Pearse Doherty (Donegal South West, Sinn Fein)

The Deputy misled the people when he told us this would be the cheapest bailout in the world and that it would only cost €4 billion. The figures presented today show that the real figure, leaving aside NAMA bonds, is closer to €70 billion.

The Government's open-ended commitment to cover bank losses plainly exceeds the fiscal capacity of the State. The losses of the banking sector have become the losses of the taxpayer. Bank debt has become sovereign debt; that is the problem. It is ordinary punters and citizens who are paying the price and suffering because of the failures of the previous Government and the direction the Government is about to take. The simple economic truth the Government does not seem to comprehend is that the more blank cheques we write to shore up the European banking system, the more we are burdening the people with future taxes and the more we increase the State's liabilities. This burden will cause the economy to contract, as we are seeing year on year. It also punishes taxpayers. Writing cheques to bail out European banks will not help anyone, apart from the creditors of the banks who should be the ones to suffer and take the hit.

The Minister is borrowing tomorrow to pay for yesterday and forgetting about today. However, what he and his Government colleagues need to do is to stand up. At the core of their banking strategy should be three simple objectives. The Government needs to reduce the liability to the State and the taxpayer, ensure there is a functioning banking system and restore confidence in the economy. None of these measures will be met by the policy outlined today. The time for sticking-plaster solutions has passed. What we need is real solutions. When we woke up this morning and read the newspapers, we were told and read about radical solutions that would be proposed by the Government, but no such solutions have been presented to us. What the Government is going to do is place a further burden on the taxpayer. Putting a figure in the region of €24 billion into a defunct banking system is beyond belief for ordinary people.

It is the shocking legacy of Fianna Fáil that the very economic survival of the State is now in question. The Minister recognised this earlier this year when he was in Brussels. He said on RTE at the time that we could be approaching a point of economic unsustainability and that the sustainability of the sovereign debt could be in doubt. I share that view in part. It is the belief of Sinn Féin and many Irish people that we have already reached that point. Deputy Noonan is the first Minister for Finance to make that suggestion, for which I commend him. Hundreds of thousands of people are fighting for their survival, as is the State. Almost 500,000 people are unemployed and some 50,000 of our young people are leaving our shores each year. A growing number of people face eviction, while families struggle to feed their children, provide warmth and clothing and send their children to school.

Fine Gael and the Labour Party have told us they have a different view. They believe the point of unsustainability has not yet been reached. As economic sustainability is the most critical issue facing the State, it is important that we tease it out. I tried to do so in questions of the Minister last week. The point of unsustainability is the iceberg that will sink the State. It is the point where the State will have no prospect of ever being able to meet the accumulating debts and where sovereign default will no longer be avoidable. Therefore, it is hugely important that the people know when that point will be reached. It is true that it is governed by myriad moving economic factors and that when it will be reached is difficult to identify. However, the Government has a wealth of economic computational models at its disposal, into which it can input a large number of variables and compute with some certainty the economic outcomes. I am sure the Minister has carried out such an exercise. If he has not done so, it would be like floating blindly into the sovereign debt iceberg. If he has not been able to identify this danger point, it is an act of the most extreme economic negligence.

If the Minister buries billions more of the Irish people's money into these banks, he pushes the country closer to the point of unsustainability. Since it is the people's money and the people's future that the Minister is gambling with, surely the people of Ireland have a right to know what exactly is the point at which Ireland can no longer pay. Will the Minister tell this Chamber and the people of Ireland what exactly is the point of unsustainability for this State? I believe that we have already met it.

After this detail of the latest, and hopefully the final, debt bill has been revealed and it is combined with sums already guaranteed or owed, Irish banking debt will be somewhere in the region of one-and-a-half times the total value of the Irish economy. This €24 billion of debt is unsustainable. We cannot carry this debt and service the interest. It is hard to see how we can begin to pay it off. I know the Minister is playing with figures and allows some of this to come from the National Pensions Reserve Fund, but if we were not doing that, we could use that money for other needs in this State.

The reality is that money for the needs of the State has to be borrowed, and the rate is currently at 5.8%. If we assume that there is now an additional burden on the State of €24 billion, an interest rate of 5.8% would require €1.392 billion just to pay the interest on this part of the bailout alone. Is the €24 billion the final figure or just the starting point? There is no way the State will be able to pay back the EU-IMF loan within five years or even ten years. We will end up refinancing and refinancing, so that the €24 billion turns into €31 billion by the time the Government leaves office, if it has the privilege of staying there for the full five years. That is the real cost of this part of the banking bailout to the people.

However, we must consider what we get for this €53 billion of debt. We get six banks, which the Government will restructure into two banks. All that can be done with Anglo Irish Bank and Irish Nationwide Building Society is to wind them down, because there are no deposits in them at this stage. EBS may have some value, but nothing significant. There is €70 billion going into the banks and we are getting a couple of defunct banks, one with a bit of value and others that are not functioning the way they should be in the economy.

The Government must decide if we want to continue along this road. The opportunity to change direction gets slimmer every day. Every decision we take makes it harder to change track, and every month that goes by before we change direction makes it harder for the State to recover, as more and more bonds are paid off. I ask the Minister to repeat the fine words that his leader echoed in this Chamber to the effect that no more capital will go into Irish banks, other than what has been committed, until burden sharing has been achieved. We know burden sharing has not been achieved on senior bonds because the Government and its Ministers failed to do it. They agreed to take it off the table at the discussions last week.

We should not put the committed money into this, because there are other ways we can do it. We should be looking at aggressive burden sharing, especially for the €21 billion of unguaranteed debt that this State never pledged to pay back to those gamblers. However, the intention seems to be that they will get some money back, or possibly all of it, as we saw with Anglo Irish Bank bonds in January. Today, the Minister must honour his party's commitment that not one red cent is to be put into the banks until burden sharing is enforced.

We can only hope that this is the final figure. We have had many occasions in the past when we thought we drew a line in the sand, only to come back again. We were told last year that AIB passed stress tests only to need further recapitalisation a few months later. Today, the bank needs about €16 billion. We were told Irish Life & Permanent did not have any problem, yet today we know that it needs €4 billion. There is a serious question about the stress tests in respect of the scenarios used in the most adverse criteria, and some commentators have alluded to this. We are already close to meeting some of those scenarios, especially the unemployment rate, which is currently at 14.7%. This means that we are 0.2% off the worst situation the Central Bank has used to deal with the capital ratio that is required within this bank. That is the first crack that scares the living bejesus out of us. We will be back here in a couple of months following the European stress tests in June when they figure out that the criteria used was not stringent enough and underestimated the serious contraction that occurring in the Irish economy, and that therefore the capital requirements are underestimated.

Unemployment cannot be looked at in isolation. Unemployment means significant drops in income, fewer bills paid, drops in consumption and spending and mortgages going further into arrears. One figure can spell disaster for this whole model and could potentially mean that the extent of banks liabilities is still unknown. We cannot draw a line in the sand if the wind keeps blowing it away.

As the ordinary people of this State woke up to get on with on their lives, the Government put €3 billion of their money into Anglo Irish Bank and Irish Nationwide Building Society. I accept that it was a promissory note to which the previous Government signed up, but €2.53 billion has been put into the defunct bank that is Anglo Irish Bank and €500 million into Irish Nationwide Building Society. It is apt that the ghosts of bailout past surface on the same day that we create ghosts of the future. It is apt that the €3 billion for Anglo Irish Bank has been put in on the same day, but it should never have happened. This Government should have looked at all options to see how we reduce the liability of that promissory note that was signed by the previous Government. When it did so, members of the current Cabinet jumped up and down in this Chamber about the idea of injecting €30 billion over a ten year period into Anglo Irish Bank and Irish Nationwide Building Society.

The Minister told us today that the stress tests do not cover these two banks, as we already know, but he went further and told us that if capital requirements are needed, the Government will look at options and it will minimise the exposure to the Irish taxpayer. That means that there will be a minimum exposure, but there will still be exposure to the Irish taxpayer for a further capital requirement into these two banks. How the hell do Labour Party Members sit on those benches listening to the Minister tell the Irish people that he is committed to looking at putting more money into Anglo Irish Bank and Irish Nationwide Building Society? It is a ridiculous situation, and he has not even said in this Chamber that he will burn the senior unguaranteed bondholders in those institutions? Why is there no outcry, Joan? What has happened?

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