Dominic Hannigan (Meath East, Labour) | Oireachtas source

I welcome the opportunity to speak on this Bill, which allows the European Stability Mechanism to set up a direct bank recapitalisation instrument which will enable recapitalisation of troubled banks in member countries directly without those moneys being added to the country's national debt, which is what happened here.

While this is a technical Bill, it could have serious implications for Ireland and the national debt in the long term. This is relevant to the discussions happening on the budget we are preparing for 2015. The growth figures we are hearing, including the most recent this week, suggest we could implement a neutral budget. However, there are still those, including the Irish Fiscal Advisory Council, that suggest the Government should make the planned €2 billion adjustment. We also heard the views of our European colleagues during the week.

All of this is, of course, because of concerns about the national economy and the national debt. The debt stands at just over 120% of GDP, the fourth highest in Europe. Debt levels across Europe have been rising in the years since the crisis began and in the eurozone the debt-to-GDP ratio is now at an average figure of just under 97%. Therefore, we are not alone with our problems. Of course, there are legitimate fears that if European-wide recovery does not take hold, this level of debt will harm the recovery not just of Ireland but of other European countries also. Therefore, this new instrument may give us an opportunity to do something about it.

In Ireland there is the possibility that the fund could be used to give us retrospective recapitalisation. The FAQ document which the ESM released in June this year included the following question: "Could direct recapitalisation be applied retroactively, so that the ESM would directly recapitalise troubled banks in countries that have received financial assistance from the EFSF and ESM?" The answer given was: "The potential retroactive application of the instrument will be decided on a case-by-case basis and by mutual agreement of ESM Members". Therefore, there is an opportunity for us. Will the Minister of State tell the House if Irish bank debt will be looked at under this instrument and if an approach will be made or has been made to the board of the ESM? I share the concerns expressed by other Members of the House, including the last speaker, that perhaps we will end up with not getting anything in terms of recapitalisation from the ESM.

Our shares in Bank of Ireland and AIB are getting into the mid to late teens in billions of euro. In the coming months and a short number of years the country may well be in a position to sell off these shares, in the process realising a dividend of perhaps €15 billion or €20 billion which could be used to help to reduce the national debt and also to pump-prime capital expenditure. I say this because we may be forced to deal with the issue ourselves. I am becoming more and more convinced that at a European level it is going to be difficult to achieve unanimous agreement. I attended a conference in Rome at the beginning of this week as part of the monitoring of the fiscal compact treaty. The House may remember that Article 13 of that treaty states we will meet as a Union every six months to discuss the implications and implementation of the fiscal compact treaty. Having listened to some of our colleagues across Europe, in particular our German colleagues, I very much doubt that we will see much movement in terms of achieving a European consensus to deal with many of the issues we face.

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