Arthur Spring (Kerry North-West Limerick, Labour)

This is a rather appropriate day to discuss this Bill. While Members have had economics for ethics, it is time they had ethics for economics. This is a good day in respect of events in Europe. My speech was written two weeks ago but now is as relevant as one written two years ago. While the issues have been tackled on a national basis, more must be done on a European basis. As for the euro's institutional framework, insufficient fiscal disciplines were imposed by the European Union and given an absence of mechanisms to control economic imbalances, we ended up in a position in which our country, as well as several others, could not sustain the level of debt imposed upon them. This was largely due to the banks.

The NTMA produced a report this morning on its function within the banking system and mentions the IMF having a significant function within that. Unfortunately, some of our economic sovereignty has been lost for two reasons, namely, the imprudence of the banks, combined with a lack of foresight on the part of the Government. In common with many previous speakers, I have worked in financial institutions and as a recent speaker mentioned, there was a completely inappropriate culture involving financial recklessness and an inability to perceive what was right for the country.

Financial institutions are licensed by the Government because of their significance in society and because of what they can do to society. They are necessary and provide much that is good. For most people, they permit access to a home by enabling one to get started on a property ladder or to get on with daily modern lives through the purchase of a car. However, greed and short-sightedness became the culture, as well as a complete inability to philosophise what it is an institution or a society should be trying to achieve. It was akin to an adolescent period for the country and we have learnt from costly mistakes. However, today probably will be highly significant. Heretofore, we have had a currency that had multiple central banks. I completely disagree with this and am on record as having stated the euro was ill-conceived to begin with. I should clarify I agree with the concept of the euro but not the manner in which it was established. I was lucky to have studied economics in central Europe in 1999 and 2000 and I can recall one of my professors telling me to question Ireland's reasons for entering the euro. The idea that a currency could have multiple central banks without having an overriding fiscal policy meant, for example, that loan to deposit ratios differed. If one put €10 on deposit in a German bank, it might have lent out €12, whereas in Ireland, a bank might have lent out €22 on foot of a €10 deposit. Consequently, using the same currency without having influence over one's interest rates, duration of credit etc., meant we had a completely separate financial outlook on our economy then did the central bank of the currency, which is inappropriate. I believe steps will be made towards addressing this issue in the future.

This Bill entails taking steps locally. I am convinced the regulator here, that is, the Central Bank of Ireland, did not know what was its role for some time. I have worked on reports for institutions that were handed to the Central Bank of Ireland and I assure Members the level of detail contained therein was comprehensive and nothing was missing. However, the philosophy as to what it was trying to achieve was wrong. Moreover, there was a lack of knowledge within the Department of Finance, as well as a culture within the country whereby current income was being used for current expenditure. One does not even run a house like that, let alone a country. It is like winning the lottery and using it on day-to-day spending. The whole property idea was ill-conceived and is what drove the banks off the edge.

However, I refer to today's developments. I am not revealing any information because I do not have it - the Minister will know a great deal more in this regard - but some draft documents on what is happening in Brussels have appeared on the Internet. If they are to be believed, it appears as though Ireland is in a position to get significant interest rate cuts, which the Government stated it would do. Obviously, this was not achieved in isolation and there has been a pan-European strategy in this regard. I have held meetings with many European social democrats and am aware the Christian Democrats have done likewise. There have been meetings with people from Germany, Scandinavia, Britain, France etc. and we have conveyed the message that our country was in real trouble, as was the currency. One only needed to pick up any financial newspaper or magazine to realise that matters were coming to a head. Moreover, we have developed friendships and have developed trust again. We are in a better position than was the case last year or indeed four months ago. In addition, as Deputy Wallace once noted, one must be able to work with one's creditors and institutions and I note the European Central Bank, ironically, is now doing what it is being told by the Commission, the Heads of Government and the IMF. They have realised they needed to protect the people because the European Union is about protecting people and is not about wealth for a small group of people. Today's events will play a significant part in allowing the project to develop because they demonstrate there is a resolve to look after what is important. It also appears as though Ireland's corporation tax will remain intact and if that is the case, it constitutes another great event.

One point I wish to highlight is that I have seen auditors enter a financial institution. However, as for the people who actually arrived at one's desk at 8 a.m. to perform audits on files that could take up six or seven boxes, for all the experience they had, the only thing they lacked were a pair of short pants. They were being paid €17 per hour, while the auditing firms were charging the time out at €200 per hour, and would return to one's desk at 11 a.m. to confirm the aforementioned files were fine. Superman would not have got through those files in three hours, never mind a bunch of trainee accountants. Consequently, the way I would describe it is that culpability lies in many places but among few people. The vast majority of people who work in financial institutions are hard-working honest people who do an honest day's work for an honest day's pay. The culture of greed existed amongst the highest elite, for whom bonuses were on a here and now basis, rather than on how banking is supposed to work. As it must take a long-term view, there should be long-term bonuses. I do not believe Members will again see in their lifetimes the reckless promotion of people who were making short-term gains for a company or institution. The reason this sector is licensed is because it is meant to be prudent at all times.

While the diplomatic offensive appears to be working, an offensive also is needed within Ireland. I note the country may secure interest rate reductions and may end up with the duration of its term loans being doubled. However, it all comes back to the point that the country is running an enormous deficit. As there will be further cuts, it is the job of both the Government and the non-Government parties to find the fairest way to impose those cuts and make Ireland viable again. It will be necessary for Ireland to take two steps back and by so doing, one must consider what one has done heretofore. In Ireland's case, we have created a mess that we will clean up. We will set about creating growth and jobs again because it is all about trying to create a standard of living and a better country for the people.

Today is a great day and the speech I prepared two weeks ago is no longer relevant. I am delighted to see the Minister in the Chamber on the last day of the session. It is not as though the Government orchestrated the last sitting day to fall on a day on which a meeting would be held in Brussels but it appears as though good news is afoot. However, the deficit must be tackled and the many Members who have ideas in this respect always should convey them. I look forward to next Tuesday, when the Taoiseach will attend a meeting of the Joint Committee on Finance, Public Expenditure and Reform, of which I am a member, when they will have an opportunity to ask him questions on what has happened heretofore.

There also are concerns regarding what banks can do to institutions of Government and this will not be allowed to happen again. While both the Central Bank and the Financial Regulator must have roles in this regard, this Bill states the European Central Bank will have a role. It will regulate, watch and have an overriding oversight on what constitutes prudent lending and what is a prudent financial institution. I am delighted by this development, as are many people throughout Europe. I believe it will lead to a better European Union and Ireland will be in a position to achieve real growth, have a correction and drive forward. Today is a highly significant day on which I am delighted the House will break up for the summer. I wish all Members a very pleasant break and I hope we will all return refreshed. I hope some Members might even take a trip to Kerry.

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