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National Debt (Continued)

Tuesday, 27 May 2014

Dáil Éireann Debate
Vol. 842 No. 1

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Deputy Thomas P. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I will deal with the Minister's final point first. The reductions to which he refers to some extent relate to debts that no one ever even attempted to pay down. The reality is that the €8.5 billion in income tax to which he refers equates roughly to the entire education budget. In the past three years the Government of which he is a member has imposed savage cuts in the health budget, which is a little bigger than that for education. The Fianna Fáil-led Administration which preceded the Government also imposed savage cuts in the health sector in the three years prior to 2011. The total figure for the cuts to which I refer is currently running at €32 billion, a phenomenal sum in the context of the national budget. Should the Government not be more robust in its efforts to have some of the overhang relating to the disastrous blanket bank guarantee reduced to a significant degree? The burden with which the people have been saddled is huge. Many economists are of the view that GNP is a better indicator of the level of the burden. When one uses GNP as the method of comparison, it becomes obvious that the country is operating in the shadow of an enormous monolith of debt. I am sure the Minister has read Plan B: How Leaving the Euro Can Save Ireland by Cormac Lucey. I am not suggesting the Government is going to adopt a plan B, but some of the figures put forward by Mr. Lucey and others are truly frightening. There may come a point when the Government - not just individual Ministers within it - is long out of office and the nation, as a result of its incompetency, is still burdened with a savage amount of debt.

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan Most countries have national debts; I do not know of any country which does not have such a debt. If one is running a national debt, one pays interest on outstanding loans. That is the way countries behave if they wish to remain solvent. Ireland's national debt is just in excess of €200 billion, of which some €64 billion arises from the situation with the banks, while €138 billion relates to the fact that we and our predecessors in government have run deficits. That is why we are obliged to reduce our deficit. On each occasion on which we run a deficit, the national debt increases and the interest burden which the Deputy deplores also rises. If we were to implement what all those who advocate additional expenditure and no cuts in expenditure are seeking, the debt would rise again and we would be obliged to pay more interest on it. It is not possible to have it both ways.

The Deputy has stated the final point I made in my initial reply is not real. Of course it is real. There is no longer a margin on the official debt relating to Europe, which is down to the rate which applies to borrowing. That is of huge advantage to Ireland because it reduces our interest rate.

The Deputy has also referred to the deal on the promissory notes and stated it has had no benefit. Some €30 billion was involved in that regard. The Deputy will recall that up to two years ago a bill of €3 billion in respect of the promissory notes had to be paid each March.

Deputy Thomas P. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan It was not paid.

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan It was paid in the first year in which we were in government, when the Deputy was still a member of the Labour Party.

Deputy Thomas P. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan It was not paid.

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan It was not paid after that and we then negotiated our way out of it. The effective rate of interest on all of that money now stands at approximately 1%. The money to which I refer is not of the pretend variety; it is real.

Deputy Thomas P. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I am not sure the European Central Bank would agree.

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan The Deputy should not be concerned with that old guff.

Deputy Thomas P. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan At this time last year, other Members and I on the left in this House presented alternative budgets and alternative ways of raising money. However, the Minister informed us that we were crazy. That is the reality. We were prepared to balance budgets and know how to do so. We also indicated that we were prepared to facilitate effective budgets and address the problems relating to the national finances left behind by the disastrous Fianna Fáil-Green Party Government. Unfortunately, for the past three years the Government has implemented remedial policies similar to those put in place by the previous Administration. Earlier today the Minister referred to history judging people. Many future historians will say the Government of which he is a member carried on the policies implemented by the Administration which preceded it and that those in the Labour Party were insane to take power with Fine Gael.


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