Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

Terms like bailout and precautionary credit line have entered into our everyday vocabulary. We all welcome the fact that Irish people pay more attention to economic matters and perhaps if we had done so in this House and elsewhere in days gone by, we would not be in the position we are in currently. However, we need to get back to a point where we are talking about the weather again instead of OMTs and all the rest. The most commonly used term in our new vocabulary is probably bailout although it does not appear in any official documents or in the troika's programme. The term "troika" is a relatively new addition to our vocabulary.

When one talks about a precautionary credit line, one must elaborate on what it actually means. The credit line that was extended to us by the troika has been called a bailout, which begs the question: what is a bailout? A bailout is when somebody lends one money and does not just ask for the money to be returned with interest but also with political conditions. Every sovereign goes to the markets and gets money from those markets at a certain interest rate but with no other conditions attached. A bailout, on the other hand, is money from a specific source with an interest rate attached, a demand for full repayment within a certain period and with political conditions attached. A precautionary credit line is exactly the same. It is a €10 billion fund that would be made available by sources which would ask for it to be paid in full over a period of time, with interest, so that the sources benefit from extending the credit to us. However, the sources would also attach political and economic conditions, forcing this State to do certain things to be able to avail of that credit. On top of that, they would put in place a surveillance and supervision mechanism, in terms of site visits to this State, to ensure that Departments and the national Parliament are adhering to the programme as agreed. Therefore, a precautionary credit line is a bailout which could have been negotiated which would be sitting there, in the background, that we could have entered into if required.

Sinn Féin believes we should not have entered into a second bailout voluntarily. We believe we should not have applied for a precautionary credit line or a renewal of the bailout. We celebrate the fact that the programme is ending next month. However, we are not celebrating the fact that while the troika is leaving Ireland, the troika's mind set remains here in Government buildings. Troika or no troika, this Government is pledged to continue to implement the policies of austerity, as it has done to date. The pursuit of austerity is why we have seen our growth forecasts decrease time and time again. It is also why unemployment, particularly for our young people, is disastrously high and our emigration figures are so shameful. The Government's policy of putting the banks first, as I said earlier, means that 118,000 mortgage holders are in arrears of 90 days or more. The troika has been a failure in my view. When I last met representatives of the troika I gave them a score card. I said to them very clearly that in terms of reducing the deficit, not only did they pass, but they passed with honours because the deficit has been reduced. However, it has been reduced by placing the burden on the shoulders of ordinary Irish people.

Unemployment has gone out of control since, while 250,000 people have emigrated under the troika's watch and the mortgage arrears crisis has spiralled out of control, with 118,000 mortgage holders in arrears for 90 days or more. In addition, the number of banks in the State has reduced by six, while additional taxes and burdens have been placed on ordinary people under the troika's watch. The banks are still not lending properly more than five years into the crisis. It is clear that the troika has failed the people, as has the Government.

Sinn Féin has demonstrated consistently to the troika and the Government the need for growth and a fair deficit reduction to begin on a road to prosperity and equality. The alternative for which republicans have argued is only strengthened by the exit of the troika. The decision not to apply for a credit line is the right one, but because the Minister reached the right decision does not mean that we should not ask how he came to that conclusion. He appeared before the finance committee last Wednesday when he said of ECOFIN, "There will be no discussion of Ireland's exit at ECOFIN," and of the Eurogroup, "On this occasion, because of the imminence of the Irish exit, I will be speaking to many people on the margins, particularly those I have not met in my round of talks over the past couple of weeks." The next morning Ministers were pulled from the floor of the Dáil to attend an emergency Cabinet meeting and we were all told to expect statements on the exit. What happened between the end of the finance committee meeting at noon on Wednesday and the panic last Thursday morning? Clearly, pressure came from somewhere because given what the Minister stated to the committee, it was not his intention to inform ECOFIN or the Eurogroup that Ireland would not take a precautionary credit line. He went further and said he would use the opportunity to speak to colleagues on the margins to whom he had not spoken so far. Was there a late night call from a European country about this issue and what the Government should do? In his five minute statement to the House the Taoiseach mentioned that country, Germany, twice. German officials have agreed to use their development bank, KFW, to help our SME sector. Any step that will help SMEs is welcome, but the timing seems odd. In a five minute scripted speech about exiting the bailout and not seeking a precautionary credit line, the Taoiseach mentioned Germany twice. One wonders when the Minister speaks of a benign time to leave the programme, if the prospect of the Labour Party's sister party being in power in Germany was part of his calculation. There is a genuine question as to why this happened. We all know this issue was causing difficulties in Germany, given the demands of the Social Democratic Party and the difficulty this would create for its members, as Deputy Michael McGrath said, in having to vote in favour of a credit line at this time. Was the Minister pushed in this regard?

The Minister for Public Expenditure and Reform said the calculations and the assessment of the different options provided for the Cabinet would be published. I pushed the Taoiseach on this issue yesterday and he said the Minister could publish whatever he wanted, which is bizarre. The Minister can do so and said on national television when asked that he would. We should have an informed debate in the House. I support not opting for a precautionary credit line, but I have my own reasons for doing so. My party has its own analysis and views on what we think would have been on offer, but I would love to see the Government's analysis. A commitment was made by a senior Minister that it would be published. It should have been laid before the Houses yesterday in order that we could have an informed debate on this motion which we are debating in a vacuum.

My party does not believe the possibility of a second bailout or a precautionary line of credit was not fully investigated. It is simply not credible for the Minister to say this. I believe him when he says the Government did not apply for a credit line. Therefore, there were no formal documents stating what the programme would be, but his trips to Washington and Brussels and talks with various serious partners in Europe led him to believe what the conditionality would be. He is not that naive or incapable that he would talk to all of these individuals without discussing the conditionality that would be attached to such a proposal. He was not conversing about whether the Government should seek a credit line or a second bailout without talking about the elephant in the room - the conditionality attached, cost, politics and supervision. All of this was discussed on the fringes and it is disappointing that the Minister is unwilling to impart that information to Members of this Parliament because it is critical for us to know what conditionality would have attached to a precautionary credit line.

We are discussing an important decision which my party supports, but we need a debate on what it means for the country and its people. A good start to that discussion would be an honest telling of the story of Wednesday afternoon and Thursday morning and how the Minister went from telling me and other members of the finance committee that "There will be no discussion of Ireland's exit at ECOFIN" to the Taoiseach standing before us a number of hours later to tell us a decision had been made and that the Minister was to inform ECOFIN and the Eurogroup of same. The Minister should do the House and the country the courtesy of telling us the entire story of what happened in between.

Next year stress tests begin on the banks. That should be a concern for the people, not out of love for the banks but because they are still tied to the sovereign. The greatest opportunity the Government had to separate banking debt from sovereign debt was not taken. The retroactive recapitalisation of the pillar banks through the ESM to the benefit of the people must continue to be pursued, even if the Labour Party’s and Fine Gael’s allies in Germany disapprove. The €64 billion plus sunk into bad banks must not weigh down another generation. The Government parties erred badly in accepting the toxic Anglo Irish Bank debt as formal sovereign debt. They must deliver on the recouping of the rest of the banking debt. The primary issue is how they are pursuing this issue.

We would not be discussing a €10 billion credit line if the guarantee given 17 months ago to retroactively recapitalise the banks had borne fruit. Even if the State got back half the money pumped into the pillar banks - that would not be acceptable - it would exceed the credit line and we would be in a better position to go back to the markets on a sustainable basis. However, the Taoiseach has stated in his letter to EU leaders that it is a requirement that this promise be fulfilled if Ireland is to experience a sustainable exit from the troika programme and a sustainable entry into the markets. I agree with him.

Many people are asking what all the high drama was about last Thursday and what it means for them, but I fear the answer is that as long as the Government is in power, the prospects for our young people and the economy will not change much. I have lost count of how many times I sat down with the members of the troika and they said unambiguously that, ultimately, the Government parties were responsible for the decisions taken. They said this in the most forceful way. We put it to them that they provided a veil for the Government in the context of its actions, but they said clearly the Government had made the decisions, that the Fianna Fáil four year plan was the basis of the troika programme which was voted on by the Parliament and that every decision since had been the Government's. During the last meeting I had with them, they reiterated this, but the problem is they have never said this publicly and have allowed themselves to be used by the Government parties as a way of introducing austerity measures.

Fine Gael and the Labour Party took the decision to carry out the work Fianna Fáil had begun. They decided to place a tax on every private family home in the State, to cut unemployment benefit for the under 26s and the telephone allowance of more than 17,000 people in my home country of Donegal and many others across the State. Now that the troika has gone, the same will apply. Next year the Labour Party and Fine Gael will charge people for water from their taps. The troika's leaving may change little, except to remove an excuse for this pro-austerity Government in doing what it is committed to doing - further austerity.

Sinn Féin was the only Opposition party this year to submit a costed alternative to the Government’s austerity budget. It would have made the same adjustment as was required of the Government but it would have reduced the tax burden on working families, protected our public services and created jobs. We showed how the deficit could have been brought down in a fair way.

I challenge Labour and Fine Gael, now that their troika crutch has been removed, to show they can be fair and capable of taking the right decisions without the excuse of saying the troika made them do it. I hope today marks a change in direction for the Government. I hope it will look at real alternatives, like the ones Sinn Féin and many who work with the poor and marginalised have recommended. This morning I tabled tens of amendments to the Finance Bill. They will be voted on next week by the select finance committee, dominated by Labour and Fine Gael Deputies. It will be their first chance with the troika on the way out to show we are not just austerity junkies. The Government will have the chance to vote down cuts to single parents and to support real alternatives. Troika or no troika, I will not be holding my breath.

No party in this House or in the North of our country cares more about Irish sovereignty than Sinn Féin. That is why we have opposed elements in EU treaties that have reduced Irish sovereignty. The full impact of the decision by the pro-austerity parties here to support not just the fiscal treaty but previous conservative EU treaties is now bearing fruit. Maastricht, Nice, Lisbon and other treaties have culminated in the reduction of the State’s economic sovereignty. Next year’s budget, as well as all subsequent budgets, will have to be signed off in Brussels and Frankfurt. How is that progress towards the re-establishment of Irish economic sovereignty? The European Commission will be here twice a year checking our balance sheets, monitoring our compliance with rules not made in our interest but by which we must abide. We will also be under extra surveillance until we repay 75% of our EU loans. Let us remember, they are loans not grants.

Sinn Féin is glad the Government did what it would have done and not taken out a further bailout facility. It is sad to see Fianna Fáil arguing for a second bailout, however. Has the party learned nothing? Yesterday, Deputy Martin argued that one reason the precautionary credit line should be taken is because of the stress test of the banks next year. Yet, no one knows whether the banks need additional credit. It is beyond belief that he can argue that this country should go voluntarily into a second bailout in case AIB, Bank of Ireland or any other Irish bank needs additional credit next year, a bailout for which taxpayers will be committed to pay back.

Sinn Féin supports the decision not to take the precautionary credit line. However, certain actions taken in Europe could be masking long-term trouble in the banking sector. Outright monetary transactions, OMT, is a good policy initiative taken by the European Central Bank, ECB, quelling fears in the markets across Europe. This could, however, be masking another problem. We know the ECB has flooded the markets with cheap money, primarily because the United States has withdrawn this type of funding. We need to be vigilant and address these problems. While the ECB’s proposals have given time to financial institutions to repair their balance sheets, there is still a question as to whether the length of time given is sufficient such is their impairment.

There has been much talk about OMT as a reason why we should have taken the second bailout. The Fianna Fáil finance spokesperson, Deputy Michael McGrath, claimed OMT is only available to programme countries or those with a precautionary credit line. He did not read the rest of the ECB press release which stated OMT may be available to countries which were in a programme and are re-entering the bond markets. Although I hope OMT will not be required for the State, will the Minister elaborate on what that sentence in the press release from the ECB means? How long would such a facility be available to this State? Would it be for three, six or 12 months?

I thank the Minister and the Government for the opportunity to debate this motion but it is a bit of a sham debate. Without access to the information of the analysis done by the Department, the information imparted to the Minister in Washington, Brussels and Frankfurt, the information as to what happened between noon last Wednesday at the finance committee and Thursday morning with the hustle and bustle of an emergency Cabinet meeting, then we are just speaking in a vacuum. It is disappointing the Minister has not released all this information. This is a charade debate. Nevertheless, we have had the opportunity to put our views on the record. While I believe the final outcome was the right one, the process of arriving at it must be questioned.

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