Tuesday, 30 November 2010
Dáil Éireann Debate
Deputy Enda Kenny: Last Sunday, 28 November 2010, the future of the Irish people and the sovereignty of this nation was decided on behind closed doors. The deal that was announced last Sunday is a bad deal for Ireland. It has been forced on us because the Taoiseach and his fellow Ministers ran up such debt over the last ten years. Their inept supervision of the banking system, along with their negligence and arrogance, led to the collapse of that system. The Government refused to face the reality of these problems and the extent of its failures. As part of the deal, the International Monetary Fund and the EU institutions have arrived on our shores to bail out this State, for which our forefathers fought. The children of the next generation will pay for the obscene waste of money and incompetence of recent years. That will be legacy of the Fianna Fáil-Green Party Government. We have been forced to borrow billions of euro——
The Taoiseach: We have funding for this State’s requirements up to July of next year. There are choices available to this country. If Deputy Kenny’s view is that this deal should not be taken up, I ask him where he expects this State to get funding. It is clear that the secondary markets are charging over 9% for money at the moment——
The second point I would make to Deputy Kenny is that this country now has the ability to draw down funds. We can now find the room and space in which to pursue a policy pathway that will enable us not only to stabilise the economy, but also to look for growth in the economy in the years ahead. It is a question of trying to find a means of increasing confidence in the economy domestically and internationally. We are a small open economy. We require the stability of the euro, which is the currency in which we operate. It is in our interests that the euro is stable. The agreement that was reached last Sunday will allow us to obtain moneys for seven and a half years, on average. This drawdown facility will fund Ireland’s requirements to the tune of €50 billion in respect of its own requirements plus allowing us to further capitalise the banking system so that we can have growth and jobs in the economy again. This is of fundamental importance and on that basis I believe it is the right deal for this country at this time.
Deputy Enda Kenny: That does not answer the question nor is it any valid reason for accepting an agreement that is not in the interests of this country. The reason we cannot go near the markets to borrow money is because of the gross ineptitude, incompetence and downright arrogance of the Government over the past number of years. The Taoiseach created the situation in which this country has not been able to go to these markets. It ill becomes any Minister of the Fianna Fáil Government to come in here and tell us we are getting a good deal at the level of interest rates now being charged. What is happening here and what happened last Sunday was a demonstration——
Deputy Enda Kenny: I respect Standing Orders and I hope the Ceann Comhairle respects my right as leader of this party to make my point here. What happened last Sunday was a demonstration of the art and the craft and the skill of national destruction. This deal was done by a respected academic and a regulator without any real political input, bargaining or negotiation. It was done as if the people did not matter, as if the people did not count and as if the people did not exist, because if they did matter and they did count, and they did exist, they would have been consulted. They were not consulted and neither was this Parliament, this Oireachtas. It was a case of doing the deal in Brussels and let them eat cheese as the sleek limousines ploughed their way through the slush.
Deputy Enda Kenny: This Government has facilitated the banks, it has facilitated rack and ruin and the placing of a debt on the shoulders of every man, woman and child in this State for the next generation. It is time to go. What is the Taoiseach’s response? I met with the IMF, the ECB and the European Commission, the very same Commission that yesterday sent a torpedo through the Government’s own growth projections for next year. What is the Taoiseach’s answer to a deal which was done behind closed doors and bulldozed through on a Minister who has lost political credibility and political momentum, a deal which is now foisted on the Irish people for years to come? What is the Taoiseach’s answer when that same Commission says that the growth rates as put forward by the Government are not valid and will not stand up? Does the Taoiseach have the courage or the gumption to see that this deal is at least put to this House by way of vote and endorsement, in view of the foul financial deed perpetrated on our people last Sunday?
The Taoiseach: On every occasion when a serious matter is discussed the Deputy seems to retreat into flights of rhetoric that fail to confront any sort of reality. That is his choice and his political style, as he seeks to grab a headline rather than to deal with the substance of the issue before us.
The Taoiseach: ——that this country requires funding for its own requirements and to ensure we have a banking system in the future. This is what the Government is doing. This requirement will be a priority for the country in coming months and years. The Government stands by its own growth forecasts in our plans because it is clear the difference——
The Taoiseach: ——in private consumption suggested by the Commission is a feature of forecasts from every international and domestic forecaster and such forecasts from the IMF, the OECD and the European Commission are not all exactly the same. However, the Department of Finance stands over its own forecast for next year at 1.75% growth. We need to rise above partisan politics now and again in this country. We need to inject confidence for our own people. Far from referring to Ireland as either banjaxed or an economic corpse, which have been the comments of the Opposition over the weekend at a time of serious import for our country, we need to recognise that——
The Taoiseach: ——people are going to work, people are in business and we have entrepreneurs in both the public and private sector who are trying to provide a good wage and standard of living for the workers in those sectors. We need to offer support rather than this constant negative rhetoric that emanates from the Opposition benches — particularly from the Leader of the Opposition — on every occasion. He fails to confront the basic issue, which is that the funding requirements of this State——
Deputy Eamon Gilmore: I did not think that it was possible for the Taoiseach and this Fianna Fáil Government to do any more damage to the country after the disastrous decision it made to provide the blanket guarantee to the banks which tied the banks to the State and which has brought us to this sorry pass with one disastrous economic decision after another. However, by any standards, the deal that was done last Sunday is a sell-out of this country. It is a sell-out of the taxpayer, who will now have to pay the full cost of bailing out the banks, protecting the European banks and paying the full cost for the mismanagement of the economy by Fianna Fáil.
Last Sunday, the Taoiseach and his Government took this country to the pawn shop. I cannot believe that he comes to the House and tries to convince us that what he got last Sunday represents some kind of a good deal. He got a loan facility but €17.5 billion of it is our own money, most of which is from the National Pensions Reserve Fund which should be used to invest in jobs and to get some growth back into the economy instead of it being pumped into the banks to follow all the money we have already pumped into them.
Deputy Eamon Gilmore: I do not know whether it is the Taoiseach’s intention but he has ended up with an agreement which, in effect, purports to tie the hands of the next Government. I do not believe it had to be like that because going into those negotiations with the international organisations I believe this country had some bargaining power——
Deputy Eamon Gilmore: ——but the problem is the Government could not exercise it because it is now a weak Government in its last days. It did not have the credibility or the authority or ability to negotiate a decent honourable deal for this country.
The Taoiseach: Deputy Gilmore suggested that this is a worse rate of interest than the deal with Greece and that is not correct. He probably knows this is not correct but it does not stop him trying to say it to the public now that there is an opportunity on national television. The rate of 5.8% over seven and a half years compares very favourably with the 5.2% over three years obtained by Greece. If it is such a bad deal, why is Greece looking for terms like ours?
Greece has now indicated to the European Union it would like to have similar terms. If it is such a bad deal, is Deputy Gilmore suggesting the Greek President is seeking a worse deal than the one he already negotiated? Clearly that is not the case; Deputy Gilmore’s assertion is not correct and I will dispense with it on that basis.
Second, on the question of whether this was a good deal, on the basis of those negotiations, the Government went in with a four year plan that provides a forward path. It does provide, on the recommendation of the Governor of the Central Bank and the chief executive of the National Treasury Management Agency, the best deal under the circumstances in which we find ourselves. I simply asked a question: what is the alternative? Is the Deputy suggesting that moneys are available from Europe under more favourable terms than those offered by the IMF? This is a technical matter, but the interest rate that applies to moneys from the IMF is the same as that of one of the European funds — 5.7% — while another European fund has an interest rate of 6.05%. The composite rate is 5.8%. It is not correct to suggest a better deal was available, because the basis of the calculation of interest is set out by those organisations. We also made sure, on the European side, that we were given interest rates comparable with that available from the IMF, since this was the first time one of the European funds had ever been used. Again, the assertion made by the Opposition was not correct.
On the question of whether this will tie the hands of future Governments, it is a matter for this or a future Government to decide whether it wants to draw down money from the facility. The terms and conditions upon which European partners are prepared to provide those facilities are set out. Therefore, there is no fettering of future Governments. If a future Government could go back to the markets to borrow at better rates than are available now, of course it would do so. That is what any Government would do. At the moment, however, given the market dislocation, this money is available far more cheaply than on international money markets. They are the only places from which we can obtain money. Eighty-five percent of our bonds are held by international investors. Where else do the Opposition Members suggest the money be obtained? We can obtain it either on the money markets at 9% or on the terms of our European partners at 5.8%. It is all right to come to the House and suggest otherwise, but those are the facts of the matter.
Deputy Gilmore asked about the possibility of putting the agreement to the House. The first instalment of money will be in the 2011 budget. Even if we had never had a banking crisis, our income level is much lower than our spending.
The Taoiseach: We must obtain €19 billion this year and a smaller amount next year. We are funded up to next June. If the Opposition does not have an alternative source of funding, it is saying that cuts of 38% or 40% will be required in pensions or something else, because we do not have the money required beyond next July.
Let us get beyond the rhetoric and deal with the reality. This country ran surpluses for many years. It has been hit with a financial and economic crisis and lost a third of its tax revenues in one financial year.
The Taoiseach: We have been making corrections, but every measure we have introduced has been opposed by the Opposition. With regard to the banking policy initiatives, regardless of Deputies’ assertions to the contrary, what we are being told is that we must continue and accelerate them in order to increase the banks’ capitalisation. It is on that basis that we must seek funding elsewhere in addition to our own.
What is Deputy Gilmore suggesting? One journalist in the economic field, who has an expertise in this area, gave an analogy yesterday. If a person has a financial problem and goes to his family for help——
The Taoiseach: ——and other spokespersons from the Labour Party said in 2002 that the fund was a waste of money and that the money should be spent on infrastructure. The Labour Party was at no time a supporter of the fund.
Deputy Eamon Gilmore: After what he has done to this country, to stand here on the day he comes back with a lousy deal and try to spin it as he has done is shameful. Let me tell the Taoiseach about the National Pensions Reserve Fund. What the Labour Party did propose was that we might have used it to provide the hospital places the Fianna Fáil Government never provided.
Deputy Eamon Gilmore: In anybody’s language, 5.8% is more than 5.2%, and it is far more than is being required of other member states. It is that high because of the economic problems the Government and the banks have created. The money that is in the NPRF, which could be usefully spent——
Deputy Eamon Gilmore: The Taoiseach has come in here and told us the deal that was negotiated last week was a good one. Yes, we have gone to our family; that is true. However, our family has a problem too, and we were in a better bargaining position than the Taoiseach’s weak, end-of-days Government allowed for. A better deal could have been negotiated for us.
Deputy Eamon Gilmore: My question remains the question that the Taoiseach did not answer: will he put the deal to the House? The Constitution states, in Article 29.5.2°, “The State shall not be bound by any international agreement involving a charge upon public funds unless the terms of the agreement shall have been approved by Dáil Éireann.” Will the Taoiseach put the lousy deal he negotiated last Sunday before the Dáil for approval?
The Taoiseach: The agreement is not a international agreement as outlined in that article. The agreement is of the type referenced in Article 29.4 — Deputy Gilmore could have read that one out, but he did not — which deals with the question of exercising executive power in external relations pursuant to that article. The agreement makes available a facility for money which, in terms of financing and funding the State, is normally obtained by the National Treasury Management Agency——
The Taoiseach: ——on international money markets. Such bond issuances do not require the approval of the Dáil because they are not the type of agreement mentioned in Article 29.5.2°, which the Deputy read out.
The Taoiseach: What I have been doing, since taking office and since this crisis emerged, is to take every step possible, in the national interest, to secure our future and allow this country to move forward again.
The Taoiseach: I have been opposed at every turn by the Deputy, which is fair enough; that is his democratic entitlement. However, he should not suggest that the policy initiatives his party suggested were correct, when everyone in Europe is saying precisely the opposite.
The Taoiseach: They have said we must build on and accelerate the initiatives we have made to solve the problems in the banking system, and the Governor of the Central Bank, who is far more of an expert in this area than the Deputy or me, has confirmed that is what we must do to bring financial stability to the State.
The Deputy also attempted to make a broader political point, which was that he would have obtained a better deal. I am asking him simply on what basis he would have obtained that deal. How could there have been a change in the basis for the calculation of interest by the IMF or the European Financial Stability Facility?
The Taoiseach: The Government, over the past couple of weeks, has sought in every possible way to make sure the parameters of the discussion and the ultimate deal were consistent with our own interests in terms of the adjustments we would have had to make even if we had never had a banking crisis. Even if we did not have a banking crisis, these are adjustments we would have had to make. Second, and very importantly, we now have in place funding arrangements for the country that enable us to find the time and space to do what needs to be done, to deepen the reforms in the banking sector, to bring about a greater consolidation in the banking sector and to create jobs and growth for our economy as we provide the funds necessary to fund the pensions for our pensioners and to ensure we provide the hospital beds for our people.
The Taoiseach: Regarding the National Pensions Reserve Fund, Deputy Gilmore cannot get away from the fact that the idea of the Labour Party coming forward as the guardian of the fund is at total variance with every public policy position he has outlined since the legislation was brought forward in 2000.
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