Larry Butler (Fianna Fail)

This was a very difficult budget. Everybody would agree that it was not the type of budget a Government would want to introduce before elections in June. We have put the country first and the elections second. It was a brave, honest and realistic attempt to get our finances into a corrective state. The Minister has achieved that, by and large. Economists and the international markets also believe we are serious about balancing our finances. One of the key elements of the budget is the measure designed to restore the banking system to a sound footing. Without that, the economy will not work.

While substantial amounts of money will be taken from people's pockets, it is important to put this in the context of the reduction in the cost of living. Oil, gas and electricity prices have gone down, as have mortgage interest rates. Savings per household will be an average of €2,500. However, there is a gap between that saving and the amount which the budget measures will take. Everybody will be worse off by between €20 or €30 per week, on average. That seems to be the gap the budget has caused.

We did not have choices in how to address this situation. Previous speakers have mentioned that Ireland still has one of the lowest tax economies in Europe, even after this budget. It is a very harsh budget; we have not seen anything like it since the 1980s. However, when benchmarking it against the rest of Europe one will find that Ireland is still competitive from a tax point of view. The fact that there are reductions in living standards will hurt but it is a reality check. The Irish people will meet the demands made of them. They are good under pressure. They are now under pressure and this is a national effort. We are going through it together. Everybody, be they at the low, middle or high point on the income spectrum, will be helping out in this regard. A little has been taken even from people who are unemployed.

With regard to unemployment, it has been Fianna Fáil policy over the years to look after the elderly and the less well off and it is regrettable that the Christmas bonus was reduced. However, like other speakers, I hope that between now and then the Government will find the extra €120 million or so that is required to look after people at Christmas. I hope it will do its best in that regard.

A number of issues arose in the debate regarding the banking system. This Government is not bailing out the banks. It is trying to keep a banking system in place. Do not forget it is everybody's banking system. It is made up of people's deposits. It is the person's credit with the bank that keeps the person going. If the system was turned off tomorrow morning, where would we go? If one did not have one's bank card or cheque to get cash, what would one do? I do not believe anybody has seriously examined what the effects would be of the banks going out of business and the money supply being turned off. It would be catastrophic. There are many criticisms about bailing out the bankers. We have changed much of the banking system and a new system will be introduced. Senator Regan said we are not doing that but we are. There will be new governance of the banks. The various boards of the banks have changed and new people are being brought in. That must be done and be seen to be done. The banking system let us down badly both here and internationally. We must take action to correct the mistakes that were made.

With regard to the asset management agency, at least we are talking about assets. In some countries, the banks have no assets. They simply have bits of paper, which could be put in the fire. The paper is worthless. At least we have an asset in land and buildings which it will be possible to quantify to estimate what the cost will be. There are safeguards in the scheme. We must protect the taxpayer. It is important to bear in mind that the banks will lose on this. They will have to write down the losses on these assets. The person who invested in the asset will also lose out substantially. We should be very clear about this. At the end of the process is the taxpayer, who is picking up the tab. It is our job to ensure that when the write down happens, the taxpayer will get value for money.

They are the key issues that must be dealt with when establishing the new asset management agency. If there is a shortfall, we must ensure there will be a levy on the banks. The banks have now been put in a healthy position and they will have to pay whatever shortfall occurs in a levy to the asset management agency, which represents the taxpayer. It is important that people understand that the banks are not being bailed out. Everybody will pay their way, and there will be pain. This is not optional. We must remove some of these bad loans from the books of the banks, although some of them are not bad loans, and allow the banks to go back to what they are good at, which is lending money to people, businesses and multinational companies. The multinationals depend on a good banking system. There are non-performing assets in the banks and they must be dealt with.

There are always casualties in recessionary times. The big casualties so far are the unemployed. We must try to protect them. We who have jobs must do everything we can to protect the unemployed, old age pensioners, children and people who depend on us. I commend this difficult budget. I would like to have seen a more attractive budget given that we must face the public in June. However, we are not here to fight elections but to manage the country's finances and ensure corrective steps are taken. That has been done quite successfully in this budget.