Dara Calleary (Mayo, Fianna Fail)

I welcome the opportunity to contribute to the debate on the Bill. I agree with much of Deputy Paschal Donohoe said. That the ideas under discussion were unthinkable one year ago is the reason we are in this crisis. Had the nettle been grasped long before now, we might not be at the precipice. In the past few hours Chancellor Merkel and Prime Minister Cameron held a joint conference. According to Reuters, Chancellor Merkel stated she was ready to act. The crisis has been ongoing since 2008 and one gets the sense from her remarks and the response to same that it is "Groundhog Day", in that people are always ready to act, yet there is a lack of decisiveness. I hope the establishment of the fund and all that goes with it, including the rules, is a start, but events will overtake it. Consider the evolving situation in Spain, in particular. The theme of the debate has been whether the fund will be large enough. This matter should be considered.

I welcome the "Yes" vote in last week's referendum and congratulate everyone involved in the campaign. Despite people's differences, some of which have been restated in this debate, the campaign was civilised and mature. We cannot escape the fact, however, that there was a low turnout. Regardless of the topic, as the country's Parliament, we cannot run away from the fact that just over 50% of the electorate believed voting on the issue to be worthwhile. This matter needs further consideration. In the aftermath of the Lisbon treaty referendum, there was a great deal of research into why people had voted or acted in a certain way. Will the Government conduct similar research on this occasion? In fairness, the referendum commission did a good job and provided accessible and understandable information. However, in the last few days of campaigning it was clear that many still believed they did not have a sufficiently proper understanding of the issues to enable them to vote. As representatives of democracy and regardless of the topic or the sides taken during the campaign, it would be worth the Government's while to conduct further research in people's lack of engagement in the campaign.

On a side issue, it is time to give up on voting on a Thursday. It belongs to a different era. We are now mature enough to vote at the weekend, be it on a Saturday or a Sunday. This would enable people to engage in the democratic process more easily than is the case.

The aftermath of the referendum has left a strange taste in my mouth. I campaigned on the basis that it was a fiscal treaty, separate from anything to do with our banking debt issues. This was the mantra of the Government and my party. Even though we were laughed and jeered at, we knew the mantra was that there was no link. However, within minutes of the "Yes" vote becoming apparent last Friday, the Government line as expressed by its most senior members - I am not referring to a Minister of State or a Government backbencher - was that it would help us to get a deal on the banking debt. They were like greyhounds out of the traps. The Ministers directly involved in the matter, Deputies Michael Noonan and Brendan Howlin, did not take that line, but a number of Ministers and others who should have known better did. Clearly, they lost the run of themselves following what was a positive result.

Like a contestant on "Who Wants to be a Millionaire", the Taoiseach telephoned all of his friends on Friday. From his inability to tell us what Chancellor Merkel said to him, it is clear she was not impressed. This point has since been stated by the German authorities. As of now, they do not believe there will be any movement on our banking debt. Regardless of on which side of the House Members are, everyone agrees it is the issue that is hanging over our heads the most.

Linking the two issues was disingenuous of those members of the Government. Unfortunately, this has been typical of some members of the Government, in that they constantly oversell their ability to deliver a deal and keep building expectations of a deal. On Friday there were soundings to the effect that a deal could be indicated as early as the next summit, but that suggestion crashed immediately. We were told there would be a deal when the promissory note was paid at the end of last October. We are still waiting for the troika's paper on our bank debt which was promised months ago. Whenever one tries to make a deal, one does not show one's cards. In managing people's expectations and building confidence the Government needs to apply the reins and be careful in its public pronouncements on a deal on our banking debt. Official pronouncements should be left to the Minister for Finance, Deputy Michael Noonan, and the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, as the Ministers dealing with the issue. They should be allowed to do the talking in public. It seems that whenever a Minister not involved in the process discusses it, he or she undermines our ability to get a deal, the context of which is changing.

The serious problem in Spain eased somewhat this morning, given that country's ability to sell bonds. However, there will be developments. If Spain does reach a deal, regardless of the type, we must be entitled to the same terms. If not, we are not in a European Union.

That has been the difficulty in this entire process since it erupted in 2008. The European Central Bank is running one process, while the political side of the European Union is running a completely separate one. The ECB is calling all the shots for those in the eurozone. Are we in a European Union or not? The ECB does not perceive the Union in the same way. This must change. If action is to be taken for one euro member state, the same entitlements should be available to another member state. One presumes that in a fiscal union the same rules apply to all members. Bluntly, if Spain gets a deal that is more lenient than the process we are going through, we are entitled to the same deal. If not, this is not a fiscal union, never mind a political one.

It seems there will be a date with destiny in two weeks when the health check of the Spanish banking system will be completed. There have been so many health checks of European banks that it is very hard to believe them at this stage. Bank stress tests in the European Union are like the boy who cried wolf. Fortunately, the BlackRock stress test of Irish banks finally came good. If this is a proper co-ordinated response, as we are led to believe, why are waiting for the Spanish banks to be stress-tested?

The mandate of the European Stability Mechanism must be expanded. We need to be ambitious and realistic from the start. We cannot set it on the seas, only to pull it back into harbour shortly afterwards to change it. We have to allow it to inject funds directly into failing banks instead of putting that cost on the back of the taxpayer, as we have done here. This would allow collective European-wide support in dealing with regional banking crises. If this is a currency and fiscal union, a proper functioning banking system is an essential part of it. The fact that we had to recapitalise our own banks and fund their losses for the sake of the euro means the State is paying down the debt. This is wrong. A proper currency union should ensure its member states share the burden.

We have to examine regulation on a pan-European basis. The European Union needs to take collective responsibility to ensure this does not happen again. The Governor of the Central Bank, Professor Patrick Honohan, recently contended that a centralised European banking regulatory system would not be affected by national blind spots such as property bubbles, as we have had here and in Spain, and would do a more effective job of supervising banks. However, he also said there was still a role for national monitoring and supervision to take account of national circumstances. National bank regulators will pick up the vibes and be in touch with what is happening in the local market. We need to have that local knowledge and presence, with a dispassionate European eye. An amalgam of these two elements, with sufficient regulation, should prevent a recurrence of recent banking crises. The ECB claims it has nothing to do with a regulatory role in bank supervision because the national central bodies fulfil this role. However, the ECB also told us we could not recapitalise our banks or burn the bondholders. It will not take responsibility for how we got to a certain point, but it will tell us how we should deal with it. If we are to learn properly from this, we need to enhance the regulatory system on a European-wide basis.

We need to revisit the need for a deposit protection policy across the eurozone. With bank runs occurring in Greece and, to a lesser extent, in Spain, deposits need to be protected by a European-wide guarantee in the same way borrowings are. The risk of contagion from a bank run would be sufficiently eliminated by such a move.

We must ensure senior bondholders in banks which go down take some of the hit. This obsession with ensuring they do not take a hit, instead putting the burden on the shareholders and the taxpayer as happened here, is morally and commercially wrong. It is like someone putting money on a horse and the ECB insisting he or she get his or her money back, even if the horse is still running one week later. One takes a bet; one hopes the odds go with-----

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