Dáil Éireann díospóireacht -
Tuesday, 3 Feb 2015

Vol. 866 No. 1

European Debt: Motion [Private Members]

Deputy Catherine Murphy

I move:

“That Dáil Éireann notes:

— that the financial crisis highlighted the deviation from the founding principles and values of the European Union (EU) such as solidarity and mutual respect amongst nations;

— the unsustainability of the debt burden imposed on Ireland and other European countries;

— that the debt burden is an obstacle to economic and social development;

— that Ireland was a casualty of timing which allowed for private banking debts to be socialised, thus sacrificing the social and economic interests of Irish citizens; and

— that there is an urgent need to recapture the founding principle of solidarity and work towards a co-operative effort to promote sustainable growth and job creation across the EU; and

calls on the Government to:

— support calls for a European Debt Conference in order to agree a common solution with our Eurozone partners; and

— work constructively at European Council level and with all relevant EU institutions towards establishing a European Debt Conference.”

I think the Acting Chairman has a list of those I am sharing time with.

Acting Chairman (Deputy Frank Feighan)

Deputy Catherine Murphy is sharing time with Deputies Finian McGrath, Maureen O'Sullivan, Joe Higgins, Joan Collins and Thomas Pringle.

Deputy Catherine Murphy

This motion refers to the call for a debt conference. It is often said that the most dangerous people are those who have nothing to lose. Too many people across Europe have been put in a position where they feel they have nothing to lose, not just because of the economic crash but how it has been responded to by powerful individuals and institutions who design outcomes in their own interest - outcomes for the few at the expense of the many. We should not be surprised at the reaction to this: mass demonstrations, a feeling of hopelessness and the political revolt at the ballot box. Huge levels of creative energy and ability are being lost through unemployment, underemployment and emigration right across Europe. Public services are being diminished, abnormal levels of personal indebtedness are limiting the quality of so many lives and ordinary citizens' pockets are being picked to pay back massive debts they did not incur in the first place.

The demand by the Greek people for a debt conference should and must be taken seriously, not least because of its democratic legitimacy, but also because it is essential for the future of Europe. It should be seen and supported by Ireland as a helpful and hopeful initiative.

As President Michael D. Higgins put it when addressing the European Parliament in 2013:

Parliaments matter; parliaments must continue to matter. Centuries of effort have been invested by European citizens in securing the vote. It is to parliament that citizens look for accountability, for strategic alternatives. If national parliaments, if the European Parliament, were to lose the capacity to deliver accountability where else might it be found?

Jürgen Habermas, widely regarded as one of the world's leading intellectuals, addressed the issue of democracy and solidarity in the context of the European crisis in April 2013 in a wide ranging paper. I do not have time to go into it in detail, but he states:

The European Union owes its existence to the efforts of political elites who could count on the passive consent of their more or less indifferent populations as long as the peoples could regard the Union as also being in their economic interests all things considered.

He goes on to say:

What unite the European citizens today are the Eurosceptical mindsets that have become more pronounced in all of the member countries during the crisis... The actual course of the crisis management is pushed and implemented in the first place by the large camp of pragmatic politicians who pursue an incrementalist agenda but lack a comprehensive perspective. They are oriented towards “More Europe” because they want to avoid the far more dramatic and presumably costly alternative of abandoning the euro.

The reason for the result of the Greek election cannot be disputed. With 175% debt-to-GDP ratio, Greece's debt mountain is the highest in the eurozone. It is usually accepted that national debt is unsustainable when it goes above a 120% debt-to-GDP ratio.

In an open letter addressed to German citizens, the new Greek Prime Minister says:

Germany, and in particular the hard-working German workers, have nothing to fear from a Syriza victory. The opposite holds. Our task is not to confront our partners. It is not to secure larger loans or, equivalently, the right to higher deficits. Our target is, rather, the country's stabilisation, balanced budgets and, of course, the end of the grand squeeze of the weaker Greek taxpayers in the context of a loan agreement that is simply unenforceable. We are committed to end "extend and pretend" logic not against German citizens but with a view to the mutual advantages for all Europeans. Our task is to bring about a new European deal within which our people can breathe, create and live in dignity.

It might come as a surprise to many Europeans that many Irish citizens identify with those hopes and expectations. It is not a narrative that has been articulated by our leaders. The message instead has been about the Irish miracle, with decreasing unemployment rates, good rates of growth and healthy export figures. The other side of the story is never part of the message. The level of emigration is a running sore. The real rates of unemployment, when JobBridge, zero hours contracts and underemployment are considered is much higher than the stated figures. The huge housing and hospital crises are a day-to-day reality. The levels of disposable income after all taxes, direct and indirect, are considered, with poor corresponding public services, are never spoken about at European level. We were reminded by Government last week that Ireland contributed €350 million to Greece's €240 billion bailout, which Syriza wants to renegotiate as part of its election promise to put an end to austerity. Much of the rest of that vast bailout came from other sovereigns. The €350 million is a very significant amount of money, which could be used productively addressing some of the issues I have just referred to. What I find objectionable is that this is put forward as a reason not to support a European debt conference. Just before Christmas - there was not a blink at this - the Governor of the Irish Central Bank extinguished, destroyed or burnt - whatever terminology one wants to use - €500 million on 23 December in the first part of the €28.46 billion that is now part of our sovereign debt and was formerly the private debts of Anglo Irish Bank and Irish Nationwide Building Society. The schedule for extinguishing the balance will be €500 million in 2015, 2016, 2017 and 2018. That will rise to €1 billion in 2019, 2020, 2021, 2022 and 2023. It will double again to €2 billion in 2024 and will continue to be paid at that rate until all the bonds are extinguished. The €350 million pales into insignificance when compared to the Anglo bonds.

Some 41% of the entire European Banking collapse was shouldered by Ireland, a country that makes up just 1% of the European population. There was significant pressure from the European institutions not to let a European bank fail, but there was no solidarity when it came to picking up the tab. All we got was a pat on the head. It is interesting that Fintan O'Toole wrote in an article today:

It comes down to this question: how much does it cost to service the debt? Who, in other words, gets the best deal from its international lenders, good Ireland or bad Greece? There's no contest. Last year, Greece paid €8 billion to service debts of €315 billion. Last year, too, Ireland paid €7.5 billion to service debts of €214 billion. So it cost us almost as much to service €100 billion less.

Ireland should be seeking a write-off of these debts in the context of the quantitative easing initiative the ECB has just embarked on.

The Spanish election is due later in the year, and with unemployment running at around 25%, much of it youth unemployment, it is hardly surprising that the anti-austerity Podemos looks like emulating the Syriza victory in Greece. A quarter of the population feels they have nothing to lose. It is not just those in indebted countries who are seeking other approaches. German debt campaigner Jürgen Kaiser concludes in his June 2013 comparative analysis of today's crisis and the post-war London Debt Agreement that "few sovereign debt restructurings have so clearly marked the transition from a state of critical indebtedness to a situation where debt is no longer an obstacle to economic and social development." Key elements of that agreement were that creditors and debtors negotiated as equals; it was comprehensive in the sense that it included almost all public and private pre- and post-war German debts; and debt service was to be financed exclusively from current income, without taking recourse to reserves or assuming new debts order to pay off the existing obligations.

Disputes about the interpretation of the agreement were to be solved, as a matter of principle, through consultation or an arbitration process, rather than unilateral decisions by creditors.

Germany's outstanding debts from the 1920s and 1930s, which were largely devolved to the new West German Government, were estimated to equate to 300% of the country's GDP in 1938. Uniquely in western Europe in this period, Germany obtained the benefit of generous debt forgiveness as more than half of its foreign debt was written off and easier repayment terms were agreed for the balance. Some of this debt was repaid only recently. What occurred in 1953, through the London debt agreement, was an extraordinary act of solidarity in much more difficult circumstances than those that obtain today. It was an act that laid the path to the construction of the European Union and enabled the reunification of Germany. The massive write-down of debt did not inhibit Germany from becoming the powerhouse of Europe.

In 2012, the Taoiseach famously stated:

We will not have the name "defaulter" written on our foreheads... We have never looked for a debt write-down.

This Government should reflect on this statement. We need to become allies rather than adversaries of the Greeks in their call for a debt conference.

In his 2013 lecture, Professor Jürgen Habermas, who is German, concluded:

If one wants to preserve the monetary union, it is no longer enough, given the structural imbalances between the national economies, to provide loans to over-indebted states so that each should improve its competitiveness by its own efforts. What is required is solidarity instead, a co-operative effort from a shared political perspective to promote growth and competitiveness in the eurozone as a whole.

Such an effort would require Germany and several other countries to accept short and medium-term negative redistribution effects in its own longer term self-interest.

Just last week, the Governor of the Bank of England, Mark Carney, attacked the strategy of austerity in the eurozone, pointing to its unemployment rate of 11.5%, which is more than double that of the United Kingdom. At the same time, the eurozone's fiscal deficit is only half the size of that of the UK. Mr. Carney also warned that persistent economic weakness damages the extent to which economies can recover. Debate on this issue needs to broaden beyond the Oireachtas to include citizens, civil society groups, professionals and a wide range of academics. We all know Governments come and go and we all have an interest in this critical issue.

To return to Professor Habermas, he argues that the German Government holds the key to the fate of the European Union and questions not only whether Germany is in a position to take the initiative but also whether it should have an interest in doing so. Writing in The Guardian on 31 January, the former German Foreign Minister, Joschka Fischer, wrote:

Not long ago, German politicians confidently declared that the euro crisis was over; Germany and the European Union, they believed, had weathered the storm. Today, we know that this was just another mistake in the continuing crisis... Merkel is underestimating the options at her disposal. She could do much more, if only she trusted herself.

We need to encourage the German Chancellor to trust herself.

If we look to our future, we can argue back and forth about whether our private and public debts are sustainable. The Government, in its amendment, declares that they are sustainable. They are only sustainable if we accept poor public services relative to the taxes that are paid or a high proportion of citizens, including children, continuing to live in poverty. They are only sustainable if we accept that they limit our ability to deliver fiscal expansion in key areas such as establishing a 21st century water infrastructure or providing a housing programme that tackles the housing crisis in a manner that normalises the housing market and moves away from the boom and bust construction profile that we have had over the years. Delivering broadband to every home and business in the country requires actual delivery, rather than announcements. We must invest in the very thing that will sustain us into the future, namely, our people, by spending on education, from preschool to university level. Not only must we create the conditions that will allow the country to thrive, we must stop and reverse emigration if we are to reduce the ratio of dependency in the population, to provide quality public services and maintain reasonable levels of disposable income.

Speaking on the current crisis, former European Commission President, Jacques Delors, stated, "Europe does not just need firefighters; it needs architects too." We need to do something radically different because we have reached a critical point. There is a new dynamic at work in Europe, one which is driven by citizens and of which we will see more. We cannot afford to lose momentum. This opportunity that must be seized. The proposal for a European debt conference is a hopeful sign and one that needs to become a hopeful reality.

Deputy Finian McGrath

I am grateful for an opportunity to speak in this urgent and important debate on the unsustainability of the debt burden imposed on Ireland and other European countries. I commend and thank my Independent colleague, Deputy Catherine Murphy, for placing the motion before the House. I urge all Deputies to support it tomorrow night.

The issue of debt must be addressed. I urge support for a European debt conference. Let us open our minds to new ideas and solutions, rather than continuing with the tired old conservative solutions that are destroying the country. We must face reality when discussing the unsustainable debt burden imposed on Ireland and other countries, which is an obstacle to economic and social development. Ireland became a casualty of timing when private banking debts were socialised. This decision sacrificed the social and economic interests of citizens. There is an urgent need to recapture solidarity, the founding principle of the European Union, and engage in a co-operative effort to promote sustainable growth and job creation across Europe. This is the objective of the motion.

Let us reject boring old conservative phrases such as "affordable" and "repayable". The key phrase in the motion is "social and economic development", which will be essential if we are to address the issue of debt. The interest on our debt amounts to €7.5 billion per annum or approximately 40% of the country's income tax revenue. This figure is only slightly less than the annual cost of the education system. Irish public and private debt amounts to approximately €700 billion. The challenge is not only to reduce our debt but also to facilitate social and economic development. We should be brave and radical by embracing the issue of debt justice. We need new and dynamic solutions to our problems.

More than 400,000 children live in deprivation, of whom 140,000 live in dire poverty. Families are at severe risk of poverty and the percentage of the population in poverty increased from 7.7% in 2012 to 8.2% in 2013. This is a national scandal. Almost 31% of the population - 1.4 million people - are experiencing deprivation and are unable to afford basic items. One quarter of the population cannot afford to heat their homes adequately, which must be difficult in the weather we have been having recently. Deprivation rates are most acute among lone parents, the unemployed and those who are not working due to illness or disability. It is also scandalous that people with a disability have taken a hit in this crisis.

Children in wealthy areas receive more special education teaching hours than children in other areas. For example, the Department of Education and Skills conducted a survey this year which found that children in Terenure receive more special education teaching hours than children in Dublin 17. The reason for the discrepancy in provision is that parents of children in wealthier schools pay between €400 and €600 to have psychological assessments done privately. These are then fed into the public education system where they are used in determining resource hours and staffing allocations to schools, and so the gulf widens.

For the record, private assessments cost in the region of €400 and €600. All children should have equal access to educational resources irrespective of their parent's wealth. That is the reality on the ground. Ireland is ranked 37 out of 41 OECD countries, ahead of Croatia, Latvia, Greece and Iceland in a league table measuring relative changes in child poverty. We have seen that 18 OECD countries recorded a reduction in child poverty during the period, including Chile, Australia and Poland. UNICEF said recently that the impact of the financial crisis saw a disproportionate decline in children's well-being. In other words, it disputes the "blame it on the recession" approach.

I urge all Deputies to come to the House tomorrow to support Deputy Catherine Murphy's motion. It is about the future of this country and about economic development. Above all, however, it is about the citizens of this country.

Deputy Maureen O'Sullivan

This is a timely, opportune and very welcome topic for Private Members' time tonight and I acknowledge Deputy Catherine Murphy's work and commitment. Tá baint ag comhdháil le díospóireacht agus ní fheadair cén fáth go bhfuil eagla ar dhaoine agus ar an Rialtas leanúint ar aghaidh agus tacú leis an rún seo. I do not understand the fear or reluctance against the idea of a conference because, surely, debate and conversation have to be welcomed.

We seem to have a propensity in this country for wasting money and for not getting the best value out of a project, venture or a plan. We do not seem able to get real value for money. I have mentioned this in the House before and it was outlined in on of last Sunday's newspapers. In my own constituency we have the overspend on the children's hospital, not to mention the tribunals, the massive property write-downs, the Irish Glass Bottle Company, which is a prime example, the incinerator, the National Aquatic Centre and so on. We do not know how to get value for our money. It is similar with the debt burden this country took on in that we did not get the best deal or the best value for the country.

I acknowledge the signs of recovery that we see but that will only be believed when recovery reaches the pockets of all sections of society. We know the sections that are still struggling - the one-parent families, the children in low-income households, those touched by the housing crisis and people with special needs. We know the statistics the Government comes up with on the recovery, including in its amendment to the motion. However, I have to ask what kind of growth we would have now if we did not have the intolerable debt burden to deal with. As it stands, the budget deficit will continue to run, meaning more and more will have to be borrowed, which means more expenditure on the interest. One figure from an economist refers to the sum of €8.2 billion to service the national debt in 2014. We can consider what that could have been spent on. We can just imagine the resources that would be at our disposal for health, education, housing, water and social issues.

The amendment refers to the economic recovery. We are the fastest growing EU member state. Again, how much further would we be with a different debt, one that was not unsustainable? A considerable portion of this is not our debt, and private bondholders are rubbing their hands in glee at their good fortune at our expense.

The situation we are in now is the situation that many African countries were in when they had unsustainable debt which was hindering growth and had conditions attached to their loans that were not in their best interests. In September last there was a proposal at the UN General Assembly to establish a committee to negotiate an international mechanism which would enable countries which were unfairly indebted to justly avoid default. Some 11 countries voted against this, including Ireland. The ad hoc UN committee on sovereign debt restructuring processes has been established and met today in New York for the first time. Ireland boycotted it, using the excuse that this was not something the EU was getting involved in, yet some EU countries were involved. It does not make sense to boycott a mechanism to resolve sovereign debt crises which could potentially facilitate Ireland getting some leeway on unjust debt, such as that undertaken in connection with the Anglo Irish Bank bonds.

There is a change of mood in Ireland and in Europe. There is a demand for a different way because families, communities and citizens are more and more demanding that they, and future generations, do not have to service a debt that was created by a greedy few, who gambled and lost, but did not really gamble as their bonds and investments were guaranteed. Who do we, as Deputies, represent? Is it the bondholders, the developers, the reckless banks and the financial institutions, or is it the people? It is very hard to accept that there are certain developers who lost but who are getting €200,000 a year from this country. If the best interests of the people were the priority and if the Government wanted to show that it is connected with the people, why not support the motion? This motion is about a conversation, about a debate, about a conference. We Irish people are very good at debate and conversation. I do not understand what there is to lose by having this debate and agreeing with it.

There is a reminder in the motion about the founding principles and the values of the EU, which are to do with solidarity and mutual respect among nations. Where is that solidarity and mutual respect when European debts are placed on the most fragile shoulders, when Ireland, Portugal, Spain and Greece have suffered disproportionately? It is almost sadistic. The press conference this morning called by Deputy Catherine Murphy was basically asking for a wider debate that would involve the Government, Departments, academics, NGOs, communities and citizens. It is a great topic for a constitutional convention, if we want to take that road again. It is basically about the common good. Where is the fear in that?

Deputy Joe Higgins

I strongly agree with the sentiments in the motion which state that the debt burden on Ireland and on other European states is unsustainable and is acting as a huge brake on the economic and social development of society. I agree also with the sentiment that it is the social and economic interests of our people that were sacrificed to private banks and to the European financial markets in the bailouts. Of course, there should be support for a European debt conference.

I do not agree that the European Union was ever managed on the basis of being a zone of solidarity and mutual respect. It was and is a club for the major corporations, the finance houses, the armaments industry and, of course, the establishment politicians, be they Christian or social democratic. Not solidarity but right-wing neoliberalism, privatisation and profit maximisation for the benefit of big capitalists is what has driven the leading institutions of the European Union.

It is incredible that the Government fails to support a debt conference. The craven adherence of Fine Gael and Labour to the austerity agenda, driven by the financial markets and the right-wing governments throughout Europe, shames the Irish people, who have been victims of austerity and who have, on many occasions, stood in solidarity with the people of Greece and, indeed, of other countries where people have suffered. It is breathtaking that an Irish Minister for Finance would describe the Irish debt as affordable and repayable and that the country is in a good position in that regard when just under €8 billion a year in interest alone is paid to banks and bondholders, the big majority of it odious debt or the result of odious debt being foisted on the Irish people and the damage that did to the economy. These are billions that could and should be going into investment, infrastructure and the creation of tens and hundreds of thousands of jobs for our people, particularly our youth. As an example, €1 billion alone out of that every year would transform the water infrastructure and obviate the push by the current Government to impose a hated water tax, which will not be accepted.

The Irish people, like the Greek people, need a debt conference, but not merely to stretch out the repayments over a longer period of time and put the burden instead of on the present generation or on the children of the present generation, on the children of children yet unborn. That would be a rotten compromise. A debt conference should deal with the repudiation of odious debt. The Irish people have no responsibility for what was foisted on them as a result of what was speculated and gambled during the bubble. The Greek people have no responsibility for the reckless lending by the European banks and bondholders to right-wing Greek governments, the majority of which did not benefit the Greek people but an elite in that society. The position is similar for the people of Portugal, Spain and other countries.

The coming to power of Syriza in Greece has given hope to people in that country and much further afield. A party to stand against austerity is what people have yearned for.

Syriza will have to hold firm to its election promises to improve the lot of working class people and must not, in any sense, agree to a rotten compromise with the European debt mongers. Inevitably, it will be in headlong confrontation with the financial markets, Frau Merkel and the other neoliberal political parties which will try to undermine the government in Greece. If Syriza and the Greek people are forced into a corner and default or if they are pushed out of the eurozone, they can only stave off disaster by taking the most radical democratic and socialist measures to nationalise the banks in public ownership and major sectors of the economy similarly in order that it can be planned for the people by introducing capital and credit controls to stop speculators and taking other such radical measures in the interests of the people. It will need a socialist programme to transform the horror created by the barbarism of the profit system and the financial marketeers.

Mar fhocal scoir, teastaíonn tacaíocht do chomhdháil Eorpach maidir le fiacha a chur ar ceal. Chomh maith le sin, teastaíonn tacaíocht le lucht oibre na Gréige i bhfábhar athrú raidiceach sóisialach daonlathach le fáil réidh le córas barbartha na margaí airgeadais agus an caipitleachas.

Deputy Joan Collins

I express my deep appreciation to Deputy Catherine Murphy for bringing forward this motion. As others have said, it is appropriate that we deal with this issue. I am happy to be one of the 11 Technical Group members who signed and sent a letter of support to Syriza before the election wishing it well and supporting its call for a debt conference. I am also proud to have been among the thousands of people out on the streets of Dublin on Saturday, marching against austerity and expressing the desire to see austerity measures stopped in this country. I am also proud to support the 300,000 plus in Madrid who marched with Podemos and called for a change in European austerity measures.

Like other Deputies, I ask the Minister for Finance and to ask the Tánaiste, Deputy Joan Burton, why there has been a dramatic change in their position on the new Greek Government's proposal for a European debt conference. When Syriza first proposed the idea of such a conference, both the Minister and the Tánaiste gave the proposal a guarded welcome. At least, they said it was an idea that could be looked at. Now, any such proposal is denounced as a demand for a debt write-off which cannot be countenanced under any circumstance. The Minister for Finance came out with a despicable statement that they still owed us €350 million. This is consistent with the "No" vote and the boycott by the Government of the UN committee on international debt in New York today. It is unbelievable that the Government voted "No" against holding this conference. Only 11 countries voted against the proposal, one of which was Ireland. All other heavily indebted European countries abstained in the vote. Ireland is boycotting the meeting. The Government has stated only "market mechanisms" can be used to resolve debt crises, which is why it will not engage with the UN committee. That is a shameful position to take. The Government is certainly not speaking for me, most Members on this side of the House or the Irish people in making that statement.

The Government's position seems strange, given that we could be major beneficiaries of any reorganisation of debt across the eurozone. The only conclusion one can draw is that if Syriza gets a deal along the lines it has proposed, this will be a huge political embarrassment for the Government. Avoiding any such embarrassment comes before a sensible suggestion which could get the eurozone out of the mess austerity has created. This strange sense of priorities is entirely consistent with the Government's new economic policy in the run-up to a general election, a policy which, as far as I am concerned, is based on three words - "Save our bacon".

A new policy is required for Europe, as the mad experiment with austerity has been a disaster. The social consequences have been well documented. We see them in the SILC figures which show that over 30% of the population are living in deprivation. In Greece the social consequences are horrific and the purchase of goods and services has fallen by 40% since 2008. The imposition of such poverty in a modern economy and EU member state is shameful and raises a moral question. Like the Irish bailout, the Greek bailout was a bailout not of the people but of EU banks, in particular German banks. Only 11% of the €230 billion was spent on Government services. In reality, the money went in one door and out the other. The social consequences of the austerity economic policy are not the only issue. As a solution to debt crisis, austerity has failed and no longer is it just those on the left who are saying this.

The Financial Times is hardly a socialist newspaper, but it states: "To service its debt burden would require Greece to operate as a quasi-slave economy, running a primary surplus of 5% of GDP for years purely for the benefit of its foreign creditors. Even the IMF has dropped hints in favour of debt forgiveness". The report went on to ask: "What is the point of demanding money back merely to hasten the bankruptcy of the Greek state?" The majority of the ECB board now accept that austerity has not worked, which is the real reason behind its decision to launch a massive programme of quantitative easing. However, quantitative easing will not work either; just ask the Japanese Minister. Quantitative easing linked with continuing austerity will certainly not work, but it could work with a debt conference to discuss how the debt could be restructured.

At least, in Greece we have a government that is prepared to say "No" and demand a serious look at an alternative. This is not rocket science; it is a no brainer. I call on this Chamber to support the Greek Government and people.

Deputy Thomas Pringle

I commend Deputy Murphy on bringing forward this timely motion. The election of Syriza in Greece in the past week was a victory for progressive politics in Greece and all of Europe. It is very likely that it will be followed by the election of Podemos in Spain. We in Ireland should be delighted with the potential these election results present to us. The election of Syriza indicates that the citizens of Greece have had enough of the policies imposed on them by the troika which have socialised the debts of the banking sector and made citizens liable for them, forcing massive austerity across the board.

The proposal made by Syriza of a European debt conference should be embraced by the Dáil and the Government. Even though we have weathered the troika programme, I must ask: at what cost? It has led to massive unemployment, particularly youth unemployment, huge levels of emigration and increases in deprivation and poverty rates. While the housing crisis may not be directly attributable to the troika and the bailout programme, our ability to respond to it is restricted by the amount of debt we are carrying and the interest payments we are required to make annually.

The Syriza proposal is for a European debt conference to be called, to include all eurozone countries. There is a precedent - the debt conference held in the 1950s that led to the Marshall plan which included a halving of Germany's debt and reductions in the debts of other European countries because of the burden imposed by the war. The Syriza proposal is to reduce the national debts of all eurozone countries to 50% of GDP. This would be achieved by the ECB buying the sovereign debts of members. This would remove approximately €4 trillion of debt and place it on the balance sheet of the ECB. It would not be a debt write-off, nor would it be a default. The bonds held by the ECB would be bought back by member states when the level of the debt reached 20% of a country's GDP. For each country the time within which this would be achieved would be different. In our case it could be as far out as 2053 or 2060.

This proposal would not involve a fiscal transfer from one eurozone country to another, which is illegal under the Lisbon treaty, and would not constitute a bailout. The balance sheet of the ECB could sustain this level of debt and the losses to it for the first number of years would be manageable, at approximately €60 billion per year. This sounds like a huge amount of money, but measured against the ECB balance sheet it is relatively small. This move would have a stimulus effect on the entire eurozone economy and help to head off the deflationary problems in the eurozone.

What this would mean for us as a nation is that our debt repayments would be reduced by up to €3.7 billion per year, moneys that could be used to address the housing crisis and invest in the economy. Considering the announcement made by the Minister for Transport, Tourism and Sport today, in which he indicated a cut of €40 million since 2014 in the fund for local and European Union-funded roads, we see the potential this investment could have in this area and services such as child care.

Investing in child care provision and creating a proper functioning affordable child-care sector would mean that citizens could continue in work without having the burden of the most expensive child care in Europe. It would also allow the development of a proper career path and living wage for child-care workers.

We could also invest in providing fibre broadband for each household in the country. That is achievable if there is the vision to provide it. The stimulus of providing real broadband would free up huge potential for people outside the major urban areas to create jobs for themselves.

The Western Development Commission in 2011 published a report that estimated that up to 18,000 jobs could be created in the creative industries in the north west alone simply by improving access to the Internet and e-commerce. Imagine the potential that could be unleashed with this kind of stimulus. These are just some of the possibilities of what we could do after the debt conference proposal.

To make it a reality requires an Irish government to have the vision to embrace it and see the potential in it. Unfortunately, the statements coming from the Government have attempted to pour cold water on the idea. It is interesting that the initial response to the proposals was not to rule it out entirely, but then the IMF and the troika came to town for the review conference a few weeks ago and the mood changed. Was it that the IMF told the Government to get back on message and toe the line? It certainly seems like it.

Things are changing within Europe and the Government needs to see what is happening. The debt conference proposal is not only to benefit Greece, it is a proposal that benefits the entire eurozone and, along with Greece and probably Spain, we should champion it. Who would have more credibility in selling this idea than a country like Ireland which did so much to shoulder the burden of the eurozone crisis, paying 43% of the entire banking bailout of the eurozone?

The Government could be helping our citizens by supporting a proposal that benefits everyone in Europe and its credentials as good Europeans would be intact. I am urging the Minister to accept this motion, not to move the mealy-mouthed amendment he has tabled and to embrace a debt conference that offers a solution once and for all to the crisis that still goes on and is still impacting on all our citizens.

Minister for Finance (Deputy Michael Noonan)

I move amendment No. 1:

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

“acknowledges that the financial crisis exposed flaws in the euro area’s design;

notes the significant enhancements to the economic, fiscal and banking frameworks in the European Union since the crisis;

acknowledges that sustainable growth and job creation across the EU are a priority and indeed was a priority of the Irish presidency;

recognises the importance of the founding principles and values of the Union, such as solidarity and mutual respect amongst nations;

further acknowledges the support of our European colleagues in the reduction of our debt burden through the lengthening of maturities on the European Financial Stability Facility and European Financial Stabilisation Mechanism debt, the reduction in interest rates on this debt, the promissory note deal and facilitating the early repayment of the more expensive International Monetary Fund debt;

notes that:

- Ireland has emerged from the economic and fiscal crisis and is now the fastest growing EU member state, and most importantly jobs are being created;

- debt is sustainable and on a firmly downward trajectory;

- economic recovery has allowed us to invest in public services and reduce the tax burden on individuals in budget 2015; and

- other programme countries are also growing strongly;

recognises that multilateral engagement should form the basis for discussions regarding debt sustainability and that the Eurogroup and Ecofin are the appropriate fora in this regard; and

agrees that the focus should be on promoting sustainable growth and job creation across the EU.”

I wish to share speaking time with Deputies Nolan, Connaughton and Michael McGrath.

Acting Chairman (Deputy Frank Feighan)

Is that agreed? Agreed.

Deputy Michael Noonan

I thank Deputy Catherine Murphy for tabling the motion, which allows us to discuss a very important issue for Ireland and Europe. I hope that in our discussions over the next two evenings we can have a reasonable debate on an issue that is currently at the centre of much dialogue in the euro area. At the heart of the initial motion proposed is the idea that public debt in Ireland and some other euro area members is unsustainable and the suggestion is that a lack of solidarity among member states has contributed to this. These suggestions are wrong.

First, I want to address the suggestion that economic recovery is being restrained by public debt. This morning, the Central Bank published projections that GDP would grow by 3.7% this year and 3.8% next year, following growth of over 5% last year. These figures are broadly in line with my Department's projections published alongside the budget. Importantly, domestic demand - that is consumer and business spending - is making a positive contribution to growth for the first time since the crisis began.

This year, the level of GDP in Ireland will likely return to its pre-crisis peak. However, it will be more balanced than during the bubble years, not relying too heavily on any one particular sector. This is a very positive development and reflects the Government's management of the economy.

Recovery is perhaps most clearly evident in the labour market, with employment having increased in each of the last eight quarters. Put another way, the level of employment has increased by 80,000 since the low point in mid-2012. Unemployment has fallen significantly and this decline is projected to continue. So while there is more to be done, we are certainly moving in the right direction.

In this regard, the Cabinet held a special meeting on jobs last month and agreed to a range of measures to ensure the delivery of three key employment targets ahead of schedule: ensuring 40,000 additional jobs in 2015, which, when combined with the 80,000 new jobs already created since the launch of the Action Plan for Jobs, will ensure the Government's original target of 100,000 new jobs by 2016 is beaten; ensuring unemployment falls below 10% this year, ahead of forecasts when the Government took office; and delivering full employment in 2018, two years earlier than anticipated. To facilitate the delivery of these targets, the Cabinet agreed to update medium-term economic and job creation strategies in a range of areas in 2015. It is clear that whatever it is doing the debt burden is not inhibiting economic growth because we have the highest growth levels in Europe and we are creating more jobs relative to our labour force than anywhere else in Europe.

I turn now to the suggestion that our debt burden is not sustainable and that it was somehow imposed on Ireland by other member states. Our debt is sustainable, which is evidenced by the fact that borrowing costs are the lowest on record. Our debt-to-GDP ratio peaked in 2013 at 123% and fell to an estimated 110% last year. This figure is above the EU average and we must continue to reduce it but importantly, the figure includes a substantial amount of liquid and semi-liquid assets built up in order to ensure a smooth exit from the joint EU-IMF programme at the end of 2013. On foot of this our net debt - that is excluding liquid assets - amounted to around 90% of GDP last year, which is close to the European average. Furthermore, this net figure will decline over time as we dispose of our banking assets. These are currently valued at just €15 billion but I am confident that with ongoing economic recovery we will recover at a minimum the €18 billion that the Government invested and up to the €30 billion invested in the pillar banks and PTSB. The debt ratio will further benefit from the successful liquidation of IBRC over time. In addition, the repayment profile has improved substantially and major funding cliffs have been removed through the extension of maturities on EFSF and EFSM loans, refinancing of IMF loans and normal debt management operations. There will be no repayments on EU loans until 2027 at the earliest. The replacement of the promissory notes with long-term government bonds involves significant savings for the State.

The NTMA announced that it intends to raise €12 billion to €15 billion in 2015 and has already had considerable success, accessing seven-year funding at less than 1%. Indeed, the last €500 million in six-month treasury bills was raised last week at an annualised yield of 0%. This morning a 30-year bond of €4 billion was raised at an interest rate of 2.08%. There were 385 separate investors from throughout the world. They believe we are sustainable for the next 30 years and are prepared to give us 30-year money at just over 2%.

The Government has made major inroads into making our debt more affordable and minimising its impact on the economy. As our European colleagues have provided the necessary support for this, I reject suggestions that there is any lack of solidarity in the Union.

It is also important to correct the misperception that Ireland's debt is mainly due to banking debt. In fact the bulk of our debt relates to the mismatch between revenue and expenditure as a result of inappropriate policies adopted during the 2000s. All the earlier contributions on the motion were about debt, banking debt and our European colleagues when everybody in Ireland knows that the main reason for the collapse in the economy were the people who sit in the benches opposite. This evening they have disappeared. Fianna Fáil wrecked this country and nobody else. It caused the problems of poverty, the housing crisis and all the other problems that were enumerated across the House this evening, in case Deputies have forgotten what happened.

In the period 2008-14, the cumulative underlying deficit - the gap between the income and expenditure of the State on services and excluding banking support - totalled €100 billion. Some €100 billion of the debt between 2008 and 2014 was because expenditure was ahead of tax and the gap was bridged by borrowing. Some €100 billion was borrowed for health services and education and all public services. If we are to debate the issue, we should at least agree on the facts. The bulk of the Irish debt is due to the fact that the previous Government not only destroyed economic activity but destroyed the tax base. We were left with a situation where the taxes collected were no longer sufficient to fund the day-to-day running of the public services in the country. As a result, just under one fifth or approximately €40 billion of our gross debt relates to banking support, at least part of which will be recovered over time in a manner that maximises value for the taxpayer. NAMA is disposing of its assets at a faster pace than initially expected and, in all likelihood, NAMA will be wound up before 2020, thereby eliminating an important source of contingent liability for the State.

The majority of the banking-related debt in our national debt is associated with IBRC. As a result of the accounting treatment applied, the total cost of Anglo Irish Bank was added to our debt in 2009 and 2010, the two years following the banking guarantee and years in which Fianna Fáil injected just under €35 billion of taxpayers' funds into Anglo Irish Bank. As a result of the promissory note transaction and the successful liquidation of IBRC, the main legacy cost of this on the national debt is the portfolio of eight floating rate Government bonds totalling €25 billion. The first bond does not mature until 2036, with the final bond maturing in 2053. The misconception is equally true when it comes to the cost of servicing the national debt. The factual position is that, of the €7.5 billion in interest payment we face in 2015, when account is taken of the various asset sales and circular flows of income, only around €800 million is bank related. Slightly more than 10% of the interest paid on the national debt is interest paid on the debt incurred in bailing out the banks and the bad decision to fund Anglo Irish Bank through promissory notes. If we are to debate this seriously, let us stick to the facts. The debt we in Ireland must pay for and sustain through interest rates is the accumulation of historic debt together with deficits that have been run since 2008. We are still running one this year and that is why we are trying to get deficits below 3% and then bring in a balanced budget by 2018 so that we are no longer building up debt.

There is another misconception that if it were not for the interest costs, banking related or otherwise, we would have billions in additional capacity to spend on day-to-day expenditure. Again, this is not the factual position. Looking to the future, interest costs are not included in the calculation of the expenditure benchmark and will have no impact on the available fiscal space. This is an important issue to bear in mind.

Before continuing, I want to say a few words about reforms that have taken place in the EU and particularly in the euro area since the crisis began. At its heart, the EU is a community of nations that came together because they realised that working together, compromising and reaching negotiated solutions was infinitely better than going to war. This was the foundation of our Union and it remains as true today as ever. Over the decades, the Union has increased in size and geographical spread but the basic principles have been always maintained and respected. I strongly dispute any suggestion that this is not the case.

It is fair to say the financial crisis and subsequent euro area debt crisis highlighted flaws in the design of economic and monetary union. Broadly speaking, the policy response has centred on retro-fitting the monetary union with the tools to make it operate more efficiently - a strengthened fiscal framework, enhanced economic surveillance and progress towards a banking union - and these are very much consistent with the principles of solidarity and mutual respect.

As a Union, we are now in a much better place. In recent weeks, financial markets in Greece have been adversely affected through declines in the stock market, capital outflows and increases in bond yields, although markets appear to be treating Greece as an outlier rather than a source of contagion. This is encouraging and suggests the firewalls created, especially outright monetary transactions, OMT, and governance changes made during the crisis appear to have the desired effect.

While the governance changes have improved policy making and the resilience of the European economy to shocks, I am conscious of the need for a greater focus on jobs and growth in Europe. This was a major theme of the Irish Presidency in 2013. The data flow has not been particularly encouraging of late - GDP in the euro area remains well below its pre-crisis peak and activity has virtually come to a standstill in the past year or so. This has manifest itself in unacceptably high levels of unemployment and social exclusion.

Our overriding emphasis now has to be on economic growth, that is, growth based not just on sound public finances and ongoing structural reform but also growth driven by productive investment. We need economic growth at a rate sufficient to get people back to work as well as to re-establish the commitment of our citizens to the European ideal that has been damaged in recent years.

In the past six months, ECOFIN has held substantial debates and took important decisions on how to create durable conditions for sustained growth and job creation, most notably on structural reforms, investment and market integration. We must have a comprehensive and co-ordinated approach to realise the full potential of our economies. In this regard, a three-pronged strategy is needed. First, there is a need for differentiated fiscal policies - those member states with fiscal space should use it, especially when borrowing costs are so low. Second, there is the role of monetary policy. The announcement that the ECB would undertake a widescale programme of bond buying to reduce financing costs for households and firms is certainly welcome. The potentially open-ended nature of the programme is also positive and has sent a strong signal that the monetary authorities are responding to the problems. Finally, member states need to undertake structural reforms to unlock the growth potential of their economies. I welcome the clarification provided recently by the European Commission that, under certain conditions, the fiscal cost associated with structural reforms will be excluded from deliberations on the Stability and Growth Pact. Investment under the so-called Juncker plan will be also treated favourably.

The European Union was formed out of a desire to forge a common destiny, while retaining a national identity. In this regard, solidarity and mutual respect among nations has been key to the restoration of economic growth in Ireland. It is fresh in the minds of the people of Ireland, the support that was sought from our European colleagues and the international institutions in terms of the programme of financial assistance in 2010.

We have successfully exited the EU-IMF programme and we have the fastest growing economy in Europe. In the most recent budget, we were in a position to invest in public services and to reduce the tax burden on individuals. The Irish people have made major sacrifices to achieve this economic and financial stability and this must not be taken for granted. While the people of Ireland firmly took control of the destiny of this country by making important sacrifices, it is important that we acknowledge the role of our European colleagues, particularly in ensuring our debt burden is sustainable.

In the run-up to the Greek elections, the issue of a debt conference was raised and has since garnered a lot of attention. My view, and that of the Government, is that when countries encounter difficulties, a process of negotiation is always better than one of conflict. Recent comment form the newly elected Greek Government suggests this is a view shared in Greece. Specifically in the case of euro area member states, all programme negotiations have been conducted between the finance ministers and prime ministers of democratically elected governments in member states within the Eurogroup, ECOFIN and the European Council, with institutional involvement as appropriate. My view is that these are the appropriate fora for resolving outstanding issues in the best interest of Europe.

When I was asked what would happen if Syriza won the election in Greece and wrote off debt, I expressed the view that it probably would not seek to write off debt in a unilateral fashion because I had read its election manifesto and it had proposed a debt conference. I made the point that if it was proposing a debt conference, its intention was to negotiate rather than take unilateral action. That is the context in which I was talking about a debt conference.

I read practically everything that has been said by the Greek Prime Minister and Finance Minister in recent days. I have not come across any proposal from the new Government on putting in place a debt conference. It has said it will not negotiate with the troika but it seems to be negotiating with the ECB and the European Commission, although it has been silent on the IMF.

I wish the Greek Government well because Greece has suffered much more than Ireland. The 25% of the Greek population who are unemployed have no social assistance after 12 months. Effectively they have to live as best they can in the black economy or through charity. In such circumstances, I can understand why the new Government committed in its election manifesto to providing food stamps and free electricity in the winter months to 300,000 people. It would, however, be a mistake to say the position in Ireland is comparable to that of Greece. Greece has an extraordinarily weak economy and it is in a very bad situation. There is solidarity in Europe in terms of assisting the Greek Government and people, and we will see how that develops in the coming weeks and months.

The solution for heavily indebted countries is growth. I hope the Greek economy can grow again. If one takes Ireland from 1995 to 2005 as a model, our general government debt was €43 billion in 1995, or 80% of GDP. The debt had increased by €1 billion by 2005 but it was only 26% of GDP. This demonstrates the point that national debt is usually rolled over rather than paid back. The proportion of GDP taken up by debt is the significant figure. During the 1990s, employment in Ireland grew by approximately 50%. Do the people who used to speak about debt default in Ireland really believe that Ireland should have defaulted in 1995?

Deputy Thomas Pringle

Who mentioned default? Where is default mentioned in the motion?

Deputy Michael Noonan

I did not refer to anybody who spoke this evening. I spoke about the people who advocate default.

Deputy Thomas Pringle

The Minister's script makes reference to supporters of default.

Deputy Michael Noonan

That is not what I actually said. I spoke about those who advocate default but I was not referring to people in this Chamber. This Government will continue to work to broaden and deepen the economic recovery that is taking place across the country. I thank Deputy Catherine Murphy and the other Deputies who signed their names to this motion for giving this House the opportunity to debate an issue that is being debated across Europe.

Deputy Derek Nolan

I will never forget the election of 2011 or the horror and despair at the state of our economy I encountered while canvassing in Galway city. I recall calling to a house in Renmore and meeting a woman in her 50s who was in tears because all of her savings had been wiped out. Her livelihood and retirement prospects had been completely undermined and she could see no way forward. That was the experience for many people around the country in a context of humiliation at the arrival of the IMF in the midst of sky-rocketing unemployment. These problems did not emerge as a result of banking debt; they were caused by the collapse of a false economy that existed in this country for a number of years. We had a housing bubble that took with it livelihoods, jobs, mortgages and hopes and dreams of a generation of Irish people when it burst. We are still trying to pick up the pieces from that collapse. As so many people lost their jobs and required help social expenditure exploded. We had to pay more to provide medical cards, social welfare and supports for people to go to college. We did our best to maintain the welfare state but even as expenditure increased dramatically our income collapsed because people were not working and paying taxes, and because the revenue to the Exchequer from the bubble dried up. While 20% of our debt relates to the banks, 80% is because we had to borrow to fill the gap between what we were taking in and what we were doing to maintain a decent standard of living for our people.

What we have done to make our debt sustainable has been remarkable. People said we would be unable to reduce the interest rates but we managed to get them decreased from 6% to 3%. Others said we would not be able to renegotiate anything with the troika but we extended the maturities, got rid of promissory notes and changed the repayment methods to make our debt more affordable.

I welcome the election of Syriza in Greece and wish it the best of luck. It has great potential to bolster the cause in Europe for the growth model, which is being pushed by countries like Ireland, France and Italy. However, the champions of its victory in Ireland, including Sinn Féin, are trying to portray it as something it is not. Sinn Féin advocates default but Syriza has gone to the pin of its collar to say Greece is not going to default unilaterally. Already the split has occurred between the two camps. Sinn Féin supported the bank guarantee in 2008 but just last week it denied that it happened.

Deputy Seán Crowe

Read the history books.

Deputy Derek Nolan

In February 2001 it claimed we did not need a bailout only for Deputy Pearse Doherty to call for a second bailout in June 2011. Both claims were factually inaccurate. Its great solution to our revenue gap was a wealth tax, which it proposed in three budget submissions. It originally claimed that such a tax would bring in €800 million but later it put its hands up to admit it did not know how much revenue it would earn. We did the right thing for the country by introducing budgets that were difficult but as fair as we could make them. Sinn Féin accused us of taking money out of the economy even though all of its own budget proposals would have taken money out of the economy. If we are an austerity Government, there is also an austerity Opposition because it believes in exactly the same debt ratios, deficit targets and structural adjustments. It introduced glossy budget statements in 2012, 2013 and 2014 but €1.5 billion of the tax increases proposed in them were exactly the same, as were €600 million in spending adjustments. We got copy and paste budgets over a three year period while the State was trying to balance the books. That does not work.

My party has been criticised for saying things at the last election but Sinn Féin's manifesto in 2011 promised to reverse all the cuts. It has not introduced a single budget document or proposal on reducing or reversing all of the cuts. Deputy Adams recently stated that it would cost €8 million to reverse water charges and the property tax when every dog in the streets knows it will cost over €1 billion. Just yesterday, Deputy McDonald revealed that she did not know where her party would find the money to pay for water.

We have to be realistic about what is happening in this country, and devise proper policies. There are people who live in a world of opportunism and there are those who sit on this side of the House and make decisions. With unemployment down from 15% to nearly 10% and growth at the highest rate in the European Union, we are finally seeing taxes decreasing and incomes increasing. I think we know who rolled their sleeves up to do the right thing instead of exploiting people's fears and worries.

Deputy Paul J. Connaughton

I welcome the opportunity to speak on this motion, which was tabled on foot of the results in the recent election in Greece. I wish the new Greek Government the very best. It was democratically elected by the Greek people.

Certainly, the Greek Government will not need my approval as a backbencher from County Galway, but I do not see why we would stand in its way. I wish its members the best of luck with what they are doing. However, I have noticed that in the short period they have been there they are already tending to row back from where they stood before the election. I noticed one comment by the new finance Minister, whose name I will not try to pronounce as I will not do it justice. He said only yesterday, "Help us to reform our country and give us some fiscal space to do this, otherwise we shall continue to suffocate and become a deformed rather than a reformed Greece". He has got elected and is looking for a bit of space and time. It sounds familiar to the situation when we came in four years ago and looked for that same space to reform. Four years on, we are starting to see the benefits of that even if it is probably not as quick as we would like and there are still things out there that upset people. There are a number of people in our country who will never get over the issue of Anglo and bondholders.

It would be easy for me to stand up here like any backbencher and kick the previous Government and other politicians, but what would be the point? The point here is what the future will bring. We see our country growing again and we see economic growth going the right way. Deputy Maureen O'Sullivan, who is still in the Chamber, asked whether things might have been quicker in getting back to double the growth. That is not guesswork and certainly there is something to consider. However, while I am not saying any of them is sitting here tonight, there were Members across the Chamber who said we had to default straight away or go for a second bailout. They were nearly wetting themselves when they were saying this. Technically, they were betting against the country. Now, there is no talk of that. Four years ago, they said the euro would go on but Ireland would not be part of it, or if we were that it would be a two-tier euro. They said we had no business in it, but where are they all now? They are nowhere to be seen and they do not talk like that anymore. That is because we are getting back to where we want to be, which is somewhere sustainable with growth and jobs. I agree that we could do a great deal more and that we need to do a great deal more.

One of the biggest issues that has always faced Greece is that if there was political instability, it was followed by economic stability. We have had political stability for four years due to the current Government of Fine Gael and Labour. I do not know how many elections Greece has had but it has been at least two or three in that time. Greece has not had a chance to have political stability. We also see another issue which is that it is always easy to blame people we never meet and can never know. I am not here to cheerlead for banks or the ECB, but like every country Greece is in need of reform. It has very high unemployment which it has to sort out itself. Of course, we need to help it to do that.

I have no particular gripe with a debt conference although I am not wholly convinced as to what it would achieve. I have no doubt that every country that goes to these talks will look to see first how it can help itself and second how it can work as part of the European Union. As a small island country that needs to work with others, it is to our benefit in particular if other economies recover and do well and as such I have no problem with that. However, we have to be logistically minded and sensible as Deputy Derek Nolan said. For every action we take, there will be a consequence, whether we like it or not. After four years in this Government, I know that when one makes unpopular decisions, one pays the price. The idea that some form of debt write down will solve everyone's problem is ridiculous. People have to start coming up with other solutions also. Countries and economies need to reform. Greece is not calling anymore for a large debt write down, but is looking to work with colleagues and partners and we should support fully what it does. It is not acceptable to continue to suggest a single populist answer that writing off the debt will make everything rosy in the garden. It is unfair to Irish citizens and European citizens. Let us see what is discussed at the debt conference, what solutions emerge and whether they will work or suit everybody else. If we can have that conversation, we can move forward.

Deputy Michael McGrath

I am glad to have an opportunity on behalf of Fianna Fáil to address the motion before the House and I compliment Deputy Catherine Murphy and others on putting it forward to ensure we have an important debate on the issue. Fianna Fáil supports the idea of a European debt conference which would examine both the sustainability and fairness of the sovereign debt burden currently borne by the most indebted countries in Europe. It is disappointing that the parliamentary replies of the Minister for Finance to date indicate that there are no plans for such a conference to take place nor does he intend to put it on the agenda himself notwithstanding his signal at one stage that he was reasonably disposed to the idea. He seems to have moved away from that position.

There is no need for the calling of a conference to cause a market panic. I suspect that is one of the reasons those opposed to a conference believe it should not happen. They do not want to cause instability in the financial markets at a time when the cost of borrowing for Ireland and other countries has reduced very substantially. However, it could be done in a managed way with the express aim of achieving an outcome that is fair to both debtor and creditor countries. Ireland's direct need from a debt conference or any other form of talks that take place would be very different from that of Greece. I am the first person to acknowledge that we are in a very different space to Greece despite having also come through a very difficult period. We are in a stronger position than the Greeks in so many different ways. We have a very open trading economy which is market based. Ours is a strong export oriented economy in a way that Greece's is not, which poses a real difficulty for it in terms of growing its way out of a very large national debt. Greece's economy has deep structural problems.

Our focus as a country should be on the unresolved issue of the legacy bank debt. The Government seems to have given up on pursuing the option of a retroactive recapitalisation of the Irish banks by the ESM. It favours instead the possible sale of a stake in AIB on the open market. It remains to be seen to what extent that course of action will result in the State being repaid a substantial amount of the €21 billion which was pumped into AIB. Ideally, it will all be repaid. A debt conference at which both the sustainability and fairness of the debt burden being shouldered by European states would be considered has the possibility of providing a new impetus for dealing with this issue. The European Stability Mechanism has been open for business for a number of months now but it appears that while the theoretical possibility of retroactive recapitalisation of the banks via this route exists, the Government has no intention of pursuing this option.

I note that we have singularly failed as a country to ensure the delivery of the June 2012 summit agreement. The summit and the Taoiseach's declaration now seem a very long way away. He said: "The agreement that we have now brought about here allows the European Stability Mechanism to be used directly in capitalising banks and that represents a seismic shift in European policy and it is one I have been advocating for several months." He went on to say:

To those the naysayers who say you should be beating the Lambeg drum up and down the streets of Europe, there is another way of getting results and that's what interests me. I'm a hard grafter and as some of them found out, they shouldn't tangle with me too often.

Two and a half years later, his words are ringing very hollow indeed. It was not only he Taoiseach who talked up the implications of the summit communiqué. The Minister for Finance, Deputy Michael Noonan said:

Our negotiating position up to now was to put arrangements in place to lessen the burden of bank debts, but it would still remain on the sovereign balance sheet. This agreement takes this further in terms of policy and the intention now is to separate certain bank debt completely from the sovereign balance sheet.

It is hard to see any action on the part of the European authorities in the intervening period which will give any practical effect to the Minister's interpretation of the June 2012 agreement.

To use the phrase of Brian Hayes MEP, who referred to the matter at the weekend, the promissory note arrangement of February 2013 put the Anglo and Nationwide debt on the "never-never". However, even this is being unravelled as we speak. While we will have to wait for the Central Bank annual report for 2014 for confirmation, all the indications are that the sale of the bonds held by the Central Bank is taking place much faster than the minimum pace prescribed in February 2013. This is diluting the benefit of the arrangement as the interest on Government bonds, which was being paid to the Central Bank and back to the Exchequer via the Central Bank surplus, is now being paid to third parties instead. While the Taoiseach lauded at the weekend the €50 billion reduction in debt payments, I would like to see an actual breakdown of this figure.

I take issue with one aspect of the motion, namely the statement of certainty that the Irish debt burden is unsustainable.

Our argument must be that the debt burden was unfairly levied, not that is it inherently unsustainable. It is possible that our debt burden will become unsustainable if economic growth does not continue. We are meeting our debt obligations as they fall due. The annual interest bill is a considerable burden at approximately €8 billion. A reply to a parliamentary question indicated that, in so far as it can be estimated with accuracy, the banking related element of this is approximately €1.6 billion with about half of it being paid in interest to the Irish Central Bank so that the net interest bill is about €800 million, which will increase if the Central Bank continues to sell the bonds. This is a huge sum of money which could be put to many important uses, such as reducing the hospital waiting lists or improving the water infrastructure. It would be wrong to claim with absolute certainty that our debt is unsustainable. Although our debt burden is making life much more difficult, we will not default on our debts and it is important that message is delivered.

I turn to the situation faced by the Greek people. When the Euro Area Loan Facility (Amendment) Bill was being debated in the Dail in 2013, I stated that while I supported the bailout measures for Greece contained in it, I doubted they would be successful in restoring the Greek economy. I noted the significant risk that, having got a third round of support, it was very possible that Greece would need a fourth, fifth or sixth bailout if the underlying weakness in the Greek economy was not tackled. We are heading into this territory because the deals done for Greece were hopelessly unrealistic and were based on unrealistic assumptions. The immediate situation is urgent for Greece and the wider eurozone. Its bailout programme expires at the end of February and it must make over €7 billion in payments before the end of the summer. The Greek Government has proposed a number of suggestions on how it will deal with it.

Having benefited from the programme, Ireland should pledge itself to assist Greece, in a spirit of European solidarity. Greece needs something akin to the Marshall aid plan which the US extended to Europe after the Second World war and from which Ireland benefited. The plight of the Greek people requires decisive European action. While there are no quick fixes, we should signal our determination to be part of the process and a European debt conference which would examine the sustainability of sovereign debt across the eurozone would be a good start.

Deputy Éamon Ó Cuív

I am pleased to have an opportunity to speak on the motion. I congratulate the proposers of the motion on giving us the opportunity to debate it. One of the interesting statements this evening was the admission by the Minister for Finance, Deputy Noonan, that the bank debt costs us €800 million of the €8 billion interest we paid last year. There has been a gross exaggeration of the cost of the bank debt relative to the budget deficit. This does not make the bank debt fair. It was always the intention that, when we reached calmer waters, we would seek to redress the unfairness of how we were saddled with the bank debt. I was a member of the then Government, and we faced two crises, one in 2008 and a very acute one in 2010. In 2008, we implemented the bank guarantee to prevent a run on the banks and avoid a situation in which the banks would not have been able to refund depositors. Be it right or wrong, at the time it was felt that to try to separate the different types of investments in banks would precipitate the very crisis we were trying to avoid. There were large deposits in Irish banks, including €50 billion in Anglo Irish Bank, approximately 40% of which comprised Irish deposits.

In 2010, due to international crises, bond prices increased across Europe, including Ireland. Money started flowing out of the Irish banks and we had to rely on temporary liquidity. The prudent thing was to try to stabilise the situation and avoid a crisis. Does anybody believe low interest rates across Europe, including in Greece, are the function of each individual economy? Are they, rather, a function of the stability of the European mechanism and the euro? When people were taking the punts with their money, it was a risk. I have never thought it was fair for a person who lends money to a second party, who then lends it to a third party, to expect to get it all back. I do not refer to ordinary depositors who act in good faith and whom we should protect as a national and European community. I refer to the bankers who loaned the money in the banking system. At the time, Europe insisted that the first party be paid back. There should have been burden sharing.

Like Deputy Michael McGrath, who put it very eloquently, at the time of the fiscal compact, I thought the Taoiseach was getting a deal on it and that there would be recognition that the Irish people should not have had to shoulder the burden because many parties were involved. Nothing happened, and the Greek Government had more influence on any extension of the debt, arrangements or reductions in interest than the Irish Government. Without supporting Greece, the Irish Government piggybacked on the eyeballing the Greek Government did. I applaud the motion. Any significant writedown or other financial mechanism - I am not fussy about the mechanism as long as it reduces the burden on the Irish people – which may be arrived at to deal with the Greek situation should not penalise Ireland for taking hard decisions. We should, therefore, support the peripheral countries such as Portugal, Ireland, Italy, Greece, Spain and Cyprus in saying the way the centre treated the periphery was unfair on two counts: the uncontrolled flow of capital out during the good times and the demand for all the money back in the bad times.

I was astounded when I read the Government’s amendment to the motion, which seems to state we are above all this, we do not want our fair deal anymore, we can paddle our own canoe and will not stand with the other peripheral economies, particularly Greece in its time of need. It seems to suggest we are not going to demand the fair play the Taoiseach promised us in 2012. It is difficult to understand the rationale behind it because no other country in the European Union would be so soft about its interests. The German Chancellor, Angela Merkel, is clear about defending her country's interests. Meanwhile, the Irish Government seems to suffer from an eternal need to be the good guy in the class, not to kick up any trouble or demand anything in any negotiation. It is not good enough. We should call for the debt conference and stand shoulder to shoulder to say the way the crisis was dealt with from the beginning was not equitable.

It was easy for those outside the system to come up with handy answers and say let Anglo Irish Bank go bust, but no one told us what to do about all of the depositors. Should we have let depositors with deposits worth €20 billion go bust? In the nationalisation the only ones who did not get their money back were the investors in the bank. We certainly were not bailing them out, or any other bank.

The Minister needs a backbone. He needs to go to Brussels to say there is unfinished busines, that the Irish people are very annoyed that they took the full hit and are now being punished by the Commission's logic in getting their house in order and that he and the Irish people want to share in any new deal done for Greece.

Deputy Seán Crowe

The motion asks the Government to support holding a European debt conference. The Taoiseach has bluntly rejected the idea. The Minister for Finance also seemed to reject it. He also said making debt more affordable was a better solution than writing it off. It makes absolutely no sense for the Taoiseach and the Minister for Finance or the Government of a state with a debt-to-GDP ratio of 111% to say "No" to the idea of having a European debt conference. I do not understand the logic of the Government’s position.

The Government says ECOFIN is the right place in which to discuss the issue, but this is the group that promised in June 2012 the separation of banking and sovereign debt. It is made up of EU finance Ministers who are so out of touch with reality that they cannot, or will not, see the impact of austerity on the young, the elderly, the unemployed and those on low incomes across Europe. The Taoiseach says we should leave it to them to sort it out.

A debt conference should not only involve Ministers but also people from civic society who have been affected by debt. The new Greek Government wants to get the European Union talking about debt and is calling for the adoption of a fresh approach. Why would anyone oppose this? When the Minister replies, he might answer that question. The Government should recognise an ally when it sees one. Instead, it seems to be blinded by misguided loyalty to those who forced austerity on the people. Its amendment to the motion promises more of the same. There is not one single word about poverty and the deprivation facing many Irish families because of debt. It affects families right across Europe. We are being presented with a benevolent European Union which has been kind to the people. The people should shut up and be thankful to the bondholders whom we bailed out. That seems to the attitude and the message we are getting.

The Government's amendment also states the debt is sustainable. If one is wealthy, it probably is, under the Government’s policies. Last night 518 patients were on trolleys in hospitals. Is that sustainable? Hundreds of thousands, mostly young people, emigrate each year. Is that sustainable? It is inexplicable that the Government of a state as indebted as ours would close its mind and say "No" to a different approach. The Government should be standing up for the people and support the call for the holding of a European debt conference.

Last September Argentina called for the creation of an ad hoc UN committee on sovereign debt restructuring that would negotiate an international mechanism to enable countries that were heavily indebted to default in a fair and just way. Ireland was one of eleven countries to vote against the creation of the committee and was the only heavily indebted European country to vote "No". The committee has been established and is meeting in New York for the first time today, but the Government seems to be staying away.

The position the Government has adopted is against the national interest. Surely an international mechanism to resolve sovereign debt crises would make it easier for Ireland to seek a write-down of some of its unjust debts and, in particular, the Anglo Irish Bank debts which most Members agree are unfair. A new UN mechanism could support Ireland and some of the world’s poorest countries which are suffering under the burden of unfair, unearned and, in many cases, unpayable debts. It is supposed to be part of the Government’s policy for development to work towards helping countries in that position. The average Irish citizen, myself included, wants to know why the Government refuses to negotiate in a serious way, at an international level, in the best interests of the people. Why would it oppose the holding of a debt conference? I listened to the Minister for Finance speak and he gave no answers. The Taoiseach said during Leaders’ Questions that it was up to EU finance Ministers to sort it out. Surely we should consider other ways.

Deputy Derek Nolan spoke about where Sinn Féin was going wrong. Like the bully in the schoolyard, he gives a few slaps, throws a few boots in and runs out. Many of the things he said were fantasies. He misquoted us. We want to see people move from their current position. The amount of personal debt Irish people have is astronomical. We all know this and if we work in our constituencies, we should know it.

The debate needs to continue. The debt conference could be opened up to every individual and could come up with some serious solutions to what is happening across Europe. Like others, I welcome what has happened in Greece. It has a new government, with a new approach and a new way forward. The rest of us in Europe need to watch and learn lessons from what has happened there and perhaps open our minds to new ways forward to deal with the crisis facing people across Europe.

Debate adjourned.