Paul Connaughton Snr (Galway East, Fine Gael)

In my time in this House, no Finance Bill was ever introduced against a more dismal financial backdrop. It is chilling that 12.5% of income tax is needed by the Government to pay the Government debt. Under the Minister's own projections, in 2013, 60% of all income tax will go towards payment of the national debt. That is before we talk about the €90 billion in toxic assets. Many economists believe that, if things pan out the way they appear at the moment, 75% of all income tax will go to pay the Government debt. If that day comes, we will have a massive problem.

I was in Argentina ten years ago when it ran into horrendous trouble. I met teachers, doctors and civil servants who had not been paid for the previous eight months. People might say this is scaremongering but if that day arrives there will be trouble, given that we had so much trouble finding €2 billion in the first budget and another €2 billion in the second. Now we are talking about taking on the toxic assets from the banks. I do not call them toxic assets, I call them smelly assets. There is €90 billion in toxic assets on paper. The Taoiseach claims the final figure will be nothing like that, the assets will realise more when the time comes. Even if we realised €30 billion, writing off €60 billion, that will impose enormous pain on every single taxpayer in the country. In view of this we believe it is time to call a halt to the method by which this Government proposes to get this country out of the current mess.

This proposal for a National Asset Management Agency goes too far, too quickly. It will be an easy way out for those who got rich very quickly when times were very good. It is against that background that I heard the Taoiseach talk about an EU scrutiny committee that will somehow evaluate these toxic assets. I cannot see how it will do it. I have no idea where this will finish, just as the Government has no idea. Many Governments in Europe have no idea either. When we talk about toxic assets, however, it means that throughout the country there are half-finished estates and land purchased through illogical and irresponsible banking. If we are to put a valuation on those, we must ask if anyone wants to buy them and for how much. At the moment they could not be given away. It is only when the demand for such products picks up that the NAMA will get its money back and that could take many years.

I wish to raise another point. I cannot understand why, when the ECB rate is reduced - on the last occasion it was reduced to an historic low of 1% - the many thousands of people who are tied into fixed rate mortgages do not benefit from that reduction. When those people signed their mortgage contracts they thought they were doing the right thing, but only some eight to 12 months later these people are paying interest rates of 5.9%, 6.1% and 5.6% when tracker and variable mortgages are freely available at rates of 3.3%, 3.5% and 3.6%. Many people will consider such terminology jargon.

I know of a couple where one partner has become unemployed and the other is on social welfare. A fortnight ago, that couple went to their bank to ask if they could have their mortgage repayments reduced to the current tracker or variable interest rates. The Minister of State knows what I am talking about because some of his constituents would have raised this issue with him. That couple told the official in the bank that if the bank could accommodate them, they would be just about able to repay their loan every month. However, the bank said they would require a breakage cost of €16,000 to make that change. The couple told the official they would not have had to make the request if they had that sort of money.

There are good banking reasons the change requested cannot be done, but there were many good banking reasons during the past five or six years when certain things that should not have been done were done. I am speaking on behalf of every couple throughout the country who is caught in this mess. As Deputy Clune rightly pointed out, when people receive their May cheques they will note the huge increase in the levies imposed on them. These are the people who are being penalised on the double and they are paying interest rates they should not have to pay at this time. That does not make sense. I accept that many people will say that mortgage holders signed a contract with the bank and the bank had to borrow extra money, and it was more costly to do it at that time. However, what was not possible yesterday might become a necessity tomorrow. If the Government wants to keep people from becoming dependent on social welfare and give them some degree of dignity, this is a measure that should not involve a cost, given that the banks are now in a position to borrow money at a lower rate than ever before. The Government has been feather-bedding the banks all the time, and what is happening is nothing short of a disgrace.

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