Dick Roche (Wicklow, Fianna Fail)
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The point I was making when the debate adjourned concerned whether the eurozone is essential for Ireland. There are not many Members who would question it, but it is a reality that safeguarding the financial stability of the eurozone is particularly important to the country for a number of reasons. Businesses need financial stability to trade. We are an open economy and we depend on trade to live. Citizens need financial stability to spend and to invest with confidence. The State needs financial stability to borrow the funds necessary for public service funding.

I was particularly surprised by Deputy Reilly's contribution prior to the adjournment of the debate. He asked whether Ireland's contribution to the fund would be safeguarded and whether there was a danger that we would effectively end up subsidising the loan to Greece. He must know that is not true and that even posing those questions is alarmist. Based on the euro area contribution of €80 million, Ireland's share which is based on the ECB paid capital will be less than 1.64% of the overall fund. This means Ireland's contribution will be less than €1.5 billion, which is the figure mentioned in the Bill; the actual figure will probably be in the order of €1.3 billion.

The loans for Greece will carry an interest rate of approximately 5%. The NTMA will source the funds that Ireland is due to provide. Deputy Reilly also asked about this, and if the NTMA has to borrow the money it will do so at a significantly lower rate than the 5% stipulated. The agreement between the eurozone states provides that the funding costs of the member state participating in the financial support package will be fully covered and this is a significant point. The safeguard underpins the entire process; it provides that if any euro member state encounters higher funding costs than those charged to Greece, the additional costs will be recouped.

The Bill before us is important but it is not complex. It provides for the country's participation in the loan arrangement for Greece, permits payments to be made from the Central Fund in respect of Ireland's share of the funding, and puts a limit of €1.5 billion on our contribution. It also establishes the various accounting arrangements that will apply. The Bill is part of set of measures that go much further than merely bailing out Greece.

In addition to the Greek package, the finance and economic Ministers have decided to establish a comprehensive range of measures, including the establishment of the European financial stabilisation mechanism, and we should all welcome this. The mechanism will allow an initial €60 billion from the overall EU budget to be mobilised very rapidly if it is required. Again, this is a prudent move because we know there are significant forces willing to attack and undermine the euro which will pick off one economy after another if we do not show solidarity. Complementing this, the euro area will also make up an additional €440 billion in loan guarantees through a special purposes vehicle.

As the recent crisis developed, it became increasingly obvious that the euro area must take fundamental measures to protect the euro. These are in every citizen's interest. On 12 May we saw for the first time the type of measures the Commission considered necessary. The enhanced co-ordination recommended by the Commission was designed to assist member states to be better prepared for any future crisis. The speculative attack on the Greek economy has reverberations for the economies of all member states, in particular Ireland because smaller member states are always vulnerable to attack. For that reason, every member of the eurozone has a shared interest in increasing the co-ordination throughout the zone.

In its examination of the pressures which have emerged, the Commission has come up with a very fine paper and I ask people who are scared of it to read it in detail. It is a very fine piece of work and makes the points that we have made in various domestic debates in this House and suggests that member states did not use the good times to pay down public debt fast enough - there are very few people who would disagree with that. We happen to be one of the countries which did, thankfully, pay down national debt because had we not done so-----

Bernard Durkan (Kildare North, Fine Gael)
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The Government is no greater than they were.

Dick Roche (Wicklow, Fianna Fail)
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-----we would be in serious "you know what" at the moment. Every credit-----

James Reilly (Dublin North, Fine Gael)
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Is the Minister saying we are not?

Bernard Durkan (Kildare North, Fine Gael)
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Everything was right up to that.

Dick Roche (Wicklow, Fianna Fail)
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The second point was that easy credit led to unproductive investment and excessive consumption, something with which nobody in the House would disagree. The third point was that public debt exploded throughout the 1980s, but in particular in Greece in the period after 2008. It was a feature across the eurozone. That was due in part to the worldwide crisis.

Jim O'Keeffe (Cork South West, Fine Gael)
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Everybody else was doing it. Is that the excuse?

Dick Roche (Wicklow, Fianna Fail)
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It is an issue which has to be addressed. I listened to contributions from the other side of the House, with respect, and people talked, in particular on this side of the House, about putting off the evil day when we dealt our expenditure issues. An illustrious person came from the broadcasting world into this House but exited after a fairly short period who disagreed with Deputy Bruton's common sense points on this issue.

Bernard Durkan (Kildare North, Fine Gael)
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We know the Minister of State is well disposed but there is no need to show it.

Dick Roche (Wicklow, Fianna Fail)
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The fourth point was that the euro area lost competitiveness; about that there is no doubt. The entire euro area has lost competitiveness and if one loses competitiveness, one loses jobs. This is one of the issues-----

James Reilly (Dublin North, Fine Gael)
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Who was warning about that for seven years? Deputy Richard Bruton.

Dick Roche (Wicklow, Fianna Fail)
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This is one of the issues which we have to address. As I said earlier, I did not interrupt the Deputy although I fundamentally disagreed with quite a number of his points.

James Reilly (Dublin North, Fine Gael)
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The Minister of State has interrupted many people in this House in his career.

Brendan Howlin (Wexford, Labour)
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Deputy, please. I ask the Minister of State to yield. Everybody is allowed to speak and make a point. It is a very important debate. We do not shout each other down. Allow the Minister of State to address the House.

Dick Roche (Wicklow, Fianna Fail)
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I will address my comments entirely to the Leas-Cheann Comhairle. I take my fair share of the blame in this. The final point in the Commission paper, which is a fine paper and well worth reading, is that in order to keep long-term interests rates and boost growth and jobs, the euro needs to consolidate. That is a view which many people have expressed over the period since the euro came into operation.

On foot of these findings the Commission makes modest suggestions. The first is that every effort should be made to reach the 3% deficit and the 60% debt set out in the Maastricht criteria. They have been in place since the early 1990s and it is unforgivable that there has not been more focus on them across the entire European Union. Second, it argues that greater emphasis should be placed on the correction and avoidance of microeconomic imbalances in the euro area. That would involve recommendations on, inter alia, competition policy, wage setting behaviour and private sector credit growth. Those are issues where, if we are all honest with ourselves, there has been slippage over the years.

The third point, which seems to have cause most allergy in this House, is the European semester. It will start in 2011 in order that budgetary and structural policies are peer reviewed at an early stage of the year, probably in April or May. They will be discussed in the euro group after implementation and not before, which is currently the case. This could mean that the recommendation of the revision of budgetary plans will be made. There is a lot of difference between that and suggesting that one is surrendering sovereignty in some way. The final point is something on which we can all agree, namely, that a crisis resolution method for the euro area is needed on a standing basis. It would involve strict conditionality for assistance provided by way of above-average interest rates, which makes sense.

The Commission's document is the beginning and not the end. It is a discussion document, not a final document and it has been and will be discussed. There is no doubt in the order of things it will be changed when the euro group, ECOFIN Ministers and Heads of State meet.

I was stunned by the reaction from Fine Gael last week because it was so much part and parcel-----

Bernard Durkan (Kildare North, Fine Gael)
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The Minister of State should not be stunned because it does not sit well on him.

Dick Roche (Wicklow, Fianna Fail)
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-----of putting in place various policies. One of the things which was achieved during that coalition was the 1996 European Council which was agreed in Dublin. Its criteria, which have been largely ignored, were set down. There has been an attempt in the House today to suggest that somehow there has been an attempt by the media and ourselves to rewrite what was said here last week. What was said here last week is a matter of fact. If one says it, it is made. I cannot understand Deputy Kenny's response to the Commission proposals. What he said-----

Bernard Durkan (Kildare North, Fine Gael)
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Maybe he was concerned.

Dick Roche (Wicklow, Fianna Fail)
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-----was well picked up by Sinn Féin.

Bernard Durkan (Kildare North, Fine Gael)
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He is concerned about the performance of the Government to date.

Dick Roche (Wicklow, Fianna Fail)
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What he said was well picked up by the media and Sinn Féin at the time, neither of whom needed any prompting from us. His reaction to this was disappointing, to point it mildly. He did not show leadership. He sought to misinterpret the Commission proposals in order to embarrass the Government. However, the only people he will embarrass if he keeps this up are those in his party which has a good tradition, in terms of European involvement.

Bernard Durkan (Kildare North, Fine Gael)
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We thank the Minister of State for his health warning.

Dick Roche (Wicklow, Fianna Fail)
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His intervention once again represents a degree of cluelessness which ill becomes the leader of a party.

Bernard Durkan (Kildare North, Fine Gael)
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We will agree to that. The Minister of State should look around him.

Dick Roche (Wicklow, Fianna Fail)
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Just how out of touch-----

Noel O'Flynn (Cork North Central, Fianna Fail)
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Deputy, the Minister of State, without interruption please.

Dick Roche (Wicklow, Fianna Fail)
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-----Deputy Kenny has become is glaringly obvious when he attempts to abuse situations, as he did on this occasion. Opposing or making critical comments about the suggestion that the Maastricht criteria should be applied is nonsense. The reaction is odder still when one considers Ireland's role in establishing the criteria. Ireland signed up for the Maastricht treaty and the main political parties on both sides of the House, to their credit, campaigned for that treaty in a referendum. Fine Gael was part of that consensus so why there should be a question from the leadership when a consensus has been agreed is beyond me. Deputy Kenny's current position------

Bernard Durkan (Kildare North, Fine Gael)
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That is because there was no consultation with this House, which the Minister of State well knows.

Noel O'Flynn (Cork North Central, Fianna Fail)
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Deputy Durkan, you will have seven minutes to speak. I ask you to have respect for the dignity and decorum of the House.

Bernard Durkan (Kildare North, Fine Gael)
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Seven minutes is very short for a debate of this importance.

Noel O'Flynn (Cork North Central, Fianna Fail)
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The Minister of State, without interruption.

Dick Roche (Wicklow, Fianna Fail)
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Deputy Kenny's current position, as of last week, could not be further from the position his party accepted in the past, in particular when the euro was established. Let us remind ourselves that the criteria were finalised in December 1996 during an Irish Presidency. John Bruton played a major role in setting out those criteria and there was international recognition of the role played by Deputy Ruairí Quinn -----

Bernard Durkan (Kildare North, Fine Gael)
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That was then, when the country was being well run and there was transparency and accountability.

Dick Roche (Wicklow, Fianna Fail)
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Deputy, with all due respect, if you come in here an act like an ass, that is exactly the label you will gain.

Bernard Durkan (Kildare North, Fine Gael)
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Acting Chairman-----

Dick Roche (Wicklow, Fianna Fail)
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Deputy, with due respect------

Bernard Durkan (Kildare North, Fine Gael)
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On a point of order, if the Minister of State can rise no higher than to call a Member of the Opposition an ass, could I ask him to withdraw it before he goes any further?

Dick Roche (Wicklow, Fianna Fail)
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With respect, I have no intention of withdrawing what I said.

Bernard Durkan (Kildare North, Fine Gael)
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Can I ask the Minister of State to withdraw-----

Dick Roche (Wicklow, Fianna Fail)
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We are engaged in the usual nonsense here.

Noel O'Flynn (Cork North Central, Fianna Fail)
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Minister of State, please.

Dick Roche (Wicklow, Fianna Fail)
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With respect, I have tolerated interference.

Noel O'Flynn (Cork North Central, Fianna Fail)
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You must respect the Chair.

Dick Roche (Wicklow, Fianna Fail)
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I am respecting the Chair.

Noel O'Flynn (Cork North Central, Fianna Fail)
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No, you must stop when I tell you to stop. I am only doing this job and there is a procedure.

Dick Roche (Wicklow, Fianna Fail)
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Provided I have the time to finish.

Noel O'Flynn (Cork North Central, Fianna Fail)
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There are Standing Orders. I do not think any Member of the House should be called what you called him and I ask you to withdraw that.

Dick Roche (Wicklow, Fianna Fail)
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Chair, read the record. I did not call the Deputy an ass. I said if a Deputy comes in here and acts like an ass, that is the appellation which will be attached.

Bernard Durkan (Kildare North, Fine Gael)
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On a point of order-----

Noel O'Flynn (Cork North Central, Fianna Fail)
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Sit down, Deputy.

Michael Noonan (Limerick East, Fine Gael)
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The Minister of State is a jackass.

Arthur Morgan (Louth, Sinn Fein)
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Is that worse than an ass?

Dick Roche (Wicklow, Fianna Fail)
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That is okay. There are equal insults. I respect the Chair. I did not call the Deputy an ass. I have been called a jackass and a worse ass, or whatever the appellation was. We should all calm down a little. If the Deputy allows me to finish my script he will have time to question each and every point I have made. I will listen to him respectfully.

The criteria-----

Bernard Durkan (Kildare North, Fine Gael)
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Lest the Minister of State presumes for a moment that he can buffoon his way through what he has just said, I have no intention of letting him go through his speech without him withdrawing an accusation that a member of the Opposition was an ass.

He might have his own private thoughts.

Noel O'Flynn (Cork North Central, Fianna Fail)
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Let me handle it. All types of asses, as the Minister of State describes them, are unparliamentary. I ask him to withdraw the remark.

Dick Roche (Wicklow, Fianna Fail)
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I withdraw the remark.

Noel O'Flynn (Cork North Central, Fianna Fail)
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I thank the Minister of State.

Noel O'Flynn (Cork North Central, Fianna Fail)
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I will let the Minister of State finish. I ask Members opposite, in particular, not to be unparliamentary, to be respectful to each other and to be respectful to the speaker and allow him to finish. We will then hear their contributions.

Bernard Durkan (Kildare North, Fine Gael)
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Has the Minister of State withdrawn the remark?

Noel O'Flynn (Cork North Central, Fianna Fail)
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He has done so.

Bernard Durkan (Kildare North, Fine Gael)
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I thank the Acting Chairman for upholding the high standards that used to apply in the House and I hope will apply hereafter.

Dick Roche (Wicklow, Fianna Fail)
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As I was saying before I was interrupted, Deputy Kenny's position as of last week could not be further from the position his party rightly and properly adopted in the past. I cannot understand why he has departed from that high standard. The suggestion which has been made by party spin doctors opposite for the past 48 hours that somehow or other the commentary by Sinn Féin, which was very accurate, in The Irish Times and by columnists about Deputy Kenny's contribution is well based. There was no need for anybody in this House to raise questions about his standards.

As I said, the criteria were finalised in December 1996 during the Irish Presidency and John Bruton played a proud role in that, as did Deputy Quinn. On more than one occasion, I have commented on the positive role played by both men. I cannot understand why the leader of the Opposition departed from that.

That Council also reached agreement on the exchange rate mechanism, ERM2, as Deputy Noonan will recall, that it would underpin the euro and on the decision of Finance Ministers on details of the Stability and Growth Pact. All of that was put in place while the main party opposite was part of Government. There was consensus in this House on all of that. That Council issued a statement in the name of the then President of the Council, John Bruton, about the excellent report to the ECOFIN. That is all a matter of record so why it was deemed necessary to depart from that now eludes me.

One must ask why the current leader of Fine Gael finds the idea of complying with the criteria repellant. For the life of me, I cannot understand why he said what he did last week. Is he trying to rewrite history? After all, his own achievements as the longest serving Member of this House are modest. However, the achievements of the Members I mentioned are significant. Is he, as observed in last Saturday's The Irish Times attempting to turn a European Commission proposal, which is just a proposal in its infancy, on budget co-ordination across the European Union into a scare about the erosion of Irish sovereignty because, if he is, he is playing the wrong game?

Deputy Kenny in a mad scramble to score points against the Government - again, this comes from The Irish Times - jettisoned principles his own party long espoused. Is he simply clueless, reckless and willing to go whichever way the wind takes him? I do not know the answer to that and perhaps when Deputies opposite speak, they will tell us the answer.

Bernard Durkan (Kildare North, Fine Gael)
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That is not an isolated incident.

Dick Roche (Wicklow, Fianna Fail)
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That is true. It is not an isolated incident. Members of this House were very quick to notice what Deputy Kenny said. I draw the attention of the House to what Deputy Ó Caoláin said. He said he echoed the Fine Gael concerns and he politely told the House that he had forecast just a development when he was campaigning for a "No" vote in two referenda on the Lisbon treaty, that is, when he was campaigning on the opposite side to Deputy Kenny.

Noel O'Flynn (Cork North Central, Fianna Fail)
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I will allow the Minister of State an extra minute and a half because of all the difficulties.

Dick Roche (Wicklow, Fianna Fail)
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I will take all of that. I thank the Acting Chairman.

Outside the House, the leader of the Socialist Party, Joe Higgins, hit the nail on the head when he said in The Irish Times that either Deputy Kenny did not know what he was talking about during the Lisbon treaty referendum when he asked the people to vote "Yes" or he is deceiving them now. I would plump for the latter explanation because he was right about the Lisbon treaty.

We had another example of that willingness by the leading Opposition party in a contribution made by Deputy Mitchell in which she made the point that somehow or other Ireland was paying more than its fair share into the Greek package. That is not the case. The proportions which I gave were established at a time when Fine Gael and the Labour Party had some involvement in Government. Regrettably, this is not the first occasion on which Fine Gael has dropped its proud European stance to play the populist card. Doing so for short term gain, if that is the motive, is a very dangerous game. We all know how dangerous it is because it undermines public confidence in our membership of the European Union and that is regretted.

Bernard Durkan (Kildare North, Fine Gael)
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So has bad budgetary policy for the past ten years.

Dick Roche (Wicklow, Fianna Fail)
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We have all worked so hard-----

James Reilly (Dublin North, Fine Gael)
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Where is the Government's jobs strategy?

Dick Roche (Wicklow, Fianna Fail)
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-----in that regard.

Noel O'Flynn (Cork North Central, Fianna Fail)
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Will the Minister of State conclude?

Dick Roche (Wicklow, Fianna Fail)
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We all know Ireland needs Europe and the last thing we need to see is further instability in the eurozone and we all have a responsibility to work to ensure that does not happen. The measures put forward by the European Commission are sensible, necessary and timely but do not undermine any member state's sovereignty. They certainly cannot undermine our position on taxation which has treaty status because of the work of the members of successive Governments. The treaties are not perfect but they are final. As always happens and as Members know, in particular those with the experience of Deputy Noonan, the proposals made, especially in a consultation paper by the European Commissions, will be discussed, elevated and changed.

There was a great debate over the weekend in which I happen to share an interest and on which I would have some common ground with Fine Gael on the need to talk about budgetary reform in this country. We should not entangle that issue with issues relating to the Commission's proposals which are sensible and timely.

Noel O'Flynn (Cork North Central, Fianna Fail)
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I have allowed the Minister of State almost three minutes of extra time because of the difficulties experienced. I understand Deputy Jim O'Keeffe is sharing time with Deputies Durkan and Noonan. Is that correct?

Jim O'Keeffe (Cork South West, Fine Gael)
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That is correct.

Noel O'Flynn (Cork North Central, Fianna Fail)
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Of course, I will give them the entire 20 minute slot.

Jim O'Keeffe (Cork South West, Fine Gael)
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I expected a constructive speech from the Minister of State with responsibility for European affairs but was hugely disappointed by the absolute lack of any constructive comment. However, I will let that be because what is important is that the core message from the Irish Parliament is that it supports financial stability in the eurozone and that Ireland is willing to play its part in full in ensuring this will happen. Anything that distracts or detracts from that core message is damaging to this country, Europe and the eurozone. That is the main reason I criticise the speech of the Minister of State with responsibility for European affairs. Even from the point of view of self-interest, it is in our interest that we have financial stability because this will impact on the premia we will, unfortunately, have to pay in years to come and the billions of euro we will have to borrow.

Why are we in this situation? It is necessary to understand that clearly when speaking about a Bill of this nature. The recent economic crisis has no precedent in our generation and it has severely challenged the functioning of the EMU exposing fundamental weaknesses in the EU economy. The European Commission's recent proposals have rightly pointed out that surveillance procedures have not been comprehensive enough. As the Commission states in its proposal document, in some member states revenues were temporarily boosted by tax rich activity driven by unsustainable booms in housing, construction and financial services. Is it not very obvious about whom it was talking? Right in the firing line is this country which, unfortunately, has been under the control of a Fianna Fáil-led Governments for the past 12 years. We have already had an admission from members of Fianna Fáil of the awful mistakes made which contributed largely to the problems we face. However, we are still waiting for the mea culpa. There has been no apology.

I wish to comment on some criticism from across the floor about Fine Gael. It is our job as Opposition Members to tease out the details of proposals emanating from Europe given the deep impact they will have on us. We need to think about this bailout in the context of our financial system and its role in the economy. I am aware of the criticisms that have been expressed about bailing out banks and countries. The good performance of a financial system basically requires efficiency and stability. We have a clear duty as EU member states to ensure the eurozone is both stable and efficient.

We need to react quickly to stabilise financial markets. Stability requires us to maintain the function of the financial system not for the benefit of financial institutions, but so that it can facilitate the economy. We must also put in place mechanisms to prevent financial problems from becoming systemic or threatening the stability of the economic and financial systems. We need to reduce the uncertainty which currently looms over Europe's sovereign debt if we are to ensure the longevity of the eurozone. We have a responsibility to defend the euro as a credible currency.

The initial reaction of the markets to the rescue package was positive, just as they reacted positively when Ireland decided the glory days were over and that it was time to start governing itself properly. The continuing decline of the euro suggests, however, that the initial positivity has waned. I welcome a weak euro from a tourism and export point of view. It will also help us to deal with the loss in competitiveness we have suffered in recent years. However, we must also consider the impact on our imports and other costs because of the potential for inflationary pressures. A weaker euro that results from fiscal uncertainties is not a wonderful place to be. We must be prepared to communicate to the market our willingness to stand behind whatever measures are necessary to stabilise the euro.

We are inherently interdependent and we share risks with other member states. This is clear from the premiums we pay for debt. Recent events demonstrate that the bond vigilantes pushed up yields on Greek, Portugese and Spanish bonds. We recently completed a successful issue of a ten year bond at 4.7% but that compares unfavourably to 4.4% in March. We are affected by what is happening in other countries. It is in our interest, therefore, to ensure that the bailout measures are successful.

This brings me to the issue of fiscal and budgetary rules. The Commission's approach is that prevention is more effective than correction. It is clear that member states failed to build up adequate buffers during the good times. Fine Gael has been raising this issue for the past ten years but nobody listened. Given that our proposals are echoed by the Commission, of course we support the proposed new measures. The Commission will introduce at European level the measures we sought domestically.

In all the years I have been in this House, I have never seen a proper debate on budget measures because of the restrictions imposed by one day debates and midnight votes. We never have an opportunity to debate the underlying state of our public finances or the question of proper borrowing and saving targets.

It is clear there was no regulation of any consequence in Ireland and the European regulations did not work. It may be in our interest to seek even stronger regulations than those being proposed by the Commission simply because of the systemic importance of our banks. I am wholly in favour of stability and the measures required to achieve it.

Michael Noonan (Limerick East, Fine Gael)
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The Greek crisis has exposed a flaw in the euro system. The problem concerns what is to be done when the economic fundamentals of a eurozone state become so weak that they signal imminent insolvency. What happens when a state can no longer borrow at affordable interest rates or, indeed, at all? What is the result when an economy becomes so uncompetitive that the very strength of the euro militates against its recovery? What can be done by other eurozone states to develop a solution when the treaties forbid state bailouts?

This Bill and the parallel legislation being introduced in other Parliaments of the eurozone provide a temporary, albeit welcome, answer. The measures being introduced will enable Greece to continue to operate without borrowing in the markets for the next two years. However, if the eurozone is to survive and prosper, the flaw which has been exposed must be given a credible and permanent fix.

The device of providing loans through member states circumvents the no-bailout clause in the European treaties. Even on a loan basis, these payments to Greece are a credible substitute for the direct interstate monetary transfers that take place in more integrated currency unions. Two years ago, California was the Greece of the United States. Why would it have been total nonsense to suggest that California could no longer remain part of the dollar zone? The reason is simply because the United States is an integrated political, economic and fiscal union which allows transfers to take place between states. Automatic stabilisers allow transfers to be made and the currency problems we face to not arise because of fiscal union.

Collectively, Europe is still the world's greatest economic power. In trade terms it remains a giant but its ambition to be a major global power that rivals the United States and China and a euro that acts as a leading world reserve currency is now a distant dream.

The flaw in the euro machine must, however, be fixed and the lack of fiscal integration must be addressed. The proposals for strict implementation of the Stability and Growth Pact with oversight by Brussels of budgetary targets represent attempts at a fiscal solution but they create their own difficulties. A more credible long-term fiscal solution is necessary. Europe also needs its own equivalent of the IMF. While I cannot see how this could be achieved without amending the treaties, the resourceful eurocrats who developed the Bill before us may find a legal means to circumvent these difficulties.

The speculation that Germany or France may withdraw from the euro is not credible. If a new super euro was created by the original six members of the Union, minus Italy, the result would be devaluations by all other member states. The hard won competitive advantages enjoyed by the Benelux countries, France and, especially, Germany, would be lost.

The idea that Greece would drop out of the eurozone has also been canvassed. This has superficial attractions because Greece would enjoy a competitive devaluation and could default on its debt without consequences for the euro. However, the attractions of this course of action are more apparent than real.

The true fear of Europe is that contagion will spread from Greece to Portugal, Spain, Ireland and Italy, with stark consequences. There is nothing attractive in sovereign default, especially when German banks are liable for one third of Greek debt and French banks are liable for 40%. German and Austrian banks are also lending heavily to eastern Europe and if the contagion spreads and expands to include sovereign defaults, God only knows where we will end up. We have seen from the United States that when problems start in a bank it is hard to know how they will develop because there are always unforeseen consequences.

Europe needs a growth strategy. What is called the Stability and Growth Pact has given us neither stability nor growth. Now that stability is to be achieved through fiscal retrenchment under the guidance of Brussels, it is time to address the jobs issue. One cannot cut one's way out of a recession but one can grow out of it.

We must find a way forward. The Government has made a good attempt at fiscal correction. It has also brought in a new architecture for the banking system. Whether we agree or disagree with that, it is now in play and I hope it works.

However, the Government has utterly failed in addressing the recession. The recession is not a subset of the fiscal or the banking problem; it is an issue in its own right and it requires its own solutions. The Government's latest attempt is to talk up the economy, aware that there are savings in every bank account in the country and that if people could be encouraged to spend there might be a domestic boost in demand which would help us out of recession. However, it is not possible in the current circumstances to talk our way out of recession. The Government must implement a series of supply-side measures - because we cannot afford demand-side measures of a major stimulus nature - to get us out of recession, encourage growth and create jobs.

Bernard Durkan (Kildare North, Fine Gael)
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I promise not to interrupt myself in the course of my contribution. We are facing what is probably the greatest single test of the European Union and its institutions since their inception. The eurozone territories are assailed on all sides by greedy and well directed speculators who have only one objective, namely, to prise one country - it does not matter which - out of the monetary union. Once a single country is taken out of the eurozone, the entire system disintegrates. The suggestion that there could be a two-speed Europe in such a scenario and that we could continue as before is not feasible. There would be utter turmoil within the European markets and economies if that were to happen.

The current recession is very deep and has broad implications. It can be compared to the recession of the late 1920s and 1930s when it took the then President of the United States many years, having tried several formulae, to begin to turn the ship around. Eventually, by virtue of a succession of events, some of which were beyond his control, he succeeded in so doing. It is extremely important that we all support the aid package for Greece and the broader stabilisation package being introduced by the European Union in order to ensure there is confidence, hope and economic recovery. We are not out of the woods in this regard by a long way.

The Minister of State at the Department of Foreign Affairs, Deputy Roche, used much of his speech to criticise the Opposition and Fine Gael in particular. However, he failed to acknowledge some important points. It is not at all unusual in the current circumstances that the European institutions would require some type of evidence to show that the Stability and Growth Pact guidelines are being observed. They have not been observed for a long time by many countries, small and large. It is reasonable to expect that the Union would seek assurance that whatever package is proposed for our economic salvation is placed on a sound footing. That sound footing can only be assured if the European Union knows what measures are being taken within member states in terms of economic policy to achieve our common objectives.

The next issue we must consider is the composition of the proposed stabilisation fund, a combined European Union and IMF initiative. This mechanism is to be welcomed, my only concern being that the IMF has not always lived up to expectations in the past. That body could, in recent years, have achieved more in certain areas relative to its stated intentions. The eurozone countries, on the other hand, have a great responsibility to themselves and to the wider European Community. If this proposal fails, we will have a serious problem.

The chief criticism from the Minister of State, Deputy Roche, was that the leader of Fine Gael and others in the Opposition had suggested that the European Union institutions were not honouring what was committed to in previous European treaties. It is not unusual or unreasonable, given the juncture we have reached, that the Opposition parties would seek some information as to the proposals the Government intends to put to the European institutions, before it makes those submissions. Some of the submissions made in the past did not stand up.

Darragh O'Brien (Dublin North, Fianna Fail)
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Does Deputy Durkan now agree there is no problem-----

Noel O'Flynn (Cork North Central, Fianna Fail)
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Deputy Durkan should be allowed to speak without interruption.

Bernard Durkan (Kildare North, Fine Gael)
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I encourage interruptions. I have been listening to Deputy O'Brien in recent days and he would be well-----

Noel O'Flynn (Cork North Central, Fianna Fail)
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Deputy Durkan has one and a half minutes remaining - he should be careful not to waste it.

Bernard Durkan (Kildare North, Fine Gael)
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I will not waste the time remaining. I ask the Acting Chairman not to interrupt me because that makes it even worse for me. In a debate as important as this, it is a sad reflection on our democracy that we have only six or seven minutes to make our contribution in the national Parliament.

I challenge any comer on the other side of the House to deny that whatever submissions were made in the past by the Government, they were questioned by the European institutions. That is why they have come back with this proposal. They have questioned Government submissions over the past six months and over the past six years. They have pointed out repeatedly that the Government did not live up to the Stability and Growth Pact guidelines and had no intention of so doing. If Members opposite want to point the finger at the Opposition benches in regard to the current crisis, I remind them that the Government has been continuously in power for the last 13 years, and for the past 25 years with the interruption of a mere two and a half years. That two and a half year period was the only time in the past 25 years that all of the guidelines laid down by the European institutions were observed by Government. That Administration could leave office with pride on that basis.

Noel O'Flynn (Cork North Central, Fianna Fail)
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I wish to clarify that the Chair does not interrupt; the Chair intervenes. I ask Deputy Durkan to bear that in mind for the future.

Bernard Durkan (Kildare North, Fine Gael)
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I thank the Acting Chairman for his intervention on my behalf in the course of my contribution.

Beverley Flynn (Mayo, Fianna Fail)
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I propose to share time with Deputies Darragh O'Brien and Chris Andrews.

Noel O'Flynn (Cork North Central, Fianna Fail)
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That is agreed.

Beverley Flynn (Mayo, Fianna Fail)
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I welcome the opportunity to contribute to the debate on this Bill. I begin by acknowledging the Damascus-like conversion my colleague on the other side of the Chamber has apparently undergone on behalf of his party. We welcome his support for the Bill and his comments on the examination of our budgets by a peer review group. Both Deputy Durkan, who is Chairman of the Oireachtas Committee on European Affairs, and his party's spokesperson on European affairs were remarkably silent in recent days when their finance spokesperson made the crazy and outrageous suggestions that we would lose our sovereignty in respect of fiscal policy as a result of these proposals and that our low corporation tax rate might be at risk. I welcome the Deputy's contribution as a signal that he did not agree with those statements.

It is disappointing that this Bill is necessary but it is important that we play our part in bringing about the stability of the euro currency and the euro economy. We will help to protect Greece by operating these repayable loans which will be channelled through the European Commission in conjunction with the IMF. It is to be welcomed that the loans are being given on a conditionality basis. It is important that those conditions are monitored carefully, as laid out in the Bill and as per the agreement between the member states. It is important that Ireland moves, like our fellow member states, to provide confidence within the eurozone. Instability in this regard has implications for the greater economy and for Ireland in particular. We have a vested interest in moving to support Greece at this particular time. It is important that as a community, European Union member states show solidarity with each other. Deputy Noonan referred to contagion. We are all concerned about any such prospect or risk in other eurozone member states.

The loan facility has come about because Greece was not in a position to borrow on international bond markets at sustainable rates. It proved necessary to agree a package which would allow Greece to avoid going to the market for its funding requirement for some time. The package amounts to €110 billion over a three year period, €80 billion of which is provided by the euro area, with the remainder provided by the International Monetary Fund. As noted in the Bill, Ireland's share of the package will be €1.3 billion, although I note the relevant section makes provision for a share of €1.5 billion. Possible short-term fluctuations will, however, be reconciled at a later stage. Ireland's share of €1.3 billion is arrived at as a result of our paid up capital at the European Central Bank.

It is understandable that people on the street will ask how we can afford to fork out €1.3 billion to Greece when we are borrowing €20 billion per annum to run the country. The overriding purpose of the loan facility is to support Greece and safeguard the financial stability of the euro area, including Ireland. Members of the public as well as the major political parties, all of which support the measure, realise there is no alternative to the loan facility provided for in the Bill. It is important to recognise that Greece will repay the funding provided when times improve. In addition, member states' funding costs are being met without an imposition on the taxpayer.

In providing this loan facility to Greece, a number of important agreements have been entered into. These include the loan facility agreement, which sets out the details of the loan, an inter-creditor agreement and a memorandum of economic and financial policy. The memorandum is important because it outlines the economic and financial policies the Greek Government must implement by 2013 to strengthen market confidence in the country's fiscal and financial position. The Greek Government must implement a number of ambitious measures by 2013 to ensure the country does not default on its bonds in future.

A further key agreement entered into as part of the loan facility is the memorandum of understanding on specific economic policy conditionality, which specifies the detailed economic policy measures that will serve as benchmarks for assessing policy performance in the context of quarterly reviews. I welcome the provision to hold quarterly reviews as it will prevent a future crisis by enabling us to determine whether Greece is playing its part in line with the various agreements. Other member states will, therefore, have early signals if the country is failing to do so.

The measures Greece must implement include public sector wage reductions, a cut in pension outlay and increases in excise taxes and VAT. The overall adjustment package amounts to €13 billion or 13% of GDP between now and 2014. There is no doubt that these ambitious targets will inflict a significant amount of pain. Ireland has successfully introduced adjustment measures to stabilise the position in this country. If we are to play our part by taking difficult decisions here, it is important that other countries, particularly those being given a substantial helping hand, take similar measures.

The position in Ireland differs greatly from that of Greece. Our economic position is much stronger than that of Greece, which has serious underlying competitiveness problems and high debt levels. Furthermore, until now the market did not believe Greece could deliver the necessary austerity measures. Ireland has demonstrated, in its budgetary process over the past 18 months to two years, that it is in a position to deliver such measures. The markets have observed our capacity in this regard and responded accordingly. As a result, we are well on the way to restoring stability to the public finances.

The ESRI and many other economic bodies have indicated that Ireland will enter growth towards the end of this year and achieve a growth rate of 3% in 2011. These are early signs that the country is taking the correct steps. As I indicated, we want assurance from the Greek Government that it is also in a position to take such steps. The quarterly reports to the eurozone group will be of particular importance in this regard. Prior to decisions being taken on the disbursement of the subsequent tranches of the loan to Greece, the European Commission will ascertain whether Greece is fulfilling its obligations under the conditionality part of the agreement.

It is important for Ireland to stand with other countries in Europe at this time. It is good to note so much agreement in the House on this measure. For this reason, I commend the Bill to the House.

Darragh O'Brien (Dublin North, Fianna Fail)
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I am pleased to have an opportunity to speak on the Bill. It was interesting to listen to Deputy Durkan's contribution. As Deputy Flynn noted, he single-handedly brought his party back into the EU fold after the rush of blood to the head his party's finance spokesman, Deputy Bruton, experienced last week when he commented on fiscal sovereignty and the threat to corporation tax rates. Deputy Bruton has been silent on the matter since, as has leader, Deputy Kenny.

It is not a coincidence that there appears to be a little trouble in paradise in respect of the Fine Gael Party in so far as its spokesperson on Europe, Deputy Creighton, has clearly stated she does not have any concerns about the corporation tax issue or EU oversight of Irish budgetary policies. I do not know whether it is coincidental that amendments tabled by the Fine Gael Party are in the name of Deputy Kieran O'Donnell rather than Deputy Richard Bruton. Perhaps the latter is steering clear of business on Europe for the time being.

As the Bill demonstrates, if the Government had not taken difficult but necessary decisions in the past couple of years, Ireland could well be in the position in which Greece finds itself and other parliaments across the eurozone would perhaps be discussing a bailout package for Ireland. It is somewhat disappointing that over the past three budgets the two main Opposition parties have seen fit to oppose the every one of the difficult but necessary measures the Government has taken. Instead of taking a constructive approach, as Fine Gael did with regard to the deposit guarantee scheme, the Opposition has been populist and opportunistic.

The Government has stabilised the deficit and unemployment and the cost of borrowing has reduced markedly in the past 18 months.

Kieran O'Donnell (Limerick East, Fine Gael)
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To have stabilised unemployment is a strange claim to make.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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It has been stabilised upwards.

Darragh O'Brien (Dublin North, Fianna Fail)
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Whatever way one looks at the issue, the Government has stabilised the unemployment rate. We are now focusing on returning to growth this year. According to all projections, the country will return to growth in the second half of this year and will achieve a significant growth rate of between 3% and 3.5% next year.

Kieran O'Donnell (Limerick East, Fine Gael)
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What about the quarter of a million people who have joined the live register?

Noel O'Flynn (Cork North Central, Fianna Fail)
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Deputy O'Donnell knows the rules of the House. I addressed this issue with a number of members of the Fine Gael and Fianna Fáil parties earlier. The Deputy must address the Chair and may not address any other Member of the House.

Darragh O'Brien (Dublin North, Fianna Fail)
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No one contests the fact that Ireland will return to modest economic growth levels later this year and more significant growth next year. This will not occur by accident but as a result of Government taxation measures and expenditure cuts worth billions of euro taken to bridge the budget deficit and regain control of the public finances.

The British Government has announced it will reduce by £6.5 billion its budget deficit of £165 billion. When one considers that the Irish Government made cuts of €4 billion last year to address a deficit of €22 billion, one sees the scale of the challenges facing the country. The Government's decisions have been proven correct. Last week, I debated this issue with Deputy Bruton on a radio programme, in the course of which he admitted that a number of the measures taken by the Government in the past 18 months to correct the fiscal position were correct. It is a terrible pity his party did not see fit to support any of these initiatives at the time. The same can be said of the Labour Party, which agreed last year that cuts of €4 billion were necessary but opposed every proposal to achieve them.

I welcome the initiatives taken by the Greek Government to tackle the country's budgetary problems with the assistance of the European Union. The loan facility for Greece is a combined package to which all European Union member states contribute designed to ensure the eurozone remains strong. This brings me to a specific point.

We need to look at the role that credit agencies such as Standard & Poor's and Fitch have played in stoking up some of these crises and talking down countries. It seems that if Standard & Poor's and Fitch say anything negative about a country, then the cost of borrowing increases for that state. The EU needs to grapple with this, because it seems that what these agencies say is gospel. The same situation occurred when an attack on Spain was ready to be set up a few weeks ago. We should consider the bona fides of these agencies as to why and when they come out with these comments. I believe there is a sinister element to this in some instances. It is far too serious to let a few private companies around the world dictate eurozone policy here. This crisis must teach us something in that respect.

The Bill is a clear signal that the EU member states are working together in assisting Greece. We are rightly playing our part in that rescue. The €1.3 billion payment to Greece is a loan and will be repaid to Ireland at a significantly higher rate. We are seeing an end to the recession in Ireland. We are now in a position to be able to create opportunities for the people who have lost their jobs in the last two years. We are supporting over 100,000 people in work at the moment through the various employment subsidy schemes. We need cohesion within Europe, and this Bill provides it. The EU states need to work together for the good of their citizens. I would like to see the two main Opposition parties in this House trying to work in cohesion with the Government and trying to put forward some realistic policies, instead of just uttering platitudes after the event and letting the Government do all the heavy lifting. We are happy to do it because we are capable of doing it.

Ned O'Keeffe (Cork East, Fianna Fail)
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I thank Deputy Chris Andrews for allowing me to speak in his slot, as I have to go to another meeting. I welcome the Bill and the loan for Greece. This is about the stability of Europe and the monetary stability of the EU. It is important for Ireland that we have a strong Europe. Ireland has benefited enormously from our membership of the European Union.

We are seeing cracks and creaks in the currency. I am worried about its stability, even with this loan. Greece has got a handshake in the form of a substantial amount of money to preserve its economy. Ireland has put its shoulder to the wheel to provide this loan. It will add to our national debt, but it will make a margin of money for us and for our economic prosperity.

Ireland has worries about the European Union. Were it not for the Germans, we would not have a strong Europe. I congratulate Angela Merkel on her defence of the euro and her fight to save it, irrespective of her political decisions and her party's problems in an election in Germany. The French are also part of the system. Irish agriculture is the area that is most at risk.

I was standing at a collection point on Sunday, and I had very good collections for the Fianna Fáil Party. They were substantially up on last year. I must get Deputy Rabbitte to count the money, because I know he is good at the figures. Farmers are telling me that we do not want to return to the days of the green pound. Irish agriculture is the biggest beneficiary from our membership of the EU, and we do not want to return to the days of bargaining if the euro collapses. Irish agriculture and the food industry will be the losers if that happens. The Government has done the right thing and I congratulate the Taoiseach, the Minister for Finance and other Ministers on their involvement in the European monetary process over the last few weeks.

The world economy is in difficulty. One of today's financial newspapers reported that Vodafone suffered substantial losses in its business in India. We hear much about the Indian economy, but that is also suffering a downturn, as is the general high-tech industry. The building bubble caused the problems in Spain and Ireland. We were over-ambitious in construction and industrial development. Greece is in crisis, but it has been backed up by the 27 EU member states. Spain, Portugal and Ireland are in the same category, but these are much more disciplined countries. Ireland has led the way in putting its economy right. There was a €4 billion adjustment last year in the budget, while we are facing a €3 billion adjustment this year and I hope all the parties, including my own colleagues, accept this. If we do not face that kind of austerity and adjust our economy, then we will not be here in the years ahead and the IMF will take over from us. We would like to run our own business here independently.

We have rescued our banks. We have rescued our economy. We still have 1.8 million people in the workforce, and we should never forget that. I came into this House 28 years ago when there were only 800,000 people in the workforce and employment was at 17% to 18%. We now only have about 13% unemployment, so we are doing quite well in this situation, given the crisis that surrounds us. There is a certain buoyancy out there, and there will be growth in our economy. However, it will be slower than we would like because of our debts.

The Government is to be congratulated on its support for the euro. Its importance to Ireland cannot be dismissed in any way. I appeal to the Opposition parties to fall into line. Deputy Rabbitte is a very committed European, even though he might not agree with much of what I have said. Should anything happen to the euro, the losers will be the people of Ireland and the Irish economy. The euro is so important to us. There is a danger that it is creaking, and if anything happens, we will be the losers.

Pat Rabbitte (Dublin South West, Labour)
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It is always worth listening to Deputy O'Keeffe on financial and economic issues. On the matter of whether there are any green shoots to be spied by observers, the notion that the Fianna Fáil collection in Mitchelstown went up last Sunday is the most tangible evidence I have heard so far of an improvement in the economy.

Seán Haughey (Dublin North Central, Fianna Fail)
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We are donating it to Greece on this occasion.

Pat Rabbitte (Dublin South West, Labour)
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The truth must be that if there is a revival in the fortunes of Fianna Fáil to the extent that people are prepared to put their hands in their pockets during the current crisis, then there is indeed a recovery on the way.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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It is not a recovery of sense.

Pat Rabbitte (Dublin South West, Labour)
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I know that this would fit in with the text that has been sent to all Fianna Fáil Deputies entitled "We have turned the corner". Let us hope that it is true.

I do not dispute what the Deputy has said. This debate is about stability in the eurozone. There is no arguing with his point that it is in our interest that the euro remains strong and is protected and that there is a requirement for solidarity and responsibility in our position vis-À-vis a member state partner in trouble. I also agree with his warning that we should not take anything for granted and that the system is creaking. The eurozone itself could be at risk. It seems a monstrous proposition, but we have seen in recent days that this is not unthinkable.

The purpose of this Bill is to give a dig-out to Greece. I support the Bill. The logic of our position is to support a fellow member state, which can no longer source money on the international bond markets. I have received half a dozen e-mails from constituents querying why we are lending money to Greece when we ourselves are broke. Usually people are satisfied with the answer, not least when it is explained to them that we might be next in the queue ourselves.

In fairness to sceptical questioners, the question does arise about what will happen if Greece does not manage to surmount its financial and economic problems and is unable to repay the loans from other eurozone partners. I do not know what the answer is and I do not know if the Minister knows. If he does, he might enlighten us in his reply. One way or another, it seems this gesture of solidarity is inevitable. The crisis provoked by Greece and exploited by speculator elements in the money markets has threatened the stability of the euro area. In such circumstances member states have little choice but to provide Greece with an alternative and sustainable source of borrowing.

However, it is still a shock to citizens of the European Union to realise that the very sustainability of the currency itself could be threatened and we are not yet out of the woods. We can blame all the speculators we like and we can reasonably deplore the credence irrationally commanded by the ratings agencies, but this crisis has exposed weaknesses that were probably inherent in the monetary union project from the beginning.

It is true that Greece did not play by the rules, but then neither did we. However, it is not just the small countries or the so-called peripheral states that broke the rules. Some of the big countries also broke the rules along the way and were seen to do so with impunity. However, Greece has earned the title as the most egregious offender. Fiddling the books has not just confronted its new government with enormous challenges, but it has plunged the entire euro area into some turmoil.

Economic and monetary union was a political project. Not all economies were at similar stages of development and some were in significant divergence. However, notwithstanding this divergence there were benefits to be gained from joining the euro. Unfortunately, the benefits appear to have concealed the necessity to address the structural divergences. In Ireland's case, our banks were unable to contain themselves. They behaved like the boy in the chocolate factory. They were suddenly able to access barrels of cheap money and shovel it out at a profit to all comers. We know where such reckless lending has brought us. Now it appears we were not alone and, Greece apart, we were only worse. It was inevitable, therefore, that when the crisis came the impact would be so much more severe in some member states than others.

Provided there is reasonable and prudent budgeting policy, the creation of a stabilisation fund was inevitable. However, in the errant states we are stuck with fiscal correction measures that are inflicting severe hardship. We know how bad it is in Ireland and can only imagine how bad it is in Greece where the cuts are reported to be twice as severe as what is happening in Ireland. However, we knew that gross spending was sustainable in the short term only because of temporary revenues from tax-driven property development. This served only to exaggerate the divergence between our economy and the benchmark German economy. The Stability and Growth Pact alone was an insufficient mechanism to make monetary union work and more especially so when it was operated more in the breach than the observance.

Necessity, however, is the mother of invention. Confronted by the threat to attack the euro, the European authorities and political leadership have now come up with solutions that will, I hope, not only tame the turmoil but provide mechanisms to anticipate problems in the future. In particular, I acknowledge the necessity for the stabilisation fund jointly created with the IMF. The shift of emphasis by the ECB is also welcome. I am not sure I yet understand the full import of measures to co-ordinate fiscal strategy. If member states are to be required in the future to send their budgetary homework to Brussels for correction, there will inevitably be resistance.

Imposing German-style discipline on the more profligate member states is not guaranteed to work. Unless it is accompanied by measures to stimulate growth and expand employment, it will not work anyway. For example, our Government's preoccupation has been entirely focused on fiscal correction and the inevitable cuts that must follow while the gap between revenues and spending remains so large. However, there is a separate recession issue that has attracted little or no attention. In so far as there was a significant policy difference in the British general election, it was between those who thought it possible for that country to grow its way out of a recession and those who thought the country could cut way out of a recession. We can only cut so much but if we do not get growth going again, we will remain playing catch up. In the early 1990s we endured a period of jobless growth. The same is likely to happen again. At European level and at domestic level as well as tackling the structural deficit, we need to see a jobs and growth strategy. So far that is missing here in Ireland and at the top of the European Union.

The debate in the neighbouring jurisdiction is interesting where that philosophical argument during the general election seems to have been resolved in favour of more cuts. That economy is obviously critical to our success here in Ireland. It now appears the economy could be plunged deeper into recession, which will be a problem for us also. Nobody on these benches demurs from the necessity to take this step of solidarity with a partner member state currently in trouble. Why the Greek situation is as serious is primarily a matter for the Greek people and political system. One cannot but have sympathy for the Greek Prime Minister, Mr. George Papandreou, and his Government over what they inherited. In addition to being profligate and reckless, to be dishonest in the presentation of the figures has created a very challenging situation for his Government.

In the process we have seen how, although not a major economy, what has happened in Greece has threatened to destabilise the entire euro project. Coming at the time it did, while the German Government was anticipating significant elections, there was a delay which was exploited. It could have been exploited with dreadful consequences for all of us. For all of these reasons I support the Bill, but plead with the Government to shift its focus now from mere fiscal correction to the entire question of a jobs and growth strategy. It should do what it can to cause that strategy to move to the top of the European agenda.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Ba mhaith liom mo bhuíochas a ghabháil leis an Teachta Rabbitte as a chuid ama a roinnt liom ar an cheist rí-thábhachtach seo. Ní aontaím leis an cinneadh atá glactha ag a pháirtí tacú leis an Bille seo. Is mór an trua é dúinn ar an eite chlé go bhfuil an difríocht sin eadrainn sa chás seo. An t-aon toradh a bhéas ar an Bhille seo agus an cinneadh atá á ghlacadh ná go mbeidh lucht oibre na Gréige thíos leis de thairbhe an chinnidh seo sa deireadh thiar. Ní lucht an rachmais a bheidh thíos leis.

As a consequence of the vulture capitalism of recent weeks, and of the past year in particular, the Bill before the House intends, supposedly as a gesture of solidarity, to extend a loan to the Greek people of up to €1.5 billion, or a bond of some kind. We are told that is the intention of the Bill but the opposite is the case. It is not an act of solidarity with the Greek people, but is, once again, an act of solidarity with bond holders from this Government. It is German bond holders in the main who are being bailed out in this case, and not our neighbours and friends, the Greek people, who will benefit. Ultimately, the Greek people will have to foot the bill, which was not caused by the working people or the unemployed of Greece. It was created by an economy built on falsehoods, by tax avoidance on a rampant scale encouraged by the Government, and by tax exemptions which encouraged those in the shipping industry and major companies to benefit while the working people had to pay their share. The situation is similar to that of Ireland. Our Celtic tiger was built on a falsehood, a basket-case economy that was found out in recent times. In the case of Greece it is the same thing. Its economy was built on falsehood and shipping in the same way as ours was built on construction. When it collapsed it did so very heavily.

The other problem with the Greek economy is that there was a cooking of the books, as is acknowledged by everybody. The system was set up to allow for that. Proceeds from the sale of shares traded on the Athens stock exchange had a tax exemption. Income from ships and shipping was tax exempt and dividends received from a Greek company was tax exempt. Capital gains from the sale of a business between family member was tax exempt.

This economy was a relatively poor and struggling one just as Ireland's economy struggled for many years to try to build good standards of education, living and public services. Much was done in Ireland, as in Greece. The problem now is that the ordinary people of both countries have to pay twice for what they thought they had already paid.

I offer an example of where some of the €1.5 billion we are offering and sending, in supposed solidarity with the Greek people, is going and what it will pay for. Not only will it pay for what my colleague, Deputy Morgan, mentioned, namely, the German bond holders but I have a list of some of the Greek military expenditure that has been ramped up in recent weeks. Just when the extent of the Greek economy's problems came to light the people are being forced to spend more money than before on military spending. This country has the highest military spend in the entire EU. In a bizarre twist to the Greek crisis, France and Germany are pressing Greece to buy gunboats, war planes and submarines from them while at the same time they and the ECOFIN Ministers are telling the Greeks to curb public spending. They must, therefore, curb all spending except military spending. Some Greek officials say privately that the Paris and Berlin authorities are using the crisis as leverage to ensure that arms contracts which were negotiated in recent years and, in particular, in recent weeks, are concluded. As a result, the country will not reduce its military spend.

An advisor to Prime Minister, George Papandreou, stated in a report, "Nobody is saying, 'Buy our warships or we won't bail you out', but the clear implication is that they will be more supportive if we do what they want on the armaments front". According to Nick Witney, a former head of the European Defence Agency, the Germans and the French have the Greeks over a barrel now. We must not forget it was this agency that our Government and so-called main Opposition parties persuaded the Irish people to buy into during the Lisbon treaty referendum. It is this company which is encouraging more spend on the armaments industry.

I offer an example of where exactly the money will go. The Greeks are concluding a deal with the French at the moment to buy six Fremm frigates. If Deputies want to know what these frigates cost-----

Séamus Kirk (Louth, Ceann Comhairle)
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The Deputy has one minute.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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-----the figure is €2.5 billion. I am sorry. There goes the Irish solidarity gesture in one moment.

Arthur Morgan (Louth, Sinn Fein)
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Twice over.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Perhaps 15 Puma search and rescue helicopters at €400 million will do. Or what about the submarine Greece is buying, which is ineffective and out of date? It has a huge cost and will facilitate further skulduggery on the part of multinationals. It is ridiculous that such a purchase is even being contemplated by a Government which must be bailed out.

The only solution to bond holders who gambled, as they did in this country and many others, is to stick it to them and say, "Sorry, hard luck, you are not getting your money. You will get it when we can afford it". They speculated and gambled and that is the only realistic alternative. If bondholders are bailed out they are encouraged to continue their speculation. That is where the capitalist system has arrived. This type of vulture capitalism has been going after one currency after another. We saw this before the euro was created and we see it again now when speculators try to destroy the euro and economies and ensure they will take whatever penny, pound, euro, or whatever, out of the economies of the European Union.

We have given away our sovereignty in recent treaties and cannot depend on or defend our economy. The vested interests will not allow us to do that. This Government, through this measure and others it is contemplating, now suggests we should give away further sovereignty so that other countries may have control over our budgetary process. They have that already, in many ways, under the Growth and Stability Pact. That is not good enough. If this country is to be sovereign it must stand up to the bondholders and should not facilitate them, in Greece or anywhere else.

Thomas Byrne (Meath East, Fianna Fail)
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Cé mhéid ama atá fágtha?

Séamus Kirk (Louth, Ceann Comhairle)
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Deich nóimeid, is dóigh liom. Deputy Byrne, ten minutes and Deputy Chris Andrews, ten minutes.

Thomas Byrne (Meath East, Fianna Fail)
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Tá áthas orm labhairt ar son an Bhille seo inniu. Measaim gur Bille an-tábachtach é, a thugann cabhair don Ghréig, ach a chaomhnaíonn agus a chosnaíonn an tír seo.

I take the opportunity to welcome the chairman of Kells town council, Councillor Brian Curran, and the members of Kells Tidy Towns committee who are in Dáil Éireann today. They are celebrating their 50th anniversary, which is worthy of recognition in the Dáil. I also welcome Dunshaughlin Comhairle Ceantarach Fianna Fáil, who are also in the Visitors Gallery. I see Councillor Noel Leonard and am sure Councillor Nick Killian is also there. They deserve a special welcome.

One of the most important documents provided to us by the Oireachtas Research Service - it is also in general circulation - is a letter of intent sent to the presidents of the euro group, the ECB and the European Commission by the Greek authorities, stating what the Greek Government intends to do with this money, how it intends to reduce its deficit and get the country back in order. Some of the points raised by Sinn Féin about Greek expenditure priorities probably have merit. I am not sure of the full facts. I am not aware of the full facts but defence spending, as in this country, was one to be reduced and should be examined by the Greeks. Every taxpayer is entitled to have that letter of intent from the Greek authorities because every taxpayer is contributing to what practically everybody believes is a necessary loan. Everyone is entitled to know what the Greeks are to do about their circumstances because every taxpayer in this country knows what we have had to do to get ourselves in shape. Cuts were made, jobs were lost, taxes have increased and wages have been cut; this has been done in the name of getting our finances in order without any pressure from Europe or the IMF, as in the Greek case. It has come without any pressure from the international bond markets that Sinn Féin wants to stick it to.

This country is a good example and we have more knowledge of what is involved in the process than any other country in Europe. The letter of intent is a useful document and we must hold the Greeks to what they are doing. Another important point which the Minister has raised is that we should make a profit as the rate of interest being charged on the loan should be more than what we are being charged on the international markets. That is an important point of reassurance and should always be borne in mind.

While on the topic of countries not being able to borrow efficiently and European countries and the currency in crisis, it should be seen as a significant achievement of the Government and the National Treasury Management Agency that the Government bonds this week were three times over-subscribed. In other words, three times as much money was available than was required. The Government had the courage to say that it needed to borrow to pay social welfare and for public services. It indicated that the country was on the right path and asked for the money. Three times what was required was offered from parties willing to invest in the country and its public services because there is trust in the Government to pay the money back and run the country correctly. That is the message that must be driven home.

Why is everybody around the world indicating confidence in the Government acting correctly when every day the Opposition argues that everything we do is terrible? The Labour Party bleats about left-wing politics and it is interesting that it is a socialist and left-wing government in place in Greece. Many of the parties involved in the cutbacks across Europe are sister parties of Fine Gael and Labour so for them to criticise policies we are undertaking which are reflected in their sister parties is slightly hypocritical.

It is important that we save the euro, which has been a strong bulwark for this country.

Séamus Kirk (Louth, Ceann Comhairle)
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I apologise for interrupting the Deputy but we are due to conclude Second Stage at 5.30 p.m. The normal procedure is to call the Minister to reply to the debate 15 minutes in advance of such time.

Thomas Byrne (Meath East, Fianna Fail)
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In that case I will give way to Deputy Chris Andrews.

Chris Andrews (Dublin South East, Fianna Fail)
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For how long may I speak?

Séamus Kirk (Louth, Ceann Comhairle)
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The Deputy may continue speaking until the Minister arrives. We expect him shortly.

Chris Andrews (Dublin South East, Fianna Fail)
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I am delighted to get a brief opportunity to contribute to the debate on this Bill, which is part of a process of solidarity. We are part of the European Union and have agreed to help Greece, which is what being in the European Union is about. We have been helped in the past by other countries, with the Germans in particular ongoing supporters and contributors to the Irish economy. When the shoe is on the other foot, we should not be found wanting. It is our time to support another small country and in many ways, Greece is similar to Ireland. We have found significant benefit in the eurozone but we must ensure stability.

As Deputy Byrne mentioned, the money will be returned. More important than the €1.3 billion over three years is the stability returned to the eurozone. That stability is not just notional and it will allow small and medium-sized enterprises to start functioning again. They will get back their confidence and banks will ensure the flow of money is available to such enterprises. The notion of stability is not theoretical but will have a significant impact on the ordinary person going to a bank for a loan, such as a businessperson employing five or six people. Small and medium-sized enterprises employ over 700,000 people in this country and are the backbone of the economy. They need this stability.

By joining other countries in supporting Greece we are getting much back. The stability will return confidence to the Irish consumer, who is still very nervous. Savings deposits are large and we must coax people to spend money again to get it running through the economy and the retail sector in particular. There are signs of improvement and a range of indicators show such improvements. The retail sector is tentatively improving and a current Minister of State, Deputy Seán Connick, advocated the introduction of a scrappage scheme in the motor sector which has made a difference. That industry has stabilised and is on the up. We are moving in the right direction slowly and steadily.

The money from the State will be pooled with other loans from euro area member states and it will be allocated by the European Commission and the ECB. It must be stated that Greece is not just getting a free meal ticket. It must introduce radical reforms which I imagine will be traumatic. It must significantly reduce public expenditure and there will be ongoing appraisal and assessments by the European Commission, which must ensure that Greece meets the criteria set down. Although we are giving much, we are getting much in return, including a stability that is important for the Irish economy.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Much of the debate on this Bill has been constructive and has touched on many of the key economic and budgetary challenges confronting us at both a European and domestic level. The contributions by the various Deputies reflect the broad spectrum of political opinion on how we should address these very fundamental challenges linked to our participation in economic and monetary union. There is, however, a shared appreciation in this House of the nature and gravity of these issues. This collective appreciation has helped to enhance the quality of the debate, especially in regard to some of the analysis of the difficulties currently facing the eurozone. I found much of the debate relating to the difficulties facing the eurozone, which I followed with great interest, illuminating and constructive.

As an active participant in the various European institutions and members of the euro area, we must provide support and demonstrate solidarity with our partners. This is especially the case in these challenging times, as the collective strength of the euro area countries underpins our resolve to undertake the necessary measures to protect the integrity of both the euro area economy and euro currency, as well as our own economy.

I also want to reiterate the point I made in my opening address that the strategy which underpins this Bill is designed to safeguard the fundamental financial stability of the single currency area. This is an essential prerequisite to our own economic recovery and by extension to the protection of the standards of living we all enjoy. I welcome the fact that most of those who spoke from the Opposition benches support this Bill. During yesterday's debate a number of technical queries were raised by Deputies. Most of these can be addressed on Committee Stage but I will deal now with some of the substantive issues that were referred to during the debate.

I will first deal with the basic question of the financial implications of the measure. I explained yesterday that there are strong financial safeguards built into the entire process to ensure the Irish and European taxpayer are not financially disadvantaged by these arrangements. We have the full reassurance of the European Commission that member states' funding costs will be met in full. Adjustment mechanisms are included to ensure a rebalancing in favour of any member state that might incur higher funding costs than those being charged to Greece for the loan facility. Our overall contribution to the euro area loan facility is anticipated to be approximately €1.3 billion, subject to a precautionary upper limit of €1.5 billion. This will take the form of loans to be repaid as the Greek economy recovers and will not impact upon our general Government deficit position.

The legislation we have been debating will provide the statutory basis for our contribution to the agreed euro area financial support to Greece. Our assistance in the form of repayable loans will be centrally channelled through the European Commission as part of the agreed euro area package in conjunction with the International Monetary Fund, IMF. This loan facility comes with strong conditions attached and will require the Greek authorities to address their current fiscal and economic problems.

The Greek authorities have agreed to introduce a fiscal austerity programme with the aim of reducing the deficit to below 3% of GDP by 2014. Public expenditure reductions of €30 billion will be implemented over this period and, to reduce its debt-to-GDP ratio, Greece will need to maintain a primary surplus on its budget of at least 5% for the next decade. It will be subject to strict monitoring and continuous assessment by multilateral agencies as part of the conditions for the loans. By any measure, these are strict and demanding conditions and will be subject to ongoing monitoring and assessment.

Looking beyond our immediate difficulties, ECOFIN Ministers have decided to establish a European financial stabilisation mechanism with a total value of up to €500 billion funded by the EU and the euro area member states. This will be supplemented by extra funding from the IMF. The mechanism was devised in the context of the risk of contagion from Greece to other member states. It provides for financial support to member states in response to difficulties caused by exceptional circumstances, such as those being experienced by Greece. This will require separate domestic enabling legislation, giving the House an opportunity to discuss these issues in concrete form. The finalisation of all of the details of the stabilisation measure will occur on Friday at a meeting of the finance Ministers.

Together with this development, EU Finance Ministers have committed to ensuring fiscal sustainability and enhanced economic growth across all member states. Linked to this objective, the European Commission has presented various reform proposals to reinforce economic co-ordination, including ones to ensure that the budgetary policies of member states are consistent with the economic and financial stability of the euro area. These will form the basis for further discussion in conjunction with the task force being chaired by EU President Herman Van Rompuy. I will be attending the first meeting of the group this Friday.

I want to allay the stated fears of some Deputies. These proposals mark the beginning of discussions on these issues. They are designed to assist the member states to be better prepared for any future crises and, as such, should be welcomed. In common with proposals emanating from the European Commission, they are designed to develop ideas and stimulate debate. The proposed enhanced budgetary surveillance is designed to enhance dialogue in the euro group on such issues and is, of course, subject to the treaty provisions. Any proposals arising from this process will need to be agreed by the member states and, in this context, cannot be misconstrued as a loss or diminution of Irish sovereignty.

I profited very much from listening to the contributions of Deputies Bruton and Burton on this subject. I intend to study again their remarks in this context prior to my participation at Friday's meeting. A number of valid points were raised by both Deputies in respect of the general orientation of the eurozone and the question of the precise balance to be struck between the various competing interests in the formulation of monetary and economic policy at European level.

Deputy Bruton will appreciate that I do not want to underwrite the entirety of his contribution. Some views I agreed with, some views I am not permitted to agree with in public and some views I disagreed with, but I found it a stimulating contribution. I do not believe Deputy Burton heard my intervention in respect of Icarus. I was commending her on making a contribution on financial matters without referring to Anglo Irish Bank. In case she feels guilty for not referring to the subject in the course of her contribution, she could construe her reference to Icarus as a reference to Anglo Irish Bank. I would agree with her that that particular entity appeared to sail a little bit too close to the sun.

Friday's meeting is the beginning of a process. The points made by the principal spokespersons for the Opposition parties were correct, in that we must reflect carefully on our position in respect of these matters. It is clear that the existing mechanism did not prevent serious problems from emerging within the euro group. I am referring to the Stability and Growth Pact. Ireland is an interesting test case, as we complied with the pact and only entered into a deviation in the course of 2008. For the first decade of our membership of the eurozone, we were at all times in compliance with the limitations imposed by the Stability and Growth Pact. However, the pact of itself did not guarantee the stability of the eurozone where Ireland was concerned and did not prevent serious problems from emerging in Ireland. This will be my starting point in any position on which I elaborate in Europe. If the existing system was an inadequate system of surveillance in the context of the types of problem that emerged, we clearly need a more sustainable system.

The great difficulty with a more sustainable system relates to the House, which has a primary role under the Constitution in approving the Estimates and devising taxation policy. Nothing we agree with in a European context can dilute this position. It is a question of striking a balance between the need for a more intensive surveillance, one that will examine overall national policy in respect of the balance to be struck between borrowing, taxation and expenditure, and the precise discretion that must remain in this House. I am not referring to just a margin of appreciation, but a real power that must remain in the House and must form the basis of legitimate debate within it on how we order our priorities for expenditure and taxation and our general line of policy in terms of borrowing, subject to a necessary and indispensable European interest on the borrowing side.

These matters will be discussed at the conference, to which I am looking forward. As Deputies can see from my observations on it so far in the House, I am not showing a big hand at this stage. In the case of a smaller member state, it is unwise to anticipate a debate too much, but I will play an active part in those discussions and ensure that our interests are safeguarded and that the general European interest is promoted. As we can see from the Greek experience, a fiscal shock in one country can have severe and serious implications for other countries.

There is a unique feature here. Some Deputies drew contrasts between Greece and Ireland and other countries inside and outside the eurozone. In the Greek case, a crucial distinction was the falsification of raw data. This puts Greece in a unique position as against the other member states. Deputy Burton's point on the structural imbalances within particular European states is apt in terms of the discussion to be held at the conference. While Ireland does not necessarily suffer from structural imbalances in this context, other countries do and the Union will need a policy on the reconciliation of structural problems with the ambitious fiscal targets that seem to form such a part of the current discussion on the euro.

Séamus Kirk (Louth, Ceann Comhairle)
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I must ask the Minister to conclude.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I thank the Ceann Comhairle for allowing me some latitude. Any policy proposals arising from this process will need to be agreed by the member states and cannot be misconstrued as a loss of Irish sovereignty. We are examining other initiatives, including the question of the reform of rating agencies and financial markets and the establishment of a European rating agency. We are also examining proposals to ensure the financial sector will pay its share in the event of another financial sector crisis.

As our relations with our eurozone and EU partners have grown ever closer, our prospects as a nation have become more interlinked with those of our partners. This is about the stability of the eurozone. Here in Ireland, we have taken credible steps to address our own economic and budgetary problems. We are implementing our own fiscal consolidation and are sending a clear signal of intent. Through implementing the decisive expenditure control measures contained in the budget, we are demonstrating our resolve to continue along the path of restoring sustainability to the public finances.

As regards certain reported comments of Commissioner Rehn this morning on our general economic strategy, nothing in what he said was of particular application to Ireland. He was discussing member states in general. Ireland has been first out of the traps in implementing a fiscal correction. Clearly, all member states are being reviewed before the June Finance Council. Commissioner Rehn was simply drawing attention to the fact that Ireland is being reviewed in that context. Neither myself nor my Department has been approached about revising the targets this year, for example. The general sustainability of our current strategy will be examined, and rightly so.

Richard Bruton (Dublin North Central, Fine Gael)
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Has the arrangement for showing Anglo Irish Bank's contribution in the accounts been resolved with the European Commission?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The arrangement that was already announced has been resolved. There is no particular issue concerning that. The Commission is not using that as an argument for a revision of the Stability and Growth Pact.

Séamus Kirk (Louth, Ceann Comhairle)
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We can visit some of these areas on Committee Stage.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Without trespassing into Question Time, I will conclude by thanking Members of the Fine Gael and Labour parties for their support for the Bill, which is in the national interest and that of the eurozone, also. I look forward to the detailed debate we will be having on Committee Stage.

Séamus Kirk (Louth, Ceann Comhairle)
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That concludes the Second Stage debate on the Bill. The question is "That the Bill be now read a Second Time." Is that agreed?

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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No.

Séamus Kirk (Louth, Ceann Comhairle)
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Tá go maith. I will now put the question: "That the Bill be now Read a Second Time."

Arthur Morgan (Louth, Sinn Fein)
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Vótáil.

Séamus Kirk (Louth, Ceann Comhairle)
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Will the Deputies who are claiming a division please rise?

Séamus Kirk (Louth, Ceann Comhairle)
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As fewer than ten Members have risen, I declare the question carried. In accordance with Standing Order 70, the names of the Deputies dissenting will be recorded in the Journal of the Proceedings of the Dáil.