Michael McNamara (Clare, Labour) | Oireachtas source

I have no doubt Deputy Seamus Healy and many of his cohorts would have preferred to see an immediate default when the Government assumed office. Such a default would have entailed an immediate €18 billion increase in the deficit because that is what the deficit was when the Government assumed office. Reducing it by the required €18 billion would have necessitated a reduction in spending on social welfare, education and health services, that is to say, the big ticket items. This would have been combined with an increase in taxation, property and incomes taxes and the universal social charge. I have no doubt that the Deputy would be the first to oppose any reduction in spending on health, education, social welfare or any of the other services on which the Government spends money.

Likewise, no doubt he would be the first to oppose any increase in income tax, in the universal social charge and in any other charge, including the household charge. He is a notable member of the anti-household charge brigade and the anti-property tax brigade. In fact, last night I heard him and many of his cohorts campaigning here against the introduction of employers' contribution to sick pay. Where is that €18 billion to be found if not through co-operation with the programme which the Government inherited?

That programme is flawed in many regards. A central element of it is pacta sunt servanda, that is, agreements will be followed, no matter how immoral are those agreements. Regardless of whose debt is the €64 billion that has been taken off the back of the Irish taxpayers and put into our banks, that debt must be paid by Irish citizens. Do I agree with that? No. Do I think it is moral? No. Do I see any alternative for the Government at this time or did I at the time that it took power? Unfortunately, I do not. That requires renegotiation and those negotiations are ongoing.

Those negotiations are at an advanced level, as we all saw last week when Chancellor Merkel, on Friday night last, caused quite a bit of confusion when she stated that there would be no retrospective recapitalisation of the banks. It is quite clear that Chancellor Merkel's first instinct is to protect German bankers at the expense of Irish citizens and, indeed, citizens of Spain and peripheral countries right across Europe, and that is very much Frankfurt's way. There is an alternative in Europe. We have seen M. François Hollande, the new socialist President of France, sign up to a growth and debt restructuring agenda which is very much the way of socialists across Europe. There will be elections next year in Germany and in Italy which will very much determine the future of Europe. As I stated, we are not free to act on our own, unless, of course, we are to slash Government spending in a way which would entail significant pain for ordinary people, but I do not advocate us being mere passive bystanders in those elections. We must reduce our deficit, first, because it is a condition of the programme we are in and, second, because any serious economist who advocates a default will first state that one cannot default until one's deficit is down to zero. We must contemplate a default but in order to be able to even contemplate a default when this programme ends - I would far rather see a default than enter into another programme on the same terms as this one - we must reduce our deficit. There is no alternative to a deficit-reducing budget at this time.

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