Finian McGrath (Dublin North Central, Independent)

Deputy O'Keeffe should not worry. We could not forget him.

When I first heard about the legislation and read about it in the newspapers I thought I was hearing things. The Minister for Finance, Deputy Brian Lenihan, was portrayed Fidel Castro-style riding in and sorting out the banks. All of a sudden I thought the Government had turned to the left. One big difference, however, is that the Cubans nationalised the banks when there was money in them but we take major shareholdings when the banks are broke. The latest developments in Cuba would be of interest to the Minister for Finance and the Government. I read in a newspaper today that the draft guidelines for economic and social policy state that as it updates its economic model, planning will be paramount, not the market. Perhaps there is a lesson for the Government and the Minister for Finance to learn from our comrades in Cuba.

The details of the legislation refer to the transfer of loans and deposits from lenders in a bid to reduce the size of the banking system. Special managers will have the power to sack directors and overrule shareholders. The Bill will also allow the Government to pump further cash into AIB which has a capital hole of €9.8 billion. In addition, it will enable the Government to wind down Anglo Irish Bank and the Irish Nationwide Building Society. The Bill changes the investment rules for the €25 billion National Pensions Reserve Fund. The Bill will also allow the Government to acquire 100% of AIB.

My colleague, Deputy Morgan, referred to the example of Iceland. It negotiated a new deal which is an improvement on the one rejected by 91% of Icelandic citizens. Iceland has secured a reduction in the rate of interest to be paid, from 5.5% to 3.2% on average. That is a sensible way to deal with the issue. Who shoulders the losses of the banks is a political choice. That is why I raise the issue. Iceland said "No" and got a better deal. We said "Yes, yes, yes" and we got saddled with an interest rate of 5.7%.

Levels of growth in the four year plan are grossly overestimated. It is important to admit that and to have an honest debate on the matter. We cannot make progress without growth. Our small open economy will be driven into the ground. No country in history has successfully accomplished what Ireland is being asked to do. At the very least other countries could devalue. That is extremely painful but it helped their economy with their neighbours. We cannot do that. If we succeed, the economics textbooks will have to be rewritten. We are being asked to do the impossible. It has never been done before. This small peripheral economy is being squeezed. The politics of the Government and some of the other conservative parties is helping the squeeze. What has happened in our country is totally unacceptable.

I referred previously to the greed of some bankers and others working in the industry and how the debt is about to cripple this country. The reality is that we live in two Irelands. We live in an Ireland of the rich and an Ireland of the poor. Let us consider Mr. Eugene Sheehy, who is retired on a pension of €529,000 from AIB. He will gain almost €16,000 per year from the budget. Mr. Seánie FitzPatrick has retired from Anglo Irish Bank on a pension of €4 million. He will gain many multiples of the Sheehy gains - in excess of €64,000 - from the budget. That is a disgrace and a grave injustice.

Attention has already been drawn to the fact that super-high earners are gaining from the budget while low and middle income recipients are being hit. "Hit" is a polite way to put it: they are being hammered. There is greater inequity in pension income. As pensioners, rightly, do not pay PRSI, they are not affected by the abolition of the ceiling. A pensioner gains approximately €16,000 per year whereas an employer on the same income gains approximately €12,000. On the other hand, a person with a private sector pension of €15,000, which is less than the minimum wage, loses €400 while a public sector pensioner on €15,000 loses €580 per year. The injustice springs from two sources. The pensions of public servants on low incomes are being directly cut while high-income private pensioners such as the former bank chief executives are not. That is a grave injustice. The application of the universal social charge results in a €404 disadvantage to all those on low incomes. It is a disgrace that we find ourselves in this situation.

There are sensible aspects to the Bill but the Government's overall handling of the banking crisis has been a disaster. Most independent observers would agree with that. I urge caution and sensible debate. Rushing through legislation is not good for the country, the economy and, more importantly, it is not good for the people of this country.

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