John Gerard Hanafin (Fianna Fail)

I support the Financial Services (Deposit Guarantee Scheme) Bill 2009 and thank the Minister of State for his continued support to this House.

The Government has been berated for failing to predict our current difficulties. However, I recall the debates held in this House on what was called at the time the soft landing for the economy. We knew the property market would slow down and we naturally made provisions on the basis of what was before us. Up to 70,000 job losses were predicted in the building industry, many of which would involve people who could take up new opportunities in their home countries in eastern Europe. The economy was powering along at an exceptionally high annual growth rate of 7% and it was believed that export led growth would allow for a very soft landing. The pretensions by members of the Opposition that they knew what would happen to the world markets simply do not stand up to scrutiny. During the 2007 general election campaign, every Opposition party called for substantially increased public spending. If a downturn was coming it would have been impossible to substantially increase spending.

When the difficulties arrived, certain parties took a politically expedient view and made statements that were harmful to the economy. I refer in particular to the Labour Party's finance spokesperson, who accused the Government of bailing out Anglo Irish Bank to save Fianna Fáil's developer friends. That claim, which went around the world, is untrue. The head of Anglo Irish Bank told the Joint Committee on Finance and the Public Service that no developer would be bailed out and that he had not experienced any political interference regarding the bail out of individual developers. We are faced with a crisis, and how we deal with it is how we will be judged in the long term. 1 o'clock

I heard an interesting story on the radio recently about a Louisiana politician. This person beat both the Democrats and the Republicans but only served one term. A journalist with him was watching how this politician operated and found it was a very simple operation. He basically told people, "Don't tax you. Don't tax me. Tax the guy behind the tree." That means we could agree with everyone and tax no one.

Consistently in this House we have asked for a two-day debate in which every political party would produce an account of the way they would deal with the €20 billion budget deficit and indicate the taxes they would increase and the cuts they would make. They have been asked to have those figures audited independently. That will never happen because the Opposition would like to pretend it need tax no one, increase public spending and let the Government take the blame for everything that happens.

We are in difficult economic times, yet I am very hopeful. This Government has taken the correct action. It has not been palliative. I know it is difficult to sugar-coat necessary cuts but this Government ensured, at a difficult time, that our banks are solid and secure. We have been through much more difficult times. I am conscious that we were able to repay our debts when debt levels were 130% of gross domestic product, inflation was 18%, unemployment was near 20%.

It is disappointing to see our credit rating affected, especially by companies like Standard & Poor's which gave fine credit ratings to sub-prime mortgages for Lehman Brothers, Bear Stearns and Goldman Sachs. In the changes it might have changed its own name to "poor standards", which might be more appropriate in the context.

The deposit guarantee scheme is essentially an enabling measure which empowers the Minister for Finance to make regulations to amend the European Communities (Deposit Guarantee Schemes) Regulations 1995. We have extended that statutory instrument already in place but it now gives the Minister the power to increase the amount to €100,000 on deposit and to forgo the first 10%. That guarantee is essential in ensuring we get stability in our finances.

Yet again this morning there were calls, which there are consistently despite this question having been answered on many occasions, for people on fixed-rate mortgages to be released from them. If cases can be found where super normal profits were made, I would agree with changes being introduced, but having worked in a financial institution for 17 years, I am aware that in many cases when a fixed-rate mortgage is given and set out in a tranche of mortgages, a fixed-rate deposit is guaranteed by the bank at the other side, and the bank makes the margin in the difference. In other words, it guarantees to pay 3% for ten years if it is lending out a mortgage at 4% for ten years. If the guarantee of the 4% to the bank is broken, one will also have to deal with the people who are receiving guarantee of 3%. In other words, one is breaking the legal contract of the depositors. Will the Opposition explain that to the depositors? If they intend to break the fixed-rate mortgages, they believe the old Louisiana story: "Don't tax you. Don't tax me. Tax the guy behind the tree."