Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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The next speakers are Deputies Dara Murphy, Pat Breen, Joe McHugh, Peter Mathews and Peter Fitzpatrick, all of whom have four minutes.

Dara Murphy (Cork North Central, Fine Gael)
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I wish to share time so I had better get going. It gives me pleasure to speak on this motion. I am chairman of the Fine Gael internal committee on European affairs and have the pleasure of sitting in the Chamber when the Taoiseach speaks before and after European Council meetings. I was here last week before the deal became apparent. I heard some of the language from the Opposition parties, such as terms like "catastrophic", "disaster" and "negligence". Today when the Taoiseach was in the House, there was scant reference to the promissory note deal. It shows that they very much underestimated the abilities of our negotiating teams - the Taoiseach, the Minister for Finance, the Minister of State with responsibility for European Affairs and the civil servants.

One of the arguments still being put forward, particularly by Sinn Féin and Deputy Donnelly, is that if we had sought or even received a write-down of debt, we would be better off. If we had received a write-down of debt and our interest rate had remained unchanged, even a write-down of 33% would not have been as good from a cashflow perspective and indeed a total debt perspective than the deal we secured. Public and media commentators are right to point out that a large body of work remains to be done, particularly with regard to the other legacy banking debt and our ambition to restore strong employment. The strategy adopted by this Government is the one that must be continued.

The first element of that was to restore our international reputation. That was done after 14 years of slowly chipping away at that reputation by virtue in recent years of non-attendance at meetings. Any time I have been in Brussels, it is remarkable to meet civil servants, particularly Irish civil servants, who work within the European Parliament and Commission and repeatedly point out that it was soul-destroying for them to be part of a nation whose government did not attend and did not represent the views of its people adequately.

In order to do any new deal, one must prove and establish that one can abide by the terms of the new deal. The job done by the Irish people and led by this Government in showing that we could achieve targets facilitated the belief among our European partners, and partners they are, that we could abide by the new terms. Very difficult measures still need to be taken. One of the difficult things to explain to people is that we will not now have to make some cuts and increase some taxes but there will still be cuts and taxes as we move to the point where we remove the deficit of €11 billion that we have over the current number of years. It is analogous to the great work in road traffic improvements through reducing drink driving limits. The families of people who have not been killed as we reduce the numbers of deaths on our roads will never know they have been spared a great tragedy. Similarly, there are tax increases and cuts that will not happen. The key element is that the confidence we need to make growth the heavy lifter over the next number of years will follow on from the confidence that is coming internationally from securing this excellent deal for our country.

Pat Breen (Clare, Fine Gael)
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I welcome the opportunity to contribute to this debate. The promissory notes deal announced last week is a significant step in the right direction for the country's recovery. While it is not the cure for all our ills, it is a major step forward on the road to recovery. The deal has vindicated this Government's strategy of negotiation and put us back where we should be among the top with our EU colleagues, which is extremely important. I acknowledge the role played by the Minister for Finance and his officials who worked day and night to achieve this deal, the Taoiseach and Tánaiste and all the Ministers and officials. I also acknowledge the hard work done by the chairman of the Central Bank, Patrick Honohan, to bring about this successful outcome. The Minister for Finance made many good friends in Europe since he became Minister and that was extremely important in securing the deal.

History shows us that the manner in which a country deals with a banking crisis is pivotal to its economic recovery. In the US, the management of the 1933 banking crisis by the Roosevelt administration is widely credited with solidifying the US economic system. In time, I believe the same recognition will be given to our Administration for the work it has done in dealing with the banking crisis. As chairman of the Oireachtas Committee on Foreign Affairs and Trade, I have seen how Ireland's international credibility has grown in stature over the past two years and I acknowledge and thank our embassies and consulates abroad for the significant work they have done in restoring Ireland's reputation.

Not even crocodile tears will be shed for the demise of Anglo Irish Bank because this is a bank that almost sank our country. The real victims of this sorry saga are the ordinary people and families the length and breadth of the country who have struggled to survive or been forced to emigrate. The Government's twin-track approach to dealing with our bank legacy debt is now paying dividends and our fiscal approach to managing our finances is also paying dividends. We have met our fiscal targets, our tax revenues increased by 5.3% last year and foreign direct investment has started to flow back into the country again. The agreement copper-fastens this renewed investor confidence in the country. Recent comments from Standard & Poor's, Fitch and Moody's further boost our prospects for attracting foreign direct investment projects to locate here.

What is crucially important is that we have the money to invest in tackling our unemployment levels, which remain stubbornly high. The Government inherited a situation in which more than 250,000 jobs were lost in the private sector from March 2008 to March 2011. While there was a net increase in the number of jobs created by the IDA and Enterprise Ireland last year, the shortfall in construction jobs, particularly for our young people, continues to pose a real challenge for the country. A return to markets would allow us to invest in further job stimulus measures. There are many projects in my county that need to be started. A new school is required in Sixmilebridge and I know much progress has been made in that regard. A total of 81 new pupils will start there in September. Ennistymon and CBS Ennis all need these projects, which are extremely important because we invest in these school projects all over the country not just in my constituency. We will also see improvements in education facilities for children and will create much needed construction jobs in our communities that are very important. Investment in key infrastructural projects is also critical to breaking the cycle of unemployment. I am thinking of the Tuam to Gort bypass that, if completed, would open up access to the west of Ireland and Shannon Airport. I welcome the deal done by this Government and think it was a great day for the country last week.

Joe McHugh (Donegal North East, Fine Gael)
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I welcome the opportunity to speak here today on this issue. I will reflect some of the feedback from my constituency and county over the weekend. While people had their pragmatic hats on, they said this will not remove the obstacles and challenges we face in the long term. However, it is a start and that was very much welcomed. I welcome the efforts of the Minister and his team and his entire operation over a long period of time to get a deal on the promissory note. However, the deal does not end Ireland's bank crisis.

Ireland's banking crisis will have a debt ratio way above 100% for a while yet, according to those in the international markets. I have learned from those working in the system that the C-word, "contagion", is no longer used. That was the word on everyone's lips - politicians, civil servants, ECB members - during the period six months ago and up to 18 months ago. Contagion was the worry. In the past six months the C-word has not been referenced and that is a good sign. While we have a long way to go to reach the overall solution, Armageddon has been avoided.

It is important to acknowledge the role of our team, in particular the civil servants in the Department of Finance and in embassies. I wish to highlight their efforts. The legislation was printed at some time last autumn - I am not privy to when the IBRC legislation was being prepared. It is worth noting that this information was not leaked because it was so vital to the interests of the State. It was protected by a code of integrity, honesty, objectivity and impartiality written in stone in 1996 by the Civil Service. This House must acknowledge the role played by those civil servants who were led by the competent, seasoned skills of the Minister, Deputy Michael Noonan. It was a lesson to me as someone in his early 40s that wisdom cannot be bought or acquired by accident; wisdom is built up over a long period of time. It must be acknowledged also that negotiation was a very bitter pill to swallow for Government Deputies. We were told to get in there, get stuck in, put it up to them. We were told not to be the best boys in the class and other nonsense. Negotiation is a political bitter pill to swallow but it was the right pill. Confrontation would not have brought us to this point in our journey. Negotiation is difficult; it requires respect. I acknowledge the role played by the Taoiseach in espousing that philosophy from the beginning.

I have only a short time left to speak-----

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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About four seconds, Deputy.

Joe McHugh (Donegal North East, Fine Gael)
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I ask the Minister to stay in touch with his counterpart in Stormont, Sammy Wilson. The Ceann Comhairle was in the North last Thursday. In order to build up good relationships with Stormont I encourage the Minister to keep that relationship strong because NAMA is the biggest creditor in Northern Ireland and that book may get bigger with possible and potential transfer of assets from IBRC. I encourage the Minister to stay closely in touch with his counterpart, Sammy Wilson.

Peter Mathews (Dublin South, Fine Gael)
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I have no doubt whatsoever about the huge efforts, the time spent and the enormous energy expended by the Taoiseach and the Minister for Finance, Deputy Michael Noonan, in getting to this current position. However, where we are at, so to speak, probably needs to be looked at not just in terms of algebra and arithmetic, where it is demonstrated that there has been a lengthening of a period of the amount of indebtedness taken on through the promissory note creation, but the essence of that debt, the losses it represents, are private sector losses. The promissory notes were first created in March 2010, six months into the governorship of the Governor of the Central Bank, who is a co-author and collaborator in the creation of those promissory notes. He was under the strong influence of the ECB to save the eurozone system. It is not right that the increasing amount of promissory notes, until it reached €31 billion, remains on the citizens of this country.

I refer to the article in today's The Irish Times by Ashoka Mody. He was the chief of the IMF team in Dublin, Ireland's mission chief. "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." We know what they are.

There are many blogs which are up to date on the arithmetic and algebra of the extension over 40 years and the interest rates. However, this does not get away from the principle that we have been landed with debts that are not the obligations of the Irish people.

The promissory notes have served the useful purpose of certifying and officially recognising the principle of official sector involvement. That is monetary financing and that is what has happened. Much more of it is needed. The legacy burdens of the crisis must be addressed; the alternative is unending human pain, a culture of national dependency and a fraying European economic and social fabric.

Wolfgang Münchau writing in The Financial Times yesterday refers to the deal as follows:

This is monetary financing for all intents and purposes. The whole structure of this agreement is so convoluted that newspapers do not report all the relevant details. As always, convolution has a purpose. It renders legal what would otherwise not be, and it allows for obfuscation.

In this case, the purpose of obfuscation would be to hide what would otherwise be a contradictory message. You cannot admit publicly in the creditor countries that monetary financing is taking place – this is sacrilege. But then this is what it takes to save Ireland from a debt trap. It was then considered the best strategy to put back the debt repayment by a generation or two.

Peter Fitzpatrick (Louth, Fine Gael)
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The deal done between the Government, the ECB and the Central Bank of Ireland is the first step in the right direction. The State will no longer have to pay €3.1 billion every year on 31 March. Thanks to the savings delivered as part of the deal, the budgetary adjustment for next year will be €1 billion less. Furthermore, we will have to borrow €20 billion less in the international markets over the next ten years as a result of this deal. The annual promissory note payments are gone. This is a step towards the economic recovery and job creation. It will significantly enhance our ability to access the bond market again. The promissory notes will be replaced with a long-term low interest government bond. The first of these long-term bonds will mature in 2038 with the final bond in 2056. Until then, we will have to pay a floating variable interest rate of 3% to 3.5% on these government bonds. The rate on the promissory notes was around 8%. This transaction is like replacing a short-term loan with both interest and capital repayments with a long-term interest-only mortgage. Our lender is the Central Bank and the Central Bank returns its profits to the Exchequer, which is the Department of Finance. It returns its profits to us. Since the Central Bank borrows its money from the ECB at 1% or less, it will make a profit of 2% to 2.5% per year on this interest.

As this money will be returned to us, the effective interest rate on our bonds will be approximately 1%.

As part of the deal and in order to allay the concerns of the ECB in respect of monetary financing, the Central Bank has committed to selling a certain number of Government bonds on the market each year. This means that the potential profit on these bonds - returning from the Central Bank to the State - will be lost to the private sector and that the interest rate may be changed.

Several prominent commentators have welcomed the deal. Mr. Colm McCarthy stated that, in view of the context, the deal was as good as we were going to get. An editorial in the Financial Timesindicated that "it is good that an economically and politically indispensable move was not blocked. Greater fiscal breathing room should help both market confidence and growth in Ireland".

Olivia Mitchell (Dublin South, Fine Gael)
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The Deputy's time is exhausted. He should conclude.

Peter Fitzpatrick (Louth, Fine Gael)
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I have four minutes and only just started. It could not be the case that my time is exhausted.

Mr. Peter Brown of the Irish Institute of Financial Trading has stated it is a stunningly good deal and that the terms agreed are quite amazing. Mr. Karl Whelan who is regarded as the expert on promissory notes is on record as stating, "This seems about as good as we could get ... I think this is a good deal for Ireland."

The remnants of the former Anglo Irish Bank and Irish Nationwide Building Society have been removed from the financial landscape. These institutions have cost the taxpayer €35 billion. There are significant efficient gains which will arise from the liquidation of the IBRC and the transfer of its assets to NAMA. The situation of those indebted to the IBRC remains unchanged and their debts will be unaffected. NAMA has proved to be very efficient in managing loan assets and pursuing developers in the best interests of the State. Pay levels in the agency, particularly at the higher levels, are significantly lower than those which obtained at the IBRC. The promissory notes relating to the former Anglo Irish Bank and Irish Nationwide Building Society served as a millstone around the necks of taxpayers. This does not change the commitment given by the European Union on 29 June last to break the vicious circle between bank debt and sovereign debt. We are still working to ensure we secure a further easing of the legacy bank debt.

Olivia Mitchell (Dublin South, Fine Gael)
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The next speaker is Deputy Tóibín who, I understand, is sharing time with Deputy Dessie Ellis.

Peadar Tóibín (Meath West, Sinn Fein)
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It was shocking to hear an Teachta Joe McHugh who comes from a county with an employment rate of 26% and where individuals have large levels of debt on their shoulders celebrate the fact that the financial crisis had really been confined to Ireland and that contagion had not spread across Europe. He appears to believe this is some achievement. I agree with an Teachta Peter Mathews to the effect that the Government has sought to hypnotise people through the use of complexity in this matter and that the real issue is the fact that not one cent of the State's debts has been written down and that it will still be obliged to pay these debts.

The people have been waiting for a long period for a resolution of this issue. In fact, they were hungry for such a solution. It must be said the Government lowered expectations as much as possible in recent months. It lowered them to such a degree that it is difficult not to fall over them. Ultimately, it saw to it that these low expectations were met. There was some understanding on the part of the people that the debt relating to the IBRC was toxic in nature, that it was not theirs and that, on moral grounds, neither they nor their children should be obliged to pay it. As a result, they were of the view that a write-down was required. It became clear last week, however, that the IBRC would be wound down but that the debt relating to it would not be written down.

The toxic debt created by Fianna Fáil is being paid in full by Fine Gael and the Labour Party. People are shocked that the Government did not even request a write-down of one cent. Its mantra has been that there was no other way to deal with the matter. When the Government states it does not have a choice, this means it has lost the argument. Politics is always about choice and choice lies at the heart of democracy. If there is no choice, there is no democracy. The Minister for Finance has stated he does not know how much the deal is going to cost. As a result of the fact that the repayment period has been lengthened, we know that the deal will be more costly to the State than would have been the case with the promissory notes. Ultimately, we will be obliged to repay a larger sum.

It is important to highlight the fact that we are at the bottom of the interest rate cycle. The likelihood is that the rate is going to increase in the future. The previous deal attracted a circular interest rate, which meant that the cost to the State was 0.75%. When the Central Bank of Ireland is forced to offload the bonds relating to the new deal, a higher interest rate will apply. The bonds to which I refer will be repaid over periods of up to 40 years. Students who are due to sit the leaving certificate this year will still be paying off the bonds at the time when they will be beginning to contemplate retirement. Extending an unfair debt does not a fair debt make. That is the key point.

In many ways, the deal reached last week flies in the face of the movement within Europe to create a separation between sovereign debt and banking debt. Fianna Fáil effectively nationalised the debt initially, but the Government has re-nationalised it. As a result, it will be impossible to share the debt in question throughout Europe. Those in government continually use the homespun analogy which they no doubt use with their constituents and which runs to the effect, "Bejakers, sure if you have a mortgage for a period of time, does it not lower the actual cost of the mortgage?" We have no house in this instance and nothing to show for this mortgage. There is no asset to justify the level of debt being repaid. In fact, the debt in question will give rise to opportunity costs in terms of housing, education, health and welfare payments. Even if one were to accept that the net current value of the debt would give rise to significantly lower real-term repayments, an entire year's worth of deficit will be added to the State's overall debt as a result of the deal done. All the cuts introduced in the past five years amount to €28 billion, only a portion of the amount of debt the Government agreed to repay in its deal with the ECB.

There are two major lies relating to the issue under discussion. The first is that in some way we are being bailed out. The Wall Street Journal indicated that when the promissory notes were first written up, Germany's exposure in respect of Ireland was approximately $200 billion. Of this, $57 billion related directly to Irish banks. At the heart of last week's deal lies the transfer of money to Ireland in order that German, French and other EU institutions will be repaid. We are not getting a bailout. In actuality, those who have not yet been born will be obliged to bail out the institutions to which I refer.

The second lie to which I refer is uttered by those on the Government benches on a regular basis and it states Sinn Féin voted in favour of the bank guarantee. The Minister of State, Deputy Fergus O'Dowd, is not stupid and knows this is not true.

Fergus O'Dowd (Louth, Fine Gael)
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It is true. Sinn Féin did vote in favour of the guarantee.

Peadar Tóibín (Meath West, Sinn Fein)
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I will explain the matter in clear terms. We voted in favour of the initial guarantee, which related to bailing out depositors. The Minister of State is winking at me, which is testament to the sleight of hand shown.

Fergus O'Dowd (Louth, Fine Gael)
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The sleight of hand is shown by Sinn Féin.

Peadar Tóibín (Meath West, Sinn Fein)
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When it became clear that Fianna Fáil wanted to introduce a blanket guarantee, we voted against it. The Minister of State is not stupid and knows this. The fact that he continues to allow people to think we supported the bank guarantee is testament to the type of politics in which he involves himself.

It is important that the Government examine the issue of monetary financing. The ECB has set precedents over and over again in this regard. When a crisis occurs and the euro is on the edge of the cliff, that crisis becomes the catalyst for change. The idea of emergency liquidity remaining in place for 12 to 14 years is tantamount to monetary financing. The buying of bonds on the secondary market is a form of monetary financing. On each occasion the ECB has stretched the parameters of what is understood to constitute monetary financing. When Italy and Spain found themselves on the precipice, the ECB created a system to facilitate the separation of sovereign and banking debt.

That is proof, if proof were needed, that if the Government had gone in with objectives, red lines and concession levels below which it would not go, and if it had used the leverage of walking away from the debt, a crisis would have occurred which would have been the catalyst for change.

Sinn Féin has a great deal of experience with regard to negotiation. The Good Friday Agreement and the St. Andrews Agreement were situations where the Irish Government and the British Government on all occasions tried to lower expectations of what could be achieved. That is the nature of meaningful negotiations. We asked the Irish Government to look for repeal of the Government of Ireland Act. The Irish Government said that would not happen, and that the British would never accede to such a request. We went to Tony Blair and demanded the repeal of the Government of Ireland Act, which was the basis for partition, and we achieved that.

Peadar Tóibín (Meath West, Sinn Fein)
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The point is that if a Government is willing to use leverage there is a far greater chance of getting the necessary deal.

The Government says it could not get a better deal, but we will never know that because it did not ask for a better deal. It is impossible to know the capacity for a deal unless it had pushed for that particular capacity.

The sad fact is that every citizen of this country will pay dearly for this deal. They will pay for it through the household charge, water charges, the universal social charge, increases in PRSI, and the various stealth taxes whereby Government policy on mobility grants, welfare, and domiciliary allowance is being changed to ensure that individuals who were entitled to those three to five years ago will no longer be entitled to them.

Unfortunately, this State still has a debt-to-GDP ratio of 120%. The key determinant of our ability to come back from that debt precipice has not been changed. That is the reason the people at home listening to this debate will see that Fine Gael, Labour and Fianna Fáil nationalised private debt.

Dessie Ellis (Dublin North West, Sinn Fein)
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I reiterate the point made by other colleagues that this debate is no substitute for the debate that should have taken place last week before the passing of the Bill to dissolve IBRC. It was an incredibly arrogant and undemocratic tone that Fine Gael and Labour took when they rammed the Bill through the House before people had the chance to digest even the broader details and consider the consequences. Government TDs heckled and laughed and were drunk on hysteria that at long last they had got something tangible. They had little concern for debating it or even considering its implications, jubilant with the idea that they could sell this pup to the Irish people.

This Government trots out many mistruths on a regular basis to make itself sound successful or to make those who oppose it sound cynical or wrong, but one mistruth which has been pedalled since last week cannot be brushed off as a desperate attempt to deflect. I speak of the claim that the so-called deal on the extension of the debt repayment is a fairer deal. We cannot have fairer unfairness. That is the premise on which the Irish people are being saddled with this debt. It is unfair, and the answer is not to suck it up and say, "Life is not fair" because it is morally wrong and it is not in the interest of the people of Ireland or Europe.

That mistruth goes to the heart of what is wrong with this Government and tells us how it has become Fianna Fáil mark 2. Now they are on the Government benches. When the risk-taking of the European banking sector came back to haunt them, Ireland was asked to bear the brunt, and the good little boys and girls of Europe happily sacrificed the people of Ireland on the altar of European capitalism.

We saved the European banking sector and our repayment was €28 billion in cuts over the past five years. That is nearly two health services' worth of cuts for our trouble. The average Irish citizen has been saddled with a debt of almost €9,000 each, well in excess of the rest of Europe. The banking crisis or, more important, how we allowed it to be handled, ended up costing us approximately €40 billion, which is 25% of our GDP and nearly ten times that of the nearest country in those terms. We have been saddled with all that, and all the cuts, taxes and austerity that came with it. We have been insulted and treated as if we had done something extraordinarily wrong by comparison with the rest of Europe.

Every second night for weeks RTE ran "vox pops" of German people saying that the Irish must pay their way and that they were sick of bankrolling us. We have been treated as pariahs who needed to be taught a lesson and instead of calling a halt to that and saying, "No more", after Fianna Fáil put out the welcome mat Fine Gael and Labour have given the European Central Bank the whole place to do with it as it pleases. Instead of saying, as thousands did last weekend, that this is not our debt and we should not be made to pay it, we have said we will pay every cent and will only ask for crumbs to try to fool our people, along with us.

Today, after this so-called deal, the Irish people still owe everything they owed from the promissory note but now with the added pleasure of owing interest, which is uncertain, and we will likely see that in the end the debt repayment will be doubled.

It is likely I will not be around to see the day Ireland is free of this debt but this Government has copperfastened it in that all our children will be paying for it for many years to come. As Brian Lucey wrote of this deal, it is Frankfurt's way, all the way. As he said, the Government has "... irrevocably linked the Anglo debt to the state". I would like to believe that it is not irrevocable and that we can change things, but the intent of the Government's move has been to copperfasten the debt and make it sovereign.

This deal may be a seismic shift, as the Tánaiste, Deputy Eamon Gilmore, prophesised last June but it is not a massive breakthrough for the Irish people. It is certainly a good deal for the ECB whose members must be laughing among themselves that our Government is celebrating that we now have entered into a situation where a debt we should be not be paying is now guaranteed not to be written down and which is now a wholly sovereign debt. It is nothing short of shameful, and Fine Gael and Labour are either fools or cynics to sell it as something beneficial or fair for the Irish people.

Our Taoiseach, Deputy Enda Kenny, made it clear from day one that we would not attempt to negotiate our debt, as he called it. At that time he stated that we will not be branded defaulters, and that we will honour our debt. Imagine a Government going in to negotiations and conceding the main argument that this is not our debt.

Fianna Gael and Labour were elected on the promise that they would negotiate a deal and burn bondholders. The only ones who have been burned are the Irish people and the generations to come. What will this mean, if anything, for the budgets of 2014, 2015 etc.? Will we see an easing of the austerity measures, and by how much?

Last weekend tens of thousands of people marched and the slogan at that march was, "This is not our debt". Many people realise the long-term repercussions for our people with which the Government has saddled us. The people are not being fooled. We will pay a heavy price down the road for short-term gains.

Olivia Mitchell (Dublin South, Fine Gael)
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The next slot is the Government slot and the first speaker is the Minister for Transport, Tourism and Sport, Deputy Varadkar, who is sharing with Deputy Harrington and the Minister of State, Deputy Costello. The Minister, Deputy Varadkar, has ten minutes.

Leo Varadkar (Dublin West, Fine Gael)
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I thank the Acting Chairman for the opportunity to speak in this important debate. The deal the Government has secured to eliminate the promissory notes and replace them with a long-term bond is a very big step forward in our efforts to restore Ireland's debt sustainability and sustainable growth. It comes a year later than we had hoped, and there are more steps to take in the coming months and years to further improve our position.

This Government on coming to office inherited a desperate situation in which €64 billion had been committed to the banking sector, much of which had already been nationalised. Since then our objective has been to reduce the burden by any means possible, with the exception of default. That is something we have not countenanced because of the immediate loss of confidence that would occur, the sudden deepening and increased austerity that would be required, and the higher interest rates we would all face in the longer term.

However, good progress has been made in reducing that burden. The first thing the Government did was renegotiate the deal with the troika.

Fianna Fáil said at the time this could not be done. Sinn Féin suggested that we should not even try and that we should just send the troika home. Neither party holds that position today.

The renegotiation involved the restoration of the minimum wage, a reduction in interest rates and a lengthening of the terms of our loans, saving us approximately €10 billion in interest and allowing us to retain half the proceeds from the sale of State assets to invest in jobs and infrastructure.

The second step was the liquidation of IBRC, which occurred last week, thereby removing the last vestiges of Anglo Irish Bank and Irish Nationwide from the Irish financial landscape. As is the case with any insolvency, there are associated costs. Costs will fall due to us this year. However, significantly, this is the first time in the eurozone that costs are likely to be shared by unguaranteed senior bondholders. This has not occurred today.

The third step was to eliminate the promissory notes. No capital payments will fall due for 25 years and the average period associated with the bonds is 34 years. This will save €20 billion in cash borrowing over the next ten years and knock €1 billion off the deficit next year and every year beyond that. Independent commentators have estimated that this is the equivalent of a write-down of 30% to 40% in terms of net present value.

Five years ago, when the eurozone and global financial crisis began, it was not possible to liquidate banks or impose losses on senior bondholders, nor was it possible to restructure bank-related sovereign debt such as the promissory note. It is now possible to do so. Had these options been open to the country five years ago, we would be in a much stronger position today. It is an enormous tragedy that the European authorities took so long to change their policy in these areas.

The next step is beginning to pay down the principal sum, or pay off some of the €64 billion that now forms part of our national debt. There is value in the shareholdings and contingent capital that has been put into the banks. We want to recover that, but at the best possible price to reduce our debt burden. Already, €1 billion has been raised through the sale of the contingent capital of Bank of Ireland. That has been used to reduce the bank-related debt. There is contingent capital in AIB and shareholdings in other financial institutions that can be sold if the price is right. Furthermore, the ESM may have a role in buying shares from us in the banks or facilitating the private sale of stakes in the banks, thus allowing us to pay down more of that bank-related debt. A further step will involve the unwinding of the residual bank guarantee, thus reducing potential exposure for the Irish taxpayer.

This week two years ago, while speaking at a press conference during the general election campaign, I stated that a Fine Gael Government would not put another cent into the banks if they came looking for more unless they showed how they would impose losses on shareholders, subordinated bondholders, senior bondholders and other creditors. That speech has often been quoted since, sometimes by critics and opponents and sometimes selectively and out of context. Perhaps I should have been more nuanced at the time but I meant what I said and certainly did not believe the process would take so long or be so difficult. While it might have taken two years, that commitment has now been honoured. Anglo Irish Bank and Irish Nationwide are no more. We have liquidated IBRC and have put it into resolution. Finally, we have put a bank into resolution. This should have happened many years ago.

Burden sharing has been imposed on both subordinate and unguaranteed senior bondholders at long last. The restructuring of the promissory notes represents burden sharing with the Central Bank system for the first time, as pointed out in The Irish Timestoday by Ashoka Mody. This represents a write-down of 30% to 40% in terms of net present value in the view of some commentators. The principal sum will be paid down also, at least in part, through the sale of financial assets acquired as a consequence of the bailouts in the future. Based on my calculations, 2013 will be the first year since the crisis began in which more money will be recovered from the banks and financial institutions than we will pay into them. That will continue into next year and perhaps the year after. In short, the tables have turned and now we begin the process of getting some of our money back from the banks. That represents a significant change.

Another point I would like to make relates in particular to the connection between the austerity regime we are now experiencing and the banking crisis. One of the worst myths circulated among the Irish is that we are facing tax increases and expenditure cuts solely or predominantly because of the banking crisis. That is simply not the case. The problem with the budget and the deficit is a different one from the one we have with the banks. It is certainly the case that they overlap and that one makes the other worse, but it is not the case that they are the same. The reason we are facing austerity, spending cuts and tax increases in Ireland is simply that, during the boom period, taxes were reduced too much. The then Government recklessly reduced taxes to an unsustainable level using a temporary windfall from stamp duty during the property boom and capital gains tax revenue, particularly from the sale of shares in financial institutions. The then Government also increased expenditure too much, and that is the reason we are facing further spending cuts and tax increases. We need to become a normal country again in terms of spending. We are certainly not that because we still spend too much. We also need to become a normal country in terms of taxation again, and that will require some further increases in taxation.

If one compares Ireland with Northern Ireland and Britain, which is providing us with a bilateral loan, one will note that our social welfare payments are much higher. Even after the cutbacks in our most recent budget, we still have the fourth highest child benefit payments in the western world. They are much higher than those in many of the countries that are lending us money, including Finland. Public sector pay, be it that of politicians, policemen or hospital porters, is still much higher than in Germany and Austria, for example. This is still the case even when one takes into account taxation and the cost of living. This is the real truth that we as politicians, in both government and opposition, should be willing to say to people. We should be willing to say that the reason we face further tax increases and spending cuts is not promissory notes, bonds or issues concerning the banks but the fact that taxes were reduced to recklessly low levels during the boom period and expenditure levels were higher than those in equivalent European countries. This trend needs to change.

We have made enormous progress in the past few months. It has been extremely slow coming but it has come. It certainly does not stop here. This has been a major step forward but a lot more needs to be done. We will be seeing that in the coming weeks.

Joe Costello (Dublin Central, Labour)
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I welcome the opportunity to speak on the agreement reached last week on the promissory note arrangement. While much more work is to be done, the deal is a very important step in Ireland's economic recovery. I pay tribute to the Minister for Finance, Deputy Noonan, the Taoiseach and the Tánaiste for the work they have done to make this deal possible. The previous Government lumbered us all with the debts of Anglo Irish Bank and used the cumbersome and very expensive promissory note arrangement to do so. It would have been preferable had the State never been made responsible for these debts. However, the promissory notes were, in effect, already national debt, and any default would have been regarded as a sovereign default.

There is no magic wand that we can wave to make these debts disappear without serious repercussions. Instead of waving such a wand, the Government had to work to restore Ireland's reputation and engage in painstaking negotiations. These negotiations have resulted in a deal that delivers on the Government's commitment to put in place a fairer and more sustainable arrangement. It is a step forward along a path to economic recovery and renewed job creation. This deal means that the annual promissory note repayment of €3.1 billion over the next ten years will no longer have to be made. The replacement of the promissory note with long-term bonds will lower significantly the financing needs of the Government in the years ahead, making it easier to exit the bailout programme and return to the markets, which we intend to do at the end of this year.

The interest rate on the bonds is lower than what the Government would otherwise have had to pay. In effect, the Government has been able to arrange cheaper financing over a much longer period. We have effectively transferred over 40% of legacy banking debt into a very long-term debt and have significantly reduced the cost of financing this debt.

The agreement results in significant cashflow benefits as the State will no longer have to borrow €3.1 billion each March to meet the promissory note repayment. This equates to a cashflow benefit of €2.3 billion in 2014 and €20 billion over the next ten years, which is extremely significant. The deal will reduce the deficit by €1 billion per annum from 2014 onwards and significantly improve debt sustainability. This means the remaining adjustment required to bring the deficit below 3% in 2015 will be reduced by €1 billion. It will have a continuing beneficial effect on the State's finances for many years.

While the total debt has remained unchanged in nominal terms, the real value of what will be repaid has been reduced considerably. There has been much talk about kicking the can down the road, but this ignores some of the real benefits of the long-term bonds being used. Professor Philip Lane has pointed out how the value of these bonds in terms of GDP should be reduced over their lifetime. In 2013 €25 billion is effectively 15% of GDP. The average maturity of the bonds is 34 to 35 years. By 2048, therefore, if nominal GDP growth is 3% per year, the maturity value of the debt will be 5.3% of GDP. It would do future generations no favours if we were to attempt to pay off these debts in the short term or to lumber them with a sovereign default.

The agreement reached last week is another step in working our way out of the economic crisis inflicted on the people by Fianna Fáil. With the reduction in interest on the bail-out loans secured last year and the deal on the promissory notes last week, substantial progress is being made. Dealing with these legacy debts is only one area in which progress is being made to get the economy back on track. Real advances are being made in boosting Irish exports, for example. I am dealing with this area within the remit of my portfolio of trade and development. Last year exports of Irish goods and services increased by 5.1% and are now well above pre-crisis levels. Exports are at a record level and there is a record level of foreign direct investment, despite the fact that we are in a bailout programme. I never hear the Opposition talk about this. The strong export performance underpinned a GDP growth rate of 1.4%, an impressive figure, given the very difficult economic conditions prevailing across Europe and beyond.

Both the Government and Irish business have refocused in response to the economic crisis. The competitiveness we lost during the Celtic tiger economy is back. Ireland's competitiveness now compared with our trading partners has improved by over 20% since 2009. We are diversifying our export markets. The real heroes of the export markets are not the multinationals but the indigenous Irish companies that are becoming extraordinarily innovative and increasing their sales to the international markets by 20% to 30% per annum. The Government's renewed focus on emerging markets is proving successful. Brazil, Russia, India, China - the BRIC countries - and South Africa are being targeted in a special way and 27 other countries around the world are also being prioritised by the Government as part of its trade strategy.

The promissory notes deal is not separate from the commitment given on 29 June last year to break the vicious circle between private bank debt and sovereign debt. The Government is fully committed to the banking union, which is a precondition for utilising the European Stability Mechanism, ESM, to address the capitalisation of the banks that are a going concern. The Government will continue to participate in the development of the ESM, which many in the Opposition opposed, and the structuring of the single supervisory mechanism. The blanket guarantee that imposed an unbearable burden is being substantially chipped away and in due course we will deal with all of it. We have now dealt with approximately 40% of it and have a roadmap for dealing with the rest. We will bring the country back into the bond markets by the end of 2013 and begin the process of creating jobs and growth in the economy, after the legacy that was left to us.

Noel Harrington (Cork South West, Fine Gael)
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I welcome the opportunity to speak on the promissory notes arrangement. First, I congratulate the Minister for Finance, Deputy Michael Noonan, and his team on a job well done. It has been generally accepted by all independent commentators that this was the best deal available in all the circumstances. In fact, some were either shocked or disappointed, perhaps, that such a good deal was negotiated.

There is no doubt that this deal is the result of hard work, strategic planning and intensive negotiations with all our partners in the Eurogroup. This is in stark contrast to the behaviour of the previous Government which had lost touch with our European partners when we were in greatest need of their support. The last Government lost the run of itself. It spent taxpayers' money as if it was snuff at a wake. In previous speeches I have referred to 20 projects over a period of ten years in which there was gross mismanagement of Government expenditure to the tune of over €7 billion. That Government also cut taxes and the tax base to an unsustainable level. Worse, however, it threw tax exemptions and financial incentives at its friends, particularly in the construction industry, who really needed to be restrained rather than incentivised. Undoubtedly, most of our current economic problems were exacerbated by the close relationship Fianna Fáil had with the building sector and this should never be allowed to happen again.

The "Prime Time" programme this week showed a classic example of stroke politics and stroke business. This type of business and politics robbed the hardworking workers and citizens of the country only to make champagne millionaires. That culture was created in the leadership of Fianna Fáil in the last three decades. Its desire for a quick thrill rather than building a strong economy with strong work and effort has cost every man, woman and child in the country his or her dream of a secure future. Does anybody now remember how Deputy Enda Kenny and Deputy Richard Bruton were attacked when they posed legitimate questions about the returns for pay increases under the benchmarking process?

After examination of the causes of our recent economic woes, I see a common factor which we must consider if we are to protect ourselves from this ever happening again. That factor is the number of so-called business gurus who were single entity bullies, running companies as if they were their personal kingdoms. They tore up the rule books and wrote their own rules. They did not tolerate contrary opinions and cost the country billions. Need I mention Irish Nationwide Building Society, Anglo Irish Bank, Quinn Insurance and others? Why would they not do this? It is exactly what they saw in our political leadership at the time, which led the country down a moral cul-de-sac. We need a much stronger regulatory system to protect us from such individuals and the formation again of a so-called golden circle.

The media need new protections to conduct more incisive investigative work and not all hunt the same story like a pack. I am aware, for example, of how long it took to remove the mask from Lance Armstrong. We must support good investigative journalism in exposing corruption and incompetence in all walks of life in order that all citizens will have better protection from these business dictators. A new crime should be introduced, that is, the abuse or misappropriation of other people's money by bankers, solicitors or other professionals tasked or trusted with the finances of others.

I am anxious that there be a social dividend for all the sacrifices citizens have had to endure owing to the reckless behaviour of the banks. In years to come, when the pillar banks return to a stronger position, I expect them to make a positive contribution to Irish society rather than returning to making super-profits. There should be a social bond for the good of our society, whereby the banks would make an extra contribution to society until all these debts are repaid and even after this, as the banks would not exist without the support of the community.

The Minister for Finance, since his appointment to office, has had only a few options available and each of them was a hard choice. He had stated there would be few gains for the taxpayers in this financial year because of front-loaded cost. However, we will save over €1 billion next year and we should give a little encouragement to taxpayers. I had intended to propose that we keep the property tax at the half rate for 2014, similar to this year, but I note the Minister has taken a more targeted approach to assist those most in need. I welcome this as a small but positive response to last week's renegotiation of the debts created by the previous Government.

Again, I congratulate the Minister, the civil servants and the Central Bank officials who worked hard to achieve this deal. It is a small step, but it should be recognised as a positive one. We could not go into negotiatings seeking something that was not available. That would have been incredible.

Olivia Mitchell (Dublin South, Fine Gael)
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Deputy Joan Collins is sharing time with Deputies Thomas Pringle, Shane Ross and Finian McGrath.

Joan Collins (Dublin South Central, People Before Profit Alliance)
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Many Deputies will have received today letters and emails from distressed IBRC workers. Last week, 850 bank workers were made redundant overnight. They received no notice, no consultation and no meetings with their unions. In fact, as one worker who emailed me said, he found out through the media. Bank employees did not cause this scandal and they are as much the victims of the greed of those at the top of Anglo and Irish Nationwide as anyone else. They did not engage in reckless spending or illegal or criminal actions. Those matters are the responsibility of the top bankers and those who were supposed to be regulating the system.

In taking the action to liquidate IBRC, the Government has a responsibility to treat these workers fairly and squarely. At minimum, the workers should be included in the transfer of undertakings to NAMA or continue to work for the liquidator. Agreed severance terms should be fully honoured. One worker pointed out to me that while he was aware that IBRC's future was limited and that as the loans were paid off the company would gradually wind down until it ceased to exist, he had made his career choice on the basis of the knowledge that a strategic plan had been agreed between the board of IBRC and the Department of Finance which not only provided guidance on the timeframe for the winding down but offered him an assurance that when his time came to leave the company, he would exit on agreed severance terms. The Government has a moral obligation to those workers to ensure there is a recognised transfer of undertakings or that agreed severances are fully honoured. Statutory redundancy would mean a halving of those agreed terms.

It amazes me that contractual issues or so-called reasonable expectations apply only to the well-heeled people who are responsible for this scandal. Despite all the spin, the reality is that the colossal debt of the €64 billion bank bailout - not counting the €35 billion bailout for NAMA - has been transferred squarely but not fairly onto the shoulders of Irish citizens. To claim that this is a good deal is a travesty of truth and of justice. It is akin to paying a debt one does not owe simply because one is allowed to pay it off over a long period of time. Who would ever agree to that? It is only those with a loose grip on reality who can call it a good deal or even the best deal that could be got in the circumstances. The real cost of the deal cannot be measured through the best estimates of floating rates or the effect over time of inflation on the principal sum. It cannot even be measured in terms of euro or billions of euro. It is an insult to talk about this deal in terms of the Irish people gaining a €20 billion bonus over its lifetime. The real cost must be measured in terms of the effect on the lives of ordinary people. It must be measured in terms of the despair of those who cannot find gainful, useful employment. It must be measured in terms of the despair of families whose children are exported at post-Famine levels every day of the week.

The bank bailout was funded with €20 billion or 80% of the total of the National Pensions Reserve Fund which has now gone out of the country to bail out speculators who incurred bad debts. Of that money, €15 billion properly invested in a job creation and infrastructural development programme could have transformed the unemployment situation. It could have ended the despair for hundreds of thousands of people and their families. Another €12 billion of the bailout funding came directly from the Exchequer. It amounts to 50% of the €25 billion taken out of our economy over the last six austerity budgets. Apart from deflating the domestic economy, austerity has involved cuts in health and other front-line services, education, social services and welfare which have been deliberately aimed at the most disadvantaged. To see Labour Party Ministers enter the Dáil last week with smug self-satisfaction written all over their faces on the basis of this deal was possibly the most sickening sight I have seen for a long time. What a way to celebrate the 100 year anniversary of 1913 not just to participate in a sell-out of ordinary people to beat all sell-outs but to celebrate and claim it was some sort of victory.

Joe Costello (Dublin Central, Labour)
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There was no smugness.

Finian McGrath (Dublin North Central, Independent)
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Moore Street, Joe.

Joan Collins (Dublin South Central, People Before Profit Alliance)
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This deal was negotiated by the elite in Ireland for the elite in Europe and solely in the interests of those elites. It will keep the markets happy, including the loan sharks and speculators as we have seen already, but it was not our debt. It is not our debt and it should never have been put on the shoulders of ordinary people in this country.

Thomas Pringle (Donegal South West, Independent)
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This debate takes place after the fiasco of last Wednesday night when legislation was rushed through on the liquidation of IBRC. We know now from the Minister's comments that the receiver was put into IBRC at 4 p.m. on Wednesday last. At that point there was no barrier to the Minister briefing the Dáil on the need to sit late to pass emergency legislation. Instead, Members had to find out from Twitter and thejournal.ie about what was happening to the extent that when the Chief Whip came to the House to amend the Order of Business, his intentions were already online. This was a deliberate and blatant contempt for the House and the mandate of all Deputies elected to the current Dáil.

This week's debate is organised as a lap of honour for the Government to slap itself on the back about the great job it has done. What has been achieved? There may be a medium term gain in savings on interest payments - reported to be approximately €1 billion per annum - but none of that will be felt this year. The Government claims that on top of interest savings the deal will reduce borrowing by €20 billion over the next ten years. This is the same amount as the savings on interest rate payments. It is where the saving on interest rates comes from. I have read reports that it will only lead to savings on borrowings of €8 billion over the next ten years. The Minister must clarify the matter.

No one on the Government side seems to be able to quantify what the deal means for ordinary citizens. Will they get any respite from the relentless cycle of cutbacks and reductions in services? It is only when that is clarified that people will be able to evaluate the deal. We know the deal takes a debt we had no obligation to repay and makes it into a sovereign debt. The Government has taken out an interest-only, 100% mortgage in exchange for the promissory note and even at that we will still pay two thirds of the promissory note cost each year. These gains will only remain if the Central Bank can hold onto the bonds for the remainder of the term. The Central Bank has outlined that it will sell off €5 billion of the bonds between now and 2023. What will happen to the gains if the ECB insists on a higher rate of sell-off and forces it on us?

The deal makes some medium term budget savings but huge issues remain. Our debt-to-GDP ratio will remain at an extremely high rate of well over 110%. Where now for the agreement of the European Council of June 2012? The Government has made much of the game-changer that was to break the link between sovereign and bank debt but the deal solidifies banking debt as sovereign debt into the future. How will the Government ensure that the commitment of last June is maintained when it has accepted the principle yet again of linking banking debt to the sovereign? We have seen the death of the June commitment. That was highlighted today in an Open Europe report. The German finance minister, Wolfgang Schäuble, has said that any bank recapitalisation through the eurozone's bailout fund, the ESM, must be significantly below the €80 billion paid in capital. He stressed that there will be no increase in commitments or guarantees for the ESM to aid banks. A deal based on last June's agreement is getting further and further away. What level of funding will be available for bank recapitalisation when the larger, more powerful countries get their share and our banks are not indispensable to the security of the eurozone? In addition, the ECB has said there will be no bank recapitalisation without member states guaranteeing the funding. That means any legacy bank debt will only be picked up if we guarantee that it will be repaid. That is sovereign debt in every sense.

The only way to ease the burden of debt on our citizens was to insist on a write-down. Unfortunately, the Government gave away the best cards it had. The Government was bluffed by the ECB and although the ECB gave in on monetary financing, the markets will be the only winners in this deal.

Shane Ross (Dublin South, Independent)
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The string of Minister and Members from the Government parties coming here to pat themselves on the back and bask in the glory of what they have achieved reminds me of a chain gang of prisoners. They were sentenced two years ago to death by promissory note for wrecking or attempting to wreck the European economy. They pleaded not guilty but were found guilty. Today, they have pleaded not guilty and been found not guilty but rather than being released their sentence has been reduced to penal servitude for 40 years. That is the reality of what has happened. The nation is still in jail and destined to stay in penal servitude for many years because the premise on which the deal is built is completely and utterly flawed.

I congratulate the Government on putting the stake through Anglo's heart. That is a great achievement in public relations terms. I congratulate it too on ending the promissory notes and on having beaten the 31 March deadline by seven weeks. On three counts it has achieved a great deal. The problem is that the bar that it set itself was so incredibly low that it was almost impossible not to achieve this.

Joe Costello (Dublin Central, Labour)
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I knew those congratulations were too good to be true.

Shane Ross (Dublin South, Independent)
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It was sticking out a mile. The Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, said many months ago that a deal would be achieved. It had to be because we could not pay and we probably were unwilling to pay. It was not realistic for us to pay the promissory notes over a ten-year period. The ECB and the European powers realised that and in effect this was pragmatism. The problem was that we did not ask for the one thing that Deputy Pringle referred to, the write-off. Once the Government accepted the fact that this debt would be paid in full it was over. The game was over. It was only a matter of tinkering around with the rates and the maturity dates, and that is exactly what happened.

Let us look at the bars that the Government has set itself elsewhere that it has not achieved at all. Growth, which was initially predicted to be 2.2% in 2013, is down to 1% and falling, while the number of jobs, which was expected to remain even, went down 1.8% last year. What other targets has the Government set itself on particularly pertinent financial matters? Was it listening to Patrick Honohan this morning talking about mortgage relief and mortgage debt? He was sending out the strongest possible warning to everybody in this House that the Government and the banks, which are joined at the hip, were not fulfilling the obligation on them to tackle this problem and that they are burying their heads in the sand.

Alan Kelly (Tipperary North, Labour)
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The Deputy should quote what he said about the promissory notes.

Shane Ross (Dublin South, Independent)
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He came before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform and said something about that, but what is happening? Absolutely nothing. It is quite obvious that the Personal Insolvency Bill, which was set up to sort out that problem, is not going to sort it out. The signals coming from the Central Bank are that we have a major crisis, much bigger than that of the promissory notes, facing us in the months to come, yet we are refusing to deal with it. Let us see this from the perspective of the real problems in the economy. It is only scratching at the surface and is not an achievement in terms of the very large write-off that was necessary. That is the only way the people could have felt it. It is all very well to say, as the Minister of State has said, that we have done well in the Financial Times - Wolfgang Münchau has congratulated us - and The Wall Street Journal. All these wonderful international and global newspapers are praising us for it.

Joe Costello (Dublin Central, Labour)
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But our Johnny is not praising it.

Shane Ross (Dublin South, Independent)
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The Minister of State should tell that to the people in his constituency who are starving.

Joe Costello (Dublin Central, Labour)
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That is begrudgery.

Shane Ross (Dublin South, Independent)
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I wish to speak without interruption, if that is all right. It is lovely to hear a socialist, or former socialist, such as the Minister of State quoting The Wall Street Journal and the Financial Times with such approval. I am delighted to hear it. Indeed, the Minister of State is worshipping the Holy Grail of the markets. It is magnificent to see it, but where did he lose his way?

Joe Costello (Dublin Central, Labour)
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I would have thought that Deputy Ross would agree with the Financial Times.

Finian McGrath (Dublin North Central, Independent)
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I thank the Acting Chairman for the opportunity to speak in this urgent and important debate on the promissory notes and the Irish Bank Resolution Corporation at this critical economic point in our history. The most important thing I want to say is that I do not support a vote to turn the promissory notes into our sovereign debt. That is the crux of this debate and this Dáil can no longer claim that we did not know all the facts. Huge mistakes were made in the past, especially when senior bankers misled this House. We all accept that reality.

Over the past year or so, while talks have continued about the promissory notes, we have seen that the delay in debt restructuring has led to more austerity. We have seen mass unemployment and emigration. Growth expectations for 2013 have fallen from 2.2% to just over 1%. Jobs growth in 2012 was supposed to be 0.8% but instead jobs have contracted by 1.2%. We have seen more large budget cutbacks, which will continue over the next 12 months. Unemployment will remain disastrously high. That is the reality. Mortgage arrears and foreclosures will continue to climb. This will explode soon. Last week in my clinic, a couple who are making efforts to pay back their mortgage at a very difficult time for their family, paying back €400 per month to try to keep their home, said that over the past few days their financial institution had asked them to come up with €1,800 per month. These are the families in the real world who are being hammered. These are the families the Governor of the Central Bank was talking about over the past 48 hours. Legacy burdens must be addressed. In case the Minister of State thinks this is just coming from somebody on the Opposition benches, Ashoka Mody, the IMF mission chief to Ireland, put forward many of the figures in respect of these arguments. This is the economic reality for 2013. We cannot say we did not know all the facts.

Like many of my colleagues I have received letters from constituents. Today I received seven. I will read one that came from an employee of the IBRC:

Dear Deputy McGrath,


I am an employee of the Irish Bank Resolution Corporation, IBRC, now in special liquidation.


Last week I was working to deliver the best possible return for the Irish taxpayers by ensuring that all repayments due on the loans borrowed from the Anglo Irish Bank and the Irish Nationwide Building Society continued to be paid and that where borrowers were experiencing difficulty with the terms appropriate adjustments were made to ensure that the borrowers could continue to meet their obligations. However, overnight I was made redundant as a result of an Act of the Oireachtas without any prior notice or consultation. Worse still I had to find out about this sudden change in my situation through the media. I was shocked and angry at this treatment and remain so.

The deal on the promissory note has been described as an historic step, but when one looks at the detail, one can see the new arrangements will mean nothing this year. The Irish people are still responsible for the €64 billion of bank debt, including €28 billion of Anglo Irish Bank debt. Not a cent of the debt burden has been removed. My colleagues have said, with regard to the negotiations, that the bar should have been higher. Like distressed home owners, we have been put on an interest-only loan up to 2038. That interest rate will almost certainly rise. Today it is low because the EU is stuck in the middle of a recession but it will increase rapidly when there is a recovery. After 25 years we will go back to paying off the original €28 billion. Our grandchildren will still be paying off this private gambling debt in 2053. The changes in payment arrangements due to the restructuring also come at a terrible price. The shift from a promissory note to Government bonds means that the Anglo Irish Bank debt has been fastened to our backs. It is now hardly legal to remove it.

Last Saturday I attended the march organised by the Irish Congress of Trade Unions and met many thousands of people. They were particularly critical of the Government's plan for dealing with unemployment and inequality. Current austerity policies are resulting in mass unemployment, emigration, greater inequality, and social stress in our families and communities. That was the basis for the protest. Protesters also put forward a very sensible proposal and I urge the Government to look at ICTU's plan for social and economic renewal because there is potential there to develop a jobs strategy and to try to get us all out of this economic mess.

Ciarán Lynch (Cork South Central, Labour)
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I wish to share time with Deputies Arthur Spring, Robert Dowds and Willie Penrose.

Olivia Mitchell (Dublin South, Fine Gael)
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Is that agreed? Agreed.

Ciarán Lynch (Cork South Central, Labour)
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I commend the work carried out by the Irish team in negotiating and restructuring the promissory notes last week. I must pay tribute specifically to the Economic Management Council comprising the Taoiseach, the Tánaiste and Minister for Foreign Affairs and Trade, the Minister for Finance and the Minister for Public Expenditure and Reform. What we witnessed last week in the Chamber is a reflection of what the Government has done since it came into office almost two years ago, which is to establish the country's economic sovereignty, restore our international reputation and carry significant reforms on how government operates. The legislation introduced last Wednesday night was not crisis emergency legislation as some have been led to understand. It had been prepared for several months. Events on Wednesday afternoon forced it to be carried through in an emergency fashion. What we saw was an issue of sequencing, but there was no crisis legislation going through the House and it is disingenuous of any Member to claim it was. Far from it, it had been prepared many months beforehand. It is a reflection of the Government's strategy which is proving to be working.

When the Government came into office, the Tánaiste and Minister for Foreign Affairs and Trade called every Irish ambassador home to inform him or her that there was a new Government in office and that the message coming from the country was going to be different. Concurrent with this, there were meetings with ambassadors based in Ireland to inform them Ireland was taking its business seriously.

It is welcome that Fianna Fáil, the author of this legacy that we are tiding up, agrees with the Government's position on the promissory notes. The reality, however, is that it had no choice. So bad was the deal it had put in place that any marginal saving was an improvement on it. It would have been better if Fianna Fáil had gone to some backstreet illegal moneylender to set up the promissory notes deal because, apart from getting a better one, it would not have had the legal standing of the legacy the Government inherited on day one.

Some Members of the Technical Group have been consistent for many years. Deputy Joe Higgins may have a view with which I would not agree, but he has been consistent during the years. Some might say he has the consistency of a stopped clock in that he is right every now and again but by accident of consistency rather than analysis that applies to real life. He has, however, been consistent and I take his remarks as genuine. However, there are other Members of the Technical Group who should know better than what they have been spouting inside this Chamber, but their priority is getting their newspaper column headline right for Sunday rather than the operation of the country.

When it comes to Sinn Féin, what can I say? Other than denying the net savings and gains from the deal put in place, if Sinn Féin engaged in the peace process the same way it has engaged with this legislation, we would still be back in the early 1990s such is its intransigence and denial of our position. The European Central Bank does not do write-downs as it is illegal.

Joan Collins (Dublin South Central, People Before Profit Alliance)
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What about Greece?

Ciarán Lynch (Cork South Central, Labour)
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It is like asking a Toyota dealer whether one can buy a Mercedes from him or her. He or she will tell us where to go.

The main question is where to next. As Deputy Thomas Pringle mentioned, there is the ESM, European Stability Mechanism, and the issue of sovereign and banking debt which needs to be worked out which cannot be allowed slip down the agenda, given the success of last week's negotiations. There is the issue of how the country progresses its successful negotiation strategy in this regard, as well as the robust implementation of the insolvency legislation. While Professor Honohan might be worried tearing the hair out of his head with mortgage arrears, we are more worried about keeping the roof over people's heads, which is the real issue that needs to be debated.

Fianna Fáil had the slogan, “A Lot Done, A Lot More to Do”. My God, it did do a lot. The hole it dug for us is quite large. For the Government there is a lot more to do to get the country back on its feet after that time.

Arthur Spring (Kerry North-West Limerick, Labour)
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From the outset the bank guarantee, the promissory notes and the regulation of the Central Bank were all bad deals for the country. As the previous speaker said, it is one hell of a deep hole out of which we are trying to dig ourselves. The economist Seamus Coffey said about the ECB deal:

The is little doubt that the new arrangement is anything other than a gain for the State. And unless your expectations were incredibly unrealistic (or more accurately based on fantasy), yesterday's announcements were pretty much as good as could have been hoped for given the institutional constraints faced.

I compliment the Taoiseach, the Tánaiste and Minister for Foreign Affairs and Trade, the Minister for Finance and the Minister for Public Expenditure and Reform. The officials in the Department of Finance have done a sterling job in putting the country first. Speaking about people putting the country first, the job done by the Governor of the Central Bank, Professor Honohan, must be borne in mind. Not only has he put his entire focus on redeeming the sovereignty of the State, he has done so with a write-down of his salary, a point not lauded by the press or the media.

The supporters of a debt write-down are living in a fantasy world. Under the Maastricht treaty, monetary financing of any EU member state is illegal. If one used this position in the negotiations with the ECB, not only would one not get a deal but the country's economic credibility would be dashed. The amount of money the promissory note was put in place for was money that was drawn down by Irish banks and subsequently pumped into the economy which was inflated and unrealistic at the time.

With our reputation in tatters two years ago, the Christian democrat and social democrat leaders in Europe needed to be approached. The Tánaiste and Minister for Foreign Affairs and Trade set about approaching his social democrat counterparts, as did the Taoiseach with his Christian democrat counterparts. The diplomatic offensive conducted by the Government cannot be underestimated. It was in good stead that we did not have Sinn Féin which is linked with the loony left in Europe, Fianna Fáil which is linked with no one in Europe, or the Technical Group which struggles to comprehend what is going on in Europe in seeking allies.

Joan Collins (Dublin South Central, People Before Profit Alliance)
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We have allies in Greece, Portugal and Spain.

Arthur Spring (Kerry North-West Limerick, Labour)
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There is no Government that it is aligned to nor is there any Opposition party about to enter government that it is aligned to. Overall, the country is in a difficult position but we will work our way out of it. It will not be easy come the next budget or the budget after that but I believe that we are in wartime economics. Perhaps some people are speaking too much without having knowledge while others, who have knowledge, are speaking too little. If the people could understand what is needed to get the country right I believe they would stay by this Government and support it to do the right thing by them and by our flag.

Robert Dowds (Dublin Mid West, Labour)
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It should be recognised that the promissory note and what went before it represent one of the greatest injustices perpetrated on the people. It is rather sad that this injustice was perpetrated when our own Government was in charge. It was not perpetrated by some coloniser from elsewhere.

I hope the Minister for Public Expenditure and Reform, Deputy Howlin, will forgive me for saying this, but a year ago I ran into him in the corridor. He had a smile on his face and I asked him why he was smiling. He commented that for the first time he believed we would get a deal on our debt and that they would sort out the euro. What happened last week was a demonstration that his hopes were delivered and, for our sake, it is more than welcome that this occurred. Great credit should be given to the Ministers concerned, that is, the four Ministers of the Economic Management Council, the Taoiseach, the Tánaiste, the Minister for Finance and the Minister for Public Expenditure and Reform. The fact that Mario Draghi was asked about this issue and stated that the members of the ECB unanimously noted the decision of the Irish Government was an indication that it was something especially for us. It was also an indication of the vast amount of work that had to be done to secure the arrangement.

How should we progress from here? This has been such a traumatic thing for us and there are lessons we must learn. Among these lessons are the following. We need to shed our obsession with property and build only what we actually need as opposed to investing blindly in property. We need to take a different view of the zoning of land and only zone what we require for industrial and residential purposes rather than the lunacy which went on during the Celtic tiger years. We need to invest our resources in terms of land, labour and capital into sustainable, long-term, job-creating industries rather than simply building houses, hotels and apartment blocks. We need to ensure we never allow the State become too reliant on the tax revenue from any one particular sector of the economy, such as happened with the building boom. We need to provide infrastructure for what is actually required. We need to be prudent with our finances, public and private, and we need to limit the racking up of personal debt through credit cards and other financial instruments. We need to change our political culture in order that there is greater focus on the long term rather than the short term. Finally, and above all, we need to ensure that our banks and lending institutions are properly regulated. If we learn these lessons we will be in a better place but in the meantime there is no doubt that while we made giant strides forward last week there is a great deal more to be done. The Government is absolutely determined to do what needs to be done and to dig the country out of the hole it is in.

Willie Penrose (Longford-Westmeath, Labour)
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The liquidation of the Irish Bank Resolution Corporation and the transformation of the promissory notes are welcome developments and the difficulties faced by the Government to achieve these should not be underestimated. Therefore, the Government should be congratulated on its achievements because they were by no means easy. It is important to bear in mind that the Government inherited the promissory note debacle due to the weakness of the previous Government in capitulating to the demands of the ECB to the effect that the debts of Anglo Irish Bank and Irish Nationwide Building Society be taken on by the Irish taxpayer. We should recall that the Government of Iceland, whose banking system was as irresponsible as ours in borrowing recklessly from European banks, took the view that the people of Iceland should not be burdened with the gambling debts of irresponsible banks and allowed that country's banks to collapse. Therefore, the Government inherited an appalling millstone around the neck of the people that was IBRC and its options to deal with the situation were rather limited. These options have been outlined by Deputy Spring.

People who refer to write-offs do not understand the nature of the treaties and the legal framework in which the ECB operates. The ECB which, at the insistence of Germany, is a replica of the Bundestag, has one objective only, that is, the control of inflation. Therefore, the ECB cannot create money and when it advanced emergency liquidity to IBRC, it insisted that the money be repaid and destroyed. It is difficult to believe that this is what the promissory notes involved but effectively what occurred was that every year the Government would hand over €3 billion of taxpayers' money to IBRC, which would then repay the Central Bank of Ireland. The bank, in turn, would then repay the ECB, which would then use the money to reduce the eurozone money supply. This had precisely the same effect as burning the money. Under the new deal the Irish taxpayer must still repay the gambling debts of the errant banks but under more favourable terms. However, we should bear in mind that the bank debts still constitute a quarter of the total national debt. Had the bank debt not been turned into sovereign debt our debt to GDP ratio would be a great deal more sustainable and we could have resumed normal borrowing by now and escaped the clutches of the troika.

It is a welcome relief that the new arrangements will result in annual savings of more than €1 billion in Government spending from 2014 onwards, but we are still in the vice grip of the troika-imposed reduction of the budget deficit to below 3% of GDP by 2015. This will require more cuts to Government spending or increases in tax in the coming two years unless there is a significant economic growth in the meantime. We should also bear in mind that while the burden of the promissory notes, which is close to 15% of 2013 GDP, will fall as a result of the deal, if we assume a realistic average growth rate of 2% over the coming 25 years the bonds issued to replace the promissory notes will still be approximately 7.5% of GDP in 2048, by which time some of us will be dead and gone and our children will be entering the labour market.

Growth rates will be remarkably important in the coming decade. Some commentators have argued that the real burden of the bonds will fall as a result of inflation. That is natural and correct but since the ECB's primary role is to ensure that inflation never exceeds 3% we should not assume that inflation will reduce the burden of our debt. Some eminent economists argue that the policies of the ECB and the troika are a problem and could lead to deflation, which is a great deal more difficult to resolve than inflation, as Japan has found out during the past decade. The ECB's German-inspired obsession with controlling inflation is not supported by the evidence, which shows that mild inflation is consistent with steady economic growth. Anyway, the deal achieved last week is a good beginning to the resolution of our financial crisis but it is only a beginning, as all speakers have said.

The crisis was partly caused by the flaws at the heart of the euro project. Europe has a central bank with only one objective, that is, the control of inflation, and one instrument, that is, the control of interest rates. A computer programme could implement the monetary policy of the ECB because it could be set to increase interest rates as soon as inflation reaches 2%. By contrast, the Bank of England and the Federal Reserve in the USA can take into account economic growth and unemployment in the setting of interest rates.

While the immediate cause of the Irish banking crisis was of course irresponsible lending to builders by Irish banks, this lending was made possible by the introduction of the euro, which eliminated exchange rate risk when Irish banks borrowed from other European banks. The implementation of a one-size-fits-all interest rate policy by the ECB further fuelled irresponsible borrowing because the ECB kept interest rates low in the interests of Germany although higher interest rates were required in Ireland to dampen the fever of borrowing. In the absence of altering interest rates as a policy instrument much more effective financial regulation was required, something, of course, we did not get. Instead, in Ireland the light-touch regulation beloved of those in the Progressive Democrats and their acolytes in Fianna Fáil led to virtually no regulation as the RTE documentary on Irish Nationwide Building Society showed recently.

When the euro was introduced many distinguished economists argued that in the absence of fiscal union and centralised bank supervision there was a danger of the crisis which eventually occurred, and it happened on a scale which justified their worst fears. Europe is only now establishing a centralised system of regulating banks and a fund to rescue failing banks. I believe the European Stability Mechanism has not been given the resources necessary to be effective. While it holds the Presidency of the EU Council, Ireland should press for an effective ESM and demand that the ESM shoulder some of the cost of rescuing Irish banks.

Ireland's GDP is less than 2% of the EU GDP yet we have taken on approximately 40% of the cost of rescuing EU banks. This is grossly inequitable and must be addressed at EU level. While the Irish banks were irresponsible borrowers, many French and German banks were irresponsible lenders and yet they have escaped their responsibilities. Ireland should insist that when the ESM is fully established it takes on a substantial portion of Irish debt. Thus far the EU handling of the banking crisis has involved privatising the gains of banks. There is now consensus among economists that the European project will be deemed to have failed unless the EU becomes a monetary and fiscal union similar to a federal state.

Last week, we witnessed the usual political haggling over the EU budget. The United Kingdom wants the benefits of EU membership without its costs and it succeeded in reducing the budget by almost €1 billion. The EU budget constitutes less than 2% of EU GDP.

In the US federal expenditure is 20% of GDP. This level of federal spending allows the US to operate a coherent monetary union in a way that is impossible in Europe with its current structures. The only alternatives for the EU to avoid periodic crises of the type we are experiencing are either to proceed to full monetary and fiscal union or to abandon the euro and return to being a free trade area.

While we have been focused on resolving bank debts for the past three years, less attention has been paid to the issue of household and small business debt. The Personal Insolvency Bill is a brave attempt to deal with this issue and I look forward to its speedy implementation. However, it will only work if the banks are compelled to deal decisively with the debts on their books. The Governor of the Central Bank recently expressed frustration at the tardiness of the banks in dealing with this issue. They need to be sharply reminded that they have been rescued with taxpayers' money and that they should deal speedily with the personal debt on their books to ensure an adequate supply of credit to the small and medium enterprises on which our economic recovery depends. Let us get on with the job in hand.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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It is obvious, but I will say it nevertheless, that no tears were shed in this country at the demise of Anglo Irish Bank.

Arthur Spring (Kerry North-West Limerick, Labour)
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What about the employees?

Mary Lou McDonald (Dublin Central, Sinn Fein)
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The public viewed it as a toxic institution and not unreasonably placed a substantial portion of the blame for our economic crisis at its door. That said, however, I am mindful of the hundreds of workers who learned in the small hours of the morning that their jobs were gone and their contracts had been torn up. That is no way to treat any set of employees, particularly those who are employed by the State. The State should be the trailblazer for high standards in employment practices. The experience of the workforce in Anglo Irish Bank indicates that the Government does not aspire to such standards. While some of those employed in the bank were on outrageous salaries, for the most part its employees were certainly not bringing home pots of gold.

The handling of the Irish Bank Resolution Corporation Bill 2013 was farcical. Regardless of the types of negotiation that had been taking place with Europe or the leaks to the media, of which the Government press office appears to have been aware in advance of 6 February, what happened in the Dáil was not the way to do business. The Government showed an enormous lack of respect for this institution, for Deputies and, most important, for the people we have the privilege to serve. It treated the Dáil and Seanad as nothing more than a rubber stamp. That is not acceptable. The Taoiseach should consider how he looked to the world outside this political bubble when he conceded an additional 45 minutes to scrutinise a Bill Deputies had only set eyes on an hour earlier.

There is a justifiable feeling among the general public that they have been let down, but this appears to be lost on the Government benches. Fine Gael and Labour Party Deputies came into the Chamber with their chests puffed out and clapped each other on the back for doing a great thing. The truth, however, is that private debt should never have been saddled on the shoulders of Irish citizens and, while Fianna Fáil walked us into this mess, Fine Gael and the Labour Party are making sure we do not get out of it for the next 40 years. Some €60 billion and counting of taxpayers' money will not be spent on public services, infrastructure or tackling the many environmental and social challenges we face.

It is said that we should walk a mile in a person's shoes. I have been trying to understand why Government Deputies describe this as a great achievement. During the course of this debate we have heard talk of great strides being made and the Government digging us out of the hole of debt. Let us consider these so-called achievements. Perhaps Deputies consider it an achievement to transform the promissory note - an IOU - into long-term Government bonds. Perhaps they think it a great achievement to change the promissory note, which was a legally dubious instrument because of the ban on monetary financing, into sovereign debt with robust legal status. The Government will argue there will no longer be a need to find €3 billion every March to repay the promissory note, but balanced against that will be the interest payments of up to €1 billion per annum in two separate payments. Unlike the promissory note arrangement, we know these moneys will not remain within the Central Bank or the State over the longer term. We are told this, too, is an achievement. Kicking the can 30 or 40 years down the road is supposed to be an achievement. Relying on inflation to eat into the principal of €28 billion is also supposed to be an achievement. There is a particular irony in this claim given that the very institution with which the Government negotiated - the European Central Bank - has the fight against inflation as its primary mandate. So much for that achievement.

In bread and butter terms, what will this mean for budgetary relief for the men and women of this country? Will it ease austerity? Will there be second thoughts on the property tax, child benefit or respite care grants? None of the above is on offer. Perhaps Government Deputies regard that as an achievement.

The bar was set very low during the course of this negotiation. My party leader and I have both stated in this House that the Taoiseach was doing a disservice to this State and its people by consistently parroting the mantra that we will pay our way and will not have the word "defaulter" written on our foreheads.

He positioned himself in that way. When we consider that was the political decision taken by the Government, it is little wonder that it could not go in and argue for a write-down. I do not buy for one second the fairy tale from the Government that it kept away from this issue because it was faintly ridiculous or patently unachievable. It kept away from it because it did not have the political courage or standing to go in and make a straightforward argument about an IOU the State could not and cannot afford, an IOU which, as admitted by the Minister, was legally dubious. The Government failed to do this.

There is work to be done on the issue of the legacy debt, but I have little confidence in the Government's ability to prosecute a successful negotiation on that issue, given how lame its attempts and "achievements" have been on the promissory notes.

Seán Crowe (Dublin South West, Sinn Fein)
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I agree with Deputy Mary Lou McDonald on last Wednesday night's farce when nobody covered himself or herself in glory in the context of what went on in the House. I listened to Deputies who shouted and roared suggesting they had read the legislation, but just down the corridor it was in their pigeon holes. Perhaps, one well worn copy had done the rounds, but it seems unlikely that people had the opportunity to read it beforehand. It was rushed through without a full debate and the Opposition was only given two hours to study it. While I welcome the Government's decision to set aside time to debate the issue this week, this does not make up for the lack of proper scrutiny of this important legislation. Following last week's farce, people should look at themselves in the mirror and consider whether it was work well done. I do not believe it was.

The Government, through this legislation, is planning on saddling taxpayers, their children and, possibly, their grandchildren with a huge debt. That is what is wrong about the decision made last Wednesday night. Like others, I believe this private gambler's debt was not created by Irish taxpayers and the State should never have taken on responsibility for it. Like others, my family and I, my sisters and brothers and their children have been left to carry this debt. I do not believe the State should pay one cent of that debt, nor should it pay one cent in interest on it. This is a legitimate and logical position to take. It was a realistic position, even before the Government's agreement last week.

The Government is following in the well worn footsteps of Fianna Fáil and going to trade the €28 billion promissory note debt for a sovereign liability which could cost the state up to €60 billion. All in all, the Government's much-hyped deal on the Anglo Irish Bank promissory notes doubles the cost to the taxpayer of bailing out that zombie bank. When we cut through all the spin and hype, the deal on the Anglo Irish Bank promissory notes represents another burden on the backs of taxpayers and future generations.

The Government, like previous Fianna Fáil Governments, argues that there was no choice and that this deal is a result for Ireland. For whom in Ireland is it a good deal? The Government may have a short memory. Less than one year ago the Taoiseach spoke about the proposed deal being a "game changer" for Ireland's finances and said an agreement would represent a "seismic shift" in European policy and should open the way to "re-engineer the debt burden." However, rather than seek a write-down of the debt, the Government has kicked the debt issue further down the road. The only "seismic shift" that took place was the shift of a possible €28 billion in private banking debt, plus possible interest of €32 billion, onto the shoulders of taxpayers and future generations.

Did the Government examine the initiatives won when other countries, Spain in particular, pushed the Eurogroup to commit to separating banking and sovereign debt? The separation of private debt from sovereign debt was what was supposed to be agreed. It is the opinion of a minority in the House that we should have pushed this issue to that conclusion. We should have insisted on the separation of banking and sovereign debt and refused to pay one cent more on the promissory notes. Now, we can, of course, look forward to the debt not only being paid by this generation of citizens but also by their children and, possibly, their children's children, for at least the next 40 years. While this deal may provide the State with some short-term deficit relief, it significantly increases the cost of bailing out Anglo Irish Bank. Ireland has been lauded by EU leaders for its "brave stance". Why not laud it, when the Government has completely capitulated to Merkel's and Frankfurt's way. Even in their wildest dreams, I am sure they did not think any state would voluntarily latch the most toxic of its toxic banking debt to itself.

Across the State ordinary people are trying to cut through the hype and spin. They are asking themselves whether their debt has been reduced and whether this deal will mean fewer tax hikes and spending cuts next year and following years. Sadly, the answer to the first question is no. We get a different spin from the Government, but over the period of the past two Governments, the citizens of the State have been hit by almost €30 billion in cuts and extra taxes in six long austerity budgets. People struggle to pay extra direct and indirect taxation introduced by these Governments. They have seen social spending slashed and major cutbacks in the services provided by the State. Low income civil servants have made major sacrifices through significant pay cuts.

In January a credit union income survey found that 1.6 million people were left with €50 or less at the end of the month after essential bills had been paid. The report highlighted that since October 2012, unfortunately, 230,000 more people had fallen into this bracket. The survey also confirmed that budget 2013 would impact negatively on the finances of eight out of ten adults living in Ireland. However, the Government and the European Union continued with their austerity measures. In 2013 ordinary citizens will be faced with new burdens through water charges and a home tax.

Is it not reasonable to ask how the people will benefit from this new arrangement? If we are saving great amounts, why are we not celebrating the dropping of a property tax worth €500 million a year? The troika was quite clear in its meeting with Sinn Féin that any savings made in the promissory note arrangements would be used to pay off the debt. The Department of Finance projects an immediate saving of some €25 million; the cut made in the budget to the respite care grant was to save €26 million. Will this cruel cut be eliminated? I look forward to that announcement.

The Government had an historic opportunity to secure a real reduction in the cost of the toxic banking debt which was a legacy of the Fianna Fáil-Green Party Government. Such a reduction would have been well received and celebrated by all sides of the House. However, the Government did not achieve this. Not only has it wasted that historic opportunity, it has also increased the cost of that heavy burden on future generations. That is what is wrong with the agreement passed last Wednesday.

Michael Kitt (Galway East, Fianna Fail)
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I call Deputy Paul Connaughton who is sharing time with Deputies Joe O'Reilly, Brendan Griffin and Mary Mitchell O'Connor.

Paul Connaughton (Galway East, Fine Gael)
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I thank the Chair for giving me the opportunity to speak to the motion. I take the opportunity to congratulate the Minister for Finance, Deputy Michael Noonan, the Taoiseach and all the officials involved in the negotiating process on a job well done. The negotiations were very involved and difficult, but the process has been worthwhile. It has borne fruit and resulted in a deal which will make Ireland's debt more sustainable and ease the economic burden on the country as we make our way out of the financial crisis. For many months, since the outset of the crisis, every time one turned on the news one was met with a barrage of bad news in terms of various rating agencies downgrading the status of Irish bonds. This deal will ensure Ireland will turn the corner.

The restructuring of the promissory notes provided for the IBRC was a very necessary step in stabilising the country's economic fortunes. This stabilising influence is reflected in the fact that the rating agencies are to take a more positive view of Irish bonds.

This deal brings us €1 billion closer to attaining our 3% target deficit in 2015 and results in a massive reduction in the State's borrowing requirement of €20 billion in the next decade. This represents money that we do not have to borrow, rather than money in hand. While this is less tangible in some respects, it makes the task facing the Irish people, in terms of extracting the country from the financial mire in which we found ourselves following the last general election, less daunting. As a country, we continue to face many difficult decisions. The budget deficit is still very large. We need to make further progress on the debt assumed from the pillar banks.

While I welcome the deal that has been done, I think it should be seen as no more than a step along the road. Tough decisions remain to be made, for example in the area of mortgages. I know the Minister for Finance recognises the need to ensure the banks deal fairly with the thousands of families that are in serious mortgage arrears and are unable to sustain their unsustainable debt levels. Every Member of this House regularly meets people who are in great financial distress. All too regularly, we witness the emotional distress this causes. Our top priority must be to tackle this thorny issue. All necessary pressure must be brought to bear on the banks to ensure they deal with householders on a case-by-case basis. Where write-downs are necessary, they must be undertaken.

I note that the Governor of the Central Bank, Professor Patrick Honohan, has said that household financial distress is at unprecedented levels. This is reflected in my experience of meeting people at my clinics in County Galway every week. According to Professor Honohan, the Central Bank and the banks have been ramping up their efforts to address these problems. This is not being reflected in the experience of my constituents whose stories I hear on a regular basis. Far too often, customers are met with a brick wall when they attempt to point out to their banks that their debts are simply unsustainable. The lack of action on the part of the banks is not just regrettable - it is morally wrong.

Families throughout the country are having to pick up the pieces as the banks hope the money will somehow materialise if they put enough pressure on hard-pressed families. This issue will have to be tackled in cases where the money needed to meet mortgage costs is simply not there. We cannot let a generation of this nation's children grow up in homes where the dark cloud of unsustainable mortgage debt is all-pervasive. Professor Honohan has spoken out about the consequences for borrowers who are not co-operative and are refusing to make a reasonable effort. While I am aware that such cases exist, I assure the House that in the majority of the cases with which I deal, the banks rather than the borrowers are refusing to make a reasonable effort.

The promissory note deal also signals the welcome death knell for Anglo Irish Bank and Irish Nationwide. Everyone in this Chamber is only too aware of the price the Irish people will pay for the decisions of rogue bankers for decades to come. This deal is a further step in the right direction as Ireland aims to emerge from the programme of assistance, and stand financially on its own two feet, at the end of 2013. All of the targets have been met to date. The necessary restructuring of the financial sector has been achieved. Ireland will regain its economic sovereignty if it emerges from the programme of assistance, which is the aim of the various steps the Minister, Deputy Noonan, and his officials have been working so hard on in recent months. I will conclude by again acknowledging the work of the Minister, the Governor of the Central Bank and the diplomats and officials in the NTMA in securing this most important deal for Ireland.

Joe O'Reilly (Cavan-Monaghan, Fine Gael)
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I would like to join others in congratulating the Minister for Finance and his officials, Professor Honohan, the Taoiseach and the Tánaiste on this significant achievement, which silences the Jeremiahs, the naysayers and those who said what has been done could not be done. It is recognised outside the House that this is a massive achievement for the Government. This deal is instilling confidence in people and will be a huge part of the recovery of our country. It means in practical terms that in each of the next ten years, some €3.6 billion will not have to be paid in respect of a promissory note. The extension of the deadline from 2038 to 2053 is a considerable achievement. Anyone whose mortgage could be extended in such a way will appreciate that the effects of inflation - even though we are trying to curb inflation, it is inevitable that there will be a certain level of inflation - would make their repayments insignificant. In reality, the effects of inflation mean this is all but a write-down. It will involve borrowing €2 billion less each year. That will have substantial implications for our economy. The use of Government bonds means the interest rate we will be paying has reduced from 8% to between 3% and 3.5%. We will have an effective interest rate of 1%. One of the first implications of the quality of this deal is the decision by Standard and Poor's to upgrade Ireland's rating with immediate effect. The deal has been applauded by a range of reputable commentators, including the Financial Times and a number of domestic commentators.

I would like to mention a couple of the advantages of this deal. The implications for consumer spending of the fact that we will not need to cut as many front-line services or impose as many taxation increases will benefit the economy. In addition to not having to make cuts, there is the twin advantage of avoiding the potential depression of the economy. Therefore, it is of enormous assistance to the country. This deal will allow us to return to the bond markets. Ireland's interest rates have fallen considerably in the past week since the deal was effected. The deal will increase confidence, which is intangible but is very important for the economy. It will serve as a boost to consumer confidence, confidence in our small and medium sized enterprises and confidence in the capacity of our lenders to lend again. Last week's achievement was matched by the arrangement of a deal on the multi-annual financial framework for the EU budget over the next seven years. In that context, some €6 billion has been dedicated to dealing with youth unemployment. The deal Ireland has achieved under the Common Agricultural Policy is very significant, with just a minor downward adjustment. It is being held at the figure that was promulgated throughout last year. That has to be significant for our economy.

The big challenge is to translate all of this into an attack on unemployment. I hope the Minister will address this in his reply. I do not need to remind the House of the impact of unemployment on the dignity of the human being. In addition, a saving of €20,000 per annum is made every time a person comes off the live register. I hope we can translate last week's success into an effort to deal with unemployment. The unacceptably high level of youth unemployment needs to be addressed too. It is very encouraging that the youth guarantee, which ensures young unemployed people get training and education, has gained traction and is being supported in the EU. The big challenge is to translate this deal into jobs by using the money that would have been paid on the promissory notes, on interest or on other borrowings but is now available to the Government to create the conditions that incentivise employment. The very existence of this deal will stimulate and create confidence in the domestic economy and thereby generate jobs. We should be very proud of this good news story. It should be endorsed in this Chamber, just as it has been endorsed by people outside the Chamber to whom I have spoken, including all reasonable commentators and the general public. If we match that endorsement and build on it for the sake of this country, it will be a good day for Ireland.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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Everyone needs a hero; every country needs a hero; every government needs a hero. Last week the Minister, Deputy Michael Noonan, filled those boots. I do not choose the noun lightly. In fact, I did not choose it at all. "Hero" was chosen by a number of journalists who wrote articles regarding last week's events. Professor Patrick Honohan, Governor of the Central Bank, Ministers and Civil Service staff have worked hard to land this promissory note deal for Ireland and we owe them a debt of gratitude.

In the Sunday Independent, a number of leading entrepreneurs and business leaders, who create jobs in this country, gave their views on the new deal. Mr. Martin Naughton, the entrepreneur and Glen Dimplex founder, described last week's deal as "very positive news". The chairman of Connemara Mining and Petrel Resources, Mr. John Teeling, said the Government had "effectively written off" the cost of the Anglo Irish Bank bailout with the new deal. Greencore boss Mr. Patrick Coveney said the deal would "undoubtedly" help our economy recover, and that it "represents another step on the road to recovery and self-sufficiency". The CEO of the Maxol Group, Mr. Tom Noonan, said the package should help to stimulate Ireland's local economy. The KBC Bank Ireland boss, Mr. John Reynolds, said the deal "is as good as - or possibly slightly better - than might have been reasonably expected". Mr. Karl Whelan, regarded as the expert on promissory notes, stated "this seems about as good as we could get ... I think this is a good deal for Ireland." Mr. Peter Brown from the Irish Institute of Financial Trading said it is a "stunningly" good deal and that its terms are "quite amazing". Mr. Robert Finnegan, chief executive of 3 Ireland, said "Any deal that allows for repayment of debt over a significantly longer period at lower interest rates is good news". The businessman Mr. Declan Ganley said the deal puts Ireland "in a better position than it was". Very respected economic and political analysts have recognised last week's agreement as the best possible outcome for Ireland.

Our success story went viral. Top newspapers around the world also recognised our success. The New York Times bore the headline "4 Years After Crisis, Ireland Strikes Deal to Ease a Huge Debt Load". The Guardian stated "Ireland secures deal to reduce Anglo Irish Bank debt repayments". Standard & Poor's stated that the deal has improved its outlook for Ireland's creditworthiness. This air of positivity will undoubtedly have major knock-on effects in terms of employment, spending and growth. The removal of the promissory notes will provide a reduction in the State's general Government deficit of approximately €1 billion per year over the coming years and it will lead to a reduction in the State cash borrowing requirement over the next ten years of €20 billion. Ireland's debt is now more manageable and the State has the space and time to recover and grow.

Let us be clear. I am not saying all our problems are over. However, we need to stop bickering and stop the negativity, put our heads down and make sure the message goes out from this country that we are open for business. Oscar Wilde stated that optimists see the doughnut and pessimists see the hole. Now is the time for all of us to see the doughnut.

Micheál Martin (Cork South Central, Fianna Fail)
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We welcome this deal as a significant improvement on the previous situation. It delivers important benefits, particularly in terms of the profile of Irish debt over coming decades. In the medium term it relieves some of the pressure on the budget. What the deal absolutely does not do, however, is deliver the final answer. It marks progress but it is not a fundamental game change. The justice of Ireland’s case for relief has only been partly addressed.

In the midst of the rising tide of self-congratulation from the Government, what it has not done is to provide a detailed analysis of the full impact of the deal. It has exaggerated benefits and ignored major areas of uncertainty in the deal. A defining part of the strategy is to put politics first. We saw this last Thursday, when the Taoiseach and Tánaiste spoke for 20 minutes and gave about 20 seconds to explaining the detail of the deal. It should be noted that the Minister, Deputy Noonan, has taken a very different approach to that followed by his colleagues. Last week, he was open and constructive and has continued that policy into this debate. His speech yesterday avoided the partisan claims of other speakers.

Remarkably, the actual text of the deal is not available to us for this debate. We have received technical briefings about the Government’s interpretation of the deal, but we have not been given the opportunity to examine the actual text. As has been shown time and again, the last thing one should do with this Government is to take its claims at face value.

Last Thursday, the Department of Finance published a detailed analysis of the deal’s impact only up to the end of 2015. It appears that, as far as the Government is concerned, all we need to know is what happens up to the next election. Everything beyond that point has been left to general statements. This matters, because the uncertainty in key elements of the deal involves up to €32 billion across the full term of these new bonds. The provisions of the deal relating to interest rates and the length of time the Central Bank will hold the bonds are not some side issue. They go to the heart of the level of relief Ireland will receive.

While the Government has withheld significant details of the negotiations, the evidence suggests this is the issue where the ECB rejected Ireland’s proposal last month.

At all stages in the discussion of this issue, Fianna Fáil has focused on being constructive. As we demonstrated again last week, we have rejected the Gilmore model of opposition still being followed by others, which involves attacking everything and never accepting the limits within which public policy is developed. However, this debate has been structured by the Government to be three days of self-praise with as little genuine engagement as possible. It has proposed a motion which goes well beyond welcoming the deal and asks us to support a much wider range of Government policies. Equally, the Government continues to use a set of arguments at home which are completely contradictory to the arguments that secured this deal. We will respond to the ridiculous grandstanding and exaggeration coming from the Government but, equally, we believe that this debate have should more substance to it. A new agenda needs to be set out. This debate has been promoted as marking the decisive end of a process. We cannot support that idea.

Ireland's case for further significant relief from the impact of its bank-related debt remains strong. Over the last week, there has been a very selective presentation of the past. Remarkably, the Government has used many arguments in this debate which undermine our case for further relief. This should be a debate about the future but the speeches from the Government require a response to their distorted picture of the background to this deal. During the period 2008 to 2010, the world experienced its biggest financial crisis in 80 years. Within Europe, the crisis was most acute because it involved a still-young currency union built with profound faults in its basic design. History already records that this was a period of dramatic uncertainty combined with an acute fear that contagion was about to swamp the European financial system and, in turn, the wider European economy. The absence of key policies and rigid application of damaging ones made a bad situation much worse, caused a succession of runs on the sovereign bonds of eurozone countries and continue to undermine recovery to this day.

Over the last two years, a series of major developments have helped to restore some stability and have removed the once-all-consuming fear of contagion. Different countries have begun to benefit from these developments. Debt write-downs, ECB intervention, shared funding of bank recapitalisation and a lender-of-last-resort fund have given countries options not available before and certainly not available in 2008-2010. When confronted with its own financial crisis, Ireland did not have these options. Ireland was effectively pushed into tackling the situation with little or no room to reduce its liabilities or receive assistance. These facts are often ignored but they have provided the entire case for the deal just agreed. Every time the Government indulges its partisan instincts to claim that everything was purely the responsibility of the last Government, it is directly contradicting the case that entitles Ireland to relief.

It is correct to say that the bank guarantee of September 2008 marks the formal start of the chain of events that created these debts, but it is entirely wrong to say that the guarantee made them inevitable. There is a lot to be learned from that event, none of which will be learned if Ministers keep up their current tactics. Given that they constantly ignore this fact, the record shows that ten out of 15 members of the current Government voted for the guarantee and all 15 voted to renew it subsequently. The Labour Party proposal of the time was not to let banks go bust but to immediately nationalise everything. It is basic fact that some of the guarantees' strongest proponents now claim to have been against it all along.

In the decade leading up to the guarantee and in particular from the point at which we formally joined the euro, bad practice and abuse within the financial system occurred on an enormous scale. This is primarily the fault of those involved, but there were major failures in the regulatory and political oversight of the banks. The ECB, the central banks of member states, governments and parliaments all failed. It is a reality that the only debates in this House about banks concerned how to get them to lend even more and no serious debate about regulation took place until the system was in turmoil.

In the period after the guarantee, the need to recapitalise the system was established. It has been well proven that at different stages, efforts to burn significant proportions of bank bondholders were opposed by key international players whose support was required to keep the financial system functioning. In effect, Ireland was denied the opportunity to reduce the debt impact of the banks. On top of this, Ireland was initially given no assistance in funding this impact and was then given funding at a high rate. My late colleague Brian Lenihan did begin a programme of writing down the debts of certain types of unsecured bondholder, but this was well below the level sought by him. It was agreed that the impact of the debt needed to be reduced, and the published record of the European Council for the period from December 2010 to February 2011 shows that the need to address Irish debt sustainability was already in the draft conclusions for the summit that our new Taoiseach attended soon after taking up office.

It was entirely right that bondholders were a major issue in the general election. My party took the brunt of justified public anger about these debts. What was entirely wrong was the cynicism with which certain parties campaigned on the issue. They talked tough while looking for votes but abandoned their posturing almost immediately. The attempt by the Labour Party and Fine Gael in this debate to redefine what their positions were is fooling no one. The Labour Party has had most of the heat because of how effective the Tánaiste was in claiming that he would be dictating terms to Frankfurt. Fine Gael was more specific, promising that "not a red cent more" would be paid for the banks. In government, however, these parties have paid billions of euro to unguaranteed, unsecured bondholders of banks. This was nothing to do with the guarantee. They did not burn those bondholders but they did burn their election promises.

What has happened since 2010 is that Europe has slowly - in fact, not yet fully - started to address the need for policy change. The escalating Greek crisis has twice led to significant reductions in the interest rates on existing loans to all countries. The fiscal treaty was enacted to give some greater credibility to the Stability and Growth Pact and, far more importantly, it creates a larger and permanent fund not just for bailouts but also to try to prevent them from being necessary in the first place. The principle of no write-downs which we faced has been abandoned. Greece has twice effectively written down its debt and the package currently being negotiated with Cyprus includes an aggressive "bail-in" of bank bondholders in order to dramatically reduce the public cost of saving banks. European banks are still going bust and being recapitalised with public money but bondholders are now sharing the pain.

Most important of all has been the changed leadership of the ECB. Under Jean-Claude Trichet, the ECB became obsessed with being a hardline enforcer of orthodox policy, even to the extent of threatening the very existence of the common currency. His successor, Mario Draghi, has adopted a radically different approach, summed up by him last year as "Whatever it takes". He has restored confidence in the banking system and signalled support for sovereign debt, stretching the limits of the bank's legal remit further than anyone had imagined. Mario Draghi has shown more imagination and bravery than any of the European Union's political leaders and without him there would be much greater austerity and a much more profound crisis across Europe. From Ireland's point of view, his impact has been undoubted - something that is highly ironic given the fact that the Taoiseach has confirmed that he held no discussions with Mr. Draghi before agreeing to his appointment.

The Government is today presenting the picture of a visionary negotiating strategy executed with determination over two years. The truth is very different. Initially, the Government said it was concerned with the interest rate on the existing loans. This was dropped when it finally accepted that the interest was returning to the Exchequer and was irrelevant. The strategy was then to come up with an agreed technical paper, but this never materialised. The next strategy was to say that Ireland deserved something for being the best boy in the class. Saying that Ireland was doing fine and should be allowed to do even better did not work either. Following the latest Greece-inspired deal, the Government finally agreed to start using Ireland's strongest case - that we incurred these debts because of European failures as well as Irish failures and deserve relief because of basic principles of equity.

While he continued to refuse to commit to this strategy in the Dáil, because he enjoys political attacks too much, the Taoiseach made this case outside the country from October onwards. As I said last week, the strength of Ireland’s case post the June 2012 Greece deal meant that a deal was highly likely and its broad outlines were always likely to be similar to the final outcome. The Tánaiste has copied the Taoiseach’s habit of directly misrepresenting my comments on this deal. For the record, among repeated comments about the likelihood of a deal, I stated in this House on 19 December:

I believe that there will be a deal in relation to the promissory note. The justice of the Irish case demands an outcome which would lengthen the term and reduce the rate to halve the impact of repayments on the Irish deficit across a few decades.

The Government has given us no detail about what was asked for during the negotiations or, more important, what changes the ECB secured in the final weeks. There is no doubt that the deal is an improvement on the previous situation. It will be easier for Ireland to borrow and this borrowing will be at a lower rate. In the next few years there is a guarantee of some improvement in the impact of the debt on both our deficit and the overall public debt. According to the Department of Finance there will be no deficit saving this year and there will be a saving of roughly €1 billion or 0.6% of national income in 2014 and 2015. Overall debt will initially go up and then fall by 0.4% in 2015. This is not a game-changer but it helps.

Nothing has been published by the Government to show the specific impact of the deal in subsequent years. While general claims are being made about savings there are many areas of doubt. The most important issue relates to how long the bonds will be held by the Central Bank. It is in Ireland’s interests that the Central Bank hold them for as long as possible because it returns most of the interest to the Exchequer and it avoids using up private sector demand for Irish bonds. This would appear to have been the issue about which problems arose over the past month. It can be surmised that the ECB said that the holding had to be limited to helping restore the stability of the financial system or it might be termed monetary financing of government in contravention of the treaties. This is where the ECB played hardball and introduced major uncertainty into the deal. The only statement on the deal issued by the Central Bank states: "The bonds will be placed in the Central Bank’s trading portfolio and sold as soon as possible, provided that conditions of financial stability permit." A series of minimum sell-offs have been outlined but it has been confirmed that the Central Bank is free to sell its entire holding at any stage. This is potentially a major problem. The interest rate is equally uncertain. For the moment it is at a variable rate off the Euribor plus 2.6%. This is a good rate but likely to rise significantly. The deal allows the Central Bank to convert the bonds to a fixed rate at any time, bringing extra uncertainty.

The Government has included figures for returned profit from the Central Bank over the next few years and has implied the basic figures will continue through the deal. Professor Karl Whelan of UCD, who predicted the shape of the deal four months ago, has estimated that on basic assumptions, almost €47 billion will be paid in interest on these bonds. Of this, €32 billion will be lost in payments to the private sector. The answer to the statement that the deal is as good as we could want is, "No". A better deal is possible. We could save billions and avoid diluting private sector demand for Irish bonds if the Central Bank were to hold the bonds to maturity. Instead of running the victory flag up the pole and consigning this debt to history, we need to make it clear that Ireland seeks and deserves further assistance. It is not clear that the ESM taking our share of the pillar banks would help – in fact it could be worse than the current situation. We should work for full justice on the IBRC-related debts and a guaranteed long-term benefit for our budget.

During last Wednesday’s emergency sitting, we argued that the interests of the IBRC staff needed to be considered. Since then it has become clear that the only people for whom the Government had no plans were the staff of IBRC. They have been treated appallingly and are being subject to a grave injustice. The Irish based staff have seen their redundancy entitlements halved and with little or no assistance available from the State to help them. In contrast, the 200 staff in Northern Ireland and the UK have retained their jobs and their redundancy entitlements. I think it is wrong and it should not stand.

People are looking at claims of a game change on debt and comparing that with their rising household debt. The mortgage crisis, in particular, is now an emergency. It is not being addressed by the banks or the by Government. It must now become the absolute priority. We must also speak up for a proper banking union with common rules and funding for closing banks and guaranteeing deposits, as well as eurozone-wide regulation. Anything else will leave unchanged the fundamental dynamics which caused this crisis in the first place.

This deal is a step forward but it is nowhere near the end of Ireland’s case for being treated justly with regard to bank-related debt. The burden remains too big and its impact on our people too severe. Further significant improvement in the deal is possible over time. We need to let it be known that we will seek this improvement.

Michael Kitt (Galway East, Fianna Fail)
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Deputy Kieran O'Donnell is sharing time with Deputies Paschal Donohoe, Heather Humphreys and Martin Heydon. The Deputy has five minutes. We will be adjourning the debate at 7.30 p.m. for Private Members' business.

Kieran O'Donnell (Limerick City, Fine Gael)
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I was lucky to be in the Chamber to hear the contribution from the Leader of the Opposition, Deputy Micheál Martin because I think Fianna Fáil is indulging in significant revisionism. I remind the members of Fianna Fáil that they caused the crisis. It is sour grapes. They are not accepting responsibility for the situation. They created the situation for the banking crisis. Deputy Martin was a member of the Cabinet the night the guarantee was introduced. He did not speak about how it came to that point. We were informed it was an issue of liquidity rather than an insolvency issue. Deputy Martin was a member of the Cabinet during the period that the promissory note was introduced. Fianna Fáil and the Green Party negotiated the promissory note. The Minister for Finance was the late Brian Lenihan and Brian Cowen was the Taoiseach. Fianna Fáil structured a promissory note which was effectively designed to give them a run-in to a general election. There was to be no interest charged on first two years of the promissory note. They rolled up the interest.

It was galling to have to listen to Deputy Martin tonight. I do not often make partisan arguments but on this occasion I will be partisan. Fianna Fáil caused the problem but its members have the cheek to come in here and say that they had a hand in bringing about this resolution. They had no hand, act or part in it. In fact, Fianna Fáil was fumbling around in the dark but its members was clever enough to know that they could lessen the load of the promissory note for the first two years. They rolled up the interest and it turned into 8% this year, the same next year and the following year. Up to €5.5 billion interest payments will be hitting the ordinary person and their current accounts.

Deputy Martin referred to the uncertain situation for the Anglo staff. He allowed the situation to develop over a period of time which saw contracts for difference with the Quinn group and reckless lending. Fianna Fáil needs to take responsibility rather than lecturing and preaching. The Fianna Fáil members do not have the moral authority, the political skill or the financial acumen to make that comment.

Barry Cowen (Laois-Offaly, Fianna Fail)
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We were not elected.

Kieran O'Donnell (Limerick City, Fine Gael)
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Revisionism was the order of the day in Deputy Martin's contribution.

Niall Collins (Limerick, Fianna Fail)
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What about the call centre in Limerick?

Kieran O'Donnell (Limerick City, Fine Gael)
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In the limited time available-----

Niall Collins (Limerick, Fianna Fail)
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Deputy O'Donnell should explain that to the people of Limerick.

Kieran O'Donnell (Limerick City, Fine Gael)
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Deputy Collins should deal with the points I have raised.

Niall Collins (Limerick, Fianna Fail)
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Deputy O'Donnell announced the opening of a call centre in Limerick.

Kieran O'Donnell (Limerick City, Fine Gael)
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If he cannot take the heat, the Deputy should get out of the kitchen. I speak about this matter from the point of view of possessing knowledge of it. I accept, however, that said knowledge is not in-depth in nature. However, I was present when these issues were being dealt with in the Dáil.

Deputy Martin has left the Chamber but I wish to deal with the points he raised. First, this is a good deal for Ireland and its people because it will reduce the financial burden that will obtain in the future. Second, the nominal amount of the debt remains the same but the real amount will be reduced by inflation during the 40-year period to which the deal relates. Three, in the context of the sale of Government bonds, in 2014 €500 million in Irish Government bonds will be released onto the market by the Central Bank. In the period 2015 to 2018, a further €500 million will be released. Between 2019 and 2023, €1 billion will be released. After 2024, the amount released will be €2 billion per annum.

There will be a real reduction in the amount of money involved here over time. The interest rate will fall to 1% per annum and the repayment period will be 40 years. This is a good deal for Ireland because it will bring about significant change and will unravel the mess Fianna Fáil created when it negotiated - perhaps it would be better to say failed to negotiate - the promissory notes. Those in Fianna Fáil were cute enough - for their own political ends - to ensure that interest would not be charged on the promissory notes in the two years leading up to the general election. The measure negotiated by the Government is positive and it will ensure that we exit the bailout programme at the end of the year. It will also ensure growth and the recovery of the economy going forward.

Paschal Donohoe (Dublin Central, Fine Gael)
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When future historians come to write books about recent events in Ireland and when their readers browse the indexes relating thereto, one of the first phrases they will encounter under the entries relating to Fianna Fáil will be "promissory notes". The promissory notes and the payments relating thereto constituted, as Deputy O'Donnell noted, a booby trap for generations to come, because tens of billions of euro in debt were stored up for future payment, and for the incoming Government, as a result of the deferral of billions of euro in interest payments for a period in which Fianna Fáil knew it would not be in power, so that the new Government would be obliged to deal with the matter. Commentators sometimes inquire as to what is the difference between the political parties in the House. Fianna Fáil created the promissory notes and this Fine Gael-led Government has ended them. That is the difference. It is a very clear difference.

Barry Cowen (Laois-Offaly, Fianna Fail)
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There are a few more differences than that.

Paschal Donohoe (Dublin Central, Fine Gael)
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Fianna Fáil foisted upon taxpayers tens of billions of euro in liabilities as a result of its inability to regulate the banking system. It could not regulate the former Anglo Irish Bank, the debt of which dwarfed the sum total of all goods and services produced in this country. This Government, of which Fine Gael is a member, obtained agreement from the European Central Bank and other authorities abroad to put in place an arrangement that would bring this saga to an end.

Many analysts have commented on this matter. Deputy Mathews referred to one of them earlier, namely, Wolfgang Münchau, who has written about the eurozone debt crisis in the Financial Times. Those opposite should consider the level of recognition afforded by Mr. Münchau to the plan agreed last week and to the impact it can have in the context of Ireland's seeking to extricate itself from its current difficulties. When writing in the Sunday Independent last weekend, Colm McCarthy referred to "an unambiguous benefit of the deal, to which there was considerable resistance from elements in the ECB. The politicians, the Governor and the Central Bank and Department of Finance officials have done as good a job on this issue as could reasonably have been expected." The commentators to whom I refer are not involved in politics and they have neither an agenda nor an axe to grind in respect of this matter, but those are their assessments of the deal agreed between the Government and the European Central Bank.

Let us consider the elements that will ensure this deal has an impact on the lives of the people we seek to serve. I suggest that there are three aspects to the deal which will have an impact on the fortunes of our country. In the first instance, the deal makes it very clear to anybody seeking to lend to Ireland that their money will be repaid before any funds are devoted to paying off debts relating to the former Anglo Irish Bank. This has an immediate benefit because people who want to invest in our country and create jobs here can do so. The second aspect is that the deal will lead to a reduction in the rate of interest Ireland is obliged to pay as it seeks to borrow abroad. That is the golden thread connecting everything we are seeking to do. The lower the rate of interest, the less money we will be obliged to spend on servicing the national debt and the more money we can invest in funding public services and creating the most precious thing of all, namely, jobs for our people.

While this achievement is hugely significant and extremely important for the Government - and it shows the difference between what is in place now and what was there before - it also marks the beginning of a process relating to other changes we need to introduce. I am very confident that with the support of the people we will be as successful in bringing forward the changes to which I refer as we have been in negotiating the deal agreed last week.

Martin Heydon (Kildare South, Fine Gael)
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I am delighted to have an opportunity to contribute to this debate. I was present in the Chamber earlier and I am aware that our colleagues in Fianna Fáil have had plenty of smart comments to make. There is much in this deal for which they need to be grateful. By addressing some of the legacy problems they left behind, we are making matters easier for them in the context of their political recovery. It will be the responsibility of others to decide whether such a recovery will be good for the country.

The agreement reached last week replaces short-term high-interest loans that were due to be paid over a seven- or eight-year period with long-term low-interest loans in respect of which an average timescale of 34 years will apply. I am 34 years of age. I was born in 1978 and the CSO's figures for that year indicate that the average cost of a three-bedroom house at that time was £2,300. The most recent comparable figures produced by the CSO indicate that the cost of such a house is now €240,000. This represents a change of approximately 90% and it shows what happened to the value of money over a 30-year period. If an equivalent 90% change occurs in the next 34 years, then the monster we inherited in the form of the promissory notes and debt will be a very minor speck on a larger economic system, particularly if our economy can grow on foot of the many measures it is proposed to introduce. This Government is intent on reforming and repairing the country's economy in order that we might get back on our feet.

The deal means that our debt is more sustainable. However, it is not a silver bullet and it will not solve all of our problems. As Deputy Donohoe pointed out, the confidence of outside investors in Ireland is definitely higher. It is important to note that those to whom we look to lend to us will have their money repaid before the debts of the former Anglo Irish Bank are paid down. The year 2038 is a long way off and who is to say that the Government in power at that stage will not roll the bonds over once again? In many respects, the biggest cashflow benefit from this deal is the €20 billion that will be saved during the next ten years. Ten years is mentioned for a specific reason. This is because government debt is dealt with in the form of ten-year paper. Above and beyond that, such debt becomes less significant. People who want to invest in this country are interested in how sustainable and how good a bet it is, and we have made our ten-year outlook appear much better. We have also reduced the cost of borrowing to the State. This is probably the greatest saving of all. One only had to read the report on the front page of last Saturday's edition of the Irish Independent to discover the real impact on this country's cost of borrowing.

A number of people in my constituency raised with me the fact that we have made this debt a sovereign debt and that we are passing it on to our children.