Billy Kelleher (Cork North Central, Fianna Fail) | Oireachtas source

I welcome the opportunity to speak in this House on this important matter.

Last night I was present when the Tánaiste and Minister for Foreign Affairs and Trade, Deputy Eamon Gilmore, addressed the House. He spoke with passion, conviction and belief. Equally, I attended many debates in this House when he was on this side of the House and he spoke with passion, conviction and belief. The only difference between the passion, conviction and belief on this occasion was the content, which was at complete variance with what Deputy Gilmore used say when he was on this side of the House. On every occasion, he would have opposed the decisions of the previous Government in trying to address the budget deficit. What I find hard to comprehend is that he then spoke about the need for honesty, no "fairytale economics and the politics of denial", and that we "need to be up front with people about how we got into this crisis", and what we need to ensure that it does not happen again. When one looks back at the record of what was stated when Deputy Gilmore was leader of the Labour Party sitting on the Opposition benches, he opposed every measure to reduce the budget deficit.

Deputy Michael McNamara is correct in stating that if one was to contemplate a default or if one wanted to strengthen one's bargaining power with the troika, the Commission, the ECB or bond holders, one would want to be in a position where one could live without them if they said "No" because if one is depending on the lender of last resort, it is difficult to negotiate from a position of strength. That is where the previous Government found itself.

The idea that we embraced the IMF and everybody else and went out hawking the sovereignty of this country to try to bail ourselves out is simply not correct. There are two reasons this memorandum was forced on this country. Some of the policies that were pursued were inflationary and when the crash came we had a massive hole in the public finances, but the policies were by and large supported by everybody in this House. When I was on the Government benches, we were scurrilously attacked on every occasion for not spending enough on public services and not reducing enough in taxation. I took a lecture from the Minister, Deputy Pat Rabbitte. When he was leader of the Labour Party, with his programme for Government under his arm in 2007, he promised that he would reduce the standard rate of income tax to 18%. If one wants honest debate, let us start with a bit of honesty in the Chamber and let us be real about the challenges and difficulties facing this country. It is at least hypocritical for the leader of the Labour Party to be able to do a somersault from the Opposition benches to the Government benches, a mere distance of five or six yards, and to turn on its head everything that was said on this side of the House as being nonsense and opposition for opposition sakes when that is exactly what Deputy Gilmore stated when he was on this side.

There are significant challenges. Deputy Peter Mathews has advocated in this House for some time that there must be a renegotiation of debt. I would be the first to support it. My party has never undermined the Government when it went abroad to negotiate a debt settlement for this country. We have advocated and encouraged them at every turn to use whatever their diplomatic powers and contacts throughout Europe to find a better way forward. As I and everybody else in the Chamber knows, and as the Government knows but cannot state publicly, the bottom line is there will be a debt settlement. It will be either by default or by negotiation. We are quite definite that this country with a population of 4.3 million simply cannot sustain the level of debt that is being placed on it, in terms of the deficit itself, the national debt and all the other arising contingent liabilities with regard to pension difficulties, etc.

The Minister for Finance may as well go back and tell the Department its projections are la-la land economics. At present, the growth projections are 0.2% of GDP for this year and 0.9% for next year. The Government is basing its figures on growth forecasts for 2012 that it projected and that will not be achieved and the forecasts for 2013 look dismal to say the least.

Let us be clear and honest. There is a very difficult time ahead for our citizens. I will accept my portion of blame in terms of the policies that were pursued that got us to where we were but at the same time everybody in this House encouraged us, begged us to spend more and promised to reduce taxes. We must use all our efforts to encourage those who are presently supporting this country to come up with solutions to make the debt more sustainable to unshackle the country's potential.

When one looks at what is said now about the bank guarantee, the Tánaiste and Minister for Foreign Affairs and Trade conveniently forgot last night that not only did Fianna Fáil, the Green Party and Sinn Féin support it, but Fine Gael supported it also. They supported it with the right intentions. At the time we were facing a difficult situation. I stood in this Chamber on the night we had to make that decision and we were told quite clearly - the Governor of the Central Bank and others said it - that banks would have closed the following day if a guarantee was not put in place. We can argue and debate forever more the extent of the guarantee, but one aspect was sure, that the banking system in this country was on the point of imminent collapse and a decision had to be made. If we had followed other parties' lines, we may not have had the massive debts placed on the Irish people but we would have had significant dislocation of society the following day - ATM machines would have had no money and cheques and salaries would not have been able to be paid. In terms of the decision that was made about a bank guarantee, that is clearly accepted by most rational people. As I stated, the parameters of it can be debated by historians but we had to deal with the position at the time.

I genuinely regret if the decision we made in government was the wrong one and we burdened the people and the generations to come with debt that was unnecessary. However, the bottom line is that at the time, it was the only decision possible.

People make great play of the idea that the European Union, the ECB and the European Commission are foisting austerity on us. They are doing that, to a certain extent, but there is also an obligation on this State to make every effort to become self-sufficient and sustainable into the future. I believe, however, that the European Commission has singularly failed to place growth at the heart of European policy. We now have a situation where the European Commission has been emasculated, with the Bundestag and the German Chancellor dictating European policy. I understand full well that the Germans make the largest contribution and that they have a lot to lose but we simply cannot continue with the situation whereby the European Commission is answerable to the Bundestag and the Chancellor when it comes to policy decisions. We had a situation where the heads of State agreed on 29 June that there would be a move towards debt resolution. In that context, Ireland was mentioned as a special case and we were very pleased that such a commitment was given to the Taoiseach by his peers at that Council meeting. Then we had a retreat from that statement. While we did eventually get clarity, it was from Chancellor Merkel. She was the person who decided to give the clarity on Sunday night through a joint communiqué. We have had no words from the Commission on its obligation to implement decisions made at Council meetings. The Commission is failing in a most appalling manner. President Barroso and others must stand up to the plate and be counted in terms of their obligation to ensure small countries are treated fairly and equally, as described in all of the treaties that found the European Union.

On the broader issues, as we face into the budget, everyone, including the Minister of State, knows the projections from the Department of Finance are no longer valid. It is simply untenable for the Government to continue to say that the levels of growth it has predicted will be achieved. It is just not happening. As we speak, the figures are unravelling. I know the difficulties the Government faces in terms of trying to address the budget deficit while also attempting to stimulate the economy. However, there must be an acknowledgement, first and foremost, that the present position is not sustainable and this economy will shrink further if something is not done. My party will publish a detailed budget that adds up and that will have some answers to our difficulties. There is no font of wisdom on this side of the House but, equally, there is none on the Government side in the context of the difficulties we are facing.

The European Union must take a more proactive role in addressing the recession that is now creeping across the rest of Europe. Many references have been made to the fact that Ireland is a trading nation. Ours is an export economy, which is small and open and which is influenced by external factors to a greater degree than most other economies because of our dependence on trade. If the United Kingdom and the rest of Europe slide into a recession, the job of the Government, in trying to bring about economic growth here, is made much more difficult. The only way that there can be a stimulus package in Europe is through the European Commission advising national governments on the way forward, based on the Lisbon Strategy and all that unfolded from it.

I applaud the Government's efforts in trying to secure a debt reduction but it is also time for it to encourage the European Commission to wake up and realise that there are millions of citizens throughout Europe who are unemployed today.

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