Liam Twomey (Fine Gael)

I move:

That Seanad Éireann recognising that:

reckless and incompetent management, regulation and oversight of the domestic Irish banking system has damaged domestic and international confidence in Ireland's economy;

the Irish economy cannot recover from the deepening economic depression without a functioning banking system that enjoys the trust of depositors, international markets and the community at large;

there is a public perception that the resolution of this banking crisis is being manipulated in the interests of powerful and wealthy elites and that unless the Government addresses this suspicion in an open and transparent manner, it will not have the legitimacy needed to gain the necessary support for the painful measures needed to put our public finances and economy back on a sounder footing;

calls on the Government to:

take more decisive action to restore the reputation of the Irish banking system as a prudent and responsible manager of investors' capital and depositors' savings and as a reliable source of credit for Irish businesses;

replace the current board and senior management team of the Irish Financial Services Regulatory Authority, IFSRA;

give the Office of the Director of Corporate Enforcement the lead role in all investigations into recent transactions by banks, their investors and directors that may have breached both company law and financial regulation, given that IFSRA itself was at the centre of many of these transactions;

reveal the names of the 'Golden Circle' of ten investors in Anglo Irish Bank, and outline what steps the Government and the bank are now taking to recover the associated €300m in debts on behalf of the taxpayer;

open up the appointment of the next Governor of the Central Bank to open international competition and scrutiny by the Oireachtas;

set a cap of €250,000 on the salaries, including bonuses and share options, of senior managers of financial institutions whose liabilities have been guaranteed by the State and-or in which the State has invested until the guarantee has expired and the State investment has been repaid; and

require the banks to acknowledge the true scale of their likely loan losses over the coming years and to reflect these losses on their accounts.

The motion is another element of the ongoing debate we are having on the economy. It is amazing to look back at the transcripts of debates over the past six months to see how quickly everything has changed for the worst day by day. While there is a global recession, we are not only in a financial crisis but also a political crisis. When the financial elements of the crisis are addressed, we must bear in mind what is happening politically and in wider society. The old battlegrounds of rich and poor, private and public sector, North and South and left and right are surfacing again in a way that is more divisive and emotionally charged and, on occasion, the debate has become more irrational and unpredictable. Like many others, I am concerned about the political crisis emanating from the financial crisis in recent weeks.

However, we are forgetting the big picture. Ireland needs to borrow €30 billion to deal with the banking crisis and the crisis in the public finances. The gap between taxes, which is the Government's income, and what it must spend, will be €20 billion this year. Tax revenues have reduced by more than €10 billion in one year, which represents an amazing deterioration in the public finances. The Government has still not succeeded in getting that message through to the public, which is one of the reasons for the unrest we have witnessed on the streets involving many groups and organisations who are clearly suffering. If the public finances are not addressed, we face an economic meltdown which could happen faster than we think. The Government's response thus far is akin to a customer paying off the minimum amount on his or her credit card bill while, at the same time, continuing to spend at the same rate while his or her income drops like a stone. In a short period of two to three years, we could lose all the gains made during the Celtic tiger era.

Our future is going backwards so fast, as it were, that it is not funny anymore. The Government parties have not addressed the crisis in the appropriate manner. They throw around statements about the need to borrow for €20 billion this year and €30 billion next year while implying they will be able to get their hands on these amounts. However, the US will not provide this money because its Administration has its own issues to deal with and the former eastern bloc countries and the Baltic states of Lithuania, Latvia and Estonia have similar economic problems to us. I attended a few European Parliament meetings recently and I had the sense the western European countries such as Sweden, Germany and Austria are more concerned about what is happening in the eastern bloc and Baltic states than about what is happening in western European states such as Ireland. They are seriously concerned about what an economic meltdown might mean for the other countries. They are worried not only about social unrest but, as the old fault lines of Europe reopen, such as the east-west divide, an increasing sense of nationalism and social and political unrest in the eastern bloc and Baltic states as well. This is a major concern for the more stable western European states because this will have a significant knock-on impact within their own countries.

Commentators who suggest Ireland can borrow billions of euro from the European Union think we can tap into an endless pot of gold but that is not the case. I do not get a sense from the Minister for Finance or the Taoiseach that they have a plan to inspire confidence in international investors that we can overcome our problems. Ireland is subject to disproportionately negative media coverage internationally regarding its economic problems in comparison with other countries. Many European power brokers are taking their lead from English newspapers, which are painting Irish in a great light, and they are not being challenged. There are many dirty bankers and toxic banks throughout Europe and the rest of the world, yet we are getting unbelievably bad press.

I am disappointed when Ministers make simplistic remarks that Opposition Members should not talk negatively about the economy because of the impact that has on international investors when they could not give a hoot what we have to say in either House. We are trying to wake the Government up to our concerns in order that something is done about them. Adopting a policy similar to paying off the minimum amount on one's credit card bill will not work forever. The Government was supposed to have saved €2 billion this year through cutbacks but that will not happen. There is a sense the Government is not selling the crisis to the public but, at the same time, an early budget will be announced this year, probably shortly after we resume following the summer recess. The Government will need to increase taxes while continuing to reduce spending because the gap currently is unsustainable for a small, open economy. I do not sense concern about this from the Taoiseach or the Minister for Finance.

No matter what is said in this debate regarding Anglo Irish Bank, the Financial Regulator, friends of the major political parties and what may have gone on in other banks, these are sideshows relative to the greater issue. However, these sideshows highlight for the people the rotten core of our political and financial sectors. I would like a greater focus from the Government parties on how to deal with this. They need to get rid of those who regulated the system over the past decade to restore public confidence in it. There is no way the Financial Regulator has any credibility in investigating what went on in our banks. No one in the Central Bank has credibility when dictating to the people what needs to be done. The Central Bank's reports highlighted concerns in 2007 but its officials only squeaked and they did not make an alarming call on Ministers. They were too close to the Government to say what had to be said loudly enough to make a difference and Government Members were more occupied with winning elections and political gain than putting the country's interests first. That is why we find ourselves in our current position.

That Government Members now want the Opposition to bail them out of their problems, despite having no respect for what the Opposition offers, is galling. All we hear is that the Opposition is attacking and unwilling to work with the Government, but we worked with it on the bank guarantee a few months ago. We have clear policy differences in that we believed that Anglo Irish Bank should have been wound down because it was not a suitable going concern. We are being proven right in that regard, but the Government has landed itself in a mire.

There are rumours that the Government wants to nationalise AIB and Bank of Ireland, but it is not making their bad debts clear to the people. For example, AIB is one of the few Irish banks that is heavily exposed to lending in eastern Europe, in this instance to the tune of billions of euro. In terms of debt, it is not considered to be one of our safer banks in eastern Europe. AIB and Bank of Ireland have loaned heavily in the English property market, the substantial losses from which are in addition to the losses that they will suffer in this jurisdiction, but we have not heard what the Minister for Finance has to say about those issues. The Government is covering them up to some degree because it does not want to spook the markets. Given those banks' share prices this morning, the markets could not be spooked further.

It is time that we move together, be more realistic and decide on what to do about the state of the economy and how to get out of this mess. We will not access the billions of euro that the Government hopes will arrive during the next two years. We must make serious decisions on the economy.

Public and private sector unions are discussing striking in one month's time unless partnership talks are re-entered. Ministers have a role in redefining what those talks are about. In recent years, it has been easy for both sides to be involved in those talks, but it is no longer that easy. When the Government begins partnership talks, perhaps the public should be included and fully informed of what is occurring. The Government must carry the people with it because they must carry the heavy burden that will face everyone in the coming years. It should be done immediately.