Joe Costello (Dublin Central, Labour)

I welcome the opportunity to discuss this important Private Members' motion and congratulate Deputy Penrose for tabling it on behalf of the Labour Party.

I utterly reject the Government's amendment which begins with the now meaningless Government mantra for all it woes: "that the global banking crisis is impacting on economic activity across the global and Irish economies". The word "global" is thrown in twice for good measure in case we missed it the first time. Of course the global economy impacts on Ireland's very open economy but Ireland's banking crisis is essentially a home-grown phenomenon. Ireland's banks broke all the basic regulatory rules and handed out money with the reckless abandon of a drunken punter in Paddy Powers who thinks he is winning when in fact he is losing his shirt. The Financial Regulator also went to sleep on the job.

The collateral damage caused by the banks' negligence is now causing serious damage to the economy. Already, the Government has had to bail out all the main banks with an approximately €500 billion national guarantee and has put the country's financial integrity on the line. This action was supposed to stabilise the banking system and attract the necessary liquidity into the banks' vaults. However, six weeks on, the banking crisis is still upon us and the credit crunch is worsening daily. The banks are not lending to small and medium-sized businesses, as ISME's spokespersons tell us daily. The recent ISME survey shows that 54% of small and medium businesses had sought credit or a credit extension from their banking institutions and had been refused, which is a colossal figure.

The banks do not appear to have the funds to make money available or they are deliberately hoarding any money they can collect to ward off the rainy day of their indebtedness, which has been created by their overexposure to the construction industry in particular. Small and medium enterprises are the back bone of the economy. They have created hundreds of thousands of jobs throughout the country and the figures provided by the Minister recently were 250 small and medium businesses and a minimum of 800,000 jobs.

However, to continue to operate they need to borrow, they need overdrafts and they need a cash flow. The Irish banking system is failing them and in failing them the banks are failing the economy and much worse, they are contributing to redundancies and the dole queues. The 95,000 job losses in the past 12 months and more than 100,000 job losses projected by the ESRI for next year is the abyss facing many Irish families for the first time this Christmas.

What compounds this awful waste of human resources is the failure of the banks to access a ready source of funding that was specifically set up by the European Union to bolster small and medium-sized enterprises throughout the 27 member states. When the autumn summit of European Union Heads of State was held six weeks ago in Brussels the European Investment Bank, EIB, placed the sizeable sum of €30 billion on the table for the banks of the 27 member states to access and loan it to their small and medium enterprises to ensure they were well resourced and did not face a credit crunch in the present financial turmoil. It was specifically for this purpose.

To date, not one of the Irish banks has bothered to draw from this invaluable pot of money while 22 of the 27 member states have grasped the windfall with open arms and are busily using it to oil the wheels of business in their countries and protect the jobs of their citizens. The Irish banks are reported to have rejected this money because it is subject to EU regulation and will not give them the profitable return they became accustomed to during the halcyon days of the Celtic tiger. Their arrogance and unwillingness to change bad habits is costing this country dearly.

Yesterday, the Minister for Finance told us that the European Investment Bank has been in contact with some of the Irish banks. Why is it not the other way around? The Minister has admitted that he has urged the banks to utilise the facility — wonderful. What is the purpose of bailing out the banks with €500 billion of taxpayers' money if the Minister cannot tell the banks that the viability of small and medium enterprises is as important as the viability of the banking system? There must be a quid pro quo. If the banks will not draw down and lend the money that is being offered to them on a plate then what is the purpose of the taxpayer saving them from collapse? They are not carrying out the job they are supposed to do.

Ultimately the buck stops with the Minister for Finance and it is not good enough for him to save the banks and state he is doing so and then stand idly by as they revert to their old discredited and irresponsible practices. Six weeks have passed since €30 billion was placed on the table by the EIB and none of this money is circulating in Ireland, money which could now be protecting Irish jobs in Irish enterprises and which was intended for that purpose. This is another example of the European Union at its best and the Irish Government at its worst.

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