Joan Burton (Dublin West, Labour)

We all know the people in power at the top of the Government - the Taoiseach, Deputy Cowen, the Minister for Finance, Deputy Brian Lenihan, and the Tánaiste and Minister for Enterprise, Trade and Employment - are the aristocrats of Fianna Fáil with three generations of party pedigree. Truly, they are aristocrats because like the Bourbons, the Minister for Finance's non-appearance in the Chamber proves he has neither learned nor remembered anything. It is a shame and a disgrace that the Minister for Finance should consciously decide to absent himself from this House on a matter of such national financial significance.

Over the past 14 months, the Minister for Finance has not given any valid justification for including dated subordinated debt among the guaranteed liabilities of the banks. Subordinated debt is risky, a form of quasi-equity debt, which carries a high yield to compensate for the risks involved. Guaranteeing subordinated debt is a bailout for speculators. A consistent Fianna Fáil theme is bailing out the developers, the banks and speculators. While civil servants are vilified by Fianna Fáil backbenchers in the national press, here Fianna Fáil is doing the business for the speculators.

In this guarantee extension, the Minister appears to have seen the error of his ways by excluding newly-issued subordinated debt from the extended bank guarantee under European Central Bank rules. There is, however, no justification for continuing to guarantee existing subordinated debt on which the European Commission has directed the stopping of coupon payments.

At Anglo Irish Bank it was widely known in the aftermath of the original bank guarantee that Mr. Seán FitzPatrick, then chairman of the bank's board, was a significant holder of subordinated debt in that institution. That is the man who was so admired by the former Taoiseach, Deputy Bertie Ahern, who fondly described him as his friend, "Seánie". From the text of the scheme itself, the dated subordinated debt lower tier 2 and asset-covered securities issued by a covered institution before the commencement date and which are covered liabilities shall continue to be guaranteed. That is a disgrace and an outrage.

Those subordinated debt holders should be negotiated with and take part of the hit. The Governments of Qatar and Dubai said the same during the recent collapse of Dubai World. Those who take the risk while they may get a high return must also take their share of the losses.

This week we learned more about the preference share arrangement and the payment of a coupon between AIB and the Government. Originally the Taoiseach and Minister for Finance promised it would yield a profit to the taxpayer. Last week the European Central Bank said the coupon rate cannot be paid and that these shares will have to be converted into equity. The €3.5 billion pumped into AIB is, therefore, to be converted into a 25% equity stake. The taxpayer will have paid €3.5 billion for 25% of a bank which today could be bought in its entirety for €5 billion. That is a loss the taxpayers - both public and private sector - will have to take on their backs as a result of the grotesque incompetence of the Taoiseach and the Minister for Finance on behalf of Fianna Fáil.

The National Pension Reserve Fund will carry a loss as soon as this arrangement is done of about €2.25 billion on that €3.5 billion investment. We are doing this for the banks in the run-up to a budget in which parents in receipt of child benefit and those in receipt of various social welfare assistance will have their payments cut. Low-paid public servants on €30,000 to €50,000 are being asked to take unspecified cuts in their wages so that we can put in an investment of €3.5 billion into AIB.

What has the Minister of State got to say to the people who are going to be cut to the bone on Wednesday's budget about the conversion of €3.5 billion in AIB shares into a 25% equity stake when the bank is only worth €5 billion? How is that for largesse when it comes to bailing out the banks and the speculators?

Fianna Fáil is an historic disgrace to the country. For the second time in a generation Fianna Fáil has destroyed the prosperity that people have built up, whether in the public or private sectors, on the back of their hard work. It is widely held that the 2008 bank guarantee was issued at a deep discount to benchmark market rates. As a consequence, the cost of Ireland servicing the interest on its national borrowings went up over German basic rates, putting it next to Greece. We all know about the current difficulties in Greece. However, it has close to 100% national debt which Ireland has nothing like. If the Government had managed this process competently, Ireland's interest costs would not have been marked up as they were.

Next Wednesday when the Minister announces the €4 billion cuts in welfare and elsewhere, it will be to meet the higher interest charges Ireland has to pay on an increased national debt because of the incompetent way the bank guarantee was cooked up and then handled by the two Brians.

The Minister has never come clean on the mechanism for calculating the guarantee fee. Originally we were told it was to be calculated on the basis of the long-term, ten-year increase in the cost of funding the national debt as a result of putting the guarantee in place. It was to be paid over the two-year lifetime of the original guarantee scheme at the rate of approximately €500 million per year. Will the Minister of State outline how the fee under the new scheme is to be calculated? Are we, instead, being asked by Fianna Fáil to buy another pig in a poke? Will it be a case where we will have a phoney earning rate which will not cover the cost in the annual budget of the increase in our national debt costs as a result of Fianna Fáil mismanagement? Is the guarantee fee under the new scheme to be lodged into a holding account at the Central Bank or will it go into the Central Fund?

The scheme states the basis for the calculation of the fee shall be advised by the Minister to the participating institutions from time to time. It is not to the Dáil but to the banks. Regarding the calculation of maturity rates, there will be an overall flat fee of 25 basis points. The Minister shall report to the Oireachtas Committee on Finance and the Public Service every six months on the level of fees received from each participating institution and progress in relation to the purposes of the Act and compliance with the terms and conditions of the scheme. Why can the Minister of State not give us details of the fees and tell us what we are to be paid for this additional burden? As a consequence of this order, every man, woman and child in this country is taking on, for a further five, ten or 15 years from end September 2010, liabilities of up to €400 billion. That is the extent of what is proposed. Naturally, there are no figures attached to this proposal. The Minister for Finance has shown contempt and arrogance in terms of not providing figures in this regard to the Dáil, as to do so might inform Members or taxpayers.

See this speech in context