Timmy Dooley (Clare, Fianna Fail)

I accept that and the Government has continued to do that. The only change in its banking policy is that it calls the two main banks two pillar banks. The word "pillar" is probably the only difference that has emerged compared with what we had done. I do not believe there has been any improvement in reputation as a result of any of the policies the Government has managed to bring to the table, but that is for another day.

It is important to get Ireland back on track and to decouple Ireland from Greece and Portugal. That is being done and represents a culmination of the process we started. I recognise the Government has continued in that vein and that success is being achieved, which is to be welcomed, particularly given that Greece finds it difficult to face up to its own issues. There are much more fundamental issues in how it handles its administration and the sooner we can move away from that the better. We need to be careful that we do not over-respond to the bond market and in particular the narrowing of spreads on bonds. That happens, usually without any great reason and is based on sentiment rather than on reality. We should not over-react when there is a positive movement as undoubtedly there will be negative movements from time to time. It should not be used as a bellwether or a benchmark as to how we are achieving. We need to continue with the very strong programme that was initiated whereby we continue to face up to the difficulties particularly in the deficit and continue to resolve the banking crisis.

There are very positive aspects to this legislation and agreement from an Irish point of view. It will significantly ease the burden on the Minister for Finance and his deputy in the preparation of the budget, to which we look forward. While I recognise that there are significant reductions in the projections for growth, those projections have not reached the target. However, despite that there is now considerable headroom as a result of the interest rate reduction, which is positive.

Sadly the Government's jobs initiative, involving raiding the private pension funds and which reduced tourism-related VAT by four percentage points, has not been as successful as we had all wished. I did not agree with the fundamental policy at the time, but I wished it well when speaking in this House on the basis that if it worked it would be great. Sadly it has not and we have seen unemployment continues to rise and we have not seen any appreciable passing on of that VAT reduction. It brings us back to the central plank of some of the promises the Government made and continues to make since the general election, as it did with its programme for Government which rehearsed its pre-election promises. The Government did it again at the "pat on the back" day it had after it was 100 days in government when everything was going swimmingly and it made commitments not to make any income tax increases through rates, tax bands or credits at the next budget. Not wanting to be trumped by the Taoiseach, the Tánaiste and Minister for Foreign Affairs told us he would protect social welfare rates. Sadly, despite the fact that considerable headroom has been provided to the Government by virtue of the interest rate reduction, the Taoiseach now seems to be weakening on that position. He said in the House yesterday that he has now discovered there were commitments in regard to tax increases in the memorandum of understanding, that it would be a matter for the ECB, the IMF and the EU and that he would have to try to alter that position. That was all in the memorandum of understanding which, as the Minister present knows, was negotiated before the general election and, therefore, before the Government was 100 days in office and before the drawing up of the programme for Government. It is disappointing and will add further to the cynicism that, on the one hand, promises were made and now the Government is weakening on that position. It is not enough to say the memorandum of understanding was a document the Government inherited. The fact is that as a result of some of the renegotiations that were made in respect of that document, the Government put its signature to it and it is now its memorandum of understanding between it and the troika. It is disingenuous to suggest it is an agreement made by somebody previously. It is important we get clarity on that.

All these measures taken at European level are important for the future of the State at a macro level but the recovery of confidence in this State will be based on the micro activity of families, individuals and citizens of this State. If citizens cannot plan in a way that assists them in managing their daily, weekly, monthly and annual budgets, it will be impossible to restore confidence in the market. We know the recovery of this State will be from the ground up. Admittedly, we must have in place the right macro policies but it will come down to individual choices on a daily and weekly basis. Unless the Government can succeed in giving confidence to the people on the ground, the macro issues will not materialise in a way that we will generate growth, which is the only way we will emerge from this crisis.

The Government has a good deal to do in terms of restoring confidence. I look forward to hearing what the Minister for Finance will say in certain statements I understand he will make later this month that will give longevity to the policy framework the Government will bring forward not only in the forthcoming budget but in future budgets. We must get clarity on individual personal finance in that regard. I hope the Minister will move away from the notion of making grand statements that are seen to appease but are not realisable. We had an instance of that on the Government's 99th day in government when the Minister, Deputy Noonan, visited the United States. He got a jolt of the green energy when he got there and decided to tell the Europeans to hell with it that we were going to burn the unsecured senior bondholders in Anglo Irish Bank. While it sounded good, the reality was that there had been no negotiations or discussions with the ECB, in particular, which, for its own good reasons, has set its face against burden-sharing with bondholders, particularly those who are classified as "senior debt". Unfortunately, that has further added to destabilising the markets and could be seen as having influenced some of the negative trends on the bond spreads since then.

The previous speaker spoke about some of the difficulties in Europe, and if I had more time - I might have an opportunity at another time - I would go into that. There are significant issues in Europe where there has been a move away from the community approach. There is now a more bilateral approach. France and Germany have taken very strong positions. Heads of State attend meetings, agree a measure and then return to their respective parliaments and countries and say something different or what the measure means for them. That is not good for the future of Europe or for putting forward a cohesive approach which will give some confidence to the international markets on which we all depend for the financing of individual states.

The Minister for Finance's comments in the US at that stage was yet another example of member states saying what suits the home audience and then going to Europe and recognising it is not doable. There needs to be more careful consideration of the matters rather than playing to the audience when, in effect, ultimately one will not be able to deliver.

See this speech in context