Jim Walsh (Fianna Fail)

To follow on from the point made by Senator Regan, it is good to see the engagement between the Opposition and the Government because those of us who occasionally have the opportunity to observe what is happening in other jurisdictions will have noticed that the British Minister, Mr. Hill, made a comment at a party meeting that the world was facing the worst economic situation in 100 years. In a Freudian slip, the British Prime Minister last week in the House of Commons mentioned the word "depression". Yesterday the American President gave an indication that it could take 15 to 20 years before we come out of this situation. All the signs are that this is as bad as the Great Depression. Everyone knows it took 20 years for the Great Depression to pass and it took the Second World War to change the scene.

I agree with the request for a debate on the recapitalisation of the banks and in particular with regard to the releasing of credit. I refer to the Dutch Government model in which it took on board 80% of the debts of the Dutch bank. There was a devaluation of 10% which was given as a cash contribution to the bank and no other cash contribution was given, in the hope that by parking these debts and taking them off the balance sheets of the bank, this would release credit through the banks. Some business people who deal in fairly substantial sums with the Dutch banks tell me that the situation there seems to be better than in any other country in Europe. I suggest this should be considered as a model for us. It is a case of trial and error as no government seems to have come up with the recipe for a solution.

Senator O'Toole referred to the divide between the public and private sectors. This will be so destructive that it could accelerate the difficulties we face and insolvency could be the end game for many countries, including our own. As Senator Hanafin said, it could well be others who will be telling us what needs to be done.

Public service salaries are too high. Our pensions are unsustainable. The extra contribution we are now making towards pensions do not in any way meet the cost of those pensions. There is still a need to reduce salaries by a minimum of 10% across the public service and there is a need to reduce numbers by a minimum of 15%. These will have to be the people who are not performing in the public service. If we fail to do this we will not be able to address the difficulties.

I refer to the reasonable points being made by Senator Alex White. The Taoiseach has been saying for quite a considerable time that there is a hole in the public finances amounting to €16.5 billion to €17.5 billion and this must be addressed over a period of four to five years. Other economists are saying it could well be north of €20 billion. All we have done with our €2 billion is scratch the surface——