Olivia Mitchell (Dublin South, Fine Gael)

Despite the evident lack of interest in this legislation, in many respects it is little short of cataclysmic. We would regard it as such in other times, although at this stage we may consider we have seen it all and cannot be shocked further. This is another sacred cow, self-evident truth and core principle being turned on its head and perhaps jettisoned altogether. I refer to the pensions reserve fund which, despite some recent losses, represents the last tangible evidence that there was a Celtic tiger and that we were capable, as a country, of providing for our future and pensions. It was a small cushion that we could salvage from the years of the raging Celtic tiger. We are being asked to raid that fund in order to save the banks. More than that, we are being asked to purloin the contributions for the next two years, amounting to €3 billion. The way it is referred to suggests the sum of €3 billion in the next two years will be given at no cost but in reality the money must be borrowed at far from favourable rates, if the Government is capable of borrowing that much. That is one sacred cow but another is the absolute independence of the National Treasury Management Agency which is also being breached. The agency is being directed, at the whim of the Minister, to make investments in financial institutions. I use the word "investments" advisedly because I do not believe they are investments.

The sum of €7 billion is not mentioned in the legislation but we are enabling the Minister to direct that this amount be invested. We are being asked to vote to allow him to direct the National Treasury Management Agency to invest in any bank up to any value; we do not know the figure the Minister will direct the body to invest. It is an absolute reversal of the terms of the original legislation under absolute independence was given to the agency to make financial investments only in the public interest. It was completely independent of the Minister of the day. Under this legislation, the Minister, without further recourse to the Dáil, will have full authority to order the purchase of any amount of shares in AIB or Bank of Ireland, which amounts de facto to nationalisation of the banks. We may be moving in that direction but I hope not, as the implications will be enormous for the country. If the dust ever settles, we must have a viable financial services sector. If we want to have anything more sophisticated than a sub-post office, we must be very careful before we go down that road. Whether we eventually go down it, we cannot bury the matter in this legislation. That step is too big and must be clearly flagged and discussed, and only taken after every other option is fully explored.

The Government persists in calling this an investment of €7 billion but nothing could be further from the truth. An investment would be entered into freely with the expectation of some reward. Even the Government in its most optimistic mood would not genuinely expect a reward, not in our lifetime or within a reasonable timescale. If it does, it is not dealing in reality. The process is not being entered into freely. The players are being brought, kicking and screaming, at a time of the banks' choosing, for an amount of their choosing and probably on their terms. That has been the nub of the problem. I am sorry the Minister is not present to listen to what I have to say, as the Government has not taken control of the financial crisis, any more than it has taken control of the fiscal crisis. At every stage, by the time it eventually took action, the nature of the crisis had changed so much that the solution was already inappropriate, too little, too late and always extremely costly.

As my colleague has noted, Fine Gael is opposing this measure. It is akin to pouring money into a pot with a hole in the bottom. Perhaps it will give us a brief respite from market disbelief regarding the state of the banks' assets but it will not last long. There is a reprieve while the markets turn to eastern European banks but the pressure will return, unless we take the action that sends messages of confidence. Even if such messages were sent, they would do absolutely nothing to achieve our goal of increasing the level of credit provided for small business.

Reading today's newspapers, by AIB's own admission its liquidity ratios will be adequate when the bank is recapitalised. In other words, the recapitalisation is required to reach the liquidity figures required by law. If the banks need this capital, they will hoard it rather than lend it to business or those seeking mortgages, etc. It is a fallacy that that goal will be achieved.

My colleagues, including the party leader, as well as Deputies Bruton and O'Donnell, have made suggestions in good faith about the direction we should take. I ask the Minister to listen to these suggestions, as something must be done about extending the guarantee which is as damaging as anything else in terms of confidence in the banks. There is also the model of a good bank to consider in recapitalisation.

The approach and measures we must take should be dictated by what the end game is and what we want to achieve in the long run, not by the minimum measures necessary to get us through next week or the week after and certainly not by dancing to the tune of the banks and the level of interference they find acceptable, but that is what has been dictating the Government's approach. It has been listening to the banks on each occasion in terms of what they need rather than what the country needs and where we need to get to. The attrition rate of this approach in terms of confidence in the banks, the economy and the Government is enormous. It is sapping the Government's ability to solve any of the problems facing us. Its drip, drip approach, as I mentioned, is always too little, too late and is sapping the lifeblood of the country, financially and psychologically. It is utterly debilitating, enervating and destructive and has to end with some decisive comprehensive action, not only for the banks, important as that is, but also to address the country's finances.

The Government has been in denial about the country's finances in recent months and the gaping hole in our finances has increased in size from €5 billion to €10 billion to €15 billion to €18 billion. Today we find it is €20 billion. Does anybody honestly believe it will end there? It will not stop increasing, unless the Government takes decisive action. It can dress it up any way it likes, but we are facing a third budget within one year. How can we expect ordinary people to plan their lives and finances and have realistic spending plans if they do not know what will happen with the Government's finances and what it will spend. How can businesses plan in a climate of such uncertainty? This incremental piecemeal approach is destroying and killing the country and must stop.

See this speech in context