Stephen Donnelly (Wicklow, Independent) | Oireachtas source

I am sorry the Taoiseach had to leave because I intended to congratulate him on the EU Presidency which he and his Cabinet have held for the last six months. I was in Brussels recently where I spoke to MEPs and officials. They complimented the Irish officials on being very professional. They spoke in particular about the officials in the Department of Finance. I was delighted to hear it. Our officials have acquitted themselves very well and have certainly earned the professional respect of their counterparts in Europe. It was great to hear that.

The Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, has done an excellent job. I am sorry the Common Agricultural Policy, CAP, has not been wrapped up, but the reforms in the fisheries policy are fantastic. He has acquitted himself very well, including when we were dealing with various crises in Ireland such as the fodder crisis.

The Minister for Finance, Deputy Michael Noonan, has done a good job. He has progressed well the talks on the European Stability Mechanism and the bank resolution mechanism. As we know, it was never going to be possible for the Minister to get concrete agreements before the German election. It appears everything is in stasis. The Minister has done a very good job within the constraints he has had to deal with.

The Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, should also be congratulated. He has led the opening of incredibly important trade talks with the US. Hopefully, there will be an EU-US free trade zone, which will be worth billions of euro and dollars on both sides of the pond and will lead to serious job creation.

The Taoiseach and his team have acquitted themselves very well. They should be very proud of themselves in holding the Presidency at a very difficult time for Ireland and Europe.

The three issues under discussion for the last Council meeting in which Ireland will hold the Presidency are conclusion of the European Semester, evaluation of efforts to boost competitiveness, jobs and growth and progression on Economic and Monetary Union, specifically relating to the banks. I will talk a little about the bank resolution mechanism. The Minister for Finance, Deputy Michael Noonan, appeared before the finance committee recently to discuss the steps he is taking. I support what he is doing and hope he can progress it well. My understanding is that a new bail-in system will be introduced, whereby shareholder capital would be used first, followed by junior and unsecured creditors and then senior creditors or senior bondholders and depositors. If memory serves, the Minister is keen to separate depositors and senior creditors. I wish him all the best in that.

In Europe at present and possibly beyond Europe depositors and senior creditors legally rank equally if any type of bail-in is required. I do not agree with that. It is right, proper and healthy that a clear legal distinction is drawn within the eurozone, and ideally across the European Union, whereby professional investors are seen for what they are, professional risk takers, and depositors, particularly small depositors, are seen for what they are, which is people who are trying to put their money in a safe place. The Minister, Deputy Michael Noonan, is trying to differentiate between the two and I wish him the best in that.

I would add a caveat, which I believe the Taoiseach, Tánaiste and the Minister should pursue. There is a potential danger regarding the stipulation that the first group of people to take a hit in a bail-in should be the shareholders. We are still the shareholder in some of our banks and there should be a caveat introduced which recognises that. In the normal course of events and in a steady state banking system shareholder capital should go first, and I agree with that. However, in the case of AIB, the bit of Bank of Ireland we own and Permanent TSB we as the shareholders have already put in a vast amount of money. If the quality asset test to be carried out by the ECB in the new year shows that these banks need more capital, it should not have to come yet again from the Irish citizens because they are essentially the shareholders of these banks.

I wish to address the Anglo Irish Bank tapes which have come to light. They dominated Leaders' Questions, and we are all listening to them constantly and getting very angry about them. This is relevant to the discussion that is taking place in Europe about Ireland and potential recapitalisation. Germany and other creditor countries could look at this and think that this increases the case for Ireland not getting any recapitalisation from them, because Ireland could not even take care of its banks and allowed the banks to deceive and entrap it. I do not agree with that position. I believe and hope that another very strong message can go out to our European colleagues, which is that the Irish citizens took the hit for the entire European financial system. Had we not committed a huge bail-in to keep these banks open, there was a risk there would be contagion. I am not convinced there would have been contagion but certainly the ECB and many other people believed there would be; therefore, we took the hit.

We now have the smoking gun. We have proof that not only did Anglo Irish Bank deceive the Government of the day, it also engaged in entrapment. It did not just decide to ask for €7 billion and hope that it would be enough and that it could trade its way out of the problem. It decided to ask for €7 billion knowing a great deal more would be required, because once the Central Bank gave €7 billion, it would have to continue to give it money. I hope that message strengthens our case for both future and retrospective recapitalisation. Indeed, the Government bonds which replaced the promissory notes should be examined. Is there now a case to say that although we have turned them into sovereign debt, there possibly was a criminal act involved in this case - certainly there was entrapment and deception - and that there is a case for a negotiation with the ECB whereby it will not call on all of these tens of billions of euro in sovereign debt?

I will conclude by asking the Government to take a further message to Europe for this last meeting. There is, quite correctly, a focus on job creation. The economic evidence shows that the single biggest stimulant of job creation is deleveraging of household debt. Economic analysis shows that it is only when one deleverages household debt that the business sector begins to invest, which is what ultimately creates jobs. The Taoiseach, the Minister for Finance, Deputy Michael Noonan, and the team should take that message to Europe and tell European leaders that if they are serious about job creation and helping the youth, they must find ways to deleverage household debt. I will be introducing a product, which I will submit to the Taoiseach and the Minister, Deputy Noonan, shortly. It is a debt for equity product which I hope will help the situation in Ireland and, potentially, further afield in Europe.

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