Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

Ba mhaith liom fosta comhghairdeas a dhéanamh leis an Aire Stáit, an Teachta Eoghan Murphy, tar éis dó bheith ceaptha mar Aire Stáit. Tá súil agam go n-éireoidh go maith leis, go n-éireoidh go maith linn, agus go mbeidh comhoibriú eadrainn i rith an téarma seo. Mar an gcéanna leis an Teachta Michael McGrath, chuir mé aithne ar an Aire Stáit le linn an fiosrúchán baincéireachta. Tá súil agam go mbeimid in ann an caidreamh sin a choinneáil agus muid ar thaobhanna difriúla de na binsí anseo.

I welcome the opportunity to speak on this legislation. Unlike previous speakers I do not look forward to the speedy enactment of this legislation. If anything, we should take time to consider and tease out all of what is included in banking legislation, including in this case, the loan facility agreement provided for therein and the unintended consequences or intended consequences or ramifications of different sections of that agreement. I was hit by a bout of déjà vuand was going to run for cover when I heard three Fianna Fáil speakers in a row say that our banks are well capitalised. It must be borne in mind that what we are speaking about in the context of this legislation is a €1.8 billion loan facility. We are told we will get back this money because it is unlikely we will ever have to issue the loan because our banks are so well capitalised. In other words, the banks will pay us back. We have heard all of that, or at least a version of it, before.

There have been positive changes in this area, which I welcome. However, it is key that we take our time with this legislation. I understand that in terms of this matter we are already five months delayed but let us not be in such a rush that we do not parse the small number of paragraphs in this legislation or the more complex document adjoining it, which I will deal with later. This legislation is the latest in a string of highly complex legislation in respect of implementation of the banking union. Specifically, it ratifies an agreement whereby the State can loan more than €1.8 billion to the single resolution board in the event of an Irish bank going bust. We are told this is a temporary arrangement during the period up to 2024 while the board is being mutualised. During this period, each member state has a compartment which can be called upon if one of its banks is in need and the fund is depleted. If it is called upon it is to be repaid by the board over time from contributions from the banking sector. We are told it is highly unlikely this scenario will ever arise. Nevertheless many previously highly unlikely scenarios have occurred in the past few years. I am sure if we were to travel back to this House ten years ago it would have been considered highly unlikely that we would at this time be living in a eurozone of zero inflation and zero bond rates. It would have been considered highly unlikely that AIB, Bank of Ireland and Permanent TSB would be in part or full ownership of the State, yet here we are. It is almost eight years since the bank guarantee was introduced and here we are again pledging the State's money to guarantee a failing bank if it is in trouble under certain circumstances. It is a hypothetical and, according to the Minister, a highly unlikely scenario yet we are being asked to support it formally in legislation.

It is important to consider what we are being asked to support today. Section 3 states, "Subject to the terms of the Loan Facility Agreement and the approval of the Minister, there may be paid out of the Central Fund or the growing produce of that Fund such sums, not exceeding, in aggregate, a sum of €1,815,000,000, as are required to enable the State to make, to the Single Resolution Board, payments provided for in the foregoing agreement." Where is the Oireachtas approval in all of this? The Minister of State, Deputy Eoghan Murphy, will say that the Oireachtas approval is in this legislation in respect of which Fianna Fáil is seeking a speedy passage through the House. This legislation deals with expenditure or a loan of €1.185 billion. Surely, the Minister should be required to come back to the House to seek approval for individual tranches of loans. At the stroke of a pen, without debate or a vote, we are being asked to empower a Minister, including a Minister without majority support, to hand over €1.8 billion of the people's money at some time in the future. Under section 6 the Minister is required to tell us at the end of the year how much of our money he or she has pledged in this loan.

That does not sit comfortably with me and it should not sit comfortably with anybody here. We all know from bitter experience how an initial loan can get out of control and be extended and increased. I want to examine this on Committee Stage in great detail. I accept that section 3 deals with the sum not exceeding €1.815 billion but section 2 states:

Minister may perform functions for purposes of Loan Facility Agreement

2.All such things as are necessary or expedient to be done for the purposes of the State’s performing its functions under the Loan Facility Agreement may be done by the Minister and there is conferred, by virtue of this section, on the Minister all the powers necessary in that behalf.

That is a very powerful section because we are basically empowering the Minister to do all the things the Minister needs to do to perform this function under the loan facility agreement. On page 11 however, is stated: "'Fixed Individual Amount'means on the date of entry into force of this Agreement, EUR 1,815,000,000, subject to any changes of such amount agreed in accordance with Clause 24 (Review Clause) of this Agreement." Under Clause 24 everybody can agree at European level that the numbers should be higher. We need to tease out how that sits with section 3 which puts a limit on the €1.8 billion. They are concerns I would like to see addressed on Committee Stage because under section 2 we are giving the Minister power to do whatever he needs to do, and all the powers under the sun to bring into being the agreement under the loan facility agreement, which includes on page 11 the idea that the sum of €1.8 billion can be reviewed and Clause 24 allows for a review to happen which allows for the set amount to be increased. I would be concerned that some legal loophole would be found in terms of section 3 that says section 2 allows him to do this and section 3 is not strong enough or robust enough. That is why we need to take our time to tease out these issues and consider all the consequences of different sections, not only of the primary legislation but of the loan agreement which is named and party to this legislation.

Section 4 limits the potential calls on Ireland's compartment to institutions authorised in the State but by the latest count there are 477 institutions enjoying some sort of operation in the State. Even on the list of licensed banks there are many the ordinary citizen would never have heard of on the high street or in radio advertising. I would welcome clarity on how strict this potential call really is.

The banking union was built on a promise to separate sovereign and banking debt but it is questionable whether it has achieved this task. The debate on banking union offered this State and the EU an opportunity to make sure a sovereign state would never be dragged down by a bank or system of banks again. That was the big idea but, as often happens in the EU, the lobbying began. Bigger countries flexed their muscles and suddenly the talk was about national compartments and sovereign backstops. As usual, the EU institutions did not waste the crisis and the ECB has increased its power significantly while its accountability and transparency remain minimal at best. If the banking union had achieved its aim of separating banking and sovereign debt, we would not be here today being asked to vote on a guarantee of €1.85 billion for Irish banks that might fall into trouble. There are positive elements of the banking union and I hope we will progress to the genuine separation of sovereign and banking debt but I have serious reservations. The new rules do something that should always have been the case. Bondholders now as a rule get burnt, then other steps are taken and only then is the state liable for any sort of hit. It took some people here and in the EU hierarchy time to grasp the concept that has always been obvious to my party, that the speculators must lose when their bets do not come in.

The second opportunity offered by the banking union debate and the general debate around this crisis was one unique to this State. The banking union discussions and the related European single mechanism talks offered a huge chance for this State to get some sort of justice on our debts. We are told we have a new system whereby never again will a state have to bail out a bank, or at least in a few years we will have that type of system. We are also told that a major Irish diplomatic breakthrough was achieved in this process, allowing us to apply the new rules retrospectively in order that we can get the money back that under the new rules would never have gone into these banks in the first place. All we had to do was apply but the previous Government and, sadly, this one too have set their faces to ignoring this possibility and letting the people pay this debt. When the history of these years is written, it will be said how bizarre it was that a small country that bore the brunt of the disastrous decisions chose not to use the mechanism that was set up specifically for it to apply for retrospective recapitalisation of its banks. It is unbelievable that the Government will not even make an application. Where is the bold Deputy Shane Ross who so decried the previous Government for not making such an application? Where is he banging his fists now on the table and saying that the Government needs to do the right thing by the people? Where is the new politics? I welcome that Fianna Fáil has said this should happen. Of course it should happen. It got us into this mess in the first place. Its Ministers signed the promissory note cheques. Its Government led us down this path.

Let us see if we can use this legislation to try to force the Government to make this application at long last. This was our open goal during the whole banking union process, our chance to set some things right, and the Government turned round and ran back down the pitch. The two great opportunities of banking union have gone a begging, or at least not yet been realised. We are left with some better rules that we hope will work even though they have been diluted and we are also left with a banking debt that was not the people’s debt and with banks that are still ripping us off even though we own some of them. Banking union so far has not served the Irish people as well as it could have. Nevertheless, it is a process under way and we must work to make sure it serves the interests of people and not just the interests of the banks or the ECB. It is a major step to guaranteeing that in future bondholders, not people on social welfare or hospital trolleys, get burnt.

I will scrutinise this legislation on Committee Stage and will take my time doing so. I will consider amendments to the section based on the concerns that I have raised and I will deal with them. If the majority in the House believes this minority Government should make a retroactive recapitalisation, perhaps we will enter a clause in the legislation to make that happen.

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