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

Caithfidh mé a rá go bhfuil sé dochreidte nach bhfuil an tAire sásta a rá sa Dáil inniu go bhfuil iarratas ón Stát seo ag dul chun tosaigh leis an airgead a chuir an Rialtas deireanach agus an Rialtas seo isteach sna bainc briste - ní raibh siad ag feidhmiú agus níl cuid acu ag feidhmiú go fóill - a fháil ar ais ar son muintir na hÉireann. Mar atá ráite cheana féin, dúirt an tAire liom nuair a chuir mé ceist air ag an gcoiste airgeadais níos luaithe i mbliana go raibh sé chun a leithéid d'iarratas a chur isteach. Níl dabht ann nach bhfuil an Rialtas ag dul síos an treo sin. Ar an drochuair, tá said ag dul síos treo eile - sé sin, na scaranna atá ag an Stát in AIB agus i mBanc na hÉireann a dhíol chuig na margaí. Dá bhrí sin, ní gheobhaidh siad ar ais ach an méid ar fiú na scaranna sin inniu, agus beidh an Stát thíos leis an méid eile den airgead a cuireadh isteach sna bainc. D'fhógair an Rialtas sa bhliain 2012 go raibh athrú mór polasaí i gcroílár na hEorpa. Nuair a tháinig siad ar ais go dtí an tír seo ó na cainteanna a bhí ag dul ar aghaidh sna uaireanta malla san oíche agus na uaireanta beaga sa mhaidin, chuir mé fáilte roimh an athrú a d'fhógair siad. Dúirt mé ag an am go raibh gá ann déileáil leis an ábhar seo go scioptha. Dúirt mé go raibh an liathróid i lámh an Rialtas, go raibh an cúl foscailte agus go raibh ar an Rialtas an liathróid a chur isteach sa chúl. Ar an drochuair, tá cúlú ar an athrú polasaí mór Eorpach le feiceáil idir sin agus an lá inniu. Tá na téarmaí atá in úsáid ag an Rialtas anois i bhfad níos laige ná na téarmaí a bhí in úsáid i mí Meitheamh 2012. I say this because I believe many people have lost faith in the Government's handling of retroactive recapitalisation. The Government has been successful in changing the mindset of a large number of people in this State, convincing them that retroactive recapitalisation should only apply to AIB and Bank of Ireland and that we have to take the Anglo Irish Bank problem and its debt on the chin. It should never have been that way. The Government came to the House with a proposal on Anglo Irish Bank bonds and tried to sell it as a major victory in terms of absolving us from the Anglo Irish Bank debt. In reality, while it brought benefits in the here and now in respect of interest payments, the full capital is still to be paid by the State, not only by this generation but by future generations.

When the Government returned from the talks in Europe on that fateful night in June 2012, its members were tripping over each other to go onto the national airwaves and proclaim a major victory on behalf of the people. I was asked for my opinion and the position of my party at that point. I welcomed the news. I said that those in government now had the ball in their hands, that the goal was open and that they needed to move swiftly to place the ball in the net. The reason I said that was because events change. At the time we were very much in the grip of the troika. At the time our debt was unsustainable, as it is now. At the time we had a vast deficit. That was the time to strike. Moreover, it was the time to strike because Spain had got into difficulty and that was probably the reason the policy change was promised in the first place.

However, in the intervening months those in government have decided to take the attitude that we should leave it to them, that it will be okay on the day and that we need not worry about it. That type of laissez-faireattitude is a symptom of this Government when it comes to key major issues. Let us consider what happened yesterday after the publication of the letter from the European Commission concerning Apple, a company that is very much valued in this State for the jobs it provides, especially in the Cork region - it is one of the largest employers in the State. When it was pointed out time and again by me and my party that certain issues needed to be dealt with in respect of Apple's tax liability, those in government refused to listen. They said it would be okay on the day. This complacent attitude is evident in the remarks of the Minister for Finance, Deputy Noonan, to the effect that the investigation was part of a wider EU investigation, but this interpretation has been revealed to be misplaced. The Government's head was in the sand and its attitude to this entire affair has damaged Ireland's reputation at home and abroad. The Minister, Deputy Noonan, tried to downplay the gravity of the probe by the Commission into Apple as recently as July this year after he received the letter. However, the detail of the letter should wake him up to the seriousness of the situation. The lengthy letter seems to build a strong case against Ireland. The Commission is clearly unimpressed by the answers it has received thus far.

Embarrassingly - I say this as a Member of this Parliament but also as an Irish citizen - it has been revealed that either the Department of Finance or the Revenue Commissioners sent the wrong turnover records in March before sending the correct records in May. It is well time that the Government got serious about these allegations and was honest with the public about the implications. The damage done already to our reputation is sizeable, and it has been made worse as a result of the complacency of this Government. We should not have allowed the European Commission to investigate this. We should have investigated it ourselves and we should have set matters correct, if there were matters to be corrected in the first place. This is an issue I will return to later on. I hope the lessons are learned in respect of the way we deal with multinational profits and that the calculations and negotiations will be a thing of the past. I hope the deals that went on for 16 years will be reviewed more regularly and that they will be evidence-based.

What we have before us today is what looks like a bland technical Bill, but I fear it represents one of the biggest political failures this Government has yet brought down upon us. The raft of new legislation brought in at EU level, supposedly to bring about a more secure banking system that would prevent a repeat of the banking collapses throughout Europe, has not delivered results. Sinn Féin has always called for the European Central Bank to step up and be the lender of last resort for the euro, to be a real backstop for the currency. This would entail increased bond buying from Governments and, potentially, direct recapitalisation of banks. The balance sheets of banks needed to be examined more thoroughly and in more detail. More transparency needed to be applied. Regulation needed to be harmonised throughout Europe and bad debts needed to be written down in banks. Bondholders should have been burned. Given the transnational nature of banks, a common resolution regime must be agreed.

There has been progress on some of this but a lack of progress in other areas.

Later this month, the stress tests on banks will be carried out and the results published. If Irish banks pass these tests, it will be on the backs of struggling homeowners and citizens reliant on public services and the State. As a member of the banking inquiry, I will diligently examine the events that led to such a situation. In June 2012 the then Tánaiste, Deputy Eamon Gilmore, and the Taoiseach welcomed a decision by EU leaders to commit to separating banking and sovereign debt. The Taoiseach called it "a seismic shift" while Deputy Gilmore called it a "game changer". The Minister for Finance went on RTE radio the following morning to say he expected this to be concluded some time that autumn. It is now 27 months later and it has all gone quiet. There is no more talk of seismic shifts or game changers or the ESM stepping in and lifting the banking debt off the shoulders off the Irish people, while our debt-to-GDP ratio remains dangerously high.

I have welcomed other moves to reduce our debt repayments, but they are drops in the ocean when compared to the potential that was there. Let us remember that refinancing debt is not the same as reducing debt. Today we are asked to support this Bill, which does not say a word about retroactive recapitalisation and the €64 billion pumped into the banks, or €30 billion if it is agreed that the former Anglo Irish Bank is off the cards. The Bill ratifies a change to the ESM treaty to provide for a direct recapitalisation instrument. The instrument contains seven little lines that say nothing new about retroactive recapitalisation. Nothing new has emerged since June 2012. The flesh has not been put on the bones of the retroactive instrument. We have before us a detailed text, even if I could not get answers about the legal status of the instrument. However, since June 2012 no further detail has been added on the issue of the retroactive use of the ESM. I question what has been happening over the past 27 months while these modalities, as they were described by the Minister, have yet to be agreed by the board of governors of the ESM. It is almost as if they do not intend the mechanism ever to be used retroactively.

We are being asked to back this Bill without the Minister being able to answer the most basic questions about how retroactive recapitalisation would work even if the State applied for it. He failed to do so again in his contribution. When he applies to get back the money that the Irish people put into the bust banks through the previous and current Governments, will his application have to follow the same rules laid down in the instrument for direct recapitalisations in the future? Does he have any notion or hint at all about how it will work? Would he mind sharing that with the Parliament? Will the State have to subtract the moneys that would have been required at the time to bring the pillar banks up to the legal common equity tier ratio of 4.5%, as established under Basel III? When I asked this in parliamentary questions, the Minister would not answer because he said it was hypothetical. Would our application have to go through the waterfall system, as with all other future applications for direct recapitalisation? That is not hypothetical; it is a basic question that the Minister has not answered. Perhaps he simply does not know, because he has not answered that question for his colleagues over the past 27 months.

We are being asked to simply leave it up to the board of governors of the ESM to make up the rules as they go along on this issue of huge importance to Ireland. The board comprises euro area finance Ministers such as Wolfgang Schäuble and Jeroen Dijsselbloem who say retroactive recapitalisation is not on the cards. By simply rubber-stamping this Bill, we are passing the ball to Mr. Schäuble and his ilk, who have their own priorities in this regard. They have shown zero indication that they are willing to look favourably on a request for retroactive recapitalisation and they have not even bothered drawing up rules for it.

We were told in a broader sense that sovereign and banking debt would be separated. This was the big announcement, but the ESM failed to properly make clear the definition of what is private debt and what is public debt. There is still an onus on the State to act before the ESM steps in, and this is laid down in the guidelines. This could mean having to recapitalise the banks to a certain level or covering a chunk of the costs for years. The direct recapitalisation instrument is complex and many have questioned how it will work in practice.

There are also concerns that the fund is simply not large enough. Are we to believe that half the fund will be spent on Ireland? There are no straight answers available on how the relatively small fund will suffice in the event of a crisis or even how it can be topped up. The proposed banking union provides little protection to the taxpayer from a recurrence and does nothing to stimulate growth or provide opportunities for job creation. It does not go far enough to separate banking debt from sovereign debt; that lie needs to be nailed. If one of our banks gets into trouble in the future, irrespective of the difficulty we face trying to get the money back that we put in in the past, the State would have to step in before the ESM. That does not equate to separating banking debt from sovereign debt. Similarly, all the assurances given at the peak of the crisis that strict measures would be put in place to ensure a crisis of this magnitude would not be allowed to recur have failed to materialise. Any reforms have been minimal, with insufficient relief from the burden being shouldered by taxpayers. There is still the so-called vicious circle.

Article 8 of this instrument, which we are effectively voting on, lays out the rules to be followed in the case of a recapitalisation. From 1 January, the system will include a bail-in by creditors. In other words, the law of the land will be that bondholders are to be burned, but that will come as little relief to families filling out forms for water charges or suffering as a result of austerity, or who have seen their loved ones and their nearest and dearest forced to emigrate in the intervening months and years. The Taoiseach once said in the House: "I will not have 'defaulter' written on my head." However, the Government has introduced a Bill which, at its core, ensures that junior and senior bondholders will be burned in the future, because that is what is right. That is now accepted by the Government and every government across Europe. It is a pity the Taoiseach did not accept that principle when he took office in 2011. One of the first actions the Government took was to pay the promissory note worth €3.1 billion to Anglo Irish Bank, thereby bailing out bondholders, senior and junior, guaranteed and unguaranteed. One of the other actions the Taoiseach took was to inject €22 billion of our money into AIB and Bank of Ireland. It is a pity this legislation was not on the cards at that time or that he did not have the foresight to understand and to realise that when a bank goes bust, the creditors are dealt with and the bondholders are burned.

We in Sinn Féin have led the charge on this for many years. We have been proved correct in that this was the right course of action but, unfortunately for many in this State, it is too little, too late. The case for retroactive recapitalisation is strong, but it will only be strong if we have a Government that is willing to stand up for ordinary people. I am concerned at recent revelations in the national media that the Government plans to sell shares in AIB, because it is simply the wrong thing to do.

The Minister's first course of action must be to state, as he did under pressure from me and other members of the Joint Committee on Finance, Public Expenditure and Reform, that he will apply for retroactive recapitalisation. We want not only the €11 billion value of the shares of Allied Irish Banks, but also the €20 billion the State injected into that bank. If these moneys are not forthcoming, we should not sell off the bank. Why would one hold on to a bank when it is in debt and costing the country a fortune and then sell it off to vulture funds as soon as it makes profit in order that they can reap the benefits? The profits of Allied Irish Banks were achieved by increasing fees and charges, refusing to deal with families in mortgage distress and hiking up variable interest rates time and again. Profitability was, therefore, achieved on the backs of the Irish people whom the Government is about to betray again.

Sinn Féin will introduce amendments to press the issue of retroactive recapitalisation, as we have done in the European Parliament. Unfortunately, some Irish Members of the European Parliament could not find it in themselves to wear the green jersey and support our amendment. While it is our hope that the Bill will help us recoup the people's money, unfortunately, our experience has been that the Government and European Union are not up to the job and will not help us recoup one cent. I hope I am wrong.

I ask the Minister to state clearly, on behalf of the Government, that the issue of retroactive recapitalisation is not dead in the water. He must spell out what he has been doing on this issue for the past 27 months. Will he seek to recoup the moneys injected into Allied Irish Banks and Bank of Ireland to help reduce the national debt, stimulate the economy and enable young people to return to these shores and businesses that have been kept afloat in these times of austerity to flourish? These are the questions the Minister must answer.

It is unfair of the Government to ask Members to take a leap of faith and pass this Bill on the basis that it will be okay on the day or that he and his colleagues on the board of the European Stability Mechanism will draw up a set of rules that will allow him to apply for and possibly secure retroactive recapitalisation at some point in future. If the Government had an ounce of decency, it would have used this legislation as a lever to bring about further clarity on Ireland's application for retroactive recapitalisation.

Given that this instrument needs to be agreed by all the EU member states affected by it, the Minister should have asked his colleagues to explain how they could expect him to ask the Irish Parliament to enshrine in law a mechanism under which bondholders and creditors will be burned if European banks get into trouble again in future, while asking Irish people to take a leap of faith regarding the money they injected into broken banks and the hit they took on behalf of financial institutions across Europe. We have not been given any detail on whether or when an application for retroactive recapitalisation will be lodged and how any such application would be treated by his ministerial counterparts in the European Union. The Minister should immediately contact other European Finance Ministers seeking further clarity on this matter. He should request something more secure than the leap of faith required by the seven short lines which state that retroactive recapitalisation may be possible on a case by case basis. The issue is of such magnitude that it demands further clarity. Its delivery has the potential to change the fortunes of many people in this State.

My party will be the first to support the Government if it is sincere about pursuing an agenda of securing retroactive recapitalisation. I have not yet seen any evidence that this is the case.

See this speech in context