Peadar Tóibín (Meath West, Sinn Fein) | Oireachtas source

It was shocking to hear an Teachta Joe McHugh who comes from a county with an employment rate of 26% and where individuals have large levels of debt on their shoulders celebrate the fact that the financial crisis had really been confined to Ireland and that contagion had not spread across Europe. He appears to believe this is some achievement. I agree with an Teachta Peter Mathews to the effect that the Government has sought to hypnotise people through the use of complexity in this matter and that the real issue is the fact that not one cent of the State's debts has been written down and that it will still be obliged to pay these debts.

The people have been waiting for a long period for a resolution of this issue. In fact, they were hungry for such a solution. It must be said the Government lowered expectations as much as possible in recent months. It lowered them to such a degree that it is difficult not to fall over them. Ultimately, it saw to it that these low expectations were met. There was some understanding on the part of the people that the debt relating to the IBRC was toxic in nature, that it was not theirs and that, on moral grounds, neither they nor their children should be obliged to pay it. As a result, they were of the view that a write-down was required. It became clear last week, however, that the IBRC would be wound down but that the debt relating to it would not be written down.

The toxic debt created by Fianna Fáil is being paid in full by Fine Gael and the Labour Party. People are shocked that the Government did not even request a write-down of one cent. Its mantra has been that there was no other way to deal with the matter. When the Government states it does not have a choice, this means it has lost the argument. Politics is always about choice and choice lies at the heart of democracy. If there is no choice, there is no democracy. The Minister for Finance has stated he does not know how much the deal is going to cost. As a result of the fact that the repayment period has been lengthened, we know that the deal will be more costly to the State than would have been the case with the promissory notes. Ultimately, we will be obliged to repay a larger sum.

It is important to highlight the fact that we are at the bottom of the interest rate cycle. The likelihood is that the rate is going to increase in the future. The previous deal attracted a circular interest rate, which meant that the cost to the State was 0.75%. When the Central Bank of Ireland is forced to offload the bonds relating to the new deal, a higher interest rate will apply. The bonds to which I refer will be repaid over periods of up to 40 years. Students who are due to sit the leaving certificate this year will still be paying off the bonds at the time when they will be beginning to contemplate retirement. Extending an unfair debt does not a fair debt make. That is the key point.

In many ways, the deal reached last week flies in the face of the movement within Europe to create a separation between sovereign debt and banking debt. Fianna Fáil effectively nationalised the debt initially, but the Government has re-nationalised it. As a result, it will be impossible to share the debt in question throughout Europe. Those in government continually use the homespun analogy which they no doubt use with their constituents and which runs to the effect, "Bejakers, sure if you have a mortgage for a period of time, does it not lower the actual cost of the mortgage?" We have no house in this instance and nothing to show for this mortgage. There is no asset to justify the level of debt being repaid. In fact, the debt in question will give rise to opportunity costs in terms of housing, education, health and welfare payments. Even if one were to accept that the net current value of the debt would give rise to significantly lower real-term repayments, an entire year's worth of deficit will be added to the State's overall debt as a result of the deal done. All the cuts introduced in the past five years amount to €28 billion, only a portion of the amount of debt the Government agreed to repay in its deal with the ECB.

There are two major lies relating to the issue under discussion. The first is that in some way we are being bailed out. The Wall Street Journal indicated that when the promissory notes were first written up, Germany's exposure in respect of Ireland was approximately $200 billion. Of this, $57 billion related directly to Irish banks. At the heart of last week's deal lies the transfer of money to Ireland in order that German, French and other EU institutions will be repaid. We are not getting a bailout. In actuality, those who have not yet been born will be obliged to bail out the institutions to which I refer.

The second lie to which I refer is uttered by those on the Government benches on a regular basis and it states Sinn Féin voted in favour of the bank guarantee. The Minister of State, Deputy Fergus O'Dowd, is not stupid and knows this is not true.

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