Richard Bruton (Dublin North Central, Fine Gael)

Deputy Blaney is leaving the Chamber but I agree with him that we must be positive against the background of this economic problem. That should be the watch call of this Government. It the reason this debate is so depressing. Economic recovery in the real economy is what matters now. It is crucial that we get real businesses back on their feet and employing people again.

There is a delusion among Ministers on the other side of the House, and on the part of Deputy Mattie McGrath also, that writing whatever cheques are necessary, as the Taoiseach put it, to solve the banking problem and fiscal retrenchment will in some way bring about a recovery in the real economy and that it will get businesses employing people again.

In his final comment Deputy McGrath expressed some scepticism about whether that is working to date. He expressed the hope that it will work but I would like to ask a question of him and other members of the Fianna Fáil Party. The Government is setting aside €32 billion for recapitalisation of the banks, 75% of which is going into either Anglo Irish Bank or the Irish Nationwide Building Society. Deputy McGrath must know in his heart, as does every Member in the House, that neither of those banks that are taking 75% of the taxpayers' money will provide any basis for real economic recovery among any business in his constituency or mine. That is the reality. There is no point in whistling by the graveyard and pretending the banking strategy is working swimmingly when the Deputy can see, as can Deputy Gilmore and me, that it is not happening on the ground. That is not happening to business.

The small business association Deputy Penrose quoted is sceptical of Mazars in terms of whether it is picking it up but Mazars is showing that lending to performing businesses has dropped by €7.5 billion, or 25%, since June 2008. What is growing on the lending front are the loans that are impaired or on the watch list. They are the only loans that are growing and they have exploded.

In terms of what is happening, the banks are perforce nursing small business loans that are non-performing but they are squeezing the life out of businesses that have a chance of surviving. That is what is happening on the ground and Mazars, for all the weakness in its analysis, is telling us that. It puts this debate into context.

The truth, as Mazars tell us, is that performing businesses or businesses with a chance of surviving this recession and building a trading economy on which we can hope to hold on to our young people are being squeezed. A bank using State capital to provide lending to those small businesses is crucial. We are not two or three months after the banking crisis. It is now 18 months since the crisis burst upon us. Deputy McGrath had to come into the House with the script that was provided for him and tell us that some measure for small business is around the corner and that if we wait a little longer we will see the magnificent fruits.

I heard the Minister of State, Deputy Calleary, read into the record all the commitments that have been extracted from AIB and Bank of Ireland but a check of the record reveals that in February 2009, more than 12 months ago, he said the same commitments had been exacted from the banks. The comments are virtually identical, even down to the reference to Enterprise Ireland, to which Deputy Morgan, who has left the Chamber, referred. Enterprise Ireland was to be in the thick of the great break-through but it did not happen and at some point the penny has to drop that it might not happen. Instead of pouring 75% or €25,000 million of scarce taxpayers' money into Anglo Irish Bank and the Irish Nationwide Building Society perhaps we should assign €2 billion, as Deputy Gilmore and Fine Gael have suggested, to develop a bank that can lend directly to the very businesses that have a chance of recovery and get money to bankable business projects. That is the challenge facing us.

Writing these cheques to keep Anglo Irish Bank on the go as part of a grand plan that will get us out of this mess is a question we must put under scrutiny. People like Deputy McGrath, who are critical at times of the adequacy of Government policy, need to put it under scrutiny. They should show me how this will work. They should explain how the cost of refloating Anglo Irish Bank or keeping it as a going concern rose from €4 billion to €6 billion to €10 billion to €18 billion and now to €22 billion and rising - we do not yet know the final figure - and the reason Government policy continues to be that the bank must be kept open. Does the cost that has escalated nearly six-fold since the policy was first enunciated not suggest, as normal cost benefit would suggest, that this policy might not be such a good one after all? Those are questions we need to be asking and the onus is on Ministers to come up with the answers. They should provide us with the evidence.

We got evidence from Anglo Irish Bank that was supposed to convince us. That was based on its analysis of the performance of its loans, and it said it was cheaper to keep the bank going but within weeks of it producing that analysis to the effect that its loans are worth 70% of their book value, we suddenly discovered that NAMA, which was appointed by the State to put a value on them, disagreed. It had written them down not at 70% but 52% and there are questions about the adequacy of that to accurately reflect the entire Anglo book.

The body that seemed to be providing the Government with the ammunition to back up its position, Anglo Irish Bank, suddenly had the carpet pulled out from under it. It was the one that had access to those loans. It had been nursing them for years. It should have known them better than anyone but it took NAMA to tell us the reality. Where is the independent Government analysis of the soundness of the strategy of keeping Anglo Irish Bank as a going concern?

We are facing a real problem. The private sector is stretched. It has huge debt burdens. It will not lift itself by its own boot-straps if the Government concentrates on fiscal retrenchment and writing cheques for the banks, particularly banks that will never lend another euro.

As Deputy Blaney said, the Government must now consider what this country needs to get us out of the position in which we find ourselves. Surely what it needs is some measure that gets money flowing to bankable businesses and that invests in arteries for the long-term economic future, namely, our broadband, electricity and water systems and our alternative energy sources. It must also examine how we can reform public service to ensure we can protect the front line as we inevitably must make do with less coming from a strained economy. Those are the challenges on which Government should be focusing, and we should be seeing strategies for those challenges. Minister who come in here and say they are still spending on some of those programmes while not admitting that they are reduced by 40% from what they were supposed to be are codding us and codding the country.

We must be clever and imaginative about how we devise ways of driving those investments. I believe the national recovery bank or Deputy Gilmore's alternative strategic bank, is a contribution to that debate. Fine Gael's NewERA, which is about raising much of the money that has been saved furiously by people in the private sector and converting that into investment in infrastructures that will get us out of the current position is another positive contribution.

This is a debate about the new versus the old and the future versus the past. The easy approach is to nurse the bad lending of the past, close down opportunities for young people, stop recruiting to the public service and retrench by slashing the investment programmes. That is the thinking of the past but it will not build a future that will employ the people we need to employ, namely, the young people coming out of our colleges. They are emigrating in droves and we will lose the basis of an economic recovery in this country if that continues to happen.

I appeal to the Government to get its head out of the sand and start to debate the choices to get this country moving again.

See this speech in context