Marc MacSharry (Fianna Fail)

I welcome the Minister of the State. It is good that the House is back in session in order that diverse points of views can contribute to debates such as this. We will have many such debates as the budget preparations take shape in the weeks and months ahead. It is important that we have differences because otherwise we would be faced with only public administration, of which we have had enough during the years. I hope, as we all seek to do the best thing by the country, that we can be innovative and positive in our contributions as the House tries to make a contribution to the recovery of the nation.

We have experienced unprecedented difficulty in the past year. Given the surpluses that were available, it is difficult to understand where all the money has gone. One can absolutely understand the public's palpable anger. I am angry that we are in this situation and, like everybody else, would like my pound of flesh. I am confident due process will give us the pound of flesh we seek. In the meantime, it is vital the Minister for Finance, who has provided leadership, and the Government take the appropriate decisions and correct actions to put the nation on the correct course, adjusting the sails to their optimum position in order that we can capitalise on the mild shoots of recovery internationally.

When we look to the past we can see how exports declined in the early to mid-1990s and were replaced by what we have all seen, that is, an unsustainable level of transaction-based taxes fuelled by a property boom. Circumstances are very much changed. All of us would have liked to have predicted the changes accurately at the time, but if we go back through the statements in this House and other House throughout that period we can see, as the Minister of State, Deputy Mansergh, mentioned, we all fought for lower taxation and increased expenditure.

Other issues include the fact that 2% money was available at rates of 8% growth. It is probably true to say that all aspects of society and all quarters, to some extent, jumped on the gravy train and we are paying a dear price for that. I am confident, however, that many of the innovative steps that have been taken so far will prove to be the correct ones. The Government is completely committed to stabilising and restoring our public finances. Difficult decisions have had to be taken in that regard already in terms of some €5 billion in proposed cuts. A further €4 billion will be required later this year and there is no question it will require pain and contribution from all aspects of out society, except, I hope, for one.

It is vital we do everything that is necessary to protect the most vulnerable in society and ensure those who are less well off, such as unemployed people who are currently struggling to make ends meet, are looked after at all costs, whatever pain has to be taken by those who are better placed. There is no question; many toes will be stood on between now and when budgets is revealed in the House in early December. It is important we ensure the toes that are stood on are the ones that are best placed and best able to take the pain.

I am confident that through informed debate and contributions in this and the other House the Minister, Deputy Lenihan, will take the appropriate decisions. It will be difficult. When one considers the magnitude and level of cuts and the commitment the Government has in stabilising our financial situation, it will be difficult to get a consensus on issues, but I am confident we will.

Recently published reports - Senator Twomey mentioned this - by the special group on public service numbers and expenditure programmes and the Commission on Taxation have brought forward a wide variety of suggestions. An bord snip nua, as it is more commonly referred to, suggested a stark number of very severe cuts, with some of which many of us on all sides of the House would have a difficulty. Far from a lack of unity in the Cabinet, as Senator Twomey would have us believe, there is absolute unity in focusing on doing what needs to be done. It was important that an independent grouping, headed by Mr. McCarthy, would come up with a full menu of suggested cuts for the public and Legislature to digest so that the correct decisions could then be made.

The Taoiseach on his first day in office said we should not be obliged or restricted by independent reports. I wrote it in my diary that day because I felt if anything was going wrong in Sligo or the north west as a result of an independent report, I could remind him of it. In the context of an bord snip nua I am pleased he said that. When the Tánaiste and others say there are things we have difficulty with, that did not make common sense and did not appear to be in the public interest, she was absolutely correct and I support her on that. It does not mean that difficult and unpopular decisions will have to be made. They will and will have to be made for the good of the many rather than the few. It is vital we ensure those who are less well off and are most vulnerable in society are protected at all costs.

In terms of restoring our competitiveness, our economy remains flexible and resilient. Price level and wages are beginning to fall. Obviously public sector pay is an issue that may have to be looked at. I hope if it is, it is done exclusively in partnership with public sector unions because that will have to be the case. We must take on board that, effectively, a 7.5% levy has meant a reduction in public service pay. The expenses regime in the Houses of the Oireachtas and in the public service as a whole must be dealt with in a robust fashion because it cannot be so out of tune with the private sector which has effectively corrected itself given the changed economic environment in which we find ourselves.

It is vital, as the Minister for Finance said, that we restore the banking sector. It is my categoric view that whatever price needs to be paid, it is important that developers and bankers take first place in the queue for any hit that will be taken by the risk which NAMA will give us. I will come back to this point. At a fundamental level, the banking system is at the very core of any functioning economy. We need money and credit to operate - that is a fact. The Government's approach to tackling the financial crisis has at all times been structured and considered, with it demonstrating in the form of the guarantee scheme its commitment to prevent the failure of any systemically important financial institution. It secured the liquidity of the banking system by doing that. Where necessary, the approach will maintain and rebuild their capital position. We saw what was done in terms of Anglo Irish Bank and the capital provided for the other major banks. The approach also includes the establishment of NAMA.

With NAMA we have found the ideal template to get credit flowing to our economy again. Those who have read the legislation in detail will have highlighted that there is no guarantee within it to say that credit will flow again. It is important, as the Minister, Deputy Lenihan, said that, given that the money involved has a rate of 1.5%, it would be in the banks' interests to lend again and put the money they will get from the ECB to work. I hope further mechanisms can be found to ensure families and viable businesses can seek and acquire the credit they need.

We should not be flathúlach about the provision of credit. It should be underwritten in a robust fashion and not just handed out. Many of us will recall throughout the boom years of the Western world the advertisements of finance companies on the television which would say all one had to do was call up and one would be sent €20,000 in the post, which was ridiculous.

It brings me on to another point about the banking sector generally. As we have seen the slight hints of international recovery, one of my worries is the international financial regulatory regime. After we have considered our own failings, there is no question that the absence of a proper international financial regulatory regime contributed in a major way to the difficulties we currently have. I would like to see a basic set of rules agreed at European level if not globally through the UN, IMF or the World Bank - I do not know the appropriate forum for it - so the focus is not on, as a banker once put it, new ways to lose money when the old ways were doing just fine. Another banking matter we need to consider is the kind of independent advice people are seeking. It is an ideological impossibility to get objective advice from anybody working in an institution with sales targets. It is simply impossible. These are some of the things I would like to see dealt with.

In terms of trying to boost our economy and being innovative about getting ourselves to work, I salute the Government and, in particular, the Minister for Foreign Affairs, Deputy Micheál Martin, on the forum that was put together last week. It was a grouping of people I would like to see kept together and expanded upon, and we should consult them continually on their views on certain issues. It would be positive. These are people who are leaders in their fields throughout the world and that they are prepared to give of their time to their nation of origin is positive.

As we prepare the budgetary process over the next few weeks, I hope the views of this House can be taken on board. Over the summer months I was involved with a group who prepared a set of proposals which I presented to the Minister, Deputy Lenihan, and which involved the prevention of the repossession of family homes. I hope the Minister of State, Deputy Mansergh, can impress upon him the need to look favourably upon the implementation of those. The proposals stated that we all acknowledge that as the eurozone recovers, interest rates will inevitably rise at a faster pace than the employment levels will recover in this country. As a result, people will find it very difficult to meet their repayments. I refer to those who were pushed to the pin of their collar in the past to get mortgages, for example. I appreciate that all the financial institutions, including those not covered by the Government's guarantee, have signed up to a protocol under the leadership and guidance of the Irish Banking Federation. I suggest we should legislate against the serving of court orders seeking the repossession of homes in the absence of a clear distinction being drawn between those who cannot pay and those who can pay but refuse to do so. I refer to what is known as wilful neglect. We took similar action in the case of private credit when we introduced the Enforcement of Court Orders (Amendment) Bill 2009 to prohibit the imprisonment of a person for the non-payment of a debt. We should offer those who cannot make repayments a variety of potential solutions, such as an increase in the term of the mortgage, all of which borrowers would have to pay for. That is just one of the suggestions I would like to make in this respect. I am pleased to have had an opportunity to make a few points on the economy. I look forward to the many debates we will have on the matter in the months to come.