Eamon Gilmore (Dún Laoghaire, Labour)

I have listened carefully to the Taoiseach's reply to Deputy Kenny and, when taken with his replies to questions on the economic situation in the past couple of weeks, I have come to the conclusion that the Taoiseach and the Government do not know what they are doing regarding the banks. The Government's handling of the economic situation is downright incompetent at this stage. Since the Taoiseach last answered Leaders' Questions in this House last Wednesday, there has been a succession of extraordinary developments in respect of the economy. The Minister for Finance told Deputy Joan Burton in the House last Thursday that the economy would shrink by 4% next year. In an interview with Ursula Halligan last Friday night, the Minister stated that the first the Government knew of the economic downturn was in July. However, people have been losing their jobs and businesses have been closing for the past year. Moreover, at the weekend commentators suggested that unemployment will rise above 300,000, or 10%, next year and that 14,000 householders are three months or more behind with their mortgage repayments at present.

Members have learned in the past couple of days that the Government intends to draw up an economic recovery plan. Two weeks ago, the Taoiseach told me in the House there was no need for such a plan, as the Government already had one, which was called the national development plan. I now hear that proposals are being developed, some of which ring familiar. They are close to what has been proposed by the Labour Party for a number of months and to what Deputy Burton and I were discussing at the Labour Party conference in Kilkenny two weeks ago. While plagiarism is a form of flattery, I wish to see the exact colour of the Government's proposals.

On Sunday night, a €10 billion package to recapitalise the banks was announced. The Taoiseach has told Members that this recapitalisation will not take place until January and that the Government is waiting for the bankers to come in with their proposals. Who is calling the shots? Is it the same bankers who landed the banking system in the problem that manifested itself in September and has continued thereafter, or is it the Government? I had thought that one of the outcomes of the guarantee scheme was to be that it would be the Government, through the Minister for Finance, that would tell the banks what was what and not the other way around.

The Taoiseach now has told Members that the recapitalisation of the banks must await some proposals from the same bankers who still are in place. They have changed nothing, it is business as usual and they will tell the Government what to do. Moreover, this will not take place until January. Will all the banks still be around next January? Can this wait until then? My understanding is that legislation will be required if the Government intends to use money from the National Pensions Reserve Fund. However, it is proposed that the Dáil will not reconvene in Leinster House until the end of January. Is the Taoiseach seriously suggesting that Members will close up shop on Thursday and that the issue of bank recapitalisation will not be addressed until the end of January? That is the effect of what he proposes to do, if he intends to use the National Pensions Reserve Fund.

The Taoiseach should answer a couple of simple questions. First, how much, in ballpark figures, of the proposed €10 billion will be drawn from the National Pensions Reserve Fund and how much from private funds? Has the Government identified the source of the private funding that will recapitalise the banks? Will the Government take equity in the banks or is an underwritten arrangement envisaged, as seemed to be implied in the statement? When will legislation to allow money from the National Pensions Reserve Fund to be used be brought before the House? The Taoiseach observed that the statement issued on Sunday night was to provide reassurance to the markets. Given the markets' response since Sunday night, does he seriously suggest this can wait until January or will some action be taken this side of Christmas that will stabilise our banking system and ensure that credit is released for businesses that are uncertain whether they still will be in business by the first week of January?

See this speech in context