Peadar Tóibín (Meath West, Sinn Fein)

It is a huge amount of money to take out of the State. I will explain the normal way the multiplier works. Every €1 invested in the economy normally adds up to a multiplier of €1.25 over the course of a year. Over four years one would expect a sum of approximately €4 to develop from one's initial investment of €1. As the reverse is also the case, we will have a negative in this instance. Therefore, the Government's decision to hand €1.5 billion to bondholders will have a negative effect, to the tune of €5 billion, on the economy over four years. Jobs, wages and wealth will be lost to the economy. It reveals as a lie the Government spin to the effect that its primary goal is job creation. The primary goal of any Government can be identified by examining the resource levels invested in various areas. The Government's decision to put more resources into bailing out the banks than into any other area demonstrates that its primary goal is bailing out the banks, rather than job creation.

I would like to clear up a number of untruths spun by the Government in recent times to deflect attention from its shameful payment of €1.25 billion to bondholders. It has stated the troika has forced it to take this action, but that is plainly untrue. Paying unsecured and unguaranteed bondholders does not form part of the memorandum of understanding. The only reference to bondholders in the memorandum is in the Government's desire to impose discounts on subordinated junior bondholders. The troika will not withdraw the money we are due to borrow under the Government programme if we do not pay these bondholders. If it were to do so, it would be breaking the agreement we reached with it. When that point is made to the Government, it usually shifts its position. It claims that the European Union and the ECB have forced it to pay bondholders, even if it is not in the memorandum of understanding. Its argument is that it cannot upset the ECB on this issue because it has provided massive liquidity for Irish banks. If we leave aside the fact that Anglo Irish Bank is a dead bank and the reality that commercial debt should be dealt with in a commercial fashion, the simple truth remains that Ireland is unable to deal with its level of debt while repaying these bondholders.

The Greek Government is renegotiating a discount of up to 70% with private sector bondholders, and the ECB is not withdrawing liquidity from Greece. We are fulfilling our requirements over and above what Greece is doing. Why should we be treated any differently? If the plug was pulled on the provision of liquidity for Irish banks, it would create financial armageddon across the European banking system. The link between Irish and European banks was the reason this liquidity was provided in the first place. Will the European Union create financial armageddon in Europe if commercial debt is not repaid? I do not think so.

The Government has also made the point that Ireland should not want to be like Greece, in the sense of having the word "default" written on our heads. When the Minister for Finance, Deputy Michael Noonan, entered into negotiations with the ECB this week on the possibility of a reduction in some of our banking debt - the Anglo Irish Bank promissory notes - the sovereign bond market rate was approximately 6%. We were being punished by the markets not because we had threatened to default or because of an inability to pay but because of the fantasy of the suggestion that we would be unable to pay all our debt. It is clear that we cannot do so.

The Government has claimed that the Opposition, in arguing that we should not pay these bonds, is failing to explain how we would be able to meet the immediate requirement to make up the deficit if the troika was to take away our funding. I have dealt with the troika issue by clarifying that this is not covered in the memorandum of understanding. Our objective is to remove the troika by returning to the markets. If Ministers had read our pre-budget submission which was costed by the Department of Finance, they would know that our policies which we would implement after negotiating a new memorandum of understanding would lead to a quicker deficit reduction than through the Government's approach. In addition, it would happen in a more sustainable way. Our policies would help the economy to grow, whereas the Government's policies are strangling it. The Government would have us sign up to an anti-investment austerity treaty in Europe which will mean austerity budgets in perpetuity. Sinn Féin wishes to see our budgets decided democratically and on the basis of our economic cycle, not the election cycle of France and Germany.

Nobel prize-winning economists have stated the route the Government is taking is leading to an austerity suicide. It is crucial that at this time the Government does not become the textbook lesson for future students of economics on how to train-wreck a whole economy.

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