Pat Rabbitte (Dublin South West, Labour)

I wish to share time with Deputy Tuffy.

The purpose of the motion is to focus on the real fear that is out there — fear of losing one's job, fear of losing one's home, fear of the unknown and fear of emigration starting all over again. However, the opportunities in the usual economies that traditionally accommodated outward migration from Ireland are fewer now than used to be the case. The need is for the Government to take a grip, to convince people that it has a plan and, if not to inspire, to at least instil confidence.

The problems confronting the Government are exceptional — the Lisbon treaty, the banks and the economy. Any one of these issues is challenging; all three together is daunting. We, in opposition, should admit that but the Opposition would not be doing its job if it did not point out the Government has contributed significantly to the depth of the hole in which we find ourselves in respect of each of the three issues. Perhaps the Lisbon treaty referendum was unwinnable at the time but it was mishandled by the Government. On the banks, the Government has gambled the country's solvency without any tangible results for the SMEs looking for the restoration of normal credit lines to maintain employment and to stay in business. On the economy, the Government has been amazingly unsure-footed and is flying in the face of the international trend by levying higher taxation without setting out any plan for economic recovery.

The failure to communicate confidence is worsening the gloom out there. People feel the Government parties are making it up as they go along. According to themselves, Ministers only engaged with the banking crisis when our banks were facing imminent collapse. I have never believed that version but that is the version fed out by the Taoiseach, the Tánaiste and Minister for Enterprise, Trade and Employment and the Minister for Finance. Since 30 September, the same Ministers have prevaricated as to the correct response, indeed as to any response, to the credit famine. At first they conveyed the impression that they believed the banks' claim there was no need for capitalisation. Gradually they have come around to acknowledge the need to address capital adequacy ratios but assert that State equity would only be considered as a last resort.

As a result we are now gambling with private equity consortia whose routine practice is to come in, make a killing and get out. The senior Ministers then echo the banks warning that even after they are appropriately capitalised, it will not necessarily follow that they will resume normal lending. We are bluntly informed by bank chiefs, whose enterprises and personal wealth have been rescued by the taxpayer, that loans to deposit ratios will determine their lending policies during the recession. The same banks demonstrated little concern for loans to deposit ratios during the boom and, in some cases, encouraged reckless borrowing that threatens our economic recovery.

The international financial tumult, falling stock markets and fiscal crises are not always intelligible to all of our people but everyone understands the fear of losing one's job. If Government cannot persuade banks to resume normal credit lines more and more people will lose their jobs. The figures are frightening. For the first time since 1999, the number at work has declined and almost 100,000 more people are on the live register than 12 months ago. Altogether more than 250,000 people are on the live register and the figure is rapidly climbing towards 300,000. The Government's summer time mantra that "the downturn won't be like the 1980s" is already wishful thinking.

The last thing this crisis needs is for viable small and medium enterprises to shed workers because the usual credit lines no longer apply. From the outside, one gets the impression the bank chiefs' response to being bailed out is to resist Government cajoling that they should put their house in order. They do not apparently acknowledge their unique position in our economy and in our society. The Government seems to be expected to support them but they do not have to reciprocate. Who is to dictate the new architecture of banking in Ireland? It appears the Government is prepared to acquiesce in private capital funds dictating the shape of banking in the future. The Government should have drawn on expert opinion to fix a strategy that would determine the new architecture rather than having the new architecture imposed on it by venture capital.

For example, it would be healthy for bank customers to have a third force in Irish banking, assuming the two lead banks can be recapitalised. If leaked documents about the Educational Building Society are accurate, then there would appear to be obvious synergies between the EBS, Irish Nationwide and Irish Life & Permanent plc. Why should Government acquiesce in Irish Life & Permanent plc becoming the icing on the cake for a new private consortium buying into, say, Bank of Ireland? We will have to live for a long time with the effects of the imminent restructuring. If the Government does not get it right, awful damage will be inflicted on our economy.

See this speech in context