Joan Burton (Dublin West, Labour)

This section is the heart of the Bill. It seeks to give the Minister extraordinary powers for the kind of scheme drawn up, whether and what will be paid by participants for the scheme and what the scheme will consist of. We have heard the Taoiseach and the Minister talk about it as a guarantee scheme but the section makes it very clear that it extends over a whole range of potential assistance, not just guarantees but injections of capital, equity stakes and other investments, including loans to the affected companies.

The difficulty is that, for instance, in section 9 on page 4 of the Bill we have essentially the recreation of something which most people will probably only have heard about in economic history textbooks, a kind of Fóir Teoranta approach. Thirty years ago if companies were failing — it was a difficulty at that time — the State could go in and effectively take a kind of debenture or loan capital in the company which would pay a rate of interest. In many cases the capital advanced was never recovered and neither was the interest on the loan because the institutions were never able to pay. The Bill provides that the Minister may subscribe for, take an allotment of or purchase shares or any other securities. There are echoes of the Fóir Teoranta model of very long ago. I do not know whether this was an inspiration. I know that homage was rightly paid to Dr. Ken Whitaker on the anniversary of the economic plan and I wonder if there was some conversation about what used to happen in times gone by.

The Labour Party's amendment No. 12 provides for an oversight board consisting of three persons appointed by the Committee of Public Accounts of Dáil Éireann who are persons of international expertise and repute who would report every six months to the Committee of Public Accounts on the operation of the Act. That kind of oversight is essential unless the Minister or his successor is not to run riot or be run over by the financial institutions which are getting this fantastic guarantee. It is a tremendous guarantee that is being advanced and I costed it at between €1 billion and €12 billion in terms of the two year guarantee and the assets which the Minister has described as being subject to the guarantee. We want some oversight and I will be tremendously disappointed if the Minister is unable to respond to this request. The Labour Party is presenting this amendment and Fine Gael is supporting it. The Minister has shown himself very disinclined to accept anything from the Opposition. He would be well advised to take this on board.

Our amendment No. 13 deals with the obligations of a credit institution to take all measures to avoid abuse of the financial support in accordance with the detailed scheme. There must be effective oversight mechanisms. What is to prevent some of the beneficiary institutions using the status and security of the guarantee to gamble recklessly again in their lending practices and the financial instruments in which they trade and speculate? We do not want the word "may" in the legislation; we want "shall". I remind the Minister that the last time a Fianna Fáil Government came into the House with a deal worked out with outside organisations, it was in relation to the redress scheme. Religious orders were to pay €127 million or €128 million, which was to be equally matched by State liability. In the end the State paid to the tune of almost €1 billion. Fianna Fáil has form on this, an arrangement worked out for an apparently good purpose which was generally supported in principle by many of the parties to assist the victims who were the object of the redress scheme. In the end it was the taxpayer who paid for the scheme, although we were told that the religious orders would contribute significantly. We want the taxpayers' interest protected and that is the purpose of these amendments.

Our amendment No. 14, which Deputy Bruton has also put forward, seeks to delete the provision for non-commercial terms which the Minister has included. It is not unreasonable to delete that provision, given that he has said that the terms on which the guarantee will be provided will be commercial terms. Amendments Nos. 20, 21 and 22 are grouped. It is provided that a draft shall be laid before each House of the Oireachtas and shall not be made unless resolutions approving the draft are passed by each House. That is removing the annoying references and replacing them with positives. Fine Gael amendment No. 21 is similar, as is No. 22. It would be outrageous if the Minister were to refuse to accept amendments which represent the views of both Labour and Fine Gael.

Amendment No. 24 provides that it shall be a condition of an application that in the event that any of the participating institutions get financial support, the applicant shall issue shares to the Minister for Finance to a value equivalent to the amount paid by the State under the financial support scheme. This is the Swedish model. It has been acknowledged in the Wall Street Journal, the Herald Tribune, the Financial Times and around the world that the model voted in and adopted by the centre right and the centre left in 1992 when Sweden was in great difficulty rescued not only the Swedish banks but the Swedish economy from a bubble of a collapsed housing construction boom which had ricocheted and was threatening to destroy the Swedish banking system. It has received the widest of accolades and equity was part of it. We are urging the Minister to include it because effectively it draws in the financial institutions to behave responsibly and help to recover the financial system from the danger that it is in and thus help our economy and ultimately the construction sector to recover.

Amendment No. 25 refers to the interest rate to be applied. I also refer to amendment No. 26 tabled by Deputy Bruton. The Labour Party strongly supports the notion of appointing somebody to the risk management side of these various bodies.

A late amendment, No. 19a, which some Deputies may not have seen, was broadly accepted in a number of discussions today. It provides that in making a scheme the Minister may require credit institutions to make particular provision to meet the credit requirements of persons on low incomes and that the Minister shall consult the money advice and budgeting service in this regard. Many ordinary people are facing foreclosure on their mortgages. These will be the little victims of the credit crunch. We are asking the Minister to bring forward a scheme whereby account will be taken of the interests of people who may default on the mortgage on their family home. Given the tradition of the Minister's party and of his family, I will be astonished if he cannot accept the amendment in the name of the Labour Party to protect the most vulnerable victims of the credit crunch. If he does not do so, he will protect the high rollers but not the little people. I would say "Shame on the Minister" if that were so.

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