Arthur Morgan (Louth, Sinn Fein)

Watch this space and see what will happen. In any event, it is a regressive measure irrespective of what the British do. The Minister knows better than most that it is the families on low incomes that will pay a higher percentage of their income as a result of what will happen in respect of VAT. The percentage rate of 5.83% in respect of the EU-IMF loan amounts, in my view, to backstreet money lending, which is completely unacceptable.

The Taoiseach stated yesterday: "This country needs this package at this time. We believe we have brought forward a package which will serve this country well." Does the Taoiseach really believe that or is he just playing politics and games? Is he for real? This State simply cannot afford to repay that loan. The Taoiseach's comments are in my view another of those comments such as "the cheapest bailout in the world". The Taoiseach and the Minister will be coming back to revisit the Taoiseach's comments yesterday. The Minister for the Environment, Heritage and Local Government, Deputy John Gormley, shared some information with us yesterday afternoon in his contribution. He told us that the satellite vans had gone from here and were on their way to Portugal and Spain. That was useful information. Why have they gone to Portugal and Spain? They have gone there because they know, as do the markets, that what is proposed in this document will not work.

This project by the Government and its EU masters - I believe they are masters more than partners - seeks to appease the markets with notions that will not work. I accept that action is needed. What was also needed was hard nosed negotiation. I am not speaking about or being critical of the public servants involved in the negotiations, rather I am speaking about the political leadership involved, which amounted to sending in a bunch of kittens to be mauled by a German shepherd. We should not have sent in kittens, rather we should have had a properly thought out policy in regard to how to take on these negotiations. At the heart of these negotiations is the euro currency. We had aces to play in this regard but the Government chose not to hard ball it. It preferred to simply roll over and go along with it, all the while knowing that our economy could not afford to repay this loan.

I accept we need support but the fundamental question that will have to be answered in the future is whether we have received support from our friends in Europe or our masters in Europe. We should have given Allied Irish Banks and Bank of Ireland bondholders an opportunity to negotiate a deal and to put their spreads over a significantly longer period with them taking up a huge chunk of the tab. If they chose not to do so, I would have advocated burning them by reconfiguring their payments into the never-never. I believe that is reasonable because that is the "market". These people took a punt. They have already made substantial gains from investments in the Irish market and elsewhere. I wonder where the question of moral hazard comes in. The consequences of the approach by the EU and the Irish Government is that no bank bondholder will fail. What will be the consequences of this in terms of how those bondholders behave in the future? This indicates to them that they can do what they like, that they can again give out money like crazy, thus creating another cycle of the mess we are now in for some future generation, be it in Ireland or elsewhere. What is happening here by way of policy in this regard is not acceptable. It is scandalous.

The Taoiseach also told us yesterday that we need to have the markets accept that what we are doing will work. The markets know this will not work. That is the reason the satellite vans, as referred to by the Minister, Deputy Gormley, have gone to Lisbon and Madrid. If this had any possibility of working those satellite vans would have returned to their stations. What the Government is doing, by way of this approach, is preparing the ground for more difficulties. There is no incentive to deal with the real problem. We all know the genesis of the problem, namely, that the Government became completely over-dependent on consumption taxes, including VAT, stamp duty and so on. The Government was happy when that cash was flowing into the Exchequer because it made Government look good. The speculators were happy because they were making fortunes and still have them. The banks, with their easy credit, were also happy. We all know that the senior bankers are not worried about this. They have gone off with huge pensions and bonuses, unlike their victims, the public. The public fell for it and went for the easy credit because they thought the good times would last forever, which was the message put out from the political leadership. The current Taoiseach was the Minister for Finance all through this period. Is it any wonder, when one looks at that whole context, that our negotiations were such a push over for the institutions.

The Minister referred in his contribution to the national recovery plan projections. Let us measure them against the figures which Commissioner Rehn's office came up with the day after the EU-IMF bailout was signed. The figures apply in respect of the two year period 2011 to 2012. The Government is projecting a 5% growth in GDP. The EU speaks of growth of 2.8%, which is almost half that projected by the Government. In respect of GNP, the Government has predicted 3.5% growth while the EU states the percentage in this respect is 0%. We then come to GNI, which is GNP plus the transfers from the EU. When one takes away those transfers and the GDP, growth, according to the EU forecast will be negative.

In relation to consumer spending, the Government is predicting a 1% increase. The EU figure in this regard is -2.8%. On investment, the Government figure in this regard is -0.7% while the EU figure is -10%. The Minister for Finance was critical of the Fine Gael leader referring yesterday to these figures. I believe Deputy Kenny was right to put these figures on the record.

It is worth doing so again as it might highlight for the Minister of Finance and his colleagues how negative are these figures. The Government is projecting an increase in employment of 18,500 while the EU projects a decrease of 4,000. Many of those who are coming off the live register are aged under 25 and they are emigrating because emigration is now a central plank of Government policy. Now that the pension fund has been given away, who will be left to pay the pensions needed in the future? That is a problem we are facing. How can a tiny, open economy service the debts run up by private banks whose bad debts are allied to those of the State? How can the State grow its way out of this debt when the Government is cutting the economy to death and using the reserve fund, not for investment or job creation, but for bank bailouts? Ireland now faces an enormous debt load, made worse by deflation and stagnation. That is where the Government is at.

The State still has options. We can burn the bondholders in Anglo Irish Bank and people should know they deserve to be burned. We can offer the bondholders in AIB and Bank of Ireland hugely discounted rates to go away before the banks are fully nationalised and if they do not accept that, we can burn them too. This is a market solution to a market problem. This is bank debt, not Government or sovereign debt. The banking guarantee must be immediately abolished and only the guarantee for depositors must remain. This will show international markets we are serious about protecting our citizens and rebuilding our economy.

The Minister stated:

Our public finance problems are serious but we were well on the way to solving them. The combination of the two sets of difficulties in circumstances where the entire eurozone was under pressure was beyond our capacity.

I agree with those comments but I completely disagree with him regarding the solution. He has taken the wrong option and, more than two years on from the emergence of the crisis, the Government is still looking in the wrong direction.

When Sinn Féin supported the bank guarantee scheme in September 2008, it was on foot of private briefings by the Minister and information given to the House that there was a liquidity and not a solvency issue. On foot of those undertakings, we supported the scheme. As Deputy Burton said earlier, had we been given the real information and documentation, which we should have insisted on, it probably would not have saved the day. The banks were throwing all sorts of information at the Government and it would not have solved anything.

The Minister for the Environment, Heritage and Local Government said in the House yesterday that he has had sleepless nights and he referred to how difficult it is for him in the "asylum", as he described Government Buildings. If I had a violin, I would have tried to play a tune or two to see if that would get him to nod off. Perhaps he gets a nap during the day but I almost felt sorry for him until all the families who are having sleepless nights and whose homes are about to be repossessed and all the people who are struggling to feed their children and making decisions on whether they should buy bread or milk came to mind. I am sure all Deputies meet these people, as my constituency office in Louth is in no way unique. We hear Ministers are under pressure but at least they have a job and a salary for the moment and they will have a pension on which they will live comfortably when they leave office. The victims of this Government who are suffering at the coal face will not have substantial ministerial pensions.

The Ministers for Finance and Environment, Heritage and Local Government have both said we need the bailout to pay the salaries of nurses, doctors and gardaí. There are way fewer of them than there has been and they have been fleeced by the pension and income levies imposed on public servants.

The Minister did not outline his negotiating strategy but I hope he can share it with us when he concludes the debate. Did he have any red lines or bottom lines? Did he decide to put it up to the institutions about the euro? Did he threaten to go it alone with a default, given the consequences of that for Europe? I do not believe a hard nosed negotiation took place. The Government simply rolled over and left them to it. A huge opportunity was missed.

I refer to the consequences of what has happened. The live register figures were published earlier. The number on the register has reduced and the Government parties are clapping themselves on the back but the reduction is down to emigration. If not, from where are the jobs coming? The Minister for Community, Rural and Gaeltacht Affairs is indicating this is not all down to emigration. No employment is being created.

In the Government's statement last Sunday night, the Taoiseach said, "The State's contribution to the €85 billion facility will be €17.5 billion, which will come from the National Pension Reserve Fund and other domestic resources". This means external assistance will amount to €67.5 billion. Is this to be a consolation? The NPRF will be effectively liquidated. Should its title be changed to the national bank pension reserve fund? There is still time for Government backbenchers and Ministers to change their minds. I hope somebody will have a serious look at this. Perhaps if the pressure on the Minister for the Environment, Heritage and Local Government is maintained for another day or two, he may get sense and say this should not be the legacy of the Green Party's time in government. Surely it can come away with better than this. If it cannot give political leadership, rather than agree to this bailout, it should step aside and let in people with the steel and backbone to negotiate a better deal for the public and to develop better policies on their behalf. It should step aside, let us go to the country and let the people decide on a real Government with a fresh mandate to sort out these matters for once and for all.

See this speech in context