Darragh O'Brien (Fianna Fail) | Oireachtas source

I thank the Acting Chairman for the lesson in how I should conduct myself. I thank the Minister who is very welcome the House on Second Stage of the Bill, the Remaining Stages of which will be completed during the week.

My party supports fully the legislation which provides the technical basis for the recapitalisation of banks within the eurozone. It is complex but it was announced in the June 2012 summit and, as such, it has been slow in evolving. There are parts of the process which are still required to be completed. A mechanism has now been put in place for future bank resolutions, but while the Minister has clarified certain elements of it, we are still missing a clear pathway for countries like Ireland on retrospective recapitalisation. That is what people are looking for following the seismic shift in EU policy announced over two years ago. The Taoiseach and the Minister for Finance have acknowledged that when the State had to step in to save the banks, there was no mechanism like this in place unfortunately. That is why it is important that it is in place should a banking crisis like the one we had visit any other eurozone state in future. That is important in itself and, fundamentally, why we support the Bill. We need to put those mechanisms in place. This was not there in previous times unfortunately. The Minister will be bored hearing this but it is important to record again that Ireland took the hit for the rest of the European banking system. While some of it was deserved, the hit was disproportionate.

It is important that it is agreed by the board of governors when the time is right that we can access this retrospectively, which leads me to a couple of questions. The Minister has made soundings in public comments in relation to the possible sale of the State's share in AIB.

Should that happen, would that mean we are effectively throwing in the towel on retrospective recapitalisation of the moneys put into Allied Irish Banks? How would that fit into a future retrospective recapitalisation? If the State recoups X amount, would it be then the case that we could go back and look for the difference in whatever we were to raise from the sale of AIB, for example? Would we be able to go back into the market and recoup the rest of the money that the taxpayers have put in? That is a fundamentally important point, and the Minister has stated in his speech that it is still something he is pursuing.

It is not easy to get agreement, but mutual agreement is needed by the ESM board of governors on retrospective recapitalisation. I am wondering how possible that is. At the end of the day it is going to be a political decision, which, in my view, will come from Germany and France. In fairness to this Government and to the previous one, the adjustments that have been made and the sacrifices the public has made to get our house and our banking situation back in order have meant that a contagious effect on the rest of Europe was not seen. This is because we acted on the night of the guarantee and have acted since then. I believe, as do most people, that Ireland is entitled - and I do not use that word lightly - to fair play from Europe. Fair play from Europe is not simply allowing the early repayment of the IMF loans or a reduction in the interest rate, which was punishing at the time anyway and was forced on us.

It is important that all parties and Independents are seen to be supporting this Bill. I am assuming all parties support it, although I note that Sinn Féin has been absent most of the day, for obvious reasons I would think, and they usually have a view on European banking policy, our fiscal approach and how they would do things. Who knows what will happen in the future? I am always hopeful that we will learn from the mistakes that have been made in the past across the eurozone and that the banking system will learn from them too. I am not sure this is always the case, and that is why it is important that a mechanism is in place into the future. What I and most people want is progress on the stated policy of a real break between banking debt and sovereign debt, which is brought about in this Bill. However it is also important to consider retrospective capitalisation and the recouping of some of the moneys that would be due to the taxpayer on the back of us taking the decisions that effectively we had no choice but to take at the time.

The Minister states that he hopes the process in relation to the draft guidelines on retrospective direct recapitalisation would be completed by November of this year. I hope at that stage, when it is appropriate to bring those guidelines back into the House, he will do so. I hope that the Minister will continue the work he is doing with other Ministers to try to convince our European partners that this is the right thing to do. I know that the rest of Europe and the European economy has its difficulties and challenges at the moment, as we also have at domestic level even though growth rates would seem to suggest otherwise. While we are dealing with that it would be a good signal for the Irish people to show that the EU works, that it does take into account the mistakes that happened in the past, and that it does not penalise the Irish citizen for taking a hit for the rest of Europe.

I very much support this Bill and on behalf of my party here in the Seanad, we will certainly assist in its early passing over the rest of the week. I would ask the Minister to give a commitment to come back and report to the House on his ongoing negotiations after 4 November this year, perhaps on Committee and Report Stages.