Shane Ross (Dublin South, Independent) | Oireachtas source

I often wonder about the value of the debates which we have prior to European summits in terms of the pattern which they follow, namely, the Taoiseach commences with a reasonably bland speech about what may or may not happen, he then receives a certain amount of criticism from the Opposition and, sometimes, constructive suggestions, as happened today in the context of the Crimean situation, and he then goes to Europe where he is applauded by the European Heads of Government on the wonderful work he is doing in Ireland. There may be a pattern developing which, hopefully, is not a replica of that we witnessed previously in the context of former Taoisigh, Bertie Ahern and Brian Cowen, going to Europe and being hailed as the great pioneers of the Celtic tiger because we all know what happened after that. Currently when the Taoiseach goes to Europe he is hailed as the great pioneer of a great economic recovery. Let us hope that is the case and that he is not entering into an unrealistic world whereby the assurance he is getting in Europe is not reflecting reality.

I agree with Deputy Crowe that the Taoiseach, instead of taking his Department's portfolio with him, should take with him a copy of Professor Morgan Kelly's speech to UCD a couple of days ago. I am not suggesting that Professor Kelly is necessarily right - he may or may not be - but he tells an alternative story which is one that they should hear in Europe. As everybody knows, Professor Kelly was right before. He was a voice crying in the wilderness when he warned about what would happen in the property market. He warned those who were riding the crest of a false prosperity that it would all end in tears. I am not suggesting what is happening now is all going to end in tears but there is an alternative view which is not heard very often. It is certainly not heard in Europe and is also rarely heard in this House.

It would be in the Taoiseach's interest to inform Europe that there is an alternative view of the Irish economy, although not one shared by Europe. As so eloquently articulated by Professor Kelly in the past few days all is not necessarily well here and there is an elephant in the room, namely, the banking sector. Europe does not want to hear that. I note the Taoiseach's speech contained only a few lines in relation to the banking sector. Europe wants to hear the consensus interpretation that we are on an unobstructable road to recovery. The message from Professor Kelly is that the SMEs are highly borrowed, and to an extent that is not recognised here or has not been properly addressed. On top of this, the economy is dependent on the SMEs, in particular in terms of employment. I have not heard that issue properly addressed by anybody here, with the exception of the Minister for Finance who said the matter should be referred to the Central Bank and that Professor Kelly should be listened to, which is a way of saying that the matter should be diverted, dismissed and sent for further critical review.

As stated by Professor Kelly the stress tests are forthcoming. They may or may not be bad for Ireland. Nobody really knows how they will be done. However, there is little doubt that the banks, which we recognise as still having problems, are an enormous sword of damocles hanging over the economy and, if the stress tests identify the real debt not only in terms of mortgage arrears, about which we speak as the most prominent problem, but in the context of borrowings by the SMEs, then the banks will at the very least have to be recapitalised. There is a state of denial in this country about this, which is particularly noteworthy on the part of the Government. When Ministers are asked they tell us not to worry, the banks will not have to be recapitalised but that statement is not based on fact, evidence or principles. This is doubly important now in light of the what the Taoiseach had to say about legacy debt. Legacy debt is another area which is not recognised in terms of what happened in June 2012. In other words, we are still pretending that somehow the banks will be recognised by legacy debt. That is not the message coming from Europe. The message coming from Europe is, "You're on your own: we think you're doing extraordinarily well and we're going to ignore the bad things."

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