Enda Kenny (Mayo, Fine Gael)

At the recent meeting of the European People's Party, EPP, we made the point, which backs up the Government's case, that the 12.5% corporation tax rate is of fundamental importance to the Irish economy and its attractiveness for foreign direct investment. As I pointed out previously, it should be noted that this country is not dependent on manufacturing t-shirts or shoes. We have many of the world's finest people working in information technology, pharmaceuticals and biotechnology companies in Ireland which play an important part in the country.

The take from corporation tax is in excess of €3 billion, which is an important amount of money in its own right. However, more important is the strength of the trust that was given by Ireland from the outset in respect of the corporation tax rate. President Sarkozy attended a number of meetings of the EPP but I did not share his view on this. When Europe signed up to the Lisbon treaty, it signed up to all that is in it where it was made clear that the right of each individual country to deal with its own business was sacrosanct. In that regard I fundamentally disagree with President Sarkozy.

The Irish people voted in favour of the European Union and the Lisbon treaty and for its full potential in terms of the EU institutions. As big countries stand by small countries in the political sense, we now have a problem which will have to be dealt with. Turning away from a crisis is never a solution. There is a real financial crisis and it is unfair to expect a country like Ireland to accept a burden of €100 billion arising from all of the complications in the banking structure.

The problem will not be solved by letting Greece, Ireland or Portugal run their course until the IMF or EU money runs out. There is serious exposure by international banks to sub-prime mortgages that have been bought in from the United States in the past number of years. I would like to think that what the Minister for Finance said here last week is not true in the political sense and that it is possible, through good politics and agreement across Europe, to get a better deal than we have. An interest rate of 5.8% is too high. I recognise the difficulty in this regard, but just as the fundamental principle of political responsibility between large and small countries applies, so it should apply in finding a solution to this crisis. One way of dealing with that would be for Europe to recognise that there must be a clear banking strategy in each country and across Europe, as applies in the United States. The Federal Reserve knows what happens in Oregon or in Florida, in California or in Connecticut. It has a handle on it all and can know what is happening in individual banks. We do not seem to have that strategy across Europe. We need to ensure a strategy is put in place for each country that will stand by the principles and commitments of what is involved here.

Why should we not have a facility at European level? For example, there is approximately €60 billion worth of tracker mortgages in the Irish system. These are running at a loss and that loss must be funded either from deposits coming in or bank borrowings. There should be a mechanism whereby mortgages like that could be moved to a special purpose vehicle, which could be funded through the ECB or some other vehicle and insured against losses by the State, in order to remove that element of the burden on the taxpayer from the banking structure. This would bring a measure of relief that would be important in terms of perception.

In the next number of years, this issue will be sorted out and it would be fortunate if one could look back from five years hence and see what triggers have been pulled to bring about that change. Last week the Minister said this cannot change and that we are locked in to the rate, but this week it has become his personal mission. It is not his personal mission, but a country mission. If we are to have good policies across Europe, we must have definitive clarity about the banking strategy that will allow countries to stand up to the mark and sort out their problems. However, we need help. We are not seeking help with two hands out, but seeking structural change. I believe that can be achieved through good politics.

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