Enda Kenny (Mayo, Fine Gael)

Does the Taoiseach accept that the citizen and the taxpayer will have to pay directly for the failure of the Government's banking strategy? What level of cut is the Government considering for the 2011 budget? Is it €3 billion, €3.5 billion, €4 billion or, as some commentators suggest, more than €4 billion?

I ask the Deputy to try to maintain some accuracy in the context of what emerged last week. We have investments which have been made into AIB and Bank of Ireland. They are preference shares which are now converted to ordinary shareholdings - we have the majority in one and a considerable portion in the other- upon which a return will be obtained in due course.

There is, of course, the appalling situation where we estimate we have to pay €29.3 billion in regard to Anglo Irish Bank for its orderly wind-down over a long period of years. I have made the point to the Deputy already on a few occasions, and I make it again today, that the accountancy treatment of that and the Irish National Building Society amount must go onto the general government balance this year as an accountancy issue but over the next ten to 14 years we will be issuing promissory notes on those. That is how we can manage it. Otherwise, we would not be able to manage it.

The cash flow implications next year for the first €3 billion of a promissory note in that respect is €172 million, as estimated by the Department of Finance, and €344 million the following year. The cash flow impact, therefore, of the payment we have to make in respect of the orderly wind-down of these financial institutions makes that a manageable operation for us.

The issue on the budget is a separate matter because we have a €18.5 billion gap on the budget that must be dealt with. That is the context in which we are operating, and the issue in that regard is that, as members of the eurozone, we are required by the European Commission, and in the interests of maintaining confidence in the country's capacity to deal with the situation, to come forward with a four year budgetary framework which will be the same framework for whosoever has the honour and privilege of serving in Government between now and 2014. We will outline, as a Government, what we believe is the best way forward in getting a credible pathway to a 3% deficit by the end of 2014. That is an obligation we have as members of the eurozone and in the implementation of the Stability and Growth Pact as interpreted by the European Commission.

If we are going to get into a politics as usual debate, we need a position where we face up to the scale of the issues with which we have to deal. We have had a banking crisis in this country. We have had a banking policy which we outlined last March. We put a six to nine months timeframe on bringing that about. We believe we will deal with it in that timeframe, as we outlined last Thursday. The loans that have been transferred to NAMA from those institutions have now been identified and valued. Those are the figures with which the Financial Regulator has come forward. I have explained to the Deputy again that this will be in addition to our national debt but we will pay interest on that debt. We will not be reducing that debt over that time. We will be paying interest, or serving the debt. In the same way as we saw in the past when there was growth in the economy, it is by that measure that one reduces the debt-GDP ratio over time through economic growth coming into the equation. That is the reason that is manageable, despite the very important imposition it places upon us in the longer term.

The issue in the medium term, whether it is the 2011 budget or the requirement to provide a budgetary framework as to how we get to a 3% deficit by 2014, is one to which we are now addressing our minds, and we will bring forward that framework in mid-November.

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