Liam Twomey (Fine Gael)

When this legislation was going through the Lower House it was opposed by Fine Gael because considerable concern was expressed that information on the proposed extension of the guarantee had not been made fully available to the Opposition for it to be able to decide genuinely whether what the Government is doing is a good or bad move. There is a sense from Government that money is limitless from some source when it comes to dealing with this crisis. Two years ago when the current Government was re-elected for a third term the country was in debt to the tune of approximately €130 billion. Now, two years later, the approximate debt of the nation is approximately €260 billion or will be that figure by the time National Asset Management Agency is fully functioning, and a further €400 billion of bank deposits are guaranteed by the State. This is not all debt but we are heading towards the Government being responsible for nearly €750 billion in moneys owed or guaranteed. It is an unbelievable change in such a short space of time. The Government is still borrowing at least €1.5 billion every month and is now guaranteeing loans for the foreseeable future for banks that want to extend their credit lines beyond two years. It may or may not be a good idea but it is difficult to say whether it is a good one.

The Government is very much acting in a way that we on this side of the House should be compliant and do what we are told because those in government know best. In some respects, they are the same individuals who got us into this mess. They were the ones who were championing Government policy for a number of years that led to the present-day scenario.

People may have understood an interesting point covered in recent media reports where a developer was being sued by a bank for his own personal assets and concern was expressed that this might undermine NAMA. There was good reason for such concern. The banks are anxious to avoid these types of cases. When the banks go after someone and appoint liquidators, some of these toxic assets have to be sold off or valued properly by the courts. We have found there have been write-offs of between 50% and 70% of the value of these assets. One can understand why the banks want to offload these toxic assets onto the taxpayer. What surprises me is that the Government believes it is its duty to take on this huge burden on foot of the fact that we are threatened by a systemic crisis. However, there has not been an adequate debate on how much what is being done is affecting us and what will be the potential outcome five or ten years from now. The banks are quiet in respect of this matter and cannot wait to offload the problem.

If the Government is serious about this legislation, the original version of which was passed last year, the bank levy should take effect immediately, not when NAMA decides that the difference cannot be made up. The legislation states a levy will be imposed on the banks if for any reason NAMA loses money. It does not take a rocket scientist or an economist to work out that NAMA will lose money. That is a certainty.

I wish to comment on the concept of chasing developers for their personal assets or money they have salted away. I am of the view that the percentage of developers who have been smart enough to protect their private assets or move certain funds into places where they will be protected from confiscation by the Government or NAMA is quite small. Most developers have gone broke and the people NAMA is pursuing will not have many private assets - other than their houses and a few luxury cars - of the sort the Government is seeking. Ours was a bubble economy and it has burst wide open. Assets previously valued at €100 million are not worth more than €30 million or €40 million now. We must face up to the fact that there has been a huge haemorrhage of value out of the economy.

It is for the reasons I have outlined that we require a debate on the direction NAMA will take. If we are serious about NAMA, the bank levy should be in place from day one. However, questions arise as to whether NAMA will actually work. Despite the guarantee and the many billions spent so far, the flow of credit within the banking system has only marginally improved. In the light of the massive cost to the taxpayer and the State, the benefits to date have been minimal. I accept some disastrous consequences may have been avoided, but we will never know might have happened.

We must engage in a serious debate on what we are doing to the nation. The Minister of State has indicated that the legislation will allow the Government to take control of private pension funds of universities and certain State organisations. Private sector pension funds have been decimated. A report published in recent days indicates that people in this country with private pensions are worse off than their counterparts in Iceland which was for some time held up as being the worst with which other countries could compare themselves. However, Ireland has now assumed that mantle.

Government representatives continue to speak as if there is no great crisis. Nothing could be further from the truth. The pensions of those in the private sector who are due to retire in the next decade have been decimated. However, the Government does not appear to accept there is a problem in this regard. It seems to hold the view that it only has an obligation towards and a responsibility for public sector workers who are due to retire. It cannot abandon those in the private sector whom it encouraged to invest in private sector pension funds, particularly in view of the fact that these individuals might otherwise have invested their money elsewhere. It cannot hang them out to dry as a result of what has happened. Public sector pension funds have lost in excess of €30 billion in value, but the Government does not appear to be paying any attention to this fact.

People who are losing their jobs or who are in a difficult position financially resent the Government's plan, which is supported by the IMF, to introduce a property tax. Those to whom I refer were encouraged by the Government to purchase houses at inflated prices. The Government received up to 40% of the value of these properties in VAT and other taxes from the resultant transactions. People who bought houses for €250,000 have seen their value drop to €150,000 or €160,000. They have seen the Government take a massive cut from the amounts they paid for their houses - the value of which has collapsed - and that Government which led them up the garden path in the first instance now proposes to impose a property tax on them. At the same time, it is wantonly throwing around billions to finance loans, guarantees and bailouts.

Those in power do not seem to understand they must do better in explaining what they are doing, not just to the Opposition but also to the people who see themselves as being hammered at every turn for a Government policy that has been bankrupt for a number of years. The Government is responsible for this self-inflicted crisis. Most Members of this House and the Lower House were present when this was happening. I was a Member of the Lower House when Charlie McCreevy and the current Taoiseach, Deputy Cowen, introduced various budgets and their sense of arrogance, over-inflated opinions of themselves and belief they were doing the right thing were difficult to take. The fact that the Government still does not accept it led us into this crisis is also giving rise to a significant level of anger among a large number of people. If the Government is determined to continue using huge amounts of taxpayers' money to guarantee the banks, etc., and to commit every citizen to take responsibility for the debts of the banks, it must be much more open in its debate on these matters with those in opposition.

The IMF's report is frightening. It indicates that the economy is going to contract by 13.5%, that unemployment will rise to 15.5% and that the losses incurred by the banks could eventually amount to €35 billion. It also refers to the billions in loans we have taken on board and the guarantees we have provided. It goes on to state we must examine the position on public sector pay and numbers, increase taxes and bring to an end the system of universal payments.

This country has never been very good when it comes to universal payments. The Government has stated people with a certain level of wealth should not have access to medical cards and tried to remove such cards from certain individuals over 70 years of age. Every person north of the Border has access to free GP health care. In the Republic, however, less than one third of the population is entitled to such care. In addition, a huge range of charges apply to those seeking care in the public health system. The lack of confidence among the people in that system is evidenced by the fact that until recently 70% of them held private health insurance. Government policy has been to oblige people to rely on private sector health care rather than tackle the significant structural and human resource difficulties within the public health system. This policy has failed dismally because people have either lost their jobs or taken massive wage cuts and can no longer afford private health insurance. They are being obliged to fall back on a public health system that is not working efficiently.

When the legislation was dealt with in the Lower House, the Government did not accept any Opposition amendments. If it really wants to make the legislation work and the general public to buy into what it is doing, the first ones to whom information should be given and to whom respect should be shown are those in opposition.