Phil Prendergast (Labour)

I welcome the Minister of State, Deputy Hayes to the House and wish him well in his brief.

I listened to his speech earlier. I did not hear Senator Boyle's speech, but I am sure he will fill me in on anything that I missed. The fact that the IMF-EU-ECB troika has just completed its quarterly review of our finances gives us a fairly good idea of where we are at. The economy is on a precipice and we have taken firm steps to address the banking crisis once and for all. Our real economy is still in tatters and any unforeseen shock might well put us into sovereign default territory. The Greek crisis is particularly worrying in this regard.

An increasing body of opinion suggests that debt restructuring is on the cards before the summer is out. These indicators have been well touted in the media and the effects on the EU economy and on Ireland in particular could be serious. The Government is being forced to take decisions on bank support that it had not wanted. Senior bondholders of the two pillar banks are being protected because these institutions cannot look to the capital markets for funding while at the same time not paying back existing debt. The Financial Regulator, Mr. Matthew Elderfield, says that protecting senior bondholders in the pillar banks is cheaper than applying haircuts, because those banks would be charged unsustainably high interest rates when they return to the markets. In the event, taxpayers would be asked to pay more money than they are now paying in, and I really do not believe the taxpayer can take one further hit.

The money going in now will attract private capital, which will reduce the amount the taxpayer will have to put in. There is a minority view on the board of the ECB to the effect that senior bondholders should take a hit, so perhaps more needs to be written on that subject. However, the majority view is that if bondholders suffer losses on such safe financial investments, that is, senior debt in regulated banks, this could spark a new crisis of confidence in the eurozone. That is the big fear.

I acknowledge that economic activity here has fallen by 15% since the end peak of 2007, as the Minister of State said. This has had an enormous impact on living standards, although people are coping and adjusting quite well. We have more competition now, and there is cheaper electricity, for example. People are shopping around, and nobody accepts the first price he or she is being offered. They are looking for the best bargain not because they want to, but because they need to. That is the big difference.

It is surprising that the media is asserting that this Government has not got Ireland a better a deal, or somehow has reneged on election promises. In the light of the actions being taken now, this could not be further from the truth. It was said here earlier that there was an immensely long honeymoon period for this new Government. I do not believe this is so. There has been an absolute "hit the ground running" element to this Government, and an immense amount has been done within a very short period. Not only has this pace been necessary to indicate that there has been a genuine effort at reform, but a real effort is also being made in having measurements that will stand up to scrutiny.

I spoke on the Order of Business today on payments to people who are leaving office, as well as on bonus payments. Ordinary members of the public find it very difficult to understand how people justify these bonuses. The standard answer is that it is in the contract and that this element cannot be changed. I have already gone on record as saying that elements of that contract should be put up to public scrutiny. When we have Oireachtas committees with some degree of accountability, we can bring those people in and ask them how they justify their bonuses.

In my opinion, a bonus is supposed to indicate that a person performed at an extraordinary level that is worth so much. What is the benchmark for measuring people's output? How can these people be protected in law when they are getting huge bonuses for having spectacularly failed at their job? It is hard to justify these pay scales to people when they are so much more than their natural needs. I am not saying that we should all live in poverty, but it is very difficult to explain that to people on the ground. They do not understand it when they cannot get a medical card, a rent review or a re-evaluation of their rates. People are utterly confused about the mixed messages that are being sent out. Having been in the Opposition and listening to members of the last Government saying that these things were set in stone and could not be changed, I believe that we now need to look for reform everywhere.

The media are commenting on issues that have not been concluded, and this Government has certainly hit the ground running. The Tánaiste used an interesting word when the latest bank recapitalisations were announced. He referred to the Government's engagement in a "process" with the troika and a diplomatic offensive with our European partners. It seems that too many people are making assumptions about how the economy will be funded in future. There has been unhelpful rhetoric coming from some European states, as if it has nothing to do with economic analysis and everything to do with domestic political considerations. We all know that is not the case. There is broad agreement on the need for peripheral economies to recover to address shaky confidence in the EU, and I believe this will be the ultimate consideration for those with whom we are negotiating. If circumstances change, the deal will have to change as well. I can understand a Minister not wanting to say this, but it seems self-evident to me. I would urge commentators to view the Government's approach to negotiations as something that is flexible, but also something that is evolving. We will only know the terms of the bank bailout and the terms for sovereign funding long after they are written.

I thank the Minister of State for listening to me and I wish him every success.