Jan O'Sullivan (Limerick East, Labour)

I wish to refer to some of the previous points made during this debate. I listened to some of the debate last week and the catchcry from the Government benches was that we should forget about the past and only look to the future. Backbencher and backbencher said that we need to give up being angry because anger is not a policy that we need. That was said the same day that the gentleman from the west drove his concrete mixer into the gates of Leinster House. Despite what we may say about him he certainly struck a chord with many people who feel that anger is probably the only outlet they have and want their anger to turn into meaningful action.

Another point that has been made is that everyone must share the pain. Anger is a very good place to start in developing a policy that will ensure that €50,000 million is never again robbed from the Irish people because of a complete failure to control rampant capitalism. That is basically what happened. There was a complete failure to control the extreme elements of uncontrolled capitalism at its worst.

We must understand why people are so angry. We must also understand why people say: "Why should we share the pain at the levels the Government appears to want to make us share it?" Poor people did not cause this crisis, neither did families whose sons and daughters are now likely to put down their roots in faraway shores. We must start at the top with those people who can afford to pay. There are still loopholes in the system whereby people who earn the highest amounts of money and have the most wealth still do not pay their share; they still get away with doing that because of tax breaks.

Before I proceed to talk about the general issues of finance, taxation and banking, I wish to refer to an area that is in my brief, that of the co-located hospital project. Incredibly that project is still on the table and it carries a 41% tax relief for developers. The Minister for Health and Children indicated in the Dáil recently that she still intends to go ahead with some of the planned co-located hospitals. This is despite the fact that her expert group on the financing of the health services clearly stated that we have enough private beds in the system already. Yet she proposes to go ahead with the plan to provide private beds and to use taxpayers' money to give tax breaks to the rich developers who intend to develop those hospitals. That is an example of where the people at the top will be facilitated with tax breaks for something that we do not need while the people at the bottom, those on low incomes, are now likely to be brought into the tax net. People in receipt of social welfare benefits, carers and people with disabilities are being asked to pay because the Government says that everyone must share the blame. The Labour Party believes that the Government should start at the top and when we are in government we will start at the top; it will be the people at the top who will start to bail us out and not the people at the bottom.

In terms of learning from the past, I cite the example of Germany. It went through two world wars, both of which it lost, but it has learned from what it went through, which it caused to a great extent, in terms of how it has structured its economy and society. The Germans have certainly learned lessons from their history. Germany has developed into one of the strongest European economies and also managed to absorb East Germany without too much disruption to its economy and its society. The Germans value their service and other services, the importance of solidarity and of engaging with the public and ensuring that extreme elements do not take over.

This republic is fairly young, but if we do not learn from what has been the biggest crisis in our history, the mistakes that were made will be repeated. The most important job we have to do as public representatives at this time in our history is to ensure that we learn from the lessons of what happened to our Celtic tiger economy and that we do not allow what happened to ever happen again. If we do not learn those lessons, we are in danger of the same cyclical behaviour happening again, the same money-grabbing people will again try to use the wealth of the country for their individual benefit. We need to develop the qualities of solidarity and a sense of society and economy that is about us all sharing in what we want for this country. We must learn from what happened in the past.

Therefore, we must take note of what Professor Honohan said and not take only a simplistic view of it. He made it clear that the decision to bring in a blanket guarantee was not the result of a sudden crisis but followed months of meetings led by the Department of Finance. It is simply inconceivable that the Minister and the Taoiseach were not briefed on what was happening at the time, yet they brought in the blanket guarantee. The Labour Party is proud to have opposed it. There are many elements of that blanket guarantee that are now haunting us in a huge way. In regard to subordinated debt Professor Honohan also stated: "Given that the whole point of subordinated debt is to be a form of risk-absorbing capital, and as such is sold as being explicitly more risky than senior bonds, it would have been reasonable to argue that subordinated debt holders should not be exempt from possible losses; as far as can be determined, no guarantee offered by any other government during the crisis covered such risk-bearing liabilities."

He also referred to the note prepared by Merrill Lynch which observed that the assumption of such a large contingent liability would have an adverse effect on borrowing costs for the State. Despite clear warnings, the Government proceeded with the blanket guarantee. As a result, enormous sums of money will be transferred to future taxpayers and the Labour Party and Fine Gael, the two parties that will presumably form the next Government, will be bound by certain undertakings. There is no doubt that the mistakes made in this area contributed significantly to the problem.

Another reason for our current problems was the lack of regulation which allowed the banks to get away with murder. It is a disgrace that the banks lent such large sums of money to individuals, frequently in the knowledge that the loans in question were tied up with and backed by other loans from other lending institutions for other properties. This responsibility for the tangled mess that has ensued lies with the Financial Regulator, Central Bank, Department of Finance and banks, specifically their boards, risk management experts and senior managers. That some of these individuals continue to hold positions in the banks is a disgrace, which the Minister should address.

On the issue of the banks making money available to businesses, I will refer to a response to a parliamentary question I received from the Minister for Finance on 3 February this year. One of the major problems with the banks is that they have taken our money and used it for their own purposes by shoring up assets and improving liquidity. We were informed that the purpose of the bank bailout and National Asset Management Agency was to safeguard the stability of the State and provide money for small businesses to reactivate the economy and maintain and create jobs. In his reply on 3 February, the Minister for Finance stated the following:

Under the NAMA legislation I will shortly be issuing guidelines to all banks participating in NAMA who lend to SMEs, to ensure that SMEs, sole traders and farm enterprises will have recourse to an independent, external review of decisions of credit refusal by the banks. The purpose of this measure is to ensure that the benefits of NAMA lead to an improved flow of credit to viable businesses.

He indicated he would establish a review system and use the information it provided. He stated:

In addition to dealing with individual cases, the credit review system will examine the credit policies and practices of the banks in respect of SMEs. This will help me to decide what further action might be necessary to secure the flow of credit.

This statement was made in early February this year yet Deputies from all sides are still being contacted daily by individuals who run viable businesses or are setting up new businesses and cannot obtain credit. Many of them have done the necessary research and know their plans are viable. One man who contacted me has found a market for his product in Britain. He attended the relevant trade fairs in the UK and secured orders for his product, for which he has also drawn up a design. Despite investing redundancy money he received from a previous job in the product, he is unable to secure further capital from the banks. This is a major problem for many other people with viable products and the owners of businesses which are likely to go out of business without credit. What has changed since the Minister for Finance gave an undertaking to make credit flow for small businesses?

I am pleased to note the Minister of State with responsibility for housing is present as I propose to raise a number of issues related to housing and local government. Limerick city, like many other cities, has a large number of empty shops. One of our local newspapers recently compared the position of Galway to that of Limerick. While we tend to regard Galway as a thriving city, the survey revealed that it has as many empty shops as Limerick and the same is probably true of other cities, towns and villages. Premises are empty for a variety of reasons, including the Government's refusal to support the Labour Party Bill which would have abolished upward only rent reviews. Shops are also closing because their owners cannot secure money to tide them over in these hard times. Shops are the lifeblood of cities and towns in that they provide employment and their closure has a negative impact on the surrounding economy and community. People no longer want to travel into city centres if they are not vibrant. I urge the development of a plan to enable local authorities to assist in this regard.

The opera centre in another part of Limerick city was a major plan by one of the large developers to develop a site in the city centre. The developer in question bought out many small shops, some of which moved elsewhere while others did not re-open. The project then collapsed. I am not sure if it has been transferred to the National Asset Management Agency but if not, it will probably transfer at a later date. The area in question, which is in the centre of the city, is now an eyesore. Where once we had thriving small shops and other businesses, we now have a large empty space. Limerick City Council is trying to produce a plan for the area but does not have cash available to take action. The Government should assist in this regard, albeit not necessarily by providing money. It should at least ensure the banks are more free with their money.

The Labour Party has proposed establishing a strategic investment bank using €2 billion of the National Pension Reserve Fund and additional funds secured from other sources. While the State owns a number of banks and has large stakes in several others, the established banks have their own ways of doing things. If we started afresh with a new strategic investment bank, we would be able to achieve the outcomes we seek.

The concept of the solidarity bond could also be developed. While I welcomed the establishment of the bond, I note it has not been advertised as a means of allowing people to be patriotic by investing money in bonds that would be used to fund positive developments. Perhaps we should introduce a diaspora bond aimed at those from other countries who have Irish origins and have made money.

The Government had a big bash in Farmleigh recently which attracted a large number of participants. It should use this concept to encourage people to invest in Ireland. Perhaps individuals could be allowed to choose where they wished to invest. For example, a person from County Limerick who emigrated to the United States and made good there could decide he wants to invest in an enterprise under development in Limerick. He could then ask the Government to facilitate his wish through some form of bond system.

If we are to pull ourselves out of recession, we must begin to think in such imaginative ways and use what is positive about this country. The problem for people who have ideas and want to rebuild the economy is that the Government is preoccupied with fiscal balance. Last year, its focus was on the banks and this year it is focused on achieving fiscal balance at the expense of job creation. People despair when they see money being taken out of the economy because it means there will be less to spend. We must find ways of bringing money into the economy, whether from domestic or overseas sources, some of whom may wish to provide money in a spirit of good will or out of a desire to stand by the Republic, if I can use that phrase given that the individuals in question may no longer live in the Republic.

In addition to activating money, we must activate people. Many of our young people are out of work, an issue discussed by Deputy O'Shea. Some of them are moving abroad and putting down roots elsewhere. I heard a programme recently about the Dubai women's Gaelic football team. Two of the women interviewed were physiotherapists who had to moved to Dubai because they could not secure employment here.

They had been obliged to go to Dubai because they could not get a job here. It is not so many years ago that it was decided to deal with a shortage of physiotherapists by providing additional courses in universities but they are now playing on the Dubai ladies' football team.

This is what is happening under the Government policy, which is the reason a different approach must be adopted. We must attempt to keep young people in Ireland and find ways to employ them. In this regard the Labour Party has proposed a jobs scheme. While I acknowledge the Government has set up one or two schemes, it appears to want to hide them. There is a jobs placement scheme under FÁS and a graduate placement scheme but it is very hard to find out about them. Moreover, I am informed by employers that it is very hard to register on the scheme indicating one's desire to place a graduate in one's business. The graduates involved do not receive any additional money but simply get their dole payments. They must also be unemployed for three months and a number of other conditions also apply. However, it is as though the scheme does not exist as one never hears anyone talking about it. The new scheme, announced recently by the Minister for Social Protection, Deputy Ó Cuív, appears to be very similar to the scheme that is already in place about which no one appears to know anything. One must be serious about wanting to get people back to work. One must facilitate them to so do and must provide them with opportunities of this kind.

I also wish to make a point I have raised previously in the Chamber about county and city enterprise boards running out of money. I was approached by a person who had an Internet business, already employed a small number of people but wished to employ more. He had applied to the Limerick city enterprise board and was approved, only to be told subsequently that the board had no money. Although he had fulfilled the criteria, the enterprise board had no money to give him.

It is crazy for an enterprise board not to have enough money for a viable enterprise in the current economic climate. Whatever else might face cutbacks, the Government should allow enterprise boards at least enough money to fund ideas which the boards consider will create wealth and jobs because we will be in deep trouble unless we begin to mind and nourish ideas for job creation. We cannot simply continue to rely on multinationals and so on but must encourage indigenous Irish industries and ideas. While there are many campus projects and people with ideas, the task is to match such ideas with money and support.

This very useful debate has been going on for some time and is drawing to a conclusion. All these issues are closely linked. Many Members have spent much of their time discussing issues such as enterprise and activation, which are closely linked to the banking crisis because enterprises cannot get going or cannot remain open in the case of shops and businesses precisely because the banks are starving them of money. The Government should keep an eye on the broader picture, on the suffering of the people and on the need to give them hope and opportunity. Rather than simply focusing on one issue at a time, that is, first on banking and now on the fiscal crisis they must all be considered together and the people must be given some positives for the future.

See this speech in context