Seán Barrett (Dún Laoghaire, Fine Gael)

At that stage the Members on the Government side of the House will understand the value of €1 billion. The business of it being only €1 billion here or there and only an estimate is unacceptable. It is an estimate which involves making commitments to bondholders in terms of pounds, shillings and pence. This is not monopoly money and these are the facts.

Someone told me we had no other option and that as a State we cannot dishonour bonds that banks took upon themselves. Since when was this the case? The bondholders who gave this money knew exactly the risk they were taking. Any dog in the street could see the likes of Anglo Irish Bank and others were pumping money into property and escalating values that no one could justify. They took the risk. Why must the taxpayer now carry the can because these people took such a risk?

The State will be in debt such that bondholders will not be prepared to touch us, never mind the fact that we were supposed to back up banks' debts. If we get ourselves into such debt we will either pay a very high premium for any moneys that we borrow or we will not get any money in the first place. The options are far greater for the State than for banks. I have listened to those who state that we should all march up the stairs blindly and support these proposals, that it is only a few billion euro here and there, that, sure, it will never happen and it is all nonsense. No one has taken into account the next wave of debt that will occur in banks as a result of defaults on mortgages and commercial loans.

Anyone who went to the trouble of reading the recent European Commission's report would have noted that the report predicts that in 2010 the EU economy will contract by 0.1%. There are variations between countries with a decline of 4.7% predicted for Lithuania, a decline of 3.2% for Latvia, 2.6% for Ireland and 1% for Spain. This is not over yet. An independent report from the European Commission informs us that the prediction is that in 2010 the economy in Ireland will contract by 2.6%. However, we hear comments to the effect that it has all bottomed out and it is all the way up from here on. Those comments do not stand up to the facts. This is data from an independent report from the European Commission.

I realise time is short but I also wish to question the figures provided by the Minister in his opening contribution to the debate. He stated that the funding of €54 billion was borrowing from the ECB and that we would borrow at a very low interest rate of 1% with a 0.5% premium. However, he assumes the rate of 1% will remain for the next ten years, although all the professional forecasts indicate that long-term rates will rise to 3.8%. That figure will then be added to the 0.5% premium. The Minister's calculations are based on the assumption that the 1% interest rate will last for the next ten years, which is not factually correct. The information that the House has been given is factually incorrect. The fact is that the long-term forecast is for the ECB rate to rise to 3.8% over a ten year period. If we add the 0.5% to that, the rate will be 4.3%. In money terms, in case anyone on the Government side of the House is interested, this amounts to €10 billion over ten years at a minimum. The attitude is that it is only €10 billion and the Minister is pretending that the 1% rate represents cheap money. He sent out every Minister of State and backbencher with a script to persuade the public that the Opposition was acting irresponsibly and that it had no ideas.

See this speech in context