Richard Bruton (Dublin North Central, Fine Gael)

I move:

"That Dáil Éireann:

notes with concern that:

— Ireland has suffered the longest and deepest recession of any Eurozone country because of reckless domestic management of the economy;

— investment, consumption, employment and living standards continued to decline in the first quarter of this year;

— the seasonally adjusted numbers of the live register rose by a further 5,800 in June and the actual number claiming now exceeds 450,000 for the first time ever;

— the Government plans to cut a further €14 billion from investment spending between 2011-2014 compared with the original commitments in the National Development Plan;

— the estimated taxpayer losses from the Government's banking strategy has reached €25 billion and is rising, even as it has failed to restore credit availability to industry; and

— market confidence in the Government's economic plan is declining, as evidenced by the rising gap between Irish and German borrowing costs;

calls on the Government to:

— recognise that its economic plan is failing to undo the loss of international financial market confidence in Ireland;

— put jobs and industry growth at the centre of its economic strategy;

— review its banking strategy to limit the taxpayers' exposure and to focus resources on supporting new lending to viable businesses;

— delay further cuts to investment spending until employment starts to recover; and

— restructure and re-capitalise the semi-State utilities in order to raise the necessary commercial funding to accelerate investments in water, high speed broadband and clean energy."

I wish to share time with Deputies Perry, Clune, Sheahan and Bannon.

Up to ten years ago, Ireland had an economic model that was the envy of the world based on high productivity growth, high export performance and sound public finances. Employment was being created at a rate of 50,000 jobs per year and people rightly looked to Ireland's economy as a model for other countries to follow. The sad truth is the model was destroyed in a few short years after we joined the eurozone. It was destroyed by Governments that simply did not understand or take seriously their responsibility to protect that model when they were committing the Irish people to behave more like Germany in economic management as members of the eurozone rather than to behave according to the McCreevy approach of, "If I have it, I'll spend it".

At a time like this we must examine what has happened to our economy. Within two years our national income has declined by 28%. No other economy has experienced such a decline. Nothing like that has been witnessed anywhere in the world since the 1930s. Investment has fallen by 101%, which is an unprecedented collapse. Up until recently, the Taoiseach was telling us this was due to international factors, that no one could have predicted what was happening and that he was acting on best advice. All that has been blown out of the water by two reports published by independent commentators - the Governor of the Central Bank and two experts from the IMF. We now know this was an entirely home-made crisis and 75% of the decline was due to bad decisions at home. From 2006 onwards it was not possible for Ireland to have, as the Central Bank and the Government wished to believe, a soft landing, yet as recently as May 2010 the Taoiseach was telling the people there would have been a soft landing if it had not been for the international crisis.

The extent to which the Government had become out of touch with the economic realities is truly mind-boggling. The toll of this crisis is to be found in the 300,000 people who have lost their jobs and 150,000 people who have emigrated over the past two years, not in economic statistics. This tsunami on employment is affecting young people most of all with 90% of jobs lost by people under the age of 35 and 60% by people under 25. They have carried the brunt of the employment collapse. We would have looked to them to build our economic fortunes in the future. They are well educated and they were bristling ideas as they left college. If they are lucky now, they will be able to seek work overseas. Many others have been caught in the property trap and they are in negative equity and struggling in the face of increasing threat to their jobs.

Today's announcement with more information about the Government's banking policy rubs salt in the wound for people. Many Members on this side of the House are not surprised to find that NAMA in its amended business plan has revised by 80% the projected profit it hoped to make. It was to be €5 billion but now it is down to €1 billion, yet officials have only examined 20% of the loans it will take on. They are saying their hoped-for profits from this operation will be down 80%. What will this be like when the full extent of the loans is made known?

Every month the Government parties come into the House looking for another €2 billion to put into Anglo Irish Bank. They are projecting we may have to put €25 billion into Anglo Irish Bank and Irish Nationwide Building Society, which will never lend again. It is an unfathomable amount. This is being done because the Government has insisted from the outset that the bank guarantee would be spread too wide and now the Governor of the Central Bank has confirmed that the guarantee was drawn up on a foolish basis. It was too broad. He acknowledged a guarantee was needed but, by including all the bondholders - people who were committed to and locked into the banks - the Government has imposed huge losses on the taxpayer. We are seeing those huge losses in Anglo Irish Bank. That is the consequence of what was done.

While all the losses cannot be avoided, many of them could have been. Having put €25 billion into failed banks that will never lend again, what are the Government parties doing about the 250,000 people in negative equity, those who are struggling to repay their mortgage and the 30,000 mortgage holders unable to repay? They have almost nothing to say to all those who are on their knees struggling with this deep financial problem. They are telling the banks they should not abuse the small group on tracker mortgages and they have said nothing about the solution. There is no mention of examining equity swaps or write-downs over time or systems that will genuinely relieve the burden for these people. The IMF is even telling us the banks are in a position to tackle this problem of certain of the most distressed loans but the Government does not recognise that.

According to today's announcement, the taxpayer will be asked to put money more into the mortgage interest supplement scheme, which will go directly to the banks. The taxpayer, therefore, is the only entity making a contribution to this problem that is not good enough. That is not a response. We will have to wait longer and there may be a response later in the year. We look forward to the thinking that may come out of this process but the Minister of State can surely recognise the dramatic contrast between the Government's emergency response to the needs of investors in banks such as bondholders and subordinated bondholders to whom we have offered a total guarantee and those at the other end of the spectrum. The same applies to its economic policy, which is all about repeating the two mistakes that got us into the crisis.

See this speech in context