Brian Hayes (Dublin South West, Fine Gael)

This has been a useful debate because it has exposed a number of very clear positions between the Opposition and Government. There is a majority view in the House for the position as outlined by the Government, a position which stands.

I wish to take up some of the points made by Deputy Ó Snodaigh. Like him, I believe in Ireland and the future of the country. I want a future in this country for my children and everyone else's children. We will only have that if the country can get back on its feet. We are a small, open economy and depend on traded goods and services. Our reputation is crucial in that regard. The idea that we would follow the default position, as the Deputy correctly outlined in regard to Greece, would be a recipe for disaster for this country.

He rightly points out the misery that Irish people have to bear as a result of unemployment, reductions in services and the like. The misery would be compounded threefold this year in terms of the adjustment that would be required if we were to follow the option he and his party have articulated. With the greatest respect to the Deputy, the Government is not prepared to play with people's lives. If one is prepared to follow the Greek option of default, then one is ready to engage in a gigantic game of chance. If Ireland had chosen that option, it would immediately have been obliged to find approximately €16 billion for the current year's budget as opposed to €6 billion. It is as a result of this that I and the majority of other Members occupy a position which is fundamentally different to that held by the Deputy.

There is one group in the House - which comprises the Deputy and others - the members of which argue that for Ireland to go forward, a unilateral position must be adopted. There is another group on the Government side - until recently I thought this group included Fianna Fáil but that party has now caved in to populism - the members of which argue that the option for Ireland is to proceed through negotiation. I argue that our position is best advanced by negotiation rather than by taking unilateral positions on any of the issues under discussion. It is in our national interest to attempt to obtain better terms and conditions in respect of the deal that was put in place by the previous Administration. The Government has enjoyed some success in this regard. I accept that such success has been limited in nature but it is success nonetheless.

In May, in the context of the jobs initiative announced by the Minister for Finance, we were successful in overturning some of the decisions taken by the previous Government and in reducing the rate of VAT. One of the reasons this month's VAT returns announced earlier today are down is that we lowered the rate in respect of certain goods and services from 13% to 9.5%. I accept that this is not the only reason for the decrease in VAT returns and that the problems relating to the domestic economy continue to have an impact. The reduction in the rate of VAT came about as a direct result of our policies, one of which relates to a desire to improve the experience of tourists who visit this country. In July, we concluded a significant settlement in respect of the amount of money the country is borrowing and the period over which it will be obliged to pay it back. This development also came about as a result of negotiation. Was it helped by the fact that the position of Greece had taken centre stage at that point? The honest answer is "yes". However, it was also helped by the fact that we had been involved in careful negotiations with our EU partners in respect of the range of funds that were to become available.

What is our next plan? We want to discover whether we can redesign the promissory notes that were put in place by the previous Administration. The amount to be repaid in respect of those notes is €47 billion. This will have to be repaid by this Government, and that which succeeds it in 2015 or 2016, over a ten-year period. Would it make more sense to repay that €47 million over a longer period and at a lower rate of interest? The answer is "yes". I do not state that we will have immediate success. If we are successful in respect of the €47 billion to which I refer and on redesigning the promissory notes relating to Anglo Irish Bank, that would be infinitely better - I suggest that any honest person would agree with me - than matters going to the wire in respect of the debt of that bank.

It remains the Government's position that it would have wanted to do something different with regard to the senior debt of €3.7 billion that remains on the books at Anglo Irish Bank. Some of that money was repaid today and the remainder will be repaid next year. However, our opinion does not reflect the majority view of the ECB. To return to the Deputy's argument regarding unilateralism as opposed to mine in respect of negotiation - and taking into account what the Minister for Finance said earlier with regard to the lesser of two evils - we must ask whether it would be better to accept the view of the ECB on this issue in the hope of being in a position to try to negotiate something better in the future. In a nutshell, this is the approach we have adopted.

In the run-up to the general election, I did not state - I challenge people to prove me wrong - that there would be unilateral burden-sharing in respect of senior debt. I stated - as reflected in our manifesto - that we would immediately introduce burden-sharing in respect of subordinated debt. We managed to achieve this in the context of recapitalising the banks. However, we did not give a unilateral guarantee to the effect that we would do this outside the framework of the ECB.

When he spoke about this issue in the United States during the summer, the Minister was correct to state that it should be firmly restored to the agenda. That is what one does in negotiations. As a means of achieving something greater, one brings forward issues about which one feels strongly. As other Deputies and I are aware, people feel passionately about this issue because Anglo Irish Bank is no longer functioning. As the Minister stated, that institution is a warehouse. In the context of our ongoing negotiations, I am not prepared to take the risk that we would not be able to achieve our objectives as a result of taking a firm stance on this issue, particularly when the greater prize is a write-down in respect of some of the promissory notes and an extension to the repayment period.

The ECB has invested a great deal of money in Irish banks. To date, it has provided the banking sector here with up to €110 billion in liquidity. The interest rate which applies in respect of this is 1.5%. If any of the Deputies opposite can identify another international agency or institution which would be prepared to lend €110 billion in liquidity to Irish banks at a rate of 1.5%, I would love them to do so. Ireland is on a life support machine, not just in terms of its current deficit but also with regard to the banks. There is agreement among Members that the two banks which are systemically important are AIB and Bank of Ireland. If we want these two pillar banks to have a future, then we should not argue in favour of a 50% haircut. How could we possibly attract private sector funds for those banks if we took a unilateral decision in respect of them tomorrow morning? That is not the way in which developed economies operate.

A 50% haircut similar to that which will apply in the case of Greece does not represent a solution to our problems. Such a development would give rise to a nightmare scenario similar to what would be experienced in a nuclear winter. Ireland would be frozen out of the markets for a considerable time if such a haircut were applied to our debts. Greece will be in the accident and emergency department for more than a decade.

Many Deputies have asked about the Government's plan. Our ambition and our objective is for the country to return to the markets by the latter part of 2013 in order that we might be able to fund our own way again. The only way this can be achieved is by taking a strong position on this issue and by working with our partners in Europe and the IMF to ensure that we can obtain a better deal. We must renegotiate the current deal in Ireland's interests and we must do this is a clever and significant way rather than by engaging in the kind of stampede politics which those on the benches opposite appear to favour. There is not any credibility in politics of that type. We will emerge from the programme and regain our economic sovereignty and the independence Irish people cherish.

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