Brian Hayes (Dublin South West, Fine Gael)

We are making real progress on returning this country to growth. The Government is sorting out the mess in a calm, considered way and we are not indulging in theatrics or dramatic gestures. Our ambitions and targets are clear and straightforward. We want to bring a better balance into Government finances and we continue to negotiate for more favourable terms from our external funding partners. We are keeping a focus on restoring growth and encouraging job creation. We are engaged in a major programme of reform and change, all with the intention of restoring the economy to an even keel and the country to a sustainable development path. Our primary objective is the creation of jobs.

The initial response of the previous Government to the banking crisis in September 2008 was to provide a full unconditional guarantee for bank debt of the covered institutions. In effect, the Government guaranteed approximately €375 billion of private bank debt and transferred, in that single decision, the liability for private bank debt to the taxpayers of the State. Subsequent to the provision of the guarantee, decisions taken by the Government in regard to the banking sector were clearly driven by the need to ensure that there was no possibility of a "call" on the guarantee. Effectively, a firm policy was established that no bank or financial institution in the State would be allowed to fail. This policy was underwritten by a guarantee provided by the State. Decisions to capitalise the banks, to nationalise Anglo Irish Bank, Irish Nationwide Building Society, INBS, and the Educational Building Society, EBS, all flow directly from and reflect the underlying need to prevent, at all costs, a call on the guarantee. Further, the exposure of the State both in terms of direct and indirect support for the banking system was a major factor in the necessity for the EU and IMF bailout. It goes without saying that the collapse of the banking sector has been at the heart of Ireland's economic difficulties. In repairing the banking system, the overarching challenge for the current Government has been to restructure the sector.

Significant progress has been achieved in recent months. We have formed the pillar banks, merging EBS with AIB, and combining Anglo Irish Bank with the INBS to form the Irish Bank Resolution Corporation, IBRC, a bank that has no role to play in the future of the Irish banking landscape. We have recapitalised the banking sector and strengthened the governance framework of the banks. At this stage, it is fair to say there is a growing consensus that the recapitalisation decision established by the Government in March 2011 is succeeding.

In terms of boosting resilience, a final €24 billion recapitalisation of the banking sector took place following the prudential capital assessment review, PCAR, process and earlier steps taken by the State during 2009 and 2010. The PCAR process is regarded as robust and comprehensive, a point underlined by the outcome of the European banking authority stress tests announced recently. With the additional PCAR capital, Irish banks are now among the best capitalised banks anywhere in the world. It is worth highlighting that approximately one third of this capital injection was sourced from the private sector through burden sharing with subordinated bondholders in the various banks, anticipated asset sales and the injection of private capital into one major bank. The contribution of the private sector is larger than originally envisaged and I view this as a clear vote of confidence in the Irish banking system and the future of the Irish economy.

Since 2008, many Irish businesses and individuals have taken money out of Irish banks and other Irish financial institutions, and now is the time to bring that money back. The banks, too, have a big job to do in reassuring their customers and growing their deposit base, and we have seen positive deposit flows for the Irish banks in the last quarter of 2011, a very positive development.

At the same time, the programme of asset deleveraging is well under way. Combined, the two pillar banks sold €15 billion of assets at significantly better prices than anticipated in the PCAR and prudential liquidity assessment review, PLAR, 2011 exercise. As it is sometimes overlooked, I want to stress that more than 80% of the assets to be disposed of by the Irish banking system by the end of 2013 are located outside of Ireland.

The merger of Anglo Irish Bank and the Irish Nationwide Building Society into IBRC has taken place, the disposal of deposit books has been completed and the work-out of the remaining loan books is progressing. All of these measures are helping to continue the process of rebuilding international investor confidence in the Irish banking sector and we are confident in and committed to the bank restructuring plans.

The motion from the Opposition asks the House to agree that the Government shall not make the IBRC bond payment due on 25 January 2012, that the Government make no further payments to IBRC bondholders and that the payment on the promissory note of €3.06 billion should not be made.

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