Frank Fahey (Galway West, Fianna Fail)

I support the Finance Bill and the difficult measures being implemented by the Government to get us out of this financial crisis. There is no doubt but that much pain is involved in the budget and the Finance Bill. The raising of taxes and levies is difficult for everybody but I am satisfied the attempts that have been made are fair. They ensure that those who are earning most are paying most and that those on the bottom of the ladder are paying least. That is not to say that everybody is not making a large contribution from his or her income. It is the only way forward in this crisis. The decision being made now is the same as the one that had to be made in 1987 after several years of procrastination during which we failed to take the hard decisions.

The cuts that have been made to public expenditure, in addition to the increases in taxation, are vital. The reality is that the Government has made cuts in the order of €5 billion in the three attempts that have been made, that is, in July and October of last year and in January of this year. Opposition parties continually call for action to be taken but every time there is a cut to expenditure or an increase in taxation, they cry halt.

I ask both the Labour Party and Fine Gael, and particularly the new candidate in Dublin West, whether they support Deputy Reilly's continual requests for greater expenditure in the health area. Week in, week out, Deputy Reilly and his Fine Gael colleagues call for increased health expenditure. Fine Gael calls for the continuation of cancer services in small hospitals across the country and, at the same time, Deputy Bruton tells us the only way forward is to cut public expenditure and not increase taxation. There is continual hypocrisy on the part of Fine Gael. Its members are speaking out of both sides of their mouths and calling for a general election at the same time. It is about time that Fine Gael gave us consistent policies that will deal with the economic crisis in this country.

I welcome the fact that the Labour Party has tabled a motion tonight on the nationalisation of the banks. The reality is that the Labour Party has opposed the Government in all its fiscal and financial policies on the banking sector. We would now be in disastrous circumstances had we gone along with the Labour Party's proposal not to introduce the bank guarantee scheme. We would have had a disaster had we accepted the Labour Party's proposal not to put equity into the banks. The party criticised the decision to nationalise Anglo Irish Bank and it is now calling for the nationalisation of the banking system. This latter proposal is the one that will bring down the Labour Party. An unbelievably crazy economic line has been taken by the party on banking policy in recent months. It is now calling on the Government, in a motion this evening, to nationalise the banks.

The only way forward is the creation of a model such as that represented by the national assets management agency, NAMA. Today's Financial Times states that, today or tomorrow, Germany will be announcing the setting up of a number of NAMA-type agencies to deal with the toxic debts in that country. No country in the world bar Iceland has nationalised its banks. Now it is Labour Party policy to nationalise the Irish banks. What circumstances would Dr. Michael Somers and the National Treasury Management Agency be in if we were to nationalise our banks tonight? What circumstances would they be in when borrowing on international markets to deal with our borrowing requirement? If nationalised, what position would the banks be in when trying to borrow in international markets? It is the most crazy, stupid proposal I have heard from any party in many years in this House.

Deputy Gilmore stated during the Order of Business this morning that we should nationalise the banks and then clean them up. I challenge him to spell out exactly what he means by cleaning them up. How exactly does he propose to deal with the now very significant debts, which are now bad debts and must be taken out of the banking system? The reality is that Irish banks will not be able to re-introduce a positive lending policy until the toxic debts they hold are taken off them. The NAMA model, if established properly, represents the way forward.

NAMA will take over the bad debts. It will not bail out the banks and certainly will not bail out the developers. The developers will be the first casualties, and rightly so in respect of any developers who overstretched their ability to run a good business. It is the developers who have toxic debts who will have to be liquidated. There are many developers in this county who have the ability to trade their way out of their difficulties given the time and the opportunity to do so. I am confident that the NAMA model will work. It is vital that the valuations of the assets be accurate and that those involved with the agency know the property, banking and accountancy businesses. It is the property business that they need to know most.

When NAMA was introduced in the House, Deputy Gilmore was very critical and sarcastic regarding the fact that a large percentage of the debt that NAMA will be taking over from the banks is foreign based. However, I am confident that will prove to be very good for the Irish banking sector. If up to 30% of Irish banking debt is overseas, we can be confident that, by and large, it will be dealt with very successfully.

An Irish banker in New York contacted me recently and gave me a formula that I hope to pass on to the Minister for Finance. He stated he could manage the Anglo Irish Bank portfolio in New York very successfully and would return a profit for the bank through the proper management of that portfolio. Furthermore, the man stated he is confident that a reformed Irish banking sector will be in a position to avail of the opportunities that will be available internationally to return to profitability as a result of the downturn that has occurred in the banking sector internationally.

While we have serious problems at present, I am confident that the Minister for Finance, Deputy Brian Lenihan, and the Taoiseach, Deputy Brian Cowen, have chosen the proper way to deal with the banking sector. It is vital that the NAMA legislation be introduced as quickly as possible, that the NAMA model be outlined to the country as quickly as possible and that the agency be set up so we can take the toxic debts off the banks. This is the only way they can return to borrowing internationally and lending to good businesses. This is the biggest problem and challenge facing the country. No business has the cashflow or credit facilities to do its business successfully. It is of the greatest urgency that the Government makes the decisions on NAMA and passes the necessary legislation.

I will listen with great interest this evening to Deputy Gilmore outlining what he would do with the nationalised banks he wants to create and how he would deal with the toxic debts. His proposal in this regard is the most crazy economic proposal we have heard in this House in a long time.

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