I wish to share time with Deputies Shortall and Nulty.
During the debate on the IBRC liquidation legislation last week, I referred to section 17, which conferred significant powers on the Minister for Finance. I sought that the Oireachtas would debate any forthcoming proposal, such that power would reside with the Oireachtas and not an individual Minister. On the next day, the deal was announced.
Very little media or public attention has been paid to the debate this week. Obviously, we are debating a motion that is not one of major substance. It is a congratulatory motion rather than one making a real decision; that is the crux of the problem. We will be able to put our opposing views on the record and vote but we will achieve little more. The relevance of the Parliament hinges on the substance of an issue. What we are doing is debating a decision after the event.
I ask whether this would occur in Germany. The clear answer is "No". On several occasions, we have seen agreements reached at European level on financial issues in respect of which the German Chancellor said she did not have the authority to sign off without first consulting the Bundestag. Last Wednesday, we relied on online media, including Twitter, and rumour in respect of a late sitting. We were not even consulted about it. That is how the Parliament has been treated. Clearly, Germany has checks and balances in its system because it has learned from history that it is very dangerous to place significant power in one person or a small group of people without having such checks and balances. We need to ensure we learn from history because it may be repeated.
We were told about Cabinet confidentiality and it seems that it was very easy to maintain because only four Cabinet members were aware of the legislation, which was prepared months ago. Some members of the Government have talked about its being a national government. Unfortunately, it sometimes feels a bit more like a dictatorship. There are frequent abuses of process, heavy use of the guillotine and inadequate time between vital stages of robust legislation. What occurred last week was a very public example of that.
The problem is not just section 17 of the IBRC legislation; it is that so much power resides with the Minister for Finance on foot of other legislation. Section 6 of the Credit Institutions (Financial Support) Act and section 34 of the Anglo Irish Bank Corporation Act 2009 are being contested in the High Court on the basis that they are repugnant to the Constitution. A case is being taken by David Hall and it is currently live.
The scary thing is that all of this could happen again. Empowering one or two people in the Cabinet could see the same type of financial transaction occurring again. Fine Gael, the largest party in the Government, produced a banking strategy before the last general election entitled "Credit Where Credit is Due". It stated that committing €100 billion in taxpayers' money to the banks so they could pay their foreign debts while starving the Irish economy of credit has made the recession far worse. In the last leaders' debate before the general election of 2011, Deputy Enda Kenny, who is now Taoiseach, asserted Ireland's reluctance to default on sovereign debt and that some burden sharing with bondholders was required. Despite this, we have seen none.
Much of the Taoiseach's Ard-Fheis speech in 2009 could have been written by Deputy Richard Boyd Barrett. He should read it again. The debts of a private bank have no place on the shoulders of the Irish public. A short time before it crashed, Anglo Irish Bank was an AAA-rated bank in a country that was known to have a property bubble. Its lending portfolio was heavily dependent on property. I am sure this fact would not have escaped the European Central Bank. Tonight, people are talking about how great it is that Standard & Poor's and Moody's are talking us up again, yet these institutions are the ones that rated the bank.
Too many elements of society and the media are cheerleaders for the soft landing. We were warned about group-think. Is it being repeated? The country was sold short. While there are short-term advantages to the deal, it is very bad in the longer term. Clearly, the bar of the Government's expectations was set far too low. This is why it is so satisfied with the deal, which provides for full payment of the debt, the formalising of the debt into Government bonds and the sharing of responsibility not with our so-called European partners but with our children and grandchildren. At the very least, the burden of the bank debt should have been shared. It should never have been fully placed on the shoulders of the Irish citizens.
The expectation is that inflation will, in practice, reduce the principal debt. That is crystal ball territory.
In The Irish Times business section last Friday there was an article written by Ashoka Mody - I am probably not pronouncing his name correctly - under the headline, "We are treating the present as if the bubbly growth from 2000 to 2007 will return". The article states:
Robert Gordon of Northwestern University concludes [in a recent paper] that the rate of technological progress has slowed sharply, and that the rise in standards of living (at least in the world's rich countries) is thus set to decelerate. In the 20th century, he says, per capita income in the US doubled for every 25 - 30 years. Yet the next doubling will likely occur only over 100 years, a pace last seen in the 19th century ... Gordon's point is not that growth will decelerate in the future, but rather that the underlying productivity growth moved to a sharply lower trajectory around the year 2000. We lived the better part of the subsequent decade with a misguided sense of extended prosperity and inflated a financial bubble. Worse, we are treating the present as if the bubbly growth from 2000 to 2007 will return.
Ashoka Mody is a former mission chief for Ireland and Germany at the IMF.
We are also moving towards a so-called more competitive society, which is reducing people's wages at a time when they are being asked to pay more. From where will the inflation come? The point made by the Minister for Finance about his mortgage and how inflation will wipe out the principal might well be a totally wrong assumption. Many contributors to this debate on the Government's side have clearly clung to this assumption. I believe it might be wrong.
People aged between 35 and 40 years are most affected by mortgage debt and negative equity. They mainly have inflated mortgages and will have them for the bulk of their working lives. After they have picked up the tab before they retire, they will then discover that inadequate provision has been made for their pensions because the National Pensions Reserve Fund has been raided by this generation and handed to the banks, with just €8 billion remaining and not invested. Nobody has been jailed and there is no proper investigation of the banks. Despite the banks having been allocated funds to deal with mortgage debt they are disgracefully dragging their heels. I could offer some very good examples that I am dealing with currently.
I have spoken to members of the generation that will pick up the tab. They are very resentful at being portrayed as having lived the high life when, in fact, most of them borrowed and scraped to get deposits to buy houses that are now only worth a fraction of what they paid for them. We must stop this myth. It is very unfair to a generation which we have no right to slag, which is essentially what we are doing.
The workers in IBRC have been treated disgracefully. These are people who are on the lower end of the salary scale. They have been told that the redundancy package is significantly below what was given in the previous exodus. That is very unfair, given the very short notice they received, and must be revisited.
