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

I move amendment No. 1:

In page 3, between lines 18 and 19, to insert the following:"2. Following the passing of this Act the Minister for Finance shall in 2014 make an application for the direct retroactive recapitalisation of the capital injected by the State in Irish banks as per the Direct Recapitalisation Instrument.".

This is a simple amendment which goes to the core of what is the European Stability Mechanism (Amendment) Bill 2014. It is perfect for the Irish State as it allows for bondholders to be burned, something which the Government had stated would not be possible. The Taoiseach rose from where the Minister for Finance now sits to ask if we wanted "defaulter" written on our foreheads. The reality is the legislation we are discussing would allow, in certain circumstances, senior and junior bondholders to be burned if a bank got into trouble. That is something that Sinn Féin and other progressive voices called for over many years but, unfortunately, this Government did not have the backbone to stand up for Irish interests and it was all too willing to be the servants of its European masters.

In the context of the budget we must remember that €64 billion of our money was injected into broken banks, and that legacy lives on today. The debt servicing costs for the entire national debt stands at approximately €210 billion, which costs just under €8 billion per year or more than €14,000 for every man, woman and child in the State. A large proportion of that is comprised of the €64 billion injected into the banks. The Minister is always too willing to argue that while we have got more than our money back from Bank of Ireland and we want to recoup as much as possible from AIB, he is really being clever with statistics. It is not a case that he is examining the guarantee and the fee attached as a result of that, but he is mixing it with the direct recapitalisation put into the Irish banks. If somebody buys a product, he or she must pay for it. That is what the guarantee fee was, and it is separate to the recapitalisation of the banks. The Minister knows that well because when the guarantee was introduced, the fee was in place before any capital was injected into the banks.

This does not take on board the fact that the capitalisation of those banks bust this State's finances. There were other factors and I am sure the banking inquiry will delve deep into them when it gets off the ground. I hope that will be in the next couple of weeks. If the recapitalisation of the banks did not take place, we would not have had such turbulent times over the past seven years for this country and the many families which still do not see light at the end of the tunnel.

The amendment places a legislative burden on this Government to live up to its verbal commitments given in this Chamber to its stated objective, which is to apply for direct retroactive recapitalisation of our banks. Unfortunately, this Government has given up the ghost in trying to secure any of the money we have put into Anglo Irish Bank, which amounts to €30 billion. The Government still speaks about the great deal done with the promissory note and although we acknowledge that it brings short-term benefit, we also acknowledge that every last cent put into Anglo Irish Bank must be repaid under this and future Governments' stated objective that the money must be repaid in full. That does not sit with the Irish people and it is a complete failure of this Government to stand up for Irish interests.

In June the Minister indicated in a letter, "Both I and my Government colleagues will ensure that Ireland's case for retrospective recapitalisation is made at all levels as appropriate." It is a year since the Taoiseach wrote to all EU leaders to ask them to keep their commitments of June 2012. When I asked about retroactive recapitalisation in the past, I was told we just have to wait until we apply for it. I am sure the Minister will again state that we cannot apply until November. It is fair enough and we understand that we cannot apply if the instrument does not exist. We expect the Minister to give clarity on what this would mean. We have expected that from June 2012, over two years ago, there would have been some fleshing out of what it would mean for this State to have retroactive recapitalisation. In recent times, the Minister's tone has softened; I hope my fears are unfounded but the Minister may have given up the ghost on this issue.

On Committee Stage and in discussions with officials, it has become evident that what we will vote on today is unclear with respect to retroactive recapitalisation. Two years on, we do not know what retrospective recapitalisation would look like. We know in great detail how a normal recapitalisation might work as it is spelled out in guidelines. Given that the German finance Minister, Mr. Schäuble, the Dutch finance Minister, Mr. Dijsselbloem, and the head of the European Stability Mechanism, ESM, Mr. Klaus Regling, have indicated that retroactive recapitalisation is not going to happen, it is clear they did not even bother to draw up the rules.

What startled me most on Committee Stage was that I expected that deep in the bowels of the Department of Finance or the Minister's office there would be a document with an analysis of how this process would work and how rules would apply with a retroactive recapitalisation request from the State. The Minister has indicated that rules have not and will not be drawn up until Ireland or another member state makes an application. In my heart of hearts, I see this as a complete and absolute failure on behalf of this Government. This is a key political priority for the Government and one area which could lift the fortunes of the majority of people in the State would be a full retroactive recapitalisation of the money we injected into broken Irish banks. No rules have been drawn up and there is no clarity on what such rules might look like or whether the value of AIB, for example, would be at current, future or historic prices. I wonder what has happened over the past two years with the Minister for Finance and his officials. The Minister has allowed this to slip.

I welcomed the 2012 statement and I recall saying at the time that we had an open goal. We had the ball in hand and we simply had to run to the goal and stick the ball in the back of the net. The Minister was jubilant when he went on RTE and indicated his expectation that the process would be concluded by October or November of that year. We all know about the comments about the "seismic shift" and the "game changer" but two years on, that has proven to be a damp squib.

I have placed the amendment on the floor of the Parliament to commit this Government to making a retroactive recapitalisation request. I would like to see the application made sooner rather than later, although the Minister argued on Committee Stage that he would not be bound by a time limit. To make it easy for the Government to live up to its commitment and tell the Irish people to trust it, I wish to make it a legislative burden on the Government to make such an application by having the amendment accepted. To do otherwise would mean the Minister will have misled Parliament and the committee, as he would just be talking the talk instead of walking the walk.

I hope this Government will make an application and it will be successful. I would have liked the Government to have been more robust in standing up to the Minister's colleagues in Europe who do not support such an application. There is nothing I have seen in the past two years which suggests that this is the primary course of action to be taken by the Government. Instead, we have heard that AIB is being readied to be sold, either to a major shareholder or a minority stakeholder. The State may hold certain shares in AIB as long as such action would be relevant.

11 o’clock

My party has a long history of successful negotiation, including in respect of the Good Friday Agreement, the St. Andrews Agreement and so on. I am aware, therefore, that the one thing one must not do during negotiations is show one's hand. One should not do what the Minister has done in the context of his stated objection with regard to applying for retroactive recapitalisation. All of his colleagues on the ESM board are of the view that the Irish Government believes it is going to make an application for retroactive recapitalisation at some point down the track. However, they also heard him inform this Parliament in the past two weeks that the Government is considering selling AIB on the stock market and that it will consider offers for the latter from big European banks if it can attract interest from them. Obviously, that to which I refer limits the potential for a successful application for retroactive recapitalisation to the fullest extent possible. What the Minister has shown is that there are other options available which the Government is willing to consider.

I have already referred to those who would not support an application for retroactive recapitalisation from Ireland. The Irish Government has provided these individuals with additional arguments to strengthen their position. The people in question can easily say to the Minister that the Government is considering selling AIB on the market so why should they - despite the fact that Ireland bailed out its banks and saved other banking institutions across Europe - give us our money back? There is no doubt that Europe would have been in a worse position if we had burned the bondholders. Why would Europe give favourable consideration to an application for retroactive recapitalisation when the Government is actively considering selling shares in AIB?

The other problem the State has, and which I have highlighted on previous occasions, is that with each day that passes, it becomes more difficult to make a request for retroactive recapitalisation. The Government will make great play of the six lines of text it managed to have included in the guidelines. However, it must be remembered that the possibility of retroactive recapitalisation and burning bondholders only came about as a result of Spain's difficulties. When Spain got into serious trouble, Europe listened and decided to act. At the June 2012 summit, EU leaders issued a statement with regard to breaking the link between the debts of bad banks and sovereigns. While it goes a certain distance in the direction Sinn Féin recommended it should go in the context of burning bondholders, the Bill before the House still calls upon the State to inject money into broken banks. It does not, therefore, fulfil the commitment given at the 2012 summit. Of course, it was when Spain was experiencing difficulties in 2012 that European leaders were forced to sit up and take notice. Those difficulties led to the ECB doing what Sinn Féin had been calling for it to do for many years, namely, act as a lender of last resort. It was then, when our deficit and debts were completely out of control and when we were carrying a massive burden, that this country should have struck a blow for the rights of its people and demanded - during that moment of weakness brought about by Spain's problems - further clarity in respect of retroactive recapitalisation. At that point, the Government should have obtained a commitment far stronger than that in which our German leaders stated that Ireland is a wee bit special. The latter just simply does not cut it.

This is not a trivial matter. What we are discussing here is an amount of €64 billion and events which sunk the Irish economy and the impact of which are still causing pain and hardship to families throughout the State. I refer to people who today will be obliged to approach the Society of St. Vincent de Paul in order to obtain money to pay for fuel to heat their homes, people who are queuing for food parcels in our capital city to feed their children and people who are in Dublin Airport saying goodbye to their loved ones and wondering if they will ever return to these shores. That is the legacy of the banking debt which has been placed on our shoulders and of the failure of the Government to strike when the time was right, to obtain a deal for Ireland and to get the maximum possible return in respect of the money that was injected into our broken banks. However, that is past; it is gone and we cannot turn back the clock. The one thing we can do, in the context of the legislation before the House, is oblige the Government to make, at the very least, an application for the retroactive recapitalisation of our banks.

Like every other Member, I do not know how such an application would be viewed. I cannot say that it would be successful. However, the Minister and the Government should start making demands. They should go back to their leaders and state that the Irish Parliament has decided that the European Stability Mechanism (Amendment) Bill 2014 is not good enough. They should state that it has not been changed by the Dáil so there will be no problem for Europe because it can be implemented there. They should further inform those in Europe that this Parliament has placed a burden on this and future Administrations to seek retroactive recapitalisation. The Minister and the Government should make it clear that the six lines which have been included in the guidelines simply do not cut it for the Irish people. They should stress that the people want their money back, that they are not fools, that they know what happened during the relevant period with regard to the flow of credit from European banks into our system, that they are aware that bankers, developers and all the rest were culpable for the economic collapse but that they also know that the European system itself was culpable. It should be made clear that what the people of this country cannot tolerate is the fact that if a bank in Germany, Spain or France goes bust in the future, the ESM will step in at a certain point in order to rescue it. It should also be made clear that they cannot understand why they are being told to suck it up, take it as it is and move on. The Minister and the Government should tell their colleagues in Europe that the people have demanded that they apply for retroactive recapitalisation and that they must understand the mood of the people.

Amendment No. 1 simply asks that the Minister include in the legislation the commitment he has given to this Parliament, to the Select Sub-Committee on Finance and to the Irish people. I see no reason why he would not accept it.

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