Brian Hayes (Dublin South West, Fine Gael)

I did not interrupt the Senator.

It is arguable that our banking position now is better than that in Spain which is facing a crisis. It will actually have a lower tier capital ratio than ours. It is experiencing what we experienced 12 or 18 months ago. I refer to the process started by the previous Government. At least we should recognise we have gone through the process and put our banking pillars in place. It has been cheaper than we expected, albeit at huge cost to the taxpayer. Importantly, we are making a success of our programme. Not every country can say this; Greece cannot do so. Another country is now involved in a programme. We are doing what we must do, irrespective of finding the bigger solution to the eurozone crisis; namely, fixing the deficit. We have a big, fat deficit, less than one quarter of which is banking debt and the great majority of which is due to our overpaying ourselves and not raising the requisite capital through taxation as a means of funding services. While we are making considerable progress, let us not forget that the majority of the debt we must pay has nothing to do with the banks. It is due simply to the fact that there is a fundamental disparity between tax revenue and expenditure. We must get this right over a number of years.

I do not want to comment on Article 136 which was referred to by number of colleagues, not least because the matter is before the courts. I have far too much respect for the concept of the separation of powers to intervene in an issue being adjudicated on by the courts. I will address a number of the points raised by colleagues.

Senator D'Arcy raised the question of our contribution and asked how it would be treated in the accounts. It will have an impact on the Exchequer borrowing requirement but not on the general Government deficit. The callable capital will be accounted for as a contingent liability. In the worst case scenario, if the money was called in, it would be a contingent liability carried by the State. There are other aspects also, about which I will talk later.

The Senator also asked whether a unanimous decision or legislation would be required to increase the authorised capital. I understand to increase the authorised capital stock of the ESM a unanimous decision of the ESM's board of governors will be required. In Ireland's case, an increase in the authorised capital that should increase Ireland's contribution or subscription above the threshold of €11 billion would also require an amendment to the legislation before us.

On the question of immunities, I listened to what the Senators had to say and the doomsday scenario. The same rights, privileges and immunities under the ESM apply under the United Nations, the World Bank and the European Commission. These are international bodies corporate and there is no distinction between the immunities, rights, privileges and protections that apply to them and those that will apply in this instance. To present the ESM as some kind of mad 007 agency that will follow a trail of mad financial destruction across the world is to reflect the desire in all of us for a thriller, but the reality is that the agency is no different an animal from any international organisation. It has been set up as an international organisation because it will have leverage to borrow money on the international money markets at a rate that will probably be more credible than that which can be obtained by many sovereigns. We can discuss this issue further tomorrow.

On the stepping-in and stepping-out facilities, Senators are correct that under the EFSF scheme, one no longer makes contributions on becoming a programme country. In the case of the ESM, however, the stepping-in and stepping-out facility will apply. Irrespective of whether one is a programme country or obtaining funds, one must continue to make a contribution. It is like a gigantic credit union, although I am sure the credit union will not like me comparing it to the ESM. In order to draw down funds, one must put funds in. That leads to my fundamental point, that if anyone can show me a part of the world where we could obtain money at a rate of 3% or less, he or she should do so. Senator Marc MacSharry who thinks I was not listening to him made a valid point.