Contribution to the Debate on the Govt Decision on Exiting Programme of Financial Support

November 20th, 2013 - Pat Breen

Wednesday, 20 November 2013

Deputy Pat Breen: I welcome the opportunity to contribute to this debate. As the Taoiseach stated last week, the decision to exist the bailout without a precautionary credit line “is the right decision for Ireland and now is the right time to take this decision”. This decision has been made possible by the people, who have been obliged to endure one of the most periods in the country’s economic history. When the troika arrived, Ministers in the previous Government told the people that the attention of the EU and the IMF would be limited to measures to improve the liquidity of our banks. The latter was, of course, total nonsense. We were tied in to the bailout and that left us little room for manoeuvre. When the Government entered office, there was a crisis in employment and some 7,000 people in the private sector were losing their jobs each month. In addition, Ireland’s international reputation was in tatters.
I remind the main Opposition party across the floor that many of the controversial proposals we have been obliged to introduce, such as the property tax and water charges, were all elements of the four-year fiscal plan to which that party signed up when in government. What the previous Administration’s plan lacked was a credible growth and jobs strategy. In the past three years we have been working to address the deficit in order to bring our public finances under control and establish the correct conditions for a clean exist from the bailout. The economy has returned to growth and Ireland is one of the minority of eurozone countries to achieve two successive years of economic growth, which it did in 2011 and 2012. Many organisations are predicting that growth next year will be even stronger than the 2% predicted by the Minister for Finance. Jobs in the private sector are being created at a rate of 3,000 per month and international confidence has been restored. The fact that our international reputation is now at an all-time high is no coincidence. The Government has gone out and sold Ireland abroad, while at home it has continued with the task of getting the economy back on a sustainable footing and successfully meeting all of our obligations with the European Commission, the ECB and the IMF.
The views of the Opposition party leader who wants to tie the Irish people into another bailout programme are not shared by international experts or the markets. Responding to the decision taken by the Government last week, Ms Christine Lagarde, head of the IMF, stated that the Irish Government has a strong record of policy implementation and that this bodes well for Ireland’s exit from the bailout. The Vice President of the European Commission, Mr. Olli Rehn, stated that it was a good day for the country. Ireland is the first country in the eurozone to exit its bailout programme. The reality is that a rising tide raises all boats. With the eurozone economy showing some signs of improvement, the Government’s decision provides a much needed boost for the eurozone in general but for Portugal in particular as it reaches the end of its own programme. It is worth remembering that the battle for a retrospective deal on the recapitalisation of our banks continues in Europe. The fact that we are emerging successfully from our programme will enhance our reputation among our EU partners. It will also enhance our bargaining power.

I look forward to the verdict of the international ratings agencies. If, as a result of last week’s decision, Ireland’s credit rating is upgraded to, for example, investment status, money will begin to flow back into the country from pension fund investors and others who are prevented from investing here at present. The leader of the main Opposition party claimed last week that we should have an insurance policy in place in the context of the headwinds which may come to bear on us. We already have an insurance policy in place. We have this Government and the Minister for Finance, Deputy Noonan, who has demonstrated a capacity to keep a right rein on our finances. Unlike his predecessors, the Minister does not pursue reckless policies. Within Europe there are strong preventive fiscal controls in place in the form of the Stability and Growth Pact. The markets are relaxed about last week’s decision in light of the transformation in our economy. We have a strong buffer in place in the form of €20 billion in cash reserves. Our public finances are under control and economic sentiment here is at its highest point since 2007. As Chairman of the Joint Committee on Foreign Affairs and Trade, I have seen evidence of how much our international reputation has improved during my travels abroad. That reputation is at an all-time high.
Now is the right time to exit the bailout. I commend the Minister for Finance, the Taoiseach and the other members of the Government whose efforts made last week’s decision possible.