Brendan Howlin (Wexford, Labour)

While I concur with Deputy Higgins that people continue to be scandalised by the amount of money the public purse was required to contribute to maintain a functioning banking system, he is incorrect to suggest the full figure amounts to €70 billion or that the current bailout amounts to €24 billion of public money ón chiste phoiblí, to use the Deputy's words. As he knows, a number of contributors provided this sum. The objective of the Government was to minimise, as far as possible, the contribution from the public purse in this tranche of recapitalisation.

The banking sector has been the key focus of attention of the new Government's work for the past four weeks. While it is not in my direct line of responsibility in the Department of Public Expenditure and Reform, it has taken up most of my time to ensure that, in as far as practicable, the decisions made were rational and in the interests of workers, the development of the economy and the maintenance of jobs.

No one can be in any doubt regarding the scale and extent of the challenges which confront the incoming Government in seeking to achieve the goals I have outlined. However, following the announcement last Thursday, no one can have any doubt regarding the commitment of this Administration to work with our international partners. Unlike some people, we cannot tell our international partners to take a hike and then expect them to give us money the following day. Unfortunately, we need money to fund day-to-day expenditure because of the disastrous economic decisions of the previous Government. Having debated with some of the Deputies opposite during the election campaign, I am aware that they take the simple attitude that we should tell lenders to take a hike and instead live off the domestic treasury before returning to the bond markets when the treasury is exhausted. This is a hopeless analysis and it is unfair to present it to people as realistic. Many of those opposite did not seek to be in office or implement policy but instead sought to be in opposition, which is where they ended up.

As I stated, the goal of the Government is to reorganise and reconstruct the domestic banking system and return it to viability and sustainability. A major job of work remains to be achieved in this respect but the goal is a prerequisite to returning the economy to sustainable growth and achieving this Administration's foremost priority of creating employment. Regardless of whether we like the banking system, and Deputy Higgins does not like it, banking remains a key enabler of economic activity. The new and reformed banking system, the pillars of which were set out last week, will provide the foundation for rebuilding our economy's capacity to provide the growth and employment that will deliver for people on an enduring basis.

In his statement last Thursday the Minister for Finance announced that the Government's decisions would provide for a radical restructuring of the domestic banking system. People are longing to know what will be the shape of banking in future. The decisions will also return the banking system to long-term viability and profitability and result in a final break in the vicious cycle of the banks' massive dependence on the taxpayer.

To the dismay of Irish people the domestic banks have to date required a substantial level of capital support from the State and funding support from the Central Bank authorities. It is, therefore, of the utmost importance and a critical initial priority of the Government that we radically restructure our banking system and reduce the bank's reliance on State and Central Bank support.

Deputy Lenihan referred to a lack of clarity as to the position of the European Central Bank. The ECB, shortly after the announcement last Thursday, welcomed the Irish authorities' rigorous assessment of the capital needs of Irish banks and indicated its support for the Government's commitment to ensure the capital needs of the institutions are met in a timely manner. It was further announced that the ECB had decided to suspend the application of the minimum credit rating threshold in the collateral eligibility requirements for Irish Government or Irish Government guaranteed debt instruments. In addition, the ECB committed to continuing to provide liquidity to banks in Ireland, a critical enabler of a functioning economy. This continuing and ongoing liquidity support from the euro system will remain critical in safeguarding the stability of the banking system and its capacity to support economic recovery over the period required for the banking system to return to full health and sustain itself through stable market funding.

Deputy Brian Lenihan also raised questions on the future of Irish Life & Permanent and burden sharing with shareholders. As the Minister for Finance set out in last week's statement, Irish Life & Permanent will require a significant restructuring of its business and shareholding to meet the capital requirement identified under the PCAR exercise. The management of Irish Life & Permanent has agreed to produce a detailed capital plan for submission to the Minister for Finance shortly, the basic elements of which are already clear and correspond to what is included in Irish Life & Permanent's deleverage plans.

The role of the group's bank, Permanent TSB, in terms of the future banking landscape will be examined in detail through the restructuring plan process the bank will undertake with the European Commission. The Commission will insist, in line with the Government's objectives, that the restructuring plan demonstrates that sufficient burden sharing has been achieved with shareholders in circumstances that capital support has been provided by the State.

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