Michael D'Arcy (Fine Gael) | Oireachtas source

It was a speech that primarily focused on the general economy. I am glad that he welcomed the Bill. We could rename it as the checks and balances Bill. It is a pity that these types of checks and balances were not in place back in September 2008 when, as Senator Barrett spoke about, people walked up the back steps into the Department of Finance and laboured a bill of ¤64 billion upon the sovereign.

I shall quote a wonderful analogy given by Professor Patrick Honohan yesterday during his speech at the Scottish Institute for Research and Economics at the David Hume Institute. He said:

In the 1990s, Ireland had stuck to the arduous but dry uplands of growth through competitiveness and fiscal discipline that alone lead safely to sustainable higher income, full employment and steady prosperity. But sometime around the turn of the century, lured by a Will O? the wisp, in the form of a property and construction bubble financed by easy access to foreign borrowing, Ireland stumbled into a morass of over-indebtedness from which it is now extricating itself.

That comment sums up the crisis perfectly. Not alone did it lead the citizens of the country into the morass of over-indebtedness but it led the Government into the easy money of transactional taxes. Those taxes looked like we were able to spend in the way we did. Now, to our dismay, we must make difficult and painful corrections.

I welcome the fact Mr. Alan Dukes, a former Minister and now the chair of the Irish Bank Resolution Corporation, formerly Anglo Irish Bank, has said that the entity will cost the State closer to ¤25 billion and not ¤29 billion to ¤34 billion. It is still an enormous sum of money but I shall put it in context. The difference is the magnitude of last year's deficit. While citizens are angry and annoyed over what Anglo Irish Bank will cost the State, and they have every right to be angry, it seems okay to run a deficit of ¤25 billion. The reason it is okay is because I saw a statistic in recent weeks that 50% of the people are in receipt of moneys from the State. That will not be able to continue. Last year's deficit was ¤25 billion, but it is not just in this country. Deficits have occurred internationally. California is running a deficit of $17 billion on top of its state debt of $618 billion. That is the extent to which countries and states are trading, but the system is flawed. We must put in place checks and balances, about which I spoke initially and which is the aim of the legislation. If they had been in place at the start of this century or at the mid-point of the first decade, we might not have reached the point where we must rectify the deficit in the manner we are doing. Here we are, however, and we must get on with it.

I had a couple of debates during the referendum on children's rights with people on the other side of the argument. They held the view that the aim of this legislation will never happen and that we will impoverish the people even further, but that is not the case. I am glad there is now complete clarity on what has become known as the debt brake. It has been made clear that we have 20 years from 2019 to make our general Government deficit 60% of GDP, to be followed by a further decrease of one twentieth from then on. That will put in place the correct grounding to allow us to advance in that at the end of the period there will not be a top-heavy position where taxpayers must pay down the debt of previous generations. The six pack of five regulations and one directive is part of European law and we are codifying it here to provide for it in national law.

I would like further details on a couple of matters from the Minister and I do not mind if he gives me the information now or later. I would like some clarity on the exceptional circumstances. When there is a grey area of that nature, there is potential for somebody, either here, in the European Union or in the Commission, to interpret the legislation in a particular way. I would like to hear more details on it.

I support the multi-annual expenditure ceilings. We must take a more medium-term view rather than the annual view we take.

I have been at meetings of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform with the fiscal council. They are fine people who are in an advisory role. Mr. Donal Donovan was previously at the IMF, Dr. John McHale is from NUI Galway and Dr. Alan Ahearne was with the ESRI and is currently with Trinity College Dublin. These people are giving good advice but they are not the Government, the Cabinet or the Minister. It is good to put in place such structures and have them codified.

I refer to the stabilisation of the banks. The Irish banks may be deleveraging too quickly. They are attempting to pay back the exceptional liquidity assistance, ELA, from the Central Bank of Ireland and the ECB, which has been reduced from ¤186 billion to ¤128 billion. They are doing so at a time when repossessions are disallowed. This point is contrary to the popular view. There are practically no repossessions in Ireland. In Northern Ireland, per thousand homes, it is ten times the rate here. During the week, we learned that 400,000 homes in Spain have been repossessed. The rate of deleveraging is too fast. It is difficult for the banks to pay down the ELA and keep people in their homes while trying to get into a position where we can move them back into the private market to be taken over in the same way as Bank of Ireland, in which the State now owns 15%.