Joan Burton (Dublin West, Labour)

The second set of bonds might be discounted for the risk factor and the interest rate might be higher, but once the main bonds are issued they will be treated by the markets as, in effect, becoming part of Irish Government debt. They will be called NAMA bonds.

In his report to the Minister for Finance, the economist Dr. Peter Bacon said:

Creditability is the overriding requirement of any proposal which is going to be successful in addressing banks' capital adequacy issues. This requires firstly that the operation be entirely transparent, that the resulting fiscal cost can be absorbed, and that the Government's prospective debt profile is a sustainable one. Another necessary feature is that NAMA should operate independently and without interference in the discharge of its functions.

Our criticisms can be summarised as follows: NAMA's operations will not be transparent; the resulting fiscal costs cannot be absorbed; and the Government's prospective debt profile, in the way the Minister is doing this, is potentially not sustainable.

In addition, NAMA will not operate independently and without interference in the discharge of its functions. That is because in every line of the Bill, the Minister has the power to direct, commit and order. While NAMA is finding a temporary home under the auspices of the NTMA, the reality is that NAMA is a cuckoo in the NTMA's nest because it is subject to the Minister's rule and diktat. The Bill makes it clear that the NTMA will have no functions whatsoever in the governance, direction or management of NAMA. It can, therefore, be argued that in its current form the Bill departs significantly from the proposals made by its original promoter, Dr. Bacon. For that reason we ask the Government to reconsider the Bill, withdraw it and produce a new Bill that seeks to address the serious issues facing the country.

I am not convinced that the Bill will do very much for the 450,000 people who have lost their jobs. I am not sure how much the Bill will do to release credit into the economy. Like the guarantee this time last year that was supposed to do the same thing and deal with liquidity, I am not convinced this Bill will do so. Therefore, the Labour Party is asking the Minister to withdraw the Bill and bring forward amended legislation, or the Government could bring forward the Labour Party's proposal, which has been used around the world as the best possible remedy.

I will finish by quoting from the report of the International Monetary Fund: "Insolvent institutions with insufficient cash flows should be closed, merged or temporarily placed in public ownership until private sector solutions can be developed."

There have been numerous instances - for example, Japan, Sweden and the United States - where a period of public ownership has been used to cleanse balance sheets and pave the way to sales back to the private sector. The Labour Party believes that is the best solution. It is the only solution that is really possible in the context of the blanket guarantee the Government gave this time last year. We recommend that to the House.

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