Martin Mansergh (Tipperary South, Fianna Fail)

One can only contrast the eagerness of Opposition parties to debate at every opportunity the huge economic challenges facing the country with their reluctance to dwell on the economy, if it could be avoided, a couple of years ago in the run-up to the last general election. It strongly suggests that the wisdom now available in hindsight was not as obvious to parties opposite then. Their programmes bought into standard growth projections and most of their criticism then took the form of repeating endlessly that the country was awash with money and that Government should be spending and investing more and taxing less.

The Government is, today, trenchantly criticised by many commentators, including some in the print media, which played a full part, in colour supplements, in hyping up the property boom, a principal cause of our banking difficulties. They are now facing some of the same problems as the State, namely, the yawning gap between falling revenue and an over-ambitious level of expenditure.

The principal objective of the Government is to stabilise the economy, employment, the public finances and the banking system. Two US Democrat state senators paid a courtesy call on me in my office yesterday. They commented that the media coverage here was just like at home and that their critics, like ours, underplayed the global factors in the crisis and wanted, in the same simplistic manner, to heap all the blame on - in their case - the state majority.

Before speaking more specifically on the banks I wish to declare an interest. One of my daughters is in middle management in AIB, albeit on maternity leave since last December.

Since last September, we have had to take an array of measures to protect our banking system, including the nationalisation of Anglo Irish Bank. As a general rule, nationalisation should be a last resort. We have gone rapidly from a situation where our main banks were among the most profitable and deemed to be among the most dependable of our private commercial institutions. I have no doubt that despite the traumatic and chastening developments of the last six months, they can become profitable and dependable again without ever returning to recent excesses. As a condition of guaranteeing deposits and recapitalising the banks, the State, as set out in detail by the Minister, will earn a significant return on its investment and, indeed, has the potential of gaining substantially from the acquisition of the assets that represent bad debts at this time.

Nationalisation means taking over uncritical responsibility for bad debts without first settling a price for them. It means having to fund all the institutions in question. It will create far greater financial pressure for amalgamations and redundancies. It would not provide any short cut to easier credit, given that the State needs to maintain its financial credibility. Small business is under great pressure from bankers and from both debtors and creditors. Nationalisation is not a short cut for solving these problems, addressing which is built into the Government's approach to its role vis-À-vis the banks.

While I accept that the alternative policy to the Government's, of wholesale nationalisation even if temporary in intent, is advocated by people coming from a wide range of directions, the Labour Party and those trade union leaders who share the same view are motivated in part by this unexpected opportunity to validate a democratic socialist ideology. I am not suggesting that the Labour Party would, necessarily, follow that if it were in Government. While I have as little time as the Labour Party for cavalier capitalism and ultra forms of neoliberalism that, in their folly, were until recently propagating the notion that the State, now so visibly needed, was practically redundant, the answer is not a reversion to 1970s style socialism. We need a healthy, balanced, social market economy with neither adjective, social or market, deleted. If we were to depart from this, it would represent a major change in direction and damage investor confidence. As the Taoiseach and the Minister for Finance stated, only Iceland has adopted the path advocated by the Labour Party in this crisis and we are not in that category.

Humanity has a regrettable tendency to extrapolate, indefinitely into the future, either boom and bloom or doom and gloom. The reality is that we are in the most severe phase of an economic cycle and we should not do anything to prolong the day when recovery begins for us. There will always be economic cycles. Some weeks ago I was much cheered by a businessman in his late 60s who owns several retail shops when he stated outside church, "Please God, we will live to see the next depression."

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