John Paul Phelan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

I am glad to have the opportunity to speak on the Bill and support its objective, which is to alter the arrangement for the European Union and the IMF to provide funding to Greece. Anything that could ease the interest rates and extend the term and therefore reduce the impact is to be welcomed from a Greek point of view. It is a country that has gone through dreadful upheaval in the past four or five years and the impact on ordinary Greek families and individuals has been horrific. This legislation is about easing, albeit marginally, the burden that the Greek people will have to face, which is why I will be supporting it. It is also an opportunity to follow up on announcements made in recent days with regard to examining Ireland's debt position following the Eurogroup finance Ministers and ECOFIN meetings over the previous two days. Therefore, this discussion comes at an opportune time.

Many figures have been bandied about tonight. I was a Member of the other House on the fateful night of the bank guarantee. During the debate on the guarantee I got my chance to speak at approximately 5 a.m. and the then Minister, the late Mr. Brian Lenihan, God rest him, gave an impassioned speech as to why it was necessary. Most people would agree that perhaps some of the advice he was being given at the time was inaccurate, to be generous. I have no doubt as to his bona fides in proposing that legislation, but I believe he was misled and others were misled as a result of that. Following the bank guarantee, the most shocking political decision of the previous Government was the subsequent decision to nationalise Anglo Irish Bank, which officially effectively meant that its debts were the country's debts. The promissory note to which the previous Government signed up meant it would be treated effectively like national debt. Of course, it did so in a very cynical manner whereby interest would only be charged from 2013 - in other words, after the general election would have taken place.

I remember putting questions to the then Taoiseach, Mr. Brian Cowen, and others and never got any satisfactory answers as to why the then Government took those decisions. We have never got those answers. I am pleased the Government's legislation programme for this term includes on the A list an amendment to the rules allowing Oireachtas committees additional powers of investigation. It is important that the Oireachtas Joint Committee on Finance, Public Expenditure and Reform would get those extra powers with regard to not just the decisions made around the bank guarantee but ultimately the decision to nationalise Anglo Irish Bank. No real information has ever been ascertained as to why that took place.

On the need to change the terms of the promissory note, there is considerable misunderstanding about what national debt is. Many people who comment and profess to understand national debt fail to understand that national debt is rarely paid off. It is turned over when the debt falls due and a new bond is issued resulting in a new debt being taken on in its stead. That is the nature of national debt.

Deputy O'Donnell was correct in pointing out that between €5.5 billion and €6 billion of current budget expenditure for the next three years is involved in funding the promissory note as established by the previous Fianna Fáil-led Government. Any positive change would have a very good economic impact for the country. Any change to the term or the rate of interest being charged would have a significant positive impact. That is why this week's news, while small in nature, is none the less a step in the right direction. There have been a number of similar steps in recent months. The job the Minister for Finance and his officials have to do on the promissory note before it falls due at the end of March is crucial for the country. They are moving in the right direction. Clearly, I am not a party to the negotiations.

It is important they are brought to a successful conclusion. Almost half of our total debt liability is in respect of the recapitalisation of Allied Irish Banks and Bank of Ireland. I have not yet heard much national discussion on, as mentioned by Deputy Kieran O'Donnell, the possibility of the European Stability Mechanism purchasing some of our debt. I have heard some commentators say this might not be beneficial for us in that while State shares in the banks are currently at a low value, they could ultimately be worth more to us and, having already recapitalised the banks to the tune of billions of euro, we would be making a second error in selling those interests at a greatly reduced value. The Minister might respond to that issue when replying to the debate. While I have not heard too much discussion on that issue during the past couple of months, I am sure we will hear more about it during the course of the next few months.

I agree with Deputy Stephen Donnelly's comments in relation to the sustainability of debt and that the Greek debt-to-GDP ratio of 190% is clearly unsustainable. The European average in this regard is approximately 90%. Ireland's debt-to-GDP ratio is at 120% and is perceived to be at the upper end of what is sustainable. If there is to be significant economic growth in this country, that figure must be reduced. The mechanism by which it is reduced, whether through the European Stability Mechanism purchasing our interests in the pillar banks or a write-down, is arguable but important. Deputy Donnelly is correct that a piecemeal approach to the Greek problem by way of a little write-down here and there will only keep it alive rather than inject it with the medicine necessary to ensure its economic recovery. It would be imperative, if a significant write-down for Greece were achieved, that Ireland would be in a position to benefit from that particular arrangement as well.

I support the provisions contained in this legislation. When we signed the original European agreement in respect of the bailout for Greece, we did not anticipate our being in a similar situation a number of months later. The mechanism by which that was established means unanimity among member states is required. Measures that would ease the burden on the Greek people should be supported by members on all sides of the House.

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