Pat Rabbitte (Dublin South West, Labour)

In budget 2010, the Government announced it had approved a capital spending envelope of €39 billion for the seven-year period from 2010 to 2016. With some justification ever since, Ministers have taken shelter behind that commitment when criticised for not coming forward with stimulus measures to arrest unemployment and get new jobs going. That €39 billion is the same figure the Minister for Finance committed to Anglo Irish Bank on Tuesday, which gives some idea of the enormity of the decision taken — State support for a failed private bank is the equivalent of the capital programme for seven years.

The Minister for Finance told the Dáil on Tuesday:

The detailed information that has emerged from the banks in the course of the NAMA process is truly shocking. At every hand's turn our worst fears have been surpassed. Some institutions were worse than others but our banking system, to a greater or lesser extent, engaged in reckless property development lending. In far too many cases there were also shoddy banking practices. The banks played fast and loose with the economic interests of this country.

In that, the Minister spoke for everyone in this House. Imagine the shock and demoralisation outside of the House, where taxpayers and citizens are struggling to understand how the position in our banks could be even worse than they had imagined.

Let us not fool ourselves. What has been forced through this House by the Government on Tuesday ultimately rebounds to the Exchequer and dramatically increases the sovereign debt being imposed on this and future generations. Let us not fool ourselves about promissory notes, European Central Banks IOUs, special purpose vehicles and off-balance sheet accounting. I understand why the Government does not want this disaster reflected in the national accounts. However, there is no escaping the reality — the bank rescue will impose a huge debt burden on the shoulders of every taxpayer in the land and will virtually double the national debt.

Already, we are seeing how this bailout is feeding through into the industrial relations arena. The Government's rescue package for the banks has pledged more than three times the annual tax revenues of the country. Of this amount, ordinary people cannot understand why the Government would want to commit almost €40 billion to the Casino Royale on St. Stephen's Green. The Government is not only constraining its own capacity to govern this country in anything approaching a fair way, but is constraining the capacity of future Governments to do so.

The figures for Anglo Irish Bank are so enormous and debilitating for our economy and for the morale of our people that we can no long rely on assertion in this House as the basis for decision-making. Neither the Government nor the banks have told us the truth to date. The bankers lied to the Joint Committee on Finance and the Public Service. They told us that the Irish banks were sound, adequately capitalised, professionally managed and did not have a sub-prime mortgage problem. Since then, they have refused to admit the truth, even to themselves. The chief executive of the country's largest bank, in a memorable phrase, said that he would rather die than accept State equity. The State is now the financier of last resort for the country's largest bank, which behaved with a recklessness that is breathtaking.

The Government took a similar drip-drip approach to revealing the truth. Although I am surprised it has not been adduced in this House, we should remember what the Taoiseach, Deputy Brian Cowen, said to Deputy Gilmore on the morning after the fateful decision of September 29:

The Irish banking sector has very well secured loans... It is important to make the point that in the event of any further call, it is my intention to ensure the Irish taxpayer will not be held liable in any way for any deficit that might occur in the event of there being a problem in the future. I intend that the sector will have to discharge any liability that may arise.

That was the Taoiseach on 30 September 2008. How far we have come since then.

Ever since that statement, the Government has been mending its hand. It never admitted the scale of the disaster until Tuesday of this week, 18 months after the guarantee, and has, time after time, made claims that simply do not stand up. Where now are the cross-collateralised loans we were reassured about? It would appear that, in the case of the Irish banks, cross-collateralisation means that the loans were secured on both a wing and a prayer.

The most serious of those claims has been the assertion that Government measures would get credit flowing again. That has not happened, with worsening consequences for jobs and the real economy. It is for this reason the Labour Party published its proposals for the establishment of a strategic investment bank. Instead, it appears we are now irrevocably committed to investing unimaginable amounts of State funds that we do not have in the Casino Royale on St. Stephen's Green.

My point is that we cannot rely on mere assertions to justify the enormity of the decision forced through by the Government. The alternative Minister for finance, Deputy Eamon Ryan, has even gone so far as to make a fool of himself, and try to make a fool of the rest of us, by suggesting that to take any alternative view on Anglo Irish Bank was, in effect, to take a decision to leave the euro. That kind of assertion is no longer adequate to justify the decision that this House made at the behest of Government.

These assertions have proved baseless in the past. To assert now that it will cost more to wind down Anglo Irish Bank than to keep it on a life support machine is no longer acceptable. We need to see the evidence. It is not enough to roll out Mr. Alan Dukes who, unsurprisingly, sounds more like a politician than a banker. For all the praise heaped on him in recent days by Fianna Fáil spokespersons, he sounds less than convincing. His figures keep changing and the role envisaged for Anglo Irish Bank in the future configuration of Irish banking, seems fanciful in the extreme. We need to see the evidence on which the Government and the chairman-designate of Anglo Irish Bank are basing their assertions. We need to see the reports prepared by independent consultants. We need to see the assumptions made in these reports. We need to know the identities of the bond holders and the implications of having to negotiate with them. We need to know who is behind the outstanding €2 billion in subordinated debt.

It is not acceptable for the Government to come into this House and say that any alternative to the road the Government has taken is unacceptable. The only evidence produced is the assertion by the speaker at the time or by the chairman-designate of Anglo Irish Bank. I accept entirely that to talk about the orderly wind-down of a bank is not the same as talking about closing a restaurant. I accept entirely there are serious risks in funding, and serious risks to do with outstanding derivative contracts, and question marks about realising the assets. All these questions arise. However, we need to see the detail of the argument that is being advanced by the Government to suggest that we should make a commitment to this failed, non-trading bank that is the equivalent of seven years of the capital programme. This is seven years of the capital programme committed to a failed bank. Does anybody on the Government side seriously believe that this bank is going to be resurrected in some form so that it will have some niche market in the new world of Irish banking?

The onus of proof is on the Government. I know we cannot do it in a hurry but the figures revealed on Tuesday are so enormous that it is no longer unthinkable that we have to examine that possibility. What argument is there that every bank, whatever the circumstances, must be kept alive? That is what the Government is doing in the case of the Irish Nationwide Building Society, a building society that was supposed to pledging mortgages and which in fact has 80% of its loan book devoted to commercial property. The Government's plan is to close it down and that is a correct plan. Therefore, why is it unthinkable that we should have a serious examination in this House about whether Anglo Irish Bank should be allowed continue? How can we continue to throw money into it like one would into a furnace? How can one expect trade unionists, whose low-paid members have been taking serious wage cuts, to merely accept, on the assertion of the Minister for Finance, that we have to continue to throw money into this bank?

We have to see the reports. The chairman-designate of Anglo Irish Bank has to accept that it is now a semi-state company and that we are entitled to see what is the corporate strategy. We are entitled to see what these reports contain and on what assumptions they were compiled. This is the biggest decision that this House has ever made and it is not good enough to expect us to rubber-stamp it on the basis of assertion and without production of the detailed evidence.

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