Clare Daly (Dublin North, Socialist Party)
Link to this: Individually | In context

I move:

"That Dáil Éireann:

notes that

- the Government intends to pay €1,250 million to unsecured Anglo Irish Bank bondholders on 25 January, 2012;

- these bondholders are anonymous speculators, many of whom bought Anglo Irish Bank bonds at between 50% and 80% discount and who stand to make huge profits if they are paid full face value for the bonds;

- the Government intends to make a payment of €3,100 million on a promissory note for the Anglo Irish Bank/Irish Nationwide Building Society (INBS) debt on 31 March, and that promissory note payments to the value of €3,100 million will be made every year until 2023, with further payments due after that date also;

- Anglo Irish Bank/INBS payments will reach at least €47,000 million by 2031, with future related borrowing and interest charges bringing the possible total cost of the Anglo Irish Bank bailout to approximately €85,000 million;

- the Government plans to raise up to €1,200 million per year by 2015 through household and water taxes, deepening the impoverishment of ordinary people – and especially the unemployed and low paid; and

- while payments to un-named bondholders are prioritised, the Government plans to cut thousands of jobs in the health service, to close hundreds of nursing home beds, to cut 3.5% from education spending over the next three years, and to cut €475 million from welfare spending this year; and

resolves that the Government:

- shall not make the Anglo Irish Bank bond payment on 25 January, 2012;

- shall not make any further payments to Anglo Irish Bank bondholders; and

- shall not pay the promissory notes for the Anglo Irish Bank/INBS debt on 31 March, 2012 and shall not make any such payments in the future."

I wish to share time with Deputies Collins, Healy, Mattie McGrath, Pringle and Donnelly.

I have moved this motion on behalf of the United Left Alliance and members of the Technical Group who support it. We are discussing this motion against the backdrop of the parents, students and teachers who had to take to the streets in their thousands last week against the cuts to DEIS schools; in the context of the almost 100 guidance counsellors who packed the Visitors' Gallery last week in opposition to the very short-term lunacy of the cutbacks in career guidance counselling at second level; against the backdrop of the €800 million in health cuts on top of a system already creaking under 12,000 health service job losses; and against the butchering of social welfare that has seen so many people suffering severe austerity every day. We have to discuss these payments against the backdrop of recent studies and surveys which revealed that half of families in this country are struggling to meet their ordinary household bills. Into that foray the Government is imposing a new household tax, a tax that will see pensioners and people in receipt of social welfare pay the same amount as a millionaire. This is a gateway tax, a new tax, which is not progressive; it does not deal with property or wealth but is a regressive tax on people's homes, the roof over their heads, which is hardly an asset and in many senses is a liability. It will see householders pay more than €1,000 per annum by 2014.

We have all this hardship and pain and for what? The answer the Government gives us is that it needs the money and we are in an economic crisis. There is no doubt that we are. The key questions that must be asked are why is that the case and how we will we get out of it. Ordinary people everywhere tell us it is galling that as this hardship and pain is imposed on them, we are preparing to hand over €1.25 billion, eight times the amount of the annual household tax, to unsecured Anglo Irish Bank bondholders. We are preparing to hand over €3.1 billion, more than the entire primary school education budget for the country, in promissory notes on foot of the Anglo Irish Bank situation at the end of March. These are moneys which were not part of any agreement and which will be paid over by a Government, whose parties stood before this electorate and promised they would share the burden and deal with the bondholders. Shame on the Minister of State and his colleagues in that regard.

I am glad at least this time around we have an opportunity to discuss the issues in regard to this tranche of our money that is to be handed over, unlike on the last occasion when the Government would not agree to change the Order of Business and allow the matter to be discussed. We lay down a challenge to every Deputy; they all have an opportunity to have their say and put forward their position on this matter. They must ask themselves, individually and collectively, will the payments of €1.25 billion and €3.1 billion to Anglo Irish Bank help or hinder us? We do not have to be geniuses or fortune tellers to know the answer to that question. It will be more of the same that has led to the problems we have now. We can categorically state that the payment of these moneys will have cataclysmic consequences for ordinary people in Ireland unless a halt is called and the demands of the motion are implemented, namely, that the Anglo Irish Bank moneys would not be paid and that the promissory notes payments would be suspended. We should remember this is not a payment of €3.1 billion this year, it is €3.1 billion for the next ten years and further billions for the next ten years after that. This is economics of the mad house - the payment of €30.6 billion in capital, which is 26% of our GDP. It is lunacy.

The Minister, Deputy Varadkar, said that if we do not pay this it would be like setting off a bomb, but a bomb for who? We very much agree with a community activist, Mr. John Bissett, who pointed out that this Government is constantly setting off bombs in the community, the impact of which is being felt by the poor and those on lower and middle incomes, the unemployed and pensioners. That is having much more devastating consequences than any bomb would have in this regard.

We acknowledge that the motion coincides with the launch of the Debt Justice Action, a coalition of NGOs, unions, solidarity groups and eminent individuals who are dedicated to popularising the arguments against the continued madness of these payments to Anglo Irish Bank. Likewise, a large number of high profile individuals and academics signed a letter last Saturday advocating that the Government abandon its course of austerity and bailouts. We want the Government to start listening to the groundswell and emerging counter consensus, of which the ULA is very happy to be a part, with regard to the disaster the Government has stood over in the same way as did its predecessors. We need to take on board the lessons of what happened in Latin America and other countries, namely, that these policies will result in ruin if we continue to pay illegal debts, a solution which is completely and utterly unworkable.

We must ask what will happen if we do not pay this money? The Minister, Deputy Varadkar, said the roof will fall on. Yet, in reality, he is saying that the Irish Government is a willing lap dog of the ECB, which is demanding that we pay a debt that is not ours in order to protect European banks. What will happen if we do not pay this money? The first answer commonly cited is that the ECB would cut off funding to our pillar banks. Let us examine that. That is not plausible as the pillar banks are being maintained to avoid contagion and it is clear that such a measure would provoke contagion if the ECB collapsed funding in that regard. Why would it take that action when it has been trying to avoid it since 2008? We are also told the measure would result in a loss of investor confidence. With Government bonds now rated as junk and given that we are not in the international market, that risk is not of any consequence. It would probably help us out given that we are being downgraded even when we are paying all the bills.

The other threat is that there would be retaliation by the troika. The promissory notes are not a condition of the bailout and would not directly affect the loan agreements. We would prefer to take that risk, which we believe is minimal, rather than accept the hard fact that unless the Government changes course and ceases paying over these moneys, we have the certainty that the pain and hardship being inflicted on ordinary people will continue. What is the reward for the bailout and austerity? Absolutely nothing. We have worse growth rates and debt levels than those predicted and unrelenting hardship.

The opportunity is being put before Members of the House tomorrow night to say "enough is enough". We have a chance to reverse this lunacy and make a stand for the betterment of all our citizens and to be a beacon for our colleagues throughout Europe.

Joan Collins (Dublin South Central, People Before Profit Alliance)
Link to this: Individually | In context

The €1.25 billion to be paid to financial speculators is nearly equal to the total amount being cut from the health and social protection budgets. In fact, there will be €25 million left over for the Minister, Deputy Quinn, in his review of the cuts in DEIS schools.

This Government is devastating our public health system which is already in crisis and people will die as a consequence. Instead of protecting the most vulnerable, they have been targeted. The most vulnerable children will be hit by DEIS cuts and at the same time we have this amoral lunacy to be repeated again in June when another €1 billion will be handed over to the former Anglo Irish Bank. No Government in its right mind would do that without good reasons. Leaving aside the fear of the Minister, Deputy Varadkar, that the troika will bomb Dublin if we do not behave, what are the good reasons? First, it is claimed that Irish banks will find it more difficult to borrow. Irish banks have not been able to borrow, unless from the ECB and the Central Bank, since 2008. The same applies to the argument about European banks. Interbank lending in the EU is frozen. It makes no difference whatsoever if this bond is not paid. It might affect the State's ability to borrow, but the State cannot borrow in the bond market. That is why we had the troika bailout. It will not affect our ability to go to the bond market in 2013 because there is not a snowball's hope in hell of re-entering the bond market next year. A second bailout is inevitable.

What does Deputy Varadkar's bomb consist of? Is it a threat by the people who lend the State or the banks money, namely the troika? If the troika, or the ECB, pulls the plug the result will be a default, the very thing the whole set-up is supposed to avoid. The bomb would not only go off in Dublin. It would explode in Frankfurt, Paris and other places across Europe and in the international markets.

There is, of course, a risk in standing up to the bullying of the troika and the ECB, but look at the risk we are taking now. The Government is destroying our domestic economy with austerity. It is condemning thousands of people to mass unemployment and emigration, destroying our public services and putting at risk whatever progress we have made towards becoming economically viable with, at least, the minimum standards of a civilised modern society, and for what? It is sticking to a programme that cannot work and will not work. The Government knows that, I know it, the IMF knows it and Standard & Poor's knows it. We should call a halt to this madness and not pay this bond.

I appeal to Labour Party Members, who pretend to protect the most vulnerable, to come into the Chamber and support the motion. I ask them not to propose an amendment but to vote for the motion and support the people of this nation against the austerity cuts that have been implemented over the last four years.

Séamus Healy (Tipperary South, Workers and Unemployed Action Group)
Link to this: Individually | In context

More and more people are coming to the view that austerity is not working. Even those who support the economic system we operate in are coming to that view and are expressing it forcefully. Before we came into the Chamber this evening the IMF - that bastion of the capitalist system - said there are very serious dangers in forcing countries to pay down debt too quickly. It also said there are serious dangers in prolonging the recession for decades. Across the board, voices are saying austerity is not working and other avenues, such as stimulating the economy, are important.

Money is flowing out of the country on a daily, indeed hourly, basis and the people are being ripped off. This is not something new. Throughout history we have had situations like this. This issue was faced by Michael Davitt when he founded the Irish National Land League and opposed rack-renting landlords. It was also faced by James Connolly, who wrote about it in The Re-Conquest of Ireland. In that pamphlet he pointed out that the Irish rich were collaborating with international financiers and others to support the ripping off of the Irish people. Even Éamon de Valera, when in government, found himself in the same position in relation to annuities. The country is being bled dry and we are faced with the same rip-off today as were those people throughout the years. We need leaders to stand up for the country and for its people.

The amount of money being taken out of the economy and out of the country is horrendous. Tomorrow, another €1.25 billion will be paid to unsecured speculators and Anglo Irish Bank bondholders, many of whom bought the bonds at knockdown prices and will make huge profits on that repayment. As much of half the repayment will be profit for these bondholders and speculators. The €3.1 billion to be paid in March of this year and for ten years and further until 2031 will amount to a minimum of about €47 billion. However, when everything is taken into account the actual amount will be in the region of €85 billion. These huge sums of money are being taken out of the Irish economy and are forcing austerity on Irish workers and families, particularly middle income and poor families while, as James Connolly said, the super-rich get away scot free and pay little or no tax - certainly not their fair share - and pay no wealth tax whatsoever.

The single biggest rise in Government spending between 2008 and 2010 was an increase from €2 billion to €4.9 billion in debt interest repayments. This figure will rise further, to €6.8 billion this year and to €10 billion in succeeding years. We believe money borrowed to cover the debts of private banks should not be paid. A considerable portion of the debt interest payment arises from this source, and this is interest alone. Additional capital repayments will make debt servicing a crushing burden for decades to come.

With regard to the promissory note liabilities undertaken by the State in relation to Anglo Irish Bank and Irish Nationwide Building Society, TASC, the progressive research group, has this to say:

If we assume a fairly benign 4.7% interest rate on Government borrowings after the country has exited the external financial assistance programme, we can estimate that the total cost of these notes between 2011 and 2031, including interest on the borrowing, will be €85 billion. Under this scenario, the annual cost would peak at over €5.3 billion in 2023 and there will be continuing debt interest costs on payments beyond 2031.

The transfer of this money out of the country and the payment of bondholders and speculators is creating huge austerity and a spiral of recession. Earlier tonight, the IMF again downgraded growth forecasts for the coming year. Irish households, middle-income and low-income families, low-paid workers and people on social welfare payments are paying through the nose for this recession, which they had absolutely no hand, act or part in creating.

Not alone must we stop this repayment of bonds, we must also ensure that the super-wealthy Irish, who own assets of €220 billion, are made to pay their fair share of taxation on those assets. We must have a wealth tax to support the Irish economy and Irish workers and their families.

I second the motion.

Mattie McGrath (Tipperary South, Independent)
Link to this: Individually | In context

I too am glad to speak to this motion. I compliment our colleagues in the United Left Alliance for putting forward this extensive and important motion at this vital time in our country's history.

I am glad the Minister of State, Deputy Brian Hayes, is here to debate the motion. He is a reasonable man and is working very hard on his brief. This morning, I listened to a debate between him and Deputy Stephen Donnelly on the "Today with Pat Kenny" radio show. From his comments, I could tell he understands this problem as much as the rest of us do. He said we are tied into an agreement made by the previous Government. I voted against that agreement even though I was an ex officio member of that Government. I knew it would be impossible for a country four times the size of Ireland to repay that kind of money. Any half-baked individual would have known that.

It was the last Government that insisted on the EU-IMF troika being brought in. I met representatives of the troika last week. As Deputy Healy mentioned, they downgraded Ireland's growth rates this week. When we met them, they were very bullish about growth rates. Some of my colleagues pointed out there was not a hope of those rates being achieved. It is nice for them to meet ordinary elected representatives sometimes. They should not meet Ministers and Government officials all the time. The same officials were there the night the bank guarantee was agreed. The same Professor Honohan is still the main man representing us out there in a voting capacity.

Why are the bad decisions that were made by the last Government being continued by this Government? The Minister of State, Deputy Brian Hayes, like the Taoiseach, the Tánaiste and all the others, made promises to the Irish people, who were aghast about what was happening. The people had a total distrust of the previous Government. They were outraged by what that Government was doing in their name.

I will admit that I voted in favour of the bank guarantee. The life was frightened out of me. The big line that was peddled was that if we did not do it, the credit unions would go bust because at least 50% of them had invested the money of ordinary local people in Anglo Irish Bank. I could not find out from the last Government how many credit unions, if any, would have been affected in that way. Nobody can find that out from this Government either. I have no doubt that one or two of them got carried away in the absence of sensible directors and invested money in Anglo Irish Bank. The other banks followed them.

It is a disgrace to visit this vista on the Irish people. It was a bigger disgrace to learn when we met the troika last week that this Government, like its predecessor, had led it to believe it had a mandate for this action. The last Government's mandate was fairly tired and spun out by the end. The people had lost trust in a depleted Government. I was a proud member of the main party in that Government for many years. I was born into it. I was disgusted. I was forced to leave it.

Many good people around the country are still angry and annoyed about the way they were sold out. What did our forefathers, including the people of 1916, James Connolly and others, fight for? Did they fight to be betrayed by bankers, by some politicians and by the regulators? We had regulators, but they were not doing their jobs. They got paid and they got pensions. They got rewarded. They are probably in other jobs now as well. Everybody knows it was a complete outrage.

Those who voted for this Government en masse are sorry now. What are they getting? The Tánaiste asked us a week ago to wear the green jersey. His Cabinet colleagues have taken the jerseys the last lads used to wear. They got them tailored so they fit nicely. They are pursuing the exact same policies even though they promised the people that things would be totally different. How do they think the people feel? We saw the results Fine Gael achieved in the presidential election and the Dublin West by-election. The people are horrified. They are turning out in great numbers at all kinds of public meetings throughout the country to voice their anger about austerity measures. They voted for the opposite.

I would like to refer to what the troika is being led to believe on a continuous basis by the Ministers and the over-paid officials who meet them. Officials in Germany and elsewhere in the EU are aghast and horrified when they hear about the wages our officials get, the hotels they stay in and the first-class flights they take. We have to get real. We have to stand up and wear the green jersey, rather than decimating what is left of our economy.

The mantra of the Labour Party is that needy and vulnerable people should be supported. Not many Labour Party Deputies are present this evening. When they were elected, they said they would save community employment schemes, DEIS schools, small schools, school transport, hospitals and nursing homes. The fear among the people is frightening. Since the administration of the medical card scheme was centralised in Dublin, nobody can get a medical card. It is disgraceful that so many files are being lost. Sick and vulnerable people are having to go through all kinds of anguish to shore up Anglo Irish Bank and Irish Nationwide. Those banks should be written off this earth.

The Minister, Deputy Varadkar, spoke about a "bomb" recently. We have had bombings in Dublin. I was in Dublin the day a bomb exploded. It was an outrageous word to use. The bombs will backfire on him. We did not get involved in world wars. We stayed out of them. It is awful to threaten people in such a way. The bomb will backfire on the Deputies opposite. We are being found out by other countries as well. Greece is getting great freedom because it is refusing to pay. The troika is telling us we are not like Greece. It thinks we are great because we are compliant. We are getting a tap on the shoulder for doing our best.

The troika was told that this Government has a mandate, but it knows different now. The Minister, Deputy Rabbitte, asked me last week how I got on with the troika. He used a condescending voice to suggest I had no business talking to the troika. I told the Minister he will know how we got on the next time he meets the troika. We told the troika a few truths. I am glad that a sizeable group of Independent Deputies were given a chance to meet the troika. I thank Deputy Catherine Murphy for fighting to ensure that meeting took place. We will meet the troika again.

I suggest the troika might have more respect for us than it had for the previous Government and this Government. The troika has been led astray by the lies of both Governments. It is not true to say we can pay this. We cannot pay it. We should not pay another penny. I am sure the Minister for Finance has already signed the cheque for the €1.2 billion that will be given to Anglo Irish Bank and Irish Nationwide tomorrow. It is a waste of money. It is a shame on the nation that it is happening. A bigger scandal is that a further €3.1 billion will be paid next month arising from promissory notes. Money is being shredded.

Paper trails of money were created to bail out people who lied to the then Minister for Finance, God rest him. They lied through their teeth to everybody at the time. They are still lying to the people. The banks - even the pillar banks - are not lending a bob to anybody. They are codding the people who are pumping money into them. When will we learn? When will the Government realise the futility of what it is doing? We need to stand with the people. The people will stand behind us. The people need to be given a choice. There needs to be a real referendum. The Government received a false mandate last year because it was given on the basis of false promises. I beg the Minister of State, Deputy Brian Hayes, to raise his voice. Government backbenchers should try to bring a small bit of common sense to this matter.

Thomas Pringle (Donegal South West, Independent)
Link to this: Individually | In context

I welcome the opportunity to speak on this Private Members' motion, which has been proposed by the United Left Alliance and is being supported by Independent members of the Technical Group. I would like to start with a quotation:

What legal or moral compulsion is on Ireland, however, to honour in full debt incurred by Irish banks when there was no State involvement in the arrangements? These loans were entered into freely by willing lenders and borrowers with absolutely no State participation. The interest rate charged represented the risk at the time and there never was a State liability. It is obscene that liability for these loans is now being transferred to the Irish taxpayer, in many respects to the poorest of the Irish taxpayers... What a disaster and an obscenity... The position has now become indefensible that the Irish taxpayer, even the poorest taxpayers, should be required to underpin the speculation of hedge fund investors. There must be transparent, open, negotiated burden sharing of bank debt.

Those words were spoken in this Chamber in December 2010 not by a member of the Technical Group, but by the current Minister for Finance, Deputy Noonan. What has happened since then? The Minister, Fine Gael and the Labour Party have morphed into Fianna Fáil since 25 February 2011. They are continuing the policies that had been adopted and were being pursued by Fianna Fáil prior to last year's election. We will see the outworking of those policies tomorrow when €1.25 billion is paid to the same hedge fund investors to whom the Minister referred in December 2010. It is even more galling that the bond which is being repaid was trading last year at a 60% discount. If the Government had gone into the market at that stage to buy them back, at least something laudable and positive would have been done about them. Instead, the Government sat back and waited and is now preparing to hand this money over to speculators who were betting, in the truest sense of the word, and are about to win big time tomorrow.

To add insult to injury, the Government intends to make a repayment of €3.1 billion arising from promissory notes in March. It has already been mentioned that €47 billion will be paid in that way by 2031. When the interest that will be paid on this is factored in, it is possible that up to €85 billion will be paid in the years ahead. When the money paid in this way goes into the Central Bank, Professor Patrick Honohan will press the "delete" button on his computer and that will be the end of that. The funds in question could be invested in the Irish economy in a way that would encourage job creation. If they were used as a stimulus, it would benefit everybody and put our people back to work. Just one year's payment arising from these promissory notes would pay for the provision of fibre broadband in nearly every house in the country. It would give every family in the country the ability to develop and grow. It would enable every business in the country to make the best use of the Internet and create jobs.

Every school should encourage students to be the best they can be so that we can build a knowledge economy for the future and look after the safety of everybody.

Instead, the Government will hand it into the Central Bank and watch it disappear and continue to pay through the nose to repay that money. We are facing into austerity forever. The Taoiseach will go to Brussels next week and sign up to a treaty that will put us into permanent austerity, a treaty that will hand over control of the Irish economy to the finance committee of the Bundestag. It is a treaty that will ensure we have to balance our budgets every single year and put us in permanent austerity. Already this year, we will see the devastation of rural schools, the devastation of DEIS schools, the removal of guidance counsellors from our secondary schools. We will see closure of nursing home beds in large numbers across the country, the destruction of our hospital services, including in Letterkenny General Hospital, forcing the most efficient hospital in the country to take further cuts. This is all in the name of paying back bondholders in Anglo Irish Bank, the most corrupt and defunct bank ever in the history of the world. We are doing this because the IMF, the ECB and the so-called troika, are telling us that we have to do so.

Yet, the Government will continue to attack low and middle income earners, forcing them to pay the household charge, septic tank charges and water charges over the coming years. In a few years, people will pay on average €1,300 per year, between water charges and property taxes, all so that the Government can pay back €85 billion over the next 20 years. It is a crying shame. The Government should go to Europe and to the troika and say we will not do this. At the very least, it should invoke the clause to delay the repayment of the promissory notes. However, it will not do this; instead it will continue to try to be the best boys in the class, continue to get the pat on the head from the troika when it visits every three months and forget about the Irish people and force us into permanent austerity and into permanent emigration and oversee the destruction of services. This is a shame on this Government. It should don the green jersey, stand up for the Irish people and not kowtow to the troika and to the defunct Anglo Irish Bank.

Stephen Donnelly (Wicklow, Independent)
Link to this: Individually | In context

The motion before the House calls on the Government not to pay tomorrow the Anglo Irish Bank bond of €1.25 billion and not to pay the promissory note of €3.1 billion at the end of March.

I will deal briefly with the issue of the bondholders. We all know that this €1.25 billion will go to anonymous holders of Anglo Irish Bank bonds, many of whom are speculators and who are set to make a probable hundreds of millions of euro in windfall profits tomorrow. They may have bought at 50% discount or less.

We know it is anonymous because I submitted questions to the Minister for Finance, Deputy Noonan, last week, asking if he knew their identities and if not, what steps had he taken to find out who they are. We should at least know to whom we are paying this money. His reply to my question stated that he did not know who they were and that IBRC had not tried to find out. This is not acceptable, particularly when the Minister, as an opposition spokesperson, informed the then Minister, Mr. Brian Lenihan, of the two websites which contained this information as to the identities of the bondholders.

I accept that the Government does not wish to pay this money, as do none of us. The Government is making a judgment call and deciding that on balance this is the lesser of two evils. There is a link to the promissory notes. The Government has decided to pay and to keep the ECB happy and therefore it hopes to get a better deal on the promissory notes.

If we can secure a massive write-down in the promissory notes, then I would accept that paying the bond tomorrow is probably the lesser of two evils and that it is probably worth it. My concern is that the Minister will say that we still have to pay all the money and on time but we can now borrow the money at a lower rate of interest. That would not be worth it. I advise that the Government should pause the payment of the bond, find out who are the owners of these bonds and take a few lessons from Greece but not as regards the state of its economy. The Minister can say that nobody wants Greece here but I do not want us to be in that situation either. However, what we could learn from Greece is that to play hardball and engage in brinksmanship in these negotiations does appear to pay dividends. So far, Ireland has had very little in terms of restructuring of interest rates and so forth.

However, the opportunity for major debt restructuring is nearly gone. The Fianna Fáil Government paid out a vast amount of this money to the unguaranteed bondholders and unfortunately, the current Government paid out a whole lot more last year and it will pay €1.25 billion tomorrow and there will be very little left. Accepting this is the reality, the opportunity moves to the promissory notes.

The promissory notes are a technical instrument. The Central Bank of Ireland created €70 billion out of nothing. It does what central banks can do, which is, it made up money. It deposited tens of billions of euro into an Anglo Irish Bank reserve account which the Central Bank held and which it regarded as a capitalisation. What the Irish banks have been doing over the past year is paying that money back to the Central Bank and it has been making that money disappear. To put this in context, between February and December of last year, the Central Bank was repaid €26 billion. This is more than the entire recapitalisation from the BlackRock stress test. If one follows the money, the Irish people borrowed all the money for the recapitalisation last year, we put it into the banking system which gave it to the Central Bank, and the Central Bank made it disappear. The Irish people were left with a debt of €26 billion which they are borrowing at a very high interest rate. That is what happened.

The Irish Bank Resolution Corporation, IBRC, the former Anglo Irish Bank and Irish Nationwide, currently owes the Central Bank a total of €42 billion in emergency liquidity assistance. In March, we will pay €3.1 billion, mainly to IBRC, which will hand that money directly to the Governor of the Central Bank, Professor Patrick Honohan and he will tear up the cheque. We will borrow it and pay interest on it and then it will increase our national debt and then the money will be torn up. We are sucking €3.1 billion, plus interest, out of the system. At reasonable market assumptions, €31 billion will cost us about €48 billion to borrow, in current cash terms. This is a vast amount of money.

The best possible outcome would be to get agreement that the Central Bank can say it invented the money and the €44 billion is gone. I am not saying the Government could negotiate this in the next few weeks but the best case would be for the Governor of the Central Bank to say he accepts €44 billion as a write-down that the bank is adjusting its own balance sheet and the Central Bank is now fully capitalised as a central bank. That can happen and if we controlled our own currency we would be doing something like that. This is what the Fed is doing and what the Bank of England is doing. If we were to do this, not only would we not have to pay the €31 billion, for which we are borrowing €48 billion, we could pull a great deal of our money back out of IBRC. Not including the promissory notes, the IBRC's assets exceed its liabilities to everybody except the Central Bank, by about €12 billion. IBRC could use its real assets, pay back everybody and still have €12 billion in assets, which the State could take back. We would save ourselves the €48 billion we need to borrow the €38 billion, plus €12 billion from IBRC. Just doing that would write down future general government debt by about €60 billion. This would get us very close to being able to exit an IMF mission. We cannot over-emphasise the potential opportunity which the promissory notes and the emergency liquidity assistance, the money the Central Bank printed and put into our banking system, is worth.

The next best case, which is another realistic negotiating option for this Government, is for the Irish Central Bank to say that €44 billion is still owed from the €70 billion but we will not talk about it for ten years. For the monetary purists in the ECB, there would be an increase in the monetary supply and it will be decreased again, albeit in ten years. We would not borrow the €48 billion we need now and inflation would do what it does, bringing down the total amount owed by 2.5% or 3.5% per year.

What I do not see as acceptable is a Government position that will still see the €31 billion owed, with Mr. Patrick Honohan tearing up all those cheques, and the money borrowed from the European Stability Mechanism or elsewhere at a low interest rate. That would not be enough. I urge the Government to be very bold with the opportunity that the emergency liquidity assistance from our Central Bank and these promissory notes give us.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"recognises that:

— the Government inherited a situation in relation to the banking sector and specifically in relation to Anglo Irish Bank and Irish Nationwide Building Society which resulted directly from the decisions taken by the previous Government;

— decisions taken by the previous Government included the decision to guarantee the debts of the covered institutions and this decision and consequential decisions taken by the previous Government have effectively transferred the liability for private bank debt to the taxpayers of this State and contributed to the need for the EU/IMF bailout; and

— the Irish Bank Resolution Corporation will fulfil its legal obligations to redeem €1.25 billion (gross) in senior unguaranteed bonds;

acknowledges that:

— the Government is working with our partners in the EU and IMF to address the situation and is actively involved in discussions with a view to reducing the overall cost to the State including the cost of the promissory note;

— the Government should not act unilaterally in relation to the repayment of unguaranteed senior debt and should have regard to the views of our partners who are providing the requisite funding for the State and for the financial institutions;

— the implications of not making such payments are such that the State's ability to fund the provision of services, pay wages etc. could be put at risk; and

— the Government must broaden the tax base and that the introduction of the household charge and the proposed introduction of water charges are part of this process;

affirms that the approach being pursued by the Government is, given the situation the Government has been presented with, the optimum approach which will produce the best medium to long-term outcome for the State and the Irish taxpayer; and

encourages the Government to press ahead with discussions and negotiations around a range of support measures that recognise the contribution made by the State in support of the stability of the Eurozone."

During the first years of this century, Ireland lost its way. Many people in positions of responsibility decided to take a walk on the wild side. Reckless borrowing by developers, crazy lending by bankers and lax to non-existent supervision by regulators all contributed to the toxic brew. It was party time. The excesses of the crazy years were celebrated by the media and cheered on by Ministers. When the German Ambassador questioned Irish payscales he was lambasted in the media. When the European Commission raised concerns about Irish Government spending, the former Minister of Finance, Charlie McCreevy, responded in his usual dismissive, know-all way by saying "when we have it, we spend it". As the property bubble accelerated out of control, a crash was inevitable. That crash has caused immense damage to the country and real suffering and hardship to many thousands of people.

After the party came the hangover. This Government was elected with a clear mandate to clear up the mess and progress has been made. The country is no longer in the accident and emergency ward.

Mattie McGrath (Tipperary South, Independent)
Link to this: Individually | In context

It is in the morgue.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

We are making real progress on returning this country to growth. The Government is sorting out the mess in a calm, considered way and we are not indulging in theatrics or dramatic gestures. Our ambitions and targets are clear and straightforward. We want to bring a better balance into Government finances and we continue to negotiate for more favourable terms from our external funding partners. We are keeping a focus on restoring growth and encouraging job creation. We are engaged in a major programme of reform and change, all with the intention of restoring the economy to an even keel and the country to a sustainable development path. Our primary objective is the creation of jobs.

The initial response of the previous Government to the banking crisis in September 2008 was to provide a full unconditional guarantee for bank debt of the covered institutions. In effect, the Government guaranteed approximately €375 billion of private bank debt and transferred, in that single decision, the liability for private bank debt to the taxpayers of the State. Subsequent to the provision of the guarantee, decisions taken by the Government in regard to the banking sector were clearly driven by the need to ensure that there was no possibility of a "call" on the guarantee. Effectively, a firm policy was established that no bank or financial institution in the State would be allowed to fail. This policy was underwritten by a guarantee provided by the State. Decisions to capitalise the banks, to nationalise Anglo Irish Bank, Irish Nationwide Building Society, INBS, and the Educational Building Society, EBS, all flow directly from and reflect the underlying need to prevent, at all costs, a call on the guarantee. Further, the exposure of the State both in terms of direct and indirect support for the banking system was a major factor in the necessity for the EU and IMF bailout. It goes without saying that the collapse of the banking sector has been at the heart of Ireland's economic difficulties. In repairing the banking system, the overarching challenge for the current Government has been to restructure the sector.

Significant progress has been achieved in recent months. We have formed the pillar banks, merging EBS with AIB, and combining Anglo Irish Bank with the INBS to form the Irish Bank Resolution Corporation, IBRC, a bank that has no role to play in the future of the Irish banking landscape. We have recapitalised the banking sector and strengthened the governance framework of the banks. At this stage, it is fair to say there is a growing consensus that the recapitalisation decision established by the Government in March 2011 is succeeding.

In terms of boosting resilience, a final €24 billion recapitalisation of the banking sector took place following the prudential capital assessment review, PCAR, process and earlier steps taken by the State during 2009 and 2010. The PCAR process is regarded as robust and comprehensive, a point underlined by the outcome of the European banking authority stress tests announced recently. With the additional PCAR capital, Irish banks are now among the best capitalised banks anywhere in the world. It is worth highlighting that approximately one third of this capital injection was sourced from the private sector through burden sharing with subordinated bondholders in the various banks, anticipated asset sales and the injection of private capital into one major bank. The contribution of the private sector is larger than originally envisaged and I view this as a clear vote of confidence in the Irish banking system and the future of the Irish economy.

Since 2008, many Irish businesses and individuals have taken money out of Irish banks and other Irish financial institutions, and now is the time to bring that money back. The banks, too, have a big job to do in reassuring their customers and growing their deposit base, and we have seen positive deposit flows for the Irish banks in the last quarter of 2011, a very positive development.

At the same time, the programme of asset deleveraging is well under way. Combined, the two pillar banks sold €15 billion of assets at significantly better prices than anticipated in the PCAR and prudential liquidity assessment review, PLAR, 2011 exercise. As it is sometimes overlooked, I want to stress that more than 80% of the assets to be disposed of by the Irish banking system by the end of 2013 are located outside of Ireland.

The merger of Anglo Irish Bank and the Irish Nationwide Building Society into IBRC has taken place, the disposal of deposit books has been completed and the work-out of the remaining loan books is progressing. All of these measures are helping to continue the process of rebuilding international investor confidence in the Irish banking sector and we are confident in and committed to the bank restructuring plans.

The motion from the Opposition asks the House to agree that the Government shall not make the IBRC bond payment due on 25 January 2012, that the Government make no further payments to IBRC bondholders and that the payment on the promissory note of €3.06 billion should not be made.

Joe Higgins (Dublin West, Socialist Party)
Link to this: Individually | In context

Hear, hear.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

Further, the motion directly relates the repayment of maturing bonds and payments on the promissory notes to the introduction of the household charge and the proposed introduction of water charges and the reduction of expenditure in health and education.

Joe Higgins (Dublin West, Socialist Party)
Link to this: Individually | In context

Correct.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

There are a number of distinct issues in this motion, including the promissory notes, payment to unguaranteed senior bondholders and reductions in Government spending. The promissory notes were a mechanism of providing capital to the former Anglo Irish Bank and Irish Nationwide Building Society institutions without having to pay the cash up front. The previous Government effectively issued an IOU in the form of a promissory note. As it stands, the State has a debt to these institutions and it also has an associated interest charge. This interest charge was set by reference to Government yields at the date of issue. As currently structured, the total cost of the promissory notes out to 2031 is approximately €47.8 billion. The reality for the Government at that time was that having committed to guarantee the bank's debts unconditionally, it had no option but to provide capital to those distressed institutions and to commit to maintaining the institutions as going concerns.

Dara Murphy (Cork North Central, Fine Gael)
Link to this: Individually | In context

I welcome the opportunity to speak on the Government's counter motion to yet another Opposition motion of this type. We are debating one of the most unwelcome realities of the support programme into which we have been forced. The ambition on all sides is that the programme will terminate at the end of 2013, which is less than 24 months away.

At a time when the issue of money leaving the State is being debated, it is vital that we also discuss the total quantum of money entering the country. The EU and IMF are providing us with significant levels of assistance. Most of the EU's €45 billion is being used to pay for public services. The ECB's €110 billion provides liquidity for Irish banks and, consequently, protects the families and deposits of Irish citizens and businesses. It is fanciful and irresponsible to discuss the redemption of bonds without taking into account the broader Irish position. It is equally simplistic to argue hypothetical situations, for example, having a Central Bank of our own again. This is not the case. We do not have such control over fiscal policy.

Stephen Donnelly (Wicklow, Independent)
Link to this: Individually | In context

We do, actually.

Dara Murphy (Cork North Central, Fine Gael)
Link to this: Individually | In context

The Government has been here before. Were we to believe the Opposition, there was to have been no reduction in interest rates. A significant reduction followed, but the negotiations undertaken by the Government were deemed unworthy of credit. Our success will secure €10 billion in savings for the Exchequer. No matter where one wishes to lay the credit for this reduction, one fact is irrefutable - the interest rate is lower because Ireland is at a significantly lesser risk of default.

We were also told by many that our economy was incapable of growth. Wrong again. Modest growth was achieved in year one of the Government's term for the first time in five years. Ireland will achieve growth again in 2012 and beyond.

Recovery will only be delivered by stability, which can only come from agreement, not from unilateral acts that undermine every economy in the world in these fragile times. It is vital to remember that Ireland is one of the most open economies in the world and has a significant trade surplus. It will benefit far more than most from a global economic recovery. We are a nation with integrity. Until the last Fianna Fáil-led Government damaged our international reputation, our nation had always proven its ability to negotiate the best for its people.

The greatest emphasis must be put on the acceptance by everyone that the Government has not completed its negotiations. The debt burden we face is too high. The issue of the promissory notes is unquestionably at the forefront of the minds of the Minister for Finance, the Taoiseach and every other Government member. The prize for the Irish people is not to win a battle and lose a war or to be regarded as the good boys of Europe. Selfishly, it is to guarantee for our farmers, food producers, business people and workforce that we stand ready to benefit from a global economic recovery, that we pay our creditors, that we be a good country to do business with and that we be willing and able to retake our place as one of the finest small economies in the world. This is the Government's ambition.

Peter Mathews (Dublin South, Fine Gael)
Link to this: Individually | In context

It is impossible in five minutes to deal with all of the matters that arise, but I will pick up on some of the comments that have been made. We are a House of 166 Members and I respect every contribution. I particularly respect the contributions of members of the Technical Group. Deputy Donnelly gave us what amounted to a tutorial on the mechanics of balance sheet financing and structuring. A great deal of nonsense has been talked on the airwaves by so-called experts, advisers and so on who do not have a clue. Deputy Donnelly is right, in that the promissory notes are a ghost asset of promises on Anglo Irish Bank's balance sheet. The corresponding credit financing comes from the Central Bank and the European Central Bank, as the depositors have all gone.

It is possible to do financial engineering, but before one does so or engages in technical mathematics in these situations, one agrees in principle what is occurring. For example, if one engages in an investment project, one decides its monetary cost and from where it will be funded. Banking is not weird and wonderful. It is quite straightforward. In September 2010, Anglo Irish Bank's balance sheet had loan assets of €72 billion, of which €30 billion owed to the make believe bubble. The value of those assets needed to be reduced to €42 billion and the reduced assets were shipped over to NAMA, leaving a hole in its balance sheet to be filled by pro-notes. As Deputy Donnelly described, the amount of money created by the Central Bank must be paid down in little bits and the pro-notes are cashed and repaid.

All of this can be changed. During our Topical Issue debate last Thursday, I asked people to do the following - pause, suspend, think, discuss, negotiate, argue and explain. Europe has been caught up in financial mayhem and volatility. Given that we have been bundled and straitjacketed into the programme, parked safely and are addressing fiscal imbalances, we are not the main problem. We have not even got Europe's attention yet. I know this. In May, I dared to write an article in the Sunday Independent suggesting that all of the margin on the programme loans from the troika should be eliminated, as it did not make sense. My suggestion was considered to be nearly out of bounds. The article was translated for Financial Times Deutschland so that people could begin to understand the principle involved.

On 30 September 2010, loan losses were only beginning to be acknowledged at a level of €50 billion, which was far too short. Even today, we are acknowledging losses of €74 billion following the BlackRock prudential capital assessment review, PCAR. It is my professional opinion, as someone who has had the benefit of working in the industry since the beginning of the early 1980s and being involved in the loan work-outs and damage limitation exercises, that the final figure will be closer to €100 billion. The reason the banks have not started to do write-downs and to collect debt at write-down levels is that they are trying to preserve the capitalisation they received last March for the next three years. Instead of getting on with it and accepting reality, they are engaged in delaying tactics. These are the issues we must explain to our partners in Germany and to Mr. Masuch of the ECB who was in Ireland last week. We must set out clearly the provenance of the whole situation.

I do not want to single out specific speakers among the various excellent contributions connecting the pain and hardship being experienced by people in this State to what went on in the banks, but Deputy Donnelly's contribution was particularly enlightening. Deputy Mac Lochlainn, meanwhile, gave the correct historical analysis of the overload of debt in the developed world and the eurozone. That is the core of the problem. There is a rehypothecation scandal which only surfaced last December and which has not yet been fully absorbed and digested. I urge Members to look up MF Global and the great Wall Street rehypothecation scandal on Google.

What the Government should do now is press the pause button. Last March, when the capitalisation of the banks took place, there should instead have been a creditor recapitalisation. I am not trying to detract from the honest efforts of Members on all sides of the House, including my colleagues in government, but there are certain indisputable facts which cannot be ignored. The credit default swap market is driving the fear that is abroad. Markets know greed and fear, that is all; there is no in-between. We must acknowledge that and ensure everything is up for discussion in Brussels.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I welcome the opportunity to contribute to this debate. The motion before us deals with issues that are of great interest to the public. People might be somewhat bored talking about banks, debts, promissory notes and Anglo Irish Bank, but they realise that these issues are affecting us deeply and they recognise the repercussions of what has gone before. The motion calls on the Government not to pay the €1.25 billion owed to senior unsecured bondholders of Anglo Irish Bank, a payment which is due to go through at around noon tomorrow. None of these anonymous bondholders can be named in the House. By the time we vote on this motion tomorrow night, the payment will already have been made.

Dara Murphy (Cork North Central, Fine Gael)
Link to this: Individually | In context

The proposers of the motion could have put if down last week.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

Different parties and groups are entitled to put forward motions in Private Members' time on different weeks.

The motion goes on to note the Government's intention to make a payment of €3.1 billion, on 31 March 2012, in respect of a promissory note for the debt of Anglo Irish Bank and the Irish Nationwide Building Society. It further notes that promissory note payments to the value of €3.1 billion will be made each year until 2023, after which further payments will be due. This, the motion observes, equates to a total payment of at least €47 billion by 2031. The motion concludes with the demand that the promissory notes due on 31 March 2012, and any payments arising in the future, not be made. That is the direction in which the debate is moving. Anglo Irish Bank has caused enormous legacy problems. As an institution, however, it has become less relevant. What is relevant is how we as a national Parliament deal with the legacy of the bank.

There is fantastic scope for the Government to make major strides in this regard. Its amendment to the motion states that it is working with its partners in the EU and IMF to address the situation. I understand the Minister for Finance, Deputy Michael Noonan, was in Brussels today. In truth, when a debate like this arises, the Minister is always very good at getting on the evening news. We are sure to see him coming out of a meeting and talking about the serious discussions in which he is engaged. This serves to take attention away from what is happening in the Chamber tonight. By tomorrow or the next day, when this motion is out of the way, those serious discussions will be revealed to have been a puff of smoke.

The Government has a track record in this regard. If it were as good at negotiating matters relating to the financial affairs of the State as it is at the public relations feat of giving the impression of doing something, we would be home and dry by now. Unfortunately, the public relations exercise comes before the substance in these matters. The Minister is making these claims on the evening news because this motion is being debated in the House and is also likely to feature in news reports. The media are assisting him in ensuring the real issues are not being dealt with.

The Government amendment tells us that the Irish Bank Resolution Corporation will "fulfil its obligation" to redeem €1.125 billion in senior unguaranteed bonds. The Government is thereby placing on the record its undertaking that these bonds will be honoured in full by it. Their value on the market is now their full par value on the basis of this guarantee in the name of the Minister for Finance, by way of this amendment in the House of Parliament. The amendment further states that we must take on board the views of our partners who are "providing the requisite funding for the State and for the financial institutions". We cannot, we are told, act unilaterally. Nobody has ever suggested that we should act unilaterally. Nobody has argued for an unstructured default. We are all in favour of negotiation and discussion. If the electronic payment was not made tomorrow, that would constitute a default. However, if it were planned and discussed and people were ready for it and could adjust for it, it would not be termed a default.

The Fianna Fáil Party will vote against the Government amendment on the basis of this exhortation to have regard to our partners "providing the requisite funding for the State and for the financial institutions". I have news for the Government - that is already done. We have signed the deal with the IMF and the EU. For the years 2011 to 2013, there is total financing of €88 billion available to the State, of which €21 billion comes primarily from the National Pensions Reserve Fund and €67 billion from the EU, ECB and IMF, divided into approximately equal thirds. There are some bilateral arrangements with the United Kingdom and others. For the Government to say that we should have regard to our partners ignores the fact that we are honouring the loan agreement. In fact, we have been told we are top of the class in this regard. The repercussions of taking action as set out in the Technical Group's motion are not what are being claimed by the Government. We have our financing in place for the next several years and we do not have to return to the bond markets in the short term. As such, we do not have to concern ourselves unduly about our rating. To reiterate, we will not be borrowing in the primary bond market in the next two years.

The Government amendment claims that the "implications of not making such payments are such that the State's ability to fund the provision of services, pay wages etc. could be put at the risk". This is the double think we have seen before. This payment is either linked to current budgetary activities or it is not. The amendment is saying that if we cause a problem in this regard we will not have the funds to pay for services. However, the funding for the State for the next two years is fully signed, sealed and delivered, and we are honouring our obligations in that regard. The Government should not be issuing threats that wages will go unpaid if this payment is withheld. That claim is false.

I saw an interview with the Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, on television on Sunday night in which he made the confusing claim that these promissory notes are not being repaid with taxpayers' money. I do not know where he thinks the money is coming from. Perhaps there is a tree out in Dublin West which grows money, in which case Deputy Joe Higgins might like to know about it. The Minister, Deputy Varadkar, seems to believe taxpayers will not be responsible for these payments. Moreover, he said they are nothing to do with the current budgetary deficit and cuts in front line services. I am pleased the Minister for Finance has overruled him by clearly linking, in this amendment, the payment of promissory notes to the need to pay wages and services. That is a more accurate reflection of the situation. The €1.25 billion that will be paid tomorrow is coming from Anglo Irish Bank, but where did that bank get its money if not from the taxpayer?

Dara Murphy (Cork North Central, Fine Gael)
Link to this: Individually | In context

That is the legacy of the Fianna Fáil Party.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I suspect the Minister, Deputy Varadkar, did not mean to mislead people in claiming the money is not coming from the taxpayer but that he simply does not understand.

Dara Murphy (Cork North Central, Fine Gael)
Link to this: Individually | In context

The Deputy's party signed the deal but its Members intend to vote against the Government amendment tomorrow.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The Government gave the promissory note for approximately €31 billion to Anglo Irish Bank last March. The latter took the note to the Central Bank in exchange for cash, which it has used to put into its deposits in order to replace the funding which fled. I agree with the final part of the motion which states the Government is committed to paying €3.1 billion per annum for the next number of years to Anglo Irish Bank in order that it can repay the Central Bank for the loan it drew down on the basis of the promissory note issued. I acknowledge that Fianna Fáil supported in general the €3.8 billion in cuts announced in the budget. Ministers have commented that this issue is not related to the budget. However, Irish taxpayers must fund the payment of that €3.1 billion to Anglo Irish Bank on 31 March 2012 and will have to do likewise each year up to 2023, when the amount will drop to approximately €1 billion per annum, giving a total of €47 billion.

Dara Murphy (Cork North Central, Fine Gael)
Link to this: Individually | In context

The legacy of Fianna Fáil.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The Minister, Deputy Noonan, when in Brussels today, should have pressed President Draghi of the European Central Bank for a clear timetable to reduce that debt in terms of overall European Central Bank requirements. There is a compelling case for deployment by the European Union of a new funding stream to ease the burden of debt on the Irish taxpayer. The ESF was not in place when the Fianna Fáil-led Government agreed to the EU-IMF programme. Other countries can now draw on that facility. The interest rate being charged on the promissory notes is 5.8% increasing to 8.2% from 2013.

This matter was discussed recently by the Committee of Public Accounts. That committee received an important letter from the chief executive of the National Treasury Management Agency, Mr. John Corrigan. In summary, Mr. Corrigan suggests that, as an alternative to the promissory notes system, we should draw down cash from the ESF and, rather than paying the 5% interest rate we are currently paying, we should try to obtain that funding at the rate of 1%, which is the rate being given to Ireland by the European Central Bank. This would reduce interest costs. Funding would then come from the European Central Bank to the Irish Central Bank, which would result in a massive cash saving to the Irish Exchequer and taxpayers.

Why should Irish citizens bail out European banks? The reason Chancellor Merkel, President Sarkozy and President Draghi want to protect the European Central Bank and the euro is to protect the big German, French, Spanish, Italian and UK banks. The Irish taxpayer is not paying for Anglo Irish Bank. We are paying so the German banks do not have to take a hit. That is what this is about. It is no wonder the troika thinks we are great people and that they give us a gold star each time they come here. We are doing what no other country in the world is prepared to do, namely, impose hardship on our citizens because of European banks.

Michael Kitt (Galway East, Fianna Fail)
Link to this: Individually | In context

Deputy Fleming has two minutes remaining.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

This debate must move on.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

As must Fianna Fáil.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

We have moved on. As I have stated on many occasions in this House, having 17 central banks in the euro area and 27 in the EU is a nonsense. There should be only one central bank, and it should take over the Irish debt. The removal of this debt from the backs of Irish taxpayers should be the focus of the Government in negotiations on this issue. This debt is being carried by the Irish Central Bank, which is only an off-shoot branch of the European Central Bank, of which our governor is a member. On the table of any negotiations in regard to fiscal compact arrangements should be that the European Central Bank take over the debts which existed prior to the putting in place of the ESF. Had the ESF been in place earlier, we would not have had to go down the expensive promissory note route. There is a compelling case for the Minister to go to Brussels prior to the due date of the March payment to negotiate that the European Central Bank take over these debts at a maximum 1% interest rate or that it absorb them in terms of any new arrangement to be entered into in Europe.

Many people - I am sure other Members have said this - have made a return of up to 100% on these bonds, which were trading at 50% of their euro value more than a year ago. Following the statement by the Minister, Deputy Noonan, that we would guarantee these loans and pay them in full, the bonds increased to par value. Had the Minister, Deputy Noonan, been clever, the NTMA could have purchased them on the secondary market at 50% value, thus saving us half the amount we are currently paying out. The reason I say that the balance due to the Central Bank is now the big issue is, there is now only €1.8 billion of senior unsecured bondholders remaining after this payment which I expect will be made tomorrow.

I welcome the statement in the motion that the Government not pay the promissory notes for Anglo Irish Bank-Irish Nationwide Building Society debt on 31 March. The Government needs urgently to renegotiate this matter in Brussels, Frankfurt and so on. Everyone who has met the troika knows of the IMF, which has an American background. It believes in the capitalist system and that if a bank is a dead duck, it should be allowed to fail. It is far more sympathetic than are people in Europe about some of these bondholders taking a hit in respect of Anglo Irish Bank. I would welcome further discussion on this issue.

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context

Cuirim fáilte roimh an rún atá os comhair na Dála ón nGrúpa Teicniúil. Tá sé fíor-thábhachtach go bhfuil an cheist seo, a bhaineann le Banc Angla-Éireannach, á phlé againn.

I welcome the opportunity to discuss this motion. I am conscious Sinn Féin brought a similar motion before the House last year. It is opportune, in particular on the eve of this Government's handing over of €1.25 billion of taxpayers' money to unsecured, unguaranteed bondholders. Much attention is being paid to what will happen tomorrow. Let us also be conscious of what happened yesterday when more than €30.6 million was paid to unguaranteed bondholders. Next week, €20 million will be paid out and in June a further €500 million will be paid. This is not a stand-alone issue. This is a repeated transfer of taxpayers' money to speculators.

Despite repeated attempts by my party and others to have the identity of these bondholders revealed, the Government continues to shield them. We know that the day one list has been sought. I call on the Government and on the Minister for Finance in particular to publish the day one list for Anglo Irish Bank, which lists the names of those who bought bonds on the day the bank was nationalised. It is likely they are private speculators, investors and hedge funds who were betting on the financial markets. It is also highly likely that they bought these bonds at a dramatically reduced value. The bondholder who will receive the €1.25 billion will get a massive windfall from the Irish people to the tune of millions of euro.

I am not surprised at the number of empty benches on the Government side. Fine Gael and Labour Party Deputies must be deeply embarrassed by their Government's actions. After all, it was only a few short weeks ago that the Government wrenched €3.8 billion from the economy in the form of spending cuts and taxes. The €1.25 billion due to be paid tomorrow equates to almost two and a half times the total cuts in social welfare in 2012, more than twice the amount of cuts to the health service announced in the 2012 budget, more than eight times the total to be raised from the household charge this year, and almost ten times the amount to be cut from the education budget in 2012.

The Minister for Transport, Tourism and Sport, Deputy Varadkar, has been mentioned a number of times in this debate. He told us on Sunday that not to pay these Anglo Irish Bank bonds would be akin to setting off a bomb in the middle of Dublin. That horse has already bolted. The December budget of this Government blew a hole so big in the finances of low and middle income families that it will take years for them to recover. All the while this Government is fleecing the taxpayer and dismantling the public services, it is handing over billions of euro to Anglo Irish Bank bondholders.

Worse than that is the national scandal that is the Anglo Irish Bank promissory note. This is an issue I have been raising in this House since early last year. Despite promises to break with the failed banking policy that was pursued by Fianna Fail and the Green Party, Fine Gael and the Labour Party have signed up to it lock, stock and barrel. Under the Anglo Irish Bank promissory note, payments will transfer from the Irish people to that bank up to 31 March 2031.

The first payment of €3.1 billion was made on 31 March last year and the Government will again make a payment of €3.1 billion in March of this year and of every year for a long time thereafter. On the total cost of the Anglo Irish Bank promissory note, I again challenge the Minister for Finance because he simply does not know what it will be. Although more than €47 billion will be transferred to Anglo Irish Bank, there will be a cost associated with borrowing that from the State, which, at a reasonable interest rate of 4.7%, will be at least €74.63 billion. That is what it will cost up to when the last penny is transferred to Anglo Irish Bank. This equates to approximately 30% of the current national debt and it will add €3.1 billion to the Exchequer deficit every year. This payment is so absurd that a national campaign has been formed in recent days - a meeting is being held in the Teachers' Club as I speak - comprising academics, community organisations and different groups that have come together under the banner of "Anglo: Not Our Debt". Its purpose is to campaign to knock some sense into the Government and to join with others who have campaigned continually on this issue in a call to suspend this payment.

The promissory note is not our debt. It should not be placed on the shoulders of the people, we simply cannot afford it and the mealy-mouthed approach by the Government must end. I again call on the Government, just as I called on Anglo Irish Bank, the Governor of the Central Bank and the Minister for Finance in the early days of September before there was any mention of renegotiating the promissory note, to state clearly that this State is unable to pay the promissory note. It should enter into negotiations with the ECB, which will be the beneficiary of that payment, not to tweak around the edges by reducing our costs marginally, however welcome that would be, but to have the promissory note parked for an indefinite period until this country can recover.