Pearse Doherty (Donegal South West, Sinn Fein)

I touched a nerve with Deputy Broughan.

There is no incentive for banks and pension funds to lend sensibly to borrowers if there is an implicit guarantee that they will always be bailed out by the taxpayer, even at the expense of impoverishing a nation. The €85 billion deal with the IMF and the EU explicitly bans the State from defaulting on guarantees given to the overseas finance institutions that loaned €15 billion in senior bonds to Anglo Irish Bank. This is what we are giving effect to in this legislation. Do Fine Gael and Labour believe that protecting these bondholders is right? Instead of writing down or renegotiating with bondholders, we should burn them completely. The European institutions that lent recklessly to our banks did not bother to consider the risk because they assumed there was no risk to them. There is a phrase about what happens when one assumes something, but I will not repeat it in the Chamber. Government debt must be restructured. Bank debts need to be converted into equity and, where banks are insolvent, debts should be written off. Measures to boost growth in the economy will be an obvious requirement to meet the significant debt repayments on this bailout, but the terms of the €85 billion loan limit our options by sacrificing most of the pension reserve fund. The Bill amends the existing provision to allow the Minister to direct the National Pensions Reserve Fund, NPRF, to invest in credit institutions so as to ensure that the fund will continue to be available to support banks. The pension fund will not go into critical infrastructure projects, take hundreds of thousands of school children out of cold prefabs or be invested in job creation projects. It will go to the black hole of banks. It will give an injection of fresh equity capital into the banks. Unlike the Labour Party, we would support the idea of changing the Bill's provisions to allow the pension fund to be invested in capital projects. It would be used to build schools, hospitals and child care facilities.

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