Fiach MacConghail (Independent) | Oireachtas source

I welcome the Minister of State to the Chamber. The last time we debated the issue was not, as Senator D'Arcy stated, late at night but early in the morning when the sun had not even risen. During last week's debate, we finally dealt with the dissolution of an ugly and toxic chapter in our history, namely, Anglo Irish Bank and Irish Nationwide. Members had to decide how to vote on the issue without knowing the full equation. While it was clearly an historic occasion, it was discomforting and troubling that Members had to vote on the basis of trusting an incomplete scenario. As I stated on the morning in question, we had to take a gamble, a punt, that the full equation of our bank debt restructuring and, hopefully, some write-down of the debt would be delivered in the subsequent days. In the end, although the restructuring of the debt was only partial in that no write-down was achieved, none of the reckless activity of the rogue, criminal banks of Anglo-Irish Bank and Irish Nationwide, which was underwritten by the previous Government, was forgiven, cancelled or reduced.

Yesterday, in The Irish Times, Ashoka Mody wrote:

What is the principle that requires the Irish taxpayer to honour the debts of a rogue bank? The promissory notes deal must not be judged by the relief it provides to the Irish budget [which it does]; the right benchmark for its achievement is the debt obligations that live on.

Mr. Mody sounds a note of clarity. We are in a peculiar, Irish position in this regard. As David McWilliams puts it, we are a debtor and creditor to ourselves.

This deal means it will no longer be necessary to make the annual promissory note repayment of ¤3.1 million over the next ten years. The replacement of the promissory note with long-term bonds will significantly reduce the financing needs of the Government and kick the can down the road in the hope that inflation and growth will not overburden our children's and grandchildren's generations. The total cost to the taxpayer is likely to be ¤55 billion over the next 35 years or thereabouts. We are dependent on growth, job creation and reducing poverty and inequality in society to avoid overburdening our children.

The Minister of State predicts that the short-term gain will not lead to a long-term cost but he cannot assure us that this will be the case. What the promissory note deal has done is achieve certainty. We now know how much we have to pay and how, when and for how long we must pay it. Anyone managing household budgets can relate to this. We must now continue to negotiate on the rest of our bank related or legacy debts.

We must seek solutions that will further improve our debt sustainability, in particular the extension of our bailout loans. It is a relief that the new arrangements will result in annual savings of ¤1 billion in Government spending from 2014 onwards. We remain in the grip of the troika-imposed reduction of the budget deficit to below 3% of GDP by 2015. This will require further cuts in spending and increases in taxes unless significant economic growth occurs. There is unlikely to be a significant spike in economic growth, which was initially forecast to be 2.2% in 2013 but is now forecast to be less than 1%. There is also no sign of an increase in jobs.

I have heard the Governor of the Central Bank, Professor Patrick Honohan, discuss candidly on radio the challenge of mortgage debt and the lack of action from our other banks. The Governor was sending out the strongest possible warning to everyone that the Government and the banks are not fulfilling the obligation on them to tackle this problem. I would welcome a response from the Minister of State on that issue.

The austerity measures placed on us by the IMF, along with the promissory note deal, mean that we are likely to make an easier exit from the bailout programme and return to the markets. We now need to realign our emphasis away from the austere philosophy of the IMF towards the profound responsibility of Government to citizens and, in particular, vulnerable sectors of society. I heard the Minister of State's colleague, the Minister for Social Protection, Deputy Joan Burton, suggest in the Dáil a more nuanced citizen-centred approach. There is a limit beyond which additional austerity becomes counterproductive. After five years, we are close to that point. The IMF has admitted in its staff report that it underestimated the affects of austerity on economics throughout the financial crisis.

Today, the Caritas Europe study on the impact of the European crisis was published. The first in-depth examination of the impact of austerity policies on people in the five EU countries worst affected by the economic crisis concludes that the policy of prioritising austerity is not working. It presents a picture of a Europe in which social risks are increasing, social systems are being tested and individuals and families are under stress. The report's main conclusion is that austerity is not working and an alternative is needed. It makes a series of recommendations, including that EU funds play a bigger role in addressing poverty and that social monitoring should be put in place for countries in EU-IMF programmes.

According to the CSO, over 700,000 people across this State are in poverty, of which 14.2% are in employment. The Minister of State spoke eloquently about pride and self belief. We need to talk about our vulnerable citizens and how we might alleviate their burden, which is directly linked to our bank debt and bailout programme. Ordinary vulnerable citizens are shouldering these challenges. I urge the Government to look out for them.

In hindsight and with a week lapsed, I am glad that I voted with the Government to dissolve the Irish Bank Resolution Corporation, IBRC. I acknowledge and congratulate the Minister for Finance, Deputy Noonan, on his leadership in achieving this significant step towards the unburdening of our debt. Tús maith, leath na hoibre.