Éamon Ó Cuív (Galway West, Fianna Fail)

Sin é do bharúil.

What we must do is get businesses back to business. Under the current arrangement, it is virtually impossible for small and medium-sized companies and for individuals to get credit from banks. We should all be able to agree on one issue, namely, that the status quo is not working. Fine Gael has proposed that there should be two banks in one bank. The weakness I see in this proposal is that there is still one bank in charge of the two banks. Moreover, the same people who are currently in charge of the assets of impaired value would remain in charge of those assets. I am open to explanation from the Opposition but I see no logical reason that the governors of the various two banks in one, who would be the same governors as those currently in office, would not treat the impaired assets as they currently doing. They are slowing down the write-down or impairment because they must do so for commercial reasons.

Our argument is that separating out the asset portfolios and giving them to an agency that is independent of the management of the banks is the best way to ensure that the banks' balance sheets are clean and that they can return to the markets to borrow money. In other words, by cleaning out their balance sheets in this way, the banks will be in a position to raise money on the inter-bank markets which they can then lend to businesses and the wider economy.

I would like a constructive debate on the relative merits of the different proposals. We are convinced that our proposal is right although we know there are risks attached to it. Various Members have asked who will be responsible for valuing the assets. It is important to clarify that we do expect to appropriate lots of properties; these properties are the security for the relevant loans. In the event that a loan continues to be repaid, the security is not taken. If the security is liable to be taken, there are standard procedures to follow. For example, in the case of a bank foreclosing on a mortgage, it would take the security, realise the value and, after costs are paid, that value would be set off against the loan. It is a standard procedure. We are proposing that the national assets management agency will value the assets.

Obviously, it will require expertise in valuing the assets and, in particular, the loan in terms of the person's capacity to repay. The ideal solution is that people repay their loans. Security is only a default position. The agency will then make an offer that will ensure real value in respect of the assets. The advantage then is that bonds are issued, the loans are placed in an agency that manages them, at arm's length from Government and the banks, and it seeks to obtain maximum payment for them.

The Minister for Finance signalled yesterday in the Budget Statement that the first instruction is to get performance of the loan. In default of this, securities will be pursued. I believe, having looked at both proposals, that the Government proposal is better than the one put forward by the Opposition. Rather than hearing the type of speeches we have heard from the Opposition, I would be interested to hear Opposition Members outline logically the flaws in our proposal and the aspects of its proposal which they believe are better.

I wish to refer to the public service and to once again put on the record of the House that I believe it has been badly served by some political commentary, which gives the impression that most public servants are not earning their wages or working efficiently. Having worked with public servants within the political system and prior to my entry into politics, I believe the vast majority of our public servants serve our country well. I do not believe there are many who are not delivering. I also believe that, because of changed circumstances, opportunities now present to downsize. I welcome in particular the decisions made in this regard. The Government decisions in regard to early retirement and allowing people to take extended leave and to obtain a payment for so doing is good. These are voluntary options which provide people with real life choices which they can take up only if they wish to do so. In this way, we get the best of both worlds, namely, we get the downsizing we need and we do so on a voluntary basis.

It was important to listen to what low paid public servants had to say about the pension levy. This has been adjusted significantly, in particular, for those on lowest pay in the public sector. The current measure provides that no levy will be paid on the first €15,000 earned, thus reducing the levy to 5%. The net saving for workers, particularly low paid workers, is €500. This means that a person earning €30,000 per annum will pay considerably less. We listened and adjusted the levy accordingly. The counterbalance is that high earners will pay a little more, which I believe achieves a better balance.

See this speech in context