Liam Twomey (Wexford, Fine Gael)
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Question 8: To ask the Minister for Finance the position regarding discussions between him and the ECB on the promissory notes for Irish Bank Resolution Corporation; and if he will make a statement on the matter. [9975/12]

Tommy Broughan (Dublin North East, Labour)
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Question 9: To ask the Minister for Finance when he expects that negotiations on the Anglo Promissory notes arrangement will produce a much reduced burden for the State; and if he will make a statement on the matter. [9922/12]

Brian Hayes (Dublin South West, Fine Gael)
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I propose to take Questions Nos. 8 and 9 together.

As the Deputy is aware, I have indicated that I am committed to reviewing the approach to the promissory notes with a view to reducing the overall cost to the State of correcting the banking system. The troika has agreed to engage in a process with Irish officials to produce a common paper which will consider options for re-engineering the notes in terms of the maturity of the notes, the interest rate, the cash flows and so on. Work is ongoing on this review.

The Deputies will appreciate that there are several parties involved in this process and it involves all the member states of the European Union, particularly the members of the eurozone. The Deputies will also appreciate that the situation in the eurozone remains unsettled and is changing on a daily basis. In these circumstances, it would not be appropriate for me to comment in any detail about various options under consideration in advance of the conclusion of the considerations and the production of a common paper. Suffice to say that a broad range of options are under detailed consideration. Additional detail on the various proposals will be available when the ongoing work is further advanced.

In tandem with this technical review, the Government has commenced a campaign at political level to garner support for an approach which is more beneficial to the Irish State. The Minister has met the Commissioner Mr. Rehn and Mr. Mario Draghi, President of the European Central Bank, as well as a number of his counterparts from member states to progress the matter. The Taoiseach has also met and discussed the issue with a number of EU Council members.

Unfortunately, I am not in a position to indicate when the review of options and the negotiations will be completed. The Government is aware of the payment due on the promissory note at the end of March 2012. However, given the nature of advocacy and the decision-making process in the EU, I would not expect this matter to be concluded in the short term. I do not expect that any possible solution will be adversely impacted if we do not have the matter resolved by the end of March. The Deputy will be aware the payment due in March is, in fact, the second payment off the principal amount, as the last was paid last year.

The Government is committed to achieving an outcome which not only serves Ireland's best interests but is also in the best interests of our external partners. The Government is of the view that the global and European economies and the financial markets will benefit from a speedy return to growth in the Irish economy. It is the view of the Government that this solution must involve a reduction in the overall burden to the State of restructuring our banking sector in terms of either or both the cost and the timing of the repayment of that debt.

Liam Twomey (Wexford, Fine Gael)
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We put our finger in the dyke and we stopped the disorderly collapse of Anglo Irish Bank in 2008. We held the line to support European financial stability in the midst of our own financial chaos. Does the Minister of State not feel we have earned the right to have a timely response to this issue in regard to whether the ECB will extend, write down or introduce some element of delay to the payments? This is an important issue that affects both sides of the House and it is necessary that this message is got through to the ECB and our colleagues in Europe.

Has the concept of winding down Anglo Irish Bank been considered? It has no deposits in the normal sense. It is a zombie bank, with little or no effect on the wider economy. If it had been signalled well in advance that Anglo Irish Bank would be wound down faster than currently envisaged, it would not have had any effect on the market.

There is a need for people in this country and for Members of this House to know what the European Central Bank is thinking. A delegation from the Oireachtas Committee on Finance, Public Expenditure and Reform travelled to Germany recently-----

Michael Kitt (Galway East, Fianna Fail)
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Does the Deputy have a question?

Liam Twomey (Wexford, Fine Gael)
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My question relates to how we can discover what the ECB, which acts very much in secrecy, is thinking. During our recent visit to Germany, a German MP told committee delegates that there is a simple rule in Germany. If one borrows money one must pay it back. The Minister of State spoke about the eurozone being unsettled. Part of the problem is that there is too much secrecy and we are not getting the answers we require quickly enough. The governing council of the ECB very much controls what the bank can and cannot do.

Brian Hayes (Dublin South West, Fine Gael)
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I understand the Deputy's frustration, which is felt on all sides of the House, concerning the outstanding liability to the State arising from the criminal reckless lending of a bank which effectively brought this country to its knees. The dilemma - to take my ship analogy - is that the ship has left dock. The decision was made by the previous Administration when, in the first instance, it guaranteed the bank's assets and liabilities-----

Tommy Broughan (Dublin North East, Labour)
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People are on the lifeboats.

Brian Hayes (Dublin South West, Fine Gael)
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-----and then proceeded to nationalise it. The problem is that reneging on that contract is seen, from the European perspective, as a form of default. We are arguing that the bank is effectively now functioning as a type of financial warehouse in that its task, over a period of time, is to outwork the assets and liabilities that are there. We are making progress in articulating that to people. Deputy Broughan and the other Deputies who attended the Bundestag recently will have heard the very strong German view, which crosses party lines, that this is a sovereign debt commitment.

I reiterate that if we were to take the position that the State will not meet that commitment, there would be a dramatic effect on the reputation of the country just as we have moved from the collapse phase to the recovery phase.

Tommy Broughan (Dublin North East, Labour)
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Could the Government not give them an instalment?

Brian Hayes (Dublin South West, Fine Gael)
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One of the reasons that our ten-year bond yields have improved so significantly, with the interest charged declining from 14.5% to less than 7% over a period of months, is the view that has grown that Ireland is now a sound place in which to invest. If we were to go down the road, as Greece has done, of arguing for private sector investment - effectively debt write-offs - how could we then construct an argument that Ireland is a safe place to do business, a secure location in which to invest and a country from which one would wish to buy Government debt?

Tommy Broughan (Dublin North East, Labour)
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The Minister of State is giving us very bad news in telling us that he will achieve nothing by 31 March. Even though he is one year in office, he has achieved nothing in that time. He claims that €3.1 billion was paid last year and the world did not change. In fact, the world did change for schoolchildren, patients and people on benefit. We have seen the capital investment programme slashed right, left and centre. There is no denying that the world changed as a consequence of paying that €3.1 billion. While some cutbacks have been rolled back - the reversal in regard to schools in the delivering equality of opportunity in schools, DEIS, scheme was largely achieved by my former colleagues in the parliamentary Labour Party - great suffering has been inflicted on people as a consequence of that payment. That is why the coming payment represents such a significant date for this country.

The Minister of State is being very disparaging to the Greek nation.

Michael Kitt (Galway East, Fianna Fail)
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Does the Deputy have a question?

Tommy Broughan (Dublin North East, Labour)
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Is it not the case that the Government has been travelling in the Greek chariot in that the interest reductions it obtained were due to what the Greeks did? The Government came in at the end, so to speak. The Minister for Finance is going out to Europe week after week but is achieving nothing with this nicely nicely approach to Chancellor Merkel and Mr. Sarkozy. Is the Minister of State saying definitively that he will not achieve anything in the short term? In other words, are we being told that this payment will be made even though it will crucify our country in 2014, with €2 billion worth of interest payments leading inevitably to reductions in essential social spending?

In regard to the technical discussion raised by colleagues on this side of the House, is one of the issues under discussion the mark-to-market interest rate which the Fianna Fáil Party disgracefully and in a treasonable way attached to the promissory note in 2010? Will the Government attempt to roll that back based on a maturity date, as we have been advised to do at the finance committee? The Minister of State claims we can neither cancel nor defer the promissory notes. That is not the case. We could, for example, consider kicking the issue into the stands for 30 or 40 years. We have options. What we do not have is a Government that will negotiate on our behalf in an aggressive and determined manner. Despite the strife and suffering in Greece, its Government may be achieving more than our own has done thus far.

Brian Hayes (Dublin South West, Fine Gael)
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The Deputy makes several assertions which I intend to counter. If he wishes to subject the people of this country to the new conditions of austerity that will affect the Greek people-----

Tommy Broughan (Dublin North East, Labour)
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I am talking about ending austerity.

Brian Hayes (Dublin South West, Fine Gael)
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I did not interrupt the Deputy. I object to any proposal to subject the Irish people to that experience. The people of this State will not be subjected to it as long as this Government is in place. The question is how one negotiates. Does one negotiate based on the Gaiety school of amateur acting, as we have just seen from the Deputy, or does one negotiate in a deliberate and calm way on what can be achieved? This Government will not play with people's lives in the way in which the Deputy proposes.

Tommy Broughan (Dublin North East, Labour)
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The Government is achieving nothing.

Brian Hayes (Dublin South West, Fine Gael)
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I reject the assertion that we have achieved nothing.

Tommy Broughan (Dublin North East, Labour)
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The Minister of State is demonstrating the Abbey style of acting.

Michael Kitt (Galway East, Fianna Fail)
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The Minister of State, without interruption.

Brian Hayes (Dublin South West, Fine Gael)
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Greek people have seen a further reduction in the minimum wage, while in this State we have increased the minimum wage, as both parties in government promised to do in the course of the election. We have achieved that by negotiation. For a programme country to secure that type of concession is an extraordinary achievement.

I reject what the Deputy said in regard to the interest rate reduction we achieved. We were working to secure it for more than six months. Papers were produced by the Government and when the Greek issue came to be resolved, the papers were there and the model was there.

I am not excluding any option in regard to the promissory notes. We are looking at all options.

Tommy Broughan (Dublin North East, Labour)
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The Government will make that payment this year.

Brian Hayes (Dublin South West, Fine Gael)
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We will work with our external partners to find an agreed solution. That is what we are committed to achieve. If the Deputy is fair about this, he will come to the same conclusion.

Paschal Donohoe (Dublin Central, Fine Gael)
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Is it not the case that if there were no promissory notes - no payments made last year and none to be made this year - the vast majority of cuts and tax increases that are required to be made would still be necessary because the gap between taxation revenue and public spending is still a multiple of what the State must pay out to meet the commitments made by the last Government? To follow up on what Deputy Broughan said, is it not the case that the price the Greek Government has paid for its strategy is an intensification of austerity in the short to medium run and a further loss of sovereignty? Greece is now in a situation where all of the power its finance department had has been conferred on a third party. That is not a course of action open to this State nor is it one the Irish people would accept.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Is the Minister of State not concerned that three of the most prominent economists in the country, at a meeting of the Oireachtas Committee on Finance, Public Expenditure and Reform last week, roundly refuted what he is saying about the promissory notes? They said they did not see us getting back to the financial markets, that the State would need re-financing in 2014, that they did not believe there is any chance of our being in a position to get money on the international markets and that, therefore, we would be in second bail-out territory. They also stated that if this happens the austerity now being imposed will pale into insignificance and will reach Greek proportions. What does the Minister of State have to say in response to those economists who say something must be done about the €3.1 billion payments due every year on the Anglo Irish Bank promissory notes?

Michael McGrath (Cork South Central, Fianna Fail)
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Almost every Member of this House will accept that the previous Government in making the decisions it made in relation to Anglo Irish Bank was criminally misled by the bank about the scale of the losses it had on its books. Deputy Twomey is correct that taking on this enormous burden has had spill-over affects across the European Union.

The EFSF has been replaced with the ESM which has a mandate for recapitalising banks. Given there was no such fund in place when the decisions were made in respect of Anglo Irish Bank, surely there is an exceptionally strong case for the Irish Government to press for those funds to be used in a cost effective manner to ease this burden.

Pearse Doherty (Donegal South West, Sinn Fein)
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Will the Minister of State accept that the reason bond spreads in Greece have increased is because its debt to GDP ratio is above 160%? Will he also accept that non-payment of the promissory note by this State would result in our debt to GDP ratio falling from the projected high of 120% to !00% or below that, which would entice investment? Will he further accept-----

Brian Hayes (Dublin South West, Fine Gael)
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For the totality of years.

Pearse Doherty (Donegal South West, Sinn Fein)
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Yes. If the promissory note did not exist our debt to GDP ratio would decrease, which would entice investment back to our country because it would then clearly be sustainable. Will the Minister of State accept that the promissory note is being paid by this State to Anglo Irish Bank, which is an organ of the State, which then pays the money to another subsidiary of the State, namely, the Irish Central Bank which does nothing other than destroy it?

Liam Twomey (Wexford, Fine Gael)
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We are not advocating default. As stated by Deputy McGrath, what we need to discuss publicly is not only the changing of the promissory note but the range of other options available, including re-financing. We deserve the right to have that debate.

Tommy Broughan (Dublin North East, Labour)
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We have heard that technical discussions are under way but Members of this House do not have a clue what the Government is trying to achieve. I reiterate that the news from the Minister of State, Deputy Hayes, that we will have to pay the €3.1 billion at the end of March as no result will be achieved by then is bad news. This means that we will continue to bear this burden in 2014 and 2015. The Government does not appear determined enough to achieve anything in this area. So far, it has done nothing.

Brian Hayes (Dublin South West, Fine Gael)
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I did not say that. I ask Deputy Broughan not to put words into my mouth. I said that this is an ongoing issue for the Government. I have not committed to any specific time lines on this.

Tommy Broughan (Dublin North East, Labour)
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The Minister of State used the words "medium term".

Brian Hayes (Dublin South West, Fine Gael)
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I have not said whether it will be paid in March. I have given no commitments in that regard.

Deputy Donohoe raised an important issue. Irrespective of the promissory note, the debt mountain facing this country is a considerable issue. We owe slightly more than €180 billion, €140 billion of which relates to the difference between income and expenditure and €40 billion of which relates to banking. If that was pulled tomorrow, we know the impact of the cuts on our people that would follow. This is the situation which faces the Government on a daily basis. It is responsible for ensuring the transition of managing the debt and looking for a fairer, restructured redesign on the promissory note which would allow us to grow the economy.

I agree with Deputy McGrath's remarks in regard to the new ESM. One of the issues that arose for discussion on Monday night, in respect of which I believe we will get agreement at the Council meeting on 1 March, is the new lending capacity. Currently, the firewall stands at €500 billion. People are talking about an increase of more than €250 billion, which would bring the total to €750 billion. I do not suggest that will be the outcome between now and March. However, as pointed out by Deputy McGrath, that would significantly advance our position.

As I stated earlier, the markets are a little like the media in that they hunt in packs. As long as the spotlight remains on Ireland investors will run away. That is the reality. We are a small open trading economy which does not have the colossal natural resources of others to determine whether we get funds into the country. The crucial piece of the jigsaw is to get money into the Irish banks and to cut our umbilical cord with the ECB. That is the crucial task we face. Slowly but surely we are getting there. In the final quarter of last year funds came back into the Irish banking sector. Also, the exposure of Ireland to the ECB has decreased in recent quarters. That is the type of deliberate process of confidence that this country needs to maintain.

I did not make any disparaging comments about the Greek people. I simply said-----

Tommy Broughan (Dublin North East, Labour)
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The Minister of State said they are worse off than we are.

Brian Hayes (Dublin South West, Fine Gael)
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If the Deputy wants to subject the Irish people to a second bail-out-----

Tommy Broughan (Dublin North East, Labour)
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They appear to be better negotiators.

Michael Kitt (Galway East, Fianna Fail)
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Please, Deputy.

Brian Hayes (Dublin South West, Fine Gael)
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I am asking the Deputy to understand to what they are now going to commit.

Tommy Broughan (Dublin North East, Labour)
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I understand that.

Brian Hayes (Dublin South West, Fine Gael)
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They are committing to a type of economic Armageddon in terms of what they face on public expenditure.

Pearse Doherty (Donegal South West, Sinn Fein)
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The Minister for Finance, as a member of ECOFIN, is imposing it on them. The Irish Government is a signatory-----

Brian Hayes (Dublin South West, Fine Gael)
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If Deputy Broughan wants to expose our people to that I fundamentally disagree with him. Written Answers follow Adjournment.