Bernard Durkan (Kildare North, Fine Gael)
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I welcome our guests and thank them for their attendance and the information they have given. I support the points raised earlier by Deputy Doherty on the deficiencies in various housing developments all over the country and the various issues that have arisen in regard to defects. I strongly support the encouragement to bring together all the constituent bodies that might have had, or should have had, an influence during the building stages, including the construction industry, the banks, other lenders, etc. Previously, loans were not available unless certain criteria were followed and there was a certain insurance engagement. The insurance companies have a role to play in this, as do the various professional bodies. Due to what they described as light overseeing, the whole situation took a nosedive and everything was let go. The result was that nothing at all happened to protect the public. In the end, the State had to come in and is offering advice.

There is a shortfall. It should be handled by way of a contribution from those who should have fulfilled their responsibilities at that particular time in order to avert what happened. If those things do not happen, we will be in this state again and will have to visit this position again. As I said before at one of these meetings, I remember having the roofs stripped from a whole block of houses back in the late 1970s or early 1980s on the basis that there were structural defects. Those properties were covered by the house building guarantee scheme, gold bond, HomeBond, premium bond or whatever. What happened in those instances is that when the magnitude of the defects was recognised by the institutions that should have covered those situations at the time, they ran away. They paid a maximum of 30% or something, with the rest having to be borne by the individuals. I strongly support action to address that and I hope the witnesses can encourage it as well.

On the cost of living and mortgages, I realise the difficulty with anybody, whether the members of this committee or otherwise, predicting what will happen and saying a particular approach is the right way to go. I am concerned about the slow reduction in inflation rates. I wonder whether it would have been better to have a short, sharp shock, with a higher interest rate increase earlier, in order that the public would have begun to know what was the target. The answer I was given when I raised this previously was that the public would bank on the target. However, we have to give mortgage borrowers and the public some kind of light at the end of the tunnel. People would say there is no light at the end of the tunnel right now. Interest rates are going up on a regular basis and will continue to go up until such time, as the witnesses said, as that has an effect on the inflation rate. My simple response to this is that we need to watch it carefully. People are worried. If they had an end in sight, they would be better able to plan their households. There is no end in sight at the moment. People are worried and suffering, and they are suffering because of the unknown as much as anything else.

It behoves all in the lending institutions and the Central Bank to steer people in the right direction. I recognise that the Central Bank gives advice, and generally good advice. However, my colleagues from all parties and I can point to issues with some of the advice that was given before the crash. In granting mortgages, the main banks were able to ask customers if they would like the costs of a continental holiday or two to be added onto their mortgage, to be repaid over 30 years or something like that. It was outlandish behaviour and the craziest thing to do to people. Some were offered funding for a new car as well, in anticipation of having to replace it in the coming years, and so on. It went on like that. I am still dealing with people who fell into that trap. We can have all the competition in the world but the reality now is that competition is going downwards and will go backwards. I know who the people were who entered the market and did irreparable damage to the whole concept of banking in this country and then disappeared. However, that is work for another day. To what extent can the witnesses advise us in this regard? They mentioned that politicians have to make political decisions, which is true. We may find ourselves between a rock and a hard place from time to time but we need to have solid advice and clear knowledge as to what we are walking into and what is the best way to go. The public we represent have problems, worries and competing demands at this time, with monthly or weekly increases in the cost of living for a variety of reasons, including interest rates. I have another question on the rates, which I may come back to presently. I would like a response from the witnesses on the advice and direction aspect, if possible.