Pádraig Mac Lochlainn (Donegal North East, Sinn Fein)

With the permission of the House I will share my time with Deputy Mary Lou McDonald.

The horror felt by the Irish people following this week's publication of the banks' long awaited stress tests seems to have passed over the heads of the Government. Fianna Fáil's ruinous plan to shove nearly half the nation's GDP into the vaults of the nation's failed banks has now been accepted by the Fine Gael and Labour Party coalition as the only game in town. They lied to the people in the run-up to the election. Fine Gael and Labour know it. They won an endorsement from the electorate on the grounds that they would renegotiate the terms of the deal with the EU and the IMF and would insist on bondholders sharing the burden of the deficit. Little more than a month after the election, it is clear that they completely and deliberately misled the people.

Fine Gael champions the virtue of being honest with the people. We hear it at every turn. The Government will tell the people how it really is. What did we get from the recent European summit? Was retention of the 12.5% corporation tax not already secured in the protocol to the second Lisbon treaty? Presumably, the people are not expected to remember that.

The policies pursued by Fianna Fáil and endorsed in the EU-IMF bailout are to be relentlessly pursued, but all done under the cover of a series of bluffing games, media opportunities and dashes off to Brussels. Deputy Gilmore announced his plans to tour European capitals, sweeten up our European partners and present to them the new face of Irish politics. There may be new faces but they are the same old policies. Locking the stable door after the horse has bolted is what comes to mind.

The economic policies being followed by the Fine Gael-Labour Government amount to little more than further deregulation of labour markets, wage cuts, tax increases and reductions in Government spending. While these crippling measures are being pursued, the Government's recent stress tests exposed further bad news. We are on our fifth attempt to stabilise the banks. Put simply, we are just biding our time until we hit eventual default, which is the taboo word. We are told it is not an option and cannot and will not become a reality, even though outside the windows of Europe the rest of the world is telling us that default is clearly on the horizon. In Ireland today, German and French banks hold only €10 billion of our sovereign debt yet they hold €74.5 billion of Irish bank debt. Need we ask ourselves why both countries are so adamant that the Irish cannot and must not contemplate default.

The Government has committed the people to borrowing billions of euro from the EU and IMF at extortionate interest rates in order to pay back the monstrous debts incurred by insolvent banks. European institutions, including the European Trade Union Institute, ETUI, the European Trade Union Confederation, ETUC, and the International Labour Organisation, ILO, are all critical of this path. These institutions believe Ireland does not have a competitiveness problem and does not need to reduce Irish workers' wages. It is Germany, the country now calling the shots on our economic crisis, that needs to look at how it contributed to the Europe-wide debt problems. In real terms, Germany's wages increased no more than 1% since 2000. If Germany increased its own workers' wages rather than demanding that peripheral countries, such as Ireland, decrease theirs, it would go a long way towards rebalancing the European wage scale. Germany's low wage and low tax policies created the erroneous perception that Ireland is uncompetitive within the labour market. The ETUI, the ETUC and the ILO believe that to engage in years of austerity in the absence of co-ordinated public investment plans from Europe can only depress the Irish economy further. The focus has to be on growth and jobs. This is not a case of transferring welfare payments from the rich countries of Europe to the poor, as is now believed by the average German taxpayer, or of Ireland passing the begging bowl and asking for handouts. It is about solidarity between the core countries of Europe and those on the periphery. Only today, the former Taoiseach and leader of Fine Gael, Mr. John Bruton, pointed this out.

Elite policy makers across the EU are responsible for the eurozone debt crisis. Ireland's problem is a European problem, and reflects a structural imbalance between the core and the periphery. The 1.8 million Irish taxpayers cannot afford to pay the creditors of private European banks who lent recklessly to Irish banks, accumulating more than €150 billion in debt. Global wages increased on average by 22% in the period from 2000 to 2009 while in the United States and in Europe wages only increased by 5% during that period. Labour productivity, on the other hand, increased by 11%. In other words, wages increased only half as fast as productivity. It is obvious the biggest beneficiaries to rapid growth, productivity and profits, were the employers yet it is wage earners who are being asked to carry the burden for the reckless behaviour of those in financial capital markets. Those who benefited from the cheap money boom are the people in the top 10% of income distribution yet they are being asked to contribute nothing towards solving their own mess. One could not make it up.

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