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

I join with other Members in welcoming the opportunity to take part in this discussion on what is a significant next step in improving the sustainability of Irish debt and therefore improving the prospects for our economic redevelopment in the next few years. I agree with many of the sentiments expressed by Members on the Opposition benches who spoke about the origin of this debt. The reality is that once the late Brian Lenihan accepted, on behalf of the State, the nature of the promissory note it was a promise to pay, and he put it on the shoulders of the taxpayer on behalf of the previous Government. The Minister for Finance, the Governor of the Central Bank, other members of the Government and civil servants have spent the past 18 months in negotiations with the European Central Bank and others to ensure that burden would be eased. This discussion, and the agreement unanimously noted last week by the ECB, is the fruit of the easing of that burden.

The next economic task for the Government is twofold: first, to ensure the agreement reached by the Heads of Government over a year ago on the difference between sovereign and banking debt is implemented and, second, that the pressures individuals and families are under as a result of mortgage difficulties is eased to allow them take a significant part in our domestic recovery over the course of the next few years. This deal was an important step on that road because it gives the Government and the economy breathing space in the coming years.

Fianna Fáil, in its previous incarnation, was very clever in its design of the promissory note. It was designed in such a way that interest only would be paid for the first few years with capital to kick in after that when it projected the next general election would take place. That would have seen Irish taxpayers at the end of March every year stumping up €3.1 billion. I commend the Minister for Finance in his efforts to ensure we did not find ourselves in circumstances where taxpayers had to find that money. The reality is that as an economy and a country we do not have to borrow that money for the next ten years to refund the promissory note. That is an immediate burden lifted off the economy.

The second important point is that I understand none of the structure of our current debt goes beyond 2035 and that this first stage of capital repayment under last week's renegotiated deal will be at the end of the 2030s. If we adhere to the parameters laid down by the European Union in terms of Government deficits, to which we are bound to adhere, we will not see additional payments falling on future generations. There is a considerable body of opinion which suggests that this additional payment will never fall on future generations. Governments generally do not repay national debt; the debt is rolled over. Economies grow over time, and that is something we hope will happen in Ireland. It is happening at present here even though circumstances are strained, to say the very least, in that the value of the debt will be run down over the next 40 years, not least by growth in the economy but also by inflation, even if inflation is moderate. That is the reason this deal, while it is not the be all and end all, is a significant improvement on the burden placed by Fianna Fáil on the taxpayers three years. That is the reason I support it fully, and I commend the Minister, the Governor of the Central Bank, the Taoiseach and everybody involved in its negotiation.

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