Alex White (Labour)

I am not as concerned, and I do not become as excited, as Senator Butler about the use of the term "bail out" in respect of the banks. I have always understood that term to have originated from the need to remove water from a sinking ship. However, I am not sure whether that is the correct derivation. We are extending a huge indulgence and generosity to the banks and, in the circumstances, the term "bail out" does not fall too wide of the mark.

Senator Twomey raised an important point when he inquired as to the likely impact of the measures being introduced in this Bill on the National Pensions Reserve Fund. Will the Minister of State outline the nature of the assessment carried out by the Government in respect of the impact of these measures and indicate whether the residual moneys in the National Pensions Reserve Fund will be sufficient to allow it to be used for the purpose for which it was originally established? Elaboration of this matter has not really been forthcoming. The Minister of State indicated:

The use of some of the resources of the National Pensions Reserve Fund to fund the bank recapitalisation programme strikes a prudent balance between the need to address an urgent economic priority and the need to continue to take account of long-term budgetary stability and the sustainability of our pensions system

I accept that he is saying, on behalf of the Government, that there is not a major concern in this regard and that a prudent balance will be struck. However, the National Pensions Reserve Fund is the property of the Irish people. We are entitled to some insight into the Government's view on the potential or likely impact on that fund of our delving into it for a purpose which was not envisaged when it was established. It is at least arguable that this purpose is one which, if not expressly excluded, was certainly implicitly excluded when the fund was formed.

It is important to recognise what is being done in the legislation before the House. Senator Norris referred to raiding piggy banks etc. Regardless of how one describes what is happening, it is important that we make clear that we are making a fundamental change to the character and purpose of the National Pensions Reserve Fund, which was established in 2001. There is no point seeking to characterise it as something temporary or as an ad hoc contingency that we must use for the moment and see how we get on. This legislation fundamentally alters the very principle and nature of the fund and the reasons for which it was established. That being so, a greater insight and a little more elaboration and analysis is necessary of the Government's view as to the future direction of the fund. What will the fund be in the future? Is it likely or at least possible that it will be open to further raids, although I hesitate to use that word because it is emotive? Is it the case that on policy grounds the Government will make other changes in the future to allow the fund to be used for other purposes? I accept that it will be done by way of legislation, but there is an element of uncertainty now as a result of the Government having altered the fundamental basis on which the fund was established.

I smiled a little when I heard the Minister of State say that the existence of the fund gave the lie to the notion that at the height of the Celtic tiger economy, when the country was awash with revenue, the money was squandered. It does not give a lie to it at all. Is the Minister of State seriously saying that because the fund was set up in 2001 to deal with the cost to the Exchequer of social welfare and public service pensions which will arise from 2025, it is an answer to the charge levelled against the Government that it failed to act prudently or understand, especially in the serious decisions that were made throughout the past seven or eight years, that there were inherent risks in the way the economy was going and that much of the economics being practised could only be described as mañana economics? Is he seriously invoking as his defence to the charge of mañana economics the existence of the fund? The fund was set up for a specific, good and prudential purpose in 2001, to anticipate how the Exchequer would deal with the pension demands that would arise after 2025 and not as a means of setting aside money for a rainy day which has now unquestionably arrived.

The Minister of State let the cat out of the bag by stating that the NPRF "has enabled us to cope with the banking crisis without aggravating further our alarming budget deficit". It was never the intention of the NPRF to enable us to cope with a banking crisis. Let us be clear on what the fund is and let the Government acknowledge that they are bringing about a fundamental change in that. What the Government is seeking to do is to alter wholly the nature and purpose of the fund. Regrettably, the Exchequer has no other source of funds to recapitalise the banks. The Government has no choice; it must do it. It must go to the piggy bank, as Senator Norris described it. However, it should not spin these things. The Minister of State is not the worst spinner in the outfit. That is not a criticism but is meant as a compliment.