Olivia Mitchell (Dublin South, Fine Gael)

Last week's announcement is not in any sense the end to our problems and nor does it pretend to be. It creates a new structure for the banks and hopefully constitutes the last and final figure regarding the recapitalisation of the pillar banks. However, since the announcement much of the debate, including the debate this evening, has pertained to default. I understand how people feel about default. Everything within me rebels against the notion of being obliged to repay money to all the bondholders who lent to us. I undoubtedly share the rage felt by many people about being obliged to pay back money to lenders who were as reckless as our own banks were feckless.

However, were we to opt for a default, we instantly would become international pariahs in the face of the markets. As the previous speaker noted, we already have suffered huge reputational damage and we cannot now or ever in the future allow ourselves to be in a position in which we were the kind of pariahs to whom no one ever would lend money again. We certainly should not do so at present, when Ireland is completely dependent on the willingness of the bailout troika to continue funding next week's salaries and pension and social welfare payments. We should not do so when our banks are dependent for continued funds on the ECB.

Moreover, one should be in no doubt but that this is about funding tomorrow morning, to allow banks to dispense money through the ATMs and to pay people's mortgages, food bills and so on. While it may be that people would continue to lend to us were we to default, I do not believe this to be the case. It certainly would be a high-risk action and no Government is entitled to play such a high-risk game with people's precious savings and futures.

The European Union has said "No" to bank default as far as the pillar banks are concerned and the Government agrees. It must agree because these are the banks the Government is asking it to fund tomorrow, the day after and the day after that. The key point is that at present, we have more to lose by defaulting then we have to gain. This is an equation with which one cannot argue. While everyone wishes it were different, it is not something with which one can argue.

I believe that at some future point, the European Union will agree to some form of debt restructuring. I believe this to be almost inevitable and that in time, the European Union will come to perceive that it is in its interests, as well as in ours. After all, Ireland is joined at the hip with other European Union states in the eurozone and the process of negotiating and renegotiating our financial interactions with them will be an ongoing business. Last week's summit is by no means the end of the story but for the present, we must work the deal.

The deal that was on offer to the previous Government has not changed, although the Government will continue to try to change it. However, for the present it must show determination in its efforts to reduce our primary balance. As the previous speaker stated, I hope the Government can negotiate a reduction in our interest rates because there is no doubt but that if we are ever to achieve the overall deficit target of 3% of GDP, we will be obliged to grow faster than we accumulate debt and at present, it is difficult to envisage how this could happen.

These are the facts of the legacy of the previous Government and they will not change by having a referendum. The result of the bailout and the bankruptcy that led to it is that we do not get to choose these solutions any more. This is the price we all are paying for the last Government's actions. It is fantasy to pretend to the people that were they to have a referendum, they would have different choices. Alternatively, it may constitute a genuine misunderstanding of what is going on but it is not the reality. The only choice left to the people was to choose a new Government to try to get them out of the hole the country is in. This primarily now means stabilising our debt, which in turn depends on interest rates, growth rates, the size of the primary balance and the requirements of the bank losses.

However, we will have no growth without functioning banks and unless there is improved market confidence at home and abroad. The holding of a referendum on how to proceed or on whether to default or otherwise will not bring that day a single moment closer. It will postpone it because it will increase uncertainty, which is the last thing the country can have at present.

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