Stephen Donnelly (Wicklow, Independent) | Oireachtas source

There are three things to which I would like to draw the attention of the Taoiseach, the Tánaiste and the House. First, the amount of money at stake; second, the amount of that sum that this nation needs back to set us up for recovery; and third, a concern of mine, the danger of limited success. I will begin with the amount of money at stake. We have all referred to the €64 billion. We know it is made up of a little more than €30 billion for the promissory notes and €33.5 billion for the remainder in terms of capitalisation. A third amount is €17 billion on interest on the promissory notes. The logic we have heard is that we need not count this sum because we are paying it into the Irish Bank Resolution Corporation, IBRC, which we own. Anyway, I have tried to get reassurance and certainty from the Minister that this money will be left in the account when the IBRC's liabilities are discharged. The message I have heard back is that this figure cannot be calculated. It is possible that an additional €18 billion in interest could be added to the €64 billion sum on which we are agreed. It is possible that when IBRC's liabilities are fully discharged that money will not be there. This would bring the total cost of the bank recapitalisation to more than €80 billion. I wish to draw the attention of the House to that. It may end up being a good deal more than the €64 billion.

How much do we need back? Obviously, we would all like the full €64 billion or €80 billion back and I appreciate the Taoiseach is doing what he can to get as much of that back for the country as possible. The figures suggest that we need it all back. Our debt to GDP ratio next year will be 120%. More concerning, our debt to GNP ratio, a more suitable ratio for Ireland, for reasons relating to arrangements for multinational corporations, will be 150%. The literature suggests that an unsustainable rate kicks in somewhere between 80% and 120%. This depends on a range of factors. We are a modern sophisticated economy suggesting our tolerance for debt is higher than that of a transition economy. However, according to some reports when one factors in our household and corporate debt we are the most indebted nation on earth. Our tolerance for higher national debt arguably is a good deal lower by that measure.

Let us be as optimistic as possible. Our target could be a debt to GNP ratio of 80%. That would require a reduction in the debt of €95 billion. Obviously, we will not get that and I would never expect the Taoiseach to be able to secure that, but it sizes the amount we must reduce our national debt by to get back to sustainability. Let us consider the debt to GDP ratio. An 80% debt to GDP ratio is just about doable. This would require a return of approximately €64 billion.

This brings me to the danger of limited success. I passionately wish the Taoiseach the best of luck and support. I do not always agree with his approach but I hope the approach he is taking is the most successful one for the country. However, I remain concerned about limited success. Let us suppose the Taoiseach managed to get back €20 billion through the promissory notes or the ESM or another mechanism. There is a danger that we will get just enough to just about continue to service the debt, but at the cost of stagnation.

I use the analogy of a family renegotiating a mortgage with the bank. We know what the banks are doing at the moment. They claim they are restructuring and they are moving people onto interest-only mortgages.

They may be looking at smaller capital repayments. What the banks are really doing is extracting every last penny they can get from the borrowers. They are not trying to put them on a sustainable path. I merely suggest to the Taoiseach, although it may sound slightly counter-intuitive, that we may be better off getting nothing and being forced into a unilateral action where we must impose a writedown to a sustainable level rather than getting just enough that it keeps us ticking along on the interest but, ultimately, we are stagnant.

I wish the Taoiseach and the Tánaiste luck. I welcome the comments of the Minister of State at the Department of Finance, Deputy Brian Hayes, and the Minister for Education and Skills, Deputy Quinn, and I hope it is the beginning of a robust approach from the Government.

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