Brian Lenihan Jnr (Dublin West, Fianna Fail)

I move: "That the Bill be now read a Second Time." This miscellaneous Bill contains a number of distinct, important provisions and it can be broken into four parts. First, there is a provision to give effect to the continued operation of existing direct debit mandates after the introduction of the Single Euro Payments Area direct debit scheme; second, there is a provision for the transfer of assets of certain pension funds to the National Pensions Reserve Fund; third, there is a provision to allow the Minister to extend the period for which financial support can be provided under the Credit Institutions (Financial Support) Act; and, fourth, there are a number of amendments to other legislation.

I wish to deal first with Part 5 of the Bill which makes a technical change to enable, with Oireachtas approval, the extension of the guarantee contained in the Credit Institutions (Financial Support) Act 2008, beyond the current expiry date of 29 September 2010.

I have been open and transparent about my approach to this issue. I note the considerable amount of discussion on this matter in the House today. This issue was first signalled on 11 February last in the context of the announcement of the details of the recapitalisation programme. It was again signalled on 7 April in the supplementary Budget Statement to the House. The reason it was signalled is that it is essential to revisit the current guarantee, subject to European Commission approval and consistent with the EU state-aid requirements, in ways which will support financial institutions in Ireland in accessing longer-term finance. As this House is aware, Ireland was one of the first member states to introduce a guarantee. The other European states have now either explicitly or implicitly introduced such guarantees. We are not unique but many of those guarantees extend far beyond the expiry date of 29 September 2010 and, hence, financial institutions in these countries have a considerable competitive advantage over our banks. It is essential not to extend the entire guarantee but to modify it to ensure our institutions are not put at a competitive disadvantage by virtue of the more extended guarantees which other jurisdictions have made. This is the essential issue here. There is no power in this Bill to allow me to extend the guarantee on the stroke of a pen; a positive resolution of the Oireachtas will be required were such to happen. It is subject to EU state-aid requirements and the amendment of the Act to facilitate longer-term debt issues by participating institutions of up to five years maturity, in accordance with the Budget Statement, is essential. The necessary modification of the guarantee may well take place from the commencement of the statutory instrument. Access to longer-term funding is in line with the mainstream approach in the European Union. It will contribute significantly to supporting the funding needs of the financial institutions, to secure their continued stability and to enhance their potential to discharge their central role in facilitating economic activity. This will require state-aid approval.

I wish to make clear at this stage that there is no question of issues of subordinated debt being covered by any such extension. That is not the issue involved and, unless that issue be raised, I am anxious to point out and to put on the record of the House that dated subordinated debt will not be part of any such extension.

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