Eamon Gilmore (Dún Laoghaire, Labour)

Earlier today, the Taoiseach said this motion is on the agenda today because of a political imperative. It is political. It is a cynical exercise in Fianna Fáil tribalism. In two hours, and with less than 24 hours notice of the wording, the Dáil is expected to debate and vote on the EU/IMF deal. We are doing so, not because the Government has suddenly woken up to the requirements of democracy or the Constitution. This is a purely political exercise for the Fianna Fáil party. This debate, we are told, is about putting it up to the Opposition and making them say how they will run the country without the IMF deal. It is another foretaste of the political posturing we can expect from Fianna Fáil during the election campaign. Fianna Fáil, the Republican Party, is reduced to trying to make political capital out of the fact that it has bankrupted the country, has been forced to seek outside assistance and has been reduced to going cap in hand to the lenders of last resort.

Let us be clear. Such is the mess that Fianna Fáil made of the country that we need outside help. The question is what form of external assistance is agreed and on what terms. Labour's view is clear. This is a bad deal for Ireland. Because it is a bad deal for Ireland, we will vote against it here and, in the forthcoming election, we will seek a mandate to renegotiate it.

The Labour Party supports the programme's objectives of achieving fiscal and financial sector stability. We have consistently argued over several years that Ireland faces a three-legged crisis – a banking crisis, a fiscal crisis, and a jobs crisis. We have supported the target of reducing the deficit in line with our obligations as members of the eurozone. We have pointed repeatedly to the need to restore credit in the economy and to fix the banks at minimum cost to the taxpayer. We have said, again and again, that the fiscal crisis and the banking crisis are linked to the jobs crisis and that growth is a vital ingredient in the solution to both.

Our concerns about the deal are not with the objectives or the four key elements of the programme. Our concerns are about the overall structure of the deal, the assumptions that underlie it and whether it will work, as well as with individual components within it.

The test of this deal, therefore, is whether, over the period of the programme, it will result in a return of investor confidence to the point where money will be lent to Ireland at reasonable rates of interest and the banking system will be able to fund itself. In the words of the memorandum, Ireland requires a programme that will "restore domestic and external confidence and thus snap the pernicious feedback loops between the growth, fiscal and financial crises". That is the stated objective of the programme, but there are strong grounds for doubting that it can achieve that goal.

The programme was constructed in a short period, and in the face of pressure from the financial markets. While Ireland was out of the bond market, the yield on bonds in other eurozone economies increased, such that there was pressure to get the deal done quickly. Because time was short, what we have before us is at best partial and at worst unworkable. This is reflected in market comment, which has questioned the interest rate being applied to the loan, the protection of senior bank debt, the amount, timing and front-loading of the fiscal austerity and the bank-restructuring plan, which lacks clarity in respect of what Irish banking will look like at the end of it.

What is being questioned are the two key assumptions on which the programme is built. The first is that Ireland's present inability to access the sovereign debt markets is for reasons that can be resolved over a three year period with fiscal consolidation and bank restructuring, making it possible for Ireland to return to the market by 2014, if not sooner. The second is that a recapitalisation of the banking system will automatically lead to the banking system being able to access funding within a short space of time without State or EU/ECB support and that the banks will therefore regain the trust of the markets, function normally and provide adequate access to credit to businesses and households.

If Ireland is to return to the market, then the market must be convinced that the Irish economy can manage its debts. This, in turn, depends on the stock of debt that has been built up, the rate of interest being paid on that debt, and the level of growth being achieved. Growth, in turn, depends on the amount of money being taken out of the economy through fiscal austerity and the extent to which the banking system has been re-organised and can deliver credit to the economy, as well as growth in the world economy and the development of a coherent model for post-crisis growth in Ireland.

While many comments are made about Ireland's flexibility and historic track record of successful fiscal consolidation, it has to be noted that on this occasion we do not have the capacity to devalue our currency. Moreover, we will export to markets experiencing slower growth and we will come out of a recession induced by a bank crisis. These tend to have a greater long-term impact on trend rates of growth than other types of recession.

Growth is critical to the success of this plan or any viable plan. That is why Labour has highlighted the need for adequate investment in the economy through a strategic investment bank. We have argued that resources must be available for a jobs strategy and against the excessive front-loading of austerity in a €6 billion budget, while accepting that the deficit must be brought under control.

So weak was the Irish negotiating position, and so much ground did Government yield on each issue, that, in the end, we are left with a deal that provides the least possible amount of money, at a high interest rate, with little clarity on how the banking system will lend to the real economy, no bail-in for senior bonds, and an extremely demanding austerity programme drawn up by people who know they will not implement it, and which is 40% front-loaded. In fact, it has been reported in the international media that the IMF itself has doubts about elements of the plan, including the fact that groups of bank creditors are not sharing the burden. It has been suggested that the IMF managed to negotiate with the Commission on the target date for achieving the 3% deficit, achieving an extension of one more year.

This is primarily an Irish problem, and it must be fixed in Ireland. It is also a European problem in which the European Union and the ECB have responsibilities. How was it that European banks were allowed to lend into the Irish property bubble, without intervention from the ECB? Why are European banks being protected from losses in respect of senior bonds while the Irish taxpayer is carrying the can? Europe made its contribution to the problem and must also make a contribution to the solution. It must do so because until there is a solution to the Irish crisis, there will be no overall solution to the euro crisis. That is the reality of inter-dependence. However, some are justifying the deal on the grounds that it will make a profit in light of the high rates of interest that are being charged.

The fact that an IMF bailout comes with conditionality is well known. It is necessary that, for the next three years, the Irish Government will be obliged to work with its lenders on economic and financial policy. The IMF has made clear, however, that this does not remove the element of democratic choice regarding how the core objectives of policy can be achieved. What is also clear is that the next Government will be involved in a process of continual negotiation on the detail of the programme. That will not be easy but it is a task that Labour is ready to take on.

My party will seek a mandate from the people for our vision of what Ireland's future can be and we will engage with the lenders on the basis of our view of how Ireland can have a prosperous and sustainable economy and a fairer society. We do not subscribe to the view that fairness must always be sacrificed for economic progress. We do not agree that cutting the national minimum wage is the answer to the problems in the labour market. We accept that the public finances must be brought under control but this must be achieved in a manner which is consistent with the broader goal of the programme, namely, that there be room for economic growth.

Fianna Fáil has brought us to the lender of last resort and Ireland has been obliged to apply for a loan. However, the terms and conditions of that loan must be workable. The deal must hang together, with jobs and growth a central part of it. Labour is opposing the motion because what is on offer is a bad deal for Ireland. In the coming election we will seek a mandate to renegotiate the programme.

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