Ciarán Lynch (Cork South Central, Labour)
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No. 7 on our agenda is the pre-ECOFIN Council briefing by the Minister for Finance. I welcome the Minister and advise members that briefing documents have been circulated by e-mail in advance of the meeting. The Minister will make his opening remarks which will be followed by a question-and-answer session.

I remind members, witnesses and observers in the Visitors Gallery that all mobile phones must be switched off. The meeting is being broadcast by UPC on channel 207 and if a mobile phone is left on, it will interfere with the broadcast, sometimes to the extent that it is seriously disrupted and those watching cannot follow or hear the proceedings.

Members and the Minister are reminded of the long-standing ruling of the Chair to the effect that members should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. I now invite the Minister to make his opening statement.

Michael Noonan (Limerick City, Fine Gael)
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I thank the Chairman and members for inviting me to address them in advance of the ECOFIN Council of Ministers which will take place next week. I will begin by providing an overview of the European and international dimensions to the work of the ECOFIN Council. As this will be the penultimate Council under the Cyprus Presidency, I take the opportunity to brief the committee on some of its key dossiers. I will also speak about the agenda for Tuesday's meeting, after which I will be happy to take questions and observations from members.

The work of the ECOFIN Council is heavily influenced by the work of the European Commission, the priorities of the rotating Presidency, the work of Heads of State and Government who meet regularly at European Council summits in Brussels, the ongoing volatile situation in the financial markets relating to the crisis in the eurozone and the work of the G20 and the IMF. Specifically in regard to ongoing international developments, the G20 met in Mexico earlier this week to consider a number of issues which we will discuss later in the week at the ECOFIN Council.

The G20 summit closed on Monday and the Mexican Presidency issued the usual communiqué setting out decisions taken.

With regard to the EU Presidency, the Cypriot Presidency still has one third of its term left to run and it is committed to making progress on a number of key dossiers, including the single supervisory mechanism under the banking union heading, and additional measures to strengthen economic governance, referred to as the two-pack. On the single supervisory mechanism, the Cypriot Presidency has stated it will do all in its power to secure agreement during its tenure. On the two-pack, it is also hopeful it will be able to respect the European Council invitation of 18 and 19 October 2012 and reach agreement with the European Parliament with a view to adoption by the end of 2012 at the latest.

The Cypriot Presidency has also successfully co-ordinated a review of the European semester and it will shortly submit a synthesis report to Council bringing together the deliberations over recent months of various Council formations. This will help inform the roadmap on the organisation of work for the 2013 European semester, which will be prepared by the incoming Irish Presidency.

Turning to next Tuesday's ECOFIN meeting, the Department has already supplied the committee with the latest draft agenda for the meeting, and I will highlight some of the key issues that will be discussed. At next week's Council meeting, Ministers will be updated on the progress in the trilogue discussions that are under way to achieve agreement on the two-pack. I expect the Council will be asked to give a mandate to the Presidency to continue negotiations with the European Parliament on the basis of a new set of compromise suggestions which will be put forward by the Presidency. It should be noted that the scrutiny sub-committee of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform will meet on 14 November. The sub-committee has invited officials from the Department to the meeting to discuss the two-pack, as well as the financial transaction tax and the common consolidated corporation tax base.

Returning to the upcoming Council meeting, the Commission will present an update on the status of the revised capital requirements rules. The proposal is at trilogue stage of negotiations, and it is likely the Commission will urge that these negotiations come to a conclusion. The need for stronger capital and liquidity standards for EU financial institutions is evident from the financial crisis and Ireland recognises this is a vital piece of legislation.

There will be a state of play report on the single supervisory mechanism, including an exchange of views. The latter will be on the basis of the Presidency report that will be prepared following an ad hocworking group on 5 and 6 November. Under the proposal, the ECB will take on the prudential supervision of credit institutions. A regulation amending voting procedures in the European Banking Authority is also proposed as part of these reforms. The objective is to ensure equitable treatment of euro area and non-euro-area member states within the single supervisory mechanism.

A state of play discussion on the financial transaction tax is scheduled for the meeting. At the June 2012 ECOFIN meeting, it became clear that agreement on the Commission's draft directive to introduce a financial transactions tax would not be reached at EU 27 level. Those countries that favour the tax are now trying to introduce it by way of enhanced co-operation, under which at least nine countries must participate. I understand that 11 countries - namely, Germany, France, Austria, Belgium, Portugal, Slovenia, Spain, Italy, Slovakia, Estonia and Greece - have written to this effect to the European Commission. On 23 October 2012 the Commission submitted its proposal for a Council decision to authorise enhanced co-operation in the area of a financial transaction tax. The Council will have to decide after consent by the European Parliament. A subsequent Commission proposal for a directive implementing enhanced co-operation in the area of a financial transaction tax should follow in due course.

The mandate for negotiation of amendments to the savings taxation agreements with third countries will be discussed at ECOFIN. There will be a proposal that the Council adopt relevant decisions authorising the opening of such negotiations, and we hope the proposal will be agreed. We will discuss in restricted session issues related to the implementation of the Stability and Growth Pact. In particular, the items discussed will pertain to Greece and may include recommendations for specific measures to be taken by Greece to address its excessive deficit.

The Presidency will inform the Council on the follow-up of the ECOFIN-related decisions taken by the European Council on 18 and 19 October. The October Council was dominated by discussion of economic issues, particularly the interim report on the future of the economic and monetary union, which identifies the single supervisory mechanism and the broader
banking union as essential building blocks to delivering genuine economic and monetary union. The Council will have an exchange of views on the outcomes of the annual meeting of the IMF and World Bank Group in Tokyo and the G20 finance Ministers' and central bank governors' meeting in Mexico, as well as a possible follow-up. The Council conclusions on climate finance - fast start finance - will be agreed in advance of the 18th conference of parties to the United Nations Framework Convention on Climate Change, UNFCCC, in Qatar from 26 November to 7 December 2012. The Environment Council adopted conclusions on the other aspects of the preparation for Doha on 25 October.

Draft Council conclusions on the annual EU statistics package will feature on the agenda. This may only be an "A" item on the Council agenda, which would allow for its approval without any major discussion. Ministers will have an exchange of views on state aid modernisation from which the Presidency will draw its own written conclusions. The Competitiveness Council will also deal with this issue on 10 December 2012 but is not considering adopting Council conclusions. It is expected that ECOFIN will subsequently adopt Council conclusions, taking into account the Presidency conclusions from the November ECOFIN discussion and the discussion at the December Competitiveness Council.

I would like to say a word on our own economic and budgetary situation. The Department's latest projections were set out in the 2012 stability programme update, which was published on 27 April. GDP growth returned last year and further modest growth is anticipated for this year, again coming from the external side. It is expected that somewhat more broadly balanced growth will develop next year and beyond. However, so far the exporting sectors are leading the recovery. This underscores the importance of restoring sustainable growth in the euro area, which is a key trading partner for Ireland. In this context, resolving the difficulties in the euro area will be vital. Furthermore, taking account of the Exchequer returns for the first ten months of this year, our budget is on track, and I am confident that fiscal targets will be achieved again this year. The Department will produce revised forecasts for 2012 and later years shortly. These will take account of domestic developments over recent months and the current outlook for the international economy. However, given the worsening of the external environment - particularly in key trading partners - it is clear that short-term growth prospects will be weaker than previously anticipated in the April stability programme update.

A considerable amount of progress has been achieved on the reform programme and enhanced governance measures in the EU as a whole and in the euro area. Europe 2020, the EU's growth strategy for the coming decade, is now well-embedded throughout the EU. This is also true of the EU semester, which has now become an important part of the annual work stream of the Commission and Council. The successful implementation of the 2013 semester will be a priority for Ireland's Presidency. The euro plus pact, which is now in place as part of the EU semester, has concrete goals aimed at fostering competitiveness and employment. The six-pack, which came into effect last December, will reform the Stability and Growth Pact by, among other things, ensuring better budgetary surveillance and focusing on prevention and correction of macro-economic imbalances. The two-pack will therefore be the key final piece of the reform strategy for the euro area.

The four presidents' paper on the economic and monetary union was released in June. The paper's four essential building blocks are proposals for an integrated financial framework, a budgetary framework, an economic policy framework and greater democratic legitimacy and accountability. An interim report by President Van Rompuy was presented to the October European Council.

A specific road map for the achievement of a genuine economic and monetary union will be presented at the European Council meeting on 13 and 14 December.

Moving forward, it is Ireland's view that the focus must be on delivering in all respects the commitments already agreed by the Heads of State and Government, including those of 29 June. Those commitments were vital in giving certainty to the markets and for Europe's credibility. During its Presidency next year Ireland will mark 40 years as a committed member of the European Union. We will take up the Presidency of the European Union on 1 January 2013 and will work in collaboration with the other members of our trio, Lithuania and Greece. Membership of the EU during the past 40 years has been good for Ireland in terms of attracting a considerable amount of foreign direct investment and in gaining access to a much bigger market for our exports. Equally, Ireland has been perceived by our European partners and successive members of European institutions as a diligent, pragmatic and constructive member of the Union. We have demonstrated this continuously during the past six occasions on which we held the Presidency of the European Union and have gained a reputation for holding efficient, business-like and pragmatic Presidencies. In 2004, Ireland presided over the enlargement of the European Union to 25 member states.

The Government believes that Ireland's future is intimately linked with continued membership of a strong and vibrant European Union and as a member of the euro area. It is the intention of the Government to continue to proactively engage with senior officials in the EU institutions and with our EU partners in the implementation of policies aimed at strengthening growth and stabilising turbulent financial markets. This is reflected in the main themes of our Presidency, which include promoting growth and restoring the EU's competitiveness.

I thank members for their attention. I am happy to respond to any questions from members.

Ciarán Lynch (Cork South Central, Labour)
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I thank the Minister for his opening statement. I propose that ten minutes be allowed for the opening round of questions and five minutes for any second and subsequent rounds.

Before I invite Deputy Dooley to put his questions, I have a question for the Minister on the financial transaction tax. The Minister's report to the joint committee today indicates that that has not yet been fully decided and that there are processes in place for a commencement date. Is that correct?

Michael Noonan (Limerick City, Fine Gael)
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Yes. The Chairman will be aware that the Commission published a paper some time ago. It became clear during the early discussions on that paper that it would not be possible to get agreement across the 27 eurozone members. The treaty provides that a smaller number of member states can proceed by way of enhanced co-operation. To do this, nine states must write to the Commission indicating that they want to move in that direction. Eleven member states have done so. It is a long and intricate process under the treaties. While there will be some discussion on the matter on Tuesday, it is unlikely that significant progress will be made in the short term.

Ciarán Lynch (Cork South Central, Labour)
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I note that Portugal, Spain, Italy and Greece are among the 11 member states involved in that process. Those countries are in similar financial programmes to Ireland. What is Ireland's determined position in this regard? Is it an observational one or has a more determined decision been taken on the matter?

Michael Noonan (Limerick City, Fine Gael)
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Ireland's position is that at a level of principle we would support a financial transaction tax, provided it was applied universally and particularly to the main world financial sectors. That would be our ideal position. If it applied in Singapore, Hong Kong, New York and Tokyo as well as in London and the European centres, we would go along with it. Our next position, in order of descent, would be that if a financial transaction tax was agreed across the 27 members, we could also agree to that. Our fear is agreement to any lesser group having a financial transaction tax in which the United Kingdom would not participate. Some 33,000 people here work in financial services and we believe that if a financial transaction tax were introduced here and not in the United Kingdom, activity would migrate from Dublin to London, resulting in a loss of part of the industry and some jobs. On the other hand, we can see the merits and principles of a financial transaction tax. In the event of a group of nine, ten or 11 member states agreeing a financial transaction tax, we will not seek to put barriers in the way of its being introduced elsewhere.

What is currently being discussed is a form of stamp duty on share transactions and other financial transactions. A low level of 0.1% is the tentative suggestion, although that is not a hard proposal. In Ireland, we already have a stamp duty on transactions in shares, which stands at 1%. What is being debated is not particularly out of line with what we are doing, although what we are doing is at a higher level than what is being contemplated. Listening to the contributions of colleague Ministers around the table, I found there was no common view across the 11 member states that have signed the enhanced co-operation request. Each has its own attitude. As such, it might be quite difficult to get agreement when it comes down to the particularities of a tax, even among the 11 concerned.

Ciarán Lynch (Cork South Central, Labour)
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As I understand it, from what the Minister had to say this morning, Ireland will not be engaging in the first round of discussions on this issue but is taking an observational position. In the eventuality that an FTT is up and running in a minimum of nine countries, will the Department engage in monitoring the tax that we are foregoing in this regard? If so, I would ask that the Department report on that matter to this committee.

Michael Noonan (Limerick City, Fine Gael)
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We will closely monitor any development because it is an issue of great relevance to Ireland. I do not believe there is a question of Ireland foregoing any tax. That is conceived so far on the basis of what has progressed. Our tax take for the 1% stamp duty will be in excess of any possible take that will accrue from a financial transaction tax. A number of other issues are running parallel to this. There is agreement among the 11 member states concerned that a financial transaction tax is in principle a good idea. However, what to do with that financial transaction tax is a matter of debate. Some people believe that as per the Tobin tax, with which Members will be familiar, it be used to fund non-governmental organisations, NGOs, in under-developed countries. Another cohort of people think it should be used in the area of climate change, to reduce carbon emissions and so on. The stronger view now is that it would form a separate stream of direct funding for the European Union. Currently, this funding is provided by way of contributions from member states. The thinking now is in terms of a separate stream funded by a financial transaction tax and, possibly, other means in the future. We are in the early stages of debate on the issue, with 16 of the 27 member countries having already removed themselves from the enhanced co-operation. There are a range of issues on which there is not unanimity.

Timmy Dooley (Clare, Fianna Fail)
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I welcome the Minister and his officials and wish the Minister well in his negotiations and discussions at ECOFIN. The Minister said in his concluding remarks that Ireland would focus on delivering in all respects on the commitments already agreed to by the Heads of State and Government, including those of 29 June. I assume we can take that as relating to our bank debt in particular. It is well recognised that there are two aspects to our bank debt, namely, the €30 billion associated with the promissory note and the €29 billion associated with our pillar bank investment. On the promissory note, there has been an expectation for some time that a technical paper would be produced setting out a mechanism by which some form of resolution would come about. In this regard, discussions since June have focused on trying to resolve the cost to the taxpayer of the investment that had to be made in our pillar banks.

May we take it that there is a continued effort to follow both streams of resolution, the promissory note and dealing with the pillar bank investment?

Michael Noonan (Limerick City, Fine Gael)
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The decisions of the Council on 29 June were much wider than any commitments made to Spain or Ireland. The primary decision at that Council was for banking union, and that consists of the three pillars of supervision across Europe, a mechanism whereby insolvent banks across the eurozone and the Union would be resolved centrally by a European mechanism, and a guarantee scheme through insurance for depositors across the Union. The best way to understand it is to consider how banks work in the United States. If a bank fails in Texas, the Texan authorities would not have the responsibility for the resolution of the institution. There would be no big fuss and it is part of the system.

In that context the commitment was made to separate banking debt from sovereign debt. In this light, a commitment was also made to the possibility of a direct recapitalisation of Spanish banks through use of the European Stability Mechanism, and then there would be examination of the sustainability of the Irish debt position, with all sovereigns treated equally.

It is true to say we are pursuing, as the Deputy noted, both sets of negotiations. We are engaging on the promissory note, as we have been for some time. The deadline in that regard is effectively the next payment date, which is 31 March next year. We are not waiting until then but pushing for an earlier resolution on that. There is also a position on the trading pillar banks and how we might be recompensed for the fact that the Irish taxpayer ultimately carried the responsibility for recapitalising both Bank of Ireland and AIB.

The Deputy knows from the statement of 29 June on banking union that before any direct recapitalisation of the banking system in Europe can occur, the supervisory aspect of the banking union must be put in place and seen to be working. That is on a longer timeframe than the promissory note to which I referred.

Timmy Dooley (Clare, Fianna Fail)
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The Minister is familiar with the country note prepared by the International Monetary Fund, IMF, clearly indicating that our debt to GDP ratio position will not be sustainable unless we get a very significant resolution, particularly on the investment in the pillar banks. It indicated that the ratio would continue to rise and one of the modelling exercises related to a return to the State of €24 billion. Unless we get something in that order, the model predicts we would find it difficult to have a sustainable debt position.

What is the Minister's expectation in that regard? I have seen some modelling done by a number of economists and the IMF indicating that the impact would be relatively minor on our overall debt position because of an elongation of the repayment associated with the promissory note. The significant positive impact on our debt position would be a return to the State of something in the order of €24 billion to €25 billion, which was invested in the pillar banks. The Government seems to take some solace from the fact that has been identified, particularly by Chancellor Merkel, as us being a special case as a result.

Does the Minister expect to have a further discussion on this? I accept the Minister discussed the matter during the week with Mr. Schäuble, who reiterated this special case position. Does the Minister expect to have discussions as part of ECOFIN about our special case? What is the Minister's expectation? Does he expect a position of investment in the order of €24 billion or is it more likely to be the ESM purchasing shares in the pillar banks at market value?

Michael Noonan (Limerick City, Fine Gael)
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I will comment briefly on the word "sustainability", which is used in two senses. It is used colloquially, such as when people say it will be very hard for Ireland to deal with servicing this bank debt with sustainability. When people use it in debate, they do not mean we will default but rather that life is being made difficult for everybody and taxpayers in particular. It is also used in a very narrow sense, effectively meaning that if a country's debt position is not sustainable, the country will default. In the first sense I agree with the Deputy and the IMF analysis but in the second sense I do not. There is no question of us defaulting. The position is that if our debt peaks at 120% or 121%, we can still service it and it remains sustainable in that sense. Nevertheless, it would put a very severe burden on the taxpayer, and the amount of resources dedicated to servicing a debt of that level would inhibit growth rates. The Secretary General of the Department, in speaking to the committee yesterday, used the metaphor of driving a car with the handbrake on. When speaking about sustainability, particularly with regard to the IMF, it is not an inability to pay that is discussed but rather the difficulty in paying, the burden placed on the taxpayer and the inhibition of growth rates.

There have been various interchanges since 29 June, particularly involving the Taoiseach and Chancellor Merkel, and both on the telephone and in face-to-face meetings. The German finance Minister came to Farmleigh the week before to meet with the Minister for Public Expenditure and Reform, Deputy Howlin, and I had a lengthy meeting with him. He reaffirmed the position of Chancellor Merkel so there is nothing new to add to the position already stated. It has been recited, parsed and analysed on a number of occasions in the joint statements made by the Taoiseach and Chancellor Merkel and after the Minister, Deputy Howlin, and I met Mr. Schäuble. There was a press conference after our meeting and the German Finance Minister quoted Chancellor Merkel in expressing the exact policy position of the federal government.

Joe Higgins (Dublin West, Socialist Party)
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We can see the National Treasury Management Agency's prediction for the debt to GDP figure to reach 117.5% this year and 120.3% next year. One projection I have seen for the interest payments on that debt next year will be €9 billion. How on earth can anybody describe that as sustainable? Of course, the interest payments can continue but that would be at the cost of impoverishing the Irish people and diverting resources that should be going into desperately needed public investment, for example, into paying the national debt. How on earth does anybody believe that the sharks in the financial markets will entertain this State for major lending in a year or two when all the economic indicators are downwards?

How does the Minister square these circles?

Michael Noonan (Limerick City, Fine Gael)
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There is no doubt that the arrangement into by the previous Government in respect of bank debt has put an enormous burden on the people. Every household is affected by it and the Government is not making light of that. It is a huge burden. The Deputy stated that it is 121% of GDP. Of that amount 40% is the transfer of bank debt onto the sovereign. If we did not have to carry the burden of bank debt on the sovereign then the debt GDP ratio would be somewhere over 80% and would be one of the lowest in the European Union. The average debt of the euro group is about 94% and we would be well under if we did not have to carry the burden. The purpose behind the two pieces of negotiations is that we envisage a reduction in the burden on the Irish taxpayer thus making it more sustainable. In blunt language, to reduce the imposition of the servicing of the debt on the taxpayer is the purpose behind the two pieces of negotiations but I cannot predict the outcome. The Taoiseach has explained the policy position in great detail and the lines that we are pursuing to secure a better deal for Ireland. We are trying to untangle a previous complex arrangement that was entered into. We would all agree that the original agreement on bank debt, in particular, imposed a very heavy burden on the taxpayer.

Joe Higgins (Dublin West, Socialist Party)
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The Minister is right. It was criminal lunacy but his Government continues the policy of bleeding the Irish people of their resources in order to honour that criminal arrangement. In light of how indefensible this is, that the Irish people are held to ransom to bail out the European financial system, how does he explain that his colleagues, particularly in German, have made such heavy weather of recognising and acting on an unjust and unsustainable proposal? Why is there talk of not having an arrangement for debt reduction until after elections take place in Germany near the end of next year?

Michael Noonan (Limerick City, Fine Gael)
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The previous Government made legal commitments which we cannot resile from. It would not be in the interests of the country to do so because resiling from those arrangements would put us in a default position. Default is not part of our policy and in the absence of a default we are negotiating a better position for Ireland.

The Deputy mentioned the German authority. It is quite clear from the statement on 29 June and the joint communiqué from the Taoiseach and the Chancellor, that Germany is now fully cognisant of the special position of Ireland and that it is positioning policy to do something about that. It is also a condition, and always was since 29 June, that before there is a move on these matters the direct supervision of the European banking system must be put in place which will be done during the course of 2013.

Joe Higgins (Dublin West, Socialist Party)
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The Minister is right that the previous Government was criminally negligent and responsible for this situation. The three institutions of the troika, the European Central Bank, the European Union and the IMF, were equally complicit in putting a gun to the head of the disastrous previous Government. That means that it put a gun to the head of the Irish people. Why should we adopt a position of justifying ourselves when the previous Government clearly placed a demand on the Irish people to pick up tens of billions of euro of private debt? It put the debt on their shoulders.

Ciarán Lynch (Cork South Central, Labour)
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I ask Deputy Dooley to remove his telephone as it is interfering with the broadcast and I apologise to Deputy Higgins for the disturbance.

Joe Higgins (Dublin West, Socialist Party)
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The Irish people are in a position to make a demand and let these institutions know what is acceptable. The Minister's Government, following on from the disastrous policies of the last Government, is bending the knee to these institutions at every point rather than standing up to them.

Michael Noonan (Limerick City, Fine Gael)
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That is not true. On a number of occasions the Deputy has stated his position on these matters. We both agree that the original deal was a bad one. The Government is trying to unwind it by negotiation. As Deputy Dooley pointed out, there are two parts to the negotiations and we are proceeding with them. We are making some progress and we shall see where it works out.

It is also true that Ireland has a deficit problem and a debt problem. Both problems are not entirely separate because the services cost of the debt kicks across into magnifying the deficit problem. Even if there was never a legacy banking issue in Ireland we are still not collecting anything like the amount of revenue that is necessary to run the services on which spending is conducted in Ireland. There is an impression that if we could sort out the legacy banking issue then everything would be resolved but that is not the case. There is an equally difficult position with the deficit and we must close the gap between revenue and expenditure and that is what the budgets are about. I agree with the Deputy that there is a crossover. Obviously, servicing that debt appears in the current account.

Ciarán Lynch (Cork South Central, Labour)
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As eight minutes have elapsed I ask Deputy Higgins to conclude and call Deputy Dara Murphy.

Dara Murphy (Cork North Central, Fine Gael)
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I welcome the Minister and his officials. I shall commence by asking him about the single supervisory mechanism and what he referred to as an exchange of views. He mentioned a proposal that referred to a prudential supervision. Today, as he will know, we will have all read the newspaper reports on pay levels for executives in the IBRC. We all welcome the call made by Mr. David Duffy that resulted in a pay reduction for Mr. Eugene Sheehy.

I wonder, within the prudential supervision and the exchange of views, if we could have some discussion on the banks that have been nationalised or left in the control of the State? Does he see a situation where officials can thumb their nose at pay reductions? On 5 April the Minister asked Mr. Alan Dukes to require the IBRC executives to take a 15% pay reduction. I think Mr. Dukes has still not got back to him on that. Is there scope within the single supervisory mechanism to address the issue? I know that it involves a difficult legal position given the botched bank bailout by the last Government but, nonetheless, CEO pay is capped. Perhaps there is a potential to introduce a cap on pay for lower grades.

Michael Noonan (Limerick City, Fine Gael)
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There is general agreement that the light touch supervision that prevailed in Ireland and elsewhere before the banking crisis was one of its causes. Everywhere, including Europe, has moved away from light touch regulation. From a policy point of view - driven by the AAA countries in Europe - anything like a common banking system could be put in place. In other words, before other people would take responsibility centrally for the debts of banking systems and other sovereigns, an effective supervisory system is the first step that must be put in place. Instead of the Irish Central Bank and the Irish regulator being the sole regulator of the Irish banking system, its regulation would move to Frankfurt.

The regulatory system would be organised and driven by Frankfurt. In practical terms, there are approximately 6,000 banks in Europe and there is a debate about the extent, but the Commission proposal is that all 6,000 banking institutions in Europe should be under the supervisory control of the European Central Bank in Frankfurt. How it would work in practice is that it would be the legal entity which would be empowered to regulate. It would work to a common rule book for all the banking institutions in Europe but in the actual application of the regulation there would be nothing to prevent Frankfurt from delegating its legal supervisory authority to local regulators. However, it would also have an override provision, where it could intervene where it thought it was necessary to impose its regulatory regime directly.

These are the things that are being worked out. I am outlining the shape of it to the committee. Whatever its shape, it must be refined, agreed and be in place early next year, and a legal framework must be in place by 1 January. That is what is meant by the supervisory position.

On the question about the IBRC, it is true that I wrote to Alan Dukes and asked him to talk to the board of IBRC to ask it to apply a pay cut across the pay levels. It was done in the public service and I cannot see why it would not be done elsewhere. At the time, it was discussed by the board of IBRC but the members of the board did not think it was wise or prudent to take the pay cut. The members said the IBRC was losing staff and that it would be very difficult for it to hire. However, my position is that while they have the legal authority to set the pay scales arising from the articles of agreement they entered into at the time the status of Anglo Irish Bank was changed by the previous Government, there is a public interest as well and I will continue to push it. We will see where it goes. The Deputy is correct that I wrote to the bank, but the board said it did not think it would be prudent to apply a reduction in salaries. However, we are working on it. At the same time, the board of IBRC took a 20% reduction in its director fees and took another 15% reduction subsequently. The chief executive has a salary this year that is approximately €200,000 less than what it was last year.

Dara Murphy (Cork North Central, Fine Gael)
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I welcome that because there is significant public anger. It is important to pursue it and, perhaps, contact Mr. Dukes again. I have a question about growth. Mr. John Moran appeared before the committee yesterday. Much of the commentary appears to forget that Ireland has growth at present, uniquely among similar countries in Europe. However, there appears to be a downward projection for what our growth figures will be. Will that help in the negotiations with respect to the promissory note? At what point does the Minister think the revised growth figures can be made public and how, if at all, will they impact on the budget he is drafting?

Michael Noonan (Limerick City, Fine Gael)
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There are a range of forecasts about growth in Ireland produced by different agencies and authorities at different times. We released growth figures in April and they are operable at present. The next set of growth figures will be released by us in the next couple of weeks. A large of amount of very strong data are coming through for this quarter, especially for the services sector. The Deputy will have seen the export figures and the purchasing managers index. While we have not got a final cut on what the Department of Finance forecasts will be, the trend is that it will be marking up the growth rate for 2012 from 0.7%, which is what we based the figure on, and it will pull back the estimated growth rate for 2013. It is not all bad news. There will be an adjustment upward for 2012 and an adjustment downward for 2013. However, it is not yet finalised so I cannot give the precise figures in advance, but that is the tendency or trend.

Arthur Spring (Kerry North-West Limerick, Labour)
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I welcome the Minister and his officials. I wish to deal with two issues. The first is the cost of funds to our banking system at present. I also wish to hear about the Minister's strategy for the ultimate sale of the banks and how the cost of funds will play into that. The ECB is reducing the amount of funding it is providing to our pillar banks. There are many strategies one can use to sell a bank and many different forms of funding can be used. One can have direct funding from the European Central Bank, personal deposits, corporate deposits or wholesale markets. In any business model one tries to buy low and sell at a higher price, but we are doing the reverse of that at present. AIB lost €1 billion last year. Has the Minister had discussions with President Van Rompuy about trying to provide us with more funding directly from the European Central Bank as we move forward? We talk about trying to capitalise the bank through the ESM. That can be done in a less onerous way than going to the markets. AIB representatives appeared before this committee last week and said they have commenced negotiations with potential investors. However, if we go to the private markets to sell our shareholding in Bank of Ireland and AIB, we will require multi-strand forms of funding going forward. I have a preference for going to the ESM. The reason is that I believe there is a strong argument to be made for our banks to be predominantly funded through the European Central Bank. It would be a great deal cheaper and less onerous. Also, it would be a way of dealing ultimately with personal debt. What are the Minister's thoughts on that?

Michael Noonan (Limerick City, Fine Gael)
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First, how are the banks funded? They take in deposits, and the deposit flow into the banks has increased. If one looks at the project as a repair of the banking system, the fact they are getting an increased flow of deposits is a good indicator that people with savings believe the banks are being repaired. They are now at the stage where I think interest rates on deposits will probably come down because they have a strong flow of deposits. Much of their funding also comes from the emergency liquidity assistance, ELA, funding from the European Central Bank. However, it is not that the ECB is cutting back on the amount of funding available but that with the increased intake of deposits and the deleveraging of the banking system, the Irish banks require less than they did previously. It is a demand-driven scheme rather than a supply-driven scheme.

On the sale of the banks, one would look first at values. We own 15% of Bank of Ireland. We also have preference shares there which will be taken out at some point. We own 99% of AIB, effectively the whole shareholding. The National Pensions Reserve Fund calculates values and it puts a value of between €8 billion and €10 billion on this. This year's figure was revised earlier this year; it was €8.1 billion. Last year's figure was €8 billion. This is inexact, however, because one is assuming there is a willing buyer.

Arthur Spring (Kerry North-West Limerick, Labour)
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What is the Minister's preference between the private investor as opposed to the ESM taking a shareholding in it?

Michael Noonan (Limerick City, Fine Gael)
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What was envisaged on 29 June was that the ESM would be empowered to recapitalise banks directly and that it would commence with the recapitalisation of banks in Spain. The precedent would be applicable to Ireland. That was the thinking. If that model was followed through, the ESM would take a bank share. It would buy the entire shareholding in the case of AIB or take a share in Bank of Ireland.

Arthur Spring (Kerry North-West Limerick, Labour)
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The cost of funds deriving from deposits is far higher than the cost of funds directly from the European Central Bank. Representatives of the pillar banks appeared before the committee last week and they said they cannot envisage interest rates, particularly those applicable to mortgages, going down in the short, medium or long term. To the contrary, they envisage them increasing. That will impose a greater burden.

We have talked about debt, which can be sustainable, but in this case it is crippling sustainability. We are asking a racehorse to do a mule's job. It does not apply to a modern society trying to develop itself. Ultimately, we must revise strategy and talk to the European Central Bank to get further funding directly from it. That can only apply if we are on fixed line strategy with the ESM to take shareholding, as opposed to the investment from private stakeholders who will ultimately benefit on the back of the negligent lending of the past.

Michael Noonan (Limerick City, Fine Gael)
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I will bear Deputy Spring's comments in mind. There are two national interests, which are not always in line. One is the individual difficulties of mortgage holders and other creditors of banks. It is in their interest to have low interest rates. On the other hand, as we are effectively the sole owner of AIB, the other national interest, which is the taxpayers' interest, is to ensure the banks become profitable so there is value in the shareholding held by the taxpayer. When we look at the level of charges and interest rates applied by the banks, the consideration on behalf of mortgage holders contradicts the consideration of making banks profitable. It is a difficult matter.

Arthur Spring (Kerry North-West Limerick, Labour)
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I am glad it has been recognised because I have been saying that for a long time. The cashflow model that sells the bank ultimately needs to reflect the fact that people in the most debt will not be burdened with the largest margins.

Michael Noonan (Limerick City, Fine Gael)
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Deputy Arthur Spring is developing the point I am making. On the ESM, the statement of 29 June envisaged that when banking supervision was put in place, something along the lines suggested by Deputy Spring will happen. The Irish banks are fully recapitalised under stress conditions. Within the current property values, the banks are adequately capitalised. When Basel III regulations on bank recapitalisation come into effect, that may change. It will not change because of new difficulties in the Irish banking system. Basel III is further down the line.

Do the committee members think a fund in Europe, designed as a rescue fund, is the best entity to run an Irish bank? It has no experience of running a bank. Its function is to raise money on the markets and give it out to countries in difficulty. We must consider that point and the arrangements-----

Arthur Spring (Kerry North-West Limerick, Labour)
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The Government has never run a bank before.

Michael Noonan (Limerick City, Fine Gael)
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We do not run the banks.

Peter Mathews (Dublin South, Fine Gael)
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Banks are easy to run if they work properly.

Ciarán Lynch (Cork South Central, Labour)
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Deputy Mathews should indicate if he wants to make a contribution.

Stephen Donnelly (Wicklow, Independent)
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I welcome the Minister. I want to pick up on his comment that there is no question of default. I understand why Deputy Noonan, as Minister for Finance, can say nothing else. For the Minister to start engaging in the kind of things I might say would drive up borrowing costs for Ireland. As a Member of the Oireachtas, however, it is very difficult to hear.

The Minister made some fantastic speeches in opposition, including calling the payments to bondholders a disaster and an obscenity and asking how any Government could stand over them. The Minister laid out why he is doing it and, although I do not agree with all of what he is doing, I understand why he is doing it. Some 40% of the debt is not ours. The markets do not believe there is no chance of default and have factored in a greater than 40% chance of default, reflected in the sovereign risk premium. The Minister cannot say there is any chance of default but I can and I will. It may be necessary and we should always bear in mind that 40% of it is not ours. We would never default on debt that was ours.

Regarding the question of Deputy Dara Murphy on the letter to Anglo Irish Bank and wages, did the Minister send a similar letter to AIB? What is the level of debt surrender engaged in by Bank of Ireland? If the Minister does not know now, he can come back to us. We had an extraordinary presentation by Richie Boucher last week, where he refused to answer legitimate questions. In some cases there was no commercial sensitivity or non-disclosure reason why he could not answer. He thumbed his nose at the Joint Committee on Finance, Public Expenditure and Reform and it was an extraordinary performance. I would appreciate it if the Minister for Finance can find out. In respect of domestic mortgages, has Bank of Ireland engaged in debt surrender to date?

I would love to hear the thoughts of the Minister for Finance on the fiscal union in five years' time. The two-pack is pretty serious. The first part refers to regulations on "common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States". This is serious in terms of national sovereignty. The single supervisory mechanism, the single banking regulator, the common capital requirements and the Stability and Growth Pact are serious matters and we are signing up to them. Can the Minister for Finance give his view on what it will feel like for the Oireachtas to make a budget in five years' time? Will European officials see the budget ahead of time? Will they be able to veto budgetary options the Government of the day would like to engage in?

Michael Noonan (Limerick City, Fine Gael)
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The Chairman and his committee invited me to discuss an ECOFIN meeting on Tuesday. I have given the committee preliminary documentation on the agenda. It is unreasonable to ask me to be held accountable for everything across my departmental brief when I have been invited to discuss the ECOFIN agenda. It is not that I am reluctant to do so but I am hesitant in case I give inaccurate information to committee members speaking from memory when I have not briefed myself on the issues raised and without accompanying documentation. I am quite prepared to answers the questions but I would prefer if members proceeded by way of parliamentary question and tabled written questions. Then, I will supply answers but I hesitate to do so now because I have only the brief on ECOFIN. I briefed myself on that topic last night.

Stephen Donnelly (Wicklow, Independent)
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I am more than happy to withdraw the two questions but the final question was specifically on ECOFIN. Perhaps the Minister can provide the committee with an answer to the first two questions.

Michael Noonan (Limerick City, Fine Gael)
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A number of new conditions are being attached to the budgetary process for ECOFIN countries and for the euro group. The documents in response to the committee's request include the two-pack, which is being negotiated at a trilogue with the European Parliament, the Presidency and the Commission. The documents provided refer to the governance part of the two-pack and some regulations on the common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficits of member states in the euro area. There is also regulation on the strengthening of economic and budgetary surveillance of member states experiencing, or threatened with, serious difficulties with respect to their financial stability in the euro area. There is progress towards agreement with the Parliament but there remain areas of divergence. The Presidency has filed amendments to bridge the gap. Members of the committee are familiar with the six-pack and the provisions of the stability treaty, which was passed in Ireland by referendum in May. It has now been passed by the euro group countries. It feeds into the additional regulatory regime.

The only additional item coming forward is suggested by the German finance Minister, which is that the Commissioner for Economic and Monetary Affairs be given the same kind of powers as the Commissioner for Competition.

Members will recall that the EU Competition Commissioner can take action, without reference back to the college of commissioners, if states are acting against the rules of competition. It is now being suggested that Commissioner Olli Rehn and his successors should have that kind of interventionist role. That would give additional supervision. It remains to be seen whether that comes to anything. As far as I have seen, no formal papers have been filed in this regard to date.

Stephen Donnelly (Wicklow, Independent)
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Just on that-----

Ciarán Lynch (Cork South Central, Labour)
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If I have time, I will bring the Deputy back in at the end. I gave him three or four minutes more than I should have.

Kevin Humphreys (Dublin South East, Labour)
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I thank the Minister for attending this meeting. As time is limited, I will concentrate on the proposed financial transactions tax. Can the Minister briefly take me through how he has formed his position on the proposed tax in advance of this ECOFIN meeting?

Michael Noonan (Limerick City, Fine Gael)
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Our policy position on the financial transactions tax has developed over a period of time. As the Deputy will be aware, the ESRI and the Central Bank developed a paper on the financial transactions tax at my request when it became clear that certain European countries were going to push the matter fairly hard. I wanted the advice I was getting within the Department of Finance to be supplemented by an examination of the possible impact on Ireland of the financial transactions tax, as then envisaged in the Commission paper. We got the paper from the ESRI and the Central Bank and it was published on our website last June.

Kevin Humphreys (Dublin South East, Labour)
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It was provided to the committee as well. I would like to know how the workings of the Clearing House Group contributed to the Minister's consideration of his policy position. The ESRI report weighed heavily on the 1984 Swedish movement to bring in a financial transactions tax. Does the Minister accept that the research done by the ESRI and PricewaterhouseCoopers was very flawed? The financial transactions tax that is now envisaged is very different from the Swedish model and the model examined by PricewaterhouseCoopers and the ESRI. Members of the Clearing House Group who regularly meet representatives of the Department of Finance are advising their senior clients that a patchwork tax would be the worst kind of financial transactions tax and that it would be much better for the EU to have a unified financial transactions tax. Is the Minister prepared to review his policy position on the matter in co-operation with this committee?

Michael Noonan (Limerick City, Fine Gael)
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The idea of a financial transactions tax has been part of political debate for quite some time. The first time I heard it debated in the Houses of the Oireachtas was on the back of the Tobin report, which was very fashionable 12 or 15 years ago.

Kevin Humphreys (Dublin South East, Labour)
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Things have moved on by quite a distance since then.

Michael Noonan (Limerick City, Fine Gael)
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Yes. The proposal at the time involved the imposition of a financial transactions tax at a very small level to fund overseas development aid, in effect. The plan was that it would lead to a big international budget for this purpose. Sweden was the only country to put in place a financial transactions tax along the lines suggested. It was a disaster from Sweden's point of view because it closed down the Swedish financial sector, in effect.

Kevin Humphreys (Dublin South East, Labour)
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The Minister is going back to 1984. We are talking about a different type of tax. As it is a residency tax, it could actually lose revenue. Transactions could take place here but the tax could be paid in other countries. I do not think we are having that serious debate. I know the Chairman is about to cut me off, so I will ask my other question. This committee has asked for the position papers and minutes of the Clearing House Group that meets the Department of Finance on a regular basis to be made available to it. I hope the Minister will respond by indicating his support for the request and for the committee's position.

Michael Noonan (Limerick City, Fine Gael)
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Deputy Humphreys mentioned Sweden and cast doubt on the professionalism of the research that was done by the ESRI and the Central Bank. I think I am entitled to reply with reference to Sweden.

Kevin Humphreys (Dublin South East, Labour)
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It is very different. I pointed out the changes that have happened as times have moved on. I am sure the Minister is aware of them.

Michael Noonan (Limerick City, Fine Gael)
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I know. It is a fact that when Sweden introduced a financial transactions tax, it wrecked that country's financial services industry. The Swedish authorities say that quite openly at meetings. They are very antagonistic to financial transactions taxes as a result of what happened previously. I know the situation has moved on. I set out the Irish policy position on a financial transactions tax in considerable detail in reply to the Chairman's first question here today. The Clearing House Group is run by the Department of the Taoiseach and is chaired by the Taoiseach.

Kevin Humphreys (Dublin South East, Labour)
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I asked the Minister whether he supports this committee's position.

Michael Noonan (Limerick City, Fine Gael)
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I cannot speak for the Taoiseach. The Deputy should table a question to the Taoiseach asking him to release the documents.

Kevin Humphreys (Dublin South East, Labour)
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The last time I asked the Taoiseach, he spoke about streaming committee meetings so there would be transparency. I am making a much smaller request at this stage. I am calling for the position papers and the minutes to be made available to this committee so we can have transparency about what is happening. The Minister mentioned what was done in Sweden in 1984. That was done on the basis of stamp duty rather than on ownership or tax residency basis. That is why it failed. It was done individually.

Ciarán Lynch (Cork South Central, Labour)
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I have to move on.

Michael Noonan (Limerick City, Fine Gael)
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The Clearing House Group is chaired by the Secretary General of the Department of the Taoiseach. It is under the authority of the Taoiseach.

Kevin Humphreys (Dublin South East, Labour)
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Does the Minister support the position of this committee in principle?

Michael Noonan (Limerick City, Fine Gael)
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The Deputy is trying to trap me. If he wants to know whether the Taoiseach will release the documents, he should table a question to the Taoiseach.

Peter Mathews (Dublin South, Fine Gael)
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I thank the Minister and his colleagues for attending. Three things struck me when I looked through the paper. The two main reinforced steel joists of the meeting are the capitalisation of the banks and the role of a central European banking supervisor. The rest of the issues are packed in around those two issues. There is a darkening shadow of debt over Europe. Politicians across the eurozone are beginning to understand that there has been a criminal capture by the financial system of the budgets of eurozone countries. The financial transactions tax might have had an earlier origin with other ideas for funding different efforts across European Union countries, but it is now essentially converting itself into an insurance fund for banks. They get the uneasy feeling that the balance sheets of the 6,000 banks across the eurozone are not as healthy as they have tried to fool everybody about. We had our own banks in last week. The sort of good news from Anglo Irish Bank was that the final estimate of its loan losses might be €25 billion, rather than between €29 billion and €36 billion. That is patently disproved by the facts. It had a €74 billion loan book at the start of the collapse. Half of that is €37 billion. There is going to be a loss of €37 billion, regardless of the mirrored corridors of accounting. When they said their final estimate is €25 billion, that was after taking credit for approximately €17 billion of interest on promissory notes over the term of those notes.

Ciarán Lynch (Cork South Central, Labour)
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The Minister will not have time to respond to the Deputy.

Peter Mathews (Dublin South, Fine Gael)
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I want this-----

Ciarán Lynch (Cork South Central, Labour)
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If the Deputy wants the Minister to nod at him at the end of his contribution, that is fine.

Peter Mathews (Dublin South, Fine Gael)
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I am asking the Minister to bring-----

Ciarán Lynch (Cork South Central, Labour)
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If he wants the Minister to engage with him-----

Peter Mathews (Dublin South, Fine Gael)
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There is an ECOFIN meeting next Tuesday.

Ciarán Lynch (Cork South Central, Labour)
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Yes, exactly.

Peter Mathews (Dublin South, Fine Gael)
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We have to get it on the agenda.

Ciarán Lynch (Cork South Central, Labour)
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The Deputy should ask questions about that meeting. If he does not, I will move on to the next questioner. If he has a question, he should ask it. If he does not, I will move on.

Peter Mathews (Dublin South, Fine Gael)
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Yes. I am going to say that the opening-----

Ciarán Lynch (Cork South Central, Labour)
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The Deputy should ask a question.

Peter Mathews (Dublin South, Fine Gael)
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This is a question. Will the Minister ask his ECOFIN colleagues next Tuesday to consider that the debt is unsustainable in this country, that-----

Ciarán Lynch (Cork South Central, Labour)
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I call the Minister.

Peter Mathews (Dublin South, Fine Gael)
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Hold on. I want to go through my list.

Ciarán Lynch (Cork South Central, Labour)
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The Deputy will run out of time. He has a minute and a half left. He should ask a question to which the Minister can respond. If there is time left, he will be able to ask another question.

Peter Mathews (Dublin South, Fine Gael)
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I am saying that the Bank of Ireland, for instance-----

Ciarán Lynch (Cork South Central, Labour)
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The Deputy is wasting time. I will move onto the next questioner if the Deputy interrupts me once more. I call the Minister.

Michael Noonan (Limerick City, Fine Gael)
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There is no indication that the financial transactions tax will be used as "an insurance fund for banks".

Peter Mathews (Dublin South, Fine Gael)
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I thank the Minister.

Michael Noonan (Limerick City, Fine Gael)
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I have not heard that suggestion from anybody. The main tendency in Europe is that such a tax is needed instead of the European budget being met totally by sovereign states' contributions-----

Peter Mathews (Dublin South, Fine Gael)
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I will put my second question.

Michael Noonan (Limerick City, Fine Gael)
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Would the Deputy let me answer?

Peter Mathews (Dublin South, Fine Gael)
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Will the Minister explain to the ECOFIN people that the capitalisation of our banks could be inadequate?

Michael Noonan (Limerick City, Fine Gael)
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Would the Deputy let me answer?

Peter Mathews (Dublin South, Fine Gael)
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The reason I am asking that question relates to what was said last Tuesday.

Ciarán Lynch (Cork South Central, Labour)
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We do not need the reason. We have heard the question.

Peter Mathews (Dublin South, Fine Gael)
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The Bank of Ireland told us that its loan book is €105 billion and its provisions are €7 billion. That is insufficient.

Ciarán Lynch (Cork South Central, Labour)
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I am moving on, Deputy Mathews. I call Deputy Kieran O'Donnell.

Kieran O'Donnell (Limerick City, Fine Gael)
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I welcome the Minister and his colleagues. One of the points the Minister is raising at the ECOFIN meeting is the revised capital requirement rules. I ask him to outline his view on that matter and what impact he expects the revisions to have on the capitalisation of our banking system.

The Minister referred to the fact that 40% of our national debt relates to the banking system. In that context, I ask him to indicate how that debt has a knock-on effect on our budgetary position. The total interest charge for servicing our debt will be €4.1 billion in 2012, €5.6 billion in 2013, €5.5 billion in 2014 and €5.6 billion in 2015. What is the value amount of those totals that relates to banking?

Michael Noonan (Limerick City, Fine Gael)
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On the Deputy's first question about the capital requirements directive and regulations, it is important that the heightened pace of the trilogue negotiations is maintained and agreement is reached on the outstanding issues before the Basel III deadline for implementation on 1 January 2013. In that context, Ireland welcomes the efforts to reach a compromise on the outstanding issues and we favour keeping the proposed text as close to the Council's compromise text as possible. The prudential capital assessment review assesses the capital requirements arising from expected base and potential stressed loan losses and other financial developments over the medium term and was published in March 2011. The covered institutions are well capitalised at levels of around 15% to 16%. These capital levels for tier one capital ratios are clearly well above the minimum of 10.5% required by the Central Bank. The recent European Banking Authority capital raising exercise did not require further injections into the Irish banks. CRD IV and CRR, therefore, hold our banks to a higher requirement than has been the case before now, and this will help secure the long-term future.

The servicing costs of all the debt from the Irish banking system do not arise in terms of the ECOFIN agenda, but I can provide that information to the Deputy. I do not want to speak from memory because I do not want to put out inexact figures.

Kieran O'Donnell (Limerick City, Fine Gael)
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I raised the issue in the context of the Minister pointing out that 40% of our national debt relates to a banking debt the sovereign took over and which this Government inherited from the previous Administration. The Minister spoke of the knock-on effect of that on the budgetary system. I was just inquiring about the negative impact the bank debt is having on our budgetary position. We have a dead weight of banking debt which has become sovereign debt. I was seeking a flavour of-----

Michael Noonan (Limerick City, Fine Gael)
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We have those figures and I have put them in the public domain by way of a parliamentary question. I will send them on to the Deputy. In terms of helping the Deputy, if he thinks of the promissory note repayments on 31 March every year in respect of Anglo Irish Bank alone, the sum is €3.1 billion. That will go on for about 12 years, and then there is a long tail to it after that of decreasing amounts.

Kieran O'Donnell (Limerick City, Fine Gael)
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As the Minister mentioned the promissory note, what is the interest figure for 2013? I believe there was an interest holiday-----

Michael Noonan (Limerick City, Fine Gael)
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It is quite complicated. As the Deputy knows, the previous Government negotiated an interest rate holiday so it did not hit our budgets, effectively, until the change of Government. Within the sum of €3.1 billion there is a lot of capital repayment built in. The amount is not standard as one goes through the years so, again, in the interest of being exact, I would need to give the Deputy that information later, and I will do so in writing.

Liam Twomey (Wexford, Fine Gael)
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In the context of his ongoing discussions with his European colleagues, does the Minister believe there is more confidence that the European crisis is settling down? Are we approaching a situation where Europe can start dealing with specific problems, like Ireland's debt problem and the deal we are seeking to resolve it? At a meeting of this committee yesterday, one of my colleagues pointed out that if growth is weaker than expected in the next few years that could have a knock-on effect in terms of us being able to reduce our unemployment levels. In that context, getting a deal and more support from Europe could have a major impact on our ability to get out of the crisis we are in.

Michael Noonan (Limerick City, Fine Gael)
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It is certainly in Ireland's interest that Europe would grow at much stronger rates than at present. Some European countries are in recession at the moment and, indeed, we are one of the stronger countries in terms of growth rates. We had a growth rate of 1.4% last year, better than the budget provision of 0.7% for this year and somewhere around the middle of the forecast for next year. We will see in a fortnight's time what the figures will be. Obviously, if we have stronger growth rates our tax take will increase, our deficit will decrease and more people will go back to work. Our model is export-led growth and because of that we need growth in the European Union because Europe is such a big customer of ours. We need growth in Europe to get maximum effect from the model of recovery we are using. Approximately 20% of our exports go to the United States of America, a further 20% go to the United Kingdom but 40% go to the European Union, with the remainder going to the rest of the world. One can see from those figures the importance of growing European economies in terms of demand for Irish exports of both goods and services. We would like to see a European solution that addresses growth and jobs, and the Taoiseach has said on a number of occasions that the main theme of the Irish Presidency will be the growth and jobs agenda.

The Deputy asked how Europe is going at the moment. It is more settled than it was six months ago but many problems remain to be addressed. The Greek problem continues but we hope that progress will be made on that in the coming weeks. Spain still has its difficulties, as Deputies will know from reading the newspapers. Italy, too, has its own difficulties. Places like Cyprus and Slovenia have very big banking problems. Individual countries within the EU all have their own programmes for strengthening their own economies. The difficulties in Europe are not behind us but significant progress has been made. The next big European project is banking union. That should be very helpful to the integrity of the eurozone and the wider ECOFIN zone. We will see how that develops and how rapidly it can be put in place.