John Paul Phelan (Fine Gael)

I second the motion. I welcome the Minister of State, Deputy Mansergh, who is a regular visitor to the Seanad, for this important and timely discussion. At the start of the week, a number of Senators, including Senator Hanafin, referred to the need for a debate on regulation and part of this motion deals extensively with that matter.

As Senator Twomey pointed out, Ireland is at a grave juncture economically and socially. On the Order of Business earlier this week, a number of Senators, particularly Senator Ross, discussed the problem that we will face if we believe, as the Government persists in doing, that our European friends will somehow bail us out and that money from Germany or the International Monetary Fund will save our banking structure. The indication is that Germany is looking eastwards and the IMF will be left stretched by its upcoming commitments during the coming months.

The economic indicators are stark. The unemployment rate is 9%, which includes an increase of 38,000 in January. We are witnessing the opening stages of social unrest. A protest occurred outside today and the building will be picketed tomorrow. Those actions are part of a continuous stream of people with concerns about the direction in which the economy is going. Tax revenue this year is projected to decline by as much as €20 billion. As Senator Twomey pointed out, the Government will need to borrow approximately €30 billion. It costs us twice as much as Germany to borrow money. Of every €3 spent by the Government domestically this year, €1 will be borrowed. On top of all those difficulties is the calamitous banking situation, which is making our credit rating worse.

One would be wrong not to acknowledge the global economic downturn, but one would equally be wrong not to acknowledge the fact that we have contributed considerably to our own difficulties through Government property decisions in the past seven or eight years. The Celtic tiger had two distinct incarnations. Its early years saw foreign direct investment and job creation in domestic companies, but in the past seven or eight years concentration has been on construction. We were good at building houses and selling them to one another, but such an economic basis could never have been strong.

Last week it was estimated, conservatively, that €10 billion left the country in light of the most recent Anglo Irish Bank revelations. The jobs, careers, lives and future of 20,000 workers in the IFSC depend on some semblance of stability in the banking structure, but that is missing. Part of the problem is the Government's failure to realise its role in undermining our banking system in recent years. For too long, there has been a cosy cartel between the Government, regulators and the banks.

The motion refers to the golden circle. I would like to know who its members are, but the necessary information on the substantive issues surrounding the contracts for difference fiasco is in the public domain. The regulator, the Central Bank and, in some shape or form, the Government knew. The Taoiseach, the then Minister for Finance, knew of a difficulty surrounding contracts for difference and the Quinn Group shareholding. Extraordinarily, the Central Bank and the regulator charged Anglo Irish Bank with solving its own problem and a number of months later they were told that the problem had been solved.

A first year economics student in college knows that if a problem with so large a shareholding in a public limited company was supposed to have been solved, the share price would have fluctuated. However, the Taoiseach has asked us to believe that he did not have a clue as to what was occurring. He did not ask why there was no fluctuation despite the alarm bells that should have been ringing in his and the regulator's heads. This question has never been answered, but perhaps the Minister of State will do so. It makes no sense.

There must be a clear-out in terms of the regulator. I support the notion that foreign expertise on banking regulation should be introduced in the Central Bank and the office of the regulator. The system cries out for that expertise.

At times, I have been a critic of social partnership, but it will and should have an important role in determining where we go from here. Senator Twomey was correct in that it has been very easy in recent years to be involved in social partnership, but difficult decisions must be made. I was struck by the Taoiseach's comments today, namely, that baggage must be left outside the door in the renewal of social partnership. Was he referring to his own baggage or the political baggage of successive Governments in the past ten or 12 years that has left us in this position?

While I might share with other Members some of the cynicism attached to the Garda raid on Anglo Irish Bank, it was something to be welcomed. I remember from my school days, a famous man named Ernest Saunders, of whom the Minister of State may have heard, who went to jail because of his involvement in an attempt to manipulate share prices. There appears to be some resemblance between the case under discussion and the events in which he was involved and for which I understand he served six years in prison.

I spoke to a school tour group here yesterday and it saddens me that their futures are at stake in the midst of all this. I was fortunate enough to be born in 1978, to benefit from the abolition of third level fees and to get a third level education. Thankfully, I have a job here for at least another few months.