Enda Kenny (Mayo, Fine Gael)

I move amendment No. 1:

To delete all words after Dail Eireann and replace with:

-- Condemns the economic policies of the Government and, in particular its policy on banking, which has attached bank debt to sovereign debt and places an almost unsustainable burden on the taxpayer;

-- Recognises that, because of these policies, intervention by the IMF and the EU was inevitable;

-- Agrees with the fiscal targets set down in the EU-IMF programme for fiscal support for Ireland;

-- Expresses serious concern that the policy programme on which this agreement is based is deeply flawed in a number of crucial areas including the promotion of growth and job creation, and the resolution of banking debt; and

-- Welcomes the commitment of the EU-IMF to renegotiate, with an incoming Government, aspects of the specific economic policies, on which the drawdown of the funds is conditional.

Fine Gael recognises the need to sort out the deficit in the public finances created by this Government. We also recognise that the Government's botched response to the crisis means that external credit lines from the EU and the IMF will be needed until the next Government delivers the policies needed to restore confidence in the Irish public finances and in our financial system.

However, the Government's so-called recovery plan, which underpins the current EU-IMF rescue package, shows that it has learnt nothing from the crisis of the past two years. We will not restore confidence to our economy unless we credibly cap the taxpayers' exposure to the banking system, while pursuing new policies to support growth and jobs in parallel to the fiscal adjustments.

The Government's commitment to continue, and to intensify its failed policies is why the plan in its current form is not workable. In addition, it is why the plan has been greeted with deep scepticism by the financial markets. That is why we cannot support the current agreement. That is also why we welcome the commitment of the EU-IMF to renegotiate, with an incoming Government, aspects of the specific economic policies within the context of our overall support for the deficit reduction targets set out in the agreement.

At the core of the massive loss of confidence in our economy and public finances has been the Government's commitment of €100 billion to reckless banks: €60 billion in recapitalisation and at least €40 billion from NAMA. The Minister, Deputy Brian Lenihan's, mantra - that bailing out these reckless banks and their investors was necessary to protect Ireland's credit rating - proved to be a catastrophic misjudgement. This policy of writing blank cheques for banks has destroyed our country's credit worthiness.

If it were not for the historical and potential future losses for Irish taxpayers from the bank bail-outs, Ireland's public finance problems would be judged by the financial markets as being difficult but manageable. The plan asks Ireland to use €10 billion of our National Pensions Reserve Fund, and then potentially to borrow up to an additional €25 billion from the EU and IMF at an interest rate of 5.8% to bail out bank investors and creditors, including those in Anglo Irish Bank.

Between Bank of Ireland, AIB and Anglo Irish Bank alone, there is €25 billion in unguaranteed, unsecured junior debts of €10 billion and senior debts of €15 billion. These debts are not Ireland's debts. Most of these were temporarily guaranteed by the Oireachtas to provide a period of stability to restructure the banks and to restore confidence, but this guarantee expired last September. Continuing to making the State responsible for the banks' debts potentially puts an unsupportable burden on taxpayers.

These debts were issued by the banks under private ownership to private investors, including other European banks. A large share of the unsecured senior and junior bonds have now been sold on by the original investors to hedge funds and other risk investors at a fraction of their original value. They are gambling that a weak Irish Government can be strong-armed into paying these bank debts in full. We support a more aggressive bail-in strategy for the banks that forces owners of these debts to participate in the recapitalisation of selected financial institutions.

The Bill published by the Government today - to give the Minister for Finance the powers to write down some of these junior debts in the banks - does not go far enough. There is also a need to negotiate with the senior bond holders to cap further losses for the taxpayer. This can be done while fully protecting the depositors and the functioning of Ireland's banking system.

This would make the adjustment for the public finances more credible, as well as facilitating a speedier re-entry by Ireland into international capital markets and re-establishing our economic independence, which has been cast away by the current Government.

The Government defends its failure to secure such a deal on the grounds that other European countries and institutions objected to burden sharing by senior bond holders in Irish banks, and fears they had about the impact of such a measure on other banking systems. If such concerns were expressed and are valid, which is arguable, then these countries and institutions should have provided Ireland with the financial incentives and means to pursue further bail-outs.

Offering Ireland nine-year loans at an interest rate of 5.8% to pay off the debts of the banks, many of which are now owned by speculators, is not a fair or credible policy. For example, Iceland has just negotiated a 15-year loan with the UK and the Netherlands, at 3.2%, to pay off some of its own banks' debts to UK and Dutch depositors. If other countries want Ireland to support the pan-European banking system, then a better deal is necessary.

The Government's so-called recovery plan, on which the EU-IMF agreement is based, does not offer any credible plan to protect jobs and growth from the effects of fiscal austerity. Our support for a €6 billion adjustment in 2011 was always conditional on the introduction of a parallel plan to stimulate the economy. The recent decision by the European Commission, after being consulted on the Government's draft plan, to revise down its growth projection for Ireland in 2011 to 0.9% confirms its own lack of confidence in the Government's growth policies.

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