Sean Barrett (Independent)

I welcome the Minister of State and thank him for his speech. It was terrific to have a copy of it. He stated: "Now is a time for euro area member states to contribute to ensuring financial stability within the euro area." Reading the Bill, all I could do was to assent grudgingly. I realise opposition might be futile, but we will return to this in a few months because we are papering over the cracks in the euro area. This is because the problems are much more fundamental than we realised at the time, and the euro is flawed in its design. We did not put enough thought into it when we joined it. As we speak, the Scandinavian countries and the United Kingdom were correct not to join it. This raises the issue of economic expertise in Ireland and what the Wright report stated about the Department of Finance having only 7% of its people qualified. Serious people warned us this would happen prior to when we joined the euro and we did not take a blind bit of notice.

This measure is a bandage. I approve of bandages in the short term as they bind up wounds and stop the spread of infection. However, it is also the socialisation of inefficient banking. This was done nationally on 30 September three years ago and today the European banks are doing it. Their inefficiencies and wasteful lending are being visited on the taxpayer yet again. Due to the faults in the euro, it is estimated that to leave it would cost €11,000 per family. Based on the Colm McCarthy estimate, we are approximately €18,000 worse off and our GDP will be 44% less in 2013 than it was in the national plan. One of the faults of the euro is that massive irresponsible bank lending was funded by the currency.

In 2001, Milton Friedman stated in The Irish Times that the euro was adopted for political purposes and not economic ones as a step towards the myth of a united states of Europe. He stated he believed the effect would be exactly the opposite as the need for different policies, such as tightening monetary policy in Ireland or a flexible monetary policy in Italy, would produce political tensions that would make it more difficult to achieve political unity. He stated Ireland was stuck with the euro and asked:

How would you break out, and start all over again to establish a new monetary system, the punt? You are not going to give it up. You have locked yourselves together and thrown away the key.

They have locked themselves together and thrown away the key. That is the basic design fault.

It is incredible, if the Minister reflects on it, that there is no exit from the euro. Someone said to me that if a man in College Park was offering free trips to the moon, a big queue would form but what would happen if one saw in the small print or if it was not stated that there was no way back? What kind of people designed the euro that one must repeatedly paper over the cracks by measures such as this? That must be the first thing when one is asked to make a contribution towards financial stability.

Peter Sutherland as good as said today that he cannot foresee a solution without some form of Greek restructuring, which is probably a nice word for a default. He knows more about Europe than probably the entire assembly of the House. Who allowed Greece to join and who is compelling it to stay? Would it not have been better if there had been sensible rules on joining and Greece was allowed to go now under some arrangement, devalue its currency and get back into business? I do not see the measure as helping Greece very much at all because of the design faults.

Another design fault is the one-size-fits-all approach. As Milton Friedman pointed out and speakers previously indicated, the policy that is needed in Germany is different from the policy required in the peripheral and Mediterranean regions. In this country's case it was a disaster. I refer to the massive lending of euro funds by our banks in real estate and financial intermediation. There was an increase in personal lending by a net €57 billion. Real estate lending increased from €4.8 billion to €97.5 billion. Lending for financial intermediation increased from €18.3 billion to €97.5 billion. Lending in construction increased from €1.8 billion to €22.3 billion. By contrast, the increase in advances after we joined the euro in manufacturing and agriculture were €4.8 billion and €2.6 billion, respectively, amounting to only 1.9% of the total increase in advances. European banks were lending irresponsibly, to what Morgan Kelly called inferior rugby players running Irish banks. It has been a disaster for this country that there were no procedures to control the capital inflow and its use.

It contrasts with the exercise of economic sovereignty in the 1990s. When we did devalue in 1992 we experienced a period of growth afterwards. Throwing away economic sovereignty, which I support the Government in now seeking to retain and restore to this country, was a serious mistake. It was obvious that it would end up where it did on 29 and 30 September 2008. The reform agenda - the sticking plaster - must include a totally new regime for banks and a much smarter Department of Finance in terms of the treaties it gets us into, and a much more active Department in controlling public expenditure which to some degree includes measures such as the bailout. Putting in more money and returning to the markets encourages more wasteful public expenditure. The objective should be to get out of the markets and to run the country on a balanced budget basis. I am less than enthused about the goals.

In terms of problems such as regulatory capture, the growth of bureaucracy and interest groups, I support the whistleblower legislation to deal with that. In retrospect whistleblowers might wish to look at the 2005 report from the OECD which pointed out that public expenditure in this country was rising over 5% when it was actually declining in real terms in Germany by 0.5%. We had tied ourselves to Germany and pursued the exact opposite policies. That was bound to come unstuck. Those in the OECD who wrote the whistleblower part maintain that in this country the report was diluted. We were warned. It would be useful if we could find the original report. We were warned that pretending we were honorary Germans and behaving in the exact opposite way and being allowed to do that within the eurozone was bound to lead to the kind of tears we have experienced in recent times. I hope the whistleblowers in the Government will look at that.

The definition of successful macro-economic management was made by William Martin, the chairman of the US Federal Reserve. His most famous quote was about the trick being to take away the punchbowl just as the party gets going. Ireland had a European finance punchbowl. We gave in more punchbowls and then we gave the banks a free lift home with more than €60 billion worth of our money.

I do not see anything fundamental in what the Minister has brought before us to reform a system which was poorly designed and was a disaster for this country. Looking at the island of Ireland the sensible part was the Northern Ireland part, which stayed out of the euro. The euro is so flawed it cannot succeed. The reason we have the Bill today is that Europe has bankrupted the IMF. All the money that is used to bail out inefficient governments worldwide is gone. Europe has to get its act together, think the policies through and stop making decisions at 4 a.m. When Irish people reject European initiatives, which were flawed, as we did in two referenda, I hope the Government will not again run referenda twice because perhaps the people got the result right the first time.