Éamon Ó Cuív (Galway West, Fianna Fail)

Ba mhaith liom moladh a thabhairt don Ghrúpa Teicniúil as ucht an rún seo a ardú anocht. Níl aon amhras orm ach go bhfuil sé thar a bheith tábhachtach go dtiocfadh muid i gcabhair ar dhaoine atá ag fulaingt de bharr an lag trá eacnamaíochta, iad siúd go mór mhór atá i mbaol a gcuid tithe a chailleadh. I commend the Technical Group on this motion which gives us an opportunity to debate this issue. Obviously there are aspects of the motion I would not agree with and I will address these later in my contribution.

I have always had a firm political belief that as many people as possible should be facilitated to own their own homes and that there is a huge value to be put on the stability of families through home ownership. Last Christmas, I was pleased to introduce a scheme facilitating an extra discount for people buying local authority houses. Anyone who walks around local authority estates can see the houses that have been bought because the owners care for them and do extra work to maintain them. The stability of society as a whole is hugely aided by a high rate of family home ownership. I also subscribe to the idea that the State should assist those who have fallen on hard times to hold on to their homes and that doing so is not only good social policy but also good financial policy. I would make exceptions where people bought trophy homes and also where, for social or medical reasons, people cannot sustain a mortgage.

The question is what one can do in practice to assist those who are most in need. How can one do so in a cost effective manner to ensure a long-term sustainable arrangement for people? The previous Government looked at this issue and commissioned a report by the expert group on mortgage arrears and personal debt. I believe these recommendations should be implemented in full.

I am surprised there was very little in the Minister's speech about a key issue, namely, a radical restructuring of the mortgage interest supplement scheme, as well as an arrangement for those who could not pay the interest on their loan to pay only 66% of the interest over a five year period. The latter point was mentioned in the Minister's speech and I understand the banks are facilitating that. The problem with that, however, is that one is only putting off the evil day which will chase one forever.

Whether in business or in private life, I have always believed that if an indebted person starts deferring their debt or takes out more loans, they are just digging a deeper hole. If the State believes a person has a future, the only way to help is by providing cash. It is not rocket science. The mortgage interest supplement provides cash.

There were also recommendations in the report on how some of the extra money to be spent on the mortgage interest supplement could be recouped from banks. In particular, there was a recommendation that if mortgage interest supplement was being paid, the banks could not charge any higher rate of interest than the basic rate of the loan. If they got the mortgage interest supplement directly, the banks would have no greater risk and, therefore would not charge a higher interest rate. The way forward is to change the terms of the mortgage interest supplement. During my term as Minister, work was ongoing in the Department of Social Protection in this regard and we had intended to introduce measures this spring. A schedule has been laid out by my officials to ensure this happens.

I agree with Government speakers that there are those who think one can have a general write-off of a huge amount of bank debt on the part of mortgage holders and that there will be no cost to be paid by anyone. This is obviously untrue. Any general write-off of debt would require further recapitalisation of the banks by the taxpayer. An indiscriminate write-off of debts by the taxpayer therefore would not only be very expensive but would also be inherently unfair. One might be writing off banks' liabilities for people who could well afford to pay. They made the choice and can afford to pay the piper. Equally, however, I am totally opposed to those who say that people took out mortgages of their own volition, that it is their responsibility to pay them and that the taxpayer should in no way help those who are down on their luck one way or another. It is uncharitable to take that attitude, as well as being unfair and inequitable. In addition, it is a simplistic way of approaching such issues.

The big question is who should be helped and how? Anyone who bought a family home at what was the going market rate at the time, even if they purchased it at the top of the market, and who cannot now repay their mortgage because of loss of income or employment should be assisted if they are facing serious difficulties. The way to do this is to assess individually those in difficulty. There is no other way of doing it. People in difficulty should avail of the money advice and budgeting service, MABS, which will undertake the assessment along with community welfare officers. In that way, one could decide who would be helped and the maximum number of households, per million euro spent, could be assisted. Every household could then be helped according to its individual needs in an open and transparent way.

There will be those who will argue that we cannot afford to extend this scheme. I would not agree with this as the direct cost of housing families who lose their homes because of repossession, not to mind the indirect costs to society and the families involved, is much greater than helping people through a temporary period of difficulty. It is also worth noting that the mortgage interest supplement currently costs approximately €70 million per annum compared with almost €1 billion for the rental interest supplement. I think it was €994 million at the last count. What we invest in saving people's mortgages tends to be quite temporary because people get re-employed. It also tends to be much less expensive than permanent social housing.

There are those who come up with great ideas, such as making 30 year mortgages into 60 year or 100 year mortgages. It is total nonsense and irrational because the people we are talking about cannot pay the interest on their mortgages and, therefore, even if they get a total holiday on the capital, it will not solve the problem. In fact, one of the proposals we had was that where the mortgage interest supplement was being paid, there would be no capital repayments to the banks.

During my time as Minister, I had prepared a schedule of implementation of the various steps concerning the mortgage interest supplement. Some of them did not require any legislative change while others required primary or secondary legislation. All of it was to have been done in the spring of 2011. It was intended to set up a central mortgage interest supplement processing unit in the Department so that everyone would be treated equally. The second decision, which did not require any legislation, was that the mortgage interest supplement would not cease until alternative arrangements had been made. If the person got a job, that was fine, but if he or she did not, the supplement would not cease until alternative long-term arrangements had been made. The third decision, which could also have been done without legislation, was to abolish the rule stating that a person could not get mortgage interest supplement if their house was up for sale. That was total nonsense, so that step was to be taken.

The fourth step was to address a provision that caught many couples who were dependent on two incomes. When one income disappeared, they may have had to live on the lesser of two incomes. There is a rule with the mortgage interest supplement that even if a person is working more than 30 hours per week, he or she can get mortgage interest supplement. That was to have been abolished by enacting legislation because there should be no relationship between the hours worked and receipt of the supplement. It should be based totally on a person's means and outgoings. The mortgage interest supplement should be calculated solely on that basis.

It was also intended that only interest would be paid to the bank if one was in receipt of mortgage interest supplement. In addition, because the supplement would be paid directly into the bank, the bank would not be allowed to charge any extra interest. Furthermore, the bank would not be allowed to charge any capital. Therefore, it could not put pressure on home owners to start clearing capital now that they were getting the mortgage interest supplement on the basis that they would not be getting the supplement if they did not need help. The bank would be told that the mortgage interest supplement, which would be its lifeline, would not be paid. There were several ways to pay for it. The first, which was to transfer people into social housing if the house is repossessed, is way more expensive. However, the other issue was that we had said MIS would not be paid for the first six months of difficulty or unemployment and following forbearance by the banks, the supplement would kick in if the householders problems were not resolved.

A general write-off of large mortgages with no connection to the ability of the mortgage holders to pay or their income would be a wasteful and irrational way to go. Some people say assistance should not be given, but that has never been our way. We have always given assistance to those who have lost jobs. By amending the MIS scheme and putting the resources that would otherwise have to be put into social housing into the scheme and getting rid of the crinkles in the scheme in the way I have outlined, we would have the means to directly help only those who need our help.

Those who do not need to be helped by, for example, doubling mortgage interest relief, will not be helped if they are 15 years into a mortgage and lose their jobs and they could have difficulties while many people would be helped who are happy at the moment because their incomes have increased and they have no problems paying for their house, including those who might have taken out relatively small borrowings because they had cash when purchasing. We must target the resources because they are finite. There is nothing we can give either by way of bank write-offs or direct support to people that will not have to be paid for by the taxpayer and, therefore, our finite resources must be targeted at those who need them and it must be made clear that the policy that the State has followed for many years in recognising the value of the family home will be protected and those who have difficulties will be assisted.

I have focused on the mortgage issue but, according to the MABS statistics, a huge number of people in severe financial difficulty do not have major difficulties with mortgages. As Minister, every time I asked MABS officials the average personal debt, I expected them to say €200,000 or €300,000 but they often said it was between €30,000 and €50,000, which was at a low level. Many people with debt problems do not have mortgages. They are in local authority houses or in other rented accommodation or circumstances. They do not own houses but they have problems with credit cards or credit union and finance company loans. Having received various offers in the post, they took on large debts but the message I have for them is that help is available. Nobody should go to bed at night worried about this. They should get help and where this issue is approached in a systematic way by MABS, the problems can be handled and resolved because nobody under our system should go to jail over a debt. The courts cannot, and do not, order people to pay that which they do not have. That has been my experience in dealing with people over the years. If a systematic approach is taken and people approach MABS, they can be helped to alleviate the terrible fear they are experiencing.

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