Marc MacSharry (Fianna Fail)

I welcome the opportunity to contribute to the debate on the Financial Measures (Miscellaneous Provisions) Bill 2009. By way of brief rebuttal, Senator Twomey was not present last week when many of the points he has just made were made by Senator Cannon on his behalf. Governments do not operate with the benefit of hindsight; they operate in a real-time environment. We previously enjoyed a period of unprecedented growth, but circumstances have changed to a fundamental degree in the past two years. We had an economy that certainly was over-reliant on a property boom and there is a price to be paid now. Many anticipated a soft landing. Fine Gael in its proposed programme for Government anticipated growth levels in the region of 4% per annum and predicted a range of services would have been introduced based on these figures. Throughout my seven years in the House I recall Fine Gael on many occasions calling for more expenditure on project A or more pay for sector B, but the reality is that circumstances have changed fundamentally.

Last week, on referring to Ireland as being in the eurozone, the Minister of State, Deputy Mansergh, rightly corrected me on my use of the term, "fatal flaw". I shall correct myself and say that if there is a flaw as regards the single currency, it is that eurozone members do not control their own interest rates and aspects of fiscal policy. We had a scenario where money was available at a figure of 2% and we had 8% growth, which led in a major way to an overheating of the economy. We were all party to this. With the benefit of hindsight, had we anticipated the difficulties both nationally and internationally, certainly things would have been done differently. I dare say there has hardly been a government in the history of the world that would not have looked back on certain aspects of its performance and said, in effect: "Considering how things have played out, we would have done certain things differently." However, that is not possible. One of the few options that would have been open to us on the property side was an increase in stamp duty, as I mentioned last week. At the time I recall a lobby, to which almost everybody was party, seeking a reduction of stamp duty. We did not control our own interest rates, but we should have been sneaking them back up to cool things off at a particular time. However, we were not in a position to do this. Perhaps that is a flaw of the single currency.

The Minister of State mentioned NAMA. During the attendance of Mr. Brendan McDonagh, NAMA's interim managing director at the Joint Committee on Finance and the Public Service, as well as Dr. Peter Bacon, we were given an insight as regards the direction it was taking. Clearly, it will be in the business of pursuing work-outs. It will not be in the business of gathering properties in the way the Resolution Trust Corporation did in the United States in the 1980s, with the Savings and Loan fiasco, and having a fire sale. Early indications are that over a 20-year period we will have the facility of securing a land bank and ensuring we get the maximum possible return on behalf of the taxpayer for whatever assets are available. I very much hope this will be the case.

As the Minister of State mentioned, the main provisions of the Bill encompass the need to ensure legal certainty, with direct debit mandates amounting to more than €100 million a year being transferred to the new single euro payments area direct debit scheme before 1 November. This is being done to prevent major disruption to cash flow for utility companies and others, including insurance companies and mortgage providers. The Bill also seeks to transfer the assets of certain pension funds to the National Pensions Reserve Fund. As the Minister of State mentioned, the Government plans to transfer pension funds from universities, as well as those of a number of semi-State companies, to form part of the National Pensions Reserve Fund. The Minister of State went into considerable detail in outlining this provision in the Bill.

The Bill gives the Minister the power to extend the period for which financial support can be provided under the Credit Institutions (Financial Support) Act to extend the bank guarantee past 2010 with the approval of the Oireachtas and in line with EU state aid requirements. This is a very important provision in that it is vitally important that the banking system is not placed at a competitive disadvantage in accessing longer term money. This is in line with EU guidelines. As the Minister of State said, it will not be a unilateral ministerial initiative but will require a positive resolution of both Houses of the Oireachtas to give it effect. The Minister for Finance said in the Dáil yesterday that it was essential not to extend the entire guarantee but rather to modify it to ensure our institutions were not put at a competitive disadvantage. He also said it would contribute significantly towards supporting the funding needs of the financial institutions to secure their stability and enhance their potential to discharge their central role in facilitating economic activity, which is certainly to be welcomed. I heard Deputy Bruton welcome this also on the airwaves in the last couple of days. While he had some reservations about the level of scrutiny provided for, in the knowledge that it will require a positive resolution by both Houses of the Oireachtas, I am sure he and his party feel more at ease.

The Bill seeks to close loopholes in the insurance Acts. As the Minister of State said, life insurance and reinsurance companies are included in the legislation, whereby the Minister can present a petition to the courts on the place in administration of a non-life insurance company and the appointment of an administrator.

The series of financial measures we have been debating both this week and last week are all part of a step by step plan being followed by the Government to ensure economic certainty, stabilise the banks and ensure the Irish banking system can get credit flowing again. I reiterate that these steps are being welcomed elsewhere in Europe and that we have been assured we are taking the right steps decisively. The guarantee scheme extension will have to be agreed to by the Dáil and meet EU state aid requirements. Ireland is being joined by many other European countries in extending its bank guarantees. From the outset many of them had covered a period longer. Banks have to be able to compete on a level playing field with their competitors throughout the world. It is about restoring confidence in the banking system and getting credit flowing again. The extension of the guarantee will allow banks to give first-time buyers loans and to grant loans to small businesses, which is what we all want to see in these difficult times. This is essential if we are to achieve economic revival. Having the provision to extend the bank guarantee will send a positive note to investors, particularly those investing in medium term five-year bonds, and help to instil confidence in them. The Minister confirmed in the Dáil yesterday that the State was already effectively liable for the liabilities of the pension funds being transferred from the universities and said these funds did not constitute an additional liability as a result.

I welcome the IMF report. As the Minister said in the other House, it offers a realistic assessment of the situation in which we find ourselves. It is encouraging to see that the IMF's view concurs with ours and that we are taking the appropriate policy decisions at the right time. It is also encouraging that the IMF has welcomed the NAMA approach. I welcome the fact that it has made a number of suggestions on how we might continue to pursue the NAMA project, as well as others in terms of public sector pay and numbers and prioritising cuts in expenditure rather than focusing on higher taxation. These suggestions are to be welcomed as they are in line with much of the work already done by the Government and the matters under consideration. There is obviously the report of the Commission on Taxation to come, as well as the review of public sector numbers and the recommendations of An Bord Snip which are imminent.

I welcome the Bill. I am glad the Government is continuing on the right road, a fact underlined by the IMF yesterday. I look forward to the further measures that clearly will have to be taken, however painful they might be for all concerned, to ensure we come through these difficult times.