Liam Twomey (Fine Gael)

It is interesting that when the Minister of State came off script he mentioned the issue of moral hazard. He clearly started to play the man rather than the ball. In his comments, the Minister of State was clearly referring to Senator Regan and Goldman Sachs. That is rather unfortunate considering that in the speech he has just delivered, the Minister of State made no reference to the Government's role in causing this crisis or how Ireland has been hit hardest by it. It seems amazing that in the last 18 months, with all the moral hazard or lack of morality that has landed us in this mess, only the Minister for Finance was man enough to tell the Irish people that he was sorry about what has happened. Neither the former Taoiseach, Deputy Bertie Ahern, the current Taoiseach, Deputy Brian Cowen, the bankers who have been well rewarded and bailed out, nor any developers who have seen their loans and property companies moving into NAMA, felt any need to apologise to the Irish people. This is a contributory factor to people's anger, particularly when Mr. McDonagh from NAMA has announced to the Joint Committee on Finance and the Public Service that he will bring the wrecking ball to developers' fantasies throughout the country and when no apology has been offered to the people by any Minister for the mess into which the Government has got us. It is nice of them to offer legislation, but it is too late to correct the mess. Growth in the economy during the tenure of the last Government, up to 2007, was equivalent to the amount of money being borrowed by Irish citizens at the time, but the Minister at the time just laughed it off and found it amusing. The Government at the time was asleep with regard to what was happening in the economy and either through hubris or lack of moral courage fooled itself into believing there was no problem and did nothing about it. As a result, we now find ourselves in a situation where there are problems with the economy and the banking sector. The wider EU and global economies are also an issue and have an impact, but they are not the main issue.

Now that the banks have off-loaded billions of euro of their bad debts onto taxpayers, we are seeing how the economy is responding. The Bank of Ireland off-loaded €500 million in a rights issue at a discount of 15% to private investors, but such a 15% discount does not apply to the investment in the bank by the taxpayer. At the same time, the cost to Government of borrowing on the international money markets has widened to 182 base points, the highest level since the last budget. It is clear international money markets still have concerns about our economy, regardless of what the Minister of State had to say about the sector. I urge the Government to respond on this. By bailing out the banks, we are compromising the ability of the people to get out of the financial doldrums in which they find themselves. The customers of Bank of Ireland are the same hard-pressed taxpayers who will now be sacrificed for the benefit of the bank's shareholders. Interest rates on mortgages are increasing, but rates on deposit accounts are dropping. Every 0.25% rates rise adds a significant burden to the mortgage repayments of hard-pressed taxpayers, the same people who have seen income and pension levies and increased taxes because of the mistakes made by the current and previous Governments, no member of which has felt the need to apologise. People have noticed that the banks have now gone back to business as usual, putting up interest rates, cutting deposit rates and providing themselves with a nice pension. The response by the Taoiseach to this attitude, having bailed them out to the tune of €54 billion, is pathetic and has had a detrimental effect on how the people see the Government. It is strange to see how the bankers have moved on so quickly, leaving the taxpayers to clean up their mess. It is a sad reflection on the Government that it allowed this happen so easily.

The future of the economy is still not secure and deflation is still happening. When the Government talks about deflation, it sees it as something positive because in the short term, the cost of certain services and products reduces. However, deflation is a problem over the medium to long term because we are in the eurozone. The only way we can get out of the economic doldrums we are in is to grow the economy. We need to put significant growth into the economy by bringing about growth in jobs. Inflation in the eurozone can help this by reducing the effect of the debt we are carrying. The debt of individuals who bought a house for €300,000 four years ago who now see their incomes cut dramatically and face increased taxes has a more disproportionate effect on them than a couple of years ago. In order to get out of this situation, we must see significant growth in the economy and some inflation that will help reduce the effects of our huge debt burden. However, the contraction in our economy is still happening. It may not be as bad as the massive contraction that happened in the overall economy last year, but it is continuing. Hopefully, it will come to an end. We have turned no corners and there are no significant green shoots at this time, although it is nice to hear that job losses are decreasing and an end is coming to the contraction in our economy.

We must be honest with the people. Some Members have stood here and said they would like to hear more positive news. One thing worse than bad news is a false dawn or false hope, such as telling the people we have turned the corner or that the recession is over and them then hearing that more jobs are being lost, that the Government deficit has grown or other bad news. This only exacerbates their fears and anxiety and does nothing to encourage them to go out and spend to help us turn the corner. We need to be far more honest with people. However, I believe they are far too angry and despondent due to the actions of the Government to respond to Ministers speaking positively.

The reclassification of Anglo Irish Bank's loans as national debt has put us at the top of the league in the context of government deficits. This has an immediate and potential knock-on effect on the widening of the base points between us and Germany with regard to international money markets when it comes to borrowing more money. As the Minister of State is aware, our appetite and need for borrowing will not decrease in the next few years. We need an open debate with the people in that regard. We are in a hell of a financial mess. No more than the Minister of State, I would love to be able to talk things up and to see us come out this difficulty, but we must be honest with the people. The banking crisis is just one aspect of the current crisis and I am not as sure as the Minister of State we have come out of our difficulty so easily. There are still major concerns with regard to NAMA and we do not know if it will make a profit. Many people feel the project is still up in the air, whether people who have been negative about what it can achieve or those who are more impartial and have not been out to attack Government policy. They too are concerned.

External factors like those mentioned by the Minister of State also have an effect. For example, we have the situation in Greece and Ireland's position with regard to Government deficit. The Minister of State only referred briefly to other potential crises over the coming months. He mentioned businesses and households. Small businesses are still being squeezed and need to see a loosening on credit by the banks and the Government must be more proactive in getting credit flowing. It is only when we see job creation and some sort of stimulus to the economy that we will have any hope of getting out of this mess. This can be helped through a flow of credit from the banks into the economy. One way or another, we must get credit flowing to get things going.

Mortgages and personal debt are a problem. People borrowed heavily at the peak of the Celtic tiger and most of the money borrowed is personal debt such as household debt or on second homes. When I warned the previous Minister about the huge levels of debt being taken on by people, he said they were not just buying second homes, but third and fourth homes. We now see where that led us. Individuals have a product that is not making much, if anything, for them, but they face increased repayments on the loans they have taken out and their incomes are dropping. That means this problem could get worse in the future. When the Minister of State is addressing all of those aspects of the economy, the role of the international economy, the role of the banking sector, the role of Government in our economy and all the potential problems that exist in our economy, we need to be more honest about what is going on because we have not a hope in hell of getting out of this in the foreseeable future no matter what happens. However, if we start deluding ourselves that things are better than they are we will only prolong the agony and make it worse for the future.