Ulick Burke (Galway East, Fine Gael)

Last evening the Minister for Finance, Deputy Brian Lenihan, introduced Second Stage of this Bill by stating that the Bill was needed "to allow the State, through the National Pensions Reserve Fund, to invest in Allied Irish Bank and the Bank of Ireland under the terms of the recapitalisation programme announced on 11 February." One of the first reasons outlined was that the State would not let any relevant financial institution fail, with a second reason being that any State involvement in financial institutions would protect the interests of the taxpayer.

We have seen everything this Government, the Taoiseach and the Minister for Finance has attempted to do. We are now told there will be a fifth attempt at rectifying the country's financial position, and we have been promised a budget in the first week of April, as announced by the Taoiseach this morning. Every attempt made until now has obviously failed. It is not just a matter of anybody in this House saying that it has failed, as the international markets have clearly outlined through what has happened to shares and so on, that there is no confidence in what the Government and Minister for Finance has done to date.

The Minister for Finance stated that "through the bank guarantee scheme we created a space to assess for further measures." How much space does the Government need before it takes realistic action to correct the position? We are now told that we must wait until April for a corrective budget but only a few days ago the Tánaiste said the finances were fine and under control. A couple of days later we are told we need €5.3 billion. We also need a mini budget to rectify this situation. All of this clearly indicates that nobody in the Government or in the Department of Finance has been realistic or capable of correcting the situation. When difficulties arose in recent decades, we had good advisers and prudent people in the Department of Finance who were capable of advising the then Government and Minister for Finance of the difficulties that might arise and how to correct them. I must say, without fear of contradiction, that the personnel in the Department of Finance have failed during the past 12 years when there was a boom to indicate to the Government of the day and to Ministers that they should rein in on their policies that resulted in the wastage of public finances on various schemes. They never warned the public at large or anybody else, although I am not sure whether they warned the Minister for Finance or the Government, about what approach that was needed. They had not recognised the approach that was needed prior to the last general election when the then Government said that its members were the only people who could handle the economy. The economy has been in autopilot mode for the past six or eight years. Regrettably, confidence in the personnel in the Department of Finance must be at an all time low, not only among the public but also among people in Europe.

What was needed was a degree of trust. From mid-summer 2008 until two days ago the banks, particularly AIB and the Bank of Ireland, said that everything was fine and that they had the resources and capacity to lend, but nothing could have been further from the truth. The revelation in recent days that AIB handed out loans to the value of €5.4 billion to 30 developers shows that it, like Anglo Irish Bank, was involved in the same routine. It was competing with a discredited bank and it also engaged in such dealings. I am sure AIB will reveal its difficulties in due course. The only thing Mr. Sheehy could do in the context of declaring these loans was to say he regretted lending to those 30 people. Regret was the sentiment he expressed. This morning we heard another chairperson of the board of a financial institution say she was sorry. It was the first such effort, but pressure was brought to bear on her to make that apology for that bank's dealings.

The AIB has written off €2.9 billion in loans. How could anybody have confidence that the proposal before us will be successful? The international markets have declared this recapitalisation scheme for the banks a failure given that the value of shares in AIB and Bank of Ireland are insignificant and have fallen so low that they have nearly gone off the horizon.

One of the many conditions of this recapitalisation programme is that the banks would provide funding for small businesses to continue in operation. However, that is far from being the case at the coalface. The Bank of Ireland and Allied Irish Banks have committed to public campaigns to actively promote small businesses and mortgage lending at competitive rates to increase transparency about the criteria to be met. When the Minister announced the recapitalisation programme, that was the stated commitment given by AIB and the Bank of Ireland, but nothing could be further from the truth. They have contracted the resources being made available to small businesses. Many ordinary small businesses throughout the country are on their knees begging those lending institutions, Bank of Ireland and AIB, to provide even overdraft facilities to allow them to continue in operation not to mention financing prospective projects. These are the people who are providing employment and likely to retain workers. Unlike many international companies that have relocated — which were supported to a large extent by taxpayers — resulting in people losing their jobs and having to seek employment overseas, these small businesses will remain in this country. If there is not a sea change in the attitude of banks to lending proposals at local level, serious problems will arise.

Many small businesses have closed and the towns in which they were located are becoming ghost towns. Reference was made to such places in County Louth, close to the Border. That trend is not necessarily unique to that area. It is happening throughout the country. I regret there is a commitment in this scheme to provide additional finances for Enterprise Ireland and IDA. There is a need for the Minister and the Government to reassess the cost of each job created by those institutions because something has gone out of control within those organisations in terms of what they are trying to create.

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