Brian Lenihan Jnr (Dublin West, Fianna Fail)

He accepted that a broad guarantee was necessary and he painted a picture of the devastation that would have ensued if we followed the advice of Deputy Burton and the Labour Party. The Governor said there would have been additional lost income and unemployment, amounting to tens of billions of euro.

The euro group statement on Tuesday welcomed the significant measures the Government has taken and endorsed this short and focused consultation now underway between the Irish authorities and the Commission, the ECB and IMF to determine the best way to provide any necessary support to address market risks, especially as regards the banking sector in the context of the four year budgetary plan and the upcoming budget. I welcome many of the contributions in this respect from the other side of the House in the context of the legitimate concerns they raised in regard to exposure of the taxpayer, the nature of the interest rate that might apply to any such arrangement and the nature of the collateral support which will continue to become available from the European Central Bank.

The purpose of the technical discussions which begin today is to assess how it may be possible to build on the significant interventions already undertaken. As I said on 30 September, the introduction of a special resolution regime will be a powerful tool for securing the necessary restructuring of the Irish banking system for the future. Such a regime is not necessarily a panacea for all ills. Discussions are ongoing at EU and international level on the measures that may be available in the future to share the costs of bank resolution with senior creditors of banks other than depositors. However, the recent widening in Irish bond spreads, in response to speculation regarding burden sharing, proves the importance of exercising caution in this area.

Deputy Noonan appeared earlier to be surprised at this part of my speech. The Deputy must not have been listening. He is normally a good listener. I have spoken several times in this House about the work underway for a special resolution mechanism and referred in my statement of 30 September last to burden sharing by holders of subordinated debt in Anglo Irish Bank and Irish Nationwide Building Society. We need to be cautious. We know the unsettling impact of the recent references in Europe to the prospect of burden sharing, and as such we need to exercise care in this matter.

On corporation tax, which was mentioned in several contributions, I have on many different occasions made clear to the European authorities that our 12.5% rate of corporation tax is an important arm of our industrial policy. As a peripheral member state, it is our industrial policy. It is a key element in our growth model. It is clear to all that growth will be essential in improving our longer term debt stability. That is the position under the treaties. It is also the case that it is an essential policy to sustain economic growth in the future. I am satisfied, based on preliminary discussions I have had earlier this week, that this is a view shared by many of the parties to these discussions.

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