Liam Twomey (Fine Gael)

It is unusual we are having statements on the EU-IMF programme for Ireland after the so-called Celtic tiger of recent years. We have pumped billions of euro into Irish banks, yet the Minister of State is talking about an additional 10,000 loans from Allied Irish Banks and the Bank of Ireland, valued at €16 billion, being transferred to NAMA. This means the average value of each loan is €1.6 million. This means a number of the loans must be valued at or below €1 million. The tranche of loans being transferred is substantial. Will the Minister of State elaborate on this when he responds?

Part of the programme involves an additional €25 billion contingency fund for the Irish banks. Will the Minister of State expand on where this €25 billion will be directed? It is a lot of money to have as a contingency fund, especially when we are just about to pour another €10 billion into the banks from the EU-IMF fund. When the Minister of State is thinking about where the €25 billion will be directed, he might comment on the report published by the Central Bank stating that bankers have given themselves bonuses for this year, in spite of the cuts the Government will be making in the budget next week. It seems a bit ridiculous that bankers are paying themselves bonuses in spite of the billions of euro poured into the banks, the additional €16 billion in loans now to be transferred to NAMA, the €10 billion we are putting into the banks, the €25 billion contingency fund to bail out the banks further, and the shrinking of the size of the banks. There seems to be an unbelievable contradiction in this regard. Will the Government ever take control of what it is supposed to be responsible for in regard to its banking policy? Hearing about bonuses is driving people crazy.

There is a need for the Minister of State to tell us how we landed in this mess. Time and again, different contributors in this House have pointed out how we walked into this crisis. Whatever Professor Honohan heard in Hong Kong in August frightened him enough to come back to Ireland and state we need to get our relationship with the international bondholders right. At that time, they had stopped lending to Ireland. In September, Mr. Olli Rehn wrote a front-page article in The Irish Times stating we would need more stringent cuts. We went through the farce of the Green Party's consensus for a few weeks before reality slapped us across the face. Thereafter, the Government was honest with us in stating the adjustments we need to make were no longer valued at €7.5 billion but at €15 billion. We never got a clear explanation for this, nor was it outlined when we would be told.

There is a sense that our European partners were losing patience with their partner in Ireland and that they started to push the agenda to get the Government to adopt a more realistic outlook on what was occurring here at the time in question. Ministers were in denial about the IMF but were also in denial about the state of our economy only six weeks before the arrival of Mr. Rehn in Dublin. There is lingering concern among the Irish that there is more we need to know about. Perhaps the Minister of State will explain further what is happening within the Irish banks and what sort of surprises we can expect to come down the tracks. There is a need to know.

Everyone is taking a hammering in regard to what is happening. The Minister of State is telling us the European Union will not touch our corporation tax rate of 12.5%. This is possibly true. Has any pressure been put on the Government by our partners in the European Union to change other aspects of our taxation policy, thus rendering our position on corporation tax null and void? For instance, businesses registered in Ireland but which do the majority of their work outside this jurisdiction may be forced to pay VAT or some other tax on earnings in other jurisdictions. This would sort out the problem for the Germans and French but would be detrimental to our potential to earn revenue from taxation. Are there ongoing discussions at EU level on this issue? Does the status quo remain for companies registered in Ireland? Are there proposed changes to other taxes that may reduce our tax revenue from companies operating outside the State?

There are two aspects to the plan. One concerns the adjustments we are to make by increasing taxes and cutting expenditure and the other concerns potential growth. The variables for growth next year are still quite significant. Dr. Peter Bacon has stated there will be no growth next year, while reports from other quarters indicate that the rate of growth will be 1.75%. This is an important issue. Perhaps the Minister of State might comment on the further adjustments which might have to be made if the rate of growth is at the lower rather than the upper end of the scale.

As many have stated, a significant jobs strategy must operate in tandem with whatever actions we take in the coming years because otherwise we will find it impossible to extricate ourselves from the current economic mess. In the context of the national recovery plan, the Government proposes to cut capital expenditure by €1.8 billion. This money is for the provision and upkeep of roads, railways, harbours, schools and hospitals and a reduction of €1.8 billion means that many of those who rely on State contracts to remain in work will find themselves unemployed. Were options other than introducing large cuts to capital expenditure, for which good value for money is obtained, available to the Government?

Will the Minister of State expand on the savings of €1 billion it is proposed to make in respect of goods and services? This is a significant amount of money and perhaps a better breakdown might be provided of the areas in which the money will be saved next year. Perhaps we might be obliged to wait for the budget before we obtain an indication of what is involved.