Seán Ardagh (Dublin South Central, Fianna Fail)

I am happy to speak on the motion on the bank recapitalisation. Unlike Deputy Ó Caoláin, I have great confidence in the Government and I commend the Taoiseach, Deputy Brian Cowen, and the Minister for Finance, Deputy Brian Lenihan, for taking action on the two main issues that currently affect our economy. On the one hand there are the country's finances; on the other is the bank situation from which confidence in the business community and growth can be accelerated. The country is in a precarious economic situation and if action is not taken over the next five years to get the finances into equilibrium it will be in a far worse position. The country's ability even to pay wages will be in question.

Over two years, if one takes the beginning of 2008 to the end of 2009, the Exchequer will be down by €25 billion in taxes. The actions to be taken this year, initially to save €2 billion, are only the start of a €16.5 billion programme of expenditure cuts and tax increases over the next five years. Action taken this year will impose hardship on those in the public sector who have secure jobs and pensions. Others in the private sector may have lost their jobs or taken pay reductions. They have insecure pensions. Next year, unfortunately, there will be further impositions with which none of us will be happy. Everybody's standard of living will reduce significantly over the five years to 2013. It will take that time to come out of the difficulties we are in as a result of the recession, the international banking situation and the devaluation of the UK pound.

By the end of 2013 our financial situation should place us back once again on an economic growth trajectory. That will come about because the banking situation will have been righted through the recapitalisation of the two major banks, thereby allowing the commercial and business world to start moving again. Now there is great difficulty in getting loans and money and in moving cash, the lifeblood of business.

As we all know, the problem with the banks started with the sub-prime problem in the United States, followed by the US Government allowing Lehman Brothers Bank to go, effectively, into liquidation. That had a huge ripple effect throughout the entire financial world. In Ireland we had an over-dependence on the construction industry. Property values were at an unsustainable level. As a result, banks had loans on their books which were subsequently valued at much less than the value of the loans. As far as the banking situation is concerned, it is very important that we put a value on those loans. I am pleased that Bank of Ireland has issued a figure of a €6 billion downward valuation on those loans. I do not believe that Allied Irish Banks was as intensively invested in those types of loans but something of that order will probably pertain in its case too.

Deputy Ó Caoláin mentioned the sum of €7 million with regard to the costs of paying for teachers of children who are somewhat disabled, and for the help these children receive in the classroom. That help will continue, not in special but in mainstream classes. That is an expenditure item and is entirely different from what we are considering in this motion, which is an investment of €7 billion in Allied Irish Banks and Bank of Ireland.

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