John Gerard Hanafin (Fianna Fail)

The first factor to be welcomed from the statement of the Minister for Finance on banking on 30 September is that we have a clear scenario within which we can work. We have figures for the final cost to the taxpayer of the banking crisis. I am cognisant that although the bill will be much higher than initially anticipated, given that we had the lowest debt to GDP anywhere in Europe at €30 billion, with significant savings in the National Treasury Management Agency, we had the means to face this crisis.

The difficulty I see at the moment is not the way the crisis is being managed but the fact that the media and certain elements of the Opposition are creating a scenario suggesting that we cannot manage our own affairs. Nothing could be further from the truth, especially when media commentators speak about the IMF coming in. Last year we spent less than 17% of our gross income on debt repayment, whereas in the 1980s we paid 33% of our net income on debt repayments. At that stage there was an 18% rate of unemployment, an 18% rate of inflation and we paid a rate of 15% for money. We were fortunate that we had our own currency at that stage but in real terms, given that this is now a wealthier economy, we are in a better position and can manage our own affairs. Nevertheless, there is much that we can and should do.

There were calls in this House today for a debate on whether the media is giving balanced reportage. This is important because we are only harming ourselves in this respect. The United States started in a similar position, with banks and financial institutions like Lehman Brothers, Bear Stearns, Goldman Sachs, Wachovia, AIG, Freddie Mac and Fannie Mae collapsing. That country had a belief in itself and is now in a better position than us, although there is no reason that should be the case. There are large amounts of savings but they are not moving in the economy because people are fearful.

As we have the final figures, there is an expectation. We know the finance system will operate well and prudently. There are new funding requirements for banks and as a result of the Basel process, they must hold more cash. There will be less money available for lending in future as a result. This is all the more reason for us to keep an eye on our banks and see how they operate. There cannot be a position where banks are getting in funds and using them to clear overdrafts or decrease overdraft amounts. We cannot have overdrafts transferred to term loans because we are told such activity is a new loan. The banks must continue to behave in a proper and prudent manner. The interests of the State, shareholders and customers come first. In this way the institutions will be much stronger in future.

The eventual figure for Anglo Irish Bank is €29 billion, with Irish Nationwide Building Society at more than €5 billion. These figures indicate that those banks had reckless lending. The only question we must ask is in what instances were people encouraged to lend and where were they encouraged to lend on the basis of bonuses. Was there knowingly reckless lending to achieve bonuses? If that is the case, further action will be required.

I am very conscious we will find it very difficult in some quarters to get straight answers on how the Opposition will deal with difficulties as part of a consensus. In fairness, Fine Gael has come forward but we have not yet had plain speaking from the Labour Party. If it wants to go the old route of plain opposition without explaining to the public the truth of the matter, the public will in time realise that, as a knee-jerk reaction, it may have looked at Labour but, in the end, the party did not give clear answers. Such action will not stand to it and all parties in the House must realise that measures must be taken, some of which will be difficult.

The targets for 2014 are ambitious but achievable. We must work cleverly together. We can consider our export growth and look at employment opportunities while we make cuts. It cannot just be a one-way street.

I spoke on the Order of Business about specific projects. I had in mind projects such as wind turbines for farms. I have been told from what I am sure is a reliable source that the VAT element of wind turbines means that the rate of return is a ten-year cycle. If the VAT element were done away with on the basis of their green credentials, their return would decrease to eight years which would become viable bank lending. This is a clear case of regressive taxation. In this instance because of the high rate of VAT, the business cannot proceed. If the VAT was eliminated, the current business would include the production of the wind turbine, the construction of same on a farm, the energy and money generated therefrom, which is guaranteed by the ESB, and the substitution of imports of oil. It is a win-win situation. We must examine whether we have any such examples of regressive taxation which we can deal with to create employment.

I can think of many instances, in particular in Tipperary, where hill farmers in Comeraghs, the Knockmealdowns, the Galtees, the Slieveardagh hills and the Silvermine mountains would be only too glad to take the opportunity to install wind turbines. If necessary, funding for the banks could be raised in the form of a bond with a specific purpose. The ESB has guaranteed the price. It is something the Minister of State could examine.

I am also conscious of the fact that there are people abroad who are advising us how to run our business. Fitch ratings agency recently suggested we are not having enough mortgage foreclosures. Having worked in the mortgage sector, mortgage foreclosures are very bad business. It is very costly to try to repossess a house, not only in terms of legal fees but also in terms of security fees on the house, auctioneer's fees and maintenance of the house. On the other side there is the trauma to the family and the cost to the State.