Kieran O'Donnell (Limerick City, Fine Gael) | Oireachtas source

I am delighted to be in a position to contribute to the debate on this relatively short Bill. I will comment on the Bill itself and I will then provide an overview in respect of where our economy, the banking system and Europe currently stand. Rather than looking back, I want to look forward.

The need for Bill obviously arose as a result of the referendum. As well as making provision in law in respect of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, the Bill will facilitate the placing of the fiscal council on a statutory footing. That council has been up and running for a period and, as originally envisaged, it is independent in its outlook. Those on the council are people of good calibre; they have come before the Joint Committee on Finance, Public Expenditure and Reform - of which Deputy Boyd Barrett and I are members - and their contribution to date has been extremely worthwhile. I welcome the fact that the council is to be placed on a statutory footing.

The other measures contained in the Bill relate to what one might term good housekeeping. If they had been put in place ten years ago, they could well have been of assistance in preventing the creation of the situation in which we currently find ourselves. Good housekeeping is always worthwhile but it must obviously go hand in hand with fostering economic growth in order that we might meet the targets required of us.

In the context of providing an overview of where we currently stand, it must be stated that the Government has stabilised the economy and the public finances. Action in this regard was urgently required and has now been taken. We have reached the stage at which we want the economy to grow. One of the Government's main priorities is the creation of jobs. We can discuss other factors but if we can get people back to work, it will reduce the level of social welfare payments and bring about an increase in taxes. The average annual cost to the State in respect of one unemployed person is €20,000. We must also be cognisant of the social and economic costs being unemployed may have on that individual. If a person is made redundant, this has major financial and personal consequences for him or her. The Government has taken major strides in this regard. In Limerick city, for example, Northern Trust, which currently employs 300 people, recently announced its intention to create an additional 400 jobs. That is a welcome development.

Kerry Group is an indigenous company which announced 900 jobs, with 800 in place by 2015, 100 jobs the following year and 400 construction jobs. The Kerry Group began in a prefab in a field in Listowel. It was developed initially by Denis Brosnan, whose work ethic and innovation has led to the company becoming a manufacturer of added-value ingredients.

I refer to yesterday's Irish Examiner, in which it seems a general observation in a report was applied to Ireland. I maintain that Ireland is different for a number of reasons. First, we have experienced growth. Second, one issue has contributed to our difficulties and that is the lack of credit. The banks are not lending. I refer to the report by John Trethowan of the Credit Review Office, which stated that the office overturned the bank's decision in 60% of cases referred to it. I know that many people will not even submit an application for credit to the banks because they are given the message that it is not worth applying. The banks have become very risk-averse.

The establishment of a strategic investment bank is part of the programme for Government and it needs to be fast-tracked. This would be a bank providing working capital for businesses in order to supply plant and equipment, buy stock and provide for daily functioning. Businesses do not have sufficient capital to expand. The indigenous sector employs over 700,000 people. The multinational sector is doing exceptionally well, with an increase in exports, but the difficulties arise in the domestic sector. Credit needs to be made to flow to indigenous businesses in towns and villages across the country. I think this was not given due emphasis in the overview undertaken by the IMF.

I refer to the reorganisation of our debt to make it more sustainable. The accord signed by the EU Heads of State and Government on 29 June 2012 is the definitive document. In my view, the three finance Ministers were stating an opening position which is part of a normal negotiating process. The 29 June agreement comprised four key components. It embedded the principle of separation of sovereign and banking debts; it dealt with the reorganisation of Spain's debt; and it mentioned Ireland in the context of making our debt more sustainable. This is the key feature. Mr. Draghi, the President of the European Central Bank, said nothing new yesterday.

The commitment on the banking debt is in the 29 June accord, and it looked at all banking debt. I want to break it down into two components. First, I refer to the issue of the promissory note. I note that no members of Fianna Fáil, the party that was in the former Government, are present. When the promissory note for Anglo Irish Bank was issued, it was argued that the bank would make a return to the State for the promissory note at the end of its existence. The promissory note was designed to put money into the bank over a long period of time and it was to be at a current value in its balance sheet. The promissory note was an artificial creation, a form of financial engineering that can always be restructured to produce the economic value of the return to the State that Anglo Irish Bank will make at the end of its existence and apply a current market value to that. That should be reflected in the promissory note in order to reduce the current value of the promissory note. This would allow a restructuring at a lower cost to the State and ultimately to the Irish taxpayer.

This country has played its role in the protection of the European banking system and this has been at a significant cost to Ireland Inc. We have stabilised our public finances. We are reliant on funding from the EU-IMF programme, but the cost of our borrowings has lowered significantly and it is now below 5%. We have made great strides because the international markets have confidence in the Irish economy and its basic financial structure.

The taxpayer is carrying the burden of the €64 billion of banking debt which is now sovereign debt. One of the key elements of this debt is the Anglo Irish Bank promissory note of €30 billion. We need to impose a current market value on the return to the Irish taxpayer at the end of the bank's life cycle in order to reduce the burden on the Irish taxpayer and spread that burden over a longer time period. The previous Government expected a return from Anglo Irish Bank. The European authorities need to take this into account and to ensure fair play for Ireland.

I refer to the Government's initiatives to promote employment. The multinational sector is very successful and it is creating jobs in Ireland. Many of the large indigenous companies, such as Kerry Group, are doing well. The domestic small and medium enterprise sector is where issues arise. The key problem in this sector is credit. The banks must play their part in this regard.

The problem, however, whether because of a lack of skills in appraising SME finance applications or some other factor, is that the banks are risk-averse. In fact, they seem more interested in repairing their balance sheets than in playing their role in restoring the economy.

The Government is doing its bit to assist small businesses. The establishment of a strategic investment bank, whose emphasis should be on providing working capital to businesses, must be fast-tracked. The microfinance scheme is already in place, providing loans of up to €25,000 to businesses employing ten staff or fewer. In addition, the partial loan guarantee scheme which will come into effect shortly should ensure the banks are less risk-averse in terms of providing much needed credit to the small and medium-sized enterprise sector. I urge small businesses to apply to the banks for funding and, where their application is rejected, to submit it to the Credit Review Office. Huge sums of taxpayers' money have gone into maintaining the banking system and small business owners should not be afraid to approach them for finance. The Credit Review Office, under Mr. John Trethowan, provides a means by which businesses can put their cases where they feel they have not been treated fairly by the banks. This week we learned that the office has overturned 60% of banking decisions in this area.

In regard to a deal on banking debt, the accord of 29 June stands. The onus now is on our European colleagues to work with us in a spirit of partnership, recognising that what is good for Ireland is good for Europe. I urge the Minister for Finance to seek to have the imputed end-of-life value of Anglo Irish Bank reflected in the current value of the promissory note, thus reducing the debt burden on taxpayers and the level of repayments. I hope a deal will be done in advance of the budget. The Government is obliged to deliver another difficult budget, something which no Government likes to do. It is about getting the country back to a position of strong growth which will lead, in turn, to increased employment levels. Nobody likes to be dependent on social welfare. Everybody wants to work and to pay their way. We do not talk enough in this House about the social context of high unemployment. Every Member of the House has seen people in their constituency offices who were once proud and are now broken. The only way to improve their situations is by way of job creation.

This Government has taken the necessary action to achieve that end, but Europe also has a part to play. We have done what was asked of us in terms of stabilising the public finances, meeting our targets under the agreement with the troika and protecting the banking system in Europe. The Fiscal Advisory Council is working well and is very much independent in its deliberations. There now must be some reciprocation in the form of a restructuring of our promissory note and, as I have proposed, a revaluation of Anglo Irish Bank in line with its projected end-of-life value. The implementation of the June accord is vital if our overall debt burden is to be made more sustainable. As it stands, our debt levels are simply too high to enable us to recover in a strong, structured way into the future. It is about working in partnership with Europe, with our colleagues playing their part in terms of restructuring our bank debt and separating out the sovereign debt component.

There has been a great deal of kite-flying in advance of the forthcoming budget. This is an unhelpful development which has caused anxiety in many sectors of the population. The overarching objective of this Government is to achieve fairness in very difficult times. Europe has a part to play in providing us with the structure and environment within which we can put forward what we regard as the fairest budget in extremely difficult times. We are already creating jobs, but we must achieve far more in terms of bringing down the jobless numbers. For that to happen, our debt burden must be reduced. In tandem with that, I call on the banks, if they do not have the in-house expertise to assess loans properly, to ensure that appropriately qualified staff are hired. Small business owners should not be afraid to approach the banks for finance. If their application is rejected, they should not hesitate to submit an appeal to the Credit Review Office. Recovery will happen only if the SME sector is facilitated to create jobs for people in every village, town and city in the country. As a person who worked as a self-employed chartered accountant for 12 years, I know that small businesses are the lifeblood of our economy. The Government is doing its bit, but the banks must also fulfil their role.

I very much welcome this Bill, which offers a practical implementation of what was ratified by the electorate in the referendum. I agree with Deputy Sean Fleming in this regard, which is not always the case. It was good to see him in the Chamber this evening. The people have voted and their verdict should be reflected in this Chamber when the vote is called on the Bill.

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