Billy Kelleher (Cork North Central, Fianna Fail)

I find it astonishing that any responsible political party would suggest a sovereign state should legitimately default on its payments. Such an action would send an appalling signal internationally, damage our credibility and mean the Government would have huge difficulty in borrowing for the day-to-day running of the State because of the current budget deficit. Such commentary is irresponsible and does not stand up to scrutiny.

It has already been pointed out that Fine Gael published a policy document with a stimulus package of an €18 billion investment to be funded by bondholders, the very same people it proposes we should default on now. Encouraging a default while asking the same investors to invest in the economy simply does not stack up.

It is important the tranche of transfers of impaired assets from the banks to NAMA is done on a case-by-case basis. When this was announced last April, it was asked whether due diligence and proper examination would apply to each individual loan. This is being done with absolute forensic analysis. The haircut in some cases may have been higher than anticipated, in others lower. The bottom line, however, is that we have a clear understanding of the bank's impaired balance sheets. We know what must be done to address these difficulties.

With the recapitalisation and transfer of assets, it is important the €3 billion to be loaned to the two major banks in 2010 and 2011 flows to the small and medium-sized business sector. Every Member knows the difficulties businesses are facing. The Mazars report adjudicated on the amount of lending from the major institutions under the guarantee scheme.

More must be done, however. The banks must step up to the plate to ensure they play their part in repaying the Irish people who stood by them with the guarantee and recapitalisation. We will be monitoring them closely and insisting they co-operate and are fully obligated in ensuring credit flows to the small and medium-sized business sector. We cannot have taxpayers funding the recapitalisation and transfer of impaired assets while the banks would not be playing their part in providing credit. Mr. John Threthowan will be used unsparingly to make sure any business refused credit will be able to go through an independent review.

There are difficulties in trying to retain economic activity. This is not just a problem for the Irish economy but felt globally. There has been a dishonest debate in the House and elsewhere claiming that Ireland is the only country finding it difficult to deal with the international recession. As Minister of State with responsibility for trade, I have visited and studied many economies abroad and it is evident many of them are struggling to retain employment and keep their trade balances intact.

Ireland has done well in this regard with competitiveness coming back into the economy. I accept the adjustments which had to take place were painful for people. Public sector workers with pension levies and salary reductions have borne a very heavy burden in the readjustment and reconfiguration of our economy to get back its efficiencies and competitiveness.

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