Peter Mathews (Dublin South, Fine Gael)

Next Wednesday, 25 January, is the due date for the redemption of a bond issued originally by Anglo Irish Bank Corporation, now the Irish Bank Resolution Corporation. We are at an important financial crossroads in the history of our country. Anglo Irish Bank has been insolvent and supported by financial engineering, promissory notes and the emergency liquidity assistance of the European Central Bank and funds from our Central Bank. The debt that lies embedded in what was Anglo Irish Bank was not created by the citizens of this country. It has been meted out onto their backs by a mixture of incompetence and mismeasurement over a certain period under the past Administration.

We are at a moral crossroads. We should bring to the attention of the creditors holding the bond the facts that the bank is insolvent and that, in effect, it is not a case of our not wanting to pay but of our not being able to do so. We can add dramatic emphasis to these facts by saying we honour our just debts. However, where debts are present that we have not the capacity to repay, we have got to explain the full story, which is not understood by the creditors, and state we cannot pay and that the bank is broke.

Consider the debt of €1.25 billion. The attention of the creditors will be in sharp focus because the banking system, the Irish-owned banks, are in debt to the ECB and our Central Bank at a level of approximately €150 billion. It is the forbearance and tolerance of citizens that keeps the financial edifice and engineering of the eurozone and the greater financial system of the developed world in place. We have been doing considerable work, facing enormous challenges. Through the great work of the Minister for Finance, Deputy Noonan, and the Taoiseach, we are bearing the load of trying to bring about a fiscal adjustment in line with the troika agreement signed in November 2010. All that work is important and must be done but the legacy debt is outside the responsibility of the people of this State.

One and a quarter billion euro is almost half the budget introduced in December. It is eight times the sum that will be raised from the household charge and twice that which will be raised by the VAT increase. The debt crisis in Ireland and other countries cannot be solved by adding more debt. I have recommend to Members of this House the book Endgame by John Mauldin, which explains how a debt crisis has developed over the past 15 years. Loading more debt on this country to pay legacy debt is like suggesting a drink problem can be solved by another whisky.

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