutions mentioned. As the Minister also knows, the National Pensions Reserve Fund currently puts an estimated value on those holdings by the State of somewhere between €8 billion and €9 billion. The State would need to get a return far better than €9 billion for it to be in our interest to dispose of our shareholdings in these banks to the ESM, which has no competence nor track record in running banks throughout Europe. I am aware that the advancement of these negotiations is now very much linked to the roll-out of the banking union and the various milestones that need to be achieved in respect of that. However, getting a really good deal in respect of the ESM relieving Ireland of the burden of bailing out AIB, Bank of Ireland and Permanent TSB could result in a substantial reduction in debt levels for this State, something which has not been achieved with the restructuring of the promissory note. This is now the second frontier and it is an equally important, if not more important, negotiation for the Government to engage in. I wish the Minister well in that respect. The IMF has factored into its calculations that Ireland should receive in the region of €20 billion in respect of the shareholdings we hold in regard to those banks. I urge the Minister to continue to work on this issue with renewed zeal on behalf of the Government and the people. Other colleagues in Fianna Fáil will address different aspects of the deal and the liquidation of the IBRC. I place these remarks on the record on behalf of the Fianna Fáil Party.

Last week Fianna Fáil voted to support the emergency Bill to liquidate IBRC and move its assets to NAMA. At the time I expressed our dissatisfaction with the manner in which the legislation was rushed through the House and the lack of accompanying information. I cannot say that subsequent events have convinced me the Government had no choice but to act in the manner it did but that is history now. We stated at the time that we have no objection in principle to the winding up of IBRC if it results in a lower overall cost to the State. We accepted in good faith the Minister for Finance's contention that not to do so would put up to €15 billion of State owned assets at risk and voted accordingly, even though he stated repeatedly in response to parliamentary questions over the past several months that he had no plans to merge IBRC and NAMA. Since the emergency legislation was passed last week, it has been announced that the revised arrangements for the promissory notes involve substituting eight long-term Government bonds. On the whole, the deal is positive for Ireland, brings undoubted benefits and will help our recovery. I pay tribute to the work of both the Minister for Finance and the Governor of the Central Bank, Professor Patrick Honohan, as well as their respective officials and the officials from the NTMA. All concerned clearly have the interests of the Irish people at heart and they deserve to be commended on their efforts. I know the task involved a lot of late nights and difficult negotiations and, on behalf of Fianna Fáil, I have no difficulty acknowledging the work that has been done.

The conclusion of the deal is a recognition that Ireland has a moral and practical case for alleviating the burden of rescuing our banks. Everyone accepts that a complex arrangement has been replaced with a similarly if not more complex arrangement. The promissory note inherited by this Government was certainly complex but it was also widely misunderstood. The best analysis I have seen of the structure was written by an economist, Conall Mac Coille, in an article in The Sunday Business Post two weeks ago. The article explained very clearly the net costs of the arrangement to the State. The net cost of the interest was the ECB refinancing rate of 0.75%. The 2% margin paid by IBRC to the Central Bank returned to the State by way of redistribution of the Central Bank's surplus and the balance of the interest rate would partially come back in the event of IBRC having a surplus after realising its losses. The key issue with the promissory note was that it involved large payments up front. Interest and capital charges meant an annual payment of €3.1 billion between now and 2023. The Government has replaced those arrangements with a series of long-term Government bonds.

While today's debate is important, the Dáil is not necessarily the best forum for exploring the detailed and technical issues that flow from the agreement. The Minister referred to the material posted to the Department of Finance website. We have studied that material and have also submitted a number of parliamentary questions on technical aspects of the arrangements. These questions will be answered later in the week. I intend to suggest in writing to the Acting Chairman, Deputy Ciarán Lynch, in his capacity as Chairman of the Joint Committee on Finance, Public Expenditure and Reform, that we invite the Minister and the Governor of the Central Bank before the committee at an early date to discuss the details of the arrangements.

The debate needs to broaden out to discuss the implications of the arrangement for the citizens of the State. I have stated repeatedly that it is important ordinary people see a dividend in terms of practical measures that will boost their disposable incomes and support job creation. To date the public have displayed a remarkable level of resilience in the face of extremely painful measures. There is a need to recognise this by moderating forthcoming tax increases and expenditure cuts in light of the interest savings the deal will generate. Unlike Greece and Spain we have not seen large scale strikes and public protest has been peaceful thus far. I do not expect the Minister to say the €3.1 billion adjustment planned for budget 2014 has now become €2.1 billion because of this deal. I am aware the matter is not that simple and, in arriving at the adjustment for 2014, a series of moving parts must be managed. It will only be towards the end of the period of preparing the budget for next year that he will be able to come to a conclusion as to the appropriate level of adjustment. Those moving parts include the level of economic growth that will be achieved in 2013, Exchequer receipts under various tax headings and the adherence of Departments to their spending profiles. However, the Minister can give a clear signal that, other things being equal, he intends to reduce the budget adjustment imposed over the coming years. If I interpret correctly what he has said in regard to the benefits of this arrangement, there will be a saving of €1 billion on the general government deficit and expenditure reductions and tax increases will be of the order of €1 billion less. I take it he intends the €1 billion we have saved between now and 2015 by way of budget decisions.

More than €28 billion in tax rises and expenditure cuts have been imposed since the correction started in 2008. This has resulted in a considerable reduction in living standards for citizens. This summer carers will get €350 less in the respite grants. Struggling parents have seen €10 per month cut from their child benefit payments. Property tax assessments will start dropping through letter boxes over the next few weeks. This is the reality for families far removed from negotiations in Frankfurt. I note from the briefing provided by the Department of Finance that on a pro forma basis the projected deficit in 2015 is now 2.4% of GDP. On that basis I imagine we will be running a primary surplus some time during the course of 2014. If that happens, it will represent a considerable achievement earned through the sacrifices of ordinary people since the first package of fiscal consolidation measures was introduced in July 2008 by the late Brian Lenihan. My party fully recognises the importance of reaching a deficit of not greater than 3% by 2015. However, given the headroom that now appears to exist in reaching the 3% target, there is limited scope to take action that would be of benefit in terms of stimulating the economy. We should not have needed the troika to remind us that unemployment remains stubbornly high and is increasingly long-term in nature. Reducing it must remain an urgent policy priority. The most recent employment statistics revealed a third consecutive quarterly fall in employment. The male jobless rate stood at 17.8% in 2012, while 11% of the female labour force was unemployed. Worryingly, the long-term unemployment rate increased from 8.8% to 8.9% over the year, accounting for 59.5% of total unemployment by the end of quarter three of 2012. This is a frightening development which requires urgent action from this House and from the Government.

Last summer the Government announced a stimulus plan with much fanfare but little has happened since then. The Government continues to cut the capital budget to ribbons. Capital spending in 2012 came in €150 million below target. In January of this year capital spending was an extraordinary 50% below the same month last year. This is costing jobs at local level throughout the country.

Deputy Pearse Doherty

Sometimes the Minister, Deputy Noonan, has the potential to make me laugh. The analogy he drew to Sinn Féin's negotiations in the Good Friday Agreement was one of those moments. However, unlike the Minister, we went into those talks with a view to trying to bring us closer to a united Ireland. As the Minister knows, we were successful, despite the fact that the Irish Government at the time, under Fianna Fáil, would not ask the British Government even to give up its claim on the North. We were successful in achieving that. Instead of betraying our principles about the validity of a united Ireland-----

Deputy Michael Noonan

Do we live in a united Ireland?

Deputy Pearse Doherty

-----we got the British Government, for the first time ever, to set aside an illegal international agreement, the pathway to creating a united Ireland. In terms of what the Minister achieved, he did not betray his principles in these talks because he did not have the principle of asking for a debt write-down in the talks. His argument was to ask what was the point in asking for something or making it a precondition if he was not going to get it. That was not his principle in the first place. We all know what the Taoiseach has said.

Deputy Michael Noonan

Did Sinn Féin not give up its claim? Was that not part of the agreement?

Deputy Pearse Doherty

It was the Irish people who gave up the claim, a claim that was never enforced when people were being burnt out of their houses through successive governments in which the Minister and Fianna Fáil were involved. That said, for the first time ever there is a legal pathway for a united Ireland to exist. The British Government is committed to bringing about a united Ireland if the people in the North agree to it through a border poll. That is a step forward with regard to trying achieve one's objectives.

Deputy Michael Noonan

Did Sinn Féin not give up its claim?

Deputy Pearse Doherty

The question needs to be asked as to what step forward the Minister has made here. If the principle was that this debt should not be placed on the shoulders of the Irish people, how has this agreement brought us forward one iota?

The reality is that last Wednesday this House, in an echo of Fianna Fáil's most disastrous spell, rushed through far-reaching banking legislation that will have huge consequences. We can only hope that as time goes on, this legislation will prove not to be as ill-thought-out and its consequences will not be as dramatic and brutal for the Irish people. The Government provided for two hours of statements on Second Stage and 15 minutes of debate on Committee Stage before it announced that this motion will be discussed over a period of four days. This motion on the promissory note will not become part of law and will not be dissected in the courts. It is not legally enforceable in the High Court or in the Supreme Court.

Deputy Brendan Howlin

Is the Deputy against it?

Deputy Pearse Doherty

My colleagues will table an amendment to the motion tomorrow. I welcome the opportunity to discuss the promissory note arrangements in this House. I reiterate that when the first promissory note was paid in 2011, Sinn Féin was the only voice to raise it as an issue. The first time the promissory note was debated-----

Deputy Brendan Howlin

You put on your green jersey and voted for the guarantee.

Deputy Pearse Doherty

With respect, Minister, you are around here for long enough-----

Deputy Michael Noonan

You voted for the guarantee.

Deputy Pearse Doherty

This kind of boyish craic of shouting across-----

Acting Chairman (Deputy Ciarán Lynch)

I remind Deputies and Ministers to address their comments through the Chair.

Deputy Pearse Doherty

Exactly. Talk to your own guy over here.

Deputy Michael Noonan

You voted for the guarantee in the Seanad when you were a Senator.

Deputy Pearse Doherty

Honest to God, you are like two little schoolboys. I am making my contribution. I have just 20 minutes.

Acting Chairman (Deputy Ciarán Lynch)

I ask Deputy Doherty to comment through the Chair. I will deal with the Ministers myself.

Deputy Pearse Doherty

Do you want me to give you a facility to deal with the Ministers, put them in their place and tell them to stop heckling?

Deputy Brendan Howlin

Drill our knees or something like that.

Acting Chairman (Deputy Ciarán Lynch)

Deputy Doherty, I have given you a lot of leverage here.

Deputy Michael Noonan

No knee-capping now.

Acting Chairman (Deputy Ciarán Lynch)

Please make your comments through the Chair.

Deputy Brendan Howlin

We might be court-martialed.

Acting Chairman (Deputy Ciarán Lynch)

I ask the Ministers, Deputies Howlin and Noonan, to behave with good grace. Deputy Doherty has possession.

Deputy Pearse Doherty

We are having a week-long debate on this issue. As I was saying before I was interrupted by the two lads, Sinn Féin had the first debate in this House on the promissory notes. I welcome the opportunity to discuss the matter again. Many serious issues arise from the passing of last week's legislation. It should have been properly debated. I will speak later about the fate of the IBRC workers. We need to reflect on the legal and commercial impact of the Bill. There is no doubt that last week's events were shoddy by any parliamentary standards. I genuinely believe that if Deputies put their hands on their hearts, very few of them would deny that what transpired in the early hours of Thursday morning in this Chamber was nothing short of shoddy and disgraceful.

Questions must be asked about why this procedure was rushed through. I am not convinced there was a requirement for it. Section 6 of the Bill, which is now under scrutiny in our courts, is highly controversial. Like all the other sections of the legislation, we should have had time to deal with it in a proper and thoughtful manner. We should have been afforded the opportunity to seek counsel on it and to make amendments to it if required. Highly contentious political and legal issues arise from the legislation. It is the type of thing we should be avoiding. It is embarrassing that when this issue was before the High Court last week, a judge did not even have access to the legislation that had been passed by this House and enacted into law. Serious questions need to be answered about why a judge in one of our courts was unable to access legislation which is now on the Statute Book with legal effect, and which the President was rushed home from Italy to sign into law. Questions have been asked about the constitutionality of the provision that ensures there is a stay on all legal proceedings against IBRC. The genuine questions that have been asked by other speakers, including Deputy Mattie McGrath, should be answered. This legislation puts a stay on all proceedings against IBRC even though there is precedent in the courts in this regard. It was ruled in a famous court case relating to Sinn Féin funds at the time of the creation of the State that legislation could not put a stay on legal cases in this way. It is unfortunate that these matters will be teased out before the courts rather than in this House.

Other questions relate to the staff of IBRC, who are employed by the State. As I said on the night we debated this legislation, many staff in IBRC and elsewhere in the banking system are overpaid. We are still waiting for the report on banking remuneration, which the Minister was supposed to have last Christmas. It has not yet seen the light of day. Ordinary workers in the bank who are on low wages or mid-range wages have been made redundant. Questions need to be asked about the impact of this legislation on employees outside the State. Are those who were employed by this bank being treated fairly? There was no statement of undertaking, which means that the rights and entitlements of ordinary workers in the bank who were not part or parcel of this have been extinguished. As the Minister said in his press conference, those in lower positions on the food chain did not cause the crisis. Regardless of what Deputy Howlin says, I do not know how the Labour Party can applaud itself for eroding the rights of State employees in this manner in the year of the anniversary of the Dublin Lock-out. It is seriously questionable. Other questions need to be asked about the decision to appoint KPMG as the special liquidator. Even though the same company failed miserably to properly oversee an audit during the height of the banking crisis, the Minister and the Government have turned to it yet again. Everybody in this House and throughout the country is aware of Sinn Féin's position on the promissory note and the toxic debt of Anglo Irish Bank.

Deputy Brendan Howlin

Sinn Féin voted for it.

Deputy Pearse Doherty

We do not believe the State should pay a single cent of this debt. It should not be paid in capital and it should not be paid in interest. That is a legitimate and logical position to have. There is no doubt it was a realistic position before the Government decided to cave in last week. I say that because I believe the Government's starting point should have been to look for and secure a write-down of this odious debt. Instead, we have the time-honoured tradition of a Government trying to sell a deal as if it had no other choice, but that was not the case. There are always choices in politics. The spin from the Government when it secured the famous statement in Europe on 29 June last was that banking and sovereign debt were to be separated. That has now been jettisoned in return for perceived short-term political gain. Eight months after the Taoiseach declared a "seismic shift" in our debt position, the State is formally taking on a huge extra chunk of banking debt in the form of a sovereign bond. We all know from where this debt came. It came from corrupt practices and criminal activities in a bank that was not overseen properly by the regulator and was facilitated by successive Governments. The approach of turning this toxic banking debt into sovereign debt by issuing sovereign bonds to cover it brought us here in the first place.

Deputy Brendan Howlin

Sinn Féin voted for it on the night.

Deputy Pearse Doherty

It is a continuation of Fianna Fáil's approach to the banking crisis, which was to nationalise private debt and thereby place the burden on the shoulders of Irish taxpayers.

Deputy Brendan Howlin

The Deputy likes to blame poor Fianna Fáil for everything.

Deputy Pearse Doherty

It was unfair when Fianna Fáil asked Irish taxpayers to take on this burden and it is equally unfair now that Fine Gael the Labour Party are asking us to issue sovereign bonds to pay off every last cent of the banking debt of Irish Nationwide and IBRC.

Deputy Brendan Howlin

The Deputy voted for that debt.

Deputy Pearse Doherty

That is the long and the short of it. I have studied the technical details on the Department's website. We need much more detail. I hope it is forthcoming. When one examines the core issue, one has to ask whether we have actually made progress on the initiative that was secured at the Eurogroup meeting on 29 June 2012. The initiative in question was forced upon European leaders as a result of the position that Spain adopted. The position the Eurogroup took was to commit to the separation of banking and sovereign debt. We need to ask how we separated sovereign and banking debt last week. How did we do that? What is our banking debt? People are familiar with the €64 billion figure, more than half of which - €34 billion - was IBRC's debt.

How did we separate our banking debt from sovereign debt? The answer is we did not separate them. The answer is that, instead of a promissory note where there is possibly some flexibility, what this Government decided to do was to issue sovereign bonds, which means it truly wedded this State to this debt into the future.

We were supposed to commend the Government on 29 June for its securing of this deal despite the fact it was Spain that put it on the table. I remember debating with the Ministers at the time. I told them they had an open goal but they had to get the ball across the line and into the back of the net. What the Government decided to do is to take the ball and run the other way.

Deputy Mattie McGrath

No liathróidí

Deputy Pearse Doherty

It first decided to say, in regard to the part relating to IBRC, "We will not look at it in the context of banking debt and we are only going to look at the issue of the pillar debts-----"

Deputy Michael Noonan

It is the same as the open goal for a united Ireland.

Acting Chairman (Deputy Ciarán Lynch)

Order, please.

Deputy Pearse Doherty

If the Minister, Deputy Noonan, is willing to use Government time for three or four days to debate the concept of a united Ireland and what we should all be doing in this House to achieve that, I and my party would be only too willing. However, we are dealing with these issues-----

Deputy Brendan Howlin

Sinn Féin has Private Members' time next week.

Deputy Pearse Doherty

The Ministers might not like hearing it but it is democracy, I have a mandate and I am entitled to speak. They are two of most senior Ministers in Cabinet, after all. What Eamon Gilmore told us after 29 June was-----

Deputy Michael Noonan

The Tánaiste.

Deputy Pearse Doherty

He said: “This lifts that burden from the Irish taxpayer and means that the European taxpayer, at a general level, through the ESM is basically taking on responsibility for it." I will repeat it because this goes to the core of this debate. It is what the Tánaiste, Deputy Eamon Gilmore, said about the achievement of 29 June and the toxic banking debt that the Labour Party rightly rallied against when in opposition: “This lifts that burden from the Irish taxpayer and means that the European taxpayer, at a general level, through the ESM is basically taking on responsibility for it."

Has any other European taxpayer taken responsibility for the majority of the banking debt that was housed in IBRC? The only taxpayer that has taken responsibility for it is the Irish taxpayer as a result of the decision that was taken last week. Has the ESM moved to fund this through its vehicle? No, it has not. Instead of actually trying to progress the achievement that was secured on 29 June, what the Government has decided to do is say, "We will talk to you in regard to separating sovereign debt and banking debt for the pillar banks, but in regard to Anglo and IBRC, do not worry, the Irish people will suck that one up themselves". That is the reality. That is why, in all consciousness, the Government cannot say this is a good deal for Irish taxpayers. If we start from the premise that sovereign debt and banking debt is to be separated, then how can we support and welcome the fact it is no longer going to be separated and that it is going to be wedded through the form of a sovereign bond?

Eamon Gilmore told us there would be light at the end of the tunnel-----

Deputy Michael Noonan

The Tánaiste.

Deputy Pearse Doherty

The Tánaiste told us there would be light at the end of the tunnel but for many people there is not. For many people, the light at the end of the tunnel was his words that it "lifts that burden from the Irish taxpayer and means that the European taxpayer, at a general level, through the ESM is basically taking on responsibility for it", as well as the quotes from other Ministers. Unfortunately, they did not run with the ball. What they did was sit on their hands and allow the whole thing to start to unravel. They have decided to cobble together this agreement and present it in a way that means we are supposed to welcome the fact all of this will be paid by the Irish taxpayer but it will be done in the future.

It is very clear that it is Frankfurt's way. There was an open goal and Ireland ended up scoring an own goal. We should have pushed this issue to a conclusion by insisting on the separation of banking and sovereign debt and refusing to pay a cent more on the promissory notes. In fact, I doubt Frankfurt even thought it would get its way in such a comprehensive way. It could have only dreamed that the Irish State would voluntarily latch the most toxic of its toxic banking debt to itself. Frankfurt has definitely got its way and Frankfurt knows the Irish people are committed more than ever now as a result of the Government initiative to repay every single cent of the Anglo Irish and Irish Nationwide debt.

Fundamentally, this deal can be summed up as winding down the bank but not winding down the debt. The Minister, Deputy Noonan, tells us that this deal is akin to having one's mortgage repayments deferred over a longer period, a claim he repeated again tonight. The problem with this comparison is that when people are paying a mortgage, they have a house, but we are paying a mortgage for the gamblers, the bankers and the criminals - we are just paying it over a longer period of time. That is what the Government believes is fair. Anybody who watched the Irish Nationwide programme last night would have seen one Deputy make a star appearance beside the former Taoiseach as they announced the bailout of Irish Nationwide. Let us look at whose mortgage we are actually paying over a longer period. The people who have been asked to bear the brunt of this, whether through property taxes, increased PRSI, a reduction in services or reduced wages in the public sector, have not built a house and are not getting the benefit of a house paid for over a longer period. However, thanks to RTE last night, we have seen some of the debts we are paying.

The Minister is right. There are some houses that were mortgaged and for which I and every other citizen and taxpayer will be paying for the next 40 years. One of those houses is Updown Court. This is what we will be paying back and what the Minister wants us to applaud. He wants us to pay in the form of a sovereign debt the losses this property incurred. Five swimming pools, a cinema, ten-pin bowling, stables, a garage for eight limos, a helipad, a squash court, floodlit tennis courts and a heated marble driveway-----

Deputy Brendan Howlin

Deputy Gerry Adams hardly had that one.

Deputy Pearse Doherty

The marble itself cost €6 million. When the Minister says this is just like a mortgage but paid over a longer period of time, the problem is that the people who are paying this mortgage over a longer period of time have no benefit from the house because it is this type of trophy house, and this type of mad investment that Mr. Fingleton and others agreed to and went bust because of, that the Irish taxpayer will be paying for this year, next year and every other year.

Every six months, we will be making a payment as a result of those toxic debts. The Minister talks about the promissory note being ripped up and he is 100% right. We all say "Good riddance" to the promissory note and know this will bring short-term benefits, which I have acknowledged. However, every six months we will be making a payment in regard to the interest on this debt. There is a genuine question as to why ordinary people should pay for this type of recklessness. The interest this year is some €800 million. Why should we be paying nearly twice the total amount that will be brought in through the property tax every single year? Why should public sector workers such as a new nurse have to take 20% less or a teacher take reduced payments as a result of decisions made by people in Anglo or Irish Nationwide? That is the serious question.

The Minister talks about this being a low interest loan and there is no doubt about that. I understand the circular nature of the Irish Central Bank and the Minister is correct to say the effective interest rate is 1%. However, what he does not proclaim loud enough is that, first, the Irish Central Bank is mandated to and has to dispose of these bonds-----

Acting Chairman (Deputy Ciarán Lynch)

The Deputy will have to conclude.

Deputy Pearse Doherty

-----and there is a minimum timeframe for it to do that. However, the ECB retains the right at any stage to demand that it disposes of all of its bonds or does so at a quicker rate. The Minister made much of the fact the rate, given the margin of 2.63% plus Euribor, is just less than 3%. Professor Brian Lucey pointed out in his blog that the average Euribor rate over the last 20 years was 4%. We are at an all-time low and not even the Minister would believe that we will see that type of rate continue in the coming years. If we hit the average rate at any time in the next couple of years, we are talking about 6% to 6.5% of-----

Acting Chairman (Deputy Ciarán Lynch)

I must ask the Deputy to conclude.

Deputy Pearse Doherty

I will conclude on this point. The reality is it depends where the starting point is. If the starting point is where Fine Gael and Labour started off in saying we are going to pay back every single penny of this debt and that we just want better conditions, then I understand completely why they would welcome this.

If one's starting point is that of Fianna Fáil - the party that heaped this burden on the Irish taxpayer - then this is obviously a relief of that burden in the immediate term so one would have to welcome it. However, if one starts from the legitimate view that this burden should not be paid by the Irish taxpayer then this cannot be seen as anything but a very bad deal whereby the Labour Party and Fine Gael have cemented us into paying this off over a period of 40 years as a result of the shabby deal they did last week with their ECB partners.

Deputy Luke 'Ming' Flanagan

The majority of the commentary on the Government's deal regarding the promissory note is headlined as positive. From reading this piece of paper I was given, that is exactly what it is about. It is all about perception and keeping it positive even if that is not the reality. Enda Kenny tells the Irish public that he has removed the need to borrow a massive €20 billion-----

Deputy Michael Noonan

Taoiseach.

Acting Chairman (Deputy Ciarán Lynch)

I am going to make an intervention here. When I introduced the Deputy, and I did the same with Deputies Pearse Doherty and Michael McGrath, I referred to him as Deputy Luke 'Ming' Flanagan. I am not calling him Ming from the Chair so I expect him to refer to Ministers in the House and other Deputies by their appropriate titles.

Deputy Luke 'Ming' Flanagan

My apologies, the Taoiseach. The Taoiseach tells the Irish public that he has removed the need to borrow a massive €20 billion over the next ten years. We also hear that the deal will give us an extra €500 million in options when it comes to next year's budget although we now hear it is €1 billion. The Government keeps changing its mind on this. Even if this was true, the savings would only be relative to the resolution that the last Fianna Fáil-Green Party Administration put in place. Measured against any other reasonable barometer, this deal can only be described as lacking in ambition and a kick in the teeth for future generations of Irish people - if there are any of us left given the amount of people leaving the country at the moment.

We were told as late as last June that there would be burden sharing, the creation of the ESM would solve all our problems and retrospective deals on legacy banking debt were as good as done. Both leaders of the coalition hailed it as a seismic shift and the media lapped it up. We understand now why that is important. It is all about perception. Fast-forward eight months' later and we have no burden sharing and no write-down of the debt forced on us to save the European banking system. This Government's lack of ambition is laid bare in its admission that it did not even ask for a write-down. Our capitulation is made worse when we hear a senior Government Minister say that the reason it did not ask was because he would be told to "go away" by the ECB if he did. If one treated a dog that way, one would get into trouble. Why would the Minister accept it? Whatever happened to burden sharing? There is none. We are now on the hook for a banking debt which we did not take out. To make matters worse, we as a nation will bail out European banks in the future through the ESM if any of our fellow European banking systems implode. When our system went bust, we paid and if others go bust, we also pay.

Obviously, the question is what was the alternative. This was not to pay the promissory note, as advised by people like Professor Brian Lucey; Deputy Mathews, the best Deputy on the Government side, and economist Paul Somerville. The simple fact is that the Government did not even try to do this. We were told it would be illegal. There is no evidence of this and we have a Government Deputy in the House who said it was not illegal. If it was, what about the bailout of the European banking system, which was illegal according to Christine Lagarde? Now we will never know whether this could have been achieved because the Government never asked in the first place. It is like the young lad in his teenage years at the disco who never asked that beautiful girl across the hall to dance. The Government will never find out whether it would have been possible and will live in mediocrity forever.

Acting Chairman (Deputy Ciarán Lynch)

On that note, the Deputy has about a minute to conclude.

Deputy Michael Noonan

Deputy Flanagan is dreaming or maybe hallucinating.

Deputy Luke 'Ming' Flanagan

An area that has not been touched is that of moral hazards. Suggestions have been made by people over the past two years that those in mortgage distress should have their debt written down to the value of the houses. This has been trashed and criticised on the basis that it would not take into account moral hazard. People apparently would not learn their lesson if they were given a break. What then about the moral hazard of the statement that is this deal? This deal sends out the message that one can buy bonds and get a rate of interest on them relative to the risk but, remarkably, one cannot lose. In this country, one can set up a bank and give out loans to one's mates and if it all goes wrong, we pay for it - wonderful country.

We now have a situation whereby our Government has chosen the bondholders over children's health. People who came to me looking for a cochlear implant for their children's ears are told the State can only afford one. This is the equivalent of going into Specsavers and being told that there is only enough money for one lens and to go away. That is the decision the Government has made. I hope it can live with it.

Acting Chairman (Deputy Ciarán Lynch)

I call Deputy Halligan, who has five minutes. Apologies, I call Deputy Boyd Barrett.

Deputy Richard Boyd Barrett

It is me and then Joe and Stephen, or Deputies Higgins and Donnelly. The stroke pulled by the Government last week is not a victory for the citizens of this State. On the contrary, with this manoeuvre, the Government has fully and comprehensively nailed the citizens of this country to the cross of Anglo Irish Bank's gambling debts for decades to come. Claiming this action as a triumph is like saying we are not going to be destroyed by Anglo Irish Bank's debts; we are going to be utterly devastated by those debts. That makes little difference to the people or the economy. It is entirely predictable that Fianna Fáil has supported the Government in this, revealing its utterly fake opposition to Government policy and showing that when the chips are down, Fianna Fáil, Fine Gael and the Labour Party are birds of a feather that flock together at the expense of the ordinary citizens of this country and our economy.

If Fianna Fáil, much of the media and the political establishment have fallen for this stroke, the ordinary people of the country have not. A total of 100,000 people took to the streets last week precisely because they do not believe it and saw through the hype and spin. What they want to know is where is the relief and victory for them. The Government will not be able to provide this because the reality is that it will not be reversing the years of austerity and cuts that have already been imposed by it and the last Government. People will still get bills for hundreds of euro for property charges through their doors in March and the Government will still impose the water charges and savage the health, social welfare and education budgets in the next budget and the one after that. They understand that every euro the Government pays for the next number of decades to pay off Anglo Irish Bank's gambling debts is a euro that could go into job creation, economic growth and the domestic economy. That is the reality and the Government will not be able to spin its way out of it for long.

The alternative was not to "restructure" debts that were not ours. They were to say, quite simply, that they are not our debts and we are not paying them and to ensure that the need for jobs, economic growth and for fairness and justice in dealing with this economic crisis comes first. The Government and Fianna Fáil will not give the people that but the people on the streets last Saturday are the only force that can bring about a just solution to this crisis.

Deputy Michael Noonan

Try that in your local shop.

Acting Chairman (Deputy Ciarán Lynch)

I call Deputy Catherine Murphy. Deputy Mathews is sitting there quietly for me, which is a change, so could I ask Government Members to mirror his behaviour?

Deputy Mattie McGrath

Hear, hear - best behaviour in class.

(Interruptions).

Acting Chairman (Deputy Ciarán Lynch)

I call Deputy Catherine Murphy.

Deputy Richard Boyd Barrett

It is Deputy Higgins and myself.

Acting Chairman (Deputy Ciarán Lynch)

That is the sequence which I did not have so I will change it. Deputy Higgins will speak followed by Deputy Donnelly.

Deputy Joe Higgins

There are 12 minutes left.

Acting Chairman (Deputy Ciarán Lynch)

I will try to accommodate people up to 7.30 p.m.

Deputy Joe Higgins

It stretches credibility beyond the limit that the right-wing political parties in this State and virtually the entire capitalist press hail as a glorious triumph an arrangement that shackles the Irish people to a gigantic millstone of toxic Anglo Irish Bank debt of €31 billion and interest over a 40 year period.

The consequences are ongoing savage austerity that is already destroying livelihoods, living standards, communities and individuals. It bears saying again that these were the private gambling losses of bankers and bondholders as they speculated wildly in this State during the Irish property bubble in pursuit of greed-driven super-profits. If the political establishment of this State, the capitalist press and the establishment of the European Union and the European Central Bank were ever guided by a moral compass, truly that compass has crashed irretrievably when they deem it just, or a victory, even, that generations of Irish people should be lashed to a treadmill of private debt. Truly, in putting the profits of the bondholders before the well-being of the majority in society, the present day political and media establishment in this State display a moral sense just as perverted as their predecessors in the Irish church and State displayed in a previous era - in the era of the incarceration, for example, of young women in the Irish version of the Gulags, known as the Magdalen laundries, something which, tragically, we have heard much about in the past week.

Deputy Michael Noonan

Is the Deputy not writing for the capitalist press?

Deputy Joe Higgins

That Ireland was a State groaning under the weight of moral strictures but at the rotten heart of the Irish establishment of that era, there was no morality. Likewise, the establishment of the EU is loudly proclaiming today that at the heart of its institutions are the values of solidarity, equality, justice and democracy. This is shameless mendacity when the cold reality reveals that the democratic rights of hundreds of millions of European citizens are subjected and subjugated to a dictatorship of the financial markets and the vindication of rights is reserved first and foremost for the bondholder, the speculator and the vulture capitalist, but 25 million citizens of the EU languish in unemployment while tens of millions more suffer from the savage austerity designed to salvage the market system.

Last June it was loudly proclaimed by the Government that an EU summit had decided to break the link between private banking debt and State debt. That promise is cynically shattered in exactly the opposite process with this deal whereby the Irish State takes all the responsibility, lock, stock and barrel, for toxic private banking debt. Yet, in the face of all this, the leadership of the Irish Congress of Trade Unions led tens of thousands of workers in marches around the country last Saturday. The leadership begged for kindness from this heartless EU financial system while being silent on and actively distracting attention from their allies in the Irish Labour Party who shamefully implement troika austerity and crush the Irish people with these toxic debts.

The most serious movement to be built against the destructive austerity in this State is the campaign against the odious property taxes and other austerity taxes. Hundreds of thousands of ordinary men and women are participating. Yesterday they brought their opposition to many council chambers where Fine Gael and Labour councillors were in hiding, pointing to the need for working people, pensioners and the unemployed, to deploy their people power and the power of workers to withdraw their labour in order to demand not a penny more to the bondholders, an end to crushing austerity, abolition of the hated property tax and the European financial system and that the major financial institutions in public ownership, under democratic control, are run for the well-being of the majority, not the profits of the tiny elite.

Deputy Stephen S. Donnelly

I cannot quite believe that this is happening to the Irish people, notwithstanding the efforts of the Government. When the dust has settled, €142 billion of senior debt, guaranteed in 2008, will end up being paid; €35 billion committed to Anglo and Irish Nationwide will end up being paid. All this is to be paid by the Irish people. The motion before the House asks Dáil Éireann to welcome the restructuring of the promissory notes. This is not a money Bill. This is a motion asking for us to welcome something; it is not asking for our permission to spend the money. In my view this is probably unconstitutional. If Dáil Éireann is not explicitly asked for permission to spend this money, it will have made a mockery of parliamentary democracy in this country.

The restructuring proposed is that the IOU issued to Anglo Irish Bank and Irish Nationwide by Fianna Fáil on behalf of the Irish people be exchanged for 35-year Government bonds. Some argue that this deal is worth accepting. It may be worth about €4 billion in today's money and it reduces the short-term funding requirements for the State. Some will argue that we are asking our children and our grandchildren to pay this debt instead of us paying it, that it would be cheaper for them to pay it in 35 years' time than for us to pay now. We do not know if this is true. Others, including me, while accepting the short-term gain, argue that it is not worth the long-term cost. That cost is accepting that the Irish people will pay €35 billion to cover the losses of Anglo Irish Bank and Irish Nationwide. We will also pay €20 billion in interest. The total amount to be paid out over 35 years will be approximately €55 billion.

Regardless of which side one takes in this debate, I would assert that we probably all believe several things to be true: first, that it is fundamentally wrong that the losses of Anglo Irish Bank and Irish Nationwide are borne by the Irish people; second, that the €35 billion committed by Fianna Fáil was not done for the benefit of Ireland; it was done in 2010 for the benefit of Europe; third, that there was little obvious advantage to us doing this for Ireland; and fourth, that it would be both preferable and reasonable that the burden for stabilising the eurozone would be met by the entire eurozone and not just by the people of Ireland.

I ask the House to think about what the Cabinet is asking us to welcome. It is asking us to welcome a restructuring of the debt. However, the Minister, Deputy Noonan, has confirmed that they never looked for any reduction in the total amount of debt owed. The rationale given by the Minister was that they would not have been given it, that they would have annoyed the ECB in asking. Because Greece did so, therefore, the decision was taken not to do so.

However, the Minister is correct in that Greece in fact asked for a write-down. The Greeks were given a write-down of €110 billion on their sovereign debt because they asked.

Deputy Michael Noonan

Not on the ECB debt.

Deputy Stephen S. Donnelly

They are also now borrowing at 0.5%-----

Deputy Michael Noonan

Not on official debt.

Deputy Stephen S. Donnelly

-----which is one seventh the level of the debt we-----

Deputy Michael Noonan

The Deputy is doing what he always does; he is misleading people.

Deputy Stephen S. Donnelly

With respect-----

Deputy Michael Noonan

I heard the Deputy on Marian Finucane's radio programme the other day-----

Deputy Stephen S. Donnelly

I will not take lectures from the Minister on misleading the Irish people. His figures are a comedy of errors.

Deputy Michael Noonan

The Deputy was lying on Marian Finucane's show the other morning.

Acting Chairman (Deputy Ciarán Lynch)

The Minister will have to withdraw that comment, please.

Deputy Mattie McGrath

On a point of order-----

Acting Chairman (Deputy Ciarán Lynch)

Please, Deputy McGrath.

Deputy Michael Noonan

I withdraw the remark.

Deputy Stephen S. Donnelly

Greece asked for a write-down and got a write-down of €110 billion. That is a fact.

Deputy Michael Noonan

Not on official debt.

Deputy Stephen S. Donnelly

That is a fact, no matter how much the Minister complains.

Deputy Michael Noonan

The Deputy is pretending and misleading again.

Acting Chairman (Deputy Ciarán Lynch)

Please, Minister.

Deputy Stephen S. Donnelly

Spain asked that it would not recapitalise its own banks and the request was granted. The truth obviously upsets the Minister. Being exposed to the truth upsets him.

Deputy Michael Noonan

The Deputy misleads constantly.

Acting Chairman (Deputy Ciarán Lynch)

Excuse me, Deputy Donnelly and Minister, I am on my feet. Any inaccuracies or counter-arguments which Ministers and members of the Government wish to deal with can be done so over the course of the debate. I ask the Members to refrain from interrupting speakers during their contribution.

Deputy Stephen S. Donnelly

I did not interrupt the Minister's comedy of figures which he proposed. He might do the same in return.

Deputy Michael Noonan

The Deputy does not have the expertise.

Deputy Mattie McGrath

I appeal to the Acting Chairman.

Acting Chairman (Deputy Ciarán Lynch)

I am trying to conclude this debate so that we can move on to Private Members' business. The Minister is not helping with his interruptions.

Deputy Stephen S. Donnelly

The Minister clearly does not want the people to hear what I am about to say. With the Acting Chairman's assistance, I will try to place the relevant information on the record. Greece asked for a write-down in its sovereign debt and it received a write-down of €110 billion.

Deputy Mattie McGrath

Hear, hear.

Deputy Stephen S. Donnelly

Spain requested that its citizens should not be asked to capitalise its banks and the ESM was specifically established to ensure that they would not be obliged to do so. Portugal requested that there would be a reduction in its borrowing costs and received one, even though our Government claims credit for this. Iceland requested that it not be obliged to pay the debts of its banks and it received a reply in the affirmative. The ECB requested many things, including the abolition of the promissory notes and the socialisation of debt.

Acting Chairman (Deputy Ciarán Lynch)

I must ask the Deputy to move the adjournment of the debate.

Deputy Stephen S. Donnelly

On a point of order, the Order of Business for the day indicates that this debate should continue until the opening statements of all the spokespersons have concluded.

Deputy Joe Higgins

That is correct.

Acting Chairman (Deputy Ciarán Lynch)

I apologise. The error is mine. Deputy Donnelly has approximately 30 seconds remaining.

Deputy Stephen S. Donnelly

With respect, I was interrupted on a number of occasions.

Acting Chairman (Deputy Ciarán Lynch)

I will allow the Deputy some leeway but he should seek to conclude.

Deputy Stephen S. Donnelly

The ECB asked for many things, including the abolition of the promissory notes, the socialisation of the banking debt and full return of the moneys advanced. It got everything it requested. We know that it is relevant that one should ask for what one wants.

Let us consider what the Cabinet is asking for in the motion. It is asking that we should welcome a deal which turns banking debt into sovereign debt. The Cabinet is also asking us to accept the motion while accepting that it never even requested a write-down in our debt. Most people would not accept that deal. This so-called deal is something which Dáil Éireann should not welcome. The Minister referred to recovering our pride. In voting for this motion, we will do things, namely, accept that the Irish people must pay off these debts and that we are passing the burden for paying them to our children and our grandchildren because we do not have the guts to pay them now. A deal which would help recover the pride of Ireland would be one which would lead to the burden for bailing out the eurozone being shared by the members of the eurozone. I call on every Deputy to reject the motion and to instruct the Cabinet to return to the negotiating table and ask for a substantive write-down in our debt on the basis of sharing the burden fairly.

Debate adjourned.