Terry Leyden (Fianna Fail)

I welcome the Minister of State, Deputy Áine Brady, on what is a difficult day for Ireland. Although the position is extremely difficult, I believe the Minister for Finance, Deputy Brian Lenihan, the Taoiseach and the Government are the right people at the right time to deal with this issue. It is an international, national and European problem and Ireland is in a very difficult position. I raised the issue of the guarantee in the House last week and made the point that it must be made crystal clear to people that their deposits are absolutely 100% safe. I made this point last week, this information has been published and the Minister has again made it quite clear. I reiterate, to provide further reassurance, that all deposits up to €100,000 in all Irish banks are absolutely guaranteed by Government guarantee. Moreover, all deposits greater than that amount are guaranteed under the eligible liabilities guarantee scheme. It is important to make this point clearly.

The four-year plan under discussion at present should be brought forward as quickly as possible, perhaps next week, to indicate to our European partners Ireland's future budgetary position. The budget will be introduced on 7 December, as the Minister has made clear that it is not possible to bring it forward because November is an important month with regard to taxation and he must have all the facts available to him before he can make final decisions in respect of budget 2011, in which savings of €6 billion must be made.

I refer to chapter 1 of the report by Professor Patrick Honohan, Governor of the Central Bank, in which he states:

It is hard to argue with the view that an extensive guarantee needed to be put in place, since all participants (rightly) felt that they faced the likely collapse of the Irish banking system within days in the absence of decisive immediate action. Given the hysterical state of global financial markets in those weeks, failure to avoid this outcome would have resulted in immediate and lasting damage to the economy and society. There would have been additional lost income and employment surely amounting, if it could be quantified, to tens of billions of euros.

This was the reason the bank guarantees were put in place at that time. Without such guarantees, the ATM machines literally would have been empty on the following day. It is important to look back to ascertain what happened in September 2008 and Professor Honohan, who an is independent observer, made that point. This quote from his report aptly and succinctly describes the reason the Government introduced a bank guarantee scheme in the autumn of 2008. It was clear to everyone that we faced a very difficult period in respect of our banking system. Funding for the banking system had all but dried up and the banks were facing closure within a matter of days.

Decisions of this nature are never easy to make but must be taken in times of crisis. Thankfully, we have a Taoiseach and Minister for Finance who have the capacity to make tough decisions and to stick by them. I also include the Green Party, its leader and members in government in this regard. In particular, I commend the Green Party because it had only been in government since 2007 and, unlike Fianna Fáil, had no previous experience of this particular situation. Fianna Fáil had been in office during a similar period during the 1980s when Charles J. Haughey was Taoiseach and when we took very hard and tough decisions that brought this country from near-collapse to a period of tremendous development. I wonder, in absolute fear, what would have happened had the Labour Party been in power in the autumn of 2008 and had failed to introduce a bank guarantee scheme.

The motion under discussion is an extension of the eligible liabilities guarantee scheme from November 2009. This is different from the original bank guarantee scheme of 2008. The scheme before Members is a more focused and targeted scheme than the original guarantee scheme and is in line with the European model of bank guarantees that was developed in its wake. No longer does the scheme cover subordinated debt, and rightly so. Moreover, to reflect the problems that participating financial institutions have inflicted on Irish society, significantly higher fees are being charged for the benefit of a State guarantee of their liabilities. Since the introduction of the original bank guarantee scheme of 2008 and its extension last year, the Government has attempted to phase out gradually the extent to which guarantee arrangements are available. The establishment of the National Asset Management Agency and the various bank recapitalisation schemes have been part of this process. One must be extremely careful about how these supports are phased out and such moves must be measured, incremental and responsible. New issues arise almost on a daily basis and these must be reflected in how we implement the eligible liabilities guarantee scheme. In fact, more than €1 billion has been collected in fees from institutions covered by this guarantee and fees will rise following the extension of the scheme.

This scheme is still of great importance to the Irish banking system. It provides certainty to people who have money on deposit with institutions covered by the scheme. These people usually are run-of-the-mill individuals who have put aside some money for a rainy day and who are anxious to be reassured that they are protected. One must always be aware of the power of confidence in the Irish economy. If people do not consider themselves to be protected, they will not go out and spend and this is a key point at this stage. I support the continuing bank guarantee scheme under the new criteria outlined by the Minister. I believe it was necessary in 2008 and still is necessary in 2010. A functioning banking system is essential to our recovery. A banking system that is responsive to the needs of its customers is also necessary and I urge all banks to start lending again to the many viable businesses and companies that are struggling with credit issues.

The Government will issue its four-year plan next week and I understand that is the envisaged timescale. Ireland is being visited by experts tomorrow from the European Union, the European Central Bank and the International Monetary Fund, who will give advice on the banking situation. They will enter consultations with senior Government institutions such as the Central Bank and all institutions of the State will study the situation. As the Minister of State is aware, we are not in this alone but are together with the eurozone. While Ireland is a small country, it is a participant in one of the strongest currencies in the world. Consequently, in such situations one must stand shoulder to shoulder together. This morning, in a detailed and comprehensive radio interview on "Morning Ireland" with Áine Lawlor, the Minister for Finance, Deputy Brian Lenihan, outlined the position exactly. I commend him on his clarity of thought, his views and his strength of character, as well as for the respect shown to him and to Ireland within the European Union. The Minister of State will be aware from her experience of travelling in a ministerial capacity to Europe, as I am from my experience as Minister of State with responsibility for trade and marketing with the former Minister, Des O'Malley, that while we fought our case at the Council of Ministers, we were always treated on a completely equal basis. This is a fact. We must have confidence in the future and must work together and we can overcome the present challenges. I commend the Opposition parties that have agreed on the four-year plan and the 3% target by the end of that period. This is highly positive and I hope we can work together for the future.