Róisín Shortall (Dublin North West, Labour)

The purpose of the statement made by the Minister for Finance in respect of the banking crisis was to end the uncertainty relating to the cost of the bank bailout by providing a final estimate of the overall cost involved. The figure provided is only an estimate and there is a long way to go in respect of this matter. Many experienced commentators have suggested that the final figure will be considerably higher than that currently being employed by the Minister. As already stated, there is a long way to go. In that context, none of the NAMA properties have even been placed on the market and the working-through mechanism relating to them has not yet been employed. The figure the Minister for Finance provided is only an estimate.

The fact that we are only now - a full two years after the granting of a blanket guarantee to the banks - being given an estimate demonstrates the absolute and appalling incompetency of the Government in handling this crisis. It is extraordinary that the situation was allowed to drift for two years, from September 2008 to recent weeks, before an estimate was placed on the cost of the bank bailout.

The final estimates for Anglo Irish, AIB and Irish Nationwide are significantly different from those previously provided. The Minister has given little or no explanation as to why this is the case. For example, the estimate relating to Irish Nationwide has doubled from the original €2.7 billion to €5.4 billion. Why were the estimates previously provided so wide of the mark? Apart from Mr. Colm Doherty and Mr. Dan O'Connor, who else at AIB will be held accountable for what happened within the bank?

In the statement he made a couple of weeks ago, the Minister made the usual attempt to shut down any questioning of his decisions. Referring to his decision not to require senior debt holders to share the burden, the Minister stated: "Any alternative strategy as advocated by some creates a significant risk of jeopardising the banking system's and indeed the State's access to international debt markets and cannot be countenanced on that basis". The fact is that in the Ireland of 2010 we have moved way beyond that kind of nonsense. It is no longer the case that the priest, the Minister or the banker knows what is best and must not be questioned. We hope those days are gone. It seems incredible that the Minister for Finance, Deputy Brian Lenihan, would come out with such comments, basically saying he was above reproach while trying to shut down any debate or questioning of the action or lack of action taken.

People have both a right and responsibility to ask questions. When we get the answers, people can decide whether they agree with the proposed course of action, but unless that basic information is provided people will continue to be kept in the dark. Were it not for the Opposition questioning what the Government was doing on the specific issue of subordinated debt, there would undoubtedly have been no movement on the Government's part to force those debt holders to share the burden to some extent. It was only in the past month that the Minister, Deputy Brian Lenihan, conceded that point.

The Central Bank's estimates appear very conservative with regard to property prices, although nobody can know these with certainty. The estimates do not include any burden-sharing with subordinated debt holders, and any subsequent saving should reduce the estimated final cost. That does not seem to be factored into the estimates we have heard. The over-riding objective of the Minister in dealing with the issue should be to ensure that he minimises the actual cost to the Irish taxpayer. There is very little evidence he is pursuing that objective. The total cost of the banking bailout must be met by the Irish taxpayers and the banks' debt holders. In simple terms, the more the debt holders contribute to the cost, the less the Irish taxpayer will have to pay, and vice versa.

It has been the Government's position since the bank guarantee was introduced in September 2008 that any cost of a bank bailout should be borne by the Irish taxpayers alone. Crucially, this is the mistake made by the Minister, Deputy Brian Lenihan, and his colleagues in the Cabinet. Only reluctantly have they accepted that holders of subordinated debt should have any share in the burden and even then they have specifically restricted this to Anglo Irish Bank and Nationwide. Scare tactics such as the statement by the Minister for Finance, or bold statements such as "senior debt obligations rank equally with depositors under Irish law" do not help the matter.

So what if that is the case? We are talking about beggaring the taxpayer and this country for a generation, and the Minister does not appear to see that there is any fairness or equity in the principle that people should share the burden, especially those who gambled and knew they were buying high-risk debt and getting returns on the basis of that risk. They knew there was always a possibility that they could lose all or part of the investment in the end. For some unknown reason, the Minister chose to shield those people up until recently. The argument, which the Minister used spuriously, was utilised to block any discussion on the subject of extending the principle of burden sharing.

It is important to consider the issue from a different angle. The Minister's statement has confirmed that Anglo Irish Bank, Nationwide and AIB are all insolvent and cannot survive without capital injections from the Irish taxpayer. Why should the Irish taxpayer pay anything to subsidise the banks' debt holders? Our starting position should be a requirement that any shortfall be made up from all debt holders, including those of AIB, before any money is paid by the Irish taxpayer. If there are convincing arguments not to do this in particular cases, we should of course consider them, but we have not heard any such arguments.

In the meantime, it is important to get information on the debt holders, on which there has been a paucity of any information. The Irish taxpayer will be in hock for the next umpteen years because of this scandal and deserves to have access to that information. There are a number of questions to be answered in this respect. Which institutions or individuals currently own the debt? We are also entitled to know when the debts were issued. We should know the repayment terms and in particular if the holders of subordinated debt were given a higher rate of return for the perceived higher risk associated with their investment. Are the holders of senior debt receiving a higher return than depositors? Irish people will be paying an enormous price for this over the next decade or so and we are entitled to that information.

We must also know what discounts are operating in the open market on these debts. There have been rumours that the European Central Bank may have recently bought some of the banks' debt. This should not be a secret and it emphasises the need to have access to the kind of information I have just mentioned.

Given the current precarious state of the country's finances and what we have seen recently in the sovereign bond market, it would be helpful for the country to be given information explaining exactly what the Government is attempting to do. The latest financial crisis in our bond markets was completely avoidable and resulted directly from the Government's inaction and dithering on sorting out the Anglo Irish Bank mess. During 2010, the Government drifted along with a good bank and bad bank proposal that was always highly unlikely to be accepted by the EU. When the Commission, unsurprisingly, told our Minister for Finance on 7 September that the plan was unacceptable, the credibility of the Minister, Deputy Lenihan, and the Government was undermined. The action highlighted the fact that despite Anglo Irish Bank having been nationalised for more than 20 months, the Government and this Minister still had no estimate of its final cost.

Subsequent disappointing economic news merely fuelled the fire of uncertainty that was created. We are now paying an extra 1% for our borrowing compared to a month ago, with the main needless cause being the unnecessary uncertainty created by the Government which has resulted in external investors having even less confidence in the Government than they had four weeks ago. If the truth is to be told, external investors probably have little or no confidence in the Government. Unfortunately, it is the Irish people who continue to pay the price for this Government's incompetence.

It is important to ask further questions. Why did it take the Government so long to come to the conclusion that Anglo Irish Bank needed to be wound up? It is known by major investors throughout the world that Anglo Irish Bank is a rogue business which has had a catastrophic impact on Ireland and almost brought down the entire country. The State has had to plough in tens of millions of euro to try to repair the damage and in order to meet this cost, the Government has introduced significant salary and social benefit cuts, as well as tax increases. It is planning even further harsh measures in a climate of spiralling unemployment. In these circumstances it is reasonable for the State to decide all depositors, including interbank depositors, should be reimbursed while everyone else, including senior and subordinated debt holders, should pay towards the banking collapse. We still do not know why the Government took so long to consider anyone else, apart from the taxpayer, paying the price for the almighty mess it had created.

It is also important to examine in some detail the role the Minister for Finance played in this entire debacle. The manner in which the European Commission rejected the Government's good-bank-bad-bank proposal while the Minister for Finance travelled to Brussels to argue for it demonstrates how detached he and the Government had become from EU decision-makers. It also highlighted the low esteem in which they are held. This was a humiliating and potentially dangerous position for our country.

Crucially, it also blows a hole in the myth that, despite all the disasters, the Minister for Finance still retains the trust and confidence of the international community. Last month's slap down by the European Commission and record Irish bond yields has demonstrated that the Minister for Finance is not taken seriously at European Commission level.

He also needs to be challenged on several statements he made during this crisis. In 2008, he famously stated the blanket guarantee would cost the taxpayer nothing. Now we know what the final bill is likely to be, what does that say about his judgment? He claimed subordinated debt amounted to just 3%, a really insignificant figure not worth considering. That was 3% of €450 billion, however. If he had tackled that debt at an early stage, we would not be facing a fiscal crisis in the upcoming budget.

Another erroneous statement made by the Minister was that Merrill Lynch recommended a blanket guarantee of Anglo Irish Bank, including incidentally all its subordinated debt. There is no supporting documentation for this claim. The evidence in the papers provided to the Committee of Public Accounts actually points to Merrill Lynch warning against such a blanket guarantee. In recent months, the Minister has claimed erroneously that the economy has turned the corner. There is as much validity to that statement as there is to his claim the guarantee would not cost the taxpayer anything.

There are other issues concerning the Minister's role that need to be clarified. The rejection of the good-bank-bad-bank proposal by the European Commission means the Government has wasted another year before establishing the cost of the bailout. Taxpayers, meanwhile, will pay the price for the Minister's dithering through higher interest charges and cuts to public services to which they are entitled. Meanwhile many of the senior directors and executives of the various banks, deeply implicated in this disaster are still in situ. That is the measure of the weakness of the approach taken by the Minister for Finance. With the blanket guarantee in September 2008 meaning the taxpayer had to pick up the tab for the scandalous behaviour of all of the banks, the Minister was in a position to clear out every board and senior management team in them. That should have been one of his conditions for providing the guarantee. Instead, he was quite happy, at a cost to the taxpayer, to leave those who had so much to answer for remain in their positions with their big salaries and pension entitlements.

The European Commission and international investors no longer have confidence in the Minister or in the Taoiseach. In turn, that is not only damaging to the country's reputation but costing us dearly with high interest rates required to be paid on sovereign debt. Apart from the former Taoiseach, Deputy Bertie Ahern, and every other Minister who allowed the housing bubble develop knowing the damage it was causing, questions must be also asked of senior officials, now retired, who played a major part in this catastrophe such as Mr. Neary, supposedly the Financial Regulator, Mr. Hurley, former Governor of the Central Bank, and Mr. Doyle, from the Department of Finance. Their roles in bringing this country to its knees must be examined. Hopefully, next week the Minister for Finance will provide answers. The Committee of Public Accounts intends to pursue answers from all those responsible.

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