I welcome the opportunity to speak on what I think is one of the most significant motions to come before the House. If the loss of our sovereignty in 2010 was such a significant event, it is important that the Dáil has its say on the matter, and I welcome the fact that the Government Chief Whip acceded to my request for a debate on it.
It is important to put the debate in some sort of context. When the troika came to town in 2010, our banks were bust, the number of unemployed people had trebled to 450,000 from 150,000 in 2008, our tax receipts had collapsed from approximately €50 billion to €30 billion, and our international reputation was in tatters. All of those issues combined led to a loss of market confidence in the Irish economy, and in order to maintain some degree of normality, we sought outside assistance through the troika’s programme. Three years later, in a tribute to the resilience and forbearance of the Irish public, whose sacrifices have ensured the progress that has been made, our international reputation has been re-established, and I commend Deputy Costello and the Tánaiste in the Department of Foreign Affairs and Trade on the leading role they have played in that respect. All of our Cabinet representatives have equally been responsible for that restoration of our reputation, which has enabled us to renegotiate with credibility some of the worst excesses of the bailout agreement as originally foisted on us by the outgoing Government of Fianna Fáil and the Green Party.
The exit from the bailout is a red-letter day, but in early 2013 we had a renegotiation of the promissory note. That represented significant progress on the liability that the Irish citizen carries as a result of this collapse. Market confidence has been restored. How else would we have accumulated a domestic backstop of around €20 billion to give us some comfort as we put our toe back in the money markets and try to fund ourselves? Of significance in the context of the sacrifices that the public have made, we have reduced the gap between what we spend on a daily basis and what we raise in taxes, and we are committed to reaching the 3% deficit target by 2015. That is the backdrop to all of this.
I am reminded of the line that the moment of absolute certainty never arrives. To be honest, I was a bit taken aback by Deputy Martin’s response last week when the Taoiseach announced the Cabinet’s decision. It seemed to me as though he were suffering from Stockholm syndrome, surrounded by former Cabinet colleagues Deputies Smith, Ó Cuív and O’Dea, as he was less than gracious about the efforts and the endeavour by ordinary citizens to get us to a stage at which we can exit the bailout. I listened this morning to Deputy Michael McGrath’s contribution – it is noticeable that not a single Member of the Opposition is in the Chamber for the debate at the moment – and while I agreed with many of his observations in respect of the context within which this exit from the bailout is taking place, there was an element of political cute-hoorism and having an each-way bet regarding the Government’s decision.
When faced with such a decision one must make it as wisely as possible. The moment of absolute certainty never arrives. Deputy Martin’s approach to this is regrettable.
In the context of this debate and as we contemplate the sustainability of our economic model, it is an appropriate time to raise the EU Summit of 29 June 2012 and ask where we are in breaking the vicious link between sovereign and bank debt. The Minister, his Cabinet colleagues, the Minister for Finance Deputy Noonan and the Taoiseach are as anxious as everybody else to build on that. However, to call a spade a spade, we have run into a cul-de-sac in our efforts to build on that. It is worth recalling that the summit statement stated:
We affirm that it is imperative to break the vicious circle between banks and sovereigns.
The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme.
We are some 18 months on from that and, unfortunately, we have seen practically no tangible progress on that matter. Is it any wonder that politics stretches credulity on occasions with the public when we see that lack of progress on an issue of such enormous significance? We have pumped €64 billion into our domestic banks in an effort, originally, to stop the contagion. “Contagion” was the buzzword in 2009 and 2010 when they were fears across Europe. We were asked to take a hit for the team and we did so. It is a reasonable conclusion that we are having difficulty getting retrospective recapitalisation, although I do not want to make that conclusion. There is another way to skin the cat in respect of getting back that money for the Irish Exchequer. Our level of indebtedness is unsustainable and we need a game changer on this matter.
AIB and PTSB are State-owned and we have a 15% stake in Bank of Ireland. The Irish banks have a €70 billion tracker mortgage book on which all those banks are losing their shirts. That is somewhat akin to the €64 billion we put into our banks to comply with the terms of our bailout. It is good news for 400,000 tracker mortgage holders that last week the ECB sought to reduce its lending rate by 0.25%. That has been passed on to those 400,000 tracker mortgage holders, but at whose cost? There are reports that the 300,000 variable mortgage holders will see a commensurate increase in their repayments. That is grossly unfair.
As a way of dealing with the capital we put into our banks, is it possible to take the tracker loan book out of the three banks I mentioned by virtue of the ESM, ECB or however? PTSB has a survival strategy with the Commission. Because of the significant drain those tracker mortgages are on our banks, could we financially engineer a solution to the tracker mortgages that takes pressure off our banks and allows them to get on to the normal business of banking? It could allow the State to extricate itself from the banking business by selling its stake in banks that would be then viable and get something back for the money we have put into these banks in recent years, particularly the three I mentioned. It is grossly unsatisfactory that this issue has not been resolved yet. However, I commend the Minister and Government on their efforts in getting us to this situation where we are exiting. We have a backstop and market confidence, and we can go back to the market early next year to further build on that backstop. On balance, it is the right decision.