Mary Lou McDonald (Dublin Central, Sinn Fein)

The Fine Gael-Labour coalition Government sought and received a mandate from the people on 25 February last. That mandate was based on a whole series of electoral promises. It was meant to be a mandate based on commitment and backbone. They said it was a mandate to renegotiate the EU-IMF deal, and impose burden-sharing on gamblers and speculators, as well as reducing the crippling interest rate on money borrowed. However, that mandate has been spectacularly breached by the Government's successive and startling U-turns.

The results of the recent election were a clear indication that the people had rejected the failed policies of the former Fianna Fáil-Green Party coalition and were demanding change. The time is long past for this new Government to grow the backbone it promised. Acceding to the call in this motion for a referendum on the EU-IMF deal is surely one of the best ways to do so.

The amendment to this motion seeks to welcome the Government's restatement of its commitment to protect those whose funds are guaranteed by the State, but senior bondholders are in no way supporting the State. Nor does protecting and sheltering them support our economy. In fact, senior bondholders are leeches on the economy. Continuing to pay them will only serve to guarantee them a licence to suck the very lifeblood from this economy. The Irish people did not take pay and public service cuts or tax increases so that private investors could be rewarded.

The Government's attempts at restructuring the banking sector are weak to the point of being anaemic. There was no ECB deal, no senior bondholder deal and no interest rate deal. The opportunity to impose haircuts on bondholders arrived with last Thursday's stress tests, when losses and equity requirements were crystallized on the balance sheets. Our Government failed to grasp the nettle, however. It held on to the forlorn hope that by maintaining credits intact, creditors would rush back in with new money. The Government does not appear to have investigated the history of debt crises, which in fact is quite simple. Whenever one has a big cloud of debt, no new creditor will come back in any substantial way. Nevertheless, the Government clings to the hope that the latest bailout will create capital reserves so high that financial markets will begin to lend to it again, thus weaning our banks away from the ECB and getting the lifeblood flowing back into our economy.

Will capital comfort be enough to bring depositors and bond investors back? The fact that "we will have very well capitalised banks", to coin a phrase, is far outweighed by their loss of credibility. Simply diagnosing potential damage to the banks' balance sheets will not automatically reduce uncertainty. Similarly, the banks' super-capitalisation will eventually be eaten away by the alarming increase in home-owner mortgage defaults.

It is a fiction to suggest the effects of these bailouts will be either a properly functioning banking system or one that will make a positive contribution to economic growth, but our bailouts were never designed for either purpose. Quite simply, they were designed to make whole those investors who would otherwise have been forced to partake of the rotten fruits of their reckless gambles.

Last week the Minister for Finance, Deputy Noonan, unveiled his new plans for bank restructuring. He revealed that Ireland would have two domestic, universal, full-service banks as the core pillars of the banking system. Bank of Ireland will make up the first pillar, while a merger of AIB and EBS will make up the second. We were also told that the core businesses of these new banks, into which we have pumped and are still pumping vast sums of money, will be focused on serving the needs of retail, commercial and corporate customers residing in Ireland. We are told that this new, restructured banking system is to lend in excess of €30 billion to the economy in the next three years, and credit will supposedly be flowing once more, just like the champagne in the Galway tent a few years ago. With €70 billion of Irish taxpayers' money invested, we can only hope this credit materialises.

We have heard so much lately about stress tests and bank restructuring that the debt burden on the State and on ordinary people has almost been downgraded. At the EU's insistence, peripheral countries are being forced to slash their budget deficits regardless of detrimental consequences for growth. As austerity drags down output, their enormous debts, expected to peak at 160% of GDP for Greece, 125% for Ireland and 100% for Portugal, look ever more unpayable. Bond yields remain stubbornly high, creating a depressing downward spiral of debt that inevitably chokes off growth.

Members of the current Government voted against the calamitous EU-IMF bailout only four months ago, so what has changed so radically to make them renege on their recent promises?

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