European Financial Stability Facility and Euro Area Loan Facility (Amendment) Bill 2011: Second Stage (Resumed)

Wednesday, 21 September 2011

Dáil Éireann Debate
Vol. 741 No. 1

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Question again proposed: “That the Bill be now read a Second Time.”

An Ceann Comhairle: Information on Seán Barrett  Zoom on Seán Barrett  Deputy Donnelly was in possession and has five minutes remaining.

Deputy Stephen Donnelly: Information on Stephen Donnelly  Zoom on Stephen Donnelly  I thank the Ceann Comhairle. I am going to vote against the Bill but not because I do not understand the benefits it offers. The interest rate reductions are significant and welcome and the Government estimates that we will save approximately €1 billion on debt repayments. This is extremely welcome. Potentially, the lending terms are going to be lengthened, which is also welcome. However, I am going to vote against the Bill because it further solidifies the wrong approach that is being taken in Europe. Essentially, the basis of that approach is to solve debt by taking on further debt, ensure that bondholders are repaid and an insistence to the effect that no banks should be closed down. In addition, Europe is insisting on austerity in the absence of any default or devaluations. It is also going to lend governments vast amounts of moneys to bankroll what is happening and is hoping that no one will default.

How are matters working out for Ireland so far? We have approximately €100 billion of other people’s debts which we will be obliged to pay off. Our banks appear to be over-capitalised but they are not lending. Critically, as has become apparent in the past two weeks, they do not appear to be passing on money to mortgage holders. When they came before the Joint Committee on Finance, Public Expenditure and Reform, representatives from Bank of Ireland had to be asked six time whether they are passing on the money to which I refer before they confirmed that they are not doing so. The banks do not appear to be lending and seem, rather, to be taking very aggressive action against people whose mortgages are in a distressed state. The unemployment rate in Ireland is continuing to rise and our GDP growth is tipping along at, it is to be hoped, slightly above zero.

How is what is being done working for Europe? We all know that Greece is on the point of collapse and there is talk of it exiting the euro. Greece is almost certainly going to default and there is a run on the French banks at present. There is also the potential for a run on the German banks. The entire system is under extreme stress.

The report issued by the IMF yesterday predicts that global growth will be significantly lower than had been expected just six months ago. Of course, this will pose a major problem for Ireland because we are betting the house on the export-led sector. That sector comprises 15% of our economy and we need to develop it further. However, the IMF has stated that the global markets into which the sector sells are going to be far weaker than expected. That is a massive problem. As a result of the fact that European banks have not been allowed to fail, we have reached a position whereby the liabilities contained in those banks are three to four times greater than the GDP of Europe. To put this in perspective, the liabilities of the American banks are exactly the same as the GDP of the US. Our banks are, compared to their American counterparts, overleveraged by a factor of three to four.

The current approach is not solving the problem. It is not working and it is not going to work. Anyone who has a mortgage or a serious personal debt or who runs a business will know that it is not possible to solve the problem of debt by taking on more debt. This does not work and many eminent economists and commentators in Ireland and elsewhere have been saying [75]as much for a long period. The chief economist recently stated that Europe needs to “get its act together”. Recent analysis of the position by J. P. Morgan states, “austerity with no FX devaluation [in other words, in the absence of the printing of money] is doomed to failure”. The same analysis points out that the IMF’s handbook published in December 2010 states, “What is happening in Greece is a textbook response to austerity without an FX adjustment and easy monetary policy”. In other words, austerity on its own — which is the prescription for Greece and Ireland — is not working and will not work.

There are two solutions which Europe must consider implementing. I trust the Minister has some influence at the European Council of Finance Ministers, of which he is a member. The first of the two solutions to which I refer is quantitative easing. In the past two rounds of quantitative easing, the US printed $2.1 trillion. That has helped. The Germans are understandably afraid of inflation. The US rate of inflation currently stands at 3.8%. The UK has injected £200 billion into its economy during its rounds of quantitative easing. If this were scaled up, it would be the equivalent of Europe printing €1.4 trillion. Inflation in the UK stands at 4.5%. I put it to the Minister that what is required is a combination of serious quantitative easing — in the region of €1 trillion to €2 trillion — and real debt write-downs, as actively advocated by Deputy Mathews. I understand that this will be difficult to obtain and that our European partners see them as major concessions. However, there is a strong case to be made to the effect that, without them, we will continue to fail and the European Union will fall. I urge the Minister to bring these possible solutions to the attention of his colleagues in Europe.

An Ceann Comhairle: Information on Seán Barrett  Zoom on Seán Barrett  I call Deputy Heather Humphreys who, I understand, is sharing time with Deputy Harris.

Deputy Heather Humphreys: Information on Heather Humphreys  Zoom on Heather Humphreys  I welcome the opportunity to contribute to the debate on the Bill, which I support. People must remember that we are travelling a long and difficult road to recovery. The banks lent recklessly and the previous Government squandered taxpayers’ hard-earned money and we are now paying the price. The medicine is very unpalatable and bitter and, unfortunately, there is no sugar in the cupboard to make it sweet.

I listened to some of the contributions of previous speakers and I am of the view that it is important that, as a nation, we should reiterate our objectives. Our first and main objective must be to regain control of our national finances and, ultimately, of our fiscal destiny and economic sovereignty. To achieve this, we must work in co-operation with our European partners in order that we might benefit from the best possible deal. We needed the support of the IMF and the European Union in order that ATM machines remained in operation and that the country did not grind to a halt.

Our global credibility as a nation was greatly damaged in recent years. Thankfully, however, as a result of the great work of the Taoiseach and the Minister for Finance, our credibility in Europe and elsewhere is growing every day. I, too, take this opportunity to compliment the Taoiseach and the Minister, Deputy Noonan, on the very effective way in which they won further concessions in interest rates during the past week. I am confident they will achieve further concessions.

It must be remembered that apart from the recent direct financial support we have received from Europe, we have enjoyed many positives as a result of our membership of the European Union. As a whole, Ireland has particularly benefited in the areas of farming and infrastructure. Our membership of and engagement with the EU has brought about many benefits for women in Irish society, especially in the workplace. The Bill will allow European member states to avail of cheaper funds. Given our current level of borrowings, it is important that we support any opportunity to reduce our interest rates and extend maturity dates. We are spending €15 [76]billion more each year than we are taking in. This cannot continue. Any pain-free solution that does not necessitate cost savings in another area has to be welcomed and availed of. This is an opportunity to put the past behind us and move forward. It is one of the benefits of being part of a co-operative in which varying levels of strength can be drawn upon at different times. An inherent danger in this structure is that if stronger economies encounter difficulties, it could weaken the process. Nevertheless, it is only through co-operation and working in unison, with the strong supporting the weak, that we will ultimately achieve success.

Deputy Simon Harris: Information on Simon Harris  Zoom on Simon Harris  I welcome the opportunity to speak to this legislation on Second Stage. The title of the Bill before the House — European Financial Stability Facility and Euro Area Loan Facility (Amendment) Bill 2011 — is wordy and lengthy. Many will be scratching their heads as they wonder exactly what it is. There is no doubt that this important legislation will be of direct benefit to Ireland and ultimately the people. When it is enacted into law, it will provide the legal framework for a reduction in our borrowing costs from the European Financial Stability Facility. This is, undoubtedly, a welcome development in our nation’s difficult journey back towards restoring its economic sovereignty which was squandered when the last Administration went on a spending binge and failed to regulate the country’s banks correctly.

As a country, we have put clear water between ourselves and other countries experiencing economic difficulties. On the domestic front, reductions in VAT and PRSI have helped some sectors of the economy to retain jobs and stabilise their own business. I see this in my constituency of Wicklow. Our exports are continuing to soar. At this week’s ploughing championships we heard plenty of positive stories about the success and development of Irish agriculture. Internationally, we are achieving lower interest rates on our various loan programmes. Our work towards restructuring the payment schedule for other debts is continuing.

The last Government stated categorically that not one full stop in the bailout agreement could be altered. We have exposed that myth in all its glory and revealed the truth. As a result of successful negotiations on the part of the Minister for Finance and the Taoiseach, we have seen interest rate reductions such as that enacted in this legislation. In addition, the Government has delivered on the restoration of the minimum wage, secured agreement from the troika on the VAT and PRSI changes in the jobs initiative and halted plans for a phase 2 of the NAMA initiative.

I sat in this House as a newly elected Deputy when some Members from the previous Government almost rubbed their hands together with glee at the prospect that this Government would not deliver. We had to listen to ridiculous questions about how many times certain people had been telephoned, not to mention where various meetings and conversations had taken place and with whom. Rather than rushing over to the European Union and coming back with a piecemeal solution that would have delivered much less for this country, the Minister for Finance, the Taoiseach and the wider Cabinet have steadily, slowly and consistently built improvements for the country, while restoring its international credibility.

It is important to emphasise that this legislation is not an answer to all of Europe’s economic ills. As a country, we have diligently pursued measures to rebuild the economy and restore the economic sovereignty squandered by the previous Government. It is unfortunate that Europe as a whole has not been so forthcoming in addressing head-on the economic crisis that engulfs it. A quick teleconference here, or bilateral meeting there, will not succeed in rectifying the European economic problem. Importantly, finger wagging by other nations towards this country and others is neither acceptable nor helpful. The reported comments of a senior European Commissioner, to the effect that we should fly our nation’s flag at half mast, were repulsive [77]and insulting. The individual who delivered them has a short memory of how the international community helped his own nation to rebuild.

The people have nothing to be ashamed of. A small handful of individuals who resided in this Chamber perhaps do. The European Union is a partnership built on mutual respect. We are there to work together in our common interest and the common interest of all citizens. Nobody has a monopoly of wisdom or solutions. Europe needs to embrace this crisis head-on, rather than wagging fingers. The Government is committed to getting on with the job. I commend the Minister for the job he has done to date. That commitment needs to be matched at European level. It seems Europe is still running to catch up. It is time for it to face this crisis head-on. I look forward to supporting this legislation.

Deputy Mattie McGrath: Information on Mattie McGrath  Zoom on Mattie McGrath  I am delighted to have an opportunity to speak during the Second Stage debate on this Bill. In May 2010 the member states in the euro area agreed to create the European Financial Stability Facility to provide financial support for states that encountered difficulties as a result of the exceptional circumstances of recent times. Those circumstances are beyond the control of member states, in some circumstances. This can be questioned in our own case. The EFSF was incorporated on 7 June 2010 for the purposes of providing stability and support for euro area member states in the form of guaranteed loans of up to €400 billion, with a limited period of time. That is what we were told or promised. I do not know when we will arrive at that stage.

I compliment that Minister for Finance, the Taoiseach and the Government on what they have achieved in relation to our so-called bailout money. I refer to the renegotiation of the interest rates, etc. I wish them well with the further negotiations on which they have embarked. It is not easy. Every little helps. I am very concerned about the sheer amount of money involved and the rate at which it will have to be repaid.

The recklessness of the banks is at the kernel of the problem. They followed Anglo Irish Bank into breakfast and dinner meetings. They behaved recklessly by firing out countless billions of euro as if there was no tomorrow. Many senior officials in these banks — I am not talking about the ordinary clerks at the desks — were getting bonuses on the basis of the amount of money they could fire out. We are all familiar on a daily or weekly basis with the appalling vista of people coming to our clinics who have no possibility of meeting their repayments at any stage. The stress tests that should have been done simply were not done. A little word, “greed”, got in the way. Some of those who decided to sign up for these loans, despite having no possibility of ever repaying them, were foolish.

Like the Deputy from Wicklow — I refer to Deputy Donnelly, rather than the Deputy who spoke before me — I do not think austerity alone will get us out of this mess. Anybody who is in business will know that if businesses are squeezed and squeezed, they will close their gates. That is the problem we face. Ireland Inc. is a business that has to be kept above water. It is obvious that we need to get our house in order in many areas of public expenditure. That process is continuing apace. However, we should be cautious about continuing to take money from people in each budget.

I supported some of the recent budgets, but I did not support more of them. I was not working à la carte— I was concerned that ordinary business people and taxpayers were not getting a fair crack of the whip. We know what will happen if they get any relief. They are being squeezed out of existence and frightened into saving. I suppose anybody who saves is a wise person. People are afraid to spend money. We know what the effects of this are. I do not believe the Revenue Commissioners understand what is happening. They have not made a proper assessment of the drying up of the tax base. The self-employed are just not earning the money. Problems are caused by this lack of turnover.

[78]It has already been pointed out that the United States and the United Kingdom have printed vast amounts of money to try to boost their economies. We have had nothing but austerity and belt-tightening. We are being lectured by the French and German leaders. They keep meeting as the heads of their respective countries. Every time they meet they create a sense of expectation before leaving it go for a few weeks and coming up with nothing. When this sends the markets into turmoil, they decide to have another teleconference or telephone discussion. Their efforts to adapt to the real crisis that needs to be grappled with are poor.

I know the Minister, Deputy Noonan, is a straight-talking man. I recall how he dealt with one of his colleagues at a recent meeting of the Joint Committee on Finance, Public Expenditure and Reform. Some might say we are off the wall over here but we are not. We are a proud and sovereign people. While our sovereignty is challenged, how dare any European Commissioner tell us to fly our flag at half mast? We do that on occasions of tragic loss in the county and we do not do it in response to the bully-boy tactics of some of these people who allowed their countries’ banks to be reckless in the extreme. They are trying to save their banks but, eventually, the whole European project could be in danger. We might never see this EFSF introduced because we have seen what happened to some countries last night. It might never come to it because the project might not be around. It is time these officials copped-on. Rather than lecturing us, they should allow senior bondholders be punished. They must be punished in some way for the reckless mistakes they made. When the Irish banks did not have the money to lend anymore — when they were cleaned out — they allowed their banks to spend recklessly also. As far as I am concerned, that is where the real problems occurred in this country.

I have two requests for the Minister at this time leading into the budget. Would he, if he can at all, ease the austerity because it is crippling families, individuals and small and bigger businesses as it goes along? The whole system is being choked. I also ask him, as he will be aware I feel strongly about it, to cut out the baggage and cut the amount of red tape imposed on business persons, and to support them to allow them to survive. I saw earlier where a junior Minister mentioned ten reasons to be in business and ten reasons to support business. We should have all the agencies tell someone who comes to meet them the ten reasons they want him or her in business and the reasons they must support him or her, not all the reasons businesses are given from agencies such as NERA coming with briefcases and ID numbers, by appointment or without appointment, and telling them why they should not be, and are not capable of being, in business. I am afraid we will kill the entrepreneurship of Irish business people, the only people who will help to get us out of this.

We have seen our export figures. I was at the ploughing championships yesterday and it is wonderful to see the farming sector in such a buoyant mood following a number of very bad years — 2008, 2009 and part of 2010. There is hope in that. We got too carried away in this country with bricks and mortar and the Celtic tiger, and we forgot about farming. The Minister, Deputy Noonan, comes from an agricultural constituency. We forgot about it mainly, and that is the rock on which we perished, but now we are respecting and understanding it. Those involved are all self-employed. They need to be supported. We need to focus the considerable number of officials in the Department of Agriculture, Fisheries and Food on a supportive role. I accept there must be such provisions as health and safety, standards and traceability. I am not saying that we cut out any of those, but we must cut out the legions of officials who are stifling the self-employed on their farms. It is wonderful to see the young people now getting involved and supporting them, rather than what they had been doing.

The Taoiseach, who I hope to meet in my county tonight and tomorrow for two good news stories, must stand up to the bully-boys and bully-girls of Europe. He must stand up and the Minister must too, and they must be seen to do this as well for the proud people in Ireland. [79] We are a proud people and know we have made mistakes. I accept I was a member of a party that made reckless mistakes, but it was punished by the electorate which is now bewildered. I want to see them told to stop lecturing us, stop finger-pointing at us, stop squeezing us, and stop talking about the bailout and all the money it involved. One must remember that the first €17 billion of it was coming out of our own pension funds and it was never an €89 billion bailout. I had words at the time with the former Minister for Finance, the late Deputy Brian Lenihan. It was a trick-of-the-loop job. They should stop being dishonest with themselves and with us and the people. People, thankfully, now have a fair modicum of education and they know what is going on.

They should deal with the issues, be prepared to burn their own senior bondholders and be prepared to accept that they made significant mistakes before the project topples over. My worry is that if it topples over, we would not know where to go or what way to turn. Therein lies the worry for our vibrant export trade, which the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, is abroad today trying to enhance. That will go up in smoke if this collapses because we will not have any security or proper level playing ground, and that is where the problem is. Chancellor Merkel and President Sarkozy need to listen and be realists here, not rub their hands at press conferences. They need to do something meaningful and make some tangible moves that will give some kind certainty to the markets so there are not these announcements on a daily basis from the rating agencies, which have become all-powerful in coming out today against one country and tomorrow against another country. The French banks are in a serious situation, and probably in as serious a situation as we are in — we know how serious is the situation in our banks.

I wish the Minister well, but I hope, as I stated, that he and the Taoiseach stand up to these officials and reassert, if nothing else, our pride in this country and our sense of honour, and not be lectured to fly our tricolour at half mast for reasons other than we like to do so.

Deputy Arthur Spring: Information on Arthur Spring  Zoom on Arthur Spring  As a person who advocated against Ireland joining the euro at the time on many fronts such as our autonomy over interest rates and our ability to print money, it is surreal to be here today. If one was to look at the clever move made by Sweden and the United Kingdom at the time, it seems to have been the prudent thing to do on many fronts.

Unfortunately, when one joins a political atmosphere one must deal with legacy issues. The mess that our country is in is predominantly due to a legacy issue left by the non-Government parties of today. I hasten to add that if some of the non-Government parties had got power, we would be in a far bigger mess than we are in today. It is not merely a European problem; it is also a national problem with which we must deal.

Punitive measures were implemented as a result of the lack of ability to self-govern and the fiscal policy of the country had run us into ruin. To put it into context, we are borrowing €375 million per week to keep the country alive. There was some talk of allowing us merely use the pension reserve fund, and that would have brought us to a point where we were completely subjected to whatever rate at which the markets want to lend to us, if they would lend money to us at all. We now would be out of money and we would have no friends within the European zone.

The part most people do not understand is that it costs €52 billion to run this country per annum and there is €34 billion coming in. One need not be a rocket scientist to work out that this results in a deficit of €18 billion. There is no such thing as a printing press in the Central Bank where one may go to print money and give some of it to the rich and less of it to the poor. This is the kind of nonsense put forward by people from different organisations that will not complete the circle. It is simple to stand back and state we have a problem but we do not have solutions.

[80]On everything that we are doing, it is not something merely for the Minister for Finance and the Minister for Public Expenditure and Reform, Deputy Howlin, who has played a massive role with the troika as well. I remind some of my Fine Gael colleagues that they need to look at this as the entire country having a problem at present and a mindset of trying to get us out of it is essential.

It is a step in the right direction. We will save between €8 billion and €9 billion over the period of ten to 15 years. We will get an extension of our loans. However, it is not the all-finishing, bells and whistles solution that we are looking for. This is not a destination; this is a journey. Every step of the way, we will have to navigate as well as we can in order to keep friends on board but also keep the country afloat. Austerity is not the solution. I am also on record in the Joint Committee on Finance, Public Expenditure and Reform as stating, as the Minister is quite aware, that there must be something more done. If there is a little bit of burden-sharing that would be good, but it is looking now like quantitative easing on an enormous scale must happen when one looks at the Italians with their debt of €1.9 trillion. For the Italians, most of that debt is held by its citizens themselves through banks.

There is an idea that there are bondholders out there who are living in the Alps or some place, with no names. The bondholders are us. They are the Deputies on the Opposition benches and the Deputies on these benches. We are the pension holders. Deputy Joe Higgins might nod his head, but his pension when he leaves this place, if he does leave it, will ultimately be paid from funds that are invested in bonds and every other diverse system throughout the world. Until people own up to where we are at, one will not come up with a cohesive approach towards a solution on this.

It is encouraging to see that we have allies. I am on an OSCE Parliamentary Assembly committee, and the social democratic grouping within that met. It gave me a platform to explain exactly where Ireland was at. One of the things that shocked me was that the Germans asked that if the position was so bad in Ireland, why were we not on the streets like the Greeks? I replied that we have had a revolution of a kind. We had an election in February and one party was decimated and two of the other parties appointed to Government in 2007 no longer exist.

  5 o’clock

We are gaining credibility and friends and solutions, but this is not what we seek in the long term. More should be done, but that will only happen with the help of the European Financial Stability Facility and the mechanisms to be put in place thereafter. This issue is complex and a great deal has been thrashed out by the finance committees and various organisations involved. I am aware the Minister is trying his best and that what I call the wartime Cabinet of the Minister, Deputy Noonan; the Minister for Public Expenditure and Reform, Deputy Howlin; the Taoiseach and the Tánaiste is doing everything it can. I wish there was a simple solution, but there is not. For now, I am content to support this measure. More people should consider solutions rather than identifying the problems. It is a legacy issue and I wish we could solve it more quickly.

Deputy Clare Daly: Information on Clare Daly  Zoom on Clare Daly  I am amazed by the previous speaker who referred to austerity as not being the solution. Naturally, it is not, but it is the only recipe in town for the Government, of which Deputy Spring’s party is part. He is not an idle bystander, rather he is part of that process.

It is an absolute scandal that an issue of such seriousness is being discussed in this manner. This matter should be put before the people in a referendum such is the seriousness of the issues raised. Instead we will have a ridiculous referendum on judges’ pay which could have been dealt with by simple legislation. Such a vitally important issue as this is not only not being put to a referendum, but the House is not being enabled to amend or change it in any way. As [81]bad as that is and although the Government has allowed that situation to unfold, the fact that the so-called Opposition parties have allowed a situation to occur where they are not even prepared to provide speakers on the matter makes it even worse. They are aided in this by the role of the media which have been remarkably silent on the issue, given the important matters at stake. It is no wonder the Government is getting away with so much in this regard.

Fundamentally, the Bill will have a vital impact on the future economic direction of the country from several aspects, some of which have been dealt with during the course of the discussion. Financially, the Bill will facilitate our voting to provide irrevocably and unconditionally €11 billion in 2013 to be paid into this fund. This sum is almost equal to three years of devastating cutbacks and tax hikes to which the people have been subjected and which are destroying the lives and livelihoods of many. This €11 billion could have been usefully expended on putting people back to work, putting special needs assistants, SNAs, to work, addressing the horrific situation highlighted on “Prime Time” last night, reversing some of the cutbacks in hospitals, repairing the water network and so on. This has hardly been mentioned in the discussion. As we are aware, that figure is simply the beginning.

We are here because of a deal struck last year which had to be amended in June because the pot was not big enough and because of the deteriorating situation. In Greece the level of funds which had to be provided rose from €440 billion to €780 billion. It is timely to remember the fanfare that greeted the deal at the time. We were led to believe that would be it, the crisis would be over and finally the European Union had a handle on the economic problems. However, as everyone is aware, within one week Italy and Spain also ended up in trouble. Until then they had been calculating on the basis of dealing with Ireland, Greece and Portugal which are responsible for only 8% of eurozone debt. Once Spain and Italy were added, it was a question of there being no limits. In this sense, this deal is akin to signing a blank cheque. We have no idea how much funding the State will have to provide. In many ways it is like being asked to shoot oneself and pay for the gun while one is at it.

Deputy Spring seemed to suggest we have great allies in Europe who are doing us a favour in assisting us out of a troubled spot, but what are they doing for us? They are putting up money, much of which we must put up for ourselves, at remarkably high interest rates. Then if we wish to access this money, we must pay over the odds in the borrowing terms and interest rates demanded. Not only that, the price demanded in terms of austerity is worse. This is an absolute recipe for disaster.

We have already to put up with a situation where those in government are constantly bleating about it not being their fault, that it was Fianna Fáil’s fault or that it was the fault of the EU-IMF deal and there was nothing they could do about it. If the Bill is passed, they will use the line that it is because of the European Financial Stability Facility and that there is nothing they can do in that regard. We should consider what the Government would propose to unleash should an economy seek access to these funds. Let us consider the detail of what is taking place in Greece: it does not make for pleasant reading. Some 35,000 state jobs are up for the chop immediately, with 100,000 due to be axed by next year. This is against a backdrop of an economy in which industrial production has shrunk by 12%. The Greek Government is imposing a property tax at 50 cent per square metre on people whose wages have already been slashed. To get over the problem of people’s inability to pay, it seeks to attach this property tax to their electricity bills. It expects the bill to be paid in two instalments by a people among whom 175,000 householders have already had their electricity supply cut off by the state electricity company because of inability to pay.

The Greek Government, the European establishment and the Irish Government must get real about what is going on. It is simply not possible to impose that level of austerity. Already [82]in Greece unions have stated they will not impose or implement the new property tax or cut off people who cannot pay their bills. Yesterday we witnessed 30,000 students protesting in Athens over education cuts. It is clear the government there will not get away with it because it is simply another example of making ordinary people pay for a crisis not of their creation. It is another example of trying to impose austerity which in all of history has only resulted in making conditions worse. It has not worked here and it has never worked anywhere else.

Important lessons should be drawn from the debt crisis in Latin America during the 1980s, a time known as the lost decade. That situation was somewhat similar to what the EU hierarchy is attempting to impose. There were brutal austerity measures imposed by the IMF at the time. This caused immense hardship for the peoples of that continent. Wages as a percentage of GDP in Latin America during that decade fell strikingly. Latin America’s share of world production was slashed. GDP growth on the continent decreased. The net result was that public debt trebled during that time. Defaults took place between 1982 and 1984 in five countries: Argentina, Brazil, Ecuador, Mexico and Peru twice. The lesson is clear and everyone knows it: austerity does not work or generate economic growth. It makes the situation worse not only for those who are at the receiving end of it, but also for the economy in an overall sense because it cuts across growth. One key lesson from that phase of history which can be generalised and should be taken into account in this and other places is that debts that cannot be repaid will not be repaid.

The scenario that the Government has opened up with the fund will not solve that problem. Writing a blank cheque that no one has the money to guarantee is nothing but a con job. Let us consider the position of the European Union. We have historically low rates of interest. What will happen to the debt if there is some form of recovery and if interest rates begin to rise again, along with inflation? Clearly, that will have an immediate knock-on effect.

This measure represents one of the most serious attacks on our economic development. It is not being done to help us or the peoples of Greece, Italy, Spain or any of the other countries affected. It is being done to bail out the banks and those at the top of society, those who caused the problems in the first place and have benefited from it also. It is clear this approach will not work. It is an horrific indictment on the Government which cannot hide behind the actions of the previous Government. The Government is moving the Bill and it will be its votes that will pass it. It is very regrettable and exposes the shallow nature of the so-called Opposition in this House that they could not even be bothered to debate these issues seriously.

Deputy Jerry Buttimer: Information on Jerry Buttimer  Zoom on Jerry Buttimer  I welcome the Minister and the Bill. The one point on which I agree with Deputy Clare Daly is that this is about economic development. We can pretend and live in the utopian world in which the Deputy lives or we can live in the real world, which many of us do. The reality is that Europe and the world is in a financial crisis which requires action and leadership, not grandstanding on a soap box or on television to gain headlines. It is about the men, women, children and families we represent. I challenge the Members opposed to this Bill to come into the real world and to stop hiding and opposing, and to put forward proper, legitimate alternatives if they feel the Government is not listening to them.

The reality is that there is no free lunch and noà la carte approach. We cannot just pick and choose. There is a sense the entire country is awaiting what happens in Europe, be it in Greece, Italy or Ireland. I welcome the commitment of the Government. I say to Deputy Daly that the politics of protest and getting gangs of people out onto the streets, and having them shouting and roaring is fine in that it lets off steam and emotion. However, the people I meet every day want more than that. These are not millionaires, property developers and speculators; they are an gnáth duine — the ordinary person. Members should stop painting property developers as [83]being pariahs. Some of them are proactive at creating jobs and we need them to get our economy back to work again, yet the mantra peddled by some is “Put them all on an island and let it drift out into the Atlantic”.

Thanks to the leadership of the Minister and the Government, we are prepared to play our part in the resurrection of the country and the people’s fortunes. It is in our hands. Equally, it is in the hands of Europe. Many people require the State’s assistance, as we all know. If we were to default and to allow a situation to develop where there was no commonality, what would happen? What is the alternative? Who will pay the wages of gardaí, teachers, nurses and carers and who will provide services? Will we go onto Dawson Street or out to Dublin West to lead protests with placards and microphones, shouting “out, out, out”? We can all lead the protests or lead the charge against the European Union but where will it get us? Nowhere. This is part of the problem.

The Bill is about reducing the borrowing costs of the nation. It is about reassuring the people that we have within the country, in the State, a Government and a Minister who are prepared to act. People want leadership from European leaders across the European Union. They do not want intergovernmentalism or tribalism; they want the project of Europe to play the role it was meant to play. Let us forget about ideology. In simple terms, this is about the common European market and the Union. It is about people, which is also what the Bill is about. We can lie down, we can shout and roar, or we can be proactive and act decisively.

None of us wants to cut services, increase taxation or deprive people of assistance from the State. However, we must live in the real world. Someone has to pay to deliver the services. There is not an infinite pot of gold being thrust into the air which the Minister can grab. Who are the wealthy the Opposition Members want to tax? They should tell us who they are and show us where the money from the wealthy can come from.

There is a vacuum in the eyes of many with regard to European leaders and I am concerned that some European leaders are playing to their own electorates. In particular, our German and French friends have an obligation to put aside their own domestic elections and consider the bigger European project, which is what this is about. People speak about sovereignty. The European project requires real decisions to be made and I hope this will happen. At home, the Government has been proactive. There has been a jobs budget, the banks have been restructured, an interest rate reduction has been negotiated with the European Union and the IMF, the minimum wage has been restored, PRSI for employers has been reduced, VAT changes have been introduced and we have made progress, although it is not recognised by some.

I am concerned our banks are not listening and are playing a kind of three-card trick on all of us. I understand that we have tightened our monitoring approach and regulation, which I welcome. However, I am concerned that many banks have significantly tightened lending to ordinary people and small and medium enterprises. I do not agree with the proposition being put forward by some of the banks that they are lending as freely as they say. The reality is they are not. Many mortgage providers will tell people not to go to the bank for a mortgage because they will be refused. In addition, the banks are taking too long to review applications and a whole plethora of steps must be gone through in order to get a mortgage or loan. It is important that we bring in the banks and make them act in the interests of the people they are here to serve.

I am concerned distressed borrowers are not getting a fair deal from the banks. I would go so far as to say that many banks are intimidating customers. One would almost need a PhD or a degree in accountancy to read the standard financial form customers must fill out. Even the explanatory notification is incredibly complicated.

[84]The Minister must get our banks to co-operate with small and medium enterprises, as has been thrust of Government policy. Some of the problems experienced by SMEs throughout the country can be overcome quite easily, such as a reduction in bureaucracy, greater co-operation from the banks and greater leniency by Revenue in allowing people to trade. Most importantly, we must allow people to employ, which the Government has done to an extent and which I hope it will do to a still greater extent in the forthcoming budget. The greatest challenge we face is to find a way to allow small and medium sized enterprises to employ people. Deputy Mick Wallace, who is present in the Chamber, is an employer and is far more eloquent than I in this regard.

I hope we can revisit the whole issue of NAMA. As a layman, I fear that all NAMA wants is simply to plunder and get cash back. I am afraid it will screw down the whole process and will not allow people to come up with business plans in order to trade their way out of their current position. I hope we can change this. Much that is positive is being done by the Government in respect of banking and finance, as well as in introducing reform and bringing leadership. As the Taoiseach noted this morning, it undoubtedly is unacceptable that so many citizens are unemployed. This is the greatest challenge facing the Government and the nation. However, to get people from being unemployed to being back at work requires a commonality that has not been found thus far in this House. I once had the misfortune to be unemployed and I still remember being obliged to go to hatch 4 in the old Cork labour exchange. One went in with one’s card every Thursday and got one’s money. That was soul destroying and is being replicated today. While the Government has shown leadership, Members of the Opposition who oppose and who shout and roar equally have an obligation to row in behind the Government and to suggest workable proposals. This is not about political point-scoring but is about getting one’s fellow citizens, men and women, back to work. It is about the future of children who recognise we are in a difficult position but wish to see action. They are inspired by what the Government has done up to now but seek a commonality that has not been found thus far.

Deputy Joe Higgins: Information on Joe Higgins  Zoom on Joe Higgins  The European Financial Stability Facility was a measure designed, not in the public interest as is claimed in the Title to the Bill, but really fundamentally to salvage the European banks and major European speculators from the consequences of their reckless lending over the previous ten years. Members are aware they gambled wildly on property bubbles in Spain and Ireland. Moreover, many European financial institutions were involved in the schemes that were built up around the sub-prime mortgage industry in the United States and accrued toxic debts to levels that are still unknown but which I have no doubt are being carefully covered up at present.

Last July, in a panic response to a fear that Greece might be forced to default on its borrowings, the EU leaders concocted this further extension to the European Financial Stability Mechanism. In essence it provided for the borrowing of masses of money in the financial markets, which was to be lent to the peripheral countries in crisis. The ordinary people of those countries were then to be bled dry to meet the payments demanded by the banks, hedge fund operators and the various speculators. Surely it should be clear to the Government and even to its backbenchers that this policy is a spectacular failure. Three years of austerity in Greece and in Ireland have yielded a dismal failure with an enormously increased crisis. All that austerity is doing, that is, the savaging of the living standards and services of the working class people who are the vast majority in society, is to pile up further crises.

Moreover, austerity is a policy that is increasingly discredited. As the left pointed out from the beginning, when one cuts in this manner the funds going into the pockets of members of that section of society with low or middle incomes who will spend virtually everything they [85]receive, then of course one cuts drastically their ability to purchase goods and services, which therefore gives rise to the dreadful crisis we face at present that has resulted in tragic levels of unemployment. If only the Government were to listen to some of the voices that increasingly are being raised both from the left and even from right-wing commentators and analysts. For example, the United Nations Conference on Trade and Development, which is led by a former leader of the World Trade Organization and who therefore is hardly a left-winger, excoriates the policy of austerity that is being driven by the European Union and the European Central Bank at present. It counsels governments to not take the advice of the very institutions, it names rating agencies, the prescriptions and actions of which got the world and Europe into this incredible present crisis.

Even one pillar of the so-called troika of the EU, the ECB and the IMF that is driving austerity down the throats of the Irish people with the collaboration of the Irish Government is in reality discrediting that policy. It appears to be schizophrenic in that it insists in Ireland and Greece that the mass of the population should take savage cuts in their living standards but yesterday warned the United States and other major economies, for which one should read the European Union, against fiscal tightening for fear it would cause further global fiscal crisis. What is fiscal tightening except cutting the amount of funds that are going to working people, to services, into capital investment and so forth? There is now a body of opinion that challenges the policy that is being driven by the EU and the ECB to which the Irish Government has capitulated and which manifestly is a dreadful failure.

The eurozone is in a crisis that will continue. By common consent it is almost inevitable that Greece will be unable to repay these draconian debts. As Deputy Clare Daly illustrated, the Greek working class and poor are being further impoverished and driven into an impossible position. However, as economic development has been shattered in Greece, how therefore can they generate the wealth to pay off such massive levels of debt? It is absolutely impossible. Moreover, default by Greece will result in a new banking crisis that will have draconian effects on the European and world economies. The problem is the governments of the eurozone and the European Union lack the necessary cohesion to have a solution. They will not find a solution on the basis of the crazed market system. Moreover, the national interests of the national capitalist establishments within the European Union are coming to the fore and will increasingly so do as tensions rise in the future and they will not agree on fundamental lines of argument they hope might improve the position. While we rely on the market system in which private banks, hedge fund operators and so forth dictate policy and interest rates and dictate to entire economies, there will be only further chaos and crisis. Therefore, for the Opposition Members who seek an alternative, such an alternative is clear. Capitalism and the financial market system are utter chaotic failures and therefore revolutionary changes in the financial system are needed. We need a socialist alternative. We need these major institutions to be brought into public ownership under democratic control and accountability. They should then be directed to act for the common good, for major public investment in infrastructure, for example, services and the like, that would be capable of recreating the crashed economies of the European periphery and many other countries in the EU that are suffering from crises to one degree or another.

We will see increasing mobilisation of the working people of Europe, pensioners, poor and youth over the next short few years in opposition to a system that is drowning them in its crisis . If we had a trade union leadership in Europe or this country that was worth anything, it certainly would not have gone this far. Working people need to reclaim their trade unions and use them as fighting organisations. They will have no option but to do that over the next few years because otherwise the situation will evolve from this crisis to another that is worse.

[86]Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan  Zoom on Michael Noonan  I thank all the Deputies who contributed to this debate. It was very interesting and we had a very good exchange of ideas. I thank in particular the Deputies in Opposition who said they will support the Bill when we vote on it. I regret it will not pass unanimously but that is the way Parliament works and the system by which we live and do our business.

The euro has been a great success and it would be a pity not to acknowledge that. There has been a 50% increase in trade volumes in Europe in the past 12 years, and Ireland has shared enormously in that. The fact we are in the euro and it continues to be our currency is one of the main drivers of the export led growth we currently have.

The euro has controlled inflation better than the German market over the years, even though it was much lauded as the great cure for inflation. The average inflation rate in Europe since the euro was put in place is 1.97%. That is very important because inflation makes people poorer, erodes savings and cuts the purchasing power of wages. The biggest contributor to poverty in a country like Ireland or any European country is inflation and it is very important that it continues to be kept low.

The overall debt figures in Europe are better than those in the United States. If Europe could get its act together collectively, we would find a solution pretty quickly. The collective deficit in Europe is only 60% of that in the United States. A comparison with a similar currency zone shows the comparisons are in favour of Europe. If one examined the mechanisms to protect a currency in times of adversity, one would find all the advantages are with the United States. The crisis we are in comes from a number of sources, but its cure is to retrospectively fit the policy instruments which can protect a currency in adversity. Such a model exists in the mechanisms in the United States.

The euro has continued to be a valuable currency. When it was founded, the exchange rate with the US dollar, if I recall correctly, was $1.22. Even after the crisis peaked in recent weeks it decreased from $1.44 to approximately $1.37 today. It is still a long way above where it started and it has increased in value against other currencies.

As late as ten days ago when Switzerland’s currency, the Swiss franc, was becoming impossibly strong to the extent that it was massively affecting exports it decided to peg the currency to stop it rising further. It did not peg it to the dollar, yen or gold standard but to the euro. It is a vote of confidence in the euro as a successful currency. The future for Ireland is to be a successful country in the eurozone. We should collectively help to protect the euro. This Bill is one of the instruments that will protect it.

The EFSF is being put in place to assist countries in difficulty in order that programme countries like Greece, Ireland, Portugal and others who may get into difficulty have sufficient funds to protect them in times of adversity. It is also a device to protect the euro as a whole. Some Deputies said the fund is too small to protect countries like Italy and Spain. That is self-evidently true. Deputy Ross referred to Timothy Geithner’s proposal that some leveraging will be done by using the fund to have a bigger firewall against adversity, which is well worth considering. There are no solutions currently in place to resist the storm that is blowing through Europe but work is ongoing and the Bill is an essential piece of architecture. I recommend it to the House on that basis.

I will pick up on many of the proposals made by Deputies. The debate has been constructive. Deputy Michael McGrath was the first speaker, followed by Deputy Smith with similar arguments. They inquired about the specific Exchequer primary balance targets we are required to meet under the programme of financial support. These are set out in the technical memorandum of understanding, TMU, which is part of the programme documents. As they are primary balance targets, they exclude Exchequer debt interest payments. They also allow for the exclusion of expenditure related to the banking sector recapitalisation and adjust for over or underperformance in [87]Exchequer tax revenues and PRSI receipts. We have adhered to the first three targets set for the end of December 2010, the end of March and the end of June 2011. The next target is set for the end of September 2011.

The ECOFIN meeting in December 2010, in a revised excessive deficit procedure recommendation, decided that Ireland’s general government deficit must not exceed 8.6% of GDP in 2012. That is the budgetary target we have to reach when making budgetary corrections this year. The recently announced interest rate reductions will be of benefit in helping us to achieve this target. However, there are other pluses and minuses which we will have to take into account in formulating a view on the likely deficit for next year and the level of adjustment that will be required to ensure we adhere to it.

We will set out revised economic and fiscal forecasts in the next month’s pre-budget outlook. Some Deputies inquired about them and they will be issued towards the end of October. They will take account of the most up-to-date information available, including quarter 2 national accounts data from the Central Statistics Office and the end of September Exchequer returns.

The Government is committed to reducing the general government deficit to below 3% of GDP by 2015. A number of Deputies made proposals on taxation. Deputy Finian McGrath suggested the introduction of a financial transaction tax. In a communication in October 2010 the European Commission stated it supported the idea of such a tax to help fund international challenges, such as development in Third World countries or climate change. However, the Commission recently proposed the introduction of a tax like this in Europe to fund the European Union. We are not in favour of that and think the European Union should continue to be funded by contributions from member states rather than taxes levied centrally across Europe such as a financial transaction tax. Some countries are in favour of a financial tax, whether it would be used domestically or to fund the European Union. I have an open mind about it but I do not want there to be a financial transaction tax in Dublin that does not apply in London, which would be injurious to the financial services industry in this city and would be injurious to the jobs of 20,000 people who work downtown in that industry. One might agree with the principle, but we need to be careful with its application. The ideal solution would be if the G20 were to apply such a tax globally.

I am not sure whether the projected yields that are claimed would be realised. I know someone who used to design software for transactions on the money market. That company had developed software that could do 2,000 transactions a minute with preprogrammed sell and buy instructions in the software. I believe they would stop trading that way if a tax was applied to financial transactions. I believe the yields are probably exaggerated because behaviour will change, as it always does when a tax is imposed. There is no consensus in Europe yet, but it is an ongoing issue.

Deputy Finian McGrath also spoke about taxes on high-income individuals, which can come up again at budget time. He also talked about increasing excise on tobacco products, but I believe he had a formula which would result in a reduction in tobacco. I was not sure whether he was advocating an increase in excise or a reduction.

Deputy Mick Wallace: Information on Mick Wallace  Zoom on Mick Wallace  It was probably a reduction.

Deputy Michael Noonan: Information on Michael Noonan  Zoom on Michael Noonan  There is an issue about excise on tobacco, which has nothing to do with health concerns, which is that we have a big problem with smuggled tobacco and the higher the excise, the greater the smuggling. We have the highest excise on tobacco products in Europe at present. There is a direct relationship between the level of excise and the black market sales of smuggled tobacco.

A number of people asked about the promissory note, burden sharing and so on. If people wish to quote me, I would prefer if they quoted me accurately and in context. Throughout my period as Fine Gael spokesman on finance in Opposition and during the general election campaign, I [88]always said that I was in favour of burden sharing with subordinated bondholders and unguaranteed senior bondholders, but only if we had the agreement of the European Central Bank. I always said we would not act unilaterally.

Deputy Pearse Doherty: Information on Pearse Doherty  Zoom on Pearse Doherty  That was not what the Fine Gael manifesto stated.

Deputy Michael Noonan: Information on Michael Noonan  Zoom on Michael Noonan  I remember participating in a famous debate moderated by Pat Kenny, and the Deputy was burning things all over the place.

Deputy Pearse Doherty: Information on Pearse Doherty  Zoom on Pearse Doherty  The Minister should have clarified that he did not support the Fine Gael manifesto which stated it might be forced to act unilaterally.

An Leas-Cheann Comhairle: Information on Michael Kitt  Zoom on Michael Kitt  The Minister to continue, without interruption.

Deputy Michael Noonan: Information on Michael Noonan  Zoom on Michael Noonan  We will not run the general election campaign again. Whichever way one takes it, the circumstances have changed somewhat since the general election. The big change was that many European countries believed, as we did that night, that there should be burden sharing with bondholders. That was driven by the German Government and when it got agreement, it was tried out in Greece. There are 20% discounts on a voluntary basis across the Greek banking system. Within a week the contagion had run into Italy and continued on to Spain, which was the source of the present crisis.

Deputy Pearse Doherty: Information on Pearse Doherty  Zoom on Pearse Doherty  Italy and Spain were going in that direction beforehand.

Deputy Michael Noonan: Information on Michael Noonan  Zoom on Michael Noonan  It was directly related to a decision that Europe should try out burden sharing in the banking sector in Greece, which was done. Mr. Trichet advised strongly against it, but the political side took the decision and that is what happened. It is very difficult to say now that Ireland should go down the same road.

In addition, there is now very little distinction in Anglo Irish Bank between guaranteed and unguaranteed bonds. The guarantee introduced by the previous Government was the greatest financial mistake ever made in this country. It was guaranteeing a private bank, Anglo Irish Bank, that was still operational. However, some months later the Government took over that bank and then it became a State bank. When it became a State bank it did not matter whether the bonds were guaranteed or unguaranteed because the signature of the sovereign was under the bonds in the bank as soon as it became a State asset. It is a false distinction to talk about guaranteed and unguaranteed bonds in Anglo Irish Bank because they both carry the State signature. It would be greeted as a credit event if there was coercive imposition on that and, as a credit event, it would ruin the good reputation we have developed in recent months——

Deputy Pearse Doherty: Information on Pearse Doherty  Zoom on Pearse Doherty  The Minister argued for it last week.

Deputy Michael Noonan: Information on Michael Noonan  Zoom on Michael Noonan  I am relating the advice to the Deputy.

Deputy Pearse Doherty: Information on Pearse Doherty  Zoom on Pearse Doherty  I know, but the Minister is arguing——

Deputy Michael McGrath: Information on Michael McGrath  Zoom on Michael McGrath  The Minister has changed his tune.

Deputy Michael Noonan: Information on Michael Noonan  Zoom on Michael Noonan  I am relating the advice of the European Central Bank to the Deputy so that he is in a position to make a judgment and he can go for the can of diesel and the box of matches after that, but he is entitled to the advice which is that it would be very risky. The Government has not made a decision. On leaving Poland I said that we would reflect on it, but this is the input on which we must reflect and it is a serious situation.

[89]There was a suggestion that the numbers keep changing on the interest rate reductions, which is true. When the Taoiseach returned from the Brussels meeting on 21 July, we did all the calculations on a 2% reduction. However, as the technical papers were worked through, the situation has improved. On the EFSF side, the minimum reduction we will get is approximately 260 basis points, which is 60 basis points more than the calculations we did originally. However, on the EFSM, which is the biggest fund on which we draw, the Commission decided that we would get that without any margin added. In that case the reduction is not 2 percentage points but 3.75 percentage points, which is what has resulted in the big variation in the figures, and certainly there has been big movement on it.

The maturity length of the loans is obviously a factor when we are pricing, but we priced it on the basis that the average for the money drawn down would be 7.5%. On that basis there is a saving of €9 billion. There is a saving of €900 million next year and between now and the end of the year there is a saving of approximately €130 million. I do not expect much of a variation on that — there might be a variation of 10 basis points on the EFSF fund but I have given the Deputy the lower figure, so we might do slightly better than that.

In addition we had put in margins for guarantees and so on which amounted to €600 million, and we are getting that money back because they have changed the design of the fund. However, we will not get it back until 2016 because we will not get it back until the bonds, in which it is included, mature. Therefore there is a real gain.

On the other hand we could take up the option of extending the maturity of the loans. Obviously if we are paying over a longer period we pay more in the total but there would be very significant savings on the interest rates. If, for example, we went to 15 years on the drawdowns for the future — I do not want to go into it today because we need to examine it and ascertain the best option for the country — the saving would run to more than €14 billion, which is a serious amount of money. That is the position on the interest rate. It was not accidental good luck because we campaigned on that and negotiated it for months on end. I was checking back on some stuff we did during the election campaign and found a report from the Financial Times from January, before we went into government. In response to the reporter who interviewed me, I said our position was to get the interest rate down to the balance of payment fund in Europe, which was offering money without the margin. The last money I saw from the balance of payment of payment fund was at 3.3%. That was our negotiating position and it worked out.

We were committed to renegotiating the programme but we are doing it in stages. The first renegotiation took place at around the time of the jobs initiative when we got the minimum wage reduction reversed. We got agreement to reduce VAT, particularly for the tourism industry. We got agreement that we would take another year up to 2015 to correct the programme. The second phase related to the price of the programme — the interest rates and the other matters to which I referred. The next phase of negotiation must be to see if we can reduce the burden of the overall debt. That is why I would like to put in place an alternative to the promissory note because the promissory note on Anglo Irish Bank is extraordinarily expensive. While it is not difficult to design a piece of financial engineering which would give one an instrument to do that, getting the agreement of 27 countries in Europe on the political side to allow us to do it is a different story. That is what the negotiation must be about going forward. It is certainly well worth attempting.

A number of Deputies made points which were not factual. Deputy Pearse Doherty seemed to think this legislation was some type of subterfuge for introducing the ESM treaty; it is not. There are references to the ESM treaty in the text but when we ratify it here separate legislation will be introduced and this legislation does not impinge on it. A referendum is not required for either this measure or for the ESM. This legislation is neutral in terms of any decision the House will take on the ESM.

[90]Deputy Clare Daly talked about the Irish guarantees and that the figure had moved up to €11 billion. That is true but it is notional. That we are a programme country meant we could step out of the arrangement for guarantees. Even though Members will note on the recital attached to the Bill the amounts that Ireland would have to guarantee, that is only the case if we were not in the programme. Once we are in the programme, we do not have to give those guarantees and, therefore, there will be no hit on Ireland.

  6 o’clock

Some of the Opposition are very critical of what we are doing, which is fair enough as that is what parliament is about, but they are very short on alternatives. Deputy Joe Higgins came forward with an alternative today. He said the free market system, capitalism and the financial industry that supports it is a busted flush and that the alternative is socialism. The problem with that argument is that of the three governments in programmes, there was a socialist government in Portugal when it went into the programme and that government was replaced by the social democrats. The then socialist government in Portugal was more to the left than the mainstream European social democrats. It was a fairly straightforward socialist party. It was the socialists in Portugal who presided over its decline which forced it into a rescue. The government in power in Greece is Mr. Papandreou’s socialist party, as opposed to a centre right party, which has a long tradition there and has provided good government but it is a socialist government. It is not socialist in the sense of the social democratic European mainstream, it is a socialist party that presides over a country where 52% of GDP is generated by state assets and state control. The finance minister in Poland told me that Greece was more a state economy than Poland was before the Russians left. In Ireland we did not have a socialist party, we had Fianna Fáil. Although a former Taoiseach said he was one of the three socialists in the Dáil, I presume Deputy Higgins was the second and I do not know who was the third. He used to look at me at times as if I had left wing leanings. That is the position.

Deputy Mick Wallace: Information on Mick Wallace  Zoom on Mick Wallace  The Minister is more of a socialist than Bertie.

Deputy Michael Noonan: Information on Michael Noonan  Zoom on Michael Noonan  I thank everyone for their co-operation. I am sure we will have several such debates between now and Christmas because there is a good deal of follow up and other legislation which will go over much the same ground.

Question put.

The Dáil divided: Tá, 99; Níl, 21.

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Information on Seán Kyne  Zoom on Seán Kyne  Kyne, Seán. Information on Anthony Lawlor  Zoom on Anthony Lawlor  Lawlor, Anthony.
Information on Ciaran Lynch  Zoom on Ciaran Lynch  Lynch, Ciarán. Information on Kathleen Lynch  Zoom on Kathleen Lynch  Lynch, Kathleen.
Information on John Lyons  Zoom on John Lyons  Lyons, John. Information on Michael McCarthy  Zoom on Michael McCarthy  McCarthy, Michael.
Information on Charlie McConalogue  Zoom on Charlie McConalogue  McConalogue, Charlie. Information on Nicky McFadden  Zoom on Nicky McFadden  McFadden, Nicky.
Information on Dinny McGinley  Zoom on Dinny McGinley  McGinley, Dinny. Information on Michael McGrath  Zoom on Michael McGrath  McGrath, Michael.
Information on Joe McHugh  Zoom on Joe McHugh  McHugh, Joe. Information on Tony McLoughlin  Zoom on Tony McLoughlin  McLoughlin, Tony.
Information on Michael McNamara  Zoom on Michael McNamara  McNamara, Michael. Information on Eamonn Maloney  Zoom on Eamonn Maloney  Maloney, Eamonn.
Information on Peter Mathews  Zoom on Peter Mathews  Mathews, Peter. Information on Olivia Mitchell  Zoom on Olivia Mitchell  Mitchell, Olivia.
Information on Mary Mitchell O'Connor  Zoom on Mary Mitchell O'Connor  Mitchell O’Connor, Mary. Information on Michelle Mulherin  Zoom on Michelle Mulherin  Mulherin, Michelle.
Information on Dara Murphy  Zoom on Dara Murphy  Murphy, Dara. Information on Eoghan Murphy  Zoom on Eoghan Murphy  Murphy, Eoghan.
Information on Gerald Nash  Zoom on Gerald Nash  Nash, Gerald. Information on Denis Naughten  Zoom on Denis Naughten  Naughten, Denis.
Information on Dan Neville  Zoom on Dan Neville  Neville, Dan. Information on Derek Nolan  Zoom on Derek Nolan  Nolan, Derek.
Information on Seán Ó Fearghaíl  Zoom on Seán Ó Fearghaíl  Ó Fearghaíl, Seán. Information on Aodhán Ó Ríordán  Zoom on Aodhán Ó Ríordán  Ó Ríordáin, Aodhán.
Information on Willie O'Dea  Zoom on Willie O'Dea  O’Dea, Willie. Information on Kieran O'Donnell  Zoom on Kieran O'Donnell  O’Donnell, Kieran.
Information on Patrick O'Donovan  Zoom on Patrick O'Donovan  O’Donovan, Patrick. Information on Fergus O'Dowd  Zoom on Fergus O'Dowd  O’Dowd, Fergus.
Information on John O'Mahony  Zoom on John O'Mahony  O’Mahony, John. Information on Joe O'Reilly  Zoom on Joe O'Reilly  O’Reilly, Joe.
Information on Willie Penrose  Zoom on Willie Penrose  Penrose, Willie. Information on John Perry  Zoom on John Perry  Perry, John.
Information on Ann Phelan  Zoom on Ann Phelan  Phelan, Ann. Information on John Paul Phelan  Zoom on John Paul Phelan  Phelan, John Paul.
Information on Michael Ring  Zoom on Michael Ring  Ring, Michael. Information on Brendan Ryan  Zoom on Brendan Ryan  Ryan, Brendan.
Information on Róisín Shortall  Zoom on Róisín Shortall  Shortall, Róisín. Information on Brendan Smith  Zoom on Brendan Smith  Smith, Brendan.
Information on Arthur Spring  Zoom on Arthur Spring  Spring, Arthur. Information on Emmet Stagg  Zoom on Emmet Stagg  Stagg, Emmet.
Information on Robert Troy  Zoom on Robert Troy  Troy, Robert. Information on Joanna Tuffy  Zoom on Joanna Tuffy  Tuffy, Joanna.
Information on Liam Twomey  Zoom on Liam Twomey  Twomey, Liam. Information on Jack Wall  Zoom on Jack Wall  Wall, Jack.
Information on Brian Walsh  Zoom on Brian Walsh  Walsh, Brian.  

Information on Clare Daly  Zoom on Clare Daly  Daly, Clare. Information on Pearse Doherty  Zoom on Pearse Doherty  Doherty, Pearse.
Information on Stephen Donnelly  Zoom on Stephen Donnelly  Donnelly, Stephen. Information on Dessie Ellis  Zoom on Dessie Ellis  Ellis, Dessie.
Information on Martin Ferris  Zoom on Martin Ferris  Ferris, Martin. Information on Luke 'Ming' Flanagan  Zoom on Luke 'Ming' Flanagan  Flanagan, Luke ‘Ming’.
Information on Tom Fleming  Zoom on Tom Fleming  Fleming, Tom. Information on John Halligan  Zoom on John Halligan  Halligan, John.
Information on Michael Healy-Rae  Zoom on Michael Healy-Rae  Healy-Rae, Michael. Information on Joe Higgins  Zoom on Joe Higgins  Higgins, Joe.
Information on Pádraig MacLochlainn  Zoom on Pádraig MacLochlainn  Mac Lochlainn, Pádraig. Information on Finian McGrath  Zoom on Finian McGrath  McGrath, Finian.
Information on Sandra McLellan  Zoom on Sandra McLellan  McLellan, Sandra. Information on Catherine Murphy  Zoom on Catherine Murphy  Murphy, Catherine.
Information on Caoimhghín Ó Caoláin  Zoom on Caoimhghín Ó Caoláin  Ó Caoláin, Caoimhghín. Information on Aengus O Snodaigh  Zoom on Aengus O Snodaigh  Ó Snodaigh, Aengus.
Information on Thomas Pringle  Zoom on Thomas Pringle  Pringle, Thomas. Information on Shane Peter Nathaniel Ross  Zoom on Shane Peter Nathaniel Ross  Ross, Shane.
Information on Brian Stanley  Zoom on Brian Stanley  Stanley, Brian. Information on Peadar Tóibín  Zoom on Peadar Tóibín  Tóibín, Peadar.
Information on Mick Wallace  Zoom on Mick Wallace  Wallace, Mick.  

Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Aengus Ó Snodaigh and Catherine Murphy.

Question declared carried.

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