Tom Fleming (Kerry South, Independent) | Oireachtas source

The much-awaited deal on the promissory notes gives us some restricted breathing space for economic growth. I hope it will give us a break from the crippling austerity measures of the last five or six years. However, it still leaves the country with a mountain to climb. While there is a positive side to this long-running saga, the reality is that we will not begin to pay off the principal on the new bonds until 2038. We will continue to make the principal payments until 2053, thereby burdening the coming generations. The promissory note payments, when taken with the interest payments, will come to a total of €48 billion, which is a stupendous figure. This deal certainly does not get us off the hook. We will still have a colossal debt. To put it in context, our total national debt is approximately €190 billion.

The decision to provide for a blanket guarantee was a grave error. Essentially, an open cheque was given to the banks and their foreign bondholders on behalf of our citizens. If we had a rational and ethical national political system, we would have guaranteed all deposits while making it clear at the time of the guarantee that we would negotiate with the bond holders on the basis of our ability to pay some percentage of the value of subordinated and senior bonds. Many of the shareholders at this time were elderly people - pensioners, by and large - who had invested small amounts of money to cover their expenses in their old age. The value of their shares was practically wiped out. As a result of this guarantee, the State was shut out of the bond markets, in effect. Investors lost confidence in our ability to repay our debts. We were charged exorbitant interest rates.

In 2010, the State had to seek help from the EU and the IMF to save us from economic meltdown. We all know that we received €85 billion in so-called "help" at that time. Many conditions were attached to the European package, which carried a penal interest rate of 5.83%. After some negotiation by the Government, that rate was reduced to just over 3%. Even Greece got a much better deal at that time.

There were many question marks surrounding the accuracy of the data on its economic situation.

There is a question regarding the quality of the deal. I know it was achieved in adverse circumstances, with a lot of intricate negotiating behind the scenes, and I would certainly give credit to everybody involved in a difficult situation. However, because of the variable interest rates applied to it, we do not know what will ultimately happen. If the interest rates rise, we will be screwed, to put it mildly, and I note that interest rates are currently at 5% in Britain. We are also well aware that, historically, there have been long periods in world history during which inflation was close to zero. Therefore, while we are very dependent on inflation rates rising in the next 40 years to assist us by wiping out the capital sum we eventually have to pay, this is based on voodoo economics - it is a case of "Live horse, get grass". I believe we need to review this matter in order to achieve a zero interest rate with a payment timeframe of 90 or 100 years, a much longer period than has been agreed. There is an international precedent in that Germany, following the First World War, was allowed an open-ended timeframe to pay back reparation moneys to the Allies. This payment was only completed in the recent past and, therefore, Germany had over 90 years in which to pay. We should strive to renegotiate certain aspects of the deal in this regard.

We received pious platitudes some months back from EU leaders who said they regarded us as a special case and that Ireland would have to be treated in a unique fashion. However, following that, they have really put us through the ropes and they have not fully acknowledged their earlier statements. There is a strong case to be made for a debt write-down. The actions to address our dire situation were prolonged and cumbersome, to say the least.

On 19 December last the IMF warned that Ireland's economy could stagnate, leaving the country in a distressed state for years to come. It warned the European Union to help cut the burden of our bank debt and gave a strong signal to the European Central Bank that it must act decisively on the €31 billion in promissory notes. While there has been action in that regard, the IMF also referred to the more than €30 billion pumped into the two pillar banks, Bank of Ireland and AIB - we might call them the "good" banks. In any case, it is good riddance to Anglo Irish Bank. There will be no one mourning it because people are glad to see the back of it. However, the IMF and its managing director, Ms Christine Lagarde, indicated that we would get some reprieve for the two pillar banks, so we should aim to renegotiate in that regard also.

The IMF noted that the Merkel-Sarkozy axis focused very much on debt reduction through austerity and increased competitiveness as the most effective means of combating the crisis. In October 2012, however, the IMF concluded that it might have got its basic economics wrong and conceded not only that austerity does not work but that it is counterproductive. Ms Lagarde realised at the time that the IMF's economic model was wrong, which implies that the fiscal compact to which we signed up will, in time, actually destroy Europe's economy. The fact is the current austerity budgets are here to stay for some time. The €1 billion in annual savings will be used to pay off debt, for example. As Deputy Jim Daly remarked earlier, the ordinary people in the street are asking what this means for them, their families and their futures. The reality is that we will still be faced with severe measures in the coming years. I hope the Government will take up this case with the troika in a more aggressive manner. We will have to get some concessions for our citizens, who are at present driven through the ground by the draconian measures of the previous six years, which have really taken their toll. The other issue is that we will be striving to get the deficit below 3% by 2015. We must have a balance. People have taken enough and, at this stage, they are disillusioned. We must give a break to the general public and work to make their lives easier.

Today saw the launch of the Caritas Europa report entitled "The Impact of the European Crisis", the contents of which are very worrying for this country and show the huge job ahead of us to bring our country back into shape and make us more solvent. This report, the first in-depth examination of the impact of austerity policies on people in the five EU countries worst affected by the economic crisis, concludes that the policy of prioritising austerity is not working. Ireland, Greece, Italy, Portugal and Spain are the focus of the report, which, using statistics, highlights historically high levels of unemployment in Europe, with more than 10% of the labour force out of work. It states that children are at a greater risk of poverty or social exclusion than the rest of the population in 21 of the 25 member states for which data is available, and Ireland is among that 21. The study strongly challenges current official suggestions that the worst of the economic crisis is over. It presents a picture of a Europe in which social risks are increasing, social systems are being tested and individuals and families are under stress. The report highlights the extremely negative impact austerity policies have on the lives of vulnerable people, and reveals that many others are being driven into poverty for the first time. It provides a worrying picture of the overall situation.

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