Maureen O'Sullivan (Dublin Central, Independent)

While considering the literature on this topic, I was struck in particular by the nine key principles drawn up by a number of highly reputable organisations with a strong track record and a strong commitment to working with people. I refer to organisations such as the Free Legal Advice Centres, FLAC, the Society of St. Vincent de Paul, Focus Ireland, Threshold and Respond!, to name a few. Basically, their call is for a fair and equitable response that really gets to the heart of this issue. We live in a society and time of excessive indebtedness, courtesy of the Celtic tiger and the pressure to buy into the excesses of that time. I completely acknowledge the principle of personal responsibility for decisions that everyone, as individuals, make. I grew up at a time when money was scarce and there was a struggle to make ends meet. People saved out of extremely limited resources and bills were paid, if not on time then eventually, and it was a time when many people, particularly where I lived, did not have bank accounts. I remember the efforts of family members and friends to save for the deposit on a house, which is markedly different from the position today.

Today, one sees a society that is crippled with this excessive indebtedness and I was struck by a quote from the Governor of the Central Bank, Patrick Honohan, a few months ago, when he stated: "Not all economic crises have left as substantial a legacy of personal debt as has the current global crisis." The organisations mentioned earlier perceive this as coming from an inability, rather than a lack of willingness, to pay on the part of those in debt. Their principles also included a call for comprehensive information to quantify the extent of the debt problem and for solutions to take into account all debt liabilities in order that they would be workable. In addition, they called for the personal insolvency legislation currently under discussion. Another principle is that the insolvent debtor should pay to the best of his or her ability for a limited time period and then for the remaining debt to be written off. Moreover, those in debt need to have someone to represent their interests when negotiations are under way because such negotiations can be extremely difficult. In addition, they need a minimum income to meet their basic needs while repaying the debts. On the latter issue of a minimum income to meet people's basic needs, discussing basic needs is a matter of interpretation and I go along with some of the NGO organisations in this regard. They also called for the unsustainable mortgages to be recognised as such and that when repossession occurs, for appropriate housing to be provided. However, before that, which makes sense, the State should try to keep people in their homes with the ongoing mortgage or as tenants. I believe all these principles are sound and can be supported.

If one considers particular aspects of excessive indebtedness, those who cannot pay their essential living expenses and debt repayments as they arise are at the heart of the problem. Moreover, it is not just about mortgage arrears but is much broader because while I acknowledge personal responsibility, there are factors that go beyond the personal, such as unemployment, businesses collapsing and ill-health. During the so-called good days of the Celtic tiger there is no doubt that people over-extended. I can recall receiving letters through the post from banks asking whether I wanted €10,000 that day, and at one point I believe I was being offered €20,000. As for the mortgages that were on offer, they were not merely 100% mortgages with no deposit upfront. People also were asked whether they needed further capital for furniture, decking out the back or a conservatory, as the financial institution would throw in a few thousand more. While it was extremely tempting for many people to opt for instant gratification, the consequences are known. As for property portfolios, I can understand the person who bought a second property as a pension fund. However, I find it difficult to find sympathy for those who went really gung ho for X, Y or Z number of properties. In my constituency of Dublin Central, in common with other constituencies I am sure, there is a preponderance of rogue landlords, that is, property buyers who are causing untold damage to long-established communities with their disregard for all planning and environmental laws and regulations.

This constitutes one of the excesses of the Celtic tiger. Only this week, I was asked to visit a flat in the inner city, which is privately owned by a landlord. I believe I may still be in shock at the conditions in which people were living, as my dog has much better accommodation than do they. Such rogue landlords also were created by the banks because of the extent of borrowing available. The priority must be to protect the individual at the other side, whose home is under threat. The institutions, that is, the banks and financial companies, are the primary causes of the excessive indebtedness one now sees, as well as the inaction and disinterest of those who should have known better, which also was a major factor. Those who should have known better in fact were fuelling this via the tax breaks and tax incentives and by ignoring completely best economic advice, both in Ireland and abroad.

Many who are excessively indebted have lost jobs and businesses and are trying to live with considerably reduced resources. In consequence, they lack the capacity to repay loans or pay the bills or both, which is a nightmare situation. While it is one thing to come from nothing to something as a progression, to come from a lot to nothing is a completely different scenario. I have in mind areas in Dublin Central and in the inner city in which people tell me the Celtic tiger passed them by. They did not get into the excesses and did not buy the additional properties here and abroad.

They did not buy big cars, go on shopping trips to New York and three and four holidays per year. They did not benefit from the Celtic tiger, but they are now suffering more owing to the economic downturn. The defunct Christmas bonus is an issue for elderly inner city residents, as that is all many of them got from the Celtic tiger and it is now gone.

The statistics show that at the end of 2010 one in ten residential mortgages was in trouble. A few months later one in nine was in trouble and a few months after that one in eight was struggling. There is still a significant number who have the ability to pay, but I know that some within this group are just about managing to repay their mortgage. We think of the property bubble when people were encouraged to buy with various inducements, not to mention the very strong media and financial institutions hype which suggested that if people did not get on the property ladder, they never would, as prices would continue to rise. People took out mortgages sometimes of over €250,000, €300,000, €400,000 and more to purchase houses and apartments that they knew were probably worth half of what they were paying. There was false advertising and incorrect advice, but who is being accountable for this? We know that those who are paying are the ones in negative equity.

The number of voluntary surrenders or abandonments in one period is greater than the number of repossessions. We know that there are long waiting lists for social housing; therefore, people have no option but to return to the rented accommodation system that I described, although I acknowledge that there are some landlords with ethical standards. Some mortgages are just unsustainable and the mortgage interest supplement could be used more effectively. Central to the issue of mortgage resolution is keeping people in their homes and avoiding placing additional pressure on the local authorities such that people avoid the nightmare that is the private rented sector. Options include availing of the mortgage to shared equity and the mortgage to rent schemes. The former involves the State purchasing a dwelling at a substantial discount from the lender and then allowing payments in instalments in such a way that the current financial situation is taken into account, as well as the option for the person concerned to buy back if and when his or her situation improves. The mortgage to rent scheme brings in the housing association or local authority and the former owner becomes a tenant paying rent that he or she can afford. I know some have reservations about this scheme. Another group which needs protection includes those tenants in buy-to-let apartments in cases where the owner-borrower is in danger of having the building repossessed.

I share the concerns of others who have spoken about the review process and think ten years is too long. It should take place sooner because so much is at stake. There will be a new body - the Insolvency Service of Ireland - with a director and staff. There will be yearly reports, strategic and business plans going to the Minister and then the Oireachtas. The director may be called before the Committee of Public Accounts, but I wonder if there is a need for the director to go before a committee when requested to do so. The name personal insolvency practitioners - PIPS - is not conducive to highlighting the serious role they will play. They will be vital in the operation of the debt resolution process. I presume they will receive extensive training and that there will be an extensive oversight procedure. The banks' veto is of concern and I hope the insolvency service can work through it to the benefit of those in debt. Let us suppose the banks do not want to buy into this process. That is an issue that will have to be dealt with.

As the Bill is complex and the language inaccessible, I hope the people in debt will be able to understand what is available. Perhaps there is a role for FLAC and the citizens advice bureaux to play. An additional worry for some is the social welfare supports. Yesterday or today I read a press release from the European Anti-Poverty Network which highlighted the serious failure of the European Union's 2020 strategy to promote coherent anti-poverty strategies. The quote is that there is a steady slide towards more poverty, exclusion and inequality for the majority.

I wish to be sure that the homeowners and their families who are truly in debt will be the ones who benefit most from the Bill, not those with the large investments and the property portfolios. The publication of the Irish League of Credit Unions "What's Left" contains some interesting statistics. It states mortgages and rents continue to be the most expensive bills, followed by groceries, utility bills and transport costs. It tells us that half of all consumers struggle to pay all their bills on time, but it is very distressing to read that there are 1.82 million adults across Ireland with less than €25 left per week after they pay their bills. As reckless banking led to personal recklessness, I am not sure why we are not going down the road of calling for a financial transaction tax and going back to the idea of a Tobin tax. Such as tax could generate massive amounts of money in revenue. It would have to be done globally and simultaneously, or else we would have speculators moving to those countries with fewer tax reductions, as they do today.

During Private Members' business last night we dealt with the Consumer Credit (Amendment) Bill 2012 and the issue of moneylenders. There are two varieties of moneylender - licensed and unlicensed. There are problems with both and unless the banks get it right, there will be greater recourse to these moneylenders, in spite of the best efforts of the credit unions which do a great job in encouraging saving, no matter how small the amount is. For every €100 borrowed, one particular licensed moneylender charged €56 for one year. Therefore, the APR on a six month loan is 187.2%. One can only imagine what illegal moneylenders charge. From discussions with community workers and others, we know that once the moneylender moves in - licensed or unlicensed - it spreads like wildfire. People are in need of what is known as doorstep credit because there will be emergencies and they will need cash quickly, but not at what it will cost them. A major problem in parts of Dublin Central is that families are borrowing money to pay the drug debts of family members. It is vital, therefore, that people who need money and are in debt can avail of funds in an equitable way.

Any Bill has to be measured by how good it is for citizens. There is much in this Bill that is good for citizens, with a few reservations.

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