Michael D Higgins (Galway West, Labour)

I welcome the opportunity to say a few words on this Bill. I listened with interest to those who suggested the Bill is necessary to re-establish trust in the lending and credit relations, particularly between banks.

There are those of us who have made reference to this in terms of "whether". The Minister, Deputy Gormley, asked whether, if there is a blizzard in the United States, we can be far behind. It is important that the Irish public, who are watching this, will require of us that we make a proper analysis. The reality of the United States, for example, was that there was a liquidity crisis and the reason the legislation was not passed in Congress was that many representing their constituents felt that the way in which the United States problem was being approached should not require the purchase of €700 billion worth of toxic debt, the equivalent of approximately $2,200 per taxpayer in the United States. There were several other ways in which one could have addressed the liquidity crisis. The IMF, in a conservative document looking at 42 banking crises internationally, showed that few — I think ten, including Paraguay and Pakistan — had got involved in purchasing toxic debt. That is a reality.

It is not about "whether". Neither is it about, unfortunately, some sort of Lego approach to the economy about which the Tánaiste is talking about — tools in the toolkit. It is about giving a guarantee and people will reasonably ask what we are guaranteeing. One turns then to the Minister for Finance and the Taoiseach.

I suggest the last thing the public wants is a guarantee that things will go on as they have done. They do not want that. They certainly do not want a version of the economy that has been qualitatively changed since the time growth was sustained by export performance to a time when one had high rates of growth based entirely on the revaluation of the property base of the economy. Frankly, the message I get from constituents is that people want an end to that. They want an element of transparency. For example, the six institutions mentioned in the legislation differ entirely in their exposure to risk. Some are heavily exposed, as has already been established in the financial accounts, in relation to commercial property liabilities; others are not. It is nonsense to be using phases such as "the banks" because they differ.

We are interested in restoring such liquidity that will create and sustain employment and that will turn the economy around in a positive way, but where is there any suggestion of that in the legislation? The Minister takes extraordinary discretionary powers in dealing with the banks, but there is no evidence that he is taking any power to change either regulation or credit policy.

It is important to place on record, just to help those who are interested internationally, that there has been a failure of regulation internationally but, much more importantly, a model has failed. According to that model, that goes back to Von Hayek and on through Freidman, unrestrained growth, by capital staying mobile, can go for ever. It has failed. It is over. Therefore, people are looking for versions of assurance that will, as they stated in the discourse in the United States, enable people to take out loans, to buy cars and to fund the stock in their shops.

It is exactly the same in Ireland. People are asking, for example, if the banks be different for those who want to start small businesses or will the banks continue facilitating property purchases of a speculative kind, many of which are not within the Irish economy at all? The Minister for Finance will be well aware of the amount of property that has been purchased externally and funded by the Irish banking system. It is a matter with which he does not deal.

I intend to return on Committee Stage to the fact that the Minister is embarking on a constitutionally frail exercise. In several places he suggests that he will consult with such Ministers as he finds necessary, but not necessarily with the Cabinet. That will not stand long. Then several other times he takes powers of a discretionary kind that are not related to any sensible credit policy or do not offer us any future regulation. A good example of this is in page 10 of the Bill, which states "on such terms as the Minister sees fit". This is sloppy drafting and no Minister should be given the powers of discretion the Minister seeks in the legislation. We will return to this on Committee Stage.

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