Ciarán Cannon (Fine Gael)

I welcome the Minister of State, Deputy Mansergh, to the Chamber and thank him for his recent visit to east County Galway in an effort to address the flooding crisis that affected the area so badly.

For 12 years the nation was afflicted with a hear nothing, see nothing and do nothing Government. The nation looked to the Government, but it looked away and we had to struggle with the old enemies of peace, business and financial monopoly, speculation and reckless banking. These enemies had begun to consider the Government as a mere appendage to their own affairs. President Roosevelt uttered the following words more than 70 years ago: "We know now that government by organised money is just as dangerous as government by organised mob." Last week President Obama stated:

This economic crisis began as a financial crisis, when banks and financial institutions took huge, reckless risks in pursuit of quick profits and massive bonuses ... And that rescue, undertaken by the previous administration, was deeply offensive but it was a necessary thing to do ... And last week, I proposed a fee to be paid by the largest financial firms in order to recover every last dime. Never again will the American taxpayer be held hostage by a bank that is "too big to fail".

In this country it is seemingly impossible for political leaders to use such firm and unequivocal language. Contrast these words with the mealy mouthed ducking and diving engaged in by our leaders last week. We were told that a banking inquiry was not necessary because, according to the Taoiseach, the priority for the moment had be to solve the problem and then deal with its sources. This begs the question of how should one go about solving a problem if one does not first establish what caused it. We need to understand the regulatory, governance, auditing and political failures that allowed the banks to swell their balance sheets unchecked. I agree with the Minister of State, Deputy Mansergh, that it is a matter of finding out what is to blame, not necessarily who is to blame.

Later in the week we had to endure the Minister for the Environment, Heritage and Local Government, Deputy Gormley, telling us that the proposed banking inquiry would not be held in secret but in private. The only time in recent months that we heard anything close to clear and definitive language was on budget day when the Minister for Finance, Deputy Brian Lenihan, pointed to the inevitability of cutting public expenditure by €4 billion. He did exactly this. Both the Minister and his departmental officials seem to be able to show one face in dealing with the public finances and another to the bankers and developers who contributed so significantly to their collapse.

We have been told over and over again that the support provided for the banks through NAMA and recapitalisation have one predominant aim, namely, to restore the flow of credit to businesses. Unfortunately, this lifeline to the business sector has not been restored and will not be for many months to come, if at all. Last week the House debated the issue of unemployment when many Members opposite correctly criticised the banking sector for not playing its part in employment recovery. The Minister of State with responsibility for trade and commerce, Deputy Kelleher, also called on the banks recently to provide credit for the small and medium-sized business sector as a matter of urgency. He said the banks had received Government and taxpayer support at a very low rate through the State guarantee and that they, in turn, had an obligation to support SMEs in the economic downturn. However, one would not be encouraged by the utterances of Mr. Eugene Sheehy, the outgoing CEO of AIB. He was refreshingly honest in saying clearly that NAMA would not make it any easier for individuals and companies to borrow next year. His emphatic message was that the real function of NAMA was to create a mechanism to stabilise the banking system which might lead to further lending when the banks were out of trouble. He said money had to be handed over to the banks and that it would be used to shore up their own reserves rather than lend to business. He went on to say that once these reserves were bulging again, the banks would be in a position to begin lending. This very revealing intervention by Mr. Sheehy, coupled with the fact that the NAMA process is now over two months behind schedule, should give us all serious cause for concern.

The latest information to hand suggests approximately €19 billion worth of loans will be transferred to NAMA next month, with the remainder to be transferred by the end of September. At a conservative estimate, this means it could be late next year before the banks get round to lending again to small businesses, assuming that they will begin to lend again, as there is nothing in the NAMA legislation to oblige them to do so. Unfortunately, late next year will be far too late for hundreds of businesses. Every employers' group, from the Small Firms Association to ISME to the Restaurants Association of Ireland, continues to point to the crisis in business lending. The Government needs to take a firm hand with the banks to ensure credit lines are restored immediately, not in 12 or 24 months. If this requires a Government-backed working capital guarantee scheme, it should be seriously considered. Such a scheme is already working in other countries and could work here. The bottom line is that we urgently need some radical thought applied to the credit crisis, as waiting another 12 or 24 months for the credit tap to be turned back on is simply not feasible.

The timely update from the Edelman Trust Barometer released this morning makes for sobering reading. It concludes that Ireland is continuing to experience a "profound" and continuing trust crisis. The level of trust in government and business here is the lowest in Europe, with the level of trust in government dropping to an all-time low of 28% from 31% compared to a global average of 49%. In Europe, Ireland was the only country surveyed that had experienced a fall in the level of trust across all four institutions - business, government, media and even NGOs. The bedrock of economic recovery must be trust. These figures indicate how far we have to go in this regard.

What is the Government's response to this trust crisis? How does it intend to build public confidence in order that we can move forward collectively with trust restored? It proposes to hold what is probably the most important inquiry in a generation in secret or in private, if one prefers the terminology used by the Minister for the Environment, Heritage and Local Government, Deputy John Gormley. That is how utterly detached from reality our leaders have become. The valuable opportunity to hold what could be an open and transparent inquiry which could have a cathartic effect on public trust has been lost by our leaders. The head of the Law Reform Commission, Ms Catherine McGuinness, is absolutely right in saying the public will have no confidence in such an inquiry. There is a significant demand from the public for an inquiry, with 91% of respondents in the latest The Irish Times poll backing it. There is no doubt that the people concerned do not want an inquiry held in secret in a manner controlled by a Government it does not trust. The same poll also concluded that almost two thirds of the people did not believe the worst was over for the economy. If we are to restore hope and trust, we need to hear the forceful and inspirational language used by Roosevelt and Obama. We need to convince the people, those who elect us, that we are firmly on their side. Immediately restoring credit to struggling businesses and announcing a full public inquiry must be the first two steps along the long road to recovery.

I will refer to two issues raised by the Minister of State, Deputy Martin Mansergh. He said that, unlike the Committee of Public Accounts DIRT inquiry, the issues in the banking sector were significantly more complex and would require a greater range of expertise. If that is the case, provide the expertise and require that it be provided for the Committee of Public Accounts to do the work that it is well capable of doing if given the resources that it badly needs.

The Minister of State also referred to the advice received from the Attorney General that, following from the experience of the Abbeylara inquiry, we would also require legislation following the Supreme Court judgment. That is certainly the case and seems to be backed up by a number of sources. If we require legislation, we could have it in a number of weeks or months. We were able to pass legislation to guarantee the banks literally overnight. There is no reason similar urgency could not attach to the legislation required in this instance.