Michael Noonan (Limerick East, Fine Gael)
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Is a Member opposite in possession?

Brendan Howlin (Wexford, Labour)
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Yes, but as the Member is not in attendance, I call Deputy Noonan.

Michael Noonan (Limerick East, Fine Gael)
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A photo finish is still a win.

When I spoke here recently on the recapitalisation of Bank of Ireland and AIB, I stated that I did not believe the Minister's proposals would be sufficient to restore the lending position of the banks in order that they could again provide a credit flow, which is essential to restoring the health of the economy. Now that the Minister is taking the necessary statutory power to give effect to his proposals, I am even stronger in my belief that his proposals are not fit for purpose.

My belief is based on a number of factors. First, the markets have rejected the proposal. The value of shares in both AIB and Bank of Ireland have collapsed. I checked the closing prices of those shares today before I came to the Chamber and AIB shares closed at 42 cent while Bank of Ireland shares closed at 19 cent. One could buy five Bank of Ireland shares for €1 and still have change. Those share prices do not reflect confidence in the recapitalisation proposals brought forward by the Minister. This is the judgment of the investment community at home and abroad. The Minister may agree and even argue that the reality is different, but in matters of investment perception is king. The perception of the investment community is that the proposed recapitalisation of the banks is insufficient. Therefore, it will not work and it is not fit for the purpose. As I said, when we debated this proposal initially, the Minister will be back here before too long taking other measures, which he signalled today in terms of this Bill and which he is partially taking.

Second, my belief is reinforced by the fact that most analysts and bank commentators view the proposals as inadequate, that the figure of €7 billion will not be sufficient to recapitalise the Irish banks because the weakness of their loan books requires far more capital than that. In the property and banking collapses in Switzerland and Sweden in the early 1990s, 8% of the banks' loan books was written off. If the write off of these two banks is of a similar proportion, then the figures are completely inadequate.

Third, the European Central Bank advised that the best way to proceed for eurozone members who need to recapitalise their banks is to recapitalise them but to bring in proposals in parallel for a bad or toxic bank together with provisions for insurance against bad debts. The Minister has not done that. He has taken no action. He has promised to consider these options, but while he waits confidence slips away. The main problem with the Government is that its decisions are always behind the curve. Matters are moving forward at a very rapid pace and the Government is chasing after events. Consequently, it never turns the trend and inspires the confidence that is necessary to get things moving again.

My fourth reason for believing the Minister's recapitalisation proposal is fatally flawed is that banks internationally, and in Ireland, will shortly have to move back to a more traditional type of banking. In the boom years the Irish banks operated on a loan to deposit ratio of, in theory, 160%; the ratio probably went higher than that. In simple terms, for every €100 they had on deposit, they loaned €160. They borrowed on the wholesale money market to make up the €60 gap. In the current process, known as deleveraging, the lending to deposit ratio will have to be reduced to between 80% and 100%.

Joan Burton (Dublin West, Labour)
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They will reverse the figures.

Michael Noonan (Limerick East, Fine Gael)
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Yes, from the current 160%. The wholesale money market is effectively shut. Even bankers do not believe bankers. The banks will have to increase deposits and reduce lending. They are currently not increasing deposits, therefore, they will have to reduce lending. The recapitalisation programme, for structural reasons within the banks, will not provide the credit flows the economy currently needs. I advise the Minister there is a danger that the banks will use the money provided by the NTMA pension fund to strengthen their own positions and to provide for their own jobs and, if they can, for their shareholders, whose interests are being wiped out, but they will not provide the credit lines the economy needs.

The Minister for Finance outlined the various agreements and protocols he has with the banks in return for the recapitalisation plan, but the inadequate credit lines available to businesses and consumers are not loosening up. Nobody believes the banks. Furthermore, nobody believes the Minister has the authority — given that he did not take it under legislative form — to instruct the banks to lend in a particular way. Therefore, the commitments they have made do not amount to very much.

In the Government announcement of 11 February 2009 on the recapitalisation of the banks, the Government set out the terms of the agreement. In the section headed "Bank Customers Package", there is a commitment to increase by 10% lending to small and medium-sized enterprises and to provide an additional 30% capacity for lending to first-time buyers in 2009. The recapitalised banks have also agreed to work closely with the IDA and Enterprise Ireland to ensure the supply of funds necessary to finance contractors engaged in major projects sponsored by these agencies have the credit facilities they need. To date, nothing seems to be happening.

I listened to the "Today with Pat Kenny" radio programme on my way to these Houses this morning and heard the chief executive of Aer Arann claim his company, which has a turnover of €100 million, could not get a €100 overdraft from the banks. He said that in the aviation business there is a cash starved winter season and a cash rich summer season and that, therefore, airlines need credit lines to tide them over. It is similar to a farmer buying cattle in the spring time and selling them in the autumn. The same principle applies in the aviation business. That chief executive of Aer Arann said on radio this morning that because he could not get €100 in credit from the banks this year he was, effectively, forced into having to let go 70 people. He had 70 redundancies in the company, but if he had a credit line with the banks those redundancies would not have been necessary. When pressed, he said the system would have to change, the banks would have to be nationalised and the Minister for Finance and the Government would have to instruct the banks to provide money in the first instance to stabilise jobs — which in the case of his company would not have been lost if he had access to credit — and to create jobs along the lines of the Minister's intent to fund IDA and Enterprise Ireland projects. However, that is not happening.

I listened to the comments of Mr. McCaughey on "Questions & Answers" last night. He is a well known businessman from Northern Ireland and a man who would be well known to Fianna Fáil. The Government appointed him chairman of the Dublin Docklands Development Authority. He was appointed to boards by the Government previously. He is a respected businessman and I believe he is a good one. He said there was little or no credit available to small and medium-sized businesses. He said the banks are more of a problem than a solution and that they should be nationalised. He said the Government should mandate the banks, when they are under State control, to provide money to the sectors of the economy that intend doing and want to do business and which are providing jobs and will continue to provide jobs.

We have heard anecdote after anecdote from Members of all sides about the experiences of their constituents in failing to get credit lines from the banks. The announcement to recapitalise the banks was made prior to Christmas, the detailed announcements were made on 9 February and it is now 3 March, but nothing has happened to relieve credit lines. This approach is not working. The danger now is that the banks will not be revitalised — as they were in Sweden over a two and half year period in the early 1990s — and that they will become the zombie-type banks which mired Japan in recession for a decade right through the 1990s because it took a different set of options. The Minister's set of options are more in line with those taken in Japan than what the Opposition is advocating, which is to follow what happened in Sweden and Switzerland.

The Bill is largely an enabling one. It enables the Minister to do what he has already announced in using the National Pensions Reserve Fund to recapitalise AIB and Bank of Ireland. It also enables the Minister to do things he has not announced. It enables him to direct the commission under the National Pensions Reserve Fund to take a controlling interest in either or both of the banks. This is very interesting. The Minister has said that he is only inserting the provisions on the basis that while he is making some changes, he might as well make a few more. He has said that he never intends using these powers. The powers he is taking would work as follows. If AIB and Bank of Ireland require more capital and went to the market on a shares issue, they obviously would not get it at the moment. If they approached their own shareholders at 42 cent and 19 cent a share, respectively, I do not believe they would get it either.

The Bill contains an enabling provision allowing the Minister to direct the National Pensions Reserve Fund to take the shares on any public offering made by a publicly-quoted bank, in other words AIB and Bank of Ireland. Of course he claims he will never use these powers. However, he went on to say that if the powers are ever used they will not be subject to reference to the Competition Authority as a financial merger because the Minister is taking to himself the powers of the Competition Authority.

Joan Burton (Dublin West, Labour)
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They will not be subject to the House.

Michael Noonan (Limerick East, Fine Gael)
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They will not be subject to EU law because the Minister is making provision that they be excluded from the provisions under EU law to treat them as mergers and reconstruction, and that they will just be a kind of management issue. He has set it up so that without returning to the House, he may instruct the National Pensions Reserve Fund to take a majority shareholding in AIB and Bank of Ireland right up to taking a controlling interest or 100%. More interestingly he has removed the commercial mandate requirement in the 2000 legislation so that it can invest even if it is not a commercially viable proposition. There is a man who never intends using these provisions and yet he went down to that level of detail. It is contained in the Bill and outlined in the Minister's speech.

People are scared enough without scaring them further. It is absolutely clear to me as to the road we are going down at the moment and it is not a very pleasant road. If I were giving advice to the Minister I would ask him why he is always chasing the issue. Why is he not upfront and admit this is not working? We need to go further and do it now. If the Minister got ahead of the game for once he would create confidence. The public are waiting for confidence. There is considerable talk about lack of leadership. What is leadership anyway? Leadership is taking the decisions that are necessary to be taken in a timely manner. There is no point in taking the decisions that are necessary to be taken when it is too late and we have gone on to the next event.

It is as clear as crystal that as we in the Opposition said the decision about a budget should have been taken a fortnight ago because it was clear that the public finances were going off the rails. We found out today that the €37 billion that the Government had pencilled in as the inflow to the Exchequer will only be €34.5 billion, which puts us another €2.5 billion adrift. The Taoiseach today announced that before the end of the month he would take measures to correct this. Again he is behind the curve and behind the pace. I know he gets offended when he is accused of lack of leadership. However, it was as clear as crystal to all of us in the House and to the commentators since 1 February that it was not possible to carry the budgetary decision beyond the date of the local and European Parliament elections and the Government would be forced to act sooner. However, by not acting sooner it will be subject to considerably more criticism. In terms of inculcating confidence into the economy, a decision forced onto the Government at the end of March gets it no marks whereas a decision voluntarily taken to bring in a budget on the same day as the pension levy would be better politics because it would appear more equitable and would give some confidence to the economy.

I found it a pretty depressing day. I found the Minister's speech pretty depressing. However, to give him his due he cheered me up in one page of his speech in which he tried to deal with the problem of the Green Party in government. It is quite clear that in Cabinet the Green Party Ministers were very concerned about the banks, but they did not express that concern or make it conditional. They were very concerned about lots of things but they did not make it conditional. However, they were seriously concerned as to whether the investment made by the National Pensions Reserve Fund was ethical. The Green Party has been on this bailiwick for a long time. What is ethical on the left is not always ethical on the right. On the question of contraceptive devices as the Minister of State will know, there is an extreme left opinion that they should be given out free with the cocoa and the Coke depending on what one's going to bed tonic is. There is a view on the right that they should be banned because they are the devil's instruments. It is very difficult for an investment company in examining the ethics of investment in a company that produces such devices to decide whether it is ethical.

I actually like the Minister. What he does, as explained in his speech, is to raise an issue which nobody raised in this context. He said that given that we are legislating again for matters relating to the National Pensions Reserve Fund, the issue of ethical investment comes up. In his next paragraph he went on to say that it is a very serious issue because it was debated at the time and it was decided that it would be left to the fund managers to decide on an ethical basis for what they would invest in but that the Government would not mandate them to exclude any investments. He then went on to say that in the experience of the past nine years with sovereign funds, they are taking a different attitude to ethical investment and that we need to take that into account.

However, he claimed that what we are doing today is of such urgency and of such importance to the economy that we could not deal with the matter in today's Bill and he would set up a committee that will report in three months. I am delighted that the Green Party had such a major input into this economic crisis that it got a committee on ethical investment that will report in three months. I ask the Minister in his reply to give a commitment to debate that report in the House. I would love to debate a report from an interdepartmental committee on ethical investment. I would like to have it debated here in the House and I am looking for that commitment from the Minister.

Joan Burton (Dublin West, Labour)
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I believe the former Deputy, the late Liam Lawlor, chaired the previous one.

Michael Noonan (Limerick East, Fine Gael)
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I will not make any reference to poor Liam Lawlor. This is simply to deal with ethical investment and not ethics in the House. At least there was some bit of entertainment in the Minister's speech today even if it is only to illustrate how ineffective the Green Party is in government.

I hope this works. I always say that to the Minister. We are in very serious times. The country is in an awful state — a frightful state. I have never seen people more frightened. I have been dealing with my constituency since 1974 and have never seen people more scared. I have never seen people so genuinely upset or having such a lack of confidence in the future. The situation needs to be pulled together and quickly. I hope this legislation works. However, when the Minister has included in the Bill an entire series of measures to enable him to take the next step, that in itself takes the confidence away from the step he is taking today.

Paul Gogarty (Dublin Mid West, Green Party)
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I will start by referring to what Deputy Noonan has said about the Green Party. He is quite correct. Ethics can be different depending on what side of the ideological debate one is. Sometimes on the one hand all life can be sacred, but the woman still has the right choose on the other. These are ethical decisions that are not made lightly. There are always shades of grey. I would contend that Fine Gael is more on the anti-abortion side and the Labour Party would be more on the clichéd, pro-choice argument. However, there are shades in the ethical investment issue. One cannot accuse someone who is trying to protect the life of the unborn of not having ethics just as one cannot accuse someone who is trying to protect the rights of the mother of not having ethics. Similarly, it is a little disingenuous to give out about the Greens for talking about ethical investment because there are huge investment opportunities here at home that are ethical, will create jobs for people and will sustain our families and communities, which is the most ethical thing one can do. I would agree that just because one has money to invest does not mean one should invest it in weapons of mass destruction, exploitative international oil companies or multinationals who abuse workers and care nothing for human rights. My colleagues, including Deputy Cuffe, who had a major impact in this regard, say we should be careful where this investment goes.

This should not be dealt with lightly as if this is the only contribution the Greens have made because we have made many other contributions. We have taken the tough decisions when it would have been a lot easier to pull out in a populist stunt and say "Hang on a second, we know it was Fianna Fáil which caused this mess", but we did not. In my last contribution on a related issue in the House, I pointed out that because Fine Gael, Labour and the PDs were all dipping into the corporate donations pot, we are collectively responsible for the mess. The responsible thing to do is to stay in government, get on with the job and take the tough decisions, even if it means losing one's seat at the end of it.

I do not want to criticise Deputy Michael Noonan too much because he has proven he is a man of principle. Deputy Noonan stopped Fine Gael taking corporate donations when he was leader of the party. Unfortunately, he got shafted by his party for doing it. The 2002 election campaign might have produced some fantastic pie-splattering photographic moments but, to be honest, it is Fine Gael which still has egg on its face over corporate donations, not Deputy Noonan. Does Deputy Noonan sleep soundly at night? You bet he does, because he put the country first.

Similarly, another Fine Gael former leader, Mr. Alan Dukes, was the author of the Tallaght strategy. He did not get his reward for the Tallaght strategy because he too was shafted by his party. Does he sleep soundly at night? You bet he does, because he put the country first. He did the right thing too.

What we see in more recent times is that people and party leaders are more inclined to choose collective self-interest over the national interest. Outrage has been expressed at measures that would be implemented like a shot if Fine Gael and Labour were in government. Half-hearted offers of co-operation have come belatedly, I will concede, but not without the jibes and always putting elections before the electorate.

Deputy Enda Kenny is a most likeable and capable man. If he ever becomes Taoiseach — I repeat if — he would no doubt grow into the job and his years of Oireachtas experience, coupled with the gravitas of that job, would no doubt maximise his potential. Does Deputy Kenny sleep soundly at night? Devil a bit of it. He dreams vivid dreams, and in those dreams he is already Taoiseach — "I'm Enda. I'm the Taoiseach. I'm the gaffer." He snores like a lion but when he wakes up, the lion fades and disappears. What pops out instead? A mouse — a mouse that is afraid to do the right thing; afraid to put petty party politics aside; afraid to start afresh; afraid to say "No more to corporate donations and the culture that caused this mess". Unfortunately, Deputy Kenny is afraid that if he does the right thing, he might end up like Alan Dukes or Deputy Michael Noonan. History has been kind about Alan Dukes and it will also judge Deputy Noonan kindly. Will it be kind to Deputy Enda Kenny? We will have to wait and see.

Of course, it would be unfair to solely discuss the attributes of the Fine Gael Party in regard to this debate. We know what the Bill is about, namely, putting some of the National Pensions Reserve Fund into recapitalising the banks, which is absolutely necessary. We all know, hands on our hearts, that it might not be enough, a point which has not been disagreed with by the Minister for Finance. However, we must make a start. AIB and Bank of Ireland have given a solemn commitment that the €3.5 billion going to each of them is sufficient. While AIB's latest results suggest it may not be, one puts in what is expected, knowing one might have to put in more.

Even allowing for the 20% or so that was caused by our own avarice, this is a global crisis. Throughout the EU and the western world, if one looks at any country — even Canada is having its problems, although it has levels of corporate governance we should emulate — one will see governments investing in their banking systems left, right and centre. We must do the same.

When one asks Deputy Eamon Gilmore what he will do and what alternatives he will offer, one gets nothing. He is the head of a party full of talent, just like Fine Gael. One need only look at Deputy Joan Burton, who is a formidable contributor in Dáil debates and a formidable expert in her field and, similarly, Deputy Pat Rabbitte. I am very fond of the Labour Party. I live a couple of doors from Deputy Joanna Tuffy and we get on like a house on fire. Unfortunately, however, Labour is a party that has put populism and pragmatism before realism. This is allied with a mind-blowing arrogance that hovers like a stale smell every time Deputy Gilmore opens his mouth.

Ciarán Lynch (Cork South Central, Labour)
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The Deputy should stick to Hot Press and flirt with it.

Paul Gogarty (Dublin Mid West, Green Party)
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It does the country no justice whatsoever.

Put simply, what Deputy Eamon Gilmore has done in the past six months has not been to peddle the politics of hope. We have had too many Obama analogies in this House. This is Ireland, a sovereign state. President Barack Obama is an inspiration to us all but we have our own people to inspire and we must do it with homegrown talent. If that homegrown talent lives up its abilities, we will do that. However, we will not do it by peddling the politics of hope while really peddling the politics of hypocrisy. We do not need to feed on the fear and cynicism that is out there. We need to show leadership.

I say this to an almost empty Chamber but I say it anyway — let us think bigger, let us think about how we recover, let us think about how we work together rather than constantly carping at one another. It will be difficult. One has to defend oneself when one is insulted, but if Deputy Gilmore is serious about his offer to work together with the Taoiseach, Deputy Brian Cowen, he should not say he will work with Fianna Fáil but only if Deputy Cowen is ditched. That shows a huge disrespect to the Taoiseach.

I have issues with Fianna Fáil, as I do with other political parties, as this House well knows. I am willing to take it on the chin when people slag off the Greens because that is what political discourse is about. The Greens are no Messiah or saviour and sometimes we are up our own backsides as well — that is true. I have often said and done things I should be ashamed of. At the same time, if people were willing to acknowledge the human frailties of the great talents in this House, we might get more done.

Rather than the arrogant posturing whereby Labour is willing to throw solutions the way of Fianna Fáil if it ditches Deputy Cowen, it should say that as of today there will be a new strategy for 12 months and that it is willing to work co-operatively. It should not seek to throw muck but to say to the people genuinely and honestly that these tough decisions have to be made, that it will try to get a consensus, work with the social partners and come up with the most equitable solution, but it is going to hurt — there is no other way for it.

When the time comes for the election, whenever it happens, the people can say it was Fianna Fáil and the PDs who were in government for most of the term, so let us blame them. The Greens will then say they are all a bunch of cute hoors who were taking corporate donations, and that is what encouraged the bankers and the developers. That is fair enough at election time. However, I guarantee the House this. The Greens take their responsibilities seriously in terms of getting us out of this crisis. We will not pull out simply to preserve our Dáil seats, and anyone hoping for an election on the back of some very positive polls could be waiting a long time. If Deputies Kenny and Gilmore must wait for such a considerable period, perhaps until 2012, before they get the opportunity to govern, then why not share the collective responsibility? Why not participate in a positive manner in governance without precondition? Let us remember that the Taoiseach, Deputy Brian Cowen, is not in a position to engage in petty squabbles concerning who has what input. However, if the Fine Gael and Labour parties were genuine and agreed in the interests of the State to actively engage without precondition in a discourse and if they honestly and openly engaged with the electorate, with voters and with the ordinary people who are suffering, they would find the Taoiseach's door open.

If the Opposition was willing to enter into a Government of national unity, it could be a reality. The Green Party will discuss such a motion at its convention at the weekend and I believe it will be passed. However, it will only be a reality if people put aside the squabbles and look to the vision. Otherwise there will be five years of Fianna Fáil and the Green Party getting it in the neck, the Labour and Fine Gael parties continuing to ride high in the polls, the population disaffected and grumbling and the economy more of a basket case than ever because of the instability caused by the bickering. That is not the solution.

We must consider our legacy as legislators. Anyone present, watching on the monitor or reading the speeches may reflect on their legacy in 20 years time. The Tallaght strategy of Mr. Alan Dukes is now 22 years old. He is fondly remembered as a man without any ego. He is helping out Anglo Irish Bank as we speak. He is not averse to throwing in some, possibly well deserved, criticisms at the speed of the Government response. However, he has been judged kindly by history because he did the right thing. We must do the right thing now. That is why I urge people to work together in the spirit of tripartisanship. I do not expect it will occur. I expect that the Green Party will argue that we must implement policies for the next 20 years which will create jobs, preserve the planet and ensure our economic stability in 20 years time and if we lose our seats that is fine. We can look back in 20 years time and reflect on the matter then.

Unfortunately, the Green Party is but a small party of the Government. We must have a wider vision. We require expertise from all areas. We have a contribution to make and we are pleased to make it. We will criticise where there is a need to criticise and we will take it in the face when necessary too. The talents of the likes of Deputies Richard Bruton, Enda Kenny, Eamon Gilmore, Pat Rabbitte and Joan Burton are under-utilised at present. The cliches come easily because that is all we are dealing with at present in this cynical House. It is very easy to sit on the fence when there is electoral gain to be made from that. We must face some home truths and realities. We must put money into the banking sector whether or not we like it and we may have to invest more money in future. We know what caused the problem globally and what contributed to the problem locally. In that context we must deal with the situation piece by piece. We must be careful not to allow the current €18 billion borrowings to spiral out of control.

The situation has not been painted in terms stark enough. The average person does not really understand the purpose of the International Monetary Fund. It is not about giving a dig out to poor auld Ireland Inc. That money is wrung out. The fund will twist arms and squeeze the blood out. It will come from the jobs here, especially from the public sector. I spoke on the pension levy acknowledging why it is necessary, although I regret that it had to be applied. I acknowledge that it should be tweaked, either now or in the forthcoming budget. We must show leadership.

I return to this point because it is important. I may sound like a broken record, but if the people are to have trust in the collective elite, there is a need for Dáil reform, cutbacks in expenses and proper vouched systems. I do not believe I am elite but Members are perceived to be elite and to receive a great deal of money, perks and benefits. In some cases we do and this has all been said before.

Last night, I attended a meeting with the Minister of State, Deputy John Curran who is a very honourable politician who succeeded despite the culture of corruption in his constituency. To my knowledge, he has never taken a corporate donation and is the epitome of the modern Fianna Fáil politician. I wish the culture of that party was more akin to the personality of the Minister of State, Deputy Curran. I say as much as a friend and without patronisation, because our friendship extends back to the council in 1999. Preceding that council, in the areas where I grew up, namely, Lucan, Palmerstown and later in Clondalkin, Newcastle, Saggart and Rathcoole, there was a culture whereby donations were handed out to politicians of all parties and willingly taken. In some cases such donations were corruptly taken as the tribunals have shown. Unfortunately, the mentality in respect of corporate donations still seems to be "a head in the sand" approach.

I raised the issue of the necessity to ban corporate donations, or at least the need to refuse to accept them within the Labour Party. Perhaps it does not receive a great deal from the banks and developers, although there are some instances of that, but certain trade unions are its paymasters. Fine Gael and Fianna Fáil consistently take money from corporate vested interests, including bankers and developers.

During the debate last night, it was no surprise when Senator Frances Fitzgerald contradicted a point I made concerning the need to ban corporate donations. One need only consider her election campaign. She spent €31,000 trying, unsuccessfully, to get a seat in Dublin Mid-West, whereas I spent approximately €10,000. I do not suggest she was remiss, but she had a wider fund available from which to pay for her campaign. When discussing the issue of corporate donations, she spoke directly to the audience with hand on heart and asked if they would rather that the taxpayer funded political parties. Many of those in the audience, which met to discuss education issues, seemed to agree, because the argument was simple. The argument was if politicians do not take corporate donations, the taxpayer must foot the bill and people have paid politicians enough already. That was the mentality. I wish to respond to the comments of Senator Fitzgerald. In reality, the taxpayer has paid for those corporations ten times over. Through corporate donations there was a process of land speculation, rezoning and corruption. This fed into the culture which encouraged bankers and developers to become so greedy and to leave us in the mess in which we find ourselves. The taxpayer paid a good deal more than otherwise would have been the case if corporate donations had been banned. That is why I fundamentally disagree with Senator Fitzgerald. I call on all Members of the House to try to work more cooperatively. It is still possible to get the dig in but we must sell a common message to the people, that is, we are in this together. We should blame those responsible later on, but for now we need to recover. Let us think bigger.

Lucinda Creighton (Dublin South East, Fine Gael)
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I am somewhat bemused by Deputy Gogarty's contribution. From listening to him one could be left with the impression that the problems facing the economy and the banking sector are somehow related to the performance of the Fine Gael and Labour parties. I am unsure how the Deputy has managed to draw those conclusions, but each to his or her own. The Deputy is entitled to his opinions. As Deputy Noonan has stated I genuinely hope the recapitalisation scheme set out in the Bill can work.

We are all aware of the significant economic challenges facing the country. In my contribution on the Private Members' motion I referred to the contraction in the economy expected this year which will be an unprecedented 5% plus. The unemployment figures for January alone show 36,500 additional people signing onto the live register. We are all acutely aware of the challenges faced by small and medium-sized business in particular. Companies are closing their doors on a daily basis with people losing their jobs and all the ensuing problems faced by families up and down the country. I hope this scheme can in some way contribute to a resolution of some of the problems in the banking sector and, by extension, in the wider economy as the two are inextricably linked.

Like my party and our finance spokesman, Deputy Bruton, I too have major reservations about the scheme. The recapitalisation scheme for Bank of Ireland and Allied Irish Banks as set out in the Bill lacks credibility to a certain degree because it has already been proven to be inadequate in other jurisdictions over the course of the past few months. One obvious failing is the very clear need which has emerged in other countries to separate bad debt from good. This is evidenced in the response of the international system, yet the Government has chosen to ignore this by failing to introduce any element which would separate good and bad debt. This is unfortunate. The US has a scheme to create bad banks and the UK and other European countries have taken a similar route because their original recapitalisation schemes failed. The European Central Bank also set out certain guidelines to governments on how to deal with this crisis and issued recommendations on the establishment of bad banks or their separation from the existing banking system. I find it remarkable that the Government has not followed any type of procedure along those lines.

The Government has adopted a much more tentative approach and arguably one that has been unsuccessful in other areas. It proposes to recapitalise by increasing the core tier 1 capital for each bank and in my view this is in the vain hope that this will provide the necessary protection against the bad debts within the banks. My fear is that taxpayers will be left dangerously exposed to these massive bad debts and overdraft and borrowing facilities will be contaminated by them. This is a concern expressed by a number of Opposition Deputies over the course of the past few weeks since the scheme was announced.

The Government should consider other options and I refer specifically to the creation of new good banks with clean balance sheets. The Minister of State may recall in the past month Deputy Bruton proposed an alternative scheme which makes quite a lot of sense, particularly in light of what has happened in other countries. I have concerns that the taxpayer is being asked to put money into banks without knowing the full scale of the bad or toxic debts and about which all of us are in the dark to some extent. I am disappointed with the Government's failure to demand full transparency and full disclosure of facts by the banks. There is a real risk the result will be to allow existing banks cover up the extent of their dodgy, very questionable property lending while continuing to starve viable, honest to goodness, genuine businesses of access to the credit which they so desperately need. New lending to small and medium-size businesses is badly needed now. This is the sector which has suffered most in recent times as a result of the bad banking practices of the past decade and more.

The Government is making a mistake in failing to look at the different model which has been proposed and which would create good banks with clean balance sheets and to which the recapitalisation would be directed and separate from the toxic debt which currently exists in the banks. This would mean creating a new bank from which existing banks would hold all the State guaranteed deposits and would then buy those parts of the loan books such as the residential mortgage and business loans and overdrafts which could be easily valued by the parent bank, either Bank of Ireland or Allied Irish Banks. This could constitute the new bank with the clean balance sheet. This is a fairly simple and understandable proposal even to those of us who are not experts in banking——

John Curran (Dublin Mid West, Fianna Fail)
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There is very little evidence of it having worked anywhere else.

Lucinda Creighton (Dublin South East, Fine Gael)
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However, there is clear evidence that what the Government is proposing is not working. We have to be creative with an alternative because we are in unprecedented times and we have seen a situation where lumping in all of the toxic debt with the good loans has clearly failed in other jurisdictions. Those of us on the Opposition benches are trying to present positive solutions which perhaps could find——

John Curran (Dublin Mid West, Fianna Fail)
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Other jurisdictions have underlying failures. We have not lost a bank in this country yet.

John Cregan (Limerick West, Fianna Fail)
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Allow the Deputy without interruption.

Lucinda Creighton (Dublin South East, Fine Gael)
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Yet. I understand the Minister of State's point but we have to be mindful of the fact that we are not immune and are exposed to the international problems and we also have our own home-grown problems in the banking system. We need to think outside the box and not make the same mistakes which have been made in other jurisdictions.

The legacy bank which Deputy Bruton spoke about would be prevented from engaging in any form of lending in the traditional sense and it would be there essentially to manage the remainder of the loan book and try to recoup the maximum value even though we all know that the capital value has been reduced significantly over the past six or 12 months or longer. It would be separated from the recapitalised banks which would be in a position to provide some form of cash flow to businesses and so open up opportunities to keep businesses alive, open and maintaining employment which is what many of us wish. It would also make it easier for first-time buyers and young couples to obtain mortgages and get onto the property ladder. The credit flow would be freed up. This is one solution.

I listened to Deputy Gogarty and I have heard the Minister for Finance and every other Minister and Government backbencher calling on the Opposition to show patriotism and to co-operate with the Government. However it is unfortunate that when we put forward solutions they are pooh-poohed and we are told they will do it their way, as the Taoiseach famously told us a few weeks' ago on the Order of Business. There needs to be a willingness on the Government benches to co-operate with the Opposition because we are genuinely making some proposals.

On other aspects of the scheme, I have a concern about the preference shares proposal which is of questionable benefit. This is another aspect of the scheme which has thrown up problems, particularly last autumn in the United Kingdom where a similar system was introduced and, to be blunt, it failed. The dividend of 8% proposed under the scheme, although less than the 12% proposed in Britain, could well prove to be penalising for banks. The estimate is that it could amount to about €300 million a year for each of the banks, or approximately €600 million, which would eat into their profits. There is major concern that this would limit their ability to free moneys for lending to businesses and inhibit the required credit flow. It is something that could reduce bank lending because of the restrictions being placed on them in having to pay the dividend to the State. I am not 100% convinced that this aspect has been well thought out since we have seen it fail already in the United Kingdom. We are in a climate where businesses are closing daily because of their inability to borrow from banks and I am not certain that this proposal will help in that regard, notwithstanding the commitment to lend to a figure of 10% lending to SMEs, as set out in the scheme. I am not certain how this will add up and believe it might prove to be very difficult. As Deputy Noonan pointed out, we have seen little evidence of credit being freed in recent weeks. In fact, the credit flow from banks is tightening on a weekly basis, as Deputies will be very much aware at constituency level.

I have other concerns, too, in relation to the legislation which is scant in detail. We do not know to what extent the Minister will be restricted in how much ultimately will be paid out. We are told the figure is €7 billion, but there is nothing to suggest it cannot increase. I am not certain what the State will get in return. We have an 8% dividend figure but do not know whether this will work out in practice. I am not sure the Minister knows either. We do not know what caps will be imposed on bank executives' pay. We are not sure what the assurances are as regards credit availability and, in general, I am concerned about the terms and conditions for the banking sector as regards the return for the State and the concessions to be made or demanded. There is nothing in the scheme in terms of detail.

We know the State is proposing to invest €3.5 billion in Bank of Ireland and €3.5 billion in AIB. There will be an option to buy ordinary shares at a later stage. It is inadequate that there is only a 25% share of directors on the boards of the banks. Also inadequate is the 25% share of voting rights as regards control of the banks. My view and that of the general public is that there should have been a total clear-out of executives within the banks. I do not know whether the Government's response has been tough or hard enough or whether the Government is demanding sufficient say in how the banks will be reformed and restructured in response to the current crisis. Neither do I have a sense that it is demanding accountability from the banks.

While the Government assures us that these capital investments in AIB and Bank of Ireland will be considered by the Financial Regulator to be tier 1 capital investments, the crux of the issue is what matters in the international marketplace. Do we have any assurances that international markets will see these investments as additions to the banks' core capital? We have seen no response from the international markets in recent weeks, notwithstanding the announcement of the scheme, as set out by the Minister. There are certain question marks in that regard also.

A particular problem I have with the Bill relates to the continuing cosy arrangements for executives. I point to the article we read in the Sunday newspapers which is of particular significance to me in my constituency. I am concerned about the appointment of the new chief executive of Bank of Ireland who clearly has very close links with significant players in the property sector which have very direct links with Fianna Fáil. I am perturbed about the continuation of this cosy cartel of bankers, builders and Fianna Fáil personalities. The decision making process that led to this appointment was extraordinary. This shows there is still a lack of realisation within the Fianna Fáil-led Government that such cosy relationships are no longer acceptable. The people are fed up and tired of them and want to see fresh faces and new personalities not connected to this cosy circle of Fianna Fáil buddies in the building and banking sectors. Unfortunately, we have not seen a clear intention from the Minister or the Government in ensuring such a shift occurs.

Section 8 of the Bill gives enormous powers to the Minister to essentially do what he wants. Deputy Noonan alluded to this issue also. The Minister is being enabled to take a controlling interest in the banks and nationalise them without recourse to Dáil Éireann which I find extraordinary. He would generate much more confidence among the public if he were to make it clear that this option was being left open to him in the Bill.

I shall conclude by saying we are in challenging times and need to get this right. While I have concerns about the Bill, I genuinely hope it will set the banking system and the economy on the right track. We all know people who are losing their jobs and facing financial crises in their personal lives. It behoves all of us as elected public representatives to work together in so far as we can to try to get the economy back on the road to recovery.

Seán Sherlock (Cork East, Labour)
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I wish to share my time with Deputies Morgan and Ó Caoláin.

John Cregan (Limerick West, Fianna Fail)
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Is that agreed? Agreed.

Seán Sherlock (Cork East, Labour)
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I propose to take ten minutes.

The Bill is being presented to us against a backdrop of an announcement today that AIB is to write off €1.8 billion in bad loans for 2008. The Minister is asking the House to support a Bill that will recapitalise that same bank to the tune of €3.5 billion. That is laudable but only if it results in provision of credit lines to businesses and borrowers in general.

The Labour Party must critically assess the proposals brought before us in the Bill. As I understand it, €4 billion of the National Pensions Reserve Fund's current resources will be used as part of that recapitalisation, out of the total of €7 billion. Bearing in mind that the global markets are not touching Irish stocks currently, I wonder whether that is a wise move and whether the methodology the Minister proposes in the Bill is not without its flaws.

We are told by the Minister that he has consulted widely with financial and property experts in drafting this Bill. I would like to know who were those financial and property experts. I become a little afraid when I hear of Ministers taking the advice of property experts given the culture we have been used to in recent years. I would like to know the nature of that advice and whether there was an alternative advice to that on which he has based his Bill.

For example, what was the alternative advice, if any, on devolving more power to the Minister with regard to directing the National Pensions Reserve Fund Commission "to make investments in such institutions and to underwrite their share issues"? Such a concentration of power must be questioned and the Minister must tell us whether there is scope for this power to be abused. It is a theoretical question but in terms of the enactment of a law it is worthy of answer by the Minister in his reply.

For instance, if the Minister determines, for political expediency, that an investment should be made in a specific financial institution, and if the NPRF determines that this is contrary to any responsible investment policy, it is powerless to act against such a move. My understanding is that the responsible investment policy is one of the key components underpinning the governance of the National Pensions Reserve Fund. Furthermore, investing such powers in the Minister bypasses this House and any scrutiny we may wish to pursue in this regard. I would like the Minister to address that point when replying to the debate.

In his contribution the Minister told us that the State will get a direct return for its investment. In the current climate, and in the context of AIB's write-down of €1.8 billion today, it is difficult to envisage any return to the taxpayer any time soon. I understand that if we take the long-term view an alternative view could be argued but the fundamental principle underpinning the National Pensions Reserve Fund is the responsible investment policy. That is a stated policy that gives rise to the need to meet the cost to the Exchequer of social welfare pensions and public service pensions to be paid from the years 2025 to 2055.

On the face of it, the Bill should, ceteris paribus, yield a return to the Exchequer over a long-term period if a number of assumptions are taken. If we assume there is no restructuring of the banking regime in this country within that period of time, that is, that no banks will merge or there will be no rationalisation or consolidation of banking, then it is reasonable to assume that the taxpayer will see a return on his or her investment but I question the Minister's strategy in that regard. That we invest with the possibility of a return is fair enough but the manner in which the Minister has pitched the proposed return on the investment speaks to me of an ill-thought out strategy that allows the banks to dictate the terms by which they will be recapitalised and not the people, through the National Pensions Reserve Fund, whose moneys will be used for this purpose.

The Minister proposes to get a preference share with a fixed dividend of 8% or ordinary shares in lieu. I would like the Minister to explain the reason he is proposing to take preference shares in the first instance instead of ordinary shares. If the Minister is buying preference shares with a fixed dividend at today's prices, what will be the total yield to the National Pensions Reserve Fund if those shares are bought back by the bank within the five year period? I understand they have a provision to do so or they are allowed to do so. It seems to me that the Minister has allowed the banks a provision to buy back shares within the five year period at today's prices.

I question the validity of such a strategy and wonder if it would have been more expedient for the taxpayers' money, through the NPRF, to be used to buy ordinary shares. That would have been a more responsible strategy. If the two banks report losses within the next five years, what will be the status of the 8% yield on those preferences? Also, what will happen to the yield? If there is a return of 8%, where will that yield be invested? Will it be awarded to the NPRF?

I would also like to know what the Minister means, in layman's terms, when he states that he will allow the commission to set up a special purpose investment vehicle. Notwithstanding that I have a degree in economics, I admit with a degree of humility that I do not have a clue what a special purpose investment vehicle is. When we are writing legislation in this House, and if we are using taxpayers' money to underpin a strategy of recapitalisation, we must have it set out to us in clear terms what exactly that means. If the Minister is to be given devolved powers and if we are setting up special purpose investment vehicles, we must know for exactly what purpose they are designed and, if there is a return on such a vehicle, the nature of that return and how those investments will be pitched. Will they be for philanthropic purposes? Will they be a sop to our learned friends in the Green Party? Will there be a sustainable element to those vehicles? What will be the nature of those vehicles? The people are entitled to know that and it must be set out clearly in any legislation that is brought before the House.

I wish to address some points made by Deputy Gogarty. I do not mean to be personal in my response to his contribution earlier but I wish to state for the record that I have never taken a bribe or a red cent from any corporate entity, except through a fund-raising race event I held whereby local companies bought in to a race night I ran when I was raising funds to try to get elected to this House. There is a desire by Deputy Gogarty to impugn certain Members of this House and develop a language that states that we are not credible to critically analyse any measure that comes forth from this Government in respect of any tract of legislation because somehow our respective parties in opposition are dirtied by the fact that they may have taken corporate donations. I wish to state for the record that I have never taken corporate donations in that sense of the word.

Arthur Morgan (Louth, Sinn Fein)
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I wish to begin by expressing my opposition and the opposition of my party to this legislation. I appreciate it is largely a technical Bill but it is what it enables that causes me concern. We have opposed the recapitalisation of AIB and Bank of Ireland because the Government is effectively handing over to the banks €7 billion worth of taxpayers' money without seeing sufficient material return to the taxpayers.

In the past six weeks the Government has taken thousands of euro from the budgets of low and middle income families through the pension levy. It has cut back on special needs education and is in the process of imposing the most damaging of health care cutbacks the country has experienced since the 1980s. All of that is being done for the benefit of the banks.

The legislation before us effectively proposes to give the Minister for Finance carte blanche to raid the pension fund whenever and however he wants provided it is for his pals in the banking sector and he decides it will rectify a serious economic disturbance. Given the Minister's abysmal failure to deal with the banking crisis so far, I am dreading the notion that he will be given such significant discretion.

At the time of the budget last October my party proposed the use of the pension fund for critical infrastructure so we could fight the recession and preserve jobs. Despite the obvious need for investment in job creation and job retention the Government is continuing its exclusive focus on the banks while cutting back on essential public services. There is nothing in this Bill which enables the use of the National Pensions Reserve Fund for labour-intensive transport infrastructure, there is nothing for the building of new schools or school extensions and nothing for other public services which would have a far more positive impact on the economy than what is currently being done with our financial institutions.

What is this legislation all about? It is about using the pension fund for the Government's only real concern, which is the banking sector. The public, the media and most economists are now sick and tired of listening to the Government waffle on about the critical importance of the banks when it has not even bothered to implement changes of any real significance to their governance or to financial regulation. It has only put bonuses on pause for 12 months, taken out a token 25% stake and done nothing to address the credit crisis which is continuing to destroy our small and medium enterprise sector. It is this lack of action on the banks coupled with the Government's quite brutal cutbacks on the public service workers, especially children in special needs education, which is causing much anger.

A number of weeks ago an article by John McManus in The Irish Times mentioned the notion of group-think which seems to be endemic among senior management in our financial and State institutions. He pointed out that PricewaterhouseCoopers is the auditor of Bank of Ireland while at the same time being employed by the Financial Regulator to carry out an assessment of its loan books. He went on to describe this conflict of interest when he said actors were ultimately the judge of their own case. This is bad practice. This conflict of interest is exactly what is wrong with the Government. It is because of the corrupt relationship between dodgy developers, the bankers and other special interest groups that the Government is now a prisoner of its own alliances.

I remind the Minister he unwisely boasted at the time of the bank guarantee scheme that this "was the cheapest bailout in the world". This guarantee has left us with a potentially crippling debt of €440 billion. With the recapitalisation of the banks we are now on the verge of using our last stash of money to pay for their mistakes. It is the banks that should pay and not the workers in our SMEs. We will therefore oppose this legislation.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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This has been described as a technical Bill. In one sense it is but it also provides for what is potentially one of the most momentous decisions that will ever be taken by the Oireachtas in our time. The Government is to commit the people's money, in the form of the National Pensions Reserve Fund, to recapitalise AIB and Bank of Ireland. Sinn Féin has argued repeatedly for productive investment of the National Pensions Reserve Fund in projects that will develop infrastructure and sustain employment in our country. We argued against the gambling of the fund on the international stock markets. In the boom times we argued for sound investment in sustainable development. We were not alone in that argument but it was ignored by a succession of Ministers for Finance.

What have we now? The greed of the banks and their wealthiest clients, their indulgence by successive Fianna Fáil-led Governments and the neglect of the so-called regulators have brought the financial sector in this State to its knees with appalling consequences for the wider economy and society. To prop up the two main banks, the Government is raiding the National Pensions Reserve Fund. It is like a family having to hand over its savings to pay off the gambling debts of the landlord.

It is important to recall that in 2004 there was a series of scandals involving AIB. It is easy to forget in the current circumstances but it is instructive to recall some of them. The revelations at that time came not as a result of investigations by the Central Bank or by the Irish Financial Services Regulatory Authority but from whistle-blowing within AIB itself. Foreign exchange customers were overcharged from 1994 and it was shown that this was known at the highest level in the bank from 2002. From 2000, between 500 and 600 mortgage holders paid up to €50 extra per month for mortgage insurance without their approval in a rip-off of customers by AIB. To top it all we had the admission that senior AIB executives were evading tax through special offshore accounts, including Faldor registered in the British Virgin Islands.

No one was surprised at any of this because scandal and AIB had become synonymous for years. Let us not forget the backdrop to all this. One scandal in particular should have been a warning then and should be a warning now. Who now remembers how AIB was bailed out by the Fine Gael and Labour Government in 1984 after the collapse of the privatised Insurance Corporation of Ireland which AIB had bought and which failed on the international market? The State bailed out AIB to the tune of many millions and got absolutely nothing in return. From 1986 AIB was centrally involved in the DIRT scandal which deprived the public purse of significant amounts of revenue at a time when health and education cuts were being imposed on our people. The Committee of Public Accounts found most of the senior management team in AIB were well aware of the existence of bogus non-resident accounts.

I stated in this House in 2004 that we must avoid a situation where only the financial institution was held responsible, with fines and penalties inevitably being passed on to customers. I said the individuals concerned in AIB were some of the most highly paid individuals in the economy and worked for a company which had made record profits. I said they must be held accountable but they were not and now we see the results.

AIB made a profit of €1.375 billion in 2002, which was the highest ever recorded profit for an Irish company up to that time. Under the policy of Fianna Fáil, AIB, Bank of Ireland and other financial institutions benefited significantly from the Government's cut in corporation tax from 16% to 12.5%. The drug of escalating profits for shareholders and escalating pay for executives fuelled the reckless lending, which in turn inflated the property bubble.

All of this was based on irresponsible borrowing by the banks and locked the Irish financial system into a cycle which could only, as we have previously highlighted in this Chamber, end in disaster. It was not the case that no one shouted "Stop". Sinn Féin shouted "Stop" but the problem was the Government refused to listen. The people are now paying the price for rampant greed and irresponsibility. They are paying it in public service cutbacks, new levies and taxes on the low paid and growing mass unemployment, and there is more to come as the Government well knows.

There are two figures which sum it all up. AIB and Bank of Ireland were bailed out to the tune of €7 billion. There were €7 million in so-called savings achieved by abolishing classes for children with special needs. The contrast is stark and tells its own story. There can only be shame on this Government in its approach to dealing with this crisis. I reject this Bill for the very sound reasons I have already explained.

James Bannon (Longford-Westmeath, Fine Gael)
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One of the main features of the National Pensions Reserve Fund Act 2000 was to ensure the National Pensions Reserve Fund could not be used by the then Government or future governments for any other purpose besides the meeting of pension costs, with a built in statutory prohibition on drawdowns prior to 2025. A measure barring governments from using the pretext of "exceptional circumstance" to raid the piggy bank of the NPRF was welcome. However, the ease with which the Government was able to utilise such funding for the recapitalisation of the State's two largest banks and overturn this provision of the Act was staggering. That it is now seeking retrospective authorisation through this Bill is equally hard to equate with the aforementioned provision. In addition, the legislation gives the Minister the power to invest unspecified amounts in any further bank or banks as he sees fit, which is an outrageous and disgraceful carry on by a corrupt Fianna Fáil Government.

Conor Lenihan (Dublin South West, Fianna Fail)
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The Deputy stated the original Act provided that exceptional circumstances would allow a government to vary the provisions of the NTMA legislation and that is the circumstance we are in. He is contradicting his argument.

James Bannon (Longford-Westmeath, Fine Gael)
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I am not contradicting my argument. This is typical waffle uttered by Fianna Fáil Ministers. The Minister of State is not tuned into the legislation. The Government's actions vis-á-vis the Bank of Ireland and Allied Irish Banks were a huge blow to public sector workers, with the ensuing pension levy controversy set to run and run. It is incomprehensible to low and middle income workers that their money is disappearing into a bottomless pit. Deputy Noonan highlighted that the shares of both banks have almost hit rock bottom.

The National Pensions Reserve Fund was set up in 2001 using the hard earned money of taxpayers as a rainy day fund for a projected increase in the age profile of the country. The fund was worth €16.4 billion at the end of December 2008 but there were signs it was worth less than all the contributions of taxpayers since its inception eight years ago. Given the fall in world stock markets, the value of the fund, less the raided €4 billion, stands at only €11.9 billion. In a move calculated to cloud the issue, as the Government parties always try to do, they appear to expect that by funding the banks through the fund, the investment will not be considered to be spending under the EU accounting rules. It will technically, therefore, not break the rules by adding to the county's debt burden. However, such a move will not go far enough to restore confidence in the economy abroad and will add to the burden of those least able to pay among our public sector workers.

How does the Minister think that a low income civil servant, forced to hand over €450 of his or her meagre €15,000 salary, felt this morning when he or she read that Allied Irish Banks, which was bailed out to the tune of €3.5 billion, recorded its first loss in Ireland since the group was set up in 1966? Shockingly, the bank made an operating loss of €121 million after writing off €1.3 billion in losses on loans, 81% of which related to property and construction. Shades of cronyism and tents rise before one's eyes when the words "property" and "construction" are mentioned.

Conor Lenihan (Dublin South West, Fianna Fail)
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The chairman of Allied Irish Banks is a Fine Gael man.

James Bannon (Longford-Westmeath, Fine Gael)
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The big guys at the Galway tent and so on embarrass the Minister of State and the Government.

Conor Lenihan (Dublin South West, Fianna Fail)
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It is not embarrassing.

James Bannon (Longford-Westmeath, Fine Gael)
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That is what has crippled the country and has us in the mess we are in.

Conor Lenihan (Dublin South West, Fianna Fail)
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Mr. Dermot Gleeson, the chairman of Allied Irish Banks, was a Fine Gael appointed Attorney General.

Seán Ardagh (Dublin South Central, Fianna Fail)
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The Minister of State should not mention names.

James Bannon (Longford-Westmeath, Fine Gael)
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The Taoiseach refers to a global crisis but the mess has been created by Fianna Fáil, which has been in power for 20 of the past 22 years. The party will not pull the wool over the eyes of the public on this issue. The Minister of State might be looking after his brother's interest but the people understand the position much better than him.

Low and middle income earners who, in light of the income and the pension levies, are in danger of losing their homes will not have their loans written off. Why will the Government not look after the many young people who are in dire straits with their loans? Last Monday, nine people attended my clinic seeking references as they headed abroad. Three of them wanted to go to Australia and six wanted to head for Canada because of the mess the Government has made of the economy.

The joy of the first step on the property ladder has turned sour for many young people and it has been replaced by the real prospect of being turned out of their homes. This is happening, despite what the Government has stated, because too many restrictions are in place. Shame on the Government for the way it is behaving towards the public. This is far from the promises Fianna Fáil made in the run up to the last general election. It will get its answer on 5 June, if not before.

Allied Irish Banks stated earlier it may write off up to €4 billion on bad loans in 2009 and €2.65 billion in 2010. Not only is today's news disturbing for the taxpayer, it is also a major blow to international investment. The chief executive of Allied Irish Banks described his efforts to explain the situation to international investors as a "very trying task". Given his salary and the perks he has enjoyed, I do not shed tears for him. His own avowed regret over aspects of the bank's lending record, particularly on loans provided to developers and builders, ring hollow in the light of the monumental blow that his actions and that of his bank have struck against the taxpayer. A number of commentators claim the problems the banks are facing are compounded, rather than eased, by the Government's blanket guarantee of their debts and deposits. Allied Irish Banks and Bank of Ireland are no longer judged individually, as they have been subsumed into Ireland Inc, and are judged as one with the Government.

The Government's total loss of credibility on the markets due to its failure to develop a comprehensive recovery package is damaging the banks it sought to protect. For their economic recovery, they need to convince international markets to lend to them. However, stories are rife about the current aversion to all things Irish among international investors and financiers. While some may be attributable to a natural caution in the current global climate, the rapid fall from its elevated position leaves Ireland open to suspicion.