Eamon Gilmore (Dún Laoghaire, Labour)

----- and to all round the new year together. Consider this plan as some kind of down payment or deposit on another four or five years of Fianna Fáil rule. That is what this plan is about. This plan is the direct result of the politics of the Galway tent and of "show-time". It is the result of the unbelievable political arrogance and folly of the worst Governments in the history of this State. There was another example of this arrogance yesterday from the Minister for Finance, Deputy Brian Lenihan, who stated that anything that is put on the table that is not contained in this plan is nonsense. This is the same Minister who told us that the bank guarantee was the cheapest in the world. This is the same Government that told us that it would not cost the taxpayer anything. It is the same Government that told us, when the Labour Party suggested the taking into temporary public ownership of the main banks rather than the NAMA strategy, that this was nonsense too. Now the banks must be taken into public ownership anyway at enormous additional cost and still are mired in NAMA. While this is the work of the Taoiseach and the Minister, Deputy Brian Lenihan, it also is the legacy of the former Taoiseach, Deputy Bertie Ahern, the former Minister, Mr. McCreevy and the Minister for Health and Children, Deputy Harney.

It is the direct result of the bank guarantee that joined the future of the State to failed banks. This plan proposes €15 billion in budgets adjustments, starting with €6 billion in 2011. It is a recipe for hardship and stagnation, for delayed ambitions, unfulfilled potential and broken dreams. Yet, for all that, the sad reality is that a programme of adjustment now is unavoidable. However, one should note from the outset that the status of this plan remains unknown. Is it a document that has been agreed with the European Union and the IMF and which will form part of the loan agreement between Ireland and the international community? Is it to be part of the memorandum of understanding for that loan? Alternatively, is it a negotiating document that is subject to change and revision before the final deal is concluded? Is it simply the Fianna Fáil manifesto for a general election that now is both inevitable and imminent but which that party will wish to delay for as long as possible into the new year? Ministers have been claiming for weeks that the plan has the blessing of the IMF and the European Union. However, a spokesperson for the Department of Finance yesterday stated otherwise, indicating that the plan can be changed in negotiations. The question is how much has been approved and agreed and how much might be changed. Members do not know the answers to these questions, just as they do not know so much else about the negotiations that are going on behind closed doors.

For example, they do not know who is negotiating on behalf of Ireland. The public now is more familiar with the principals from the IMF and European Union teams than they are with the Irish negotiators. It is known that Mr. Chopra is negotiating for the IMF and that Commissioner Rehn is in overall charge of the negotiations for the European Union but who exactly is negotiating for Ireland and exactly what are they negotiating? The size of the loan is unknown nor is it known how much of it will go straight into the banks. Moreover, the rate of interest that will be charged is unknown, which is a critical issue. Professor Karl Whelan of UCD has raised this issue and has shown calculations that suggest an interest rate of 6% or perhaps 7%. This would have enormous consequences for Ireland and the Government must reveal both what it is negotiating as a credit facility and that this is what is being negotiated, rather than some kind of sub-prime loan. There is no justification and no rationale for charging Ireland more than Greece and the Government should insist on a better deal. This is Ireland's problem but it also is a euro problem and responsibility works both ways. When the deal is concluded, will the four year plan bind the next Government, a Government of which this Fianna Fáil Cabinet is unlikely to form any part?

As I have said on many occasions, the Labour Party supports the target of cutting the deficit to 3% by 2014. It does so not because we believe it will be easy to achieve but because it is necessary for Ireland to stabilise its public finances. However, we do not support the notion that the adjustment should be front-loaded with a figure of €6 billion in 2011. This level of front-loading poses a grave risk to jobs and growth and is a risk that should not be taken. Moreover, the Labour Party is supported in this position by the leading article in today's edition of the Financial Times, which I will quote to the Taoiseach. It states:

Cuts of this magnitude could throw Ireland back into recession. That would be a tragedy: yawning as it is, Ireland's fiscal gap is the least of its challenges; a slower pace of consolidation might have been its best bet at encouraging growth.

The Taoiseach challenges the Labour Party about its statement to the effect that a €6 billion adjustment should not be undertaken in the first year but that such an adjustment should be more modest and should be balanced on a broadly 50:50 basis. The Taoiseach plucked figures from the air and suggested such an approach would mean this much more on this tax and that much more on the other tax. This misses the entire point, which is that we must allow the economy to grow and get people back to work. If this is done, tax revenues will increase because more people will be at work and the economy will be more successful. However, the more that is cut from it, the more likely one is to drive the economy further into recession.

It is important to remember where that figure of €6 billion came from, because it has become a kind of Holy Grail. It emerged in the last weeks before Ireland sought external assistance at a time when the idea was that one had to impress the markets. The argument was being made by the Government that the markets would be impressed were Ireland to get its deficit down below 10%. The claim was made that bond dealers, who work for international banks, would be fooled into believing that €9.99 is not a tenner.

Now that strategy has failed. In fact, the €6 billion figure impressed nobody, because it was clear that an adjustment on that scale would pose a grave risk to growth. Now, however, the Government does not believe it can row back on that figure, even though we are no longer in the market. How clever does the €6 billion look now?

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