John Gormley (Dublin South East, Green Party)

The decision to support the EU IMF programme is remarkably difficult but we believe it to be absolutely necessary and unavoidable. In the first instance, there is no other realistic option. Ireland is funded into the middle of next year, but it will need to borrow more money. We will need that money to make the social welfare payments, the old age pension payments and the carers payments to the most needy in our society. We must borrow to pay the wages of our doctors, nurses, gardaí and prison officers. We must borrow to ensure that our transport infrastructure continues.

The agreement will be for a facility of €85 billion. Several key points should be borne in mind with regard to the facility. The provision of an €85 billion facility does not mean that the State will use all of the funds. The State will likely re-enter the bond markets as early as possible. The funds identified for the financial sector are in the form of contingency capital, which will only be drawn down if required. The State will contribute €17.5 billion towards the €85 billion from its own resources, including some of the National Pensions Reserve Fund. The bulk of the funds are provided for the financing of the State's budget deficit, which has already been factored into the budgetary projections.

The reality is that the interest rates currently demanded by the markets are too high, meaning the EU-IMF mechanism is unavoidable. We believe the alternative is a good deal worse. With the bonds markets effectively closed off to us, the only other option to the current programme is to reduce our deficit to come into line with our taxation income. If we could not access these funds on the bond markets, we would be obliged to immediately balance our public expenditure against the tax we raise. In 2010, we are borrowing €19 billion of the €50 billion that we spend. This would necessitate immediate cuts in pay and social welfare of 38% to balance the books, something that cannot be contemplated or countenanced.

The interest rate agreed in the programme must also be considered in terms of relative cost. The projected average interest rate of 5.8% should be compared with the rates currently available on the international bond markets, which are significantly higher for Irish and Portuguese bonds. This deal is for a far longer period than that arranged with Greece and therefore compares favourably with it. The liquidity of our banking system has been dependent on the European Central Bank funding of more than €100 billion at remarkably low rates.

There has been much comment on whether the senior bondholders in the banks should be "burned". I fully favour the idea that those who made bad lending decisions in respect of our reckless banks should also share the consequences. However, many commentators and politicians have presented the concept of senior bondholders sharing the burden of bank debt as an easy "get-out-of-jail" card that the State could play. The reality is that such a decision is not one Ireland could ever make unilaterally. It was pointed out at the launch on Sunday last that such a move would have consequences for the entire eurozone and far beyond. Its knock-on effects in terms of the future of the euro would be very severe. For our own economy, the consequences would be even greater and we would risk an effective drying up of funding for Ireland and our banks. The consequences of such a unilateral move are unthinkable for people seeking access to their cash and for businesses in need of ongoing credit. No individual or person would remain unaffected. It would threaten the very functioning of our economy.

The EU-IMF programme provides us with an opportunity to achieve a properly function banking system. It will involve an intensification of the measures already adopted by the Government to reform our banking system, which will be fundamental in getting our banks lending again. The programme provides for a fundamental downsizing and reorganisation of the banking sector such that it is proportionate to the size of the economy. This will lead to a smaller banking system, capitalised to the highest international standards with renewed access to normal market sources of funding and focused on supporting the recovery of the economy.

The EU-IMF programme combined with the national recovery plan contains many painful measures. However, there are also reforms in the programmes that offer us an opportunity to restructure our economy and put it on a more sustainable footing. We must seize this opportunity to deliver further on the reforms necessary to create a strong and sustainable economy in which the needs of our people are placed above those of interest groups.

During the debate in recent days several points have been made which must be addressed because some of them have been unfair. It has been put that the negotiators who carried out such sterling work on our behalf gave us a bad deal and that we should not have supported their recommendation. None of those who were negotiating on our behalf, including Patrick Honohan, Mr. Cardiff and Mr. Corrigan, are attached in any way to any political party. They are independent people. Deputy Gilmore suggested his party may be in Government soon. That may well be the case but in that instance he would have to work with these individuals. I believe these individuals are people of calibre, commitment and integrity. If Deputy Gilmore found himself in exactly the same situation where these people made a recommendation to him while looking out for the best interests of the country, what would he have done? Would he have rejected it out of hand? I believe he would not have done so. They found themselves in a very difficult situation as did the Government. This was not something anyone would wish to contemplate before entering Government.

There has been much debate on whether it was the guarantee or NAMA that sparked this problem. As far as I know there was no such guarantee in Greece or Portugal. I do not believe there has been any equivalent to NAMA in those countries. In any case, the debate on the NAMA issue has changed. At the time, we were told NAMA would not pursue the builders. Certainly, it has done so. We were told it would pay over the odds. That is not the case. The criticism levelled at NAMA now is that it has led to the crystallisation of losses in the banks. The debate has changed. I do not believe these things led to the problems we face now.

Let us be honest with ourselves. What has led to this problem is the fact that the ECB has lent money in a reckless way to reckless banks. That is a fact and we must ask ourselves some difficult questions in this Chamber about the nature of the ECB and the euro project at this stage. I recall vividly the debate that occurred in this Chamber and the whole question of what Hans Tietmeyer of the Bundesbank termed an asymmetric shock. He stated that if there were an asymmetric shock in the eurozone it could not survive. This is what we are now experiencing. We must ask ourselves these questions. What should we do now at this stage with regard to the euro? This question is far bigger than anyone in this Chamber.

The satellite vans have gone. There are one their way to Portugal and, God knows, perhaps they will be on to Spain after that. What will we do with the euro? How can we survive this crisis? Inevitably, if the euro is to survive it will require some form of federal Europe. That is the only way. We could end up with a two-speed Europe. These are the realities that we must discuss in a very honest way in the coming weeks. Perhaps this is one of the things we would prefer to avoid but it is now unavoidable. If there were such a thing as a federal Europe, what would it lead to? It would lead to harmonised taxes. These are the realities to which everyone here must face up and it is likely Deputy Gilmore will have to face these when he takes on a role in Government.

It has been stated by Deputies on the other side that the Opposition has been placed in a straightjacket. That is an apt analogy in more ways than one. I warn those other parties that they should know when they enter government during this crisis, they will be entering an asylum. They will have to endure the sleepless nights, the no-win situation and the non-stop criticism.

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