Tony McLoughlin (Sligo-North Leitrim, Fine Gael) | Oireachtas source

After the Christmas break, Ministers made it clear that the proposal to pay €3.1 billion was not on, as we simply could not afford such a payment. I acknowledge that many people, including Members of this House, would argue that this note should never have been honoured and paid. Unfortunately, the last Government's solemn undertaking of September 2008 meant we were obliged not to default and thereby ruin Ireland's reputation, which has been carefully enhanced by the Taoiseach and the Tánaiste since this Government came to office in March 2011.

I welcome the reduction of approximately €1 billion in the State's general Government deficit, which will bring us €1 billion closer to attaining our 3% deficit target by 2015. Further cuts and tax increases are still being considered by the Government to further reduce our budget deficit in 2014. It is fair to say that this task will be easier as a result of last week's deal. I hope the Ministers, Deputies Noonan and Howlin, will consider some options that would not have been open to them without this deal. The State continues to spend €1 billion more each month than it takes in, which is a problem even after the agreement of this deal. Many people, including public representatives, are choosing to ignore this state of affairs. This is another leftover from the previous Government, which decided to pay for public services with unsustainable taxes, mainly money generated from the property bubble.

The reduction in wages and the rise in unemployment to over 14% is having an impact on demand for goods and services. As a result, we have poor growth and a very sluggish domestic economy. The cost of our social protection budget - over €40 billion - further complicates this Government's efforts to reduce the budget deficit. This week's positive news from a ratings agency is encouraging for Ireland's economic outlook and vindicates the Government's work. I am sure many Members of this House share my significant concerns about the lack of growth in the economy.

I represent a very mixed constituency. It extends from Sligo, which is a gateway city, to the most rural parts of north Leitrim. The common denominator across the many different issues that arise in such areas is the lack of employment opportunities. The reduction in the spending power of people in the local economy is resulting in a dramatic decrease in the footfall of small commercial businesses, mainly in the services sector. The difference between the revenue receipts and the costs of such businesses is often too much for them to bear.

One can ask what difference this deal on the promissory note will make to this sector given the fact that less tax and fewer cuts are required because of the deal and the consequent savings, which will certainly be a help, although more is required.

I would like the Minister for Finance, alongside the Minister for Jobs, Enterprise and Innovation and the Minister of State with responsibility for small business, to look at ways of boosting the domestic economy. There are many demands on this Government going forward but this is in an area that needs attention. The Minister, Deputy Noonan, has more battles on his hands in terms of our overall banking debt and that will be a battle fought in the same way as the one on the promissory note. Based on this form, the Minister will have the confidence of the House in these negotiations.

I listened to some of my Fianna Fáil colleagues highlighting the issue of the many homeowners in mortgage distress and in fear of losing their homes. I heard the words last weekend of Professor Patrick Honohan, who has put it to the banks to deal with this issue. We need to get a clear picture and grasp the nettle that the banks have serious issues pertaining to a level of bad debt. The Governor believes this will mean that people will not lose their homes but will sit down with the banks and work out a payment plan, and they will make some effort to pay. I welcome this statement. This is a major issue for so many people. I hope to see some injection of reality from the banks when they are dealing with people who feel vulnerable. However, I find it hard to take lectures from the Fianna Fáil party on this issue when, while in government, it dispensed with bank regulation and overheated the economy, which gave us inflated property prices, and it presided over an economy that lost its competitive edge.

Debt write-down is a cry of the Opposition. In my view, its members were being disingenuous by letting some people think we were going to get debt write-down. They knew this was never going to happen because of what the previous Government signed up to. We all know this was a mistake. Reneging on this would have serious implications for the cost of borrowing and we are now in the final lap towards getting out of the bailout and back to the markets, which a goal all of us in this House long to achieve.

See this speech in context