Shane Ross (Independent)

As a veteran of many budget debates in this House, I am reasonably used to the pattern of such debates, namely, the Government spokespersons speak about the parts of the budget of which they approve and the Opposition spokespersons speak about the parts of it about which they can be critical and which hurt individual sectors. While this is not a difficult game to play, it is much more difficult this time round for the Government because this budget contains so little that is saleable to any vested interests or lobby groups, although Senator MacSharry made a good fist of it with the limited ammunition he had in his armoury.

I am disappointed the budget is not being debated from a slightly different perspective. Rather than speak to individual items contained therein we should be examining it in the context in which it comes to us. If we are honest, this budget is the result of a negotiating rout in Merrion Street ten days ago. The Government is not unused to negotiating routs for budgets. This budget, however, despite what has been said by the Minister of State in the debate and by the Minister in the Dáil yesterday, was not written by the Minister or the Cabinet. It was written and dictated by outside forces that are more powerful than our Government and ourselves. Whereas this House is so often the rubber stamp in terms of budgets, the rubber stamp in this case was not this House or the Dáil but the Cabinet. We took our orders from the IMF and Europe. That is what has been delivered to us today. This is not unusual because in the past we have taken our orders on budgets from the social partners. It is enlightening that the social partners are outside the tent on this budget. The reality is that external forces dictated what went into this budget.

I would have preferred us not to have had the type of conventional budget we have and for the Minister to have announced yesterday that we were going to burn the bondholders.

Once the decision was made that the bondholders would not suffer any pain, it was directly and immediately transferred to social welfare recipients, taxpayers and even those with a fair amount of wealth. It would have been better if the Government and the Department of Finance had thought outside the conventional area and stated they were going to make the bondholders pay because that price had to be paid. There is a rationale for this. Whereas the bankers are, possibly, the most guilty parties for the entire fiasco that is the economy and they were reckless and irresponsible, where did they get the money? If we ask the question and point the finger at them and say they were reckless in producing the property frenzy and that they vandalised the nation, we also have to ask if those who gave or lent to the banks must share the responsibility and if they were equally guilty because they also lent recklessly and without accountability. That was the message we should have received. The Minister of State should not paint a picture of horror and despair if that were to happen. It would have been a default, but what would have been wrong with that? Once one defaults, one is saying, "I cannot pay". The reality is we cannot and could not pay. We are, in effect, defaulters.

The lender of last resort has come to rescue us because nobody else will lend us money and the reason is we are bust. If one looks at the budget from the position of a bankrupt nation, one is looking at it from a very different perspective. Instead the Government parties took the line that they would pay off the bankers who had lent recklessly to us because they said no one would lend to us ever again if that were to happen, which is an extraordinary reason because nobody was lending to us anyway. Therefore, what was the big problem? Our credit rating had sunk to levels which made it impossible for us to borrow. Why did the Government not state it could not borrow and that it would reach a settlement with the bondholders on its terms, not theirs. Instead, it has opted to pay a huge price which we probably will not be able to pay.

We have already debated the interest rate. I do not want to go over that ground, but it is horrific. Assumptions made in the four year plan and the budget can be debated until kingdom come, but the growth rates are based on very weak evidence. It would be surprising to the world markets and many independent economists in Ireland if we had a growth rate that consistently averaged 2.75% in the years to come. The figures are wildly optimistic. Perhaps we have to be optimistic, but if we cannot pay the IMF and the European funds the rates they are charging, we will have to borrow more money to pay the penal interest rates on these loans. There is an element of hope and postponement rather than evidence-based information that indicates that we can pay. The budget is based on a premise which is on rocky foundations. Why have we not been given, at least, a good argument spelled out in black and white against the consequences of a default or against a debt for equity swap? Why have they not been spelled out because people are asking everywhere why the taxpayer has to pay for the sins of the banks? Why cannot somebody else, particularly the institutions which lent to the banks, at least take some of the pain?

Why has there not been a good and rational explanation for Ireland not becoming part of a two-tier Europe with two currencies? These issues still seem to be taboo, but if one looks at what is happening in Europe objectively - I do not make predictions because that is dangerous and I do not know what will happen no more than anybody else - the signs of structural strains in the eurozone in Portugal, Spain, Italy, Ireland, France and Greece indicate that is a real possibility. It is not what anybody wants to see happen, but when one considers that Greece, Portugal, Spain, Italy and Ireland could all be bailed out, the pattern that is developing is that the problem will get larger each time and the eurozone will crack up and, bit by bit, we are trying to put sticking plaster on it. However, the direction in which we are pointing means something will happen to the euro. Everybody hopes this will not happen, but let us see what the scenario is because there is a good chance that will happen and, by pretending it is not a possibility every time we have a crisis, we are on the back foot.

The first crisis was remedied by the creation of €750 billion fund which was supposed to be the solution, but we now know the problem is so great that this fund is too small. If the problem affects Portugal, Spain and Italy, it will have to be increased. Everybody has read about the squabbling over euro bonds as the next answer to this growing problem. I do not know whether that will happen, but it looks increasingly unlikely because the Germans will not put up with it. Why, at the very least does, the Department of Finance not spell out to every concerned citizen the implications of a departure from or the break up of the euro for Ireland, as well as the downside and the upside? It is no good saying it will not happen because it may. We are entitled to receive an answer because the budget is working on the absolute assumption that the IMF package will work not only for Ireland but also for Greece and all of the other countries, the economies of which are in jeopardy as a result of the contagion in the banks.

I wanted to get into the detail of the budget, about which I have been somewhat critical, like everybody else. However, those who say the budget is an attack on social welfare recipients are right, but spare a thought for middle Ireland and the middle classes also. What about the young middle class and the middle-aged married couple with two school children to whom Senator MacSharry referred? They have been hit everywhere, not just in their income but also in child benefit, the price of petrol and mortgage payments. This has put them in a position where they might not be able to repay their mortgages or educate their children. That is the reality. More emphasis might be put on the real difficulties of those who have their heads just above the parapet and who will sink beneath it as a result of this budget.